Government

While originations are down across the board, ""[t]he drop in originations has been most pronounced among borrowers with lower credit scores,"" said Federal Reserves Governor Elizabeth A. Duke. From 2007 to 2012, purchase originations among borrowers with credit scores higher than 780 declined by 30 percent. In contrast, purchase originations for borrowers with credit scores between 620 and 680 declined by 90 percent, and originations among borrowers with credit scores below 620 were ""virtually nonexistent,"" according to Duke.

As the stream of foreclosure review settlement checks continue to be released, the Office of the Comptroller of the Currency (OCC) provided another update on the status of the checks' whereabouts. So far, after unleashing the first round of payments April 12, more than 2.2 million recipients have cashed or deposited more than $2 billion in checks as of May 9.

Most mortgage fraud takes place in the short sale and REO space, according to Rob Hagberg, associate director of fraud investigations at Freddie Mac. ""This area is ripe with fraud,"" he said during a webinar hosted by CoreLogic. While servicers and others in the industry have adapted to some fraud schemes and put measures in place to detect and prevent fraud, schemes continue to evolve as fraudsters find new ways to manipulate sales. Both short sale and REO fraud often require fraudsters to convince servicers a home is worth less than it actually is.

According to Freddie Mac, the 30-year fixed-rate mortgage (FRM) averaged 3.42 percent (0.7 point) for the week ending May 9, up from last week, when it averaged 3.35 percent. Frank Nothaft, VP and chief economist for Freddie Mac, explained the rise in fixed rates this week was a reaction to April's better than expected employment report.

A former senior bank official of a Delaware bank that received government funds pleaded guilty to bank conspiracy fraud, according to a joint announcement from the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and the U.S. Attorney's office for Delaware.

Foreclosure activity in April fell to a 74-month low across the country, but many judicial states are experiencing rising foreclosures. Furthermore, judicial foreclosure auctions reached a 30-month high, according to RealtyTrac's April U.S. Foreclosure Market Report. April's scheduled judicial foreclosure auctions, which reached their highest level in 30 months, demonstrated a 22 percent monthly increase and a 31 percent yearly increase. In contrast, non-judicial foreclosure auctions reached an 88-month low, having fallen 43 percent from last April.

About 96,000 borrowers who received a check under the foreclosure review settlement should expect a second payment since their checks were for a lesser amount than what they should have received. The second round of payments to make up for the difference is only for eligible borrowers who had their mortgage serviced by former subsidiaries of Goldman Sachs and Morgan Stanley. Rust Consulting, the paying agent, announced the supplemental checks are scheduled to be sent around May 17. In a release, Rust Consulting said ""a clerical error"" led to the lesser amount.

In the first quarter of this year, the mortgage giant reported pre-tax income of $8.1 billion, the largest in its history. Fannie Mae attributed the improvement to ""strong credit results driven by an increase in home prices, including higher average sales prices on Fannie Mae-owned properties, a decline in the number of delinquent loans, and the company's resolution agreement with Bank of America."" The GSE also announced it will pay $59.4 billion to Treasury.

First time claims for unemployment insurance for the week ended May 4 dropped 4,000 to, 323,000, again the lowest level in more than five years the Labor Department reported Thursday. Economists expected initial claims to increase to 335,000. First time jobless claims for the week ended April 27 were revised up to 327,000 from the originally reported 324,000.

Freddie Mac's first-quarter earnings came in slightly ahead of last year's final quarter, the company revealed in its quarterly filing. First-quarter net income at Freddie Mac was $4.6 billion, barely above the $4.5 billion recorded in Q4 2012 but well above the $577 million in last year's first quarter--and the second largest in company history.