A spinoff product of the Federal Home Loan Banks’ Mortgage Partnership Finance Program experienced explosive growth in lender participation resulting in a record 2012, according to the FHLBank of Chicago. The MPF Xtra program, launched in 2008 to serve as a conduit for Fannie Mae loans, saw its volume increase from $2.8 billion overall during 2011 to $6.9 billion at year-end 2012, noted the Chicago FHLBank in its fourth quarter 2012 earnings report.

The majority of financial institutions defending themselves against a massive litigation initiative by the Federal Housing Finance Agency on behalf of Fannie Mae and Freddie Mac for toxic mortgage-backed securities purchased by the GSEs launched a counteroffensive this week by urging a federal appeals court to intervene in their favor against the “unfair” trial judge. Fifteen banks, including JPMorgan Chase, UBS Americas, Citigroup, Deutsche Bank and Bank of America, filed a joint petition with the Second Circuit Court of Appeals in New York complaining that U.S. District Judge Denise Cote has engaged in a “one-sided” approach designed to force a settlement rather than “foster fair and reasonable determination of the issues.”

Nearly two months after it shut down a plan by Fannie Mae to lower the costs of so-called “force-placed” insurance, the Federal Housing Finance Agency this week unveiled for public comment a plan that would ban the payment of lucrative commissions and reinsurance fees to banks in return for their purchase of lender-placed insurance policies. Under the FHFA proposal, seller/servicers would be prohibited from accepting sales commissions or fees related to the placement of force-placed insurance where a conflict of interest exists between them and the insurance providers and their affiliates. Fannie Mae and Freddie Mac may be affected by such costs where a servicer pays the higher premiums and is unable to recoup the cost from the homeowner or at a foreclosure sale. Consequently, explained the FHFA, the expense is passed along to the GSEs for reimbursement.

The top Democrat on the House Committee on Oversight and Government Reform, who is a vocal critic of the head of the Federal Housing Finance Agency, is calling for a hearing to dissect recent reports by the FHFA’s official watchdog that the agency has been “inadequate” in its oversight of the GSEs. The committee’s Ranking Member, Rep. Elijah Cummings, D-MD, formally requested Committee Chairman Darrell Issa, R-CA, to hold a hearing with FHFA Acting Director Edward DeMarco on the hot seat and FHFA Inspector General Steve Linick, to discuss a new IG audit detailing the agency’s inattention to mortgage servicing complaints. “Another week has brought another sorry report from the FHFA Inspector General finding that FHFA and the GSEs have failed to take seriously their obligations to protect consumers,” said Cummings.

The Ninth Circuit Court of Appeals ruled last week that a 2010 Federal Housing Finance Agency directive advising Fannie Mae and Freddie Mac not to purchase mortgages laden with certain first-priority lien obligations under the Property Assessed Clean Energy program falls within the FHFA’s purview as GSE conservator. A three-judge panel of the Ninth Circuit overturned a ruling last August by California Federal Judge Claudia Wilken that determined the FHFA was not acting as conservator but as regulator and had improperly exercised substantive regulatory oversight in violation of the Administrative Procedure Act when the agency halted GSE involvement with PACE programs.

The GSEs continued to reduce their footprint in global debt markets during the fourth quarter of 2012, with debt outstanding and issuance down from the previous quarter and from the same period a year ago. Fannie Mae’s, Freddie Mac’s and the Federal Home Loan Banks’ combined debt outstanding was $1.867 billion during the period ending Dec. 31, 2012, down 2.5 percent from the third quarter and down 11.6 percent from the fourth quarter 2011, while the GSEs issued a combined total of $598.8 billion in new debt during the fourth quarter.

Is the tide turning on residential delinquencies suffered by banks or do the numbers look better because the group is selling legacy MSRs?

Fannie Mae could have an answer to its 'deferred tax asset' issue by the end of next week, freeing up billions of dollars in money.

Genworth moves closer to delinking from its mortgage insurance unit. Meanwhile, Wells Fargo has suffered the loss of a well-regarded regional rep.

Industry observers are lauding the passage of an amendment in the Senate’s proposed budget to curtail the use of Fannie Mae’s and Freddie Mac’s guaranty fees to pay for unrelated spending.By a vote of 50 to 49 last weekend, the Senate passed its fiscal 2014 budget resolution. An amendment making it more difficult to tap fees charged by the government-sponsored enterprises was offered by Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson, D-SD, and Ranking Minority Member Mike Crapo, R-ID, and approved by unanimous consent.