Foreclosure

More backlash from the 27-page proposed servicer settlement developed on Wednesday when representatives from the House Financial Services Committee voiced their disapproval and concern in a letter to Treasury Secretary Timothy Geithner. The letter, signed by committee chairman Spencer Bachus and four other members, was obtained by DS News on Thursday. It contains a page of questions the group wants answered, with a great deal of attention focused on principal write-down mandates.

While nationwide figures are trending lower, foreclosure rates in Phoenix, Arizona, are climbing again, according to a new report from the W. P. Carey School of Business at Arizona State University. The university study found that although foreclosures decreased to 30 percent of transactions in the single-family home resale market in the Phoenix area at the end of 2010, that rate shot up to 43 percent in January with little to no change in February.

Data released Thursday from HOPE NOW shows that while permanent loan modifications outpaced foreclosure sales in the month of January, the gap between the two is getting smaller. In January there were around 101,000 permanent loan modifications completed, down from 111,000 in December 2010. Servicers' proprietary modifications outpaced HAMP mods by almost three to one. At the same time, foreclosure sales in January totaled 73,000, up from 58,000 the month before.

New data from RealtyTrac shows that foreclosure filings nationwide dropped 14 percent between January and February, as overall activity last month sunk to its lowest level since February of 2008. RealtyTrac says total foreclosure filings - including default notices, scheduled auctions, and bank repossessions - were reported on 225,101 properties in February, a 27 percent decrease from a year earlier and the biggest year-over-year decline since the company began issuing its report in 2005.

The House Financial Services Committee voted Wednesday to send two bills to the full House that would terminate the Home Affordable Modification Program (HAMP) and HUD's Neighborhood Stabilization Program. The committee says the bills would prevent $30 billion in taxpayer funds from being spent on ""ineffective"" programs. Already, the House has cleared the way to begin deliberations this week on the two bills advanced by the committee last Thursday to end FHA's Short Refi Program and the Emergency Mortgage Relief Program.

As predicted following the recent settlement proposal from state attorneys general and several federal agencies, servicers are not reacting with enthusiasm to the terms offered. One of the biggest conflicts in coming to an agreement is the proposed punishments servicers will have to face as consequences for their role in last year's robo-signing mess. Though nothing has been confirmed, hefty fines and/or principal reductions are projected to be in development. The reaction from banks and other industry participants has been less than receptive.

Freddie Mac said Wednesday that it has selected Green River Capital and Atlas REO Services to provide sales and disposition support to HomeSteps. HomeSteps is the GSE's real estate sales unit. It markets Freddie Mac-owned REO homes nationwide through local real estate brokers. Freddie Mac says it has contracted the two firms to expand its capacity to handle expected increases in REO inflow volumes.

The California State Department of Real Estate (DRE) focused its attention on upfront fees this week as it continued to warn consumers of persons illegally offering loan modification and mortgage relief services. Since 2008, the DRE has pursued more than 4,500 cases that involved loan modification complaints, resulting in 244 ""desist and refrain"" orders to stop illegal operations that name 785 separate respondents. The agency has also made more than 100 referrals to the California State Bar identifying attorneys involved in unlawful loan modification activities.

HUD's Office of the Inspector General (OIG) reviewed more than 250 loans from 15 lenders and found that nearly half of those loans did not meet the Federal Housing Administration's (FHA) guidelines. The OIG launched Operation Watchdog in January 2010 to examine loans from the lenders and found areas of noncompliance, including misstatements of a borrower's income, liabilities, and credit history, which resulted in actual or expected FHA losses on default claims of more than $11 million.

AARP, the nation's largest nonprofit membership organization established to support the social wellbeing of individuals over the age of 50, filed a lawsuit this week against HUD on behalf of three surviving spouses of reverse mortgage borrowers who are now facing foreclosure. The lawsuit names HUD Secretary Shaun Donovan as the defendant and alleges that the federal agency has made changes to federal rules that offer protection for surviving spouses to allow its lenders to initiate foreclosure and eviction actions against the plaintiffs.