With all the buzz after the multistate settlement regarding potential relief to homeowners, the Texas Foreclosure Prevention Task Force (TFPTF) reminded consumers to be cautious of potential scams.

“It’s getting harder to identify the good guys from the bad guys,” said David Long, co-chair of the TFPTF. 

Baron and Budd attorneys, led by a team in Los Angeles, filed a lawsuit on February 10, alleging that Wells Fargo and JPMorgan Chase charged excessive default service fees.

“Wells Fargo and Chase executives conspired to increase profits in any way they can, even if that meant deceiving homeowners who were losing out on the American dream,” said attorney Roland Tellis in a statement. “In addition to charging unnecessary and marked-up fees, the banks concealed the fees through cryptic wording.”

Sen. Robert Menendez (D-New Jersey) says the $25 billion settlement struck between federal and state officials and the nation’s five largest mortgage servicers “helps homeowners but it’s a long way from healing the grievous wounds left by the crisis.”

Those wounds have been made deeper by the continuing decline in home prices that has put millions of homeowners in the hole on their mortgage, owing far more on their loan than the home is now worth.

Menendez, who is chairman of the Senate’s housing subcommittee, has introduced a bill that he describes as “innovative,” which would encourage lenders to reduce principal for underwater borrowers with a shared-appreciation modification.

Menendez’s Preserving American Homeownership Act would establish a program through which banks would write down the principal balance of the mortgage to 95 percent of the re-assessed value of the home. This reduction would take place over a three-year period in

While the $25 billion settlement between five of the nation’s largest servicers and 49 of the state attorneys general awaits approval from a judge, there is some relief in the industry that the 16 months of investigation and negotiation has come to a close.

“The best thing about the mortgage settlement is that it’s done,” said Stan Humphries, Zillow’s chief economist on the company’s website.

“The agreement brings closure to these issues and enables the company to move forward in our ongoing efforts to help borrowers find affordable and sustainable payment relief whenever possible,” Ally stated Thursday afternoon.

However, while federal and state officials are congratulating themselves, the settlement’s impact on the broader market remains questionable. “It will be a good thing for many individuals,” Humphries admits, but “[a]s far as helping the housing market as a whole, it’s a drop in the bucket.”

Nonetheless, Mike Heid, president of Wells Fargo Home Mortgage suggests the settlement will have some positive impact. “Today’s agreement represents a very important step toward restoring confidence in mortgage servicing and stability in the housing market,” he stated Thursday after the settlement announcement.

Wells Fargo has agreed to pay $1.01 billion to the government and $4.34 billion in borrower relief.

The bank stated Thursday that it will begin an expanded refinance program and borrower relief program at the start of March.

Zillow forecasts home values will be on the decline through December 2012, but the decrease will be smaller than 2011.

While the $25 billion robo-signing settlement concludes 16 months of intense negotiations, questions still remain on how this will impact borrowers and the larger economy.

Capital Economics stated that while it is good that the settlement has been finalized and will offer principal reductions and refinancing schemes to borrowers, the bigger picture is that the settlement is not large enough to dramatically alter the outlook for the housing market or the wider economy.

Looking at the economy, $25 billion is worth 0.2 percent of gross domestic product (GDP), and if the deal expands to $40 billion, that would be 0.3 percent of GDP, according to the Capital Economics report.

When assessing the housing market, the report projects little impact. While $10 billion will be set aside for principal forgiveness, close to 11 million borrowers are underwater, totaling about 700 billion in negative equity.

The settlement also doesn’t include Fannie Mae or Freddie Mac mortgages, which represents roughly half of American homeowners.

“It’s a start, but it’s a drop in the bucket.  There is still a long way for banks to go in repairing families, communities and the housing market,” said Mark Seifert, executive director of Empowering and Strengthening Ohio’s People (ESOP).

While the relief provided to homeowners is said to be immediate, ESOP questioned exactly how homeowners will be notified of the relief they can receive, especially those already in foreclosure.

“[The] devil is in the details. In our experience, the industry has never done anything voluntarily to repair the damage they wreaked over the last decade, and we have no reason to believe this settlement will be any different,” said Seifert.

In addition to the $25 billion, new servicing standards were set for the top five servicers – Bank of America,

The $25 billion settlement with banks over foreclosure abuses may result in a wave of home seizures, inflicting short-term pain on delinquent U.S. borrowers while making a long-term housing recovery more likely.

Lenders slowed the pace of foreclosures as they negotiated with attorneys general in all 50 states for more than a year over allegations of faulty and fraudulent paperwork used to repossess homes. With yesterday’s agreement, banks are likely to resume property seizures.

“The best thing about the settlement, frankly, is that it will be done,” said Stan Humphries, chief economist for Seattle-based Zillow Inc. (Z), a provider of home-sales data. “The shadow of the settlement hung over the market for a year now.”

The backlog of foreclosures has trapped homeowners in properties they can no longer afford, depressed neighborhood prices by increasing the number of abandoned homes and led banks to tighten mortgage credit standards because of uncertainty about the cost of their potential obligations. Foreclosure starts fell 46 percent in December from October 2010, when the investigation into the so-called robo-signing of mortgage documentation began, according to Irvine, California-based RealtyTrac Inc.

The agreement will direct $17 billion to writing down debt to buffer about 1 million homeowners from foreclosure through mortgage forgiveness, forbearance or loan modification programs, according to Housing and Urban Development Secretary Shaun Donovan. About 750,000 borrowers may get direct payments of as much as $2,000 to compensate them for servicing errors.

Small Borrower Universe

Principal reductions and other loan modifications will be accessible to a small universe of borrowers because the deal doesn’t include loans owned or guaranteed by Fannie Mae (FNMA), Freddie Mac or Ginnie Mae, which pools and sells Federal Housing Administration loans. The five banks included in the settlement control or own 7.3 percent of all outstanding single-family mortgages, according to Inside Mortgage Finance.

“The primary beneficiaries of any principal reductions, loan modifications or refinancings are really a universe that excludes 92 percent of mortgage borrowers,” said Guy Cecala, publisher of the newsletter.

After a six-year slide in home prices, demand is showing signs of strengthening, bolstered by a jobless rate that fell to8.3 percent last month. The number of Americans who signed contracts to buy previously owned homes in December held near a 19-month high, indicating that stabilization in the market that began in late 2011 may continue this year.

Driving Down Prices

A surge of home seizures may drive down values, at least for a while, in a fragile market. The number of new foreclosure filings fell 34 percent last year, according to RealtyTrac, resulting in a backlog that now may flood the market with low-cost properties. About 1 million foreclosures will be completed this year, up 25 percent from 2011, according to the firm.

“All of this will result in more foreclosure pain in the short term as some of the foreclosures that should have happened last year instead happen this year,” Daren Blomquist, a RealtyTrac vice president, said in an e-mail yesterday.

About 5 million homes have been lost to foreclosure in the U.S. since 2006, according to RealtyTrac.

“I think there’ll be more price weakness, because we’ll see the number of distressed sales pick up,” said Mark Zandi, chief economist for Moody’s Analytics Inc. in West Chester,Pennsylvania. “But I think the price declines will be modest. I think the banks themselves are going to be very sensitive to market prices. I don’t think they’re just going to dump property. That wouldn’t be in their best interest.”

Decline Since 2006

Home prices have dropped 33 percent from their July 2006 peak, according to the S&P/Case-Shiller index of values in 20 U.S. metropolitan areas. About 11 million U.S. homeowners have negative equity, or owe more on their mortgages than their homes are worth, according to CoreLogic Inc. (CLGX), a real estate data provider. That has limited their ability to sell or refinance and reduced the incentive to keep paying.

Principal reductions may help cut the number of mortgage delinquencies by improving borrowers’ finances and reducing incentives for so-called strategic default, when homeowners walk away from a property because they have too much negative equity, according to a Federal Reserve report sent to Congress Jan. 4.

U.S. homeowners have $750 billion in negative equity, Humphries said. The deal will help the residential market “at the margins, but little more,” according to an analysis late last month by London-based Capital Economics of the impact of the settlement on housing.

Reductions ‘Seem Small’

The money may have an added benefit: It will test the effectiveness of principal forgiveness in preventing defaults, and may spur a larger-scale program if successful, said Paul Diggle, a property economist at Capital Economics.

“There has been a lot of discussion of principal reductions and whether that’s the one measure the U.S. housing market needs to get it going again,” he said in an interview this week. “That may well be the case. But the amounts of principal reductions under the settlement seem small.”

Principal was reduced on 10,772 loans, or 7.8 percent of the mortgages with payment modifications, in the third quarter of last year, according to the office of the U.S. Comptroller of the Currency. All of those loans were held by private investors or were in bank portfolios.

The agreement announced yesterday includes $5 billion in cash for states to pay for foreclosure-prevention initiatives. Loan servicers will refinance $3 billion in mortgages to reduce homeowners’ interest rates and pay about $1.5 billion to borrowers harmed by botched foreclosures.

Debt Forgiveness

The money set aside for mortgage-debt forgiveness also can be used for short sales, when a lender agrees to a sale for less than owed on the home. Banks have been stepping up the sales by pre-approving deals, streamlining the closing process, forgoing their right to pursue unpaid debt and in some cases providing as much as $35,000 in “relocation” incentives. Short sales accounted for 33 percent of financially distressed transactions in November, up from 24 percent a year earlier, according to Santa Ana, California-based CoreLogic.

For California, which has the highest number of properties in the foreclosure pipeline, banks agreed to pay $12 billion to help 250,000 homeowners with principal reductions or short sales, according to Kamala Harris, the state’s attorney general.

Borrowers in Florida, which had the second-most foreclosures, will receive an estimated $7.6 billion in benefits from loan modifications, including principal reduction, according to state Attorney General Pam Bondi.

Citigroup, Wells Fargo

The total value of the agreement with lenders includingCitigroup Inc. (C), Bank of America Corp. and Wells Fargo & Co. may grow to $40 billion if the next nine largest mortgage servicers sign on to the agreement, Donovan said. In a best-case scenario, if all banks participate fully, the deal might be worth $45 billion to homeowners and victims of foreclosure.

The settlement adds to a series of recently expanded government steps to protect consumers and encourage lenders to refinance homes and modify payment terms for homeowners facing foreclosure.

President Barack Obama this month proposed plans to expand loan modifications for delinquent homeowners to include some principal reductions through his administration’s Home Affordable Modification Program, or HAMP. Underwater homeowners would be able to refinance at current low interest rates through the Home Affordable Refinance Program, or HARP. Some of the refinancing plans require Congressional approval.

Under the administration’s Making Home Affordable program, $29.9 billion in aid had been pledged as of Jan. 30.

Buying in Bulk

Separately, Fannie Mae, the mortgage company under U.S. conservatorship, invited investors to apply for a new program to buy foreclosed homes in bulk to be managed as rental properties, under another program announced by the Federal Housing Finance Agency. The goal of that program is to reduce the inventory of foreclosures while providing rental homes to people who can’t qualify to buy or don’t want to own.

“No action, no matter how meaningful, is going to by itself entirely heal the housing market,” Obama said at an appearance with state attorneys general in Washington yesterday.“But this settlement is a start. And we’re going to make sure that the banks live up to their end of the bargain.”

Investors are likely to buy many of the foreclosed homes that come on the market to take advantage of low prices and demand for rentals, Zandi said. About 21 percent of home sales in December were investor purchases, according to the National Association of Realtors.

Manage as Rentals

Private equity funds including Los Angeles-based Oaktree Capital Management LP (OAKTRZ) and New York-based GTIS Partners announced plans in January to buy $2.5 billion of foreclosed single-family homes to manage as rentals, focusing on states with the highest number of foreclosures, such as California, Florida and Nevada.

“There’s pretty strong investor demand, particularly in some markets where prices have overshot,” Zandi said. “They’ve gone well below what you’d expect given incomes and rents.”

There remains a danger that “a wave of foreclosures” may destabilize the housing market, said Susan Wachter, professor of real estate and finance at the University of Pennsylvania’s Wharton School.

“The logjam has to be unleashed and it has been -- this will do that,” she said. “That’s a good thing. But then there needs to be methodical loan-by-loan determination of the best resolution.”

Federal and state officials announced this morning that the federal government and 49 state attorneys general – with Oklahoma as the lone exception – have reached a $25 billion agreement with the nation’s five largest mortgage servicers to address what authorities describe as “loan servicing and foreclosure abuses.”

After 16 months of investigation and negotiation, the federal-state group entered into what is the largest joint federal-state civil settlement in history.

The settlement agreement with the nation’s top five servicers – Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial (formerly GMAC) – provides financial relief to homeowners and establishes new homeowner protections.

“This historic settlement will provide immediate relief to homeowners – forcing banks to reduce the principal balance on many loans, refinance loans for underwater borrowers, and pay billions of dollars to states and consumers,” said HUD Secretary Shaun Donovan.

The settlement, however, does not preclude the government from pursuing criminal or civil claims outside of the agreement, and borrowers and investors can still pursue individual or class action suits against the banks for robo-signing grievances, according to a statement from Iowa Attorney General Tom Miller, head of the attorney general negotiating committee.

Deputy Attorney General Eric Holder also made clear that the settlement does not absolve the servicers from securitization activities – an issue of concern among several attorneys general throughout the negotiation process.

The settlement “preserves extensive claims related to mortgage securitization activities, including the claims that will be the focus of the new Residential Mortgage-Backed Securities Working Group,” Holder stated Thursday.

The Breakdown:

The $25 billion will be distributed in two ways: $20 billion is designated for financial relief to borrowers, and $5 billion in cash will go directly to federal and state government agencies.

HOPE NOW announced plans to reach out to military homeowners facing foreclosure.

Stakeholders representing the mortgage servicing industry, non-profit counselors, investors, regulators, and military members met in Washington, D.C. to strategize on ways to assist those in the military who are at risk of losing their home due to a permanent change in station and other issues.

John Dalton, President of the Housing Policy Council and former Secretary of the Navy, attended as a key panelist.

Respondents from a Fannie Mae National Housing Survey for January 2012 expressed expectations for home prices to increase by 1 percent over the next 12 months, and most Americans continue to expect no change in mortgage rates.

This marks the fourth month in a row consumer expectation was positive. 

“The Federal Reserve’s pledge to keep interest rates low beyond 2014, extending their prior time frame of mid-2013 announced in the summer, appears to have been reflected in the rising share of consumers expecting the rate to remain near record low levels for another year,” said Doug Duncan, VP and chief economist for Fannie Mae.

“At the same time, consumers expect home prices to rise over the next year, extending the streak of rising home price expectations to four months. If the employment market continues to strengthen, it is unlikely that the Fed

A foreclosure report released by CoreLogic Wednesday revealed that the number of homes in foreclosure is decreasing nationwide. The report included monthly data on foreclosures, foreclosure inventory, and 90-plus delinquency rates.

Completed foreclosures for 2011 totaled 830,000, compared to 1.1 million in 2010. The December 2011 completed foreclosures figure was also down to 55,000, compared to 67,000 in December 2010. 

Nationally, the number of loans in the foreclosure inventory decreased 8.4 percent in December 2011, compared to December 2010, which is a decline of about 130,000 properties.  Data from the report revealed 1.4 million homes, or 3.4 percent of all homes with a mortgage, were in the foreclosure inventory as of December 2011. 

A property is counted as foreclosure inventory when the mortgage servicer places the property into the foreclosure process. Foreclosure inventory is only measured against homes with an outstanding mortgage. About one-third of homeowners nationwide own their homes.

“The inventory of foreclosed properties has begun to shrink, and the pace at which properties are entering foreclosure is slowing. While foreclosure filings are being curtailed by a variety of judicial and regulatory constraints, mortgage servicers are completing REO sales faster than they are completing foreclosures,” Mark

An estimated 1.05 million homeowners received permanent loan modifications from mortgage servicers in 2011, according to year-end data released Tuesday by HOPE NOW.

That tally represents a 40 percent decline from the 1.76 million mods granted in 2010.

Of the more than 1 million loan mods completed last year, approximately 695,000 were done through servicers’ own proprietary programs, while 353,677 were through the government’s Home Affordable Modification Program (HAMP).

For the month of December, HOPE NOW reports there were approximately 80,000 loan modifications completed, which included 56,000 proprietary and 23,374 completed under HAMP.

HOPE NOW’s industry data shows that loan modifications outpaced foreclosure sales for the fourth consecutive year. In 2011, there were approximately 843,000 foreclosure

Data through the end of January released by Clear Capital Monday shows home prices in the U.S. are down 2.6 percent from a year ago.

The company’s rolling quarter assessment, which compares the four months through January 2012 to the previous three months, returned a 1.6 percent decline in home prices at the national level, after three months of stability.

Clear Capital says the culprit is the Midwest market, which saw a dramatic turnaround in momentum, losing 4.0 percent quarter-over-quarter, and marking the first time in seven months it has led the nation in quarterly losses. That compares to a loss of just 0.4 percent reported last month for the rolling quarter.

These shorter term declines pulled down the Midwest’s year-over-year returns to -5.2 percent. Clear Capital says this drop in values can be partly attributed to a 1.5 percent uptick in REO saturation in the region over the past quarter, from 29.5 percent to 31 percent.

Other regions of the country showed little change in prices, with quarter-over-quarter declines of less than 1.0 percent, according to Clear Capital’s report.

UPDATED to reflect statement issued by Iowa Attorney General Tom Miller late Monday evening.

The deadline for the 50 state attorneys general to sign onto the settlement negotiated between the committee headed by Iowa Attorney General Tom Miller and five large servicers was extended from Friday to Monday. Late Monday evening, Miller’s office issued a statement saying more than 40 states have agreed to participate in the settlement.

“This enables us to move forward into the very final stages of remaining work,” Miller said. “Federal and state officials, as well as representatives from the banks, continue to address matters that they must complete before finalizing any settlement.”

Miller declined to provide any further details on Monday’s developments.

More than 930,000 homeowners have received a permanent modification through the government’s Home Affordable Modification Program (HAMP), saving an estimated $10.5 billion in monthly mortgage payments, according to Treasury.

While this tally – nearly three years after the program’s launch – falls well short of the results initially promised by President Obama of helping 3 to 4 million homeowners restructure their loans, federal officials continue to tout a key success of HAMP as improving standards and processes within the industry.

Treasury’s latest report card on HAMP points out that HOPE NOW lenders have offered more than 2.6 million proprietary mortgage modifications from April 2009 – when HAMP was launched – through December 2011.

Officials also contend that HAMP ensures borrowers are fitted with sustainable modifications. Quarterly redefault data shows that after six months in the program, more than 94 percent of homeowners remain in their permanent modification.

During the month of December, 23,374 permanent HAMP modifications were granted by participating servicers, according to the Treasury report released Monday. Another 20,079 trial plans were started under HAMP.

Treasury notes in its report that eligible borrowers entering HAMP now have a high likelihood of earning a

Year-end data from CoreLogic shows home prices fell by 4.7 percent over 2011. It marks the fifth consecutive year the company has recorded an annual decline in residential property values.

CoreLogic performed a separate calculation, which illustrates just how big an impact distressed sales are having on home prices. The company excluded all short sale and REO transactions from 2011 and found that when the distress factor is taken out, prices declined by just 0.9 percent.

Commenting on the company’s latest results, Mark Fleming, CoreLogic’s chief economist said, “While overall prices declined by almost 5 percent in 2011, non-distressed prices showed only a small decrease. Until distressed sales

Each month of 2011, outstanding mortgage balances in the U.S. declined by an average of $30 billion, according to a recently released report from Moody’s Analytics and Equifax.

The report, authored by Christian deRitis, director of consumer credit economics at Moody’s, attributes the decline to defaulted loans being written off.

It will be at least three more days before the industry learns how many and which states have agreed to the robo-signing settlement that was proposed last week. The deadline for state attorneys general to opt in has been pushed from February 3 to February 6.

Geoff Greenwood, spokesperson for Iowa Attorney General Tom Miller, says at least one state requested an additional business day to come to a decision, so Miller moved the cut-off date to Monday. Miller is head of the negotiating committee for the states.

While terms of the current settlement proposal have not been disclosed, it’s expected that the agreement will include penalties against the nation’s five largest mortgage servicers in the range of $25 billion and will lay out procedural changes for foreclosure processing.

Should an agreement be reached, it would absolve Ally Financial, Bank of America, Citigroup, JPMorgan Chase,

President Obama on Wednesday outlined his proposal to allow millions more homeowners to cash in on today’s historically low mortgage rates.

Speaking at a community center in Falls Church, Virginia, the president issued a call to Congress to pass legislation to establish a streamlined refinancing program through the Federal Housing Administration (FHA) that would be open to all non-GSE borrowers with non-jumbo loans who have been keeping up with their mortgage payments.

The administration estimates the program could provide as many as 3.5 million borrowers with the opportunity to reduce their mortgage debt and would cost between $5 and $10 billion.

The cost of the new refi program would not add a dime to the national deficit, Obama said, as it would be paid for by imposing fees on financial institutions with more than $50 billion in assets.

This Financial Crisis Responsibility Fee has not yet been approved by lawmakers on Capitol Hill. The president has tried to push this same big-bank-tax through the channels twice before, in early 2011 and early 2010, but was unsuccessful.

The idea met with strong opposition from lawmakers and industry trade groups, who threatened to take legal action had the Financial Crisis Responsibility Fee passed.

Under the president’s proposal, any borrower with a mortgage that is not currently guaranteed by Fannie Mae or Freddie Mac can qualify for a refinancing through FHA if they:

• have been current on their payments for the past six months and have not missed more than one payment in the six months prior
• have a FICO score of at least 580
• have a loan that meets FHA conforming loan limits for their area
• are refinancing the mortgage on their principal residence

Borrowers will apply through a streamlined process which Obama says is designed to make it simpler and less expensive for both borrowers and lenders to refinance.

Borrowers will not be required to submit a new appraisal or tax return. To determine a borrower’s eligibility, a lender need only confirm that the borrower is employed.

Those who are not employed may still be eligible if they meet the other requirements and present limited credit risk. However, lenders will need to perform a full underwriting of these borrowers to determine whether they are a good fit for the program.

The president outlined additional steps to reduce program costs, including establishing loan-to-value (LTV) limits for qualifying loans. Obama says his administration will work with Congress to establish risk-mitigation measures which could include requiring lenders interested in refinancing deeply underwater loans (e.g. greater than 140 LTV) to write down the balance of these loans before they qualify.

Obama also proposed creating a separate FHA insurance fund designated for the new streamlined refinancing program. He says this will help FHA better track and manage the risk involved and ensure the program has no

“The administration believes that the mortgage servicing system is badly broken and would benefit from a single set of strong federal standards,” the White House said in a document outlining President Obama’s vision for how a servicing shop should be run.

The president on Wednesday introduced what he’s termed the Homeowner Bill of Rights – plainly defined principles that Obama says will ensure borrowers and lenders are playing by the same common-sense rules. 

At the top of that list is a simple, straightforward mortgage disclosure form so borrowers have a clear understanding of their loan. Obama told constituents in Falls Church, Virginia, where he unveiled the new Bill of Rights, that the Consumer Financial Protection Bureau is already making headway in its effort to replace overlapping and complex mortgage forms with a new shorter, simpler form to be used for all home loans.

Obama’s new set of standards mandate servicers provide homeowners with full and clear disclosure of all fees and penalties upfront, with any changes disclosed before they go into effect.

It also requires servicers and investors to implement standards that minimize conflicts of interest and facilitate communication between multiple investors and junior lien holders, so that loss mitigation efforts are not hindered.

Carved out within the Homeowner Bill of Rights is a series of rules to ensure homeowners at risk of foreclosure are provided with the assistance they need to save their homes.

Obama’s proposal calls for early intervention by servicers to contact every homeowner who has demonstrated hardship or fallen behind on their payments, and provide them with a comprehensive set of options to avoid foreclosure. The president’s directive states that every distressed homeowner must be given “a reasonable time” to apply for a modification.

The Federal Housing Finance Agency (FHFA) on Wednesday issued a notice to investors interested in buying government-owned REOs in bulk for use as rental properties, encouraging them to register with Fannie Mae in order to pre-qualify as an eligible bidder.

FHFA says the first pilot transaction will be announced in the “near-term.” During the pilot phase, Fannie Mae will sell off pools of various types of assets, including rental properties, vacant properties, and nonperforming loans, with a focus on the hardest-hit areas.

These pilot sales represent the initial stage of the government’s Real-Estate Owned (REO) Initiative announced in August 2011, when FHFA issued a Request for Information (RFI) seeking input on options for selling single-family REO properties held by Fannie Mae, Freddie Mac, and the Federal Housing Administration (FHA). The agency received more than 4,000 responses from industry stakeholders.

The REO Initiative will allow qualified investors to purchase pools of foreclosed properties from government housing agencies with the requirement that the properties be rented out for a specified number of years.

“This is an important step toward increasing private investment in foreclosed properties to maximize value and

The national vacancy rate among single-family non-rental homes fell to 2.3 percent in the fourth quarter of 2011, according to data released Tuesday by the U.S. Census Bureau.

That’s down from 2.7 percent at the beginning of last year, and the lowest homeowner vacancy rate since early 2006.

Undoubtedly, the decline in vacancies is an offshoot of fewer foreclosures in 2011 combined with a slight uptick in home sales for the year.

RealtyTrac reports foreclosure starts were down 39 percent from 2010. And while new home sales had their worst showing in recorded history, the National Association of Realtors tracked a 1.7 percent annual increase in existing-home sales.

Paul Diggle, property economist with Capital Economics, says it’s another sign that excess inventory – at least the visible inventory – is slowly but surely being cleared. It

“We’ve reviewed the details of the latest settlement proposal from the banks, and we believe it is inadequate for California,” Shum Preston, spokesperson for the California Justice Department told DSNews.com.

“Our state has been clear about what any multistate settlement must contain: transparency, relief going to the most distressed homeowners, and meaningful enforcement that ensures accountability. At this point, this deal does not suffice for California,” Preston said.

“With about one out of every five of the nation’s foreclosures being in California, the value of any settlement without the inclusion of the Golden State may not be of interest to the banks,” according to James Frischling, president and co-founder of NewOak Capital, an advisory, asset management, and capital markets firm.

Frischling says without a release from California, “[t]he liabilities they [the servicers] face would still be massive, so California is the 800 pound gorilla in the room that must be part of any settlement.”

The settlement terms could include as much as $25 billion in penalties assessed against the servicers, which would be used to fund principal writedowns and mortgage modifications and be used to compensate borrowers impacted by servicer errors.

It’s been reported that smaller servicers may also join the settlement, which would release them from future litigation by the state and federal officials involved on matters related to past documentation and affidavit issues.

The Washington Post reports North Carolina Bank Commissioner Joseph Smith has been tapped to ensure that the terms of the settlement are carried out. Smith was President Obama’s pick to lead the Federal Housing Finance Agency (FHFA) back in November 2010, but his nomination failed to win approval in the Senate.

The company also reported that delinquencies at the end of 2011 were down nearly 8 percent from the previous year and were 25 percent below their peak in January 2010.

The foreclosure inventory, on the other hand, remains near historic highs, at 4.11 percent as of the end of December.

But the agency says it will reassess the investor incentives now being offered, taking into consideration the number of eligible loans, operational costs to implement such changes, and the potential effects of incentivizing borrowers to remain current.

Among the other changes announced, borrowers who are struggling because of debt beyond their mortgages, such as second liens and medical bills, will be eligible for an alternative program evaluation with more flexible debt-to-income criteria.

In addition, Treasury will expand eligibility to include investor properties that are currently occupied by a tenant as well as vacant properties slated for rental use.

Tim Massad, Treasury’s assistant secretary for financial stability says single-family homes serve an important function as affordable rental housing, and foreclosure of investor-owned homes has disproportionate negative effects on low- and moderate-income renters, as well as communities.

The deadline for HAMP will be extended for an additional year through December 31, 2013.

To date, HAMP has helped approximately 900,000 struggling homeowners permanently modify their mortgage loans, providing them with a median savings of more than $500 a month.

Massad says the administration is committed to a multi-pronged effort to support American homeowners and the housing market recovery.

In addition to foreclosure prevention initiatives such as HAMP, Massad says the federal government plans to focus on transitioning foreclosed properties into rental housing, making it possible for responsible homeowners to refinance, and providing hard-hit states with resources to develop targeted relief programs.

the ripple effect that has on sales of foreclosed properties that might have been improperly processed.

“The sooner the market gets more clarity about accepted foreclosure procedures, primarily through the long-promised settlement between multiple states attorneys general and major lenders, the sooner the market can more efficiently dispose of these distressed properties,” according to Moore.

Even with the hurdles to selling foreclosures, distressed sales continue to represent a historically high percentage of all sales, Moore explained. He points to 2005 and 2006, when foreclosure sales accounted for less than 5 percent of all sales nationwide.

According to RealtyTrac’s analysis, a total of 92,824 pre-foreclosure homes – typically short sales – sold to third parties in the third quarter of last year.

Pre-foreclosures had an average sales price nationwide of $191,119, a discount of 24 percent below the average sales price of homes not in foreclosure. These properties took an average of 318 days to sell after receiving an initial foreclosure notice.

Pre-foreclosure sales increased sharply on an annual basis in Michigan (up 68 percent), North Carolina (up 44 percent), Ohio (up 43 percent) and Georgia (up 35 percent). RealtyTrac reports that pre-foreclosure sales outnumbered REO sales in several states in the third quarter, including Colorado, Florida, New Jersey, and New York.

A total of 128,712 bank-owned REOs sold to third parties in the third quarter, according to RealtyTrac’s report. They carried an average sales price of $146,437 – 42 percent below non-foreclosure prices – and had an average time-on-market of 193 days after being foreclosed.

Nevada, California, and Arizona posted the nation’s highest percentage of foreclosure sales during the third quarter.

At the national level, the inventory of for-sale single-family homes, condominiums, townhouses, and co-ops dropped by 22.29 percent over the last year, according to new statistics released by Realtor.com.

The site concludes that at the close of 2011, there were 1.89 million single-family homes on the market, down 6 percent from just one month prior.

The median age of the inventory in December increased by 7.02 percent from November, but Realtor.com says the

The analytics firm notes the average credit score required to attain a mortgage loan is 700. While this is higher than scores required prior to the crisis, it is constant with requirements one year ago.

Additionally, a Fed Senior Loan Officer Survey found credit requirements in the fourth quarter were consistent with the past three quarters.

The study, provided by Campbell Surveys and Inside Mortgage Finance as part of the companies’ monthly HousingPulse Tracking Survey, found that this low-bid-winning dynamic is particularly true for distressed properties because mortgage servicers selling foreclosed or REO homes generally prefer transactions that can settle within 30 days.

The total share of distressed properties in the housing market in December, as represented by the HousingPulse Distressed Property Index (DPI), continued at a high level of 47.2 percent, based on a three-month moving average. December marked the 24th month in a row that the DPI has been above 40 percent.

Cash buyers, many of them investors, are putting downward pressure on home prices across the board, according to the HousingPulse Survey.

The long-awaited housing recovery is beginning to blossom, according to industry experts taking a look at recent existing-home sales.

While admitting home sales “are still very low,” Paul Dales, chief economist at Capital Economics, says “it is clear that housing recovery is now well underway.”

The evidence: home sales have been on the rise for the past three months, posting a 5 percent increase in December.

Lawrence Yun, chief economist for the National Association of Realtors (NAR), concurs with Dales’ assessment, saying “The pattern of home sales in recent months demonstrates a market in recovery.”

Yun suggests consumers are gaining confidence from “record low mortgage interest rates, job growth and bargain home prices.”

In addition to the 5 percent increase in December, NAR reported a 1.7 percent annual increase in existing-home sales in 2011, a total of 4.26 million homes for the year.

The Federal Housing Finance Agency (FHFA) says as of June 30, 2011, Fannie Mae and Freddie Mac held nearly 3 million first lien mortgages in which the borrower owed more on the loan that the home was worth.

FHFA estimates principal forgiveness for all of these mortgages would require funding of almost $100 billion to pay down the loans to the value of the homes securing them.

In response to a request from members of Congress, FHFA on Monday publicly disclosed the analysis that led the agency to exclude principal forgiveness from the menu of loss mitigation tools available to the GSEs.

Reps. Elijah E. Cummings (D-Maryland) and John F. Tierney (D-Massachusetts) have been pressing for a subpoena to be issued to obtain this data from FHFA in order to evaluate the agency’s reasoning for prohibiting principal reductions on Fannie and Freddie’s loans.

The lawmakers cited public statements by high-level officials at the Federal Reserve, championing principal forgiveness as a viable solution for heading off defaults and foreclosures, and they questioned FHFA’s determination that reducing principal balances would not serve the best interests of the GSEs, taxpayers, and the housing market at large.

Edward DeMarco, acting director of FHFA, responded with a lengthy letter, supplemented with data charts, equations, and the findings of three separate staff analyses prepared over the past year.

He said FHFA did not conclude that “principal reduction never serves the long-term interest of the taxpayer when compared to foreclosure,” as the congressmen alleged. 

In considering principal forgiveness, FHFA compared taxpayer losses from principal forgiveness versus principal

As robo-signing reviews reach completion, servicers are beginning to work through some of their foreclosure backlogs, according to a third-quarter report from Moody’s Investors Service.

Moody’s reports that as servicers work through the bulk of their delinquencies, modifications are on the decline. Servicers are now turning to loss mitigation alternatives, including short sales and deeds in lieu, Moody’s says.

Moody’s calculated a decline in “total cure and cash flowing,” measuring successful loss mitigation efforts in the third quarter. The decline “resulted from servicers having worked through significant portions of their eligible 60-plus delinquencies,” according to Moody’s.

Citi, GMAC, and Chase experienced the greatest decreases in cures.

Data released Thursday by Freddie Mac shows the average rate for a 30-year fixed mortgage edged down to 3.88 percent (0.8 point) for the week ending January 19, to hit a new all-time low.

The previous record low for the 30-year rate was 3.89 percent, set just the week prior. Last year at this time, the 30-year fixed-rate mortgage was averaging 4.74 percent. It’s now come in below the 4.00 percent mark for seven consecutive weeks.

The 15-year fixed-mortgage rate was the only product included in Freddie Mac’s regular weekly survey to show upward movement, albeit by only one basis point. The

Delinquencies were unchanged between the months of November and December, but declined 7.7 percent from December 2010. LPS puts the mortgage delinquency rate, including loans 30 or more days past due but not in foreclosure, at 8.15 percent.

Foreclosures declined by 1.3 percent from November to December and are 1.0 percent below the level reported at the end of 2010. By LPS’ calculations, the national foreclosure inventory rate is 4.11 percent.

Of the 6,167,000 mortgages going unpaid in the United States, LPS says 2,066,000 are in foreclosure. The remaining 4,101,000 haven’t made it that far down the pipeline, even though 1,792,000 are 90 or more days delinquent.

States with the highest percentage of non-current loans, combining delinquencies and foreclosures, included Florida, Mississippi, Nevada, New Jersey, and Illinois as of the end of December.

The lowest percentage of non-current loans can be found in Montana, Wyoming, South Dakota, Alaska, and North Dakota.

He points out that households are paying off their debts and at the same time accessing credit more easily, with some even adding Home Equity Lines of Credit in the third quarter of last year – the first such movement for these second-lien mortgage products since the financial crisis began.

Fleming cites a quarterly survey by the New York Federal Reserve Bank, which shows total household debt continues to decline. At the same time, consumer sentiment rebounded strongly in the latter part of 2011, posting a six-month high in December – an indication that consumers’ confidence in the strength of the economy is growing, according to Fleming.

Most housing statistics basically moved sideways in the latter part of 2011, but Fleming finds several positives in the numbers. Although market indicators are coming off of very low levels, he notes that both existing-home sales and single-family housing starts have begun to increase, homebuilder confidence is improving, and affordability is at an all-time high.

Putting all of these statistics together suggests that while there is a very long way to go, the housing market is likely to sustain these upward movements in 2012, according to Fleming.

“While we cannot say with a high degree of certainty what 2012 has in store for us, indications based on the latter part of 2011 are that both the broad economy and the housing market are moving toward positive growth in 2012,” Fleming said.

He concedes that some impediments do exist, including slower global economic growth, a recession in Europe, and fiscal and political uncertainty in the United States.

But Fleming says when you look at the big picture, “we are bullish on the prospect of improving economic performance in 2012 from 2011.”

Freddie Mac expects a 2 percent to 5 percent increase in home sales in 2012 amid moderate economic growth over the year, according to the GSE’s U.S. Economic and Housing Market Outlook for January.

Contributing to the anticipated rise in home sales are expectations that mortgage rates will remain near their current deflated levels and consumer confidence will pick up slightly.

Freddie Mac expects the economy to grow about 2.1 percent over the first quarter of this year and real gross domestic product growth to total 2.7 percent for the year.

Approaching the year with “cautious optimism,” Freddie Mac’s chief economist, Frank Nothaft, says, “There are some positive signs in the job market and consumer confidence; housing is starting to raise hopes for continued gradual economic recovery.”

The U.S. economy is projected to grow 2.3 percent for the year, according to Fannie Mae’s Economics & Mortgage Market Analysis Group.

The 2009 record was set with the sale of 46,879 homes, and 2011 surpassed this milestone with 48,186 sales.

“We believe that re-deploying vacant REO properties into rental homes is a way to help revitalize the housing market,” said Bruce Rose, Carrington’s founder and CEO.

Rose contends that reducing the number of distressed properties for sale will stabilize home prices and help neighborhoods that have been damaged by foreclosures begin the restoration process.

The bank-owned homes purchased through the venture will be managed as rental properties by Carrington. The company notes that there is growing market demand for rental units – demand that can be met through the industry’s effort to remove distressed properties from the sales inventory and stabilize the housing market.

Carrington currently manages over 3,000 single-family rental homes under Fannie Mae’s Tenant-in-Place and Deed-for-Lease programs. The company has developed a national field services network along with a proprietary software system that allows for centralized property monitoring and management.

“Carrington’s REO rental program is an excellent fit for our investment strategy, which includes a broad range of debt and equity investments in real estate-related investments and restructurings,” said John Brady, Oaktree’s head of global real estate. 

“We believe that this is not only a unique investment opportunity with few qualified large-scale competitors, but one that also has the potential to have a broader positive effect on the housing market and the overall economy,” Brady added.

The banks and attorneys general are allegedly “very close” to a settlement, Reuters reported Wednesday, referencing remarks from HUD Secretary Shaun Donovan at a U.S. Conference of Mayors meeting.

The settlement currently on the table would assist about 1 million homeowners in obtaining principal reductions and would provide “direct compensation” to others, according to Reuters.

The settlement “would both fix the servicing problems, but also help over a million families around the country stay in their homes,” Donovan said, according to Reuters.

As settlement negotiations continue, a subset of 12 attorneys general reportedly met last week to discuss their own investigations into mortgage servicing and foreclosure practices, according to a Tuesday Bloomberg article.

California, New York, and Massachusetts attorneys general – all of whom left settlement negotiations to pursue their own investigations – were present.

ability Office (GAO) responded and concluded that bank walkaways, though not a common practice nationwide, are focused in economically struggling areas and pose significant health, safety, and financial concerns.

Such a practice, according to Brown, should not be supported by the federal government.

“Too many Wall Street banks are walking away from too many Ohio Main Street communities,” Brown said. “And when they do, they leave behind homes that are often vandalized and left to crumble.”

Brown says responsible homeowners are seeing their property values plummet as abandoned homes in their neighborhood are left to decay. He cites a study by the Federal Reserve Bank of Cleveland which found that each vacant property in Cleveland could decrease the sales price of homes within 500 feet by about 3.1 percent.

Brown says the OCC’s guidance only serves to legitimize a practice that is unfair to homeowners and local communities. He’s calling for the agency to adopt important reforms to mitigate the damage caused by homes abandoned prior to foreclosure.

Where foreclosure is initiated on a property that the bank ultimately decides to release, Brown asserts the OCC should require servicers to complete the foreclosure and finance the cost of demolishing the home, or they should be required to transfer title of abandoned properties to governmental or nonprofit entities, such as land banks.

“Strong standards from the OCC will send a message that Wall Street must share in the responsibility to end the foreclosure crisis,” Brown wrote to Walsh.

The senator says preventing banks from walking away from properties will give servicers greater incentive to avoid unnecessary foreclosures and act in the best interest of the nation’s communities.

Ten states saw vacancies go up by 70 percent or more, largely as a result of high foreclosure rates. Those with the largest increases over the last decade were Nevada (126 percent), Minnesota (100 percent), New Hampshire (99 percent), Arizona (92 percent), and Florida (90 percent). Georgia, Michigan, Colorado, Rhode Island, and Massachusetts also experienced increases above 70 percent.

The elevated number of vacant homes carries with it a hefty price tag for lenders that must resume ownership after foreclosure. GAO found that in 2010, Fannie Mae and Freddie Mac reimbursed servicers and vendors over $953 million for property maintenance costs.

However, it’s local governments, many of which are already dealing with depleted funds, that are feeling “significant” pressures from the rise in home vacancies, according to GAO.

The agency notes that other studies have concluded vacant foreclosed properties may reduce prices of nearby homes by as much as $17,000 per property. As a result, municipalities report being out millions of dollars in lost tax revenues. That’s in addition to extra expenditures to put staff, systems, and programs in place to ensure local property ordinances are met, as well as costs associated with addressing public safety issues posed by extended periods of vacancy or improper property maintenance.

In conducting its analysis, GAO interviewed local officials and representatives of community groups to gauge the causal effect of foreclosures on vacancy numbers, the types

Schneiderman’s office will distribute the funding to nonprofit and legal aid services aimed at helping homeowners facing foreclosure.

Schneiderman released a request for applications from legal organizations aiming to help struggling homeowners last week.

administer all aspects of these loans — from collecting payments, to modifying troubled loans, to proceeding with foreclosures and property liquidations when borrowers default,” S&P said in its report.

“Ultimately, a mortgage servicer’s success from an investor perspective boils down to defaults within its portfolio of mortgages and the speed and volume of any recoveries it can achieve on those loans,” S&P noted.

The ratings agency noted that both foreclosure frequencies and loss severities are functions of a myriad of factors, and many of those factors are out of the servicer’s control — including the loan-to-value (LTV) ratio, state-specific foreclosure requirements, and the quality of the underwriting at origination, as well as changing property valuations in a volatile market.

For this reason, S&P looked at each servicer’s speed through the foreclosure and resolution process against averages for the related states and loan types, as well as the success of the servicer’s loan modification program.

Long foreclosure periods typically increase losses due to the interest advanced each month, as well as taxes and insurance that may need to be paid and property preservation costs.

To complement its analysis of liquidation speeds, S&P also assessed the success of each servicer’s loan modification programs. Overall, the agency found that “loan modifications were successful more often than not.” On average, S&P found about 60 percent of modified loans were still current 12 months after being modified.

S&P says the extent to which servicers are able to modify loans — and the terms of those modifications — can vary based on servicing agreements and government program rules.

“While these factors limit the efficacy of modification success rates as a measure of a servicer’s overall success, we believe that paired with liquidation speeds, these factors help provide a more complete picture of the merits of the various servicers’ strategies,” S&P said.

The company reported net income of $3.7 billion for the fourth quarter of 2011, compared with $4.8 billion for the fourth quarter of 2010.

Although the numbers paint a picture of a company in full recovery mode from the financial crisis and recession, JPMorgan’s latest results missed analysts’ expectations as

The exception was Oregon, where foreclosure starts rose by 5 percent.

Foreclosure sales in the West coast states were mixed but “down far less than we expected given lender announcements of holiday moratoriums,” ForeclosureRadar reported.

Foreclosure sales rose in California and Washington and fell in Oregon, Nevada, and Arizona.

The ratings agency perceives the risk as greatest in the prime jumbo sector, where more than half of the borrowers, who have so far been making their mortgage payments regularly, are now underwater on their mortgages. Moody’s says negative equity among prime jumbo borrowers has “risen significantly” since late 2010.

The subprime sector, on the other hand, faces the lowest potential for significant performance deterioration in 2012, namely because more of its weaker borrowers have already defaulted, leaving less room for losses to increase substantially.

Moody’s says the risk of performance deterioration in the Alt-A and option ARM sectors is less than that of the jumbo but greater than that of the subprime sectors, with option ARM loans facing the greater risk of strategic defaults.

“The practices of the servicers will continue to play a major role in determining loan performance,” commented William Fricke, a Moody’s VP and senior credit officer.

“Although modifications that include principal forgiveness are a key way to prevent strategic defaults, we continue to expect servicers to be reluctant to employ principal forgiveness, given that the GSEs do not permit it, and that many private label RMBS carry provisions limiting the practice.”

Servicing is undergoing a transformation, however, as servicers establish single points of contact for delinquent borrowers and increasingly transfer servicing to special servicers – both of which Moody’s considers to be credit positives.

The ratings agency expects the issuance of private-label RMBS to be modest in 2012, owing to GSE dominance and regulatory uncertainty. 

The deals that do take place, Moody’s believes, will feature more comprehensive reviews of originators, better quality and more reliable loan level data, and strong mechanisms for enforcing breaches of representations and warranties (R&Ws).  They will also better address legal issues relating to foreclosure challenges.

Foreclosure filings in the Atlanta area in 2011 were 2 percent higher than in 2009.

Atlanta took the No. 12 spot on the top 20 list for the year with a 3.69 percent foreclosure rate.

The year-to-date decline in October was 2.7 percent.

According to preliminary data, LPS estimates prices in November declined about 0.5 percent.

While LPS has tracked persistent declines since the market peak in June 2006, its analysts report price declines have slowed in the past few years.

The greatest declines were seen between June 2007 and December 2008 when prices fell $56,000.

Since then prices have fallen about $26,000, and declines have been interspersed with small seasonal upticks. These upticks, however, have not played an impactful role in price trends. Since 2009, prices have fallen an average of 4.2 percent per year.

Last year’s tally of nearly 1.9 million properties with a foreclosure filing seems staggering, but it’s actually the lowest reported since 2007. It’s 34 percent below 2010, 33 percent below 2009, and 19 percent below the 2008 total.

RealtyTrac’s newly appointed CEO Brandon Moore describes foreclosure activity last year as being in “full delay mode.”

“The lack of clarity regarding many of the documentation and legal issues plaguing the foreclosure industry means that we are continuing to see a highly dysfunctional foreclosure process that is inefficiently dealing with delinquent mortgages – particularly in states with a judicial foreclosure process,” Moore said.

These delays, however, may be coming to an end. Moore says there were strong signs in the second half of 2011 that indicate lenders are finally beginning to push stalled foreclosures through in select local markets.

“We expect that trend to continue this year, boosting foreclosure activity for 2012 higher than it was in 2011, though still below the peak of 2010,” Moore said.

Despite signs that some markets are experiencing a pickup in foreclosures, RealtyTrac’s analysis shows that processing timelines continued to increase. 

With unemployment forbearance, the servicer reduces or suspends monthly payments for a specified period for a borrower who is unemployed.

With the new guidelines, the servicer can approve an unemployment forbearance term of six months without

The paper, titled Foreclosure Mediation: Emerging Research and Evaluation Practices, draws from a March 7, 2011 workshop put on by the Justice Department’s Access to Justice Initiative, a panel established in 2010 which works to ensure the U.S. justice system remains accessible and fair to all, irrespective of wealth and status.

The workshop was attended by dozens of foreclosure mediation program stakeholders and researchers. Tuesday’s report summarizes the workshop proceedings and shares recent research and resources for foreclosure mediation.

“The loss of a home to foreclosure can be devastating to a family,” said Mark Childress, who heads the Access to Justice Initiative as senior counselor.

“The report released today compiles the best available research on foreclosure mediation programs and serves as an important resource for existing programs around the

Foreclosure starts, on the other hand, declined in November from 209,000 to 166,000.

Completed foreclosure sales rose from 64,000 in October to 71,000 in November.

About 68 percent of proprietary modifications completed in November reduced principal and interest payments for borrowers, and about 66 percent lowered principal and interest payments by at least 10 percent.

About 83 percent of proprietary modifications were fixed-rate modifications with an initial fixed period of at least five years.

“There are more alternatives to foreclosure than ever before for homeowners through federal programs, proprietary modifications, and state level initiatives such as Hardest Hit Funds,” said Faith Schwartz, executive director of HOPE Now.

“Mortgage servicers and non-profit, housing counselors are using all tools at their disposal to find options that fit each individual homeowner’s situation whenever possible,” Schwartz said.

According to Schwartz, the industry continues to emphasize “improving the customer experience through enhanced technology, single point of contact and leveraging all tools available to assist with foreclosure prevention, which in some cases includes graceful exits.”

HOPE NOW plans to host homeowner outreach events in several cities in the first quarter of 2011, including: Charlotte, North Carolina; Miami and Tampa, Florida; Las Vegas, Nevada; and Sacramento and Los Angeles, California.

Treasury says borrowers now entering HAMP have a better chance of earning a permanent modification and realizing long-term success. Eighty-three percent of eligible homeowners that signed on to HAMP since June 2010 have received a permanent modification, with an average trial period of 3.5 months.

Treasury’s report stressed that the latest mortgage performance report from the Office of the Comptroller of the Currency found that HAMP has proven more sustainable for homeowners than industry modifications. Because of HAMP’s emphasis on affordability relative to a homeowner’s income and successful completion of a trial payment period, the OCC says 70.5 percent of HAMP-modified loans remain current, versus 57.6 percent of other proprietary modifications.

In releasing the latest numbers, Raphael Bostic, HUD assistant secretary, said when you compare today’s data to market data from 2009, “…it’s clear that we’ve made important progress in recovering from this housing crisis.”

Treasury’s report indicates there are 891,542 more borrowers who are currently delinquent and eligible for HAMP assistance.

Bostic says with so many homeowners still struggling to pay their mortgages, “[t]here is still a lot of work to do.”

This marks the fifth consecutive week the 30-year rate has come in below the 4.00 percent mark. To put things into perspective, last year at this time, it was averaging 4.77 percent.

The 15-year fixed-rate averaged 3.23 percent (0.8 point) in Freddie Mac’s survey this week, down from 3.24 percent the week prior.

“We continue to be consistent in saying that the recovery will be a lengthy and gradual one,” he said.

Throughout 2012, Veros expects the strongest markets to experience a 4 percent price increase and the weakest markets to experience 5 percent to 6 percent decreases.

The strongest markets are located in the Great Plains and include North Dakota, South Dakota, Nebraska, Iowa, Texas, and Louisiana.

Fargo and Bismark, North Dakota are projected to see the greatest appreciation over the year, rising 3.5 percent and 3.3 percent respectively.

North Dakota is particularly well positioned for price appreciation due to its low unemployment rate of 3.4

Should the valuation company’s predictions ring true, it would be the first time since 2006 that the change in annual home prices has landed in positive territory.

Data released by Clear Capital Monday shows year-over-year, national home prices were down 2.1 percent in 2011. The company says movement in home prices began to stabilize somewhat during the latter half of the year and REO sales as a percentage of total home sales began to decline, which helped to moderate depreciation for the year overall.

In 2012, Clear Capital is forecasting U.S. home prices to show continued stabilization with a slight gain of 0.2 percent across all markets. That would put national home prices near levels not seen since 2001.

“Overall, 2011 was a relatively quiet year for U.S. home prices compared to the last five years,” said Dr. Alex Villacorta, director of research and analytics at Clear Capital. “With national prices down a little more than two percent for the year and sitting at their lowest point since 2001, our projections show that the current balance the market has found will continue through 2012.”

According to Clear Capital, the importance of micro-market analysis becomes plainly apparent as the 2012 forecast is for a flat U.S. market, but only 40 percent of individual markets (20 of 50) are projected to be stable.

Individual markets reacting to their local economic drivers will exhibit a wide range of performance levels, Dr. Villacorta explained.

When looking at distinct metro market areas, it turns out only 24 percent showed signs of stabilization in 2011, while the others are still moving more dramatically higher or lower, Villacorta explained.

“What’s most interesting is that the lower segments of appreciating markets are driving much of the current price growth,” Villacorta said. “In places like Florida, which have historically been hard hit, we are now seeing

New data released by Lender Processing Services (LPS) shows mortgage delinquencies at the end of November 2011 were nearly 25 percent below their January 2010 peak.

LPS says over that period, the number of noncurrent mortgages was slashed by nearly a quarter simply because fewer borrowers were falling behind on their payments – a trend which dominated 2010 and the first quarter of 2011.

Unfortunately, the company says that trend has come to an end. LPS puts the national delinquency rate at 8.15 percent as of the end of November.

The trend toward fewer loans becoming delinquent appears to have halted, according to LPS. At the same time, the company says new problem loans – those loans seriously delinquent as of the end of November that were current six months prior – have not improved significantly in the last year.

“This degree of stagnation indicates that while the situation is not getting markedly worse, it is not improving either, and inventories of troubled loans remain significantly higher than pre-crisis levels across the board,” LPS explained in its November Mortgage Monitor report.

LPS’ mortgage performance data also showed both new and repeat foreclosure starts dropped sharply in November, down nearly 30 percent from the month prior.

As late-stage delinquencies in the pipeline still number close to 2 million, LPS says the sharp drop is more indicative of the impact of ongoing document reviews, additional state legislation, and new regulatory requirements rather than a shift in trend.

Previously, servicers could offer up to three months of forbearance without payment on Freddie Mac loans or up

it can be difficult for an investor to assemble enough geographically proximate properties to achieve efficiencies of scale with regard to the fixed costs of a rental program.

Fannie Mae, Freddie Mac, and FHA together hold about half of the outstanding REO inventory, and Fed officials have identified specific markets with large concentrations of government-owned REOs, where bulk sales to investors make sense.

There are about 60 metropolitan areas that each has at least 250 REO properties currently for sale by the GSEs and FHA.

Atlanta has the largest concentration with about 5,000 units. The next-largest inventories are in Chicago; Detroit; Phoenix; Riverside, California; and Los Angeles, each with between 2,000 and 3,000 government-owned REOs for sale.

The Fed’s whitepaper also points out that the number of properties currently in the foreclosure process is more than four times larger than the number of properties in REO inventory, with similar geographic distribution. If recent trends continue, the share of REO inventory held by the GSEs and FHA should increase, according to Fed officials.

The Federal Housing Finance Agency (FHFA) released a request for information in August of last year to solicit ideas from market participants on ways to effectively sell off pools of properties to investors who will employ an REO-to-rental strategy. The agency is currently reviewing more than 4,000 responses.

An interagency group in which the Federal Reserve is participating is considering issues related to the design of a program that would facilitate REO-to-rental conversions.

The Fed’s 26-page whitepaper addresses a host of other issues that could potentially hinder such a program, as well as other facets of today’s housing market that are holding back a recovery.

The CFPB has the authority to oversee nonbank mortgage companies no matter their size, and assess whether they are conducting their businesses in compliance with federal consumer financial laws, such as the Truth in Lending Act (TILA) and the Equal Credit Opportunity Act (ECOA).

Officials say the CFPB’s approach to nonbank examination will be the same as its approach to bank examination.

The bureau released an 800-page manual last October, detailing its examination procedures for both bank and nonbank entities. The guide pays particular attention to reviews of mortgage servicing practices – an area that CFPB officials have repeatedly referenced as a priority for their examiners.

The CFPB says it may also require nonbanks to file certain reports with its office, review consumer-facing marketing material, and inspect compliance systems and procedures as part of its review process.

According to the CFPB, its examiners will “in general” notify a nonbank in advance of an upcoming examination, but that doesn’t completely rule out unannounced visits.

The CFPB says when considering whether and how to supervise particular nonbanks, the bureau will take into account several factors, including the nonbank’s volume of business, types of products or services, and the extent of state oversight.

CFPB officials intend to coordinate with other federal and state regulators in order to allocate resources appropriately and minimize burdens on the nonbanks, the bureau explained.

The CFPB says it would like to maintain an ongoing dialogue about its supervision program and is requesting comments or feedback through its website.

return the forms by the end of April to be considered for review.

Those who did not receive a letter may request information and forms by visiting IndependentForeclosureReview.com, or calling 888.952.9105.

The reviews, which were mandated by the OCC in April, “will determine whether individuals suffered financial injury and should receive compensation or other remedies due to errors or other problems during their home foreclosure process,” stated the OCC in a press release Wednesday.

According to the release, those who were protected by bankruptcy, under the protection of the Servicemembers Civil Relief Act, performing according to a modification agreement, and those whose mortgage balances were more than they owed at the time of foreclosure could receive remunerations from their servicers.

Instances in which fees or monthly payments were inaccurately calculated may also require compensation from servicers.

The OCC’s advertisements made their way to the public through 7,000 small newspapers and 6,500 local radio stations.

Trepp “view[s] this as the first of a six to twelve month stretch where the rate could increase by 75 basis points in aggregate,” as loans originated in 2007 begin reaching their balloon dates.

Multifamily properties continue to fare worst among major categories of CMBS properties, despite a 61 basis point drop over the month of December. The rate stood at 15.57 percent at the end of the year.
Multifamily delinquencies are also down from one year ago when the rate was 16.48 percent.

Lodging ranked second for delinquency rate at 12.20 percent with industrial properties following closely behind at 12.03 percent.

Industrial properties saw the largest year-over-year increase in delinquencies, rising 3.06 percent from December 2010 to December 2011.

Office and retail properties posted the lowest delinquency rates at 8.97 percent and 7.85 percent, respectively in December. Both experienced gains over the month of December.

However, retail properties are in line with their rate one year ago, which was 7.86 percent.

Office properties are up over the year from 6.93 percent in December 2010.

Among the 100 largest metropolitan areas, serious delinquencies – those 90 days or more past due or in foreclosure – declined from 10.4 percent to 9.3 percent from its December 2009 peak to June 2011.

The decline in serious delinquencies can be attributed to a decline in delinquent loans, according to Foreclosure-Response.org, which states delinquencies fell from 5.5 percent at the end of 2009 to 3.7 percent in mid-2011.

Areas experiencing higher rates of serious delinquencies include Florida, California and some areas of New Jersey, the Great Lakes region, and the South.

stability and we must make every effort that to promote recovery in every responsible way we can.”

According to FHA, the waiver contains strict conditions and guidelines to prevent predatory property flipping in which properties are quickly resold at inflated prices to unsuspecting borrowers.

Among these conditions, all transactions must be arms-length, with no link between the buying and selling parties.

In addition, in cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will apply only if the lender meets specific conditions, and documents the justification for the increase in value.

FHA’s property-flipping waiver is limited to forward mortgages, and does not apply to the agency’s Home Equity Conversion Mortgage (HECM) for purchase program.

Since the original waiver went into effect on February 1, 2010, FHA has insured nearly 42,000 mortgages worth more than $7 billion on properties resold within 90 days of acquisition.

The agency says its own research has found that in today’s market, acquiring, rehabilitating, and reselling foreclosed properties to prospective homeowners often takes less than 90 days.

As a result, FHA says prohibiting the use of its mortgage insurance for a subsequent resale within 90 days would adversely impact the willingness of sellers to consider offers from potential FHA buyers, namely because they would be required to cover holding costs and the risk of vandalism that comes with allowing a property to sit vacant over a 90-day period of time.

clear that prices don’t need to fall further,” Capital Economics says.

Nondistressed home prices in particular seem to have bottomed out. While home prices declined 4 percent this year, prices of nondistressed homes fell only 0.5 percent.

Having reached the bottom, however, prices will not jump far in the new year. Capital Economics predicts national home prices will remain unchanged over the next two years before seeing positive movement – a 2.5 percent increase – in 2014.

This past year has seen some positive movement in housing inventory with a 20 percent decrease in the number of homes listed for sale over the year. However, supply will remain an obstacle moving forward as the current shadow inventory is estimated at 4 million.

Demand will also continue to be an issue. However, the report notes the market has seen a slight increase in home sales, which it attributes to first-time buyers. 

Banks are contributing to rising demand and supply absorption by allowing loans with loan to value ratios of 80 percent or even slightly higher, something that has not occurred since mid-2008, according to Capital Economics.

The overall economy will not help boost the housing market in the coming year as the U.S. will continue to be affected by the euro-zone crisis.

The rental market will continue to be the best-performing segment of the market.