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...

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...

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...

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...

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...

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...

Some large banks may be re-thinking their commitment to the mortgage business and creating opportunities for a number of mid-sized firms, according to analysts at FBR Capital Markets. Servicing problems and mounting repurchase demands have pushed some large banks to allocate less capital to mortgage banking and slowed their originations, FBR analysts said. “This has created an opportunity for smaller players to step up and fill the void while still attaining healthy margins,” the company added. FBR specifically pointed to PHH Mortgage, U.S. Bank, Quicken Home Loans, Provident Funding, BB&T and...

A proposed radical shift in how lenders are paid for servicing Fannie Mae and Freddie Mac mortgages would make the business less feasible and skew the competitive landscape even more than it is, according to the Mortgage Bankers Association. In a comment letter to the Federal Housing Finance Agency, the MBA said the regulator and the two government-sponsored enterprises ought to shelve their controversial plan to reform servicing compensation. The FHFA and the GSEs have focused on two alternatives: a fee-for-service model favored by the agencies, and an industry proposal to reduce the...

Commercial banks reported a robust $4.91 billion in mortgage banking earnings during the third quarter of 2011, according to a new analysis of bank call report data by Inside Mortgage Trends. Mortgage banking income was up 52.8 percent from the three months ending in June, reaching the industry’s highest level since the end of 2009. Despite the improvement, year-to-date mortgage banking earnings were still down 4.8 percent from the first nine months of 2010. The surge in mortgage banking earnings resulted from increased loan origination and secondary market activity. Banks reported...(Includes one data chart)

The government’s effort to develop and implement a plan for bulk sales of inventory of government-owned foreclosed properties is slowly gaining form and substance, according to the summary of suggestions released by the Federal Housing Finance Agency released last week.In August, the FHFA, along with the Treasury Department and the Department of Housing and Urban Development, issued a request for information seeking input for new options for selling single family REO held by Fannie Mae, Freddie Mac and the FHA.