Fannie Mae is starting to market a risk-sharing mortgage-backed security that would require investors to bear some of the financial risk if mortgages default. The company, which is reportedly getting ready to launch a “road show” to debut its new risk-sharing mortgage bond within the next two weeks, is following up on Freddie Mac’s $500 million Structured Agency Credit Risk bond, which the GSE priced in July. The Federal Housing Finance Agency’s Strategic Plan calls for both Freddie and Fannie to establish loss-sharing arrangements, in which private investors bear some or all of the credit risk.

Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the 12 Federal Home Loan Banks during the second quarter of 2013, with a negligible increase from the previous quarter, according to a new analysis and ranking by Inside The GSEs based on data from the Federal Housing Finance Agency. Meanwhile, Ginnie Mae securities posted a modest but noticeable decline within the FHLBank system during the period ending June 30, 2013. GSE MBS accounted for 73.9 percent of combined FHLBank MBS portfolios, up 1.9 percent from the first quarter. The Finance Agency’s data do not separately break out Fannie and Freddie volume or share.

FHA lenders have gradually stretched to originate loans for borrowers with more modest credit scores in recent quarters, although these borrowers typically are better positioned to keep up with their payments, according to an Inside FHA Lending analysis of data released by the agency. The average credit score for single-family loans endorsed in the second quarter of 2013 was 693 – the lowest such average in nearly four years. This is partly the result of a shift toward more purchase-money mortgages, which generally have ... [1 chart]

Parties to trustee lawsuits challenging a city’s use of eminent domain to deal with foreclosures are gearing up for a face-off at an injunction hearing Sept. 13 in federal district court in San Francisco. The city of Richmond, CA, the defendant in the lawsuit, has suffered setbacks in the last few days and has yet to make good on its threat to initiate eminent domain proceedings after investor trustees rejected its offer to purchase distressed mortgages for restructuring. Wells Fargo and Deutsche Bank, acting as trustees for a group of ...

The question of whether the FHA should allow the refinancing of underwater mortgages seized through eminent domain has reemerged as a key issue following a recent decision by the city of Richmond, CA, to use its authority to take over distressed mortgages for restructuring. There is a new twist to the question, however. Could FHA’s refusal to refinance such mortgages be deemed discriminatory against cities and homeowners if eminent domain programs meet the requirements of the FHA Short Refinance program? Is that tantamount to redlining? A top executive of Mortgage Resolution Partners, which developed the eminent domain strategy to help underwater homeowners at risk of foreclosure, said ...

California remains the top source of new single-family mortgages for Fannie Mae and Freddie Mac, even as Fannie remains the dominant GSE in terms of production through the first half of the year, according to an Inside The GSEs analysis. A total of $160.3 billon home loans on Golden State properties were securitized by the two GSEs during the first six months of 2013, accounting for 23.1 percent of their total business for the half year. That was up 21.2 percent from total California production during the first six months of 2012 as the overall GSE market rose 20.2 percent from a year ago.

The FHA has proposed measures to strengthen its oversight of FHA lenders and each measure could potentially increase lenders’ liability and compliance risk, compliance experts warned. Published for comment in the July 9 Federal Register, the proposals are part of a new enforcement regime that the FHA is considering to monitor and sanction lenders. They cover statistical sampling, origination quality standards, annual reviews, compare ratios, and indemnification and other remedies for loan defects. The proposed enforcement measures, however, raise a ...

The Department of Housing and Urban Development is adopting the mortgage banking industry’s data standards format for the FHA’s TOTAL Mortgage Scorecard, which HUD uses to evaluate the credit risk of FHA loans that are submitted through an automated underwriting system. The standards were developed by the Mortgage Industry Standard Maintenance Organization (MISMO), a nonprofit subsidiary of the Mortgage Bankers Association. MISMO is an open data standards group that promotes consistency among mortgage transaction participants to reduce loan processing costs, increase transparency, and ultimately ...

Ginnie Mae guaranteed more than $216.9 billion in mortgage-backed securities during the first half of 2013, up 18.8 percent from the same period last year. Issuance was also up 8.0 percent in the second quarter from the first quarter, according to an Inside FHA Lending analysis of Ginnie Mae data. Not surprisingly, a significant share – $132.8 billion – of Ginnie Mae MBS issuances over the six-month period were backed by FHA loans. VA accounted for $72.1 billion while Rural Housing Service loans totaled $10.5 billion. Ginnie Mae issuances dropped during the first quarter but surged in the second quarter as ... [1 chart]

Sallie Mae’s recently announced plan to split into two publicly traded companies isn’t leaving analysts at ratings services or Wall Street firms with much to cheer about on multiple fronts. In late May, the Sallie Mae board of directors authorized newly appointed CEO John Remondi to press ahead with plans to split the company’s existing businesses into two publicly traded entities – a new education loan management firm, known as NewCo, and a consumer banking company, to be known as Sallie Mae Bank. The board’s stated intention with the move, talked about since at least as early as 2010, is...