Fannie Mae and Freddie Mac each lost much more in the third quarter of 2011 than during the previous three month period and more than one year ago as the two GSEs reported significant derivatives losses.On a combined basis, Fannie and Freddie lost $9.5 billion in the third quarter, compared to a $5.0 billion loss in the second quarter and $3.8 billion in losses during the same period a year ago.

It will be months rather than weeks before the Federal Housing Finance Agency and other government departments are ready to deploy a plan for bulk sales of the inventory of government-owned foreclosed properties, according to the head of the FHFA.Testifying before the House Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises last week, FHFA Acting Director Edward DeMarco told members that with the long-awaited revision of the Home Affordable Refinance Program out of the way, focusing on the government’s ample real estate owned inventory is the “next priority.”

Congress should permit the conforming mortgage loan limits for Fannie Mae, Freddie Mac and the FHA to remain lower as attempts to restore the higher limit could do the mortgage market more harm than good, an expert says.The “emergency” high cost conforming loan limits enacted in 2008 for the GSEs and the FHA expired on Sept. 30, dropping the limit to $625,500 from $729,750.

A bill introduced in the Senate this week would “responsibly unwind” Fannie Mae and Freddie Mac and “end the dependence on the government for housing finance.” Sen. Bob Corker, R-TN, said he introduced the Residential Mortgage Market Privatization and Standardization Act to start a conversation on how to best to rebuild the mortgage finance market.

Many mortgage lenders are concerned about a new fee-for-service compensation plan proposed by Fannie Mae, Freddie Mac and their federal regulator – including a change in how servicers get their fees. Under the current minimum servicing fee system, servicers take their slice of compensation out of the interest payments being passed through from borrowers to the government-sponsored enterprises. Under the proposed fee-for-service plan, servicers would pass through the entire consumer payment and then get their compensation from the GSEs. Beyond the economics of the proposed change – servicers would get a flat fee, perhaps...

The Federal Housing Finance Agency late last month announced a number of changes to the federal government’s Home Affordable Refinance Program for underwater borrowers with mortgages from Fannie Mae and Freddie Mac. But one important little detail that escaped the attention of many has to do with the borrower loss of non-recourse loan protections for borrowers who refinance. Millions of Americans live in states that have such protections that could keep them from being personally liable in the event of a default. But in many of these states, refinancing removes those protections – enabling a lender to pursue tens or hundreds of thousands of dollars more than they would legally have been entitled to without the refinance.

FHA claims rose in 2011 from last year with loss mitigation and property conveyances accounting for the bulk of paid claims, according to Inside FHA Lending’s analysis of FHA fiscal year data. Though increasing by 7.7 percent, claims are still far below the 15.0 percent average for FHA loans, said an agency spokesperson. On Sept. 30, servicers reported 635,096 mortgages in serious default, yielding a default rate of 8.7 percent. This fiscal year, FHA reported 326,892 claims, of which 200,808 were loss mitigation-related and 91,448 were property conveyance actions. Claims related to pre-foreclosure sales and Home Equity Conversion Mortgage loans showed the most ...

Fannie Mae, Freddie Mac and their federal conservator are trying to devise a new servicing compensation scheme without upsetting the to-be-announced agency MBS market that Wall Street dealers and Main Street mortgage lenders depend on. In a recent white paper outlining two alternatives for reforming servicing compensation so that more resources are available for distressed loans, the Federal Housing Finance Agency said “promoting continued liquidity” in the TBA market is one of its primary objectives. The agency also mused that a new servicer compensation system for the government-sponsored enterprises could...

Prospects for a return of elevated conforming loan limits remain unclear after the Senate approved a reinstatement provision in an appropriations bill in October. Most conservatives in the House remain strongly opposed to the reinstatement – which would likely delay the return of the non-agency market. More than 30 percent of members of the House support a temporary reinstatement of elevated conforming loan limits, according to a letter sent to House leaders this week. ...

Even though the home-purchase mortgage market remains on life support, this important sector of the mortgage industry got a little bit of good news in September – namely, that the share of home purchases involving all cash transactions actually dipped to the lowest level seen in 2011. According to the results from the latest Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, cash transactions accounted for 29.5 percent of home-purchase transactions tracked in September. While that still represented the most popular method for purchasing a home in the U.S., it was...(Includes one data graph)