While incidences of mortgage fraud have remained steady over the past six quarters overall, submissions of fraudulent employment/income information are on the rise, according to the latest Mortgage Fraud Risk Index by Interthinx. Employment/income fraud on mortgage applications increased 8.8 percent during the third quarter of 2011. The sharp turns in this category of fraud throughout the past few years reveal certain market occurrences.

A New York federal judge ruled Monday against the proposed $285 million settlement agreed to by Citigroup and the Securities and Exchange Commission (SEC) in October. Judge Jed Rakoff said he has ""regretfully"" concluded that the agreement is neither reasonable nor in the public interest. Rakoff's opposition is rooted in the lack of evidence needed to determine whether the settlement is sufficient and the fact that Citigroup did not admit fault. He has set a trial date of July 16 for the issue to be aired in public.

Holistic financial counseling -- that which focuses on a borrower's entire financial situation -- can prevent both foreclosures and re-defaults, according to a recent study sponsored by special servicer Outreach Financial Services. Holistic financial counseling can save servicers up to $71.5 million in losses on a portfolio of 10,000 loans, according to the study. When holistic counselors review a borrower's entire financial status, they are generally able to diminish monthly spending by $200 to $300.

While the attorneys general working toward a settlement with the nation's largest servicers may be able to strike a settlement without California, it may cost them. A deal that seemed likely imminent as of the end of October would have required $25 billion from the banks - $5 billion in cash penalties and $20 billion in refinancings and modifications. That $25 billion could be reduced to $18.5 billion if California refuses to take part in the settlement, and it could limit the amount of assistance provided to California homeowners.

Investors are making up an increasing share of home purchase transactions, especially in the distressed sector, according to an industry report. In October, investor purchases accounted for 22.3 percent of transactions, in keeping with the last three months during which the rate has remained above 20 percent. At the same time, distressed property transactions grew to take up a larger portion of the market. Investors are seeing profit potential in homes that may need repair because rents are steadily rising.

September marked the 20th consecutive month that distressed sales made up more than 20 percent of commercial property sales, according to Moody's/REAL Commercial Property Price Index. The index reported distressed transactions for the month accounted for 25.9 percent of all commercial transactions. While distressed sales were in keeping with recent trends, commercial property prices broke a four-month streak of increases with a 1.4 percent decline in September, according to Moody's.

A federal judge has ruled to allow the Delaware and New York attorneys general to pursue litigation in Bank of America's $8.5 billion settlement with mortgage investors. Bank of America reached the settlement agreement in June with Bank of New York Mellon, the trustee for the 530 mortgage-backed securities trusts in question. But the judge has ruled that there's more at stake than the financial interests of the few major investors involved in the settlement negotiations.

The Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) announced Monday that it intervened to block 40 mortgage modification schemes advertised on Yahoo! and Bing. In response, Microsoft terminated 400 advertising contracts with the perpetrators of the schemes. Microsoft is the founder of Bing, and its technology backs Yahoo! Search. Monday's notice follows an announcement last week in which SIGTARP reportedly shut down 85 mortgage modification scams advertised on Google.

The third quarter of 2011 saw a net increase of 2,738 mortgage-related jobs, according to recent industry data. This increase is the first recorded in five quarters. The recent increase in refinances encouraged by remarkably low interest rates sparked a demand for loan originators and processors, while continuing high levels of delinquencies and foreclosures bolstered the need for servicing staff. The 2,738 gain compares to a net loss of 464 jobs in the previous quarter and a loss of 936 jobs a year ago.

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.