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.

Whether by legislation or by regulation, a group of House Democrats want Fannie Mae and Freddie Mac to give unemployed homeowners a break by issuing a foreclosure moratorium. Last month, Rep. Matt Cartwright, D-PA, filed H.R. 4255, the Stop Foreclosures Due to Congressional Dysfunction Act, which would require the Federal Housing Finance Agency to establish a six-month moratorium on GSE-guaranteed mortgages held by homeowners who have lost their emergency unemployment compensation “due to congressional inaction.” The bill requires that borrowers must have been in good standing prior to losing their unemployment benefits in order to be eligible for the temporary forbearance.

The Federal Housing Finance Agency’s oversight of Fannie Mae’s and Freddie Mac’s pre-foreclosure inspection process can and should be enhanced by strengthening quality assurance and controls, according to a new audit by the agency’s Office of the Inspector General. The FHFA-OIG audit found potential fraud in property inspection reports ordered by the two GSEs. Among the findings: the property inspection reports – which are used for foreclosures – contained inaccurate information that conflicted with corresponding photographs.

Fannie Mae and Freddie Mac junior shareholders face an uphill battle in their lawsuits challenging the Treasury’s August 2012 “net worth sweep” that effectively allows Uncle Sam to confiscate all of the companies’ profits, warns a legal expert. Investors are challenging the amended agreements regarding the seniority of Fannie and Freddie preferred stock owned by the federal government over investors’ GSE preferred stocks. More than a dozen lawsuits filed against the government – led by hedge funds Perry Capital and Fairholme Capital Management – are pending in federal district court in Washington, DC, and in the Court of Federal Claims.

With housing finance reform unlikely to clear Congress in the near term even as Fannie Mae and Freddie Mac remain “highly leveraged” on a global scale, a pair of policy advocates are urging Treasury Secretary Jack Lew to trigger existing protective regulations under his discretion that would classify the two GSEs as systemic risks to the economy. American Enterprise Institute Fellow Alex Pollock and Thomas Stanton, author and former Financial Crisis Inquiry Commission staffer, petitioned Lew in a letter this week to act in his capacity as chairman of the Financial Stability Oversight Council and designate Fannie and Freddie as Systemically Important Financial Institutions.

Seniors Group Targets Johnson-Crapo Bill Supporters With Paid Media. A right-leaning seniors advocacy group has taken out television and radio ads in seven states to call out supporters of the Senate’s bipartisan proposal to overhaul Freddie Mac and Fannie Mae, labeling it “Obamacare for the mortgage industry.” The 60 Plus Association campaign targets seven senators for supporting a measure by Sens. Tim Johnson, D-SD, and Mike Crapo, R-ID, arguing that the bill would wipe out GSE shareholders. Three Democrat and four Republican senators were named in the campaign.

Johnson-Crapo is wide open on what entities could issue the new MBS and even allows single firms to be loan originators, aggregators, issuers and bond guarantors.

What does the CFPB think of Martin’s allegations and Raucci’s report backing her up? An agency spokeswoman did not return a media inquiry from IMFnews.

The Consumer Financial Protection Bureau is widely seen as the single most powerful, consumer-oriented regulatory agency in the nation’s history, yet it has only a fraction of the supervisory budget that the safety-and-soundness banking regulators have. So how does it prioritize its resources and activities so it can “punch above its weight class?” “The way we approach our prioritization is looking across the market, regardless of charter or type of entity, and breaking it up into different [sub]markets,” Peggy Twohig, assistant director in the CFPB’s Office of Supervision Policy, said Tuesday during a breakout session at the annual convention of the Consumer Bankers Association. “Bank, nonbank – it doesn’t matter to us. We look at where the risk to the consumer is and we try to execute our program against that.” The bureau reviews...

Loss-mitigation activity by major bank servicers has decreased significantly in the past year, coinciding with servicers’ completion of loss-mitigation requirements under the $25 billion national servicing settlement. Eight major banks and thrifts completed 72,466 loan modifications in the fourth quarter of 2013, a 49.5 percent decline from the fourth quarter of 2012, according to a new report from the Office of the Comptroller of the Currency. The servicers completed 60,765 foreclosures in the fourth quarter, down 42.6 percent from the fourth quarter of 2012. The declines in loan mods and foreclosures by banks have outpaced...