Republican lawmakers on both sides of Capitol Hill are pushing harder for secondary mortgage market reform legislation as the first session of the 112th Congress moves toward a holiday break. The House Financial Services Subcommittee on Capital Markets and the Government Sponsored Enterprises this week approved legislation aimed at boosting the non-agency mortgage securities market by creating an extensive federal regulatory framework. The bill, approved on a party line vote, does not address the fate of Fannie Mae and Freddie Mac, nor does it provide for any federal backing for...

In the world of federal budget magic, Democrats and Republicans are both looking at increases in Fannie Mae and Freddie Mac guarantee fees as a way to offset the cost of extending payroll tax breaks due to expire at the end of 2011. Both parties so far are rejecting the other party’s proposed solution to keep the tax break, though both bills include nearly identical plans to start raising fees charged by the government-sponsored enterprises. The Senate Democrats’ Middle Class Tax Cut Act of 2011 would start raising GSE guarantee fees by 12.5 basis points per year. The GOP bill in the...

The Inspector General assigned to watch the Federal Housing Finance Agency is “actively investigating” possible fraud in mortgage securitization, loan origination, servicing and loss mitigation activities, the IG said during a hearing in the Senate Banking, Housing and Urban Affairs Committee this week. FHFA Inspector General Steve Linick reiterated observations in his organization’s semiannual report released last week that the FHFA sometimes shows “undue deference” to the government-sponsored enterprises and has not always been as proactive in its oversight as it should have...

There are a slew of metrics that go into the calculation of performance incentives for Fannie Mae, Freddie Mac and their top executives. Some of them – like hitting softball market share targets when the only competition is Ginnie Mae and Freddie Mac – seem hard to miss. For 2010, one of Fannie’s performance goals was to achieve a 33 percent share of new single-family mortgage-backed securities issuance. The company actually attained a 44 percent share of MBS issuance last year, which helped Fannie’s top executives earn 89 percent to 99 percent of their maximum long-term...

Changing how mortgage lenders are paid for servicing Fannie Mae and Freddie Mac loans is ill-advised at this point because servicing requirements themselves are in flux, according to the Mortgage Bankers Association. Adopting the radical fee-for-service proposal advanced by the Federal Housing Finance Agency would be particularly disruptive for a market that’s still under a lot of strain, the industry group said in a letter to the FHFA. The FHFA is collecting industry feedback on reforms to servicer compensation that is now based on a minimum servicing fee paid out of...

A Senate panel this week endorsed President Obama’s nominees for open posts at the Department of Housing and Urban Development and the Federal Deposit Insurance Corp., although the nomination of Carol Galante as head of the FHA may likely be delayed on the Senate floor. While the vote on the nominations of Maurice Jones to become HUD deputy secretary and Thomas Hoenig to be vice chairman of the Federal Deposit Insurance Corp. were unanimous, Galante ran into trouble with Republicans on the Senate Committee on Banking, Housing and Urban Affairs. Galante’s nomination was approved on a...

The Federal Housing Finance Agency filed a lawsuit in the U.S. District Court for the Northern District of Illinois against the City of Chicago this week to keep it from enforcing its recently amended “Vacant Buildings Ordinance” against Fannie Mae and Freddie Mac. The move may provide servicers a way to fight the ordinance without bringing upon themselves any enforcement action from the city while the litigation is pending, according to some observers. “The City of Chicago is interfering unlawfully with FHFA’s federally mandated oversight and exercise of discretion, as conservator...

The volume of home mortgage debt outstanding sank to a five-year low as of the end of third quarter of 2011, according to new data released by the Federal Reserve. The agency reported that the outstanding volume of single-family mortgage debt fell 0.6 percent during the third quarter, dropping to $10.336 trillion. That marked the 15th consecutive quarterly decline and the lowest level since the third quarter of 2006. The only component in the servicing market that’s showing much growth is the Ginnie Mae program, where the outstanding balance of...(Includes two data charts)

Agency residential MBS issuance in November rose to its busiest level since the start of 2011, but seasonal slowdowns in housing activity and a refinance boom that’s losing steam suggest that the current wave is at or near its peak. Fannie Mae, Freddie Mac and Ginnie Mae generated a total of $114.53 billion in new single-family MBS during November. That was up 11.2 percent from October volume and marked the highest monthly production level since January 2011, when the agencies issued $137.76 billion. But consumer demand for refinance loans has been...(Includes two data charts)

Industry experts and trade groups said this week they were generally supportive of a House Republican bill to create a new non-agency residential MBS market, but they still want the government to have a role, however limited, in the final product. The Private Mortgage Market Investment Act, drafted but not yet filed by Rep. Scott Garrett, R-NJ, would create a heavily regulated MBS market made up solely of private entities that would function with no federal guarantee at all. Garrett, who chairs the House Financial Services Subcommittee on Capital Markets and Government...