Foreclosure

To alleviate issues of foreclosure in one of the hardest hit areas, Illinois Governor Pat Quinn launched two initiatives. One effort will connect homeowners to resources to keep them in their homes, and another will help revitalize areas affected by foreclosed and vacant properties. Illinois is consistently ranked among the top 10 states with the highest number of foreclosures.

While the $25 billion settlement between five of the nation's largest servicers and 49 of the state attorneys general awaits approval from a judge, there is some relief in the industry that the 16 months of investigation and negotiation has come to a close. Mike Heid, president of Wells Fargo Home Mortgage, says the agreement represents ""a very important step toward restoring confidence in mortgage servicing and stability in the housing market.""

Zillow forecasts home values will be on the decline through December 2012, but the decrease will be smaller than in 2011. Home values in the U.S. fell in the fourth quarter, with the Zillow Home Value Index sinking 1.1 percent after a less significant decline for the two previous quarters. Zillow's report also shows that the rate of homes foreclosed on increased slightly to 8.2 out of every 10,000 in December, compared to 8 out of every 10,000 homes in November.

The Office of the Comptroller of the Currency (OCC) and the Federal Reserve issued statements Thursday detailing monetary penalties they have levied against the nation's largest servicers for ""unsafe and unsound mortgage servicing and foreclosure practices."" The OCC is assessing a total of $394 million in penalties against Bank of America, Citi, JPMorgan Chase, and Wells Fargo. The Federal Reserve's monetary sanctions total $766.5 million and target the same four institutions as well as Ally Financial.

Property code violations come in all shapes and prices, but Field Asset Services (FAS) narrowed the list down to the top 10. The list is based on FAS's 30 mortgage and asset management clients; the company services more than 130,000 active properties on an ongoing basis. ""Cities and local municipalities across the nation are becoming more vigilant towards issuing code violations to reduce blight and improve neighborhood conditions,"" said Dale McPherson, CFO of Field Asset Services.

Thursday's unprecedented $25 billion settlement between federal and state officials and the nation's top mortgage servicers was especially favorable to California. After leaving settlement negotiations in September, claiming the proposal at the time was inadequate for California homeowners, Attorney General Kamala Harris opted to sign on to the final settlement, which was revised to secure $18 billion for the state of California. At the time Harris left the settlement, California was expected to receive about $4 billion from the banks.

While the $25 billion robo-signing settlement concludes 16 months of intense negotiations, questions still remain on how this will impact borrowers and the larger economy. Capital Economics stated that while it is good that the settlement has been finalized and will offer principal reductions and refinancing schemes to borrowers, the bigger picture is that the settlement is not large enough to dramatically alter the outlook for the housing market or the wider economy.

Federal and state officials announced Thursday morning that the federal government and 49 state attorneys general - with Oklahoma as the lone exception - have reached a $25 billion agreement with the nation's five largest mortgage servicers to address what authorities describe as ""loan servicing and foreclosure abuses."" The settlement with the nation's top five servicers – Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial (formerly GMAC) - provides financial relief to homeowners and establishes new homeowner protections.

Analysts at Fitch Ratings expect to see a sharp rise in the cost to service mortgage loans. They describe the housing recovery in the U.S. as ""unhurried"" and as a result, they say lenders have been forced to shoulder higher foreclosure expenses. Fitch says increased foreclosure costs compounded by credit, compliance, regulatory, and other real-estate owned expenses are beginning to have a profound effect on the industry. The agency estimates the cost of servicing nonperforming loans is likely to double from pre-crisis levels.

HOPE NOW announced plans to reach out to military homeowners facing foreclosure. Stakeholders representing the mortgage servicing industry, non-profit counselors, investors, regulators, and military members met in Washington, D.C. to strategize on ways to assist those in the military who are at risk of losing their home due to a permanent change in station and other issues.