Certain watchdog agencies of the federal government have expressed concern to Congress about whether additional steps already taken by the FHA and Ginnie Mae to improve their risk management are sufficient to avert potential government intervention. A recent study by the General Accountability Office and testimony by Department of Housing and Urban Development Inspector General David Montoya before a House panel have raised questions about the financial stability of the FHA and Ginnie Mae and their ability to respond to a major financial crisis. Both the GAO and Montoya concluded that the two agencies...

The Federal Housing Finance Agency should assume “a more active role” in its management of Fannie Mae and Freddie Mac and has not been sufficiently proactive in its enforcement and oversight of the two government-sponsored enterprises, according to the FHFA Inspector General. “FHFA’s role as conservator has evolved over time,” the IG said. At the outset of the conservatorships, FHFA forbade the enterprises from engaging in certain activities and retained approval authority over others,” said the OIG report. “Soon thereafter, FHFA delegated day-to-day operational decision making to the...

Acting Comptroller of the Currency John Walsh reassured participants at an interagency conference on the Community Reinvestment Act last week that the enforcement orders federal bank regulators issued last year and the state attorneys general national mortgage settlement will work well together. “I’ve said from the beginning that it is not only possible, but absolutely necessary, that our separate actions be able to work well together. And I think we’ve succeeded in that,” Walsh said. “The steps we have each required servicers to take to fix the problems in servicing and foreclosure processing ...

Commercial banks solidified their status as the biggest investor class in the MBS market over the second half of 2011, according to a new analysis by Inside MBS & ABS. Banks increased their holdings of residential MBS by some 5.7 percent over the final six months of last year – a period during which the MBS market itself was shrinking by 2.3 percent. That raised the commercial bank share of the MBS market to 21.1 percent. Savings institutions and credit unions, both significantly smaller groups than commercial banks, also boosted their MBS holdings in 2011. In fact, the...(Includes one data chart)

Ginnie Mae has seen a huge increase in business volume and appears to have adequate reserves, but the agency is still hamstrung by the federal budget process and has work to do to improve its risk management, according to a new Government Accounting Office report. With $1.186 trillion in single-family MBS outstanding and $301.7 billion in new issuance just last year, Ginnie is nearly as big as Freddie Mac – minus the retained portfolio. But the agency has a relatively small staff of full-time employees and has to get around the federal budget process by using business revenues to hire...

A Texas-based mortgage lender that recently lost its approval to originate and underwrite FHA loans sued in state court to compel the Department of Housing and Urban Development to withdraw an announcement of the enforcement action. AmericanHomeKey filed the complaint in Dallas County Court to force the withdrawal of a March 23 HUD press release announcing the immediate and permanent revocation of the lender’s FHA authority to originate, underwrite and close new mortgages with FHA insurance. The lender said a premature announcement would ruin its relationship with investors and result in massive losses. The HUD Mortgagee Review Board announced ...

The Federal Housing Finance Agency is running the numbers again on principal reduction for Fannie Mae and Freddie Mac loans to factor in the Obama administration’s offer to pay investor incentives to the government-sponsored enterprises. According to reports, Fannie and Freddie are more open to the idea of writedowns. For months, FHFA Acting Director Edward DeMarco has maintained that principal forbearance is a more effective way to help underwater GSE borrowers while protecting the financial interests of the GSEs and the Treasury Department. DeMarco acknowledged that the agency is “having...

The mortgage industry told the Consumer Financial Protection Bureau that the recent state attorneys general settlement contains a robust set of consumer protections that ought to be used as the framework for developing national servicing standards. However, industry representatives expressed concern that such an initiative could create additional barriers to entry to the servicing business. “First and foremost, the AG settlement will provide substantial relief to homeowners and will establish significant new homeowner protections for the future,” the Mortgage Bankers Association said in a recent...

Lenders, home builders and affiliated settlement service companies are lobbying the Consumer Financial Protection Bureau to preserve the ability of affiliated settlement service providers to do business with one another under the final ability-to-repay/qualified mortgage rule the agency is charged with writing. “We strongly support a competitive mortgage market where builders and lenders large and small, unaffiliated and affiliated, as well as other settlement service providers actively compete to provide sound mortgage products and ancillary settlement services to consumers,” said the Leading...

Nearly two months after the House and Senate overwhelmingly voted to curtail bonus payments to Fannie Mae and Freddie Mac executives, congressional lawmakers last week approved a final bill to send to the president’s desk for signature. Among the amendments included in the Stop Trading on Congressional Knowledge Act of 2012 – which would bar members of Congress and staffers from using non-public, inside information for personal benefit – are prohibitions on bonus payments to top executives of the two government-sponsored enterprises while they remain in conservatorship. The STOCK Act also...