Foreclosure

Bank of America organized 45 dedicated outreach events this year in local markets across the country where the lender is seeing high levels of mortgage delinquencies among its customer base. Ron Sturzenegger, BofA's legacy asset servicing executive, says the goal is to get in front of the consumer. The company undertakes an aggressive marketing campaign ahead of each event and provides a loss mitigation decision on-site to 60 percent of those who come with all the necessary paperwork. BofA expects to host the same number of outreach events in 2012.

Nevada Attorney General Catherine Cortez Masto has filed a lawsuit against Lender Processing Services (LPS), alleging the company executed fraudulent documents to support foreclosure proceedings. Masto's announcement came as a surprise, considering just last month LPS disclosed publicly that the attorney general's office assured the company it was not a target of the state's investigation, which has already resulted in the indictment of six former LPS employees for alleged robo-signing abuses.

November marked the fourth straight month that Fitch Ratings has recorded a decline in the delinquency rate for loans held in U.S. commercial-backed mortgage securities (CMBS). CMBS late-pays fell by 15 basis points to 8.41 percent, as new delinquencies totaling $1.8 billion were offset by $2.2 billion of resolutions. Behind the positive numbers, though, Fitch says the performance of CMBS collateralized by office properties remain an area of concern, with more than half of all new delinquencies stemming from office loans.

The ongoing turmoil still gripping housing markets across the country has manifested itself in the Federal Reserve's macro assessment of household wealth and capital flow. With foreclosure stripping millions of Americans of their largest asset and potential homebuyers still watching for the market bottom, the total sum of home mortgage debt in the U.S. has dropped to its lowest level in nearly five years. Outstanding mortgage debt contracted by 1.8 percent over the third-quarter period to $9.88 trillion.

Low property valuations and steep sales discounts reduce the proceeds from liquidated loans by almost a third, according to Moody's Investors Service. As home prices drop, equity erosion drives most of the losses incurred on defaulted loans, but Moody's says in today's environment that's not the whole story. The agency's analysis of 46,000 loans liquidated since 2007 found that on average, a foreclosed property will be valued about 18 percent lower than average home prices, and will be subject to an additional sales discount of about 15 percent.

After filing criminal charges about a month ago against two title officers employed by Lender Processing Services, Nevada Attorney General Catherine Cortez Masto has filed complaints against three additional notaries. The new defendants allegedly filed fraudulent notices of default with the Clark County Recorder's office after notarizing the signature of persons not in their presence. A fourth notary reportedly struck a plea deal with the attorney general after admitting to notarizing about 25,000 fraudulent foreclosure documents.

Fannie Mae has released the third-quarter results of its Servicer Total Achievement Rewards (STAR) Program, which grades servicers on foreclosure prevention performance. The GSE says three companies - JPMorgan Chase, PHH Mortgage, and U.S. Bank - demonstrated improvements in scorecard metrics measuring the volume of foreclosure alternatives provided to borrowers. All three raised their scores to a 3-STAR rating, which means they are at or above the median performance level.

Foreclosure activity slipped 3 percent in November when compared to the previous month, but filings at various stages of the process showed starkly different movements, according to RealtyTrac's latest market report. Scheduled auctions hit a nine-month high following the default surge that began in August. At the same time, RealtyTrac says REO activity is at a 44-month low. Total filings are down by double-digits from a year ago, but RealtyTrac doesn't view the numbers as the making of a trend.

Freddie Mac has notified servicers that they are required to take part in mortgage assistance programs offered by state Housing Finance Agencies (HFAs) in connection with the federal government's Hardest Hit Fund initiative. The GSE says collaboration with state HFAs will provide additional support for servicers' efforts and ""our mutual commitment"" to help at-risk borrowers avoid foreclosure. HFA programs provide funds to servicers which may be applied to such criteria as loan-to-value ratios in order to help borrowers qualify for a modification.

Citing data from Lender Processing Services estimating more than 2 million properties in some state of foreclosure, Fitch Ratings says REO sales - both single-property and bulk sales - will be an integral component of the housing market over the next two years. However, the timing and method of disposition will have significant implications for home prices, according to Fitch. The agency notes that distressed properties generally sell at a substantial discount, further exacerbated by the presence of excess inventory.