Last week, key Republicans on the House Financial Services Committee asked banking regulators to provide a detailed analysis of a key provision in the controversial proposed rule on risk retention in securitization that could make non-agency MBS issuance unprofitable for issuers. In a letter to the agencies charged with implementing the risk-retention requirements of the Dodd-Frank Act, Republicans Spencer Bachus (AL) and Scott Garrett (NJ) expressed their concerns about the premium capture cash reserve account requirements drafted by the regulators. The PCCRAs would require issuers to hold any premiums...

Fannie Mae and Freddie Mac could end up on the hook for millions of dollars in unpaid property taxes as well as the targets of numerous legal complaints following a Michigan federal judge’s ruling that could force the GSEs to open their coffers to a plethora of revenue-starved local governments. Two weeks ago, U.S. District Court Judge Victoria Roberts granted Oakland County, MI, summary judgment in its lawsuit against Fannie and Freddie because the two GSEs failed to pay the transfer tax on deeds recorded by the state Register of Deeds Office, as required by Michigan law.

Bank of America appeared to clear a hurdle in getting final approval for its proposed $8.5 billion MBS settlement when the New York State Supreme Court last week dismissed an attempt to overturn the deal by an investor group that was not included in the settlement. New York State Supreme Court Justice Barbara Kapnick dismissed the complaint brought by Walnut Place LLC and related entities on March 28 saying that the investors can’t sue BofA directly without giving the Bank of New York Mellon enough time to act in its role as the MBS trustee. Walnut Place’s appeal seeks to revive its suit against BofA. Walnut...

The Federal Housing Finance Agency is in the midst of a full and frank appraisal of the Treasury Department’s recently proposed incentive program to spur GSE principal reductions through the Home Affordable Modification Program, with a final answer to be forthcoming later this month, according to the agency head. For months now, FHFA Acting Director Edward DeMarco has been the target of unrelenting political pressure from the Obama administration and Congressional Democrats to allow Fannie Mae and Freddie Mac to employ mortgage principal reductions as a tool to modify underwater GSE loans.

President Obama this week signed into law a measure that, among other things, kills big bonus payments to Fannie Mae and Freddie Mac executives for as long as the GSEs are subsidized by taxpayers. After nearly two months and some legislative positioning, Congress passed the Stop Trading on Congressional Knowledge Act of 2012. Primarily, the STOCK Act bars House and Senate members and their staff from using non-public, inside information for personal benefit.However, an amendment to the bill which was passed on an overwhelmingly bipartisan margin in both houses of Congress prohibits the payment of bonuses over and above a GSE executive’s salary compensation while Fannie and Freddie remain in government conservatorship.

The inherent tensions between the Federal Housing Finance Agency’s dual role as both conservator and regulator of Fannie Mae and Freddie Mac pose “significant challenges” that may put the Finance Agency at cross purposes with its two missions, according to the FHFA’s official watchdog. A white paper issued by the FHFA’s Office of Inspector General last week offering its current assessment of the agency’s conservatorship of the GSEs cited the Finance Agency’s two main challenges as: attempting to advance the enterprises’ business interests while assisting distressed homeowners; and simultaneously serving as both conservator and regulator.

Senate Democrats would like to see the Federal Housing Finance Agency loosen even further the refinancing restrictions on GSE mortgages and they’ve got a couple of pointers on how to make it so. Last week, Democrats on the Senate Banking, Housing and Urban Affairs Committee, led by Chairman Tim Johnson, SD, wrote FHFA Acting Director Edward DeMarco to encourage the Finance Agency to take the Home Affordable Refinance Program beyond HARP 2.0.

Three former Fannie Mae executives, including the company’s one-time CEO, have petitioned a federal judge to toss the securities fraud case the government filed against them late last year. Filed last week in the U.S. District Court for the Southern District of New York, the motion to dismiss contends the Securities and Exchange Commission is thin on proof that the GSE, at the direction of the then top executives, failed to disclose to investors the companies’ exposure to subprime mortgages prior to the 2008 housing market crash.

The risk of fraud in property valuation, occupancy and identity has seen its highs and lows in 2011 but the rising trend of employment and income fraud in mortgage loan applications over the last two years is cause for concern, according to Interthinx’s 2011 Mortgage Fraud Risk Report. According to the annual report, the employment/income fraud risk index rose 14 percent in 2011 and has been on an upward trend for more than two years. Over that period, the index has increased more than 45 percent, it said. The report said the increase may have been the result of the larger decline in the income of working...

If mortgage lending profitability was directly correlated to an ability to respond satisfactorily to borrower complaints, a lot of mortgage bankers might be looking for a new line of work. In 768 cases (46.7 percent) initially tracked by the Consumer Financial Protection Bureau, mortgage lenders reported they closed a consumer complaint without providing any relief whatsoever, according to the bureau’s first semi-annual report to Congress, submitted to the House Financial Services Committee last week. Credit card gripes, on the other hand, were closed without any reported relief in 27.7 percent of the...