Foreclosure

Timothy Massad, acting assistant Treasury secretary, said this week that beginning next month Treasury will start publishing a scorecard grading the largest servicers based on their compliance with the Home Affordable Modification Program (HAMP). Though members of the House voted yesterday to end the program, the Treasury is moving forward with its plans to hold servicers publicly accountable, basing the first report on performance in 2010. Massad says Treasury will withhold financial incentives for unsatisfactory grades.

Default Attorney Group (DAG), a consortium of creditors' rights law firms from across the United States, announced Wednesday that the organization has welcomed two new firms to its membership. Potestivo & Associates P.C., which offers representation in Michigan and Illinois, and Reisenfeld & Associates LPA, LLC, which covers Ohio, Indiana, and Kentucky, have both joined the group of seasoned legal professionals serving the mortgage lending and servicing community.

CoreLogic announced this week that the company's Credco division has launched a data-enhanced version of its ENCORE report, which the company says provides lenders with a 360-degree view of mortgage lending and servicing risk. In a recent test of more than 1 million loans, it identified 70 percent of the lender-identified fraud and more than 50 percent of the total foreclosure and charge-off losses.

The U.S. House of Representatives passed legislation Tuesday evening to end the administration's flagship foreclosure prevention initiative, the Home Affordable Modification Program (HAMP). The HAMP Termination Act (H.R. 839) was approved with a 252 to 170 vote. Pundits are calling it a largely symbolic vote since the bill is not expected to win as much favor in the Senate, although Republican senators have already introduced their own bill to pull the plug on the federal mod program.

Perhaps in preparation for the meeting between bank representatives and lawmakers scheduled for Wednesday, servicers have drafted their own proposal in response to the robo-signing settlement they were given earlier this month. Though specific details of the servicers' version are not yet available, the draft reportedly features some of the same guidelines as the 27-page term sheet sent by state attorneys general and federal regulators, although servicers made no mention of principal write-downs.

The Securities and Exchange Commission (SEC) said last week that Bank of America must entertain shareholders' request to open up its foreclosure practices for an independent audit. The SEC ruled that BofA must include the option on the ballot at its annual stockholder meeting this spring. But the company's shareholders aren't waiting for a formal investigation. They filed a lawsuit this week with the New York State Supreme Court claiming they were damaged by the bank's intent to hide defects in the paperwork used to process foreclosures.

Wolters Kluwer Financial Services on Tuesday announced the launch of Pre-Foreclosure Manager, a hosted solution for U.S. mortgage servicers to create, mail, track, and manage borrower default notices. The nation's servicers face a rising number of loans entering default in addition to increasing regulatory pressures. Wolters Kluwer Financial Services says its new technology offers a solution to address large spikes in foreclosure volumes with limited in-house resources and reduce the risk of non-compliance.

New data released by Lender Processing Services (LPS) Monday clearly illustrates that foreclosure timelines are growing longer and longer. The company reports that the average loan in foreclosure right now has been delinquent for a record 537 days, and 30 percent of loans in foreclosure have not made a payment in over two years. As of the end of February, LPS says foreclosure inventory levels stood at more than 30 times monthly foreclosure sales volume.

The Office of the Comptroller of the Currency (OCC) has issued a notice to the chief executives of all the lenders it regulates warning them of the risks involved in real estate-owned exchange programs. Several companies have started marketing real estate-owned exchange programs to national banks as a means to reduce problem assets on their balance sheets, but the OCC says these programs ""can raise significant safety and soundness, legal, and accounting concerns.""

According to R. Aaronson, CEO of Hilco Real Estate LLC, the company will launch Hilco Real Estate Acquisitions Group to originate, underwrite, and acquire assets across a range of property classes and stages, including those in workout, foreclosure, and REO. Acquisition capital will come from various sources, including Hilco and investor partners selected for each transaction. The group's primary acquisition targets will be industrial and retail properties.