Analysts have mixed expectations for residential mortgage servicing in 2012, with some seeing it as a year of foreclosure-prevention reforms and others anticipating a higher level of vigilance in new deals and loan quality. Although issuance of non-agency MBS will be modest again in 2012, new deals will have more comprehensive reviews of originators, more reliable and better-quality loan-level data, and stronger enforcement of breaches of representations and warranties, according to Moody’s Investors Service. New deals will better address legal issues relating to foreclosure challenges. Some of the deals...

Expect the run up to the fall elections to curb any meaningful results in terms of a legislative overhaul of Fannie Mae and Freddie Mac. However, industry insiders say it’s quite likely that lawmakers will work through the year to tweak various GSE reform proposals for the next Congress to take up in 2013.As Congress resumed this week following the holiday break, members returned to some 14 bills in the House advancing their way through committee – though only a couple are considered “comprehensive” reform legislation. Meanwhile, two bills filed at the end of last year in the Senate got the other chamber of Congress into the GSE reform debate after a long dormancy.

Despite the Federal Housing Finance Agency’s release of a long awaited study justifying its position against the writedown of underwater GSE mortgages, principal-reduction proponents, including House Democrats, appear poised to redouble their efforts to pressure the FHFA to see things their way.This week, the Finance Agency released its analysis of taxpayer losses to explain the FHFA’s policy decision to exclude principal forgiveness as a policy in favor of principal forbearance, the alternative that the GSEs currently apply to their underwater loans.As of June 30, 2011, Fannie Mae and Freddie Mac had nearly 3 million first-lien mortgages with outstanding balances in which the borrower owed more than the loan on the home was worth.

A trio of real estate finance trade groups is calling upon Congress to leave the GSEs’ guarantee fees alone as lawmakers devise a way to pay for tax cuts for the remainder of 2012.The Mortgage Bankers Association, National Association of Realtors and National Association of Home Builders dispatched a joint letter to House and Senate leaders late this week noting their united opposition “to increasing g-fees for reasons other than minimizing the GSE’s risk exposure.” Late last month, the Federal Housing Finance Agency directed Fannie Mae and Freddie Mac to increase g-fees on new mortgage products by 10 basis points starting April 1.

California remained the biggest source of new single-family mortgages for Fannie Mae and Freddie Mac during 2011, according to the new special report, GSE Market Profile: 2011, from Inside Mortgage Finance Publications.A total of $189.9 billion of home loans on California properties were securitized by the two GSEs, accounting for 22.6 percent of their total business for the year. That was down 15.1 percent from the total California Fannie/Freddie production back in 2010, while the overall GSE market fell 17.0 percent from a year ago.Although fixed-rate mortgages dominated the GSE market in 2011, California produced $17.9 billion in adjustable-rate mortgages – 30.8 percent of the national total. ARMs accounted for just 6.9 percent of the total GSE volume.

No matter which political party controls the House during next year’s 113th Congress, there will be a new House Financial Services Committee chairman in charge of setting the agenda as both the current chair and the ranking member are vacating their positions at the end of 2012.Rep. Spencer Bachus, R-AL, said this week he will observe the House’s six-year term limit rule for chairmen and ranking members and not seek a waiver with the House Republican Conference. On Nov. 28, Rep. Barney Frank, D-MA, the committee’s one-time chairman and current ranking member announced he would retire from Congress at the end of his present term. Bachus, who was elected to the House in 1992, is seeking re-election this fall.

The Federal Housing Finance Agency this week less than enthusiastically issued a call for public comment on the potential revival of Property Assessed Clean Energy program loans even as the Finance Agency is appealing the court order mandating issuance of its proposed rule.On Jan. 26, the Finance Agency published in the Federal Register an Advanced Notice of Proposed Rulemaking concerning PACE mortgage assets and a Notice of Intent to prepare an environmental impact statement under the National Environmental Policy Act “to address the potential environmental impacts of FHFA’s proposed action.” Property Assessed Clean Energy programs offer loans for energy-efficiency home improvements. While 27 states and the District of Columbia have legislation in place to permit PACE financing for green homes, in July 2010, Fannie Mae and Freddie Mac stopped purchasing PACE-related mortgages that had automatic first-lien priority over previously recorded mortgages.

California Democrats, including many in the state’s congressional delegation, would like the current head of the Federal Housing Finance Agency replaced by President Obama for someone who will take “immediate action to prevent more foreclosures.” Earlier this month, a group of 28 California House Democrats dispatched a letter to the president urging him to appoint a new permanent FHFA director via recess appointment. The Finance Agency under Acting Director Edward DeMarco has “consistently and erroneously interpreted its mandate” as Fannie Mae and Freddie Mac’s regulator “far too narrowly” and consequently has failed to help struggling California homeowners.

Securitization experts are expecting a rerun of last year in 2012, as the U.S. economy slowly rights itself and most segments of the asset-backed securities market generate reasonable new issuance and stable performance. While observers suggest the housing market may make only modest improvement this year, no one expects much non-agency mortgage activity. Growth in issuance of non-agency mortgage-backed securities is going to be very slow, said Ron Mass, co-head of structured products at Western Asset Management Co. Because the market is underwriting the mortgage borrower, and no longer relying...

If there was any question about what was driving the housing market in 2011, some year-end housing numbers have provided two clear answers: investors and distressed properties. The combination of investors buying up large amounts of distressed properties not only put downward pressure on home prices, but also cut into the home-purchase mortgage business by generating a significant number of cash sales. These are some of the major conclusions that can be drawn from a look at 2011 results from the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. Last year’s housing...(Includes one data chart)