Government

This year's tally of failed banks rose to 90 over the weekend, as state and federal regulators stepped in to close the doors on two more community-based lenders in Iowa and Louisiana. Polk County Bank has been acquired by Grinnell State Bank in Iowa, and Louisiana's Central Progressive Bank is now part of First NBC Bank. Together the two closings are expected to cost the FDIC more than $70 million.

Lawmakers voted late Thursday to increase the ceiling for loans insured by the Federal Housing Administration (FHA). Included in a ""minibus"" spending bill passed by both the House and Senate was an amendment to restore the FHA loan limit to $729,750 in high cost areas. The maximum loan limit was lowered from that amount to $625,500 on October 1st for government housing agencies, including FHA, Fannie Mae, and Freddie Mac. The loan limits for Fannie Mae- and Freddie Mac-backed mortgages were not raised with the newly passed measure.

Freddie Mac plans to re-securitize certain mortgage loans that were previously delinquent but have been reinstated to current, performing status. The new-issue bonds will not, however, include loans that have been modified. The GSE says this new avenue for securitization will provide more flexibility for the company to manage its mortgage-related investment portfolio and its distressed assets. Freddie Mac expects to make its first offering of reinstated loans later this month.

California Attorney General Kamala Harris reportedly sent subpoenas to Fannie Mae and Freddie Mac, requesting information about their servicing, foreclosure, and property leasing actions in the state. The attorney general's office also intends to investigate the GSEs' actions regarding purchases of ""toxic mortgages."" With one of the highest default rates in the nation, Harris has been actively seeking aid for California homeowners and has recently lobbied for increased principal reductions from Fannie and Freddie.

Members of a House subcommittee voted Thursday not to pass a bill which would have allowed banks to classify modified loans as accruing rather than non-accruing. While most members of the subcommittee agreed that, in many instances, examiners and regulators are posing undue hardship on community banks, the bill was shot down with 8 ayes and 10 nays. Those who opposed said it would allow lenders to manipulate their accounting so that they don't have to hold additional capital against a potentially problematic loan.

Nevada Attorney General Catherine Cortez Masto has filed criminal charges against two title officers for alleged robo-signing. The defendants are employed by Lender Processing Services (LPS) and are allegedly responsible for tens of thousands of fraudulent documents that made their way through the Clark County Recorder's Office from 2005 to 2008. LPS says it cooperated with Masto's investigation and was assured earlier in the month that the company was not a target of the attorney general's inquiry.

The Michigan Supreme Court ruled Wednesday that MERS, as record-holder of the mortgage, does have the right to initiate foreclosures in the state. The decision reverses an April ruling from the Michigan Court of Appeals, which called into question thousands of cases in which MERS was named as the foreclosing party. The appellate court's judgment sent shockwaves through the distressed housing market in Michigan. Now, with the higher court's ruling, sales of homes that had been foreclosed in the name of MERS can proceed.

Hudson & Marshall conducted an REO auction event for HUD in Las Vegas earlier this month targeting owner-occupants. The result? There are now more than 100 new owners of homes throughout both Nevada and Arizona that were previously sitting idle and vacant as part of the government's foreclosed inventory. The Las Vegas event was the culmination of a five-week aggressive marketing campaign, and was conducted in conjunction with BLB Resources.

The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) is vigilantly targeting mortgage and foreclosure rescue scammers that advertise online. SIGTARP announced Wednesday that it recently halted 85 online scams that promised to help homeowners pursue mortgage loan modifications. Google has cooperated with SIGTARP in its investigation and since the discovery of the 85 mortgage fraud schemes, has suspended 500 advertisers.

A federal judge has reversed HUD's decision to temporarily suspend Allied Home Mortgage Corporation after the agency accused the bank of committing fraud and violating several Federal Housing Administration (FHA) requirements. The judge said the damage to Allied's business as a result of the suspension outweighs any harm that would be suffered by the government before the issues can be litigated. Allied and its CEO deny the allegations against them.