For an all too brief moment last week there was bipartisanship on Capitol Hill as exasperated Democrats and Republicans took turns questioning and berating the CEOs of Fannie Mae and Freddie Mac and their regulator surrounding the issue of executive compensation at the two GSEs.Federal Housing Finance Agency Acting Director Edward DeMarco was called before the Senate Banking, Housing and Urban Affairs Committee and the House Committee on Oversight and Government Reform to explain some $13 million in performance bonuses to Fannie CEO Michael Williams and Freddie CEO Charles Haldeman and eight other senior executives at the taxpayer-subsidized firms.

Details about the revised Home Affordable Refinance Program revealed few surprises in the seller-servicer bulletins issued by Fannie Mae and Freddie Mac last week with only a modest expansion in program activity expected.Among the noteworthy revisions under HARP 2.0, Fannie and Freddie have eliminated the existing cap on loan-to-value ratio, relaxed representation and warranty stipulations and reduced loan-level price adjustments for most HARP loans.

Freddie Mac is unwrapping a new set of incentives for its HomeSteps properties to both homebuyers and real estate agents this winter in an effort to pick up the sales pace of the GSE’s real-estate owned inventory.Through January 31, 2012, Freddie is offering homebuyers up to 3 percent of the final sales price toward closing costs while selling agents representing the owner-occupant buyer would receive a $1,000 bonus under the incentive plan.

Both Fannie Mae and Freddie Mac retained their hefty shares of mortgage-backed securities with something of a bump during the third quarter of 2011, according to a new Inside The GSEs analysis.The GSEs issued a combined $174.8 billion in MBS in the third quarter, a 12.8 percent increase from the second quarter. Compared to the third quarter of 2010, Fannie and Freddie saw an 11.2 percent decrease in MBS issuance during the first nine months of the year.

With the severe housing recession having created a more than abundant supply of poorly performing mortgages that will likely linger for years, “step servicing,” or varying compensation based on the amount of servicing work performed, may well be the wave of the future. “Currently, many in the industry are proposing step servicing fees for transactions including newly originated prime jumbo product,” said Kathleen Tillwitz, senior vice president of U.S. and European structured finance for DBRS, in a recent analysis. “As a result, the servicing fees we are seeing for prime jumbo loans are currently ranging anywhere from...

Total single-family originations could drop another 20 percent or more in 2012, following a similar decline this year, according to mortgage industry economists. The consensus forecast from Fannie Mae, Freddie Mac and the Mortgage Bankers Association is that $1.28 trillion in home loans will be originated in 2011, a decline of 22 percent from last year’s estimated volume. But 2011 will prove to be just a prelude to another sharp decline in production next year. Despite the fact that mortgage rates are expected to stay at...

One of the goals in the recent revisions to the Home Affordable Refinance Program is to stimulate more interest among lenders, largely through relaxed requirements on representations and warranties and some streamlining of the process. But HARP 2.0 also includes new guidelines on soliciting potential customers, both from the lender’s own portfolio and from borrowers currently serviced by another firm. A handful of lenders have begun touting the expanded program to consumers. The new program includes specific refi solicitation practices that lenders must...

Employment and income fraud risk has been steadily rising since 2009. Analysts at Interthinx attribute the growing risk to the misrepresentation of borrower data to meet the tighter debt-to-income ratios that lenders now demand. The Mortgage Fraud Risk Report shows that employment and income fraud risk in the third quarter was up 8.8 percent from the same period last year, and up 50.0 percent from the third quarter of 2009. One thing that doesn’t change is the states that have the highest exposure to this fraud; Nevada, the riskiest state, has an index value of 255, and Arizona comes in a close second with an index of 243. These...

The regulatory burden of the Dodd-Frank Act creates pressure on community banks to hire additional compliance staff instead of customer-facing staff, reducing resources that could be directly applied to serving a bank’s customers, resulting in fewer mortgages getting made, slower job growth and a weaker economy, according to Steve Wilson, the American Bankers Association’s immediate past chairman. The Dodd-Frank provisions he cited as particularly troubling for community banks include risk retention, higher capital requirements, narrower qualifications for capital, and doubling the size of the deposit insurance fund – taking as much as $50 billion out of the earnings and capital of the industry in the process. “The Dodd-Frank Act also requires 20 new Home Mortgage Disclosure Act reporting obligations,” Wilson said in a speech last week. “These and other reporting requirements will add considerable compliance costs to every bank’s bottom line.”