Loss Mitigation

According to a community advocacy group in California, home value losses from foreclosed homes in California have cost a minimum of $632 billion, and could end up costing as much as $1 trillion. California is considered one of the ""hardest-hit"" states in the country, and according to the report, one in every five foreclosures in the United States is in California. One state lawmaker has proposed legislation in an attempt to recover lost tax revenue by forcing lenders to pay $20,000 for each home foreclosure they initiate in California.

The U.S. House of Representatives voted Wednesday to pull the plug on HUD's Neighborhood Stabilization Program (NSP) and rescind $1 billion in grant money that has not yet been awarded. The NSP Termination Act (H.R. 861) passed the House with a 242-182 vote. It now moves to the Senate, where it is not expected to be met with such favor. White House officials again indicated that President Obama will veto the bill should it make it that far.

Midwest Real Estate Data (MRED) has teamed up with Fannie Mae to provide its brokers and agents with a service designed to shorten the time they have to wait for approval from the GSE on short sale transactions. MRED provides property listing services in northern Illinois, southern Wisconsin, and northwest Indiana. This week, the company announced the availability of the Fannie Mae Short Sale Assistance Desk for its coverage area. The tool has already been employed by MLSs in Florida and Nevada, and agents there are seeing the benefits.

Minnesota Attorney General Lori Swanson filed a lawsuit Monday against Meredian Financial Corporation, a California-based mortgage lender and broker. According to a statement from the attorney general, the lender charged Minnesota homeowners thousands of dollars in fees to refinance their mortgages, but the refinances did not happen. Swanson says Meredian targeted homeowners struggling in the troubled economy who were looking to get out of an adjustable-rate mortgage or lower their interest rate by refinancing.

As part of its crackdown on mortgage scams targeting homeowners facing foreclosure, the Federal Trade Commission (FTC) has charged a national operation with marketing bogus loan modification services. The complaint alleges that U.S. Mortgage Funding Inc., Debt Remedy Partners Inc., Lower My Debts.com LLC, and their principals mislead consumers to believe they are affiliated with or approved by consumers' lenders. They tell consumers not to contact their lenders and to stop making mortgage payments, claiming that falling behind on payments will demonstrate the consumers' hardship and need for a mortgage modification.

HomeFree-USA recently revealed its success in assisting struggling homeowners by using HOPE LoanPort, a Web-based system to submit home retention applications to mortgage servicers. HomeFree-USA, which oversees a network of 65 housing counseling agencies, endorses the HOPE LoanPort system for eliminating lost paperwork and reducing decision times on loan modification applications.

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.

The Federal Housing Finance Agency (FHFA) has pushed the cut-off date for the Home Affordable Refinance Program (HARP) out by a year. HARP allows homeowners with a mortgage owned by Fannie Mae or Freddie Mac who owe more than the home is worth obtain a new loan at today's lower interest rates. The program was originally set to expire on June 30, 2011. FHFA has now extended the program through June 30, 2012.

The California Association of Realtors (CAR) sought to bring attention to what the organization describes as the state's ""ineffective"" short sale process Thursday by placing an open letter advertisement in California's seven largest daily newspapers. The letter, signed by CAR president Beth L. Peerce, called on lenders and industry regulators to streamline and improve the short sale process.

Americans are beginning to gain ground against the worst recession in recent history as more and more economic indicators point to recovery. A new study from the Federal Reserve says household net worth in the U.S. soared $2.1 trillion during the last three months of 2010. The figures are a good sign for the mortgage market as it struggles to get a handle on delinquency numbers in the millions, provided the increased net worth translates into fewer homeowners who are unable to meet their mortgage obligations.