Foreclosure

In response to the pressing need to provide housing-related assistance to stabilize communities affected by high levels of foreclosures, the federal bank and thrift regulatory agencies recently announced a proposed change to the Community Reinvestment Act regulations. This change, the agencies said, would specifically encourage depository institutions to support the Neighborhood Stabilization Program administered by HUD.

Legal actions tied to foreclosures and investor-related cases have surged. An industry study released this week shows that the Mortgage Litigation Index prepared by the Washington, D.C.-based firm Patton Boggs LLP hit an all-time high during the first quarter of this year. Active cases during the three-month period totaled 155, according to the report. It was the highest reading since the index was launched in 2007. Criminal cases more than doubled and mortgage insurance emerged as an area of growing litigation.

The number of loans held by Fannie Mae and Freddie Mac that were 60-plus-days delinquent stood at 1.7 million at the end of the first quarter of 2010, the companies' conservator said in a report to Congress this week. While the volume of past dues may seem colossal, FHFA says the figure actually represents a 1.3 percent decrease - the first decline in two years. The agency says servicers are working through the glut of GSE delinquencies at a much faster pace, too, with foreclosure prevention actions up 75 percent in Q1.

Servicers continued their loss mitigation efforts under the Home Affordable Modification Program (HAMP) last month. According to the Treasury's latest HAMP report card, 346,816 modified loans had been granted permanent status as of the end of May, up more than 15 percent from 299,092 in April. As for individual servicer performance, Bank of America led the way once again with 62,969 permanent modifications in place at the end of May. The title of highest conversion rate, though, went to HomeEq Servicing, at 86 percent.

Four months after Bank of America and its special loan servicer CWCapital Asset Management sought to foreclose on Manhattan's largest apartment complex, a New York federal judge has given them the green light to move forward with a foreclosure sale. The owners of Stuyvesant Town and Peter Cooper Village defaulted on $3 billion in senior mortgage bonds earlier this year in an attempt to force CWCapital to restructure the debt -- a move that backfired. The judge ruled that the amount owed has grown to $3.67 billion. The complex is currently estimated to be worth $1.9 billion.

ZipRealty, one of the largest real estate brokerages in the United States, offers its clients access to more than 290 short sale agents and recently launched a Ziprealty.com microsite dedicated to providing house hunters and home sellers with resources to navigate the complicated short sale process. The company says that while nearly 13 percent of home listings across the markets it serves are currently short sale properties, many clients are confused about how these sales differ from standard sales -- and ZipRealty is working to eliminate that confusion.

Pre-foreclosure notices have been sent to 57,256 New York homeowners who have fallen behind on their mortgage since February 13, 2010. State law now requires that a pre-foreclosure notice be sent at least 90 days before the lender commences legal action and mandates that all servicers provide the New York State Banking Department with key information from these notifications. The details help officials identify areas of at-risk homeowners and allow housing counselors to proactively reach out to delinquent borrowers.

Enterprise Community Partners, Inc., a Columbia, Maryland-based provider of development capital to create affordable homes and rebuild communities, recently announced that it has appointed Robert Grossinger as VP for national foreclosure response. Grossinger joins the company from Bank of America, where he was SVP in the corporate social responsibility group overseeing the bank's neighborhood stabilization efforts, including its REO sales to Neighborhood Stabilization Program recipients.

As households across the nation continue to face the threat of foreclosure, many homeowners are looking for new loss mitigation options. In fact, some at-risk borrowers want to pursue a loan modification on their own--but know they need help. In response to this, Mesa Law Group recently launched a new program that provides the backing of the firm's insight and preparation for at-risk homeowners who are on a budget and are attempting to modify their loan directly with their lender.

The analytics firm CoreLogic released its Home Price Index Monday, which shows that residential values in the United States rose in April on an annual basis -- the second consecutive monthly increase. The company reported that home prices, including distressed sales, were up 2.6 percent compared to April 2009. Excluding distressed sales, year-over-year prices increased by 2.2 percent, which seems to signal that distressed properties now are not as heavily discounted as they were a year ago and are closing the price gap between traditional, non-distressed homes.