The Senate Banking, Housing and Urban Affairs Committee approved a Republican regulatory relief bill on a strictly partisan vote late this week, with all of the mortgage-finance provisions previously reported intact. Sen. Pat Toomey, R-PA, momentarily offered Fannie Mae and Freddie Mac a “get out of jail free” card, in the form of an amendment addressing capital requirements for the two government-sponsored enterprises, then withdrew it, presumably for use at a future point in time. “This is...

Nomura Holdings Inc. is mulling an appeal following last week’s court order that it, along with RBS Securities, pay Fannie Mae and Freddie Mac a total of $805.1 million to resolve claims arising from the pre-crisis sale of non-agency MBS to the government-sponsored enterprises. Judge Denise Cote of the U.S. District Court for the Southern District of New York rendered the judgment May 11 after a three-week bench trial in which she found Nomura and RBS liable for the claims brought by the Federal Housing Finance Agency. The MBS were backed by mortgages with an unpaid principal balance of about $2.05 billion at the time of purchase. Nomura and RBS, which underwrote four of the seven MBS deals at issue, provided...

The Senate Banking, Housing and Urban Affairs Committee this week passed the Financial Regulatory Improvement Act of 2015 by a 12 to 10 margin along party lines. The measure, introduced by committee Chairman Richard Shelby, R-AL, includes a number of GSE provisions. Title VII of the bill prohibits the use of increases in Fannie Mae and Freddie Mac guaranty fees to offset outlays or reductions in revenues for “any purpose other than enterprise business functions or housing finance reform as passed by the Congress in the future.” The bill was approved by the Senate Banking, Housing and Urban Affairs Committee. Another provision would prohibit the U.S. Treasury from selling or...

Lenders are showing “restrained enthusiasm” for the new rep-and-warrant policy changes, according to Jeremy Potter, general counsel and chief compliance officer with Norcom Mortgage. The changes were made to help reduce uncertainty in addressing lenders’ concerns about when they might be asked to repurchase a loan. “On the one hand, you had some restraint where the lender’s reaction was ‘what am I really getting and how is this going to actually materialize?’ But on the other hand, there is the enthusiasm about an example of a regulator, investors and the lender community working together to make a significant advancement to accomplish goals that are good for everyone,” he said.

In tandem with its efforts to build a common securitization platform, the Federal Housing Finance Agency provided an update on its progress in developing a single security for the GSEs last week. “The single-security project is intended to improve the overall liquidity of Fannie Mae and Freddie Mac mortgage-backed securities, and lower costs for borrowers and taxpayers,” said the FHFA. The recent update primarily focused on the decisions it made based on the 23 response letters it received and dialogue the agency had with industry leaders after initiating a request for input last year. While representatives from the Federal Home Loan Banks suggested that the FHLBank system become an eligible issuer of single securities, the FHFA declined that proposal.

The Federal Housing Finance Agency this week unveiled final eligibility rules for nonbank servicers, codifying minimum capital and liquidity ratios for the industry along with a host of standards that owners of servicing rights must meet. All the requirements take effect December 31 of this year. In particular, the mandates, on the surface, might look burdensome to smaller shops that aren’t used to extensive audit requirements pressed upon them by Fannie Mae and Freddie Mac. The surveillance and “best practices” guidelines cover a host of areas, including such things as servicing transfers, and how the servicer (or servicing agent) manages its call center. Smaller shops, to some extent, are thrown a bone in the final rules.

The Federal Home Loan Bank system earned $1.015 billion in the first quarter of 2015, according to figures compiled by the system’s Office of Finance, an 82.6 percent increase when compared to the same quarter in 2014. The sharp increase was primarily the result of higher gains on litigation settlements, according to the Office of Finance. Litigation settlements accounted for $480 million in gains for the three months ending on March 31. The OF said the bulk of it was “driven by the FHLBank of San Francisco’s $450 million settlement of certain claims arising from investments in private-label mortgage-backed securities.” Total FHLBank assets for the first three months of the year were down at $879.9 billion, a 3.7 percent decrease from...

The Federal Housing Finance Agency continues to mull over the decision on whether to ban captive insurance firms owned by real estate investment trusts from the system. The agency received 1,300 comment letters on the controversial proposal and Mel Watt, FHFA’s director, was vague last week on when a final decision would be made. “FHFA is continuing to evaluate the comments we received and we will come to a resolution as quickly as we can prudently do so,” he said during the Federal Home Loan Banks Directors Conference in Washington. Last year, Watt raised safety and soundness concerns about captive insurers borrowing and joining the FHLB system. Some regulators are concerned that REITs and other financial...

Although the trial between the Federal Housing Finance Agency and Nomura Holdings is over, Nomura said that it is planning an appeal. The Japanese-based investment bank was found financially liable last week when Federal Judge Denise Cote ruled the bank knowingly sold bad mortgage-backed securities to the GSEs ahead of the 2008 financial crisis. The FHFA is working to put a dollar amount on the damages that Nomura and RBS Securities, the underwriter of four of the seven securitizations at issue, should pay. Nomura spokesman Jonathan Hodgkinson, said in a statement that losses by Fannie Mae and Freddie Mac resulted from an unprecedented decline in home prices. However, that defense approach failed. According to Cote “given the magnitude of falsity, it’s not surprising that the defendant...

U.S. Mortgage Insurers Supports GSE Risk-Sharing. The USMI wrote a letter this week to Sen. Richard Shelby, R-AL, in support of Shelby’s regulatory relief bill, which calls on the GSEs to engage in front-end risk sharing transactions. “This directive would make greater use of private capital to “de-risk” the GSEs, lower the exposure and costs for the enterprises and taxpayers and should lower costs to borrowers,” the trade group said. Fannie Names Winning Bidders of First NPL Sale. Fannie Mae unveiled the winning bidders on its first-ever sale of non-performing mortgages last week: SW Sponsor LLC and PRMF Acquisition, the latter of which is an affiliate of Neuberger Berman Fixed Income Funds. The GSE...