Fannie Mae’s and Freddie Mac’s home retention activity declined for the most part during the second quarter of 2012, according to a new analysis of Federal Housing Finance Agency data by Inside The GSEs. Total loss mitigation activity – total home retention efforts and foreclosure alternatives combined – declined 11.4 percent during the second quarter of the year to 190,315. Total loss mitigation for the first six months of the year fell 18.6 percent to 405,127 compared to the same six-month period in 2011.

The Federal Housing Finance Agency has proposed a rule to acquire explicit discretionary authority to require Fannie Mae, Freddie Mac or any of the 12 Federal Home Loan Banks to undergo a stress test every year, no matter how much the GSEs have in consolidated assets. The proposed rule, published in the Oct. 5 Federal Register, would implement a part of the Dodd-Frank Act, which requires certain financial companies with consolidated assets of more than $10 billion, and which are regulated by a primary federal financial regulatory agency, to conduct an annual stress test.

More than a year after the Federal Housing Finance Agency first announced its proposal to sell investors Fannie Mae foreclosed properties in bulk for rentals and two months into its second sale with less than 800 properties moved, market watchers are expressing skepticism about whether the program will ever advance beyond the pilot stage. Earlier this month, the FHFA announced that New York-based Cogsville Group LLC was the winning bidder of 94 Fannie-owned properties. The firm paid $2.1 million for a share in a joint venture with the GSE resulting in a transactional value to Fannie of $11.8 million or 86.2 percent of the properties’ estimated value.

Advocates for GSE reform say recent actions by the Treasury and the Federal Housing Finance Agency have made it more important than ever for policymakers to start moving Fannie Mae and Freddie Mac away from government support or risk seeing the two enterprises enveloped forever within the federal budget. Two former Bush administration Treasury officials made their case this week in a Washington Post opinion piece, citing the government’s recent sale of stock in insurance giant American International Group to recoup the bailout billions Uncle Sam floated the company during the financial crisis as an admittedly inexact blueprint for Congress and the White House to follow to get the feds out of Fannie and Freddie.

Endorsements of new loans under the Home Equity Conversion Mortgage program continued to slide as production fell significantly during first half of 2012. HECM production declined by 25.0 percent from the same period last year to $7.1 billion and fell 4.9 percent from the first to the second quarter. In-house originations accounted for almost all originations reported by top HECM lenders. Initial principal amount at loan origination totaled $4.7 billion. MetLife Bank led all lenders with $2.03 billion, an estimated 63 percent originated in house, and captured a 28.5 percent market share. Production rose 21.6 percent ... [One chart]

The FHA is starting to lose business to private mortgage insurers and the conventional mortgage market because it is no longer the cheaper alternative, a recent industry survey indicated. Numbers released by the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey show consumer preference for conventional home loans rising as a growing number of homebuyers, particularly current homeowners, used mortgages backed by Fannie Mae and Freddie Mac to finance home purchases in August. The survey noted that current homeowners increased their use of mortgages in June this year while investor participation began ...

The Federal Housing Finance Agency last week outlined its plans to design a new securitization system and model pooling and servicing agreements to improve Fannie Mae and Freddie Mac operations and help revive the non-agency market. Non-agency market participants welcomed the FHFA’s proposed new utility-like infrastructure but said it should not be mandatory for non-agency transactions. The FHFA said upgrades are needed in the MBS systems of the government-sponsored enterprises and “it makes sense to direct ...

Some of the major players in what is likely to develop as the real estate owned rental securitization market are still unsure about how exactly the market will develop. However, investor interest in the REO rental sector is strong, even if securitizations will not receive AAA ratings. At a seminar this week hosted by the American Securitization Forum, Suzanne Mistretta, a senior director at Fitch Ratings, confirmed that the rating service will not give initial REO rental securitizations anything higher than a single-A rating. Fitch and others have been approached...

Certain aspects of the securitization process can and should be standardized to serve a “utility function” for the secondary mortgage market under a new proposed securitization platform drafted by the Federal Housing Finance Agency. Last week, the FHFA released a white paper detailing its proposed framework for a common securitization platform and model pooling and servicing agreement for review and public comment. The FHFA is working...

Unanticipated complications with the Dodd-Frank Act appear to have caused Fannie Mae and Freddie Mac to miss a Sept. 30 deadline set by the Federal Housing Finance Agency to initiate risk-sharing transactions with non-agency investors. However, FHFA officials said they continue to work with the government-sponsored enterprises on the issue. “Risk sharing is a complex process that requires time to assess market opportunities, structural considerations, make operational changes, and develop proper risk metrics and controls,” an FHFA spokesman said. “We are moving forward steadily and expect to continue making progress in the coming months.” FHFA officials would not comment...