Changing how mortgage lenders are paid for servicing Fannie Mae and Freddie Mac loans is ill-advised at this point because servicing requirements themselves are in flux, according to the Mortgage Bankers Association. Adopting the radical fee-for-service proposal advanced by the Federal Housing Finance Agency would be particularly disruptive for a market that’s still under a lot of strain, the industry group said in a letter to the FHFA. The FHFA is collecting industry feedback on reforms to servicer compensation that is now based on a minimum servicing fee paid out of...

In the world of federal budget magic, Democrats and Republicans are both looking at increases in Fannie Mae and Freddie Mac guarantee fees as a way to offset the cost of extending payroll tax breaks due to expire at the end of 2011. Both parties so far are rejecting the other party’s proposed solution to keep the tax break, though both bills include nearly identical plans to start raising fees charged by the government-sponsored enterprises. The Senate Democrats’ Middle Class Tax Cut Act of 2011 would start raising GSE guarantee fees by 12.5 basis points per year. The GOP bill in the...

The Federal Housing Finance Agency last week announced two new outside hires to fill the slots of chief operating officer and the agency’s deputy director of division enterprise regulation.As the FHFA’s COO, Richard Hornsby will be responsible for the strategic management of the agency’s operations and will oversee the FHFA’s administrative and support services, including budget and finance, human resources and information technology.

The Federal Housing Finance Agency needs to be much more hands-on and engaged in its oversight of Fannie Mae and Freddie Mac, according to the Finance Agency’s official watchdog.The FHFA Office of Inspector General’s conclusion is not new, but the OIG doubled down on its criticism of the agency last week both in its Semiannual Report to Congress and in written testimony submitted to the House Financial Services Subcommittee on Oversight and Investigations.

The Federal Housing Finance Agency issued a final rule last week which clears the way for the Federal Home Loan Banks to voluntarily merge, but it remains to be seen whether any of the 12 FHLBanks desire consolidation.The final rule, published in the Nov. 28 Federal Register, is largely similar to the proposal the FHFA issued one year ago following “a number of minor revisions” to address concerns raised by commenters.

Federal financial regulators are still sifting through stacks of criticism about their controversial risk-retention proposal for the MBS and ABS market and have not yet decided whether to start over again with a new proposed rule, as most industry groups have urged them to do. The agencies are also getting a lot of push from Capitol Hill to re-think the original proposal, which was released in late March. “I am very concerned that if the qualified residential mortgage definition being worked out by regulators isn’t broad enough, it could hurt the housing market, especially...

Patton Boggs, a large Washington DC-based law and lobbying firm, has seen an en masse exodus of its mortgage banking lawyers. Ballard Spahr created a Mortgage Banking Group for the three Patton Boggs partners and an associate, while Dykema welcomed two senior attorneys to its growing Financial Services Regulatory and Compliance practice. Patton Boggs did not return calls for comment regarding the future of its own mortgage practice, and the departed lawyers would not speculate as to the future of their former firm. Partners Richard Andreano, John Socknat and Michael Waldron...

Massachusetts Attorney General Martha Coakley sued five major lenders late last week for allegedly illegal foreclosure practices. One of the firms, GMAC Mortgage, responded by pulling out of Massachusetts lending, prompting Coakley to request a Congressional investigation of GMAC. This week, the AGs of California and Nevada followed suit with a joint announcement of a dual mortgage fraud probe. “We have two clear goals with this lawsuit,” Coakley said. “One is to provide for real accountability for the roles the banks have played in unlawful and illegal foreclosures and second...

The proposal drafted by a senior House Republican that aims to lure private capital into the secondary mortgage market received the general support of industry witnesses at a hearing this week, but Democratic lawmakers say repealing key features of the Dodd-Frank Act would be a non-starter. The Private Mortgage Market Investment Act, drafted but not yet filed by Rep. Scott Garrett, R-NJ., would create a heavily regulated mortgage-backed securities market made up solely of private entities that would function with no federal guarantee at all. Under the bill, the Federal Housing...

President Barack Obama and his Democrat allies on Capitol Hill initiated a multi-prong attack against their Republican opponents this week in an effort to put them on the hook in the 2012 election over their refusal to allow an up-or-down vote on Richard Cordray, the president’s nominee to head the controversial Consumer Financial Protection Bureau. The initiative started this weekend, when the White House released a report and began an accompanying media blitz, warning of the dangers American consumers face in the financial marketplace without a director at the...