Mortgage market observers say they are seeing a gradually building struggle by the Federal Housing Finance Agency to maintain its precarious balance between the FHFA’s congressionally-mandated roles as conservator to the GSEs and – indirectly – regulator of 65 percent of the mortgage market. Industry interests, meanwhile, continue to call for greater “transparency” surrounding Fannie Mae- and Freddie Mac-related decision making. Under the Housing and Economic Recovery Act of 2008, the FHFA was created to succeed the Office of Federal Housing Enterprise Oversight as regulator to Fannie and Freddie as well as the 12 Federal Home Loan Banks.

Proponents of creating a covered bond market in the U.S., as well as a potential competitor for the Federal Home Loan Bank System, are hopeful that Canada’s recent establishment of a covered bond legal framework will lend legislative momentum to push such a bill through Congress this year. A spokesman for Rep. Scott Garrett, R-NJ, told Inside The GSEs this week that the chairman of the House Financial Services Subcommittee on Capital Markets and Government-Sponsored Enterprises will re-file his bill, the U.S. Covered Bond Act, in the near future. “With the federal government backing over 90 percent of the mortgage market, we must seek creative ways to enable the private sector to provide additional mortgage, consumer, commercial, and other types of credit,” Garrett said in a statement. “I look forward to working with my colleagues in the House and Senate to ensure we pass covered bond legislation in the 113th Congress.”

The retreat of some large loan aggregators from the mortgage market has been a challenge for many small loan originators, but Federal Home Loan Bank officials say the Mortgage Partnership Financing Xtra program has gone a long way to pick up the slack. Through MPF Xtra, six FHLBanks provide member institutions an alternative for selling first mortgages that they originate that allows them to retain customer relationships without taking on interest rate and prepayment risk. The program is one of several options under the Mortgage Partnership Finance program, which is run and managed by the FHLBank of Chicago. Introduced in 1997, the MPF provided...

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 2012, with a slight decrease 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 modest increase within the FHLBank system during the period ending Sept. 30, 2012.

The Federal Housing Finance Agency will employ a new, more comprehensive examination rating system which would be used to inspect Fannie Mae, Freddie Mac, the Federal Home Loan Banks and the Banks’ Office of Finance under a final rule issued earlier this month. The new system, published in the Nov. 13 Federal Register, will implement a single risk-focused examination system for all three entities that would be similar to the “CAMELS” ratings used by federal prudential regulators for depository institutions.

The Federal Home Loan Bank Office of Finance announced this week that preliminary combined net income for the 12 FHLBanks rose by 19.6 percent to $660 million in the third quarter of 2012, up from both $552 million in the second quarter and $469 million in the third quarter of 2011, according to the Federal Home Loan Bank Office of Finance. For the first nine months of the year, the FHLBanks earned $1.94 billion, $867 million more than the Banks earned during the same time last year. The Office of Finance attributed the increases to be primarily driven by changes in non-interest income.

The Federal Housing Finance Agency recently issued an updated strategic plan in which the FHFA outlines the next phase of conservatorship for the GSEs, Fannie Mae and Freddie Mac. The FHFA’s plan establishes “restrictions and expectations” for the GSEs, which have been under government conservatorship since September 2008, but the agency does not manage the day-to-day operations of the two companies. Just like the draft document first submitted to Congress earlier this year, the FHFA’s updated Strategic Plan: Fiscal Years 2013-2017 sets four broad goals for the Finance Agency: safe and sound housing GSEs; stability, liquidity, and access in housing finance; preserve and conserve the GSEs’ assets; and prepare for the future of housing finance in the U.S.

Fannie Mae, Freddie Mac and Ginnie Mae officials pledged to continue efforts to build a better secondary market system while coping with the business challenges of dealing with an increasingly diverse universe of lenders delivering loans directly to the agencies. “Fannie Mae is a different company today,” said Timothy Mayopoulos, president and CEO of the firm, during a panel session at this week’s annual convention of the Mortgage Bankers Association. He said 80 percent of the government-sponsored enterprise’s upper management has been promoted to their roles or hired since the GSE went into conservatorship four years ago. Half of the company’s 7,000 employees have been hired since then. “The people of Fannie Mae today are...

The Federal Housing Finance Agency is looking for feedback on a proposed advisory bulletin which would set forth standards to guide FHFA staff in its supervision of secured lending to insurance company members of the 12 Federal Home Loan Banks.The Finance Agency’s advisory bulletin on insurance company collateral, published in the Oct. 5 Federal Register, noted that lending to insurance company members over the last several years has come to represent “an increasingly larger portion” of FHLBanks’ overall business, with several Banks actively targeting this member segment.

Fannie Mae and Freddie Mac have released new guidelines designed to bring more of the two GSEs’ servicing requirements into alignment. The updated policies, both issued Oct. 3, focus on aligning contracts and the enforcement of remedies with seller/servicers in compliance with a Federal Housing Finance Agency directive. “The requirements announced in this bulletin build on the success [of previous announcements], and through our work with Fannie Mae, provide servicers with greater clarity, consistency and transparency across the enterprises on how servicer performance will be measured,” explained Freddie in its announcement.