The chairman of the House Oversight and Government Reform Committee announced late this week that he has opened an investigation into a reported deal struck last month in which Fannie Mae agreed to buy some of Bank of America’s home-loan portfolio.In a letter sent to Federal Housing Finance Agency Acting Director Edward DeMarco, Rep. Darrell Issa, R-CA, requested the FHFA provide the committee documents and a “full explanation of the agency’s decision-making process” regarding the purchase.

The massive legal action that the Federal Housing Finance Agency has initiated against many of the nation’s big lenders on behalf of Fannie Mae and Freddie Mac needs to be resolved forthwith, says an industry attorney, before a prolonged litigation “feeding frenzy” and resulting uncertainty paralyze mortgage market participants.Two weeks ago, the Finance Agency filed legal papers contending that the 17 financial institutions which sold Fannie and Freddie $196 billion of mortgage-backed securities, mostly between 2005 and 2008, duped the GSEs into buying tens of billions of dollars of MBS that went south after the housing bubble burst.

Fannie Mae and Freddie Mac are reportedly in talks with the Securities and Exchange Commission to settle claims that the two GSEs failed to disclose to investors the companies’ exposure to risky subprime mortgages prior to the 2008 housing market crash.

A group of three dozen lawmakers from both parties have issued a last-ditch appeal to House appropriators to take action to extend the temporarily increased conforming loan limits that are set to expire at the end of this month. Unless Congress intervenes, the “emergency” high cost conforming loans limits that were enacted in 2008 for Fannie Mae, Freddie Mac and the FHA will expire on Oct. 1.

Two Ohio pension funds have filed suit in federal court against the Federal Housing Finance Agency to overturn a recent Finance Agency rule that could curtail any award for damages the funds might someday receive in their securities fraud suit against Fannie Mae. In papers filed in the U.S. District Court, District of Columbia, lawyers for the Ohio Public Employees Retirement System and the State Teachers Retirement System of Ohio disputed a final rule issued…

Mortgage lending to finance home purchases increased a hefty 32.2 percent from the first quarter to the second quarter of 2011, helping to offset a huge drop in refinance activity. Housing sales jumped 43.6 percent during the second quarter, although the housing market in 2011 is still considerably slower than it was a year ago. Conditions looked better in the second quarter largely because the first quarter of 2011 was one of the worst on record for housing sales and home-purchase lending. Fewer than 1 million new and existing home sales were reported during the first quarter of 2011, yielding a record low of just... [Includes two data charts]

Even as industry observers agree that the White House’s announced attempt to improve refinance efficiency through an expansion of the Home Affordable Refinance Program is worthwhile, there remain too many unknowns at the moment to judge how effective a HARP makeover will be. As part of his much anticipated speech before a joint session of Congress last week, President Obama noted his administration’s intent to help homeowners. “To help responsible homeowners, we’re going to work with federal housing agencies to help more people refinance their mortgages at interest rates that are now near 4 percent,” said Obama. “That’s a step that can...

The Senate Banking, Housing and Urban Affairs Committee may not be moving any closer to a decision on reforming the mortgage finance system, but lawmakers should be getting well versed in the various analytic perspectives on the role of the federal government. At a hearing this week, the committee heard testimony from researchers who support winding down Fannie Mae and Freddie Mac as soon as possible and others who say private capital won’t be drawn back into the system unless there is a government guarantee. “There’s absolutely no reason to believe that private capital would immediately step-up – even if it would eventually...

The Federal Housing Finance Agency’s legal action late last week against many of the nation’s largest financial institutions on the grounds they misled Fannie Mae and Freddie Mac about the quality of subprime and Alt A MBS purchased by the government-sponsored enterprises has few positives but plenty of negative potential consequences for the market, experts say. The 17 separate lawsuits filed by the FHFA seek unspecified damages on $196 billion in mortgage securities the two GSEs purchased, mostly between 2005 and 2008. The agency conducted extensive loan-level reviews that allegedly revealed widespread discrepancies between... [Includes two pages of data]

Private investors in agency MBS could lose $13 billion to $15 billion from a new government effort to help current Fannie Mae, Freddie Mac and FHA borrowers refinance, according to a new Congressional Budget Office staff working paper. The Obama administration is expected to announce a revved-up refinance program as part of a new strategy to strengthen economic growth. A “stylized” refinance program analyzed by the CBO would have a relatively small impact on the overall economy, the analysts said. The biggest impact would be on private MBS investors and the estimated 2.9 million households that would likely be brought into the...