Government

Washington's Westside Community Bank has the dubious honor of being the first to fall in 2013. The FDIC announced that the Washington State Department of Financial Institutions shuttered Westside on Friday.

Foreclosure inventory in November fell as requirements from the national mortgage settlement ""influence the pace of first-time foreclosure starts,"" Lender Processing Services (LPS) stated in a recent report. Foreclosure inventory shrunk to 3.51 percent in November, a near 10 percent decline from September 2012. LPS explained the settlement requires the servicers to provide a 14 day notice before referring borrowers to foreclosure, and the letters were sent starting in September. However, as servicers get up to speed on settlement requirements, LPS says it expects foreclosure starts to rebound in the coming months.

According to the latest monthly housing scorecard from the Obama administration, the housing market has officially bottomed out, although ""recovery remains fragile."" With prices rising for 12 consecutive months as of October and sales on the rise as well, HUD's senior advisor on housing finance, Michael Berman said, ""[O]ur housing market is continuing to show important signs of recovery."" The government's Making Home Affordable Program has achieved more than 1.5 million loss mitigations and early delinquency interventions, according to the December report.

Three former executives of the Bank of Commonwealth based in Norfolk, Virginia were charged for understating millions in loan losses and hiding the state of the bank's portfolio, the Securities and Exchange Commission (SEC) announced in a statement. Edward J. Woodard (former CEO, president, and chairman of the board), Cynthia A. Sabol (former CFO), and Stephen G. Fields (former EVP) were charged for allegedly misrepresenting the bank's deteriorating loan portfolio to investors.

The Federal Reserve announced it paid a record $88.9 billion to Treasury in 2012. In 2011, the Fed distributed $75.4 billion to Treasury. The previous record amount was for $79.3 billion in 2010, according to the Fed. The earnings are from Fed programs that were introduced to stimulate the economy and involve the purchase of billions in mortgage-backed securities (MBS) each month to keep interest rates down. Currently, the Fed buys $40 billion in MBS each month and $45 billion in Treasury purchases.

President Obama opened a big hole in his White House by tapping Jack Lew to replace Timothy Geithner as Secretary of the Treasury, leaving empty for the moment the role of Chief of Staff. Meanwhile, it may take a while before the impact of the long-awaited Consumer Financial Protection Bureau's rules on qualified mortgages will be felt. The CFPB heard the pleas of lenders and housing advocates to avoid taking steps to slow the incipient housing recovery.

After issuing a finalized qualified mortgage (QM) rule on Thursday, the Consumer Financial Protection Bureau (CFPB) also released its guidance on rules to protect consumers of high-cost mortgages. For borrowers with high-cost mortgages, the bureau's final rule bans potentially risky features such as balloon payments (with some exceptions) and penalties for borrowers who pay off loans early. The rule also bans and limits certain fees and practices, such as fees for modifying loans and fees for requesting a payoff statement.

Four years after inheriting an economy on the brink, Secretary of the Treasury Tim Geithner is stepping down. The nominee to replace him: Jack Lew, former director of the Office of Management and Budget during both the Clinton and Obama administrations and current White House Chief of Staff.

Following Bank of America's announcement of a $306 billion sale of mortgage servicing rights (MSRs) Monday and amid talk of more MSR sales from the bank Thursday, Fitch suggests BofA may not be alone in its strategy of unloading MSRs. ""We believe that other banks with large MSR assets may also begin to complete sales or pursue other strategies to limit their size on bank balance sheets,"" Fitch said this week. Fitch specifically points to Wells Fargo and JP Morgan as banks likely to fall in line with BofA's approach.

According to Freddie Mac's Primary Mortgage Market Survey, the average rate on a 30-year fixed-rate mortgage (FRM) was 3.40 (0.7 point) percent for the week ending January 10, up somewhat significantly from 3.34 percent in 2013's first survey. The 15-year fixed average also climbed--though not as drastically--reaching 2.66 percent (0.7 ppoint). The 15-year FRM averaged 2.64 percent previously.