A federal bankruptcy judge last week ruled against increasing Lehman Brothers’ reserves for residential MBS claims. The ruling by Judge Shelley Chapman of the U.S. Bankruptcy Court for the Southern District of New York was a setback for investors and trustees who asked the court in August to increase Lehman’s current reserves of $5 billion to $12.1 billion in a bid to force the defunct investment bank to repurchase legacy MBS., according to a Barclay’s Research report. The lawsuit against Lehman alleges...

The public comment period closed this week on a Federal Housing Finance Agency proposed rule that updates and clarifies the requirements for Federal Home Loan Bank capital stock and capital plans. The proposal is mostly a housekeeping change, shifting regulations from the old Federal Housing Finance Board rulebook to the FHFA. “The proposed rule would not make any substantive changes to these requirements, but would delete certain provisions that applied only to the one-time conversion of bank stock to the new capital structure,” the agency said. None of the FHLBanks commented on the proposal, which would align the rules better with long-standing practices for transactions in FHLBank stock. Most significantly, the proposed rule would add appropriate references to “former members” ...

The FHA and Ginnie Mae will share in the record-setting $16.7 billion settlement between Bank of America, the Department of Justice and certain other federal agencies and six states to resolve claims related to mortgage fraud and toxic mortgage-backed securities. The FHA will receive approximately $800 million and an undisclosed amount for consumer relief from BofA. The bank was accused of falsely certifying poorly underwritten loans for FHA insurance, resulting in huge losses for the agency. It is unclear how much Ginnie Mae’s share would be from the settlement. “As a direct endorser of FHA-insured loans, Bank of America performs a critical role in home lending,” said U.S. Attorney Loretta Lynch for the Eastern District of New York during the announcement of the global settlement in August. “In obtaining a payment of $800 million and sweeping relief for troubled homeowners, we have not ...

In the wake of the Federal Reserve’s announced end to its multi-part quantitative easing program, look for private investors to face a number of challenges when it comes to increasing their share of the MBS market, concluded a white paper by the Mortgage Bankers Association. The MBA paper, issued late last week, noted there is no single player waiting in the wings able to pick up the slack when the Fed relinquishes its role as the dominant purchaser of agency MBS. “Many of the potential private investors face...

Fewer than 100 financial institutions could be adversely affected by a proposed Federal Housing Finance Agency rule to tweak membership criteria for the 12 Federal Home Loan Banks, the agency’s head told the Senate Banking, Housing and Urban Affairs Committee last week. In his first oversight hearing appearance since assuming office in January, FHFA Director Mel Watt said the agency’s “preliminary review” has found of the 7,500 FHLBank member institutions less than 100 may potentially be negatively impacted.

Fannie, Freddie Conforming Loan Limits Mostly Unchanged for 2015. The Federal Housing Finance Agency this week said that conforming loan limits for Fannie Mae and Freddie Mac in 2015 would remain at current levels in most markets. For much of the country, the conforming loan limit for one-unit properties will remain at $417,000. The loan limits are established under the terms of the Housing and Economic Recovery Act of 2008 and are calculated each year.

Fannie Mae and Freddie Mac mortgage-backed securities remained the preferred investment choice of the 12 Federal Home Loan Banks during the third quarter of 2014, with a very slight decline 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 effectively no movement within the FHLBank system during the three-month period ending Sept. 30, 2014.

Prohibiting real estate investment trusts from joining the Federal Home Loan Bank system would hurt efforts to revive the non-agency market, according to two REITs that have gained access to FHLBank financing. Officials at both Two Harbors Investment and Redwood Trust said FHLBank advances helped the REITs fund originations of jumbo mortgages in the third quarter of 2014. Both companies recently gained access to FHLBank advances via captive insurance entities ...

Ginnie Mae is seeking comment on several proposed data collections, including those that would strengthen the agency’s ability to monitor participants in its mortgage-backed securities programs. Due to its growing concern over the influx of non-depository issuers into the single-family MBS program, Ginnie has proposed to collect more loan-level data to supplement the information already being collected and reported on a monthly basis. The proposed data collection consists of bankruptcy-related information (action type, case identifier, chapter type, bar date) as well as borrower-related information (borrower bankruptcy indicator, classification type, total mortgaged properties, counseling initiated indicator and credit score date). Other proposed new data include document custodian ID, type of insurance claim coverage, investor unpaid principal balance (UPB), adjustment to ...

The Mortgage Bankers Association has formally called upon the Federal Housing Finance Agency’s official watchdog to reconsider some of its proposals meant to prevent the next multi-billion dollar fraud scheme against Fannie Mae and Freddie Mac. In a letter dispatched to the FHFA’s Inspector General late last week, the MBA cited its opposition to certain recommendations the IG made to the Finance Agency in its August post-mortem on the swindle perpetrated by the now-defunct Taylor, Bean & Whitaker Mortgage.