GSEs

Some argue that nonbank mortgage lenders' rising market share poses a risk to the financial system. But this belief arises from an inaccurate understanding of what is in fact a well-regulated sector.

The decline in foreclosures and short sales is contributing to the dearth of housing inventory, complicating the prospects for home buyers feeling the pinch of tight credit and lenders that need purchase mortgages to supplant refinancing once interest rates rise.

Private mortgage insurers see deeper coverage of GSE loans as a way to expand business, while lenders hope it could lead to a reduction to guarantee fees.

A bipartisan group of Senate Banking Committee members is urging the Federal Housing Finance Agency to make risk-sharing a higher priority for Fannie Mae and Freddie Mac.

Fannie and Freddie should offer upfront risk-sharing options in order to give lenders an opportunity to lower their guarantee fees while encouraging more private capital and competition to flow into the secondary mortgage market.

The details of the final Des-Moines-Seattle Home Loan Bank deal made it clear why this merger worked when past attempts had not and gave clues as to whether other institutions could one day follow suit. Following are three items that jumped out.

Rep. Edward Royce, R-Calif., urged fellow House members Wednesday to support a Senate proposal that would make significant reforms to Fannie Mae and Freddie Mac.

The merger of the Federal Home Loan Banks in Des Moines and Seattle became official on Monday, shrinking the overall number of banks in the system to 11.

New servicing standards issued by the government-sponsored enterprises are unlikely to pose a hurdle for the biggest nonbank players in the market, but small servicers could find it more challenging.

In a sign that the GSEs may once again be trying to compete with each other, Freddie Mac will no longer charge lenders to use its Loan Prospector automated underwriting system.