California Attorney General Kamala Harris filed suit this week against Fannie Mae and Freddie Mac, taking up a notch her probe of the two GSEs’ mortgage lending and foreclosure practices.The lawsuits, filed in California Superior Court in San Francisco, seek to compel the companies to turn over documents the AG’s office had sought through a subpoena served to the two companies on Nov. 15.The Federal Housing Finance Agency directed Fannie and Freddie not to respond to the subpoenas.The subpoenas sought information about how Fannie and Freddie are handling thousands of foreclosed properties, as well as details about the GSEs’ mortgage-servicing and home-repossession practices.

Industry trade groups, as well as Fannie Mae and Freddie Mac’s regulator, are questioning the wisdom of Congress as lawmakers in both chambers have bills pending to hike the fees charged to guarantee GSE mortgages as a way to help offset the cost of extending the payroll tax cut through 2012.Both House and Senate versions of tax cut extension bills would add an additional 10 basis points to the guarantee fees charged by Fannie and Freddie through 2021. The increase would offset about $35.7 billion in costs, including $1.3 billion in the first year, according to the Congressional Budget Office.As Inside the GSEs went to press, the prospect of any tax cut extension was in doubt after the House rejected the bill calling for a two-month extension. Instead, House Republicans demanded immediate talks with the Senate on a year-long plan but the Senate ruled out further negotiations until the House passes the stop-gap measure.

The Federal Home Loan Banks of Seattle and New York recently announced personnel changes in the executive ranks of both Banks.The Seattle Bank’s Board of Directors last week appointed Michael Wilson as its new president and CEO, replacing acting president and CEO Steven Horton, who himself replaced Richard Riccobono in October 2010. Wilson, currently executive vice president and chief business officer of the FHLBank of Des Moines, brings 17 years of experience in the FHLBank system, serving in various Bank posts. He will join the Seattle Bank effective Jan. 30, 2012.

The use of Federal Home Loan Bank advances among bank and thrift members fell overall during the third quarter of 2011. Two of the three top members show a drop-off larger than the overall industry’s year-over-year rate of decline, according to the Inside Mortgage Finance Bank Mortgage Database.All of the nation’s bank and thrifts reported using a combined $323.3 billion in advances as of Sept. 30, 2011, down 5.2 percent from the second quarter and off 19.7 percent from the same period a year earlier.The Federal Home Loan Bank’s Office of Finance in its third quarter combined finance report cited decreased member demand, regular maturities and continuing prepayments for the third quarter decline.

The outcome of the securities fraud case leveled against six former top executives of Fannie Mae and Freddie Mac could hinge on what exactly is considered a subprime loan. At least one defendant is prepared to argue that there is no standard definition.In fact, the GSEs appear to still be reporting their subprime and Alt A exposure in much the same way they did in the period covered by the Securities and Exchange Commission lawsuits.Late last week, the SEC pulled the trigger on its three-year investigation of claims that the two GSEs failed to disclose to investors the companies’ exposure to subprime mortgages prior to the 2008 housing market crash.

For the past 18 years, listeners to the nationally-syndicated Dave Ramsey Show have heard the host recommend Nashville-based Churchill Mortgage. While Ramsey’s debt-free living message might seem at odds with a mortgage banking company issuing loans, Churchill Mortgage has found in Ramsey an excellent partner. “We get phone calls and hits to our website from every state in the country,” said Matt Clarke, Churchill’s CFO and COO. “The population of callers is largely high quality borrowers.” Churchill has been a sponsor of the Dave Ramsey show since it began, and continues to reap benefits. The question...

Mortgage bankers reported significant gains in profitability during the third quarter of 2011 as strong secondary market margins more than offset losses on the servicing side. The average mortgage banker earned $7.33 billion in gross income during the third quarter, up 24.3 percent from the previous period, according to the Mortgage Bankers Association’s latest quarterly performance report. Average pre-tax income was up a more robust 147.9 percent from the second quarter to $1.12 million, while average net income after adjustments surged 122.2 percent, the MBA data show. Through the first nine...

As a group, commercial banks reported a small increase in the volume of loan repurchases and indemnifications made during the third quarter, but some institutions posted much bigger increases than the overall industry trend. At the same time, a number of banks – including two of the top five – reported declines in the volume of buybacks and indemnifications compared to the second quarter of 2011, according to a new analysis of bank call report data by Inside Mortgage Trends. Bank mortgage repurchases and indemnifications totaled $5.94 billion during the third quarter, up...(Includes one data chart)

There’s been a notable changing of the guard among attorneys in the mortgage banking practices at the law firms of Patton Boggs, Ballard Spahr and Dykema. Partners Richard Andreano, John Socknat and Michael Waldron and associate Reid Herlihy left Patton Boggs recently with upwards of 100 clients and signed on with the newly created Mortgage Banking Group at Ballard Spahr. The new unit is part of Ballard Spahr’s larger effort to build up its Washington, DC, office. Meanwhile, Dykema augmented its regulatory presence by bringing on board former Patton Boggs senior lawyers Heather Hutchings and Haydn Richards to its Financial Services Regulatory and Compliance practice.

Private mortgage insurers would play a strategic role under a new Senate proposal for winding down Fannie Mae and Freddie Mac and privatizing guarantees on high-quality mortgage securitizations. Introduced by Sen. Johnny Isakson, R-GA, the Mortgage Finance Act of 2011 would create a new regulatory framework for securitizing “qualified residential mortgages” and an alternative form of guarantee provided by a new Mortgage Finance Agency. Under Isakson’s bill, the two government-sponsored enterprises would be placed in a run-off mode by the Federal Housing Finance Agency 18 months from the date of enactment. They would be required to ...