Foreclosure

DecisionReady, a provider of default servicing compliance solutions based in California, announced this week that it has reviewed 1 million delinquent residential mortgage loans for loss mitigation and foreclosure process and policy compliance for leading servicers. DecisionReady technology offers compliance for early stage delinquency through loss mitigation, foreclosure, and the post-sale process to ensure regulatory rules and investor guidelines are met.

According to data released by Lender Processing Services (LPS) Tuesday, delinquency rates are down across all first-lien home loan products, with an 18 percent overall decline since the start of 2010. The company attributed the drop to more loans entering foreclosure, combined with a decline in new delinquencies. The nation's foreclosure inventory, on the other hand, swelled almost 10 percent over the course of 2010. LPS says 30 percent of the foreclosures started during the month of December are ""repeat foreclosures,"" meaning they have been in foreclosure previously.

A new Florida law firm, Gerner Mayersohn May, PLLC, was recently formed in Fort Lauderdale by David E. Gerner, Esq, of Ohio-based Gerner & Kearns, Ted Eric May, Esq., of New York-based Sheldon May & Associates, and Leah Mayersohn of the Mayersohn Law Group in Florida. The new firm will provide legal counsel to clients throughout the state, focusing on mortgage banking, default services, and collections.

Alabama Governor Robert Bentley recently announced the creation of Hardest Hit Alabama (HHA), a new program that will provide $162 million for foreclosure prevention efforts in the state. The Alabama Housing Finance Authority will use the money, which was allocated by the U.S. Treasury, to provide temporary assistance to unemployed or underemployed homeowners in the state to help them stave off foreclosure while they search for work.

With loan modifications on a steady decline, the analysts at Fitch Ratings say the common thread running through the industry has become when will the servicer foreclose as opposed to how can a distressed borrower stay in their home. Fitch's analysis of loan mod trends shows little improvement in success rates. While alternatives like short sales are modestly improving loss severities, the agency says servicers report borrowers are electing to remain in their property longer by staying on through the extended foreclosure process.

Bank of America has set up a new operational division to service all defaulted residential loans. It will be led by Terry Laughlin, who will oversee the bank's mortgage modification and foreclosure programs, and is charged with resolving investors' mortgage repurchase claims. The decision to establish a new, separate division to handle the company's problem loans came out of the bank's ""self-assessment of default servicing"" following the robo-signing scandal.

Although the nation is in the midst of an economic recovery, unemployment levels remain extremely elevated, and that - along with lower housing prices and a large inventory of homes in foreclosure - is leading to an increase in defaults on housing finance agency (HFA) loans, according to the analysts at Standard & Poor's (S&P). A recent study by S&P has revealed that delinquent HFA loans have exceeded state averages for the first time since the agency began tracking loan performance in 2006.

Moody's Investors Service studied two million loans backing residential mortgage-backed securities (RMBS) pools and found that a loan that is modified and then reported as current is three times as likely to default over the ensuing twelve months as a current loan that has not been modified. The agency's also put the practices of eight major servicers under the microscope. It found that six-month re-default rates vary considerably, from 20 percent for Citi and Litton to 33 percent for Bank of America.

California's attorney general says the $6.5 million settlement from two former Countrywide executives will be used to establish a fund to help foreclosed homeowners. The settlement comes from a litigation that began more than two years ago against Angelo Mozilo and David Sambol. According to the lawsuit, Countrywide lured buyers with low teaser rates and failed to inform them of the downsides of adjustable-rate loans. The suit alleged that Mozilo and Sambol knew of these practices and did nothing to stop them.

In more bad news for the Home Affordable Modification Program (HAMP), three congressmen, Reps. Jim Jordan, Patrick McHenry, and Darrell Issa have proposed a bill to end the program. Issa is chairman of the Oversight and Government Reform Committee and introduced the bill at the committee's first hearing last week. HAMP took a beating at the hearing from the lawmakers. They called the program a ""colossal failure"" and said it's just one more example of why government interference in the private sector doesn't work.