A panel of federal regulators told members of the House Financial Services Committee this week that enforcement of securities violations would be greatly hampered if the government was compelled to seek admissions of wrongdoing or liability as a condition of settlement. Committee Chairman Spencer Bachus, R-AL, said the purpose of the hearing was to examine the settlement practices of federal financial regulators, in particular the Securities and Exchange Commission. The SEC has come under public scrutiny after a federal judge last fall rejected the terms of an SEC settlement in lieu of trial that...

The two GSEs divulged not so wildly divergent earnings during the first quarter of 2012. Fannie Mae posted its first free-and-clear profit since being drafted into government conservatorship some 3½ years ago while Freddie’s positive net income wasn’t enough to honor its dividend obligation and it was forced to ask taxpayers for further fiscal life-support. One year after it posted a $6.5 billion net loss, Fannie reported $2.7 billion net income during the first quarter, following to a net loss of $2.4 billion in the fourth quarter of 2011. Freddie actually reported net income in the first quarter and the fourth quarter, $577 million and $619 million respectively, but not enough to repay $1.8 billion in preferred stock dividends for the first three months of 2012.

Freddie Mac’s new chief executive is expected to have his work cut out for him when he takes possession of the company’s corner office starting next week, industry insiders say, as it remains to be seen how much of a change agent anyone serving as CEO under government conservatorship can be.Last week, Freddie’s board of directors announced, with Federal Housing Finance Agency consent, the appointment of Donald Layton as CEO and elected him a member of the board.

Real estate transactions in New Castle County, DE, will no longer be exempt from transfer tax as a conveyance from a governmental entity, following a new ruling from the county’s legal counsel.The New Castle county law department found that Fannie and Freddie are federally chartered private corporations and not governmental agencies. The county’s revised interpretation of the realty transfer tax statute earlier this month, “consistent with the growing practice in other jurisdictions,” has prompted the county to enforce the distinction starting in June.

Both Fannie Mae and Freddie Mac held onto their ample shares of mortgage-backed securities with something of a bump during the first quarter of 2012, according to a new Inside The GSEs analysis. The GSEs issued a combined $303.9 billion in MBS during the first quarter, a 13.9 percent increase from the fourth quarter of 2011. Compared to the first quarter of last year, Fannie and Freddie saw a 16.4 percent increase in MBS issuance. Between the two companies, Fannie and Freddie registered a plentiful 77.9 percent share of new MBS during the period that ended March 31, 2012, up from 77.1 percent the two companies held during the fourth quarter of 2011 and much farther apart from the 74.8 percent both GSEs held during the first quarter of 2011.

The White House is backing a trio of Senate bills filed last week to expand the Home Affordable Refinance Program to an even wider circle of underwater borrowers as part of the Obama administration’s re-election “to-do list.” The Equity Rebuilding Act sponsored by Sen. Jeff Merkley, D-OR, would lower costs for some homeowners seeking to refinance through HARP. Under the bill, homeowners who are current on their mortgage seeking to refi into a 20-year loan term or shorter would have their closing costs covered by Fannie and Freddie. A second bill by Sen. Dianne Feinstein, D-CA, the Expanding Refinancing Opportunities Act of 2012, would create a $6 billion FHA fund to provide insurance for underwater homeowners who currently don’t have a federally backed loan. To pay for the FHA extension, Feinstein would extend by one year the temporary, 10-year, 10 basis point increase of the GSE guarantee fee that took effect April 1.

Investors will be able to bid on Fannie Mae real estate-owned single-family homes intended for rent “in the next few months” but the Federal Housing Finance Agency warns not to expect fire sale prices from its pilot program.FHFA Senior Associate Director for Housing and Regulatory Policy Meg Burns testified last week before a congressional field hearing that the agency is completing its review of investor applications and is on target to complete its first pilot transaction in the next few months. “The application process is comprehensive, rigorous and demanding, requiring exhaustive amounts of information and documentation from the applications and their business partners,” said Burns.

Look for the Federal Housing Finance Agency to press its multiple legal actions against many of the nation’s biggest issuers of non-agency mortgage-backed securities after a federal judge rejected a bid by UBS Americas to turn back the FHFA’s lawsuit over its sale of non-agency MBS to Fannie Mae and Freddie Mac. Judge Denise Cote, of the U.S. District Court for the Southern District of New York, two weeks ago denied UBS’ motion to dismiss on statute of limitations grounds, while dismissing the FHFA’s negligent misrepresentation claims. The FHFA, as GSE conservator, sued UBS in July 2011 alleging that billions of dollars of MBS purchased by Fannie and Freddie were based on offering documents that contained “materially false statements and omissions.”

The Federal Housing Finance Agency is requesting public comment on its draft document Strategic Plan: Fiscal Years 2013-2017. The FHFA said it’s updating its plan in order to incorporate the strategic plan for conservatorships of Fannie Mae and Freddie Mac that the Finance Agency sent to Congress in February.

Fannie Mae received a leg up earlier this month in its defense against a former staffer’s wrongful termination lawsuit when a federal judge ruled that the GSE is not legally considered a government entity while under the conservatorship of its regulator, the Federal Housing Finance Agency. Caroline Herron, a former Fannie vice president who left in 2007 but returned as a consultant in 2009, filed suit against the GSE in June 2010. Herron claims she was wrongly fired for reporting what she said was Fannie’s mismanagement of the Obama administration’s housing rescue initiatives. According to papers filed in U.S. District Court for the District of Columbia, Herron sought to prove that Fannie was not a private company but an adjunct of the state while under FHFA conservatorship as part of her claim against Fannie. Herron asserted a Bivens claim, a claim under the First Amendment for private damages against federal officials for civil rights violations outside the purview of the Federal Tort Claims Act.