Mortgage banking operations owned by commercial banks posted a significant increase in loan sales during the fourth quarter, helping to push earnings higher. Bank mortgage banking units sold a total of $299.0 billion of single-family mortgages during the fourth quarter, up 20.2 percent from the previous three-month period. It was the industry’s second quarterly increase in sales volume after sinking to just $227.0 billion during the second quarter of last year. For the full year, mortgage sales came in 14.4 percent below the level reported during 2010, and the banking...(Includes one data chart)

Lenders should expect at least a short-term boost in profits from the Federal Housing Finance Agency’s recent tweaks to the Home Affordable Refinance Program, analysts say as the industry’s largest lenders have seen a big increase in new refinance applications for HARP 2.0. In its first-quarter earnings report issued last week, Chase cited the impact of HARP in part for generating $1.6 billion in mortgage production revenue, an 80 percent increase from a year earlier. Likewise, Wells reported first-quarter mortgage originations to be up $9 billion from the fourth quarter of 2011, with 15 percent of originations credited to HARP, while application volumes rose 20 percent during the same period.

Almost half of lenders believe that strategic defaults will increase in 2012, a specter that continues to affect national housing policy. There are no reliable data regarding strategic defaults in the U.S., considering the secrecy inherent in the act. That has forced policymakers to make dollars-and-cents decisions based on conjecture about borrower behavior. A new FICO survey found that 46 percent of bank risk professionals expect the number of strategic defaults in 2012 to surpass those in 2011. Survey participants had a generally pessimistic view of homeowners’ regard for their mortgage...

Fannie Mae and Freddie Mac’s mortgage servicers will soon be required to review and respond to short sale requests within 30 days of an offer on the property and to provide weekly status updates if the offer is still under review after that, under new standards issued this week by the Federal Housing Finance Agency. Under the new guidance, effective June 15, servicers will have to make a final decision within 60 days of receiving an offer on a short sale property. The FHFA said the change is an attempt to hasten the traditionally time-consuming and difficult primary alternative to foreclosure.

MBS Business Surges in 1Q 2012 Due to RefiGSE single-family securitizations leapt 16.2 percent during the first three months of 2012 compared to the previous quarter as mortgage lenders delivered some $303.9 billion in home loans to Fannie Mae and Freddie Mac’s securitization programs, according to an Inside The GSEs analysis. The first quarter’s flood of new business marked the fourth straight quarterly increase in production of GSE mortgage-backed securities after the market tanked in the second quarter of 2011.

Fannie Mae and Freddie Mac’s combined cash infusion from taxpayers during the latter half of 2011 came in significantly below estimates forecast by the GSEs’ conservator, according to a new report. The Federal Housing Finance Agency’s fourth-quarter conservatorship report noted that Fannie and Freddie’s actual combined draw during the second half of last year was $19 billion, some $10 billion below the Finance Agency’s most optimistic projections issued last fall. In October, the FHFA circulated its updated projections of the financial performance of the GSEs, including potential draws under the Senior Preferred Stock Purchase Agreements with the Treasury Department.

The Federal Housing Finance Agency has revised and consolidated its categories for safety and soundness and Affordable Housing Program examination findings pertaining to Fannie Mae, Freddie Mac and the Federal Home Loan Banks, the FHFA announced in a recent advisory bulletin. Examination findings are deficiencies related to risk management, risk exposure, or violations of laws, regulations or orders that affect the performance or condition of a regulated entity, according to the FHFA.

After months of hearing Congressional Democrats and White House allies suck up the public debate oxygen in favor of GSE principal reduction, mortgage writedown opponents are speaking up as the Federal Housing Finance Agency looks to be reconsidering its stand against loan forgiveness. Industry groups are expressing with greater volume their concern that principal forgiveness on loans guaranteed by Fannie Mae and Freddie Mac would ultimately hurt the housing market.

Four and a half years after it was placed on a form of probation, the Federal Home Loan Bank of Chicago was officially released from its consent cease-and-desist order by the Federal Housing Finance Agency this week. FHFA Acting Director Edward DeMarco said the Finance Agency terminated the order because of improvements in the Bank’s financial condition and capital position, resolution of the agency’s risk management concerns and consideration of “specific comments and assurances made by the FHLBank’s board of directors to FHFA.”

Lack of procedures for resolving repurchase conflicts between non-agency MBS investors and providers of representations and warranties could negatively affect the rating for any newly issued residential MBS, according to a new analysis by Moody’s Investors Service. The volume of unresolved repurchase conflicts between MBS investors and reps and warranties providers can be gauged by the number of lawsuits and the growing dollar value of settlements, said Moody’s analyst Kathryn Kelbaugh. The issue was thrust into the spotlight recently because 82 percent of the loans backing the $746 million non-agency...