The Federal Housing Finance Agency should review the concerns of industry trade groups about Fannie Mae’s plans to reduce the cost of lender “force-placed insurance” and then facilitate a “collaborative resolution” that’s open and transparent, industry groups contend. In a letter to the FHFA earlier this month, the American Bankers Association warned that Fannie’s March 2012 request for proposal inviting insurance companies to compete for the GSEs lender-placed insurance business directly as a way to ensure a significant reduction in insurance costs is rife with unintended consequences to the industry. “The proposal, if adopted, effectively would allow Fannie Mae to pick winners and losers among insurers, would be potentially inconsistent with state insurance requirements and would dramatically alter existing servicing operations, contracts and costs,” noted the ABA. “Such a proposed major reform of the mortgage servicing market should be considered in the sunshine.”

Over the past few weeks mortgage consultants have been discussing a potentially lucrative “request for proposal” issued several months ago that requires outside vendors to aid the Federal Housing Finance Agency in carrying out its “Strategic Plan” for taking the GSEs to the next stage in their evolution. But according to these consultants, interviewed by Inside The GSEs, the fate of this RFP has gone dark with the agency declining to discuss the contract or anything tied to it. An agency spokeswoman told IGSEs that not all agency RFPs are public. A check by IGSEs found that the regulator/conservator of Fannie Mae and Freddie Mac posted just one RFP last year, a project that requires education and training services for what’s called an “executive leadership training” program. The reason the strategic plan RFP has created some buzz in the industry is that it may involve asking a vendor how it might go about merging Fannie and Freddie. However, a copy of the RFP in question – obtained by IGSEs – mentions nothing about a merger of the two, and is worded so generally that it might entail just about any duties.

Analysts at Keefe, Bruyette & Woods noted in a recent report they expect both Fannie Mae and Freddie Mac to sell their real estate-owned properties “more meaningfully” if the GSEs can do so at levels “that are in line with current carrying values on the companies’ balance sheets.” At the end of the third quarter, Fannie held approximately 107,000 REO properties, worth an estimated $16.1 billion, assuming a purchase price of $150,000 per property. Freddie held some 51,000 REOs, equivalent to $7.6 billion assuming the same purchase price. KBW observed that there is room for improvement in how Fannie and Freddie move their REOs. “We believe that the GSEs will be unwilling for political reasons to take meaningful upfront losses to sell REO properties, even if it makes longer-term sense from an economic perspective,” said KBW.

With the official opening of the 113th Congress and the Obama administration’s second term to commence next week, the two key congressional committees overseeing mortgage and housing issues are reorganizing their membership rolls. But it remains to be seen whether lawmakers will be any more successful at advancing legislative GSE reform than during the previous two-year session. As expected, Rep. Jeb Hensarling, R-TX, has assumed the gavel of the House Financial Services Committee, replacing the term-limited former chairman Spencer Bachus, R-AL, who will remain on the committee as chairman emeritus. Rep. Gary Miller, R-CA, will serve as vice chairman of the committee, while Rep. Lynn Westmoreland, R-GA, will serve in the newly created position of committee whip.

The federal judge in charge of overseeing the multiple lawsuits filed by the Federal Housing Finance Agency against non-agency mortgage-backed securities issuers for allegedly misrepresenting deals that were sold to Fannie Mae and Freddie Mac rebuffed yet another motion by one of the banks to shut down the legal action. Last week, Judge Denise Cote of the U.S. District Court for the Southern District of Manhattan rejected a motion to reconsider her December decision allowing the FHFA to proceed on behalf of the GSEs with most of its fraud claims against Ally Financial. On Dec. 19, the judge denied most of Ally’s motion to dismiss, including the defendant’s request that the court strike the demand for punitive damages, finding there were sufficient factual allegations in the FHFA’s complaint to move forward with its fraud complaint.

The Consumer Financial Protection Bureau this week issued a long-awaited final rule that establishes ability-to-repay and qualified mortgage (QM) standards, as well as a second, temporary category of QMs for government-backed mortgages to avoid market disruption. At the same time, the CFPB sought comment on a proposed rule that would exclude new and existing FHA, VA and Rural Housing Service (U.S. Department of Agriculture) programs that facilitate refinancings for borrowers at risk of delinquency or default. The temporary QM category was spurred by CFPB’s concern about the ...

The Obama administration is making a renewed push in 2013 for a government-backed non-agency refinance program, potentially the third major phase of the Home Affordable Refinance Program. However, there appear to be numerous hurdles to using the government-sponsored enterprises to help refi non-agency borrowers and a similar proposal using the FHA has yet to gain widespread support in Congress. Under the latest HARP 3.0 proposal, Fannie Mae and Freddie Mac would refinance certain non-agency mortgages with negative equity, waive mortgage insurance requirements and charge the borrowers higher guaranty fees. The proposal would require approval from Congress. “After taking significant taxpayer bailouts, the GSEs’ fiscal condition is...

The securitization market generated $1.847 trillion in new residential MBS and non-mortgage ABS in 2012, reversing two straight years of declining volume, according to a new Inside MBS & ABS analysis and ranking. Last year’s output was up 41.2 percent from total issuance in 2011, and it marked the strongest annual new issuance volume since 2009. Total securitization volume rose modestly, by 2.3 percent, from the third quarter to the fourth quarter, and activity cooled significantly in December. As has been the case since the financial market meltdown in 2008, securitization was dominated...[Includes three data charts]

The Consumer Financial Protection Bureau has issued its long-awaited “qualified mortgage” ability-to-repay final rule that, as expected, includes an exception for Fannie Mae and Freddie Mac mortgages and does little to facilitate a rebound in the non-agency sector. Mortgage lenders will be presumed to have complied with the ability-to-repay rule if they originate “qualified mortgages” that prohibit or limit the risky features believed to have harmed consumers in the recent mortgage crisis. That means...

New York Mortgage Trust recently completed two unique short-term securitizations backed by residential and multifamily mortgages. Officials at the real estate investment trust said the deals provide NYMT with greater funding flexibility for future loan purchases. Shortly before the end of 2012, NYMT issued a security with a three-year term to finance residential mortgages owned by the REIT with an aggregate market value of approximately $59.6 million. NYMT said it received gross cash proceeds of approximately $38.7 million before deducting expenses associated with the private placement. “We believe...