Mortgage securitization experts have not yet figured out how to preserve the liquidity and consumer benefits provided by the to-be-announced agency MBS market in a mortgage finance system that doesn’t have a role for government agencies. “The failure of the private market has been in figuring out how to encourage a solution with less government,” said Peter Nirulescu, a partner at Capital Market Risk Advisors, during a panel held by the Securities Industry and Financial Markets Association this week. Despite panelists’ varying perspectives, all agreed that the TBA market continued to perform robustly and any changes made to the...

Legislative and executive branch policymakers should carefully consider curbing investment portfolios of the Federal Home Loan Banks, say former Bank officials, while a current top Bank official says any such changes in the FHLBanks’ investment authority could undermine the system’s ability to carry out its mission.Since 1990, when Congress broadened the FHLBanks’ previously restricted membership, the pressures for dividends, price competition for advances and increases in required capital levels have significantly increased the “investment” portion of the Banks’ balance sheets, according to former Federal Housing Finance Board Chairman Bruce Morrison.

The Federal Home Loan Bank of Dallas has rolled out a new home modification grant program for disabled veterans who were injured in the line of duty during post-Sept. 11, 2001, service.FHLBank of Dallas has allocated $250,000 for its Housing Assistance for Veterans (HAVEN) program effective Oct. 3.HAVEN grants are available through participating FHLB Dallas member institutions to assist individuals in FHLB Dallas's five-state district of Arkansas, Louisiana, Mississippi, New Mexico and Texas.

In a major shakeup of its executive suite, Freddie Mac’s chief executive will step down next year while three members of the GSE’s board of directors are also headed for the exits, the Federal Housing Finance Agency announced this week.Freddie CEO Charles Haldeman Jr. informed the board of his desire “to step down sometime in the coming year,” according to the FHFA announcement. Freddie did not comment on Haldeman’s resignation, nor did it make the announcement itself, referring to the Finance Agency’s official press release in its Securities and Exchange Commission 8K filing this week.

Long awaited alterations to the Home Affordable Refinance Program announced by the Federal Housing Finance Agency this week are expected to be of some relief to underwater homeowners but it will do little to endear the Finance Agency to its critics, particularly among House Democrats, who think the FHFA should do more.Among the new HARP enhancements is the elimination of certain risk-based fees for borrowers who refinance into shorter-term mortgages and lower fees for other borrowers. Also removed is the current 125 percent loan-to-value ceiling for fixed rate mortgages backed by the government-sponsored enterprises.

Fannie Mae earlier this month released additional results of its new servicer evaluation program for the first half of 2011, noting that 11 out of 13 servicers in this peer group are considered on track to meet at least median performance levels.In February, Fannie rolled out its Servicer Total Achievement and Rewards (STAR) program, designed to encourage customer service improvements and better foreclosure prevention outcomes for homeowners by rating servicers on their performance in those areas. Fannie categorizes servicers into three peer groups based on the number of loans they service, with each servicer scored using the Servicer Performance Scorecard. STAR ratings are based on a five-star scale.

The chairman of the House subcommittee that oversees the GSEs unveiled a bill late this week that seeks to drastically overhaul the secondary mortgage market – without the need for Fannie Mae or Freddie Mac.The Private Mortgage Market Act would create a heavily regulated mortgage-backed securities market consisting strictly of private entities functioning without a federal guarantee, according to Rep. Scott Garrett, R-NJ.Garrett, who chairs the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises, said the goal of his legislation is to facilitate continued standardization and uniformity, ensure rule of law and provide MBS investors with the necessary transparency and standardization to ensure “that a deep and liquid market develops” without Fannie and Freddie.

The 12 member “super committee” of House and Senate members tasked with tackling debt reduction should seriously consider raising the guarantee fees charged by Fannie Mae and Freddie Mac as one way to reduce government expenditures, according to the chairman of the House Financial Services Committee. In a letter to the members of the Joint Select Committee to Reduce the Deficit, Rep. Spencer Bachus, R-AL, said the committee should consider raising the premiums the GSEs charge lenders to insure against the risk that borrowers will fail to repay their loans to something even higher than the White House and regulators have proposed.

Under fire by its official watchdog, as well as by a senior House Democrat, the Federal Housing Finance Agency last week announced it has directed Fannie Mae and Freddie Mac to transition away from the GSEs’ current foreclosure attorney network programs. FHFA’s directive – which it says is in synch with the Finance Agency’s Servicing Alignment Initiative to produce uniform foreclosure processing standards – will move toward a system where mortgage servicers select qualified law firms that meet certain minimum, uniform criteria. Under current practice in certain states, each GSE designates law firms eligible to undertake foreclosure work, and mortgage servicers then select and work with these firms, according to the FHFA.

In a move that could potentially prolong already protracted litigation, a U.S. District Court judge in New York ruled last week that a proposed $8.5 billion settlement over Bank of America’s non-agency mortgage-backed securities belongs in federal and not state court.Judge William Pauley denied a motion by the Bank of New York Mellon to move the lawsuit filed by BofA Countrywide non-agency MBS investors back to New York State Supreme Court. Eleven entities sharing the name Walnut Place petitioned for the federal court venue, claiming the case’s size and complexity qualified it for a “mass action.” Judge Pauley agreed.