Fannie Mae and Freddie Mac this week reported a combined $4.74 billion in net income during the third quarter, as the two government-sponsored enterprises avoided taking further draws from the Treasury Department by staying in positive earnings territory. The GSEs’ combined third-quarter income was down 41.7 percent from the previous three-month period, mostly because Fannie’s net income fell 64.6 percent from second-quarter earnings that were pumped up by a $3.04 billion recorded benefit on credit losses. Fannie’s $1.81 billion in third-quarter net income was much more in line with the $2.72 billion it earned in the first three months of the year, as well as Freddie’s recent performance. Freddie reported...

Mortgage market watchers should expect “business as usual” from a second Obama administration as the White House and Congressional Democrats are poised to preserve gains under the Dodd-Frank Act, including the Consumer Financial Protection Bureau. Both parties say they want to resolve the conservatorships of the government-sponsored enterprises, but experts say the necessity of addressing budget and tax issues will trump all other considerations next year. “Clearly a second term for the Obama administration would be business as usual as best they can,” explained Timothy McTaggart, partner at the Pepper Hamilton law firm during a pre-election webinar. “I don’t think Dodd-Frank will remain sacrosanct for all time. I think during a second term the [regulatory] agencies will get past the point of having to put the rules out, they will get some feedback and they will start making it known where they see gaps or deficiencies.” Karen Shaw Petrou, managing partner of Federal Financial Analytics, said...

The Consumer Financial Protection Bureau has found “significant non-compliance” during its examinations of mortgage lenders, compelling them to take a variety of steps deemed necessary to be brought into compliance, according to the CFPB’s first report on its examination findings. Violations under the Real Estate Settlement Procedures Act included failures to make proper and complete disclosures to consumers of costs and other terms because of errors in the good faith estimate and HUD-1 settlement statement, the CFPB stated. Truth in Lending Act violations included...

MGIC Investment Corp. announced last week it has reached a tentative agreement with Freddie Mac “on substantially all terms of a settlement” of a simmering and prolonged dispute over pool insurance between the mortgage insurer and the government-sponsored enterprise. If MGIC and Freddie are able to agree on matters “significant to final resolution” involving payments to be made to the GSE, it would resolve a coverage dispute that threatened to prevent the MI from backing some loans. “The principal economic terms concerning the amount of payments in settlement of MGIC’s obligations under the policies at issue have been...

The three-month surge in agency MBS issuance appeared to run out of steam in October, as total agency securitization of single-family mortgages dropped 11.4 percent from the previous month, according to a new market analysis and ranking by Inside MBS & ABS. The sharpest decline was in Fannie Mae issuance. The government-sponsored enterprise cranked out $58.92 billion in single-family MBS last month, down 28.4 percent from September’s volume. It marked the lowest monthly production for Fannie since April, when the GSE issued just $46.12 billion in volume. Securitization activity at Freddie Mac was...

Non-agency MBS investors, issuers and the rating services appear to favor a new framework for representations and warranties that would incorporate provisions recently established by the Federal Housing Finance Agency for Fannie Mae and Freddie Mac MBS. The new agency framework includes standardized provisions with three-year sunsets for certain repurchase obligations. At the ABS East conference sponsored by Information Management Network in Miami last week, Rebecca Dorian, head of non-agency MBS and ABS trading at Morgan Stanley, said the FHFA’s rep and warrant framework could be scaled for the non-agency market. In fact, she said such standardization is necessary for non-agency MBS. Rep and warrant provisions in pooling and servicing agreements on outstanding non-agency MBS vary...

Look for quality control at both Fannie Mae and Freddie Mac to be a “critical” component of the recently unveiled GSE representation and warranty framework as the first, best method to curb prospective putbacks, a Federal Housing Finance Agency official advises. Maria Fernandez, the FHFA’s associate director of housing and regulatory policy, told attendees of an Inside Mortgage Finance webinar last week that the Finance Agency has heeded the pleas from the industry that QC needed to be done sooner to allow for a clearer understanding of the process.

With third-quarter earnings results right around the corner for Fannie Mae and Freddie Mac, the Federal Housing Finance Agency last week released a revised range of projected draw-downs the GSEs could take from the U.S. Treasury over the next three years. Fannie’s and Freddie’s total taxpayer cash infusion could top as much as $209 billion by the end of 2015 – a “savings” of more than $100 billion from similar projections one year ago, according to the Finance Agency.

The Federal Housing Finance Agency and the Consumer Financial Protection Bureau announced this week they will partner to create a national mortgage database to provide detailed information about mortgage loans. “The database will primarily be used to support the agencies’ policymaking and research efforts and to help regulators better understand emerging mortgage and housing market trends,” said the FHFA and CFPB.

No matter who sits in the Oval Office or which party controls Congress following next week’s election, expect GSE reform to remain a secondary priority in 2013, despite the best efforts of select lawmakers who want to get the legislative ball rolling, experts say. A functioning non-agency mortgage-backed securities market is necessary before members of Congress can be convinced to move forward with GSE reform, according to Rep. David Schweikert, R-AZ. Schweikert told attendees of the ABS East conference in Miami last week that’s why he plans to introduce legislation during the 113th Congress to establish a non-agency MBS framework.