Government

Starting July 1, large numbers of non-paying borrowers will have the opportunity to modify existing mortgages through a more streamlined process. This sounds like a good way to reduce foreclosures and prop up home prices, but as we will shortly see the proposed program is oddly risky and likely to encourage additional defaults. The program is open to borrowers who have already modified their loans once, perhaps a few years ago when rates were higher. This, at least, is a good idea. So what's the big difference between the new program and the modifications offered previously?

ISGN CorporationTM (ISGN), a Florida-based provider of end-to-end technology solutions and services to the mortgage industry, teamed up with TRUPOINT Partners, an independent regulatory compliance organization, to offer a comprehensive Consumer Financial Protection Bureau (CFPB) Mock Audit.

Attorneys for Standard & Poor's (S&P) filed Monday a motion to dismiss a civil lawsuit from the federal government accusing the ratings agency of inflating ratings and misrepresenting the creditworthiness of certain securities. Led by Attorney General Eric Holder, the Department of Justice announced in early February a complaint against S&P for allegedly defrauding investors in an attempt to gain more business. At the time, Holder noted that his department had identified more than $5 billion in losses to federally insured financial institutions resulting from collateralized debt obligations (CDOs) rated by S&P between March and December 2007.

A day before Consumer Financial Protection Bureau (CFPB) director Richard Cordray testified before the Senate Committee on Banking, Housing and Urban Affairs to deliver his semi-annual report, Rep. Jeb Hensarling (R-Texas), chair of the House Committee on Financial Services--which was also slated to hear from Cordray--announced his committee cannot accept Cordray's testimony as Cordray's appointment is not legal. Hensarling intends to ""conduct rigorous oversight"" of the agency until the leadership issue is resolved, but he does not accept Cordray's continuation of his position as director.

Although credit scores play a crucial role in the homebuying process, a recent FindLaw.com survey found nearly a quarter of Americans have never bothered to check their credit report. Overall, 22 percent of the 1,000 adults surveyed said they've never checked their credit report even though credit reporting agencies are required to provide free copies when requested. Out of the 78 percent who said they have checked their credit report, 46 percent checked within the last year.

The Consumer Financial Protection Bureau's (CFPB) ambitious effort to build a National Mortgage Database was not taken lightly by lawmakers during a Senate committee hearing Tuesday. Senators expressed discomfort over the idea of having a federal agency track consumer behavior, despite CFPB director Richard Cordray's continued emphasis on the anonymity the database will provide to individual consumers. Cordray also explained that without the database, the agency can't do its job.

After experiencing the sharpest drop in two years in February, new home sales increased 1.5 percent to a seasonally adjusted annual rate of 417,000 in March, the Census Bureau and HUD reported Tuesday. Economists surveyed by Bloomberg expected March sales to increase to 419,000 from a February's originally reported 411,000. The median price of a new home, according to the Census-HUD report, plunged $17,900 (or 6.8 percent) in March to $247,000, the largest month-over-month decline since February 2011.

The Consumer Financial Protection Bureau (CFPB) announced two individuals were added to the bureau's leadership team, and two current staff members will be serving in different roles. Dan Smith was hired as the first assistant director for the newly-created Office of Financial Institutions and Business Liaison. The office was formed to connect the CFPB with bank and nonbank trade associations, financial institutions, and businesses to enhance collaboration and communication.

The 2013 national bank failure tally ran up to eight this weekend as three more institutions fell by the wayside. FDIC announced the collapses of Chipola Community Bank in Marianna, Florida; Heritage Bank of North Florida in Orange Park; and First Federal Bank in Lexington, Kentucky. Chipola Community Bank and Heritage Bank of North Florida were both closed by the Florida Office of Financial Regulation, which appointed FDIC as receiver of both.

As part of its ongoing efforts to assist the industry in the implementation of new mortgage guidelines, the Consumer Financial Protection Bureau (CFPB) issued proposed amendments to address questions and clarify the qualified mortgage (QM) and servicing rules first laid out in January. The proposal addresses five topics, including debt-to-income ratio concerns surrounding the Ability to Repay Rule, uncertainties around the temporary QM provision, and which criteria are used to define ""small servicers.""