Government

The Federal Housing Finance Agency (FHFA) on Wednesday issued a notice to investors interested in buying government-owned REOs in bulk for use as rental properties, encouraging them to register with Fannie Mae in order to pre-qualify as an eligible bidder. FHFA says the first pilot transaction will be announced in the ""near-term."" During the pilot phase, Fannie Mae will sell off pools of various types of assets, including rental properties, vacant properties, and nonperforming loans, with a focus on the hardest-hit areas.

Massachusetts Attorney General Martha Coakley has seen mortgage and foreclosure-related complaints quadruple in her state over the past two years. In fact, the category now overshadows all other types of consumer complaints. Coakley's office counted 983 mortgage and foreclosure-related complaints last year, a 431 percent increase over 2009. Coakley says the data confirms that the subprime lending and foreclosure crisis is a top concern for homeowners who face losing their most valued possession.

President Obama on Wednesday outlined his proposal to allow millions more homeowners to cash in on today's historically low mortgage rates. He issued a call to Congress to pass legislation to establish a streamlined refinancing program through the Federal Housing Administration (FHA) that would be open to all non-GSE borrowers with non-jumbo loans who are current on their payments. The program would cost $5 to $10 billion and would be paid for by imposing fees on the largest financial institutions.

Was the nation's second largest mortgage company betting against mortgage refinancing? Allegations supporting the affirmative which were made public this week have prompted the U.S. Treasury to launch an official probe. Analysts say the story is less sensational than it appears and only highlights the conflict that comes with being neither fully public nor fully private. The GSE's main business is guaranteeing mortgage credit risk, but it needs to turn a profit to stay in this business, all the while being told its duty is to foster a housing recovery.

State attorneys general have until Friday to sign on to a settlement that would resolve claims against the nation's top five mortgage servicers surrounding documentation errors in foreclosure processing, according to a widely circulated media report. The year-long back-and-forth between state counsels and the largest servicers may be in its final days ... possibly. Attorneys general in Delaware and California have already rejected the proposal, and some say without California, in particular, the settlement may not be of interest to the banks.

State and federal regulators stepped in to shut down five lenders over the weekend, including one New York-based credit union and four FDIC-insured institutions - two in Tennessee and one each in Florida and Minnesota. Eastern New York Federal Credit Union in Napanoch, New York, is the first federally insured credit union to be liquidated in 2012, while the FDIC's failed-bank tally for the 2012 calendar year now stands at seven.

The special mortgage investigation unit announced by President Obama during his State of the Union address Tuesday night has taken shape. The new Residential Mortgage-Backed Securities (RMBS) Working Group will operate within the Financial Fraud Enforcement Task Force and will consists of at least 55 Department of Justice attorneys and investigators, as well as state attorneys general. The president has tasked the group with uncovering those responsible for pooling and selling mortgage bonds that contributed to the financial crisis.

Changes announced Friday to the Home Affordable Modification Program (HAMP) are expected to extend relief to a larger share of struggling homeowners as well as renters. One of the key adjustments centers around principal reductions. To encourage investors to agree to the principal reducing modification currently available through HAMP, Treasury is tripling incentives for such restructurings, paying from 18 to 63 cents on the dollar, and extending this same incentive to Fannie Mae and Freddie Mac, who have previously opted not to participate in HAMP's principal writedown option.

With vacant and deteriorating properties taking a toll on communities throughout Ohio and Michigan, 16 congressmen from the two states are proposing large-scale demolition as a means of easing the burden of these problematic properties, and they've petitioned President Obama for federal funding. They say some homes in Ohio are selling for 8 percent of their appraised value as a result of neighboring vacancies, and they cite a demolition project in Flint, Michigan, that preserved $109 million in property values among the remaining inhabited homes.

New York Attorney General Eric Schneiderman has reportedly been designated co-chair of President Obama's new investigative team to probe the mortgage industry for past misconduct. In his State of the Union address, Obama announced the creation of a special unit of federal prosecutors and state attorneys general to examine the risky lending practices that led to the financial crisis. As the industry and the economy stagger toward recovery, some believe digging into the past may not be the best way to move forward.