ABS issuers are scrambling to get a handle on complex new rules to mitigate conflicts of interest in the structured finance market that are being developed by the Securities and Exchange Commission and federal banking regulators. “At the end of the day, we’ll spend lots of time figuring out how to comply,” said Bianca Russo, managing director and associate general counsel at JPMorgan Chase, during a seminar sponsored last week by the American Securitization Forum. “It’s going to be a challenge to comply, however the rules turn out.” Complexity and consistency are...

Legislative proposals for a TBA market backed by non-agency MBS as an alternative to a market driven by government-sponsored enterprises lack precedence and are full of unknowns, according to analysts. “While this is a laudable effort – and a necessary one in order to remove the government’s sup-port from the housing finance market – the extent to which private enterprise will be able to pick up the slack the GSEs leave behind is unknown,” said Benjamin Feldman, a housing policy analyst and advocate. Peter Wallison, an Arthur F. Burns fellow in financial...

For an all too brief moment last week there was bipartisanship on Capitol Hill as exasperated Democrats and Republicans took turns questioning and berating the CEOs of Fannie Mae and Freddie Mac and their regulator surrounding the issue of executive compensation at the two GSEs.Federal Housing Finance Agency Acting Director Edward DeMarco was called before the Senate Banking, Housing and Urban Affairs Committee and the House Committee on Oversight and Government Reform to explain some $13 million in performance bonuses to Fannie CEO Michael Williams and Freddie CEO Charles Haldeman and eight other senior executives at the taxpayer-subsidized firms.

Details about the revised Home Affordable Refinance Program revealed few surprises in the seller-servicer bulletins issued by Fannie Mae and Freddie Mac last week with only a modest expansion in program activity expected.Among the noteworthy revisions under HARP 2.0, Fannie and Freddie have eliminated the existing cap on loan-to-value ratio, relaxed representation and warranty stipulations and reduced loan-level price adjustments for most HARP loans.

Controversy regarding management bonuses at Fannie Mae and Freddie Mac was cited last week as a significant factor for lawmakers’ decision to reinstate temporary higher limits for mortgages insured by the FHA but not for loans backed by the GSEs.The “emergency” high-cost loan conforming loan limits enacted by Congress in 2008 for the GSEs and the FHA expired on Sept. 30, dropping the limit to $625,500 from $729,750.

Freddie Mac is unwrapping a new set of incentives for its HomeSteps properties to both homebuyers and real estate agents this winter in an effort to pick up the sales pace of the GSE’s real-estate owned inventory.Through January 31, 2012, Freddie is offering homebuyers up to 3 percent of the final sales price toward closing costs while selling agents representing the owner-occupant buyer would receive a $1,000 bonus under the incentive plan.

Both Fannie Mae and Freddie Mac retained their hefty shares of mortgage-backed securities with something of a bump during the third quarter of 2011, according to a new Inside The GSEs analysis.The GSEs issued a combined $174.8 billion in MBS in the third quarter, a 12.8 percent increase from the second quarter. Compared to the third quarter of 2010, Fannie and Freddie saw an 11.2 percent decrease in MBS issuance during the first nine months of the year.

With the severe housing recession having created a more than abundant supply of poorly performing mortgages that will likely linger for years, “step servicing,” or varying compensation based on the amount of servicing work performed, may well be the wave of the future. “Currently, many in the industry are proposing step servicing fees for transactions including newly originated prime jumbo product,” said Kathleen Tillwitz, senior vice president of U.S. and European structured finance for DBRS, in a recent analysis. “As a result, the servicing fees we are seeing for prime jumbo loans are currently ranging anywhere from...

Despite low mortgage rates, the outlook for the purchase-mortgage market remains gloomy. And you can blame it mostly on current housing market conditions. One of the biggest problems plaguing the housing market, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey, is the large share of distressed properties that make up home sales in most areas of the country. Nationally, foreclosed properties and short sales accounted for a whopping 48.4 percent of home purchase transactions tracked in the HousingPulse Distressed Property Index during...