A push for servicers to implement principal write-downs and provide screening for as many modification options as possible before proceeding to foreclosure has been met with stiff resistance from servicers and some lawmakers. Meanwhile, the number of loan modifications pales in comparison to the number of foreclosures. But new data suggests that modifications and even write-downs in certain cases might actually be more beneficial to investors as well as struggling borrowers.

Opposition to the proposed servicer settlement developed a stronger stance this week as four attorneys general released a letter to Iowa's Tom Miller, who is leading the states' investigation. Attorneys general from Virginia, Texas, Florida, and South Carolina said while they support actions to correct problems unearthed by the robo-signing scandal, the proposal includes mandates and suggestions that are out of the scope of their enforcement role. They expressed particular uneasiness over the provisions surrounding principal write-downs.

A recent report by the National Association of Realtors (NAR) reveals interesting information regarding the foreclosure inventory of the hardest hit states. It is pretty well known that Arizona, Nevada, California, and Florida have been most affected by the foreclosure crisis. Together the four states make up 42 percent of the foreclosure volume in the United States. Despite this, NAR estimates it could take as little as seven months to clear the shadow inventory in some of the hardest hit states.

Another lawsuit centered around mortgage securities backed by faulty loans may be brewing. The National Credit Union Administration (NCUA) has threatened to sue four banks and investment firms unless they refund more than $50 billion for mortgage-related bonds that went bad. Goldman Sachs, Bank of America's Merrill Lynch unit, Citigroup, and J.P. Morgan Chase are named as the targets of NCUA's legal threats. The regulator says mortgage securities sold by these companies led to the collapse of five wholesale credit unions.

The FDIC filed a lawsuit last week against three former Washington Mutual (WaMu) executives and two of their wives, alleging that they ran the bank into the ground in order to fatten their own wallets. The lawsuit says former WaMu CEO Kerry Killinger, former COO Stephen Rotella, and home loans president David Schneider focused on short-term gains to increase their own compensation, while encouraging risky mortgage lending when they knew the housing market was about to collapse.

After the House passed measures to terminate several federal foreclosure prevention programs, Rep. Steve Cohen of Tennessee stepped in with a measure of his own - a bill that establishes a grant program to fund efforts by state and local governments to provide mediation between homeowners and lenders in order to pursue alternatives to foreclosure. The mediation would postpone sheriff sales of owner-occupied residences until viable options to avert foreclosure have been explored.

Mortgage servicers were plagued with lawsuits in the last quarter of 2010, according to an industry data source. The percentage of legal actions against servicers rose 42 percent in the last three months of 2010, and actions associated with loan modifications tripled. The report said that 151 mortgage-related lawsuits were reported in the fourth quarter, jumping from 106 in the quarter before. Secondary marketing litigation nearly doubled, and criminal cases also rose.

On Monday the Treasury announced that it will wind down the remaining $142 billion mortgage-backed securities (MBS) portfolio it carries. This news comes just as the federal government is making plans to drastically reduce its role in the mortgage marketplace. Beginning this month, Treasury plans to sell up to $10 billion in agency-guaranteed MBS each month, with the goal of fully extinguishing the portfolio in a little over a year and turning a profit for taxpayers.

Two recent studies about investors who buy vacant and deteriorating homes and resell them paint vastly different pictures of the effects such actions have on neighborhoods. A report from the Federal Reserve Bank of Cleveland says many cities are being hurt by investors who purchase homes and sell them quickly without regard for back taxes on the property. But another report says investors who play the game fairly are actually contributing to the growth and overall health of ailing neighborhoods and helping families at the same time.

According to a community advocacy group in California, home value losses from foreclosed homes in California have cost a minimum of $632 billion, and could end up costing as much as $1 trillion. California is considered one of the ""hardest-hit"" states in the country, and according to the report, one in every five foreclosures in the United States is in California. One state lawmaker has proposed legislation in an attempt to recover lost tax revenue by forcing lenders to pay $20,000 for each home foreclosure they initiate in California.