Government

While the homeownership rate falls, rental demand rises bringing rental rates up and apartment vacancies down -- all of which has led Freddie Mac's chief economist to label the multifamily sector a positive signal for the U.S. housing industry. Frank Nothaft says improvement in the economics of apartment management has prompted an increase in structure values, property sales, and new construction. He notes that many newly-formed households are choosing to rent rather than own in the current, unstable economy.

Help for underwater homeowners has moved from principal writedowns to refinancing in the settlement negotiations between state attorneys general and the nation's five largest mortgage servicers. According to a widely circulated report, the proposal made its way into the talks last week. Borrowers who are current on their mortgage payments but owe more than their home is worth would be able to refinance at today's lower rates. The main caveat is that the loan must be owned, not just serviced, by one of the five banks.

The state of Hawaii has now gone live with its Mortgage Foreclosure Dispute Resolution (MFDR) program. MFDR is a key component of Act 48 signed into law by Gov. Neil Abercrombie this spring and is intended to ""reform the foreclosure process"" in the state, according to government officials. The program is designed to offer owner-occupants of residential property in non-judicial foreclosure the opportunity to meet directly with their lenders to modify their loans or work out an alternative to foreclosure.

Republican members of the House Financial Services Committee point to the GSEs and the Obama administration's housing programs as areas for Congress' deficit reduction super-committee to examine as it works toward cutting $1.5 trillion of the nation's debt. A letter drafted by Chairman Spencer Bachus and signed by 20 Republican committee members first calls for an increase in the GSEs' guarantee fees and then the elimination of such programs as HAMP and HUD's Neighborhood Stabilization Program.

This year's failed-bank tally has risen to 80 with the closings of four more lenders over the weekend. Piedmont Community Bank in Georgia was picked up by State Bank and Trust Company. Country Bank in Illinois has been taken over by Blackhawk Bank & Trust. In Cranford, New Jersey, First State Bank has now become part of New York's Northfield Bank. Blue Ridge Savings Bank in North Carolina was absorbed by the Bank of North Carolina.

The administration is looking into ways to support greater private sector involvement in the secondary market for home mortgages. Officials are weighing a proposal that would allow Fannie Mae and Freddie Mac to sell off portions of their mortgage-backed securities (MBS) to private investors. These MBS carve-outs would not carry a federal guarantee but would pay a higher interest rate. A pilot program could be rolled out as early as next year to test private investors' willingness to share some of the risk carried by the GSEs.

GMAC Mortgage has teamed up with the Loan Value Group, LLC on a pilot program that provides financial incentives for borrowers with VA loans to remain current. GMAC is offering Loan Value Group's Responsible Homeowner (RH) Reward program to a group of Veterans Administration (VA) customers who are current on their mortgage payments but have seen a significant decline in the value of their homes. The program returns a portion of their lost equity in exchange for continued, timely mortgage payments.

While five major banks continue to deliberate with the state attorneys general for a settlement involving violations in mortgage documentation, the same five banks, plus several others, also face charges for committing fraud against veterans and taxpayers. Defendants accuse 13 banks of ""a brazen scheme to defraud both our nation's veterans and the United States Treasury of millions of dollars"" by overcharging borrowers in connection with home loans refinanced through a U.S. Veterans Affairs program.

Williams Title Guaranty and Escrow Agency, Ltd., has entered a five-year contract with the U.S. Department of Housing and Urban Development (HUD). Williams Title provides title insurance and escrow services on lender-owned REO properties, meeting the needs of lenders, mortgage brokers, real estate agents, and REO asset managers. As a designated HUD closing agent, Williams Title Guaranty will complete HUD closings for the entire state of Colorado.

After admitting to an extensive mortgage fraud scheme, the former president of Lend America was suspended from doing any future business with HUD. Michael Primeau pled guilty to charges that he ordered employees to pay company operating expenses with funds intended to cover borrowers' first mortgages at refinance closings. Previously an FHA-approved lender, Lend America also allegedly violated FHA's origination and underwriting standards on several occasions, according to HUD.