Although the outlines of an expanded Home Affordable Refinance Program are far from clear, MBS analysts say the most likely changes designed to help more borrowers take advantage of record low mortgage rates will not have a disastrous impact on the MBS market. Observers note that there are two ways to expand the potential HARP population: remove the existing chronological restriction (loans made prior to June 2009) or lift the current loan-to-value restriction of 125 percent. The chronological restriction is relevant because a lot of borrowers who have used HARP already could benefit from refinancing again because...

Guarantee fees up, loan limits down. Reform of the government-sponsored enterprises is set to begin with subtle adjustments to Fannie Mae and Freddie Mac pricing, not with sweeping legislation from Congress. Federal Housing Finance Agency Acting Director Edward DeMarco noted that the guaranty fees charged by the GSEs have already started to increase, and further gradual increases will be implemented next year. ...

“Sept. 2 was the most significant day for mortgage crisis litigation since the onset of the crisis in 2007,” Isaac Gradman, managing member of IMG Enterprises, said in reference to the non-agency mortgage-backed securities lawsuits filed by the Federal Housing Finance Agency. He predicted that the involvement of the U.S. government in mortgage litigation will encourage more private litigants to file lawsuits seeking securities law claims and buybacks. Gradman, whose MBS consulting firm specializes in analyzing contractual rights, potential liabilities and MBS regulation, said the FHFA lawsuits could provide plaintiffs with a roadmap to recoveries. ...

Several states would have seen their FHA dollar volume decline by 10 percent or more in the first half of 2011 had the lower FHA loan limits been in place at the beginning of the year. Connecticut and the District of Columbia would have been the hardest hit with 15 percent and 14 percent drops in their FHA volumes, respectively, over the six-month period, according to Inside FHA Lending’s analysis based on Department of Housing and Urban Development projections. California, which ranked first among states in FHA production, would have experienced a 12 percent drop, followed by Massachusetts with 11 percent. Colorado...(Includes one data chart)

The House this week voted to reject a short-term government spending bill but what’s interesting is what’s not in it: a provision extending the temporary loan limits. While attention is on the possibility of a government shutdown, it appears that a last-ditch effort by the mortgage industry and its allies in Congress to extend the current $729,750 high-cost area loan limit before Sept. 30 has failed. The measure lost by a vote of 195-230 after Democrats withdrew their support and 48 Republicans defied party leaders in protest over spending caps. It would have kept the government operating through...

Expect a gradual but deliberate increase in Fannie Mae and Freddie Mac guarantee fees to a level that more closely reflects what a private market would charge, the head of the Federal Housing Finance Agency announced this week. In a speech at the American Mortgage Conference in Raleigh, NC, FHFA Acting Director Edward DeMarco said that since Fannie and Freddie were placed into government conservatorship three years ago this month, the two government-sponsored enterprises have steadily increased g-fees and lessened the degree of cross subsidization in credit pricing. Yet, DeMarco noted, the GSEs’ current pricing for credit guarantees “is...

Industry groups are ramping up efforts to extend conforming loan limits currently available in high-cost markets that are set to expire at the end of the month, focusing their lobbying efforts on appropriations legislation in the House. The National Association of Realtors and the National Association of Home Builders are dou-bling their efforts to persuade Congress to extend current limits for Fannie Mae, Freddie Mac and the FHA, which top out at $729,750 for single-family units in the lower 48. Barring legislative action, the top loan limit will drop to $625,500 on Oct. 1. In addition to the lower ceiling, loan limits in most high-cost markets will...

Government mortgage programs don’t just dominate the mortgage origination business, they are also sitting on a huge inventory of real estate owned properties that are clogging the housing market recovery and adding to government budget problems. That spurred the Department of Housing and Urban Development, the Federal Housing Finance Agency and the Treasury last month to look for public input on ways to minimize losses for taxpayers and increase private investment in housing, including property sales and joint ventures. The National Association of Realtors said the best way to deal with the large REO inventory is to...(includes data chart)

In order to provide a benchmark that helps the private sector price mortgage credit, policy makers need to make an effort to replicate the standardization and uniformity currently provided by agency mortgage-backed securities, the managing director of Barclays Capital told lawmakers last week.

During the past three years, the GSEs have steadily increased their commercial mortgage-backed security issuance, assuming a role of dominance that private investment banks once held, concluded a recent report by Standard & Poor’s Ratings Services.