Observers in MBS and legal circles are closely watching how a federal judge will rule on a pending motion by UBS Americas to dismiss the mortgage securities lawsuit brought last summer by the Federal Housing Finance Agency on statute of limitations grounds and the ruling’s potential impact on other pending FHFA MBS litigation. The FHFA sued UBS in July and then filed a blizzard of 17 lawsuits against some of the industry’s biggest institutions, including Bank of America, Credit Suisse, JPMorgan Chase, Morgan Stanley and others, seeking tens of billions of dollars in damages incurred by Fannie Mae and Freddie...

The securitization industry told the Securities and Exchange Commission this week that certain rules might be needed to make sure transaction parties are not creating and selling ABS that are intentionally designed to fail or default and profiting from the failure or default of such securities. However, industry representatives urged the regulator to make sure that any such rules not be overly broad or vague or place undue restrictions or prohibitions upon the securitization market and otherwise impair its recovery. The SEC in September proposed a rule to implement provisions...

The Consumer Financial Protection Bureau is on course to spend nearly half a billion dollars in 2013, half of which is projected to be devoted to supervision and enforcement, according to the budget proposal released by the Obama administration this week. The CFPB breaks down its expenditures into three categories, the largest of which is devoted to supervision, enforcement, fair lending and equal opportunity (SEFLEO), with projected funding to exceed the other two categories combined. After spending approximately $60 million in 2011, the SEFLEO bucket is budgeted at $214 million for 2012 and $261...

The Federal Housing Finance Agency’s own data prove that reducing the principal owed on underwater Fannie Mae and Freddie Mac loans would actually save taxpayers money, contrary to the agency’s position that writedowns are against taxpayer interests, according to House Democrats. In a letter last week to FHFA Acting Director Edward DeMarco, Reps. Elijah Cummings, D-MD, and John Tierney, D-MA, labeled the agency’s report justifying its policy against principal reduction as “seriously deficient and misleading.” “We understand that the FHFA is not part of the Obama administration, and that you do not take...

In an unusual legal development, the City of St. Paul, MN, late last week suddenly removed its challenge in a case before the Supreme Court of the United States that could have produced a definitive ruling on the disparate impact theory of lending discrimination under the Fair Housing Act. What’s unusual in Magner v. Gallagher is that the city believes it would have prevailed in the nation’s highest court – but opted to ask for dismissal because city leaders came to the conclusion that a victory could substantially undermine important civil rights enforcement in housing throughout the nation. The city expects to...

Loan production was up sharply in the wholesale mortgage business late last year, despite the high-profile retreat from the sector by some major lenders. A new Inside Mortgage Finance ranking and analysis reveals that wholesale production jumped 22.4 percent from the third to the fourth quarter of last year, posting a bigger gain than the 17.0 percent increase in retail originations. While the broker channel saw the biggest increase – a hefty 48.5 percent jump that raised its market share back to double digits – the correspondent business also posted a solid 14.9 percent gain in volume. Despite the fourth...

A Federal judge in Chicago tabled for the moment the Federal Housing Finance Agency’s hopes of a speedy ruling in its favor of its lawsuit to exempt Fannie Mae and Freddie Mac from the city’s new vacant building ordinance, although the judge appears open to hearing the FHFA’s jurisdictional argument.Last month, U.S. District Court Judge Joan Lefkow denied the FHFA’s request for summary judgment in its lawsuit against Chicago while she ordered the city to file its response to the Finance Agency’s litigation.Filed in December, the FHFA’s lawsuit on behalf of the two GSEs seeks to prevent the city from enforcing the ordinance which requires mortgagees to pay a $500 registration fee for vacant properties and requires monthly inspections of mortgage properties to determine if they are vacant.

Both Fannie Mae and Freddie Mac retained sizeable shares of mortgage securities with a not insignificant bump during the fourth quarter of 2011, according to a new Inside The GSEs analysis.The GSEs issued a combined $261.6 billion in MBS in the fourth quarter, a 13.0 percent increase from the third quarter.Fannie and Freddie dropped to $852.8 billion in MBS issued for the year, an 11.1 percent decrease in MBS issuance during the January to December period. The GSEs’ issuance represented 72.1 percent of total MBS produced during 2011.Between the two companies, Fannie and Freddie registered an ample 77.1 percent share of new MBS issued during the quarter that ended Dec. 31, 2011, up from the 69.1 percent the two companies held during the third quarter and surpassing the 74.8 percent share both GSEs held during the first quarter.

Industry insiders are cautiously expressing optimism about widespread reports that the Federal Housing Finance Agency is having second thoughts about implementing its proposed overhaul of mortgage servicing compensation in the face of massive lender pushback.Numerous published reports have fueled the industry’s expectation that the FHFA is working to tactfully back away from proposed alternatives for a government-sponsored enterprise compensation model intended to benefit servicers, consumers and investors.The Finance Agency’s September discussion paper set out two alternatives for changing the current 25 basis-point minimum fee compensation method for mortgage loan servicers. One alternative would reduce the minimum-servicing fee to as low as 12.5 bps payment with a 5 bps reserve fund, and the second alternative would institute a fee-for-service method whereby the loan servicer would be compensated with a flat fee per month for each performing loan they service.

The Federal Housing Finance Agency has made a number of minor but important changes to its existing Freedom of Information Act regulations.On Jan. 31, the Finance Agency published in the Federal Register updates to its FOIA regulations to include the FHFA Office of Inspector General. The FHFA-OIG, which came into existence in October 2010, did not exist when FHFA’s original FOIA regulations were issued in 2009.The FHFA final regulation lists the various revisions to the agency’s 2009 FOIA regulation, as well as describes what information is exempt from disclosure.