On April 28, 2011, the Federal Housing Finance Agency (FHFA) directed Fannie Mae and Freddie Mac to establish consistent mortgage loan servicing and delinquency management requirements. Consistent with the directive, Fannie Mae is updating the maximum number of allowable days in which routine foreclosure proceedings are to be completed in each jurisdiction. If the servicer fails to complete a foreclosure action within the prescribed time frame, Fannie Mae will impose a compensatory fee. Compensatory fees will be applied based on the unpaid principal balance of the mortgage loan, the applicable pass-through rate, the length of the delay, and any additional costs that are directly attributable to the delay. Compensatory fees will not be assessed if a servicer’s aggregate amount of monthly compensatory fees is $1,000 or less. Servicers should contact their Servicing Consultant, Portfolio Manager, Investor Reporting Business Analyst, or Fannie Mae’s National Servicing Organization’s Servicer Support Center at 1-888-FANNIE5 (888-326-6435) with any questions regarding this Announcement. FULL ANNOUNCEMENT:

Fannie Mae 30-year 4.0 and 4.5 MBS coupons have risen to price levels that would give lenders more leeway to reprice for the better. This friendly directional change is being driven by weakness in stocks which have fallen to new session lows. Benchmark Treasuries are currently at their lowest yield levels since 830am.

There is little activity to report in the MBS market today. Mortgages have mostly followed the directional movements of benchmark Treasuries, which are quite connected to the stock lever at the moment. With the S&P at 1291, near its session lows, mortgages are near their best levels of the day. Fannie Mae 4.0 MBS coupons are currently 5/32nds off their intraday lows (100-25) at 100-30. But neither side of the market is taking any special risks and trading ranges for MBS and TSYs remain inside Friday's range. While it's not out of the realm of possibility for a few lenders to consider repricing for the better here, we'd expect that to be the exception as opposed to the rule. More gains are likely needed if we're to see broad-based reprices for the better.

A key observation we've relied upon in generating our analysis over the past 6-months is the assumption that markets have been, in some way, “repeating history.” In case you missed it we expanded further on that topic last Friday. We shared a few charts that offer a color-coded graphical depiction of that market behavior and further illustrated our point by highlighting long term trend channels. In either the comments of that blog post or the Dashboard's Live Chat function, please let us know what you think about our analysis. This content isn’t intended to be an argument that history will continue repeating itself, but it does offer some guidance on the specific behaviors we might see if the broader movements continue to correlate to our theory. Here’s the link:

(Reuters) - The struggling housing sector will not stop the country's economic recovery but the Obama administration needs to deal with problems in the market, a top White House economic adviser said on Sunday. "We still need to deal with these housing issues and it's going to take us substantial time as a nation to work our way out of what was a 10-year-plus bubble, but I do not believe that will prevent us from recovering," White House economist Austan Goolsbee said on CNN's "State of the Union." The administration is already using taxpayer funds from its $700 billion bank bailout program to help prevent foreclosures and give struggling Americans a reprieve on their mortgage payments. But the programs have had little impact on the overall housing sector. March home prices slumped below lows reached during the financial crisis in April 2009. Goolsbee did not elaborate on what the administration could do to help the housing market recover. The White House has little leeway to increase government spending to help spur the housing market to keep the economic recovery advancing. Political appetite for further government stimulus measures is low as lawmakers from both parties focus on deficit reduction. Goolsbee said he was optimistic that the debt ceiling issue could be resolved within the next month and he said Congress should not push the negotiations right up to the deadline.

Mortgages and benchmark Treasuries have displayed little desire to rally before this week's auction cycle begins tomorrow, regardless of continued weakness in equity markets. We described this concessionary behavior in a "Continuing Education" micropost which can be found in the MBS Live Market Updates. Loan pricing has indeed deteriorated modestly this morning, but not nearly enough to warrant a change in "Best Execution" quotes. "Rate sheet influential" MBS coupons are bid slightly above their worst levels of the session as are benchmark Treasuries.