Refinance originations increased sharply during the third quarter, but relatively little of the gain came from the government’s streamlined program for borrowers with little or no equity. Analysts do expect an uptick in activity under the revamped Home Affordable Refinance Program, but many are braced for lackluster results. A total of $192.0 billion of refi loans were originated during the third quarter, up 31.5 percent from the previous three-month period. While that was significantly greater than the 7.3 percent growth in purchase-money...(Includes three data charts)

The proposal drafted by a senior House Republican that aims to lure private capital into the secondary mortgage market received the general support of industry witnesses at a hearing this week, but Democratic lawmakers say repealing key features of the Dodd-Frank Act would be a non-starter. The Private Mortgage Market Investment Act, drafted but not yet filed by Rep. Scott Garrett, R-NJ., would create a heavily regulated mortgage-backed securities market made up solely of private entities that would function with no federal guarantee at all. Under the bill, the Federal Housing...

The combined holdings of residential MBS by banks and thrifts topped the $1.5 trillion mark for the first time ever during the third quarter, as depository institutions without a lot of great alternative investment options continued to plow money into the market. Banks and thrifts held a record $1.533 trillion in residential MBS at the end of September, up 2.8 percent from the previous quarter and 10.4 percent ahead of the same period in 2010. Banks and thrifts held a combined 23.2 percent share of the outstanding residential MBS in the market. The biggest...(Includes two data charts)

It would be better for the mortgage market, for taxpayers and for Fannie Mae and Freddie Mac if Congress did not dawdle in promulgating housing finance reform and clarified the future role, if any, the two government-sponsored enterprises will have, the CEOs of Fannie and Freddie told lawmakers this week. Testifying before the House Financial Services Subcommittee on Oversight and Investigations, Fannie CEO Michael Williams and Freddie CEO Charles Haldeman called on Congress to take action as the continued lack of clarity about Fannie and Freddie’s future is harmful to...

Commercial banks will have to do more than just look at the credit rating on a security before deciding it qualifies as a potential investment under a proposed rule issued by the Office of the Comptroller of the Currency this week. The Federal Deposit Insurance Corp. is scheduled to consider a similar proposal next week. Under marching orders from the Dodd-Frank Act, bank regulators have been removing references to external credit ratings from a variety of regulations – even though banks themselves don’t agree with the change. Most commenters on earlier proposals from...

The chief of enforcement at the Securities and Exchange Commission took issue with a U.S. District Court judge’s rejection this week of the agency’s proposed $285 million settlement with Citigroup over a collateralized debt obligation backed by MBS that went sour, and defended the deal as the best available course of action, given the restrictions under current law. Robert Khuzami, director of the SEC’s Division of Enforcement, responded to a ruling announced early this week by U.S. District Court Judge Jed Rakoff in Manhattan in which the judge rejected the multi-million-dollar...

Most bond dealers expect the Federal Reserve to begin buying a substantial volume of MBS in an effort to stimulate an anemic economy, according to the results of a Bloomberg News survey of bond dealers. They project that the Fed could buy as much as $800 billion of MBS in 2012. The Fed would not respond to requests for comment regarding this plan, but the purchasing of MBS may be a part of a new round of quantitative easing for the market. Fed analysts claim that the agency’s first big MBS buying binge, between November 2008 and March 2010, helped push mortgage rates...

Non-agency participants maintain that the reinstatement of “emergency” high-cost loan limits for FHA loans – but not Fannie Mae or Freddie Mac – will not impede originations of non-agency jumbo mortgages. Meanwhile, some housing trade groups and congressmen representing high-cost districts continue to push for a reinstatement of the government-sponsored enterprises’ high-cost loan limits. In November, President Obama signed legislation that restored the maximum $729,750 loan limit for the highest-cost FHA markets ...

Fannie Mae recently started to transfer “higher-risk” mortgages to special servicers in an effort to improve performance, typically on non-prime loans. In its earnings filing for the third quarter of 2011, Fannie said it is “transferring servicing on loan populations that include loans with higher-risk characteristics to special servicers with whom we have worked to develop high-touch protocols.” The protocols include ... [Includes one data chart]

Whatever FHA relief the Department of Housing and Urban Development may offer as part of a pending settlement of foreclosure-related charges will not necessarily let mortgage servicers off the hook, said HUD Secretary Shaun Donovan.Donovan assured lawmakers during a House Financial Services Committee hearing this week that any offer of relief from any FHA liability in connection with ongoing robo-signing settlement talks would be “in exchange for significant penalties and help to homeowners who were wronged by bad servicing practices.” The HUD secretary neither confirmed nor denied the ...