A fair question to ask is this: If DOJ goes after Mozilo, why not go after the owners of Ameriquest/Argent which created so much of the faulty subprime product that Greenwich securitized?

The Federal Housing Finance Agency’s request for public comments last week on the structure for a proposed GSE security has some industry insiders wondering if this is the prelude to the eventual consolidation of “Fannie Mac.” The implementation of the single security issued and guaranteed by Fannie Mae and Freddie Mac would be part of a “multi-year initiative” to build a common securitization platform.

The head of a group of disenfranchised Fannie Mae and Freddie Mac investors has called on Federal Housing Finance Agency Director Mel Watt to end conservatorship of the two GSEs and undo what stakeholders consider the illegal government “net worth sweep” of Fannie and Freddie profits. Tim Pagliara, executive director of Investors Unite, followed Watt to Atlanta to seek a meeting with and to put pressure on the director to acknowledge the concerns of GSE shareholders.

Pershing Square Capital Management – reportedly the largest investor in Fannie Mae and Freddie Mac common shares – filed two separate lawsuits last week demanding the federal government cease and desist its “net worth sweep” of GSE profits. The New York hedge fund contends that the government’s action not only illegally shortchanges investors of the GSEs’ common, it also amounts to a de facto liquidation of the two firms, according to its first complaint filed with the U.S. Court of Claims in Washington. The first complaint lists the U.S. as a defendant, as well as Fannie and Freddie as nominal defendants.

Last week’s announcement by the Federal Home Loan Bank of Atlanta that it would participate in the Mortgage Partnership Finance program, which is managed by the FHLBank of Chicago, “closes the circle” by ensuring that all 12 FHLBanks now are part of a mortgage securitization program, according to an industry observer. …

As the Federal Housing Finance Agency mulls over a proposed increase in fees charged by the GSEs to provide guarantees on mortgage-backed securities, so far those advocating for a g-fee hike remain in the minority. The Securities Industry and Financial Markets isn’t flatly opposed to an increase in g-fees under certain conditions but policy makers should “consider the broader context” in which the guaranty fee will be raised.

Delegated servicers hired by Fannie Mae failed on numerous occasions to close short sales at the authorized price, according to a new audit from the Inspector General of the Federal Housing Finance Agency. The IG also found that a Fannie Mae remediation plan does not hold servicers fully accountable for the resulting losses. Issued late last week, the IG audit focused on the effectiveness of the FHFA’s oversight and Fannie’s controls over delegated servicers to ensure that net proceeds for short sales met the authorized reserve established by Fannie. The IG found that both the GSE and its regulator came up short.

Fannie Mae’s and Freddie Mac’s conservator and the regulator of the Federal Home Loan Bank system is requesting input on its strategic plan for the next four years. The Federal Housing Finance Agency is seeking feedback on its draft document “FHFA Strategic Plan: Fiscal Years 2015-2019.” The plan sets the agency’s priorities in its oversight of the two GSEs and the 12 FHLBanks. The plan lists three strategic goals: ensure safe and sound regulated entities; ensure liquidity, stability and access in housing finance; manage the enterprises' ongoing conservatorships.

There is little to no chance of legislative GSE reform occurring until at least 2016, so market participants should plan accordingly, predicted a report issued last week. Despite two separate bills awaiting a floor vote in both the House and Senate, Kroll Bond Rating Agency said there’s little chance housing reform legislation will garner enough support to pass until after the next presidential election.

Fannie, Freddie Subprime Holdings Continue to Run Off. The GSEs’ holdings of nonprime mortgages continue to decline, largely due to runoff, according to a new analysis by Inside Nonconforming Markets, an affiliated publication. Fannie Mae and Freddie Mac held a combined $252.2 billion of Alt A and subprime mortgage assets at the end of the second quarter, down 18.3 percent from 2Q13. Purchased/guaranteed mortgages account for 71.9 percent of the holdings, with the rest of the GSEs’ nonprime exposure in non-agency mortgage-backed securities.