Foreclosure activity last month slowed down along the West Coast, according to the tracking firm ForeclosureRadar. The company monitors filings and auctions in Arizona, California, Nevada, Oregon, and Washington, and said the numbers were down across the board. Foreclosure sales saw a similar decline in the firm's coverage area, and bank-owned inventories were mostly flat, suggesting fewer REOs were sold. ForeclosureRadar's CEO says activity should continue to be sluggish for a while.

Daniel Mudd, former CEO of Fannie Mae, has received a Wells notice from the Securities and Exchange Commission (SEC) regarding his service with the GSE. A Wells notice informs the recipient that the agency is considering legal action against him. The recipient may elect to respond to the Wells notice with arguments and counter-evidence, and Mudd is reportedly planning a rebuttal. On the heels of Mudd's Wells notice comes the news that lawmakers are preparing to introduce bills as early as this week to accelerate the wind-down of the GSEs.

Following last week's statement by Bank of America CEO Brian Moynihan that principal reductions are unfair and not in everyone's best interest, more banks and even some attorneys general have spoken out against the controversial clause in the settlement proposal. Wells Fargo CEO John Stumpf voiced his disapproval of principal write-downs, saying such provisions would entice people to default on their loans. Some attorneys generals said they feel write-downs would force servicers to break their contracts with investors.

Senators and banks across the country are joining forces in order to provide mortgage protection for members of the military. After reports that some members of the military and their families are struggling to remain in their homes, senators announced an act to protect servicemembers from abuses. In a similar effort, two of the top servicers have announced plans to help protect members of the military from foreclosure and high credit costs.

On Friday the U.S. House voted to end the Emergency Homeowner Loan Program for borrowers who are unable to make their mortgage payments because of unemployment. The fund was established under the Dodd-Frank Act to provide interest-free loans to homeowners for up to 24 months while they look for new employment. This is the second House vote to end a foreclosure mitigation program that some lawmakers claim just isn't working. The bills are not expected to pass the Senate.

More backlash from the 27-page proposed servicer settlement developed on Wednesday when representatives from the House Financial Services Committee voiced their disapproval and concern in a letter to Treasury Secretary Timothy Geithner. The letter, signed by committee chairman Spencer Bachus and four other members, was obtained by DS News on Thursday. It contains a page of questions the group wants answered, with a great deal of attention focused on principal write-down mandates.

Data released Thursday from HOPE NOW shows that while permanent loan modifications outpaced foreclosure sales in the month of January, the gap between the two is getting smaller. In January there were around 101,000 permanent loan modifications completed, down from 111,000 in December 2010. Servicers' proprietary modifications outpaced HAMP mods by almost three to one. At the same time, foreclosure sales in January totaled 73,000, up from 58,000 the month before.

As predicted following the recent settlement proposal from state attorneys general and several federal agencies, servicers are not reacting with enthusiasm to the terms offered. One of the biggest conflicts in coming to an agreement is the proposed punishments servicers will have to face as consequences for their role in last year's robo-signing mess. Though nothing has been confirmed, hefty fines and/or principal reductions are projected to be in development. The reaction from banks and other industry participants has been less than receptive.

HUD's Office of the Inspector General (OIG) reviewed more than 250 loans from 15 lenders and found that nearly half of those loans did not meet the Federal Housing Administration's (FHA) guidelines. The OIG launched Operation Watchdog in January 2010 to examine loans from the lenders and found areas of noncompliance, including misstatements of a borrower's income, liabilities, and credit history, which resulted in actual or expected FHA losses on default claims of more than $11 million.

The robo-signing settlement presented to servicers by government agencies and attorneys general last week features 27 pages of rules and regulations. Though the details of the settlement have been released to the public, they are in no way final and will go through many rounds of negotiations before government officials and servicers can come to an agreement. There is speculation that reaching a resolution will be a daunting task, but officials are hoping the process will be complete in the next two months.