Look for the tug of war between proponents and opponents of extending high-cost loan limits for Fannie Mae, Freddie Mac and the FHA to go down the wire and even heat up when Congress returns from its summer break in September, Hill watchers predict.Unless Congress intervenes, the “emergency” high-cost market conforming loan limits that were enacted in 2008 will expire on Oct. 1. That would drop the top Fannie, Freddie and FHA loan limit from the current maximum $729,750 to $625,500.

Fannie Mae and Freddie Mac have each suspended Republic Mortgage Insurance Co. and its affiliate RMIC of North Carolina effective immediately as approved mortgage insurers after the GSEs concluded the mortgage insurer will no longer be able to meet mandatory capital requirements.According to Fannie’s July 29 announcement, RMIC breached its regulatory risk-to-capital limits required by North Carolina, the mortgage insurer’s state of domicile, as of Sept. 30, 2010.

Fannie Mae and Freddie Mac will not be branching out into the role of a “master servicer” in a new, yet-to-be-launched $2 billion bond program as top Republican members of the House Financial Services Committee feared, according to Treasury Secretary Timothy Geithner.In a letter dated July 21 and in response to a letter sent by Committee Chairman Spencer Bachus, R-AL, Vice Chairman Jeb Hensarling, R-TX, and four of the committee’s subcommittee chairman, Geithner firmly ruled out any participation by the two GSEs in Treasury’s loan-guarantee program.

In the 18 states that have loan limits scheduled to expire come October, the impact on borrowers will be minimal, according to a recent report released by economists at the Federal Housing Finance Agency. The National Association of Realtors, the Mortgage Bankers Association and the National Association of Home Builders have been lobbying to extend current high-cost loan limits that are scheduled to decline from a maximum of $729,750 to $650,500 on Oct. 1, claiming that the market isn’t stable enough to stand up without them. Sens. Robert Menendez, D-NJ, and Johnny Isakson, R-GA, this week introduced S. 1508, the Homeownership Affordability Act of 2011, to allow...

Despite the newly signed debt ceiling deal passed in the nick of time this week by Congress and signed by President Obama, Fannie Mae, Freddie Mac and the Federal Home Loan Banks remain at risk of having their AAA ratings downgraded if the government fails in the future to keep its fiscal house in order, according to Moody’s Investors Service.Moody’s confirmed the AAA government bond rating of the U.S. following the raising of the statutory debt limit on Aug. 2, but the credit rating agency assigned a “negative” rating outlook to Uncle Sam.

The Mortgage Bankers Association urged the Federal Housing Finance Agency to include other fee structures and not just seek public comment on one servicing fee structure in a forthcoming proposal. The FHFA has been working behind closed doors with Fannie Mae, Freddie Mac and Ginnie Mae to devise a new servicing compensation structure for mortgages securitized by the agencies, which account for over 90 percent of new lending. Industry groups and others have been consulted during the process, which is expected to result in an exposure document subject to public comment. The MBA cautioned the FHFA against showing preference for any...

The Federal Housing Finance Agency may make a number of minor but important tweaks before finalizing changes to its existing Freedom of Information Act regulations.

The Federal Home Loan Bank Office of Finance announced late last week that preliminary combined net income for the FHLBanks fell 64 percent to $251 million in the second quarter, down from $698 million at the end of the fourth quarter 2010 and a drop of 23 percent from the same period last year.The FHLBank system’s lower profitability, which has been dwindling each quarter since the third quarter 2010 high of $732 million, was driven by a decline in yields on interest-bearing liabilities, as well as lower average balances of interest-earning assets and interest-bearing liabilities, said the Office of Finance.

Mortgage market watchers and insiders on Capitol Hill report there is little chatter and seemingly even less enthusiasm from the White House to send to the Senate another nominee to serve as the permanent director of the Federal Housing Finance Agency.As the FHFA’s Acting Director Edward DeMarco is set to begin his third year as the Finance Agency’s “temporary” head next month, no one among the legislative staffers, trade association officials and industry insiders who spoke with Inside The GSEs said they expect a change in the status quo. But neither did they have anything discouraging to say about his leadership or job performance to date.

Officials testifying before a Senate Banking, Housing and Urban Affairs Committee hearing this week came out in strong opposition to eliminating a government guarantee in the MBS market of the future, claiming that such measures would have a significant impact on borrowers’ ability to obtain plain vanilla 30-year fixed-rate mortgages. “Many large investors utilize the MBS market to execute trades driven by macroeconomic views and would not utilize a market which combines credit risk with interest rate risk,” said Andrew Davidson, president of Andrew Davidson & Co., an analytics and consulting firm. “With a smaller investor base, liquidity would be...