It’s only a matter of time before the remaining big bank defendants settle lawsuits filed by the Federal Housing Finance Agency over billions in non-agency mortgage-backed securities sold to Fannie Mae and Freddie Mac in the years leading up to the housing crisis, predicts a legal expert. Last week, Bank of America agreed to a $9.3 billion settlement that covers its own dealings as well as those of Countrywide Financial and Merrill Lynch, which it acquired in 2008. The agreement covers some $57 billion of MBS issued or underwritten by these firms.

A North Carolina federal magistrate has recommended that a Justice Department fraud case against Bank of America be dismissed, but he also said a separate Securities and Exchange Commission lawsuit against the bank based on a different federal law should proceed. The DOJ last August filed suit against BofA under the Financial Institutions Reform, Recovery and Enforcement Act, accusing the bank of defrauding investors in the sale of $855 million of non-agency MBS. Last week, U.S. Magistrate David Cayer of the U.S. District Court for the Western District of North Carolina found that the government failed to prove the bank made “material” false statements to the former Federal Housing Finance Board. The DOJ claimed...

Legislation that would allow privately insured credit unions access to the Federal Home Loan Bank system cleared committee last week and is headed to the House floor for a vote. Introduced in December by Rep. Steve Stivers, R-OH, and Joyce Beatty, D-OH, H.R. 3584, the Capital Access for Small Community Financial Institutions Act of 2013, would amend the Federal Home Loan Bank Act to allow privately insured credit unions to be eligible for FHLBank membership. H.R. 3584 was voted out of the House Financial Services Committee by a vote of 55-0.

The top Democrat and Republican of the Senate Banking, Housing and Urban Affairs Committee this week delivered their long-awaited mortgage reform bill which aims to put Fannie Mae and Freddie Mac out of business within a half-decade window, but with a couple potential leases on the lives of the two government-sponsored enterprises. In a rare Sunday filing, the legislation authored by Senate Banking Chairman Tim Johnson, D-SD, and Ranking Member Mike Crapo, R-ID, would set up a powerful new agency, the Federal Mortgage Insurance Corp., which could assume control of the GSEs within six months of enactment and begin writing new “catastrophic” mortgage-securities guaranties. Based on the bipartisan legislation introduced by Sens. Bob Corker, R-TN, and Mark Warner, D-VA last summer, the new bill adds...

Fannie Mae, Freddie Mac and the Federal Home Loan Banks will now be required to report directly any suspected fraud to the Financial Crimes Enforcement Network under the terms of a final rule. Published in the Feb. 25 Federal Register, the final rule adopts “without significant change” FinCEN’s November 2011 proposal to require the GSEs to file suspicious activity reports directly with FinCEN rather than through their own regulator, the Federal Housing Finance Agency.

The advance business for the 12 Federal Home Loan Banks increased throughout 2013 ending the year ahead both on a quarterly and an annual basis, according to preliminary figures released by the Federal Home Loan Bank Office of Finance. Advances increased 7.2 percent to $498.6 billion during the fourth quarter of 2013 while posting an even larger 17.1 percent increase from $425.8 billion a year earlier. The Office of Finance attributed the increase in advances due to “higher member borrowing, particularly by large-asset members.”

Officials at Two Harbors Investment are touting the real estate investment trust’s recent admission into the Federal Home Loan Bank system as a way to diversify funding options for originations of jumbo mortgages, although FHLBank financing may not play a major role in the REIT’s funding in the current environment. In December, TH Insurance Holdings, a wholly owned subsidiary of Two Harbors, was granted membership in the FHLBank of Des Moines. Two Harbors said it appears to be the first REIT to receive ...

One of the biggest challenges for nonbanks that want to originate jumbos is finding capital to fund the operations. Two Harbors Investment appears to have found a unique source of capital for non-agency originations: a government-sponsored enterprise. In December, TH Insurance Holdings, a wholly owned subsidiary of Two Harbors, was granted membership in the Federal Home Loan Bank of Des Moines. Officials at Two Harbors said the company appears to be the first real estate investment trust to receive ...

The Federal Housing Finance Agency last week issued regulations that clamp down on “golden parachute” severance payments to departing GSE executives. Published in the Jan. 28 Federal Register, the FHFA’s final rule applies to Fannie Mae, Freddie Mac, the Federal Home Loan Banks and the Office of Finance, as well as any “entity-affiliated parties,” including independent contractors such as attorneys, accountants and appraisers.

Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the 12 Federal Home Loan Banks during the third quarter of 2013, with a modest increase from the previous quarter, according to a new analysis and ranking by Inside The GSEs based on data from the Federal Housing Finance Agency. Meanwhile, Ginnie Mae securities posted a pocket-sized increase within the FHLBank system during the period ending Sept. 30, 2013.