Analysts forecast uncertainty for the agency MBS market going into 2014 as the policy landscape reshapes itself and investors cautiously adapt to the shape of things to come. Look for 2014 to be a “year of transition” amid a slowly rising range of U.S. Treasury yields, a slowly recovering economy, and a Federal Reserve that transitions away from quantitative easing toward forward guidance, according to RBS analysts. RBS noted...

The supply of outstanding residential MBS grew by 0.3 percent during the third quarter, hitting $6.383 trillion, according to a new Inside MBS & ABS analysis. The Federal Reserve gobbled up most of the increase. Ginnie Mae remained the fastest-growing MBS product. Its $1.377 trillion in outstanding single-family MBS was up 2.6 percent from the second quarter, and it expanded by 8.1 percent from September 30, 2012. Fannie Mae posted a more modest 0.8 percent increase in single-family MBS outstanding, while the Freddie Mac supply shrank slightly. The non-agency MBS market continued...[Includes two data charts]

The Aug. 28, 2013, release of the re-proposed credit risk-retention rule by federal banking and housing regulators was eagerly awaited by investors and the mortgage industry. But it’s also raised some new questions for securitizers and investors, according to a new white paper from CoreLogic. The proposed rule sets out the risk-retention provisions for securitizers that underwrite ABS, but it also exempts from those provisions all securities issued by the housing agencies, which is to say, MBS generated by Fannie Mae, Freddie Mac and Ginnie Mae. “Given that exemption, what are the incentives for private securitization where there is capital relief in the alternative?” the white paper asked. CoreLogic notes...

Incredulous mortgage industry trade groups are pushing back against a controversial increase this week in loan-level price adjustments for loans purchased by Fannie Mae and Freddie Mac. The two GSEs – under the direction of the Federal Housing Finance Agency – rolled out their LLPA revisions – Freddie calls them post-settlement delivery fees – through bulletins to seller/servicers. The LLPA adjustments follow the announcement last week by outgoing FHFA Acting Director Edward DeMarco of another 10 basis point increase of guaranty fees Fannie and Freddie charge lenders.

The Federal Housing Finance Agency proposed this week to establish “loan-purchase” limits for the GSEs which won’t occur until next October at the earliest. The regulator and conservator of Fannie Mae and Freddie Mac is seeking comments regarding loan-purchase limits 4.0 percent below the statutory GSE loan limits. The FHFA said it is considering a $600,000 purchase limit in the highest-cost markets and a purchase limit of $400,000 in non high-cost markets.

The American Civil Liberties Union and a Brooklyn-based advocacy group, the Center for Popular Democracy, have filed a Freedom of Information Act claim against the Federal Housing Finance Agency demanding that the regulator produce all agency records “pertaining to the use of eminent domain to purchase mortgages.” Filed in the U.S. District Court for the Northern District of California, the lawsuit seeks information regarding the FHFA’s relationship with big banks and mortgage-backed securities investors and whether such interests influenced the agency’s opposition. The suit was filed earlier this month on behalf of community housing advocates in California, New Jersey and New York.

A nearly decade-long class-action fraud lawsuit on behalf of Fannie Mae investors and the GSE’s accountant KPMG LLP has been put to rest following the approval of a federal court judge earlier this month. In papers filed with the U.S. District Court of the District of Columbia, Judge Richard Leon said he found the $153 million settlement and plan for distributing it among the more than one million class members was “fair, reasonable and adequate.” Two Ohio pension funds – the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio – filed suit in 2004 related to a $6.3 billion overstatement of earnings against Fannie and three former GSE executives, including then-CEO Franklin Raines.

PNC Financial Services will pay Freddie Mac $89 million to put to bed all buyback liabilities on home loans sold to the GSE in the years leading up to the mortgage-market meltdown, the lender announced earlier this month. The settlement resolves certain PNC repurchase obligations for both existing and future claims for approximately 900,000 loans that were sold to Freddie between 2000 and 2008. The $89 million payout, less credits of $8 million, will also be used to compensate Freddie for any losses that the GSE incurred in the past or any other losses that may result in the future, said PNC.

In between the Federal Housing Finance Agency’s announcement of a new guaranty fee increase and the Senate’s confirmation of a new FHFA director, a Manhattan federal judge last week quietly issued a ruling that permits the agency to proceed with its residential mortgage-backed securites lawsuits. In the summer of 2011, the FHFA filed suit against 18 big banks in connection with flawed mortgage securities Fannie Mae and Freddie Mac purchased between 2005 and 2007. A number of defendants in the case, including a host of individuals, argued in an appeal filed in August that due to a 2005 change in Rule 430B of the Securities Act of 1933, they should not be held liable in the case.

Fannie Mae last week issued an update to its lenders describing the new process that the GSE has implemented to identify and monitor individual appraisers. According to Lender Letter LL-2013-10, Fannie reviews appraisal reports for patterns of discrepancies and inconsistencies. Using the appraisal data that it collects through the Uniform Collateral Data Portal, Fannie said it has developed a process that identifies appraisers whose work displays more egregious issues.