The Inspector General of the Federal Housing Finance Agency told senators last week that the FHFA still doesn’t have enough examiners, in his opinion, to sufficiently regulate the GSEs, while the Finance Agency head noted that the FHFA has added more than 200 staffers since 2008, with just a bit more hiring planned. Testifying before the Senate Banking, Housing and Urban Affairs Committee, FHFA IG Steve Linick said that the Finance Agency is making progress on a number of fronts, including GSE assets and implementing the OIG’s audit and evaluation recommendations. However, following a 2011 OIG report which identified “shortfalls” in the FHFA’s examination coverage due to examiner shortages, the FHFA has made progress by “reorganizing the examination function and hiring new staff [but] it is not clear that the FHFA has achieved adequate resources.”

The Federal Housing Finance Agency is soliciting comments from the public on how its regulations may be “more effective and less burdensome.” The FHFA’s call for comments in a April 19 publication of the Federal Register is in keeping with a 2011 executive order that calls for each independent regulatory agency, including the FHFA, to analyze its existing regulations and “modify, streamline, expand or repeal them,” as well as to make public a plan to periodically review its “existing significant regulations” to make the agency’s regulatory program “more effective or less burdensome” in achieving regulatory objectives.

The Department of Justice recently announced enforcement actions against a New York-based FHA lender and its owner/president for fraudulent certification of FHA-insured loans as well as two separate settlements with bank subsidiaries for alleged violations of the Servicemembers Civil Relief Act. In the first action, the U.S. Attorney for the Southern District of New York, the Department of Housing and Urban Development, and the HUD Office of the Inspector General jointly announced a civil mortgage fraud lawsuit against ...

The unrelenting campaign by liberal Democrats and progressive activists to depose the Federal Housing Finance Agency’s acting director could backfire by making him politically untouchable, while the badgering directed at the Obama administration threatens to alienate the very man they seek to convince to act in their favor, according to industry observers. According to a memo released late this week that was prepared by New York Attorney General Eric Schneiderman’s legal team, President Obama has the power to replace FHFA Acting Director Edward DeMarco without congressional approval. “We conclude that the president has the authority to remove the acting director at will, and there is a strong argument that he has the authority to designate a new acting director, although the answer to that question is less certain,” noted Schneiderman’s memo.

Fannie Mae’s and Freddie Mac’s recent, unambiguous return to profitability will diminish an already waning urgency among Capitol Hill lawmakers to proceed with legislative GSE reform as the companies’ profits flow into the U.S. Treasury by the billions, industry experts warn. Fannie announced last week that the GSE expects to remain profitable “for the foreseeable future” after posting record-shattering quarterly and yearly earnings for the period ending Dec. 31, 2012. In the wake of Fannie’s announcement, the White House this week said that from January 2013 to the end of 2023 the two GSEs could send $183.3 billion to the Treasury.

The Home Affordable Refinance Program will continue for another two years as the number of HARP refis for deeply underwater borrowers continued to represent a “substantial portion” of total HARP volume in January, the Federal Housing Finance Agency announced this week. HARP had been scheduled to expire at the end of this year before the FHFA’s directive to Fannie Mae and Freddie Mac to extend the program through Dec. 31, 2015. “FHFA determined that extending the program now will provide additional opportunities to refinance, give clear guidance to lenders, and reduce losses for Fannie Mae, Freddie Mac and taxpayers,” said the Finance Agency.

Although Fannie Mae posted stellar – and record – earnings last week, the best is yet to come thanks to a $58.9 billion allowance for “deferred tax assets” the GSE is likely to capture when it releases earnings for the first quarter of 2013, a number that will be revealed some time in May. In its 10-K filing for 2012, Fannie did not absolutely say it will move to capture the DTA allowance in the first quarter, but notes that “if and when the valuation allowance is released, it will be included as income.” The GSE said it did not take the DTA in 2012 because it has not been steadily profitable for a long enough period of time. It noted that the decision was “complicated.”

UBS Americas failed in its bid to shut down a lawsuit brought by the Federal Housing Finance Agency in connection with non-agency mortgage-backed securities purchased by Fannie Mae and Freddie Mac, while in another case three former Freddie executives lost their own bid to dismiss a Securities and Exchange Commission securities fraud case against them. The Second Circuit Court of Appeals last week upheld a lower court’s ruling that denied UBS’ motion to dismiss the FHFA’s suit as time barred. In the summer of 2011, the FHFA filed 18 lawsuits in Manhattan federal court against UBS and other big banks on behalf of the GSEs, alleging violations of the federal Securities Act of 1933 for approximately $200 billion in non-agency MBS sold to Fannie and Freddie.

Despite its efforts to enhance its hiring outreach to potential minority and women contractors and employees during 2012, the Federal Housing Finance Agency still faces challenges finding qualified and diverse candidates, according to a new report to Congress by the FHFA’s Office of Minority and Women Inclusion. Established under a Dodd-Frank Act mandate, the OMWI noted that the Finance Agency’s overall representation of minorities and women “compares favorably to that of the federal and private workforces.” The FHFA’s 585 staffers in 2012 were comprised of 32.4 percent minorities and 46.7 females, compared to the federal government’s breakdown of 34.1 percent minorities and 43.5 percent females.

The FHA is seeking comment on a proposal to change the period for reviewing loans for direct endorsement from pre- to post-closing in order to increase the number of acceptable loans and, therefore, reduce any potential risk to the Mutual Mortgage Insurance Fund. Under the proposal, a lender applying for unconditional direct endorsement authority would be required to submit the necessary loan files only after closing. After determining that the mortgage is acceptable and meets all FHA requirements, the agency would notify the lender that the loan has been endorsed. Current regulations provide for ...