The percentage of single-family homes sitting empty fell to 2.3 percent in the fourth quarter of 2011, according to data released Tuesday by the U.S. Census Bureau. That's down from 2.7 percent at the beginning of last year, and the lowest homeowner vacancy rate since early 2006. Analysts say it's a sign that excess inventory - at least the visible inventory - is slowly but surely beginning to clear. The Census Bureau also reported that the nation's homeownership rate dropped to 66.0 percent - its lowest level in nearly 14 years.

State attorneys general have until Friday to sign on to a settlement that would resolve claims against the nation's top five mortgage servicers surrounding documentation errors in foreclosure processing, according to a widely circulated media report. The year-long back-and-forth between state counsels and the largest servicers may be in its final days ... possibly. Attorneys general in Delaware and California have already rejected the proposal, and some say without California, in particular, the settlement may not be of interest to the banks.

Data released Tuesday morning by Standard & Poor's for its S&P/Case-Shiller home price index showed declines in November of 3.6 percent for the 10-city composite and 3.7 percent for the 20-city composite when compared to price levels from a year earlier. Analysts were expecting a year-over-year drop in the range of 3.2 to 3.4 percent. Eighteen cities were in negative territory. Detroit and Washington, D.C. were the only exceptions. At -11.8 percent Atlanta continued to post the lowest annual return.

Fiserv is forecasting average U.S. home prices to fall by another 2.7 percent through the third quarter of 2012, before rising 3.8 percent by the third quarter of 2013. The company says the monthly mortgage payment for the median-priced U.S. home has dropped to $640, nearly 45 percent below the peak of the housing bubble. This improvement in housing affordability is expected to drive sales activity going forward, and while not enough to change Fiserv's predictions for the direction of prices at the national level, the company does foresee notable improvements in select markets.

State and federal regulators stepped in to shut down five lenders over the weekend, including one New York-based credit union and four FDIC-insured institutions - two in Tennessee and one each in Florida and Minnesota. Eastern New York Federal Credit Union in Napanoch, New York, is the first federally insured credit union to be liquidated in 2012, while the FDIC's failed-bank tally for the 2012 calendar year now stands at seven.

The analysts at Capital Economics are holding fast to their forecast that the downturn in the housing market is drawing to a close. As a result, they say housing should soon start to boost economic growth, but as it now makes up only a small share of the economy, the sector is unlikely to add much more than 0.2 percentage points to annual gross domestic product (GDP) growth this year. In the fourth quarter of 2011, residential investment accounted for just 2.5 percent of overall GDP. That's down from the 2005 peak of 6.3 percent and the 1946 to 2008 average of 4.8 percent.

The number of foreclosure actions initiated in 2011 was down 38.7 percent compared to 2010, according to a new report from Lender Processing Services (LPS). The foreclosure inventory, on the other hand, remains near historic highs, at 4.11 percent. The numbers illustrate the impact of processing delays brought on by the robo-signing controversy, the impact of which remains strong in judicial states. LPS says half of all loans in foreclosure in judicial states have not made a payment in more than two years compared to 28 percent in non-judicial states.

The special mortgage investigation unit announced by President Obama during his State of the Union address Tuesday night has taken shape. The new Residential Mortgage-Backed Securities (RMBS) Working Group will operate within the Financial Fraud Enforcement Task Force and will consists of at least 55 Department of Justice attorneys and investigators, as well as state attorneys general. The president has tasked the group with uncovering those responsible for pooling and selling mortgage bonds that contributed to the financial crisis.

The default servicing industry is in a state of transition, according to Larry B. Litton Jr., CEO of Selene Finance, and it's the smaller, more nimble servicing operations that will have the advantage in reacting quickly to the new rules and the changes that are in store. Litton says many of the bigger servicing shops are still set up to do what he considers commoditized types of processes and aren't able to adapt quickly to the regulatory changes coming down the line, while smaller special servicers are already built for single point of contact and to be highly responsive to consumers.

Changes announced Friday to the Home Affordable Modification Program (HAMP) are expected to extend relief to a larger share of struggling homeowners as well as renters. One of the key adjustments centers around principal reductions. To encourage investors to agree to the principal reducing modification currently available through HAMP, Treasury is tripling incentives for such restructurings, paying from 18 to 63 cents on the dollar, and extending this same incentive to Fannie Mae and Freddie Mac, who have previously opted not to participate in HAMP's principal writedown option.