Government

Mortgage debt decreased with overall household debt in the second quarter, the Federal Reserve Bank of New York reported Wednesday. Mortgage balances stood at $7.84 trillion in the second quarter, down by $91 billion from the first quarter. The New York Fed report explained the decrease was partly ""due to reporting gaps associated with the servicing transfer of a higher-than-usual number of loans."" Overall consumer debt continued to fall, ending at $11.15 trillion in the second quarter, down by $78 billion, or 0.7 percent, compared to the first quarter.

Although the pace of loan modification activity slowed from the first to the second quarter this year, foreclosure starts saw an even greater quarterly decline, according to data from HOPE NOW. In the second quarter, servicers provided 204,000 loan modifications to distressed borrowers, down by about 16 percent from the prior quarter. However, loan modifications were still up 13 percent from a year ago. Meanwhile, foreclosures starts were down 30 percent compared to the first quarter and down 38 percent from last year.

Homeowners who refinance continue to overwhelmingly opt for fixed-rate mortgages, and by historical standards, fewer homeowners are using refinances as a means of putting more cash in their pockets, according to Freddie Mac's 2013 Second Quarter Refinance Report. More than 95 percent of homeowners who refinanced their mortgage loans in the second quarter of this year chose fixed-rate loans. At the same time, ""[t]he cash-out amount, while increasing, continues to remain low by historical standards,"" according to Frank Nothaft, VP and chief economist at Freddie Mac.

During a Bipartisan Policy Center forum Tuesday, experts generally agreed the housing market is on the path to recovery, but the strength of the national recovery remained in question. According to Douglas G. Duncan, chief economist at Fannie Mae, we may be in a recovery, but it has been the ""weakest recovery since World War II"" when considering income growth. Richard Smith, CEO and president of Realogy, took a more optimistic approach and stated we are in the early stages of a ""fairly strong recovery,"" with prices reacting to inadequate supply.

A drop in housing-related retailers slowed retail sales last month. Total retail sales increased 0.2 percent in July, down from June's 0.6 percent increase, the Census Bureau reported Tuesday. Economists had expected sales to increase 0.3 percent. The weaker-than-expected retail sales report decreases the likelihood the Federal Reserve will begin to taper its bond buying monetary stimulus program.

Turns out, when the Justice Department announced triumphs of the Distressed Homeowner Initiative in October 2012, the numbers were largely overstated. In an updated press release Friday, the Justice Department announced the initiative actually resulted in 107 criminal defendants charged in U.S. District Courts in Fiscal Year 2012 (October 1, 2011 to September 30, 2012), not the 530 first reported. The corrected release also stated the cases involved more than 17,185 homeowner victims, while the original numbers reported the cases included more than 73,000 homeowner victims.

The Wisconsin Department of Financial Institutions closed on Friday the Bank of Wasau, appointing FDIC as receiver. As of June 30, the bank had approximately $40.7 million in deposits and $43.6 million in total assets.

Hot on the heels of a huge fiscal year (FY) 2012 and the issuing of its 20 millionth home loan, the Department of Veterans Affairs (VA) is working through a mandate to expand its VA Appraiser Fee Panel by 25 percent. ""Right now we have just over 4,100 appraisers on our fee panel,"" said Gerald Kifer, supervisory appraiser of the VA in a WorkingRE.com article. ""We are looking to appoint an estimated 1,400 additional appraisers to VA panels nationwide."" The expansion comes at an appropriate time. VA loan volume has grown a staggering 305 percent from FY 2007 to FY 2012.

Newly initiated foreclosures are on the decline, reaching their lowest numbers since December 2005 in June, according to the latest Housing Scorecard from the Obama administration. Meanwhile, the administration continues to add to the tally of homeowners helped through its Making Home Affordable Program, bringing the total to more than 1.7 million as of June. Looking forward, the administration says it will focus on forming a new housing finance system.

President Obama is trying to solve the wrong problem by calling, as he did in his speech in Phoenix, for the end of Fannie Mae and Freddie Mac as we know it. To be sure, Fannie and Freddie were not the hallmarks of responsibility in the mortgage meltdown, but have gotten a bad rap. For all their housing expertise, they missed all the signals of the housing bubble (but then again so did Federal Reserve chairman Alan Greenspan and his successor Ben S. Bernanke who dismissed it when the first signs of the meltdown emerged). Instead of suggesting replacing Fannie and Freddie to restore the nation's housing markets, the president should be proposing to return them to their original charters.