Government

A report from the Federal Housing Finance Agency (FHFA) Office of Inspector General stated that the FHFA needs to improve how the agency supervises and oversees Freddie Mac and points to issues with regulating servicers contracted by the GSE. The report revealed that in 2008, FHFA had information indicating that mortgage servicing represented a heightened risk to the enterprises, but FHFA did not begin to devote added attention to servicing issues until August 2010. From the first quarter of 2008 through the fourth quarter of 2010, the number of seriously delinquent Freddie Mac loans went up 376 percent, going from 95,000 to 453,000, according to the report.

Fannie Mae is looking to change the way insurance is applied to borrowers who end up with force-placed insurance due to gaps in coverage. The GSE announced Tuesday that it has issued a request for proposals (RFP) inviting insurance companies to compete for Fannie Mae LPI business, which should lead to significantly reduced insurance costs. By reducing insurance costs, homeowners, taxpayers, and Fannie Mae are all said to save money. Fannie Mae also said it will provide servicers with new policy guidelines on when and how to secure LPI, as well as guidance regarding allowed reimbursable costs.

First time claims for unemployment insurance rose 8,000 in the week ended March 2, the Labor Department reported today, the third straight weekly increase after revisions to earlier data. Continuing claims, reported on a one-week lag, increase 10,000 to 3,416,000, the second straight weekly increase.

Through a streamline refinance program, borrowers with FHA-endorsed loans may find it easier lock in lower interest rates while paying less in fees. Beginning June 11, 2012, the FHA will lower upfront mortgage insurance premiums to .01 percent and reduce annual premiums to .55 percent for certain FHA borrowers, Carol Galante, acting commissioner of the FHA, announced today. To be eligible, borrowers must to be current on their FHA-insured loans, which need to have been endorsed on or before May 31, 2009.

President Obama is announcing two steps that will be taken to assist servicemembers and FHA borrowers, the administration stated in a release today. One provision will have servicemen who were foreclosed upon since 2006 reviewed, and if any are found to have been wrongfully foreclosed upon, they can receive compensation equal to a minimum of lost equity, plus interest and $116,785. In addition to foreclosure reviews, servicemembers will be reviewed for interest rates to see if any were charged more than 6 percent after a request to lower the rate.

Financial institutions filed 19,934 mortgage loan fraud (MLF) suspicious activity reports (SARs) in the third quarter of 2011, a 20 percent increase compared to the third quarter last year, when 16,567 reports were filed, according to the Financial Crimes Enforcement Network (FinCEN) report of MLF SARs. In the third quarter of 2011, about 62 percent of the filings involved suspicious activities that started four or more years ago, compared to only 24 percent a year ago during the same time. The 2011 filings stem largely from mortgage repurchase demands and special filings generated by several depository institutions related to mortgages originated in the height of the housing boom, according to the report.

During January, approximately 74,000 homeowners received permanent loan modifications from mortgage servicers, according to modification data released by HOPE NOW, a voluntary, private sector alliance of mortgage servicers, investors, mortgage insurers and non-profit counselors. While the January numbers are a decrease compared to the previous two months, it was a record-breaking month for foreclosure sales. For the first time since October 2009, foreclosure sales, which reached approximately 79,000, outpaced loan modifications.

State regulators closed Global Commerce Bank of Doraville, Georgia on Friday, marking the first bank closing for March and the second Georgia bank to close in two weeks. So far this year, twelve FDIC-insured banks have closed. The FDIC entered into a purchase and assumption agreement with Metro City Bank of Doraville, Georgia, to assume all of the deposits of Global Commerce Bank.

Five California men were charged for allegedly operating a mortgage modification scheme and defrauding hundreds of victims under the business as CSFA Home Solutions, the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP) and Orange County, California, District Attorney Tony Rackauckas announced Friday in a statement. Between January 2009 and March 2012, the defendants are accused of creating numerous fraudulent loan modification businesses through which they purported to offer loan modification assistance.

Former CEO of Brookstreet Securities Corp. was ordered by a federal judge to pay a maximum $10 million for securities fraud, the Securities and Exchange Commission (SEC) announced Friday in a statement. The SEC charged Stanley C. Brooks and Brookstreet in December 2009 with fraud due to the sale of risky mortgage-backed securities to customers who were not looking to purchase risky investments. The more than thousand customers who bought the risky Collateralized Mortgage Obligations (CMOs) through Brookstreet included seniors and retirees.