Commercial banks and savings institutions continued to increase their MBS holdings during the third quarter, despite more competition for the still-shrinking asset class. A new Inside MBS & ABS analysis of bank call report data shows that banks and thrifts held a record $1.617 trillion of residential MBS as of the end of the third quarter, up 0.5 percent from the previous quarter. All of the growth came from commercial banks, as thrift MBS holdings continued to decline, dropping 1.3 percent to $175.6 billion. Banks managed to increase...[Includes two data charts]

A three-judge federal panel this week heard a rare interlocutory appeal by one of the defendants in a series of lawsuits that the Federal Housing Finance Agency has filed in connection with non-agency MBS purchased by Fannie Mae and Freddie Mac. Lawyers for UBS Americas argued before the Second Circuit Court of Appeals that it should reverse the May ruling by Manhattan Federal Judge Denise Cote denying the bank’s motion to dismiss the FHFA’s lawsuit as time-barred under the statute of repose. The FHFA sued...

Ginnie Mae is beefing up its staff to handle increased securitization volume, a growing number of applications for new issuer approval, and closer monitoring of current participants in the Ginnie Mae program, according to a top agency executive. The agency plans to have 130 market professionals on staff by 2013, up from 70 in 2010, to ensure compliance of new and current participants with existing guidelines and the agency’s adaptation to a changing MBS market, said Michael Drayne, senior vice president at Ginnie Mae’s Office of Issuer and Portfolio Management. “We have been given...

The Home Affordable Refinance Program surged to a record 286,044 loans during the third quarter of 2012, but volume began to slow in September, according to an Inside MBS & ABS analysis of new data released by the Federal Housing Finance Agency this week. HARP business was up 17.8 percent from the second quarter to the third, based on loan count, but overall refinance activity at Fannie Mae and Freddie Mac was up 21.8 percent for the same period. The program for underwater Fannie and Freddie borrowers saw a huge increase in volume at the start of the year as lenders implemented a series of changes in the program. Activity surged again in the second quarter when loan-to-value limitations were largely taken out of the equation. But HARP volume fell off...[Includes one data chart]

Fannie Mae and Freddie Mac have reduced their dependency on U.S. government support, but there may be restructuring issues within the budget talks to resolve the looming “fiscal cliff,” according to Fitch Ratings. Fitch this week affirmed its “AAA” rating for both Fannie and Freddie even as its outlook for the two GSEs remains “negative.” However, the rating agency warned that its outlook for Fannie and Freddie depends upon the economy and the ability of political leaders to come to an accord on taxes and government spending before year’s end.

The Federal Housing Finance Agency has announced this week that the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2013 will remain at existing levels. In most of the country, the loan limit – established under the terms of the Housing and Economic Recovery Act of 2008 – are calculated each year. HERA sets loan limits as a function of median home values in local areas.

The Federal Housing Finance Agency’s proposal to levy extra guaranty fee charges on GSE mortgages originated in five slow-foreclosure states attracted nearly universal calls to curtail or even to outright scrap the measure from industry participants and from lawmakers. If implemented as proposed, the FHFA would target Connecticut, Florida, Illinois, New Jersey and New York for an additional, one-shot g-fee of between 15 and 30 basis points in 2013.

Industry groups rallied late this week in opposition to a new effort to use revenue derived from an additional GSE guaranty fee to fund amendments to a jobs bill. H.R. 6429, the STEM Jobs Act, would extend by one year the 10 basis point g-fee increase mandated by Congress last year to pay for an extension in payroll taxes. All of the added revenue from that fee hike, which will remain in effect for 10 years, will go into the U.S. Treasury and not cover Fannie Mae and Freddie Mac credit losses or count toward the GSEs’ other financial obligations.

The Eleventh Circuit Court of Appeals ruled earlier this month that a 2010 Federal Housing Finance Agency directive advising Fannie Mae and Freddie Mac against purchasing mortgages laden with certain first-priority lien obligations under the Property Assessed Clean Energy program is not tantamount to a rulemaking that can be challenged in court. The ruling rejected a challenge by Leon County, FL, to uphold its PACE program. The county claimed the FHFA had engaged in rulemaking without the required notice and comment period in violation of the Administrative Procedure Act.The circuit court’s opinion by Judge Rosemary Barkett found the Finance Agency’s action was consistent with its congressionally defined role as conservator under the Housing and Economic Recovery Act of 2008.

Both Fannie Mae and Freddie Mac retained their dominant shares of mortgage-backed securities with a bit of a boost during the third quarter of 2012, according to an Inside The GSEs analysis.The two GSEs issued a combined $335.4 billion MBS during the third quarter, compared to $273.9 billion during the previous quarter. Fannie and Freddie saw an ample 54.7 percent increase in MBS issuance during the first nine months of 2012 compared to the same period a year earlier.