In an unusual move, the federal judge overseeing the Federal Housing Finance Agency’s massive legal action against many of the nation’s biggest MBS issuers has granted a defendant the right to appeal her denial of its motion to dismiss. Last week, Judge Denise Cote of the U.S. District Court for the Southern District of New York granted permission to UBS Americas to go over her head to the U.S. Court of Appeals for the Second Circuit. UBS hopes the appellate court will reverse...

The gap between the performance and liquidity of Fannie Mae and Freddie Mac MBS continues to widen and a proposal to make their securities interchangeable is gaining traction among stakeholders. But unless a workable valuation solution is found, bridging that gap between the two government-sponsored enterprises will remain nearly impossible, said the Mortgage Bankers Association. Pricing differences between Fannie and Freddie have grown...

Mortgage lenders and servicers face increased congressional and regulatory attention and pressure over how they should respond to the unique needs and problems active-duty U.S. military personnel face handling their mortgages, particularly when they are transferred. Sen. Richard Shelby, AL, ranking Republican on the Senate Banking, Housing and Urban Affairs Committee, emphasized during a hearing this week the disruptions that Permanent Change of Station orders can cause service members. “When PCS orders are issued, service members are required to move even if they owe more on their mortgage...

For the second time in less than a year, Fannie Mae’s and Freddie Mac’s conservator has gone to court in Illinois to assert that the two federally chartered government-sponsored enterprises are exempt from certain local and state property assessments. Last week, the Federal Housing Finance Agency filed suit in the U.S. District Court Northern District of Illinois, Western Division, against the Illinois Department of Revenue and county clerks to block local government efforts to collect real estate transfer taxes from Fannie and Freddie. The FHFA suit was in response to litigation filed by DeKalb County and five other counties to compel...

The Department of Housing and Urban Development is looking for ways to expand the FHA’s home renovation program to accommodate real estate-owned properties even as the mortgage industry urged HUD to open the program to investors. Acting FHA Commissioner and Assistant Secretary for Housing Carol Galante said HUD is considering use of the 203(k) Rehabilitation Loan program to ease FHA’s huge inventory of foreclosed properties. HUD’s REO inventory has dropped from a peak of 68,997 foreclosed properties in March 2011 to 29,692 in February. As of May 27, the inventory was ...

Attorneys representing non-agency mortgage-backed security issuers suggest fighting repurchase-request lawsuits to narrow the claims and eventually settling such lawsuits. Jason Halper and Martin Seidel, partners at the law firm of Cadwalader, Wickersham & Taft, said reducing the claims can help lead to a better settlement for issuers. “You can very often narrow the case substantially,” Seidel suggested this week during a presentation by the State Attorneys General Enforcement Network. Among other issues ...

Mortgage industry participants are concerned about plans by the Federal Housing Finance Agency to expand the non-agency market via a contraction of Fannie Mae and Freddie Mac. The comments were submitted to the FHFA last week in response to the FHFA’s proposed strategic plan for fiscal years 2013 to 2017. “To attract private capital to the mortgage market and reduce [government-sponsored enterprise] risk exposure, FHFA will direct the [GSEs] to price guarantee fees to levels that align pricing with ...

Industry trade groups like what they have heard so far about the Federal Housing Finance Agency’s risk sharing proposal that would shift some of the mortgage credit exposure the government-sponsored enterprises hold to private investors, but more details are desired. In a comment letter on the FHFA’s draft strategic plan, the American Bankers Association said it “would welcome more details” about the agency’s intention to implement risk sharing but the trade group favors the effort. “This could be an important tool to re-engage the private sector, but it must be done in a transparent and well...

The Federal Housing Finance Agency’s case against UBS Americas will serve as a test case in a series of lawsuits the agency filed in connection with non-agency MBS purchased by Fannie Mae and Freddie Mac, a Manhattan federal district court ruled last week. In a June 13 decision, Judge Denise Cote of the U.S. District Court for the Southern District of New York denied UBS’s request that it should not be the first of 17 cases to proceed because it is not a loan originator and was not accused of fraud. According to the court, UBS was the best test case because the number of securitizations and...

The Federal Reserve surprised some analysts this week by taking a cautious path in its latest effort to stimulate employment growth, choosing to extend its Operation Twist bond-buying program until the end of 2012 by focusing on Treasuries. The Federal Open Market Committee “intends to purchase Treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately 3 years or less,” the FOMC said after its two-day meeting this week. “This...(Includes one data chart)