The Federal Housing Finance Agency released its performance review of first-quarter earnings for the GSEs this week and it stands to reason that Fannie Mae and Freddie Mac could post strong earnings for the second quarter. Here’s why: loan production was decent, which means guaranty fee income should be as well. But the real gain could come from rising interest rates. When rates fell during the first quarter, Fannie and Freddie booked $4.2 billion losses from the markdown on the value of derivative securities they use to hedge. Rates increased in the second quarter, which means the question now becomes: how much of a gain will the two book? Fannie Mae and Freddie Mac reported continued profitability in the first quarter of 2015...

The GSEs benefited from the Consumer Financial Protection Bureau’s free pass on the debt-to-income ratio requirements of the qualified-mortgage rule, resulting in a $132.9 billion increase in business.A new Inside Mortgage Finance analysis of mortgage-backed securities data illustrates that from the beginning of 2014 through the end of the first quarter of 2015, approximately 16.3 percent of the loans securitized by Fannie Mae and Freddie Mac had DTI ratios exceeding 43 percent. In the non-agency world, a qualified mortgage has to have a DTI ratio of 43 percent or less. While the government-insured market has its own QM rules that effectively ignore DTI, a loan eligible for sale to the GSEs is considered a qualified mortgage if it meets all the QM criteria – such as no interest-only payments – other than the DTI cap.

Non-members of the Federal Home Loan Banks are able to service mortgages under the Acquired Member Asset program, according to a recent regulatory interpretation issued by the Federal Housing Finance Agency. FHLBanks have been challenged with finding eligible members to take over the servicing of AMA loans from private financial institutions that want to transfer the servicing rights for various reasons. Some members want to do so because they can no longer service the loan, and others are unwilling to continue servicing the loan, said the FHFA. As a result, a number of banks have been considering or have already allowed the sale of servicing rights to institutions that are neither members of any bank, or affiliates of bank system members.

Wells Fargo was the top seller to Freddie Mac in 2Q with $12.6 billion, according to newly compiled figures from Inside Mortgage Finance, but BofA was a somewhat close second...

However, refinance loans continued to account for the lion’s share of GSE business, Inside Mortgage Finance found.

A few years back, then FHFA Director Ed DeMarco cut the compensation of the CEOs as a response to lawmaker concerns.

Fannie Mae and Freddie Mac saw a robust 22.3 percent increase in their single-family business during the second quarter of 2015, according to a new Inside Mortgage Finance ranking and analysis. The two government-sponsored enterprises issued a combined $232.36 billion of single-family mortgage-backed securities during the second quarter. It was their strongest quarterly production level since the third quarter of 2013, and it lifted ... [Includes three data charts]

Private mortgage insurers will have to hold more capital for lender-paid mortgage insurance, but the changes will only apply to business written after Jan. 1, 2016. Fannie Mae and Freddie Mac this week announced that lender-paid MI coverage will be subject to a 1.10 “multiplier” for mortgages with loan-to-value ratios above 90 percent. Mortgages with LTV ratios of 90 percent or less will be subject to a 1.35 percent multiplier. The government-sponsored enterprises ...

When Fannie Mae recently announced that its automated underwriting system would be free for all seller-servicers, matching a move made by Freddie Mac, lenders everywhere rejoiced. But not the nation’s mortgage cooperatives, which stand to lose business because the advantage of their “buying power” (with Fannie and Freddie, at least) is now greatly reduced. “Co-ops basically lose their main benefit,” said Mat Ishbia, president and CEO of United Wholesale Mortgage ...

Prior to the financial crisis and the government takeover of Fannie and Freddie, some seller-servicers had “strategic alliance” deals that allowed them to pay under 15 basis points in g-fees...