Foreclosure

Rep. Marcy Kaptur, D-Ohio, submitted a resolution (H.Res. 344) calling for a temporary foreclosure moratorium to the House Financial Services Committee Friday. ""[T]he United States finds its housing market in a precarious and unstable state, where homeowners' mortgage balances are routinely larger than the current value of their homes and where people are losing their homes at an alarming rate,"" Kaptur states in the resolution. Kaptur notes that in April 2011, there were 219,000 new foreclosures, 7,300 each day.

Putting struggling borrowers into mortgages with more manageable monthly payments via a loan modification is a key element of the industry's effort to cut the nation's foreclosure crisis short. A recent study by the Office of the Comptroller of the Currency (OCC) and the Office of Thrift Supervision (OTS) took a look at loan performance post-modification. The regulators found that more recent modifications have performed better than earlier modifications, reflecting an increasing emphasis on lower monthly payments and sustainability.

The FDIC has filed suit against former IndyMAC Bancorp Inc. CEO Michael Perry for $600 million in losses caused by risky mortgage loans. The FDIC accuses Perry of purchasing $10 billion in risky residential loans.

Foreclosure sales declined for the second straight month, while foreclosure starts increased, according to HOPE NOW. Foreclosure sales nationwide decreased 7 percent from 73,000 in April to 68,000 in May.

With delinquent mortgages at unprecedented levels, sheer market conditions command a staff the size of a small army dedicated to working with distressed borrowers. Servicers have added thousands to their loss mitigation teams over the past few years and most are still recruiting. JPMorgan Chase has added more than 10,100 new employees nationwide to the default and loss mitigation organization since 2008, almost doubling its staff. Chase has partnered with HOPE NOW, nonprofits, and state agencies conducting over 1,500 local events through April.

With mortgage delinquencies at unprecedented levels, it's become clear that the current servicing-fee model is lacking. The GSEs and Ginnie Mae are in the process of developing new servicing compensation structures to provide greater flexibility for the servicing of nonperforming loans. As deliberations move forward, the Mortgage Bankers Association is recommending they consider the idea of a new ""reserve account"" strategy to cover the higher expenses associated with default servicing.

A judge has denied Bank of America’s motion to dismiss a case involving tens of thousands of homeowners who claim the bank denied them help through the Home Affordable Modification Program (HAMP). Homeowners are asking that Bank of America provide permanent loan modifications to eligible borrowers and award damages to homeowners wrongfully denied modification. The attorney for the homeowners claims the bank is depriving homeowners of federal bailout funds that could save them from foreclosure.

The Applied Analytics division of Lender Processing Services, Inc. recently introduced the LPS Home Price Index (HPI). The LPS HPI shows historical price trends for residential properties in the United States, offering estimates of property values that underlie residential mortgage portfolios and securities. LPS says the new tool is a reliable way to estimate borrower stress, negative equity, and potential for default and loss.

During the second quarter of 2011, foreclosure actions plunged by 51 percent in the tri-county South Florida region compared to the same three-month period in 2010, according to a new report from CondoVultures.com. Lenders filed close to 7,200 notices of default between April and June in Miami-Dade, Broward, and Palm Beach counties. Nearly 14,800 were filed in the second quarter of 2010. At the current pace, foreclosure filings in 2011 would rank as the fewest number of actions since the South Florida real estate downturn began.

The national unemployment rate edged up in June to 9.2 percent, as the economy added just 18,000 jobs. The numbers were worse than market forecasts. Economists were expecting the rate to remain unchanged at 9.1 percent and job gains to be between 85,000 and 100,000. Declines in the labor market have added significantly to the volume of seriously delinquent mortgages. On Thursday, the administration announced that it was extending the mortgage forbearance period to 12 months for unemployed homeowners in government programs.