Government

Americans have lost $7 trillion in home equity in the past five years, and nearly 12 million homeowners are currently underwater. The Progressive Policy Institute says these issues deserve just as much attention in the upcoming presidential election as the issue of unemployment, and in a January report, the institute offers a few suggestions to improve the housing market and ultimately, the economy at large, including shared appreciation mortgages and down payment savings accounts for first-time buyers.

Oregon Attorney General John Kroger has issued a public warning to consumers in the state to be on the lookout for scammers portending to offer independent foreclosure reviews as part of the mandate to major mortgage servicers issued by the OCC and Federal Reserve. Servicers have begun offering case reviews to consumers who faced foreclosure between January 1, 2009 and December 31, 2010. Kroger says scam artists are also contacting Oregon consumers, offering to conduct an ""independent foreclosure home loan review"" or a ""securitization review"" for a fee.

The Securities and Exchange Commission (SEC) on Wednesday charged the holding company for one of Florida's largest banks and its top executive with misleading investors about growing problems with the company's loan portfolio early in the financial crisis. The SEC alleges that BankAtlantic Bancorp and its CEO and chairman Alan Levan made false statements in public filings and earnings calls in order to hide the deteriorating state of its commercial residential real estate land acquisition and development loans.

Maryland Attorney General Douglas Gansler and Wells Fargo have reached an agreement to settle allegations that two companies Wells acquired in 2008 - Wachovia and Golden West - used deceptive practices to market adjustable-rate mortgages (ARMs). In addition to loan modifications for certain consumers, Wells Fargo has agreed to pay $940,056 to the attorney general's office for restitution to affected borrowers who lost their homes in foreclosure.

Principal reductions - the merits of which have been debated strongly in recent years - are gaining support from lawmakers. Two congressmen are pushing to subpoena the Federal Housing Finance Agency (FHFA) for its analysis of the potential effects of principal reductions by the GSEs. Reps. Elijah Cummings of Maryland and John Tierney of Massachusetts sent a letter Wednesday to the chairman of the House Oversight Committee urging him to issue a subpoena after several failed attempts to procure the desired information from FHFA.

Government officials are in the process of reviewing 4,000-plus recommendations for turning repossessed homes into rental properties in order to trim the REO inventory held by federal housing agencies. The administration says it is pursuing potential ideas for REO-to-rental pilot programs ""with a sense of urgency,"" but two California firms don't plan to wait on the government's involvement. Carrington Holding Company and Oaktree Capital have partnered to buy up $450 million in REOs and convert them into rentals.

Wolters Kluwer Financial Services continues to expand its regulatory and risk management consulting services. The company recently brought on Timothy R. Burniston to serve as VP and senior director of professional services for its risk and compliance business. Burniston, previously a senior associate director with the Federal Reserve Board's division of consumer and community affairs, joins the company's growing roster of more than 400 in-house regulatory and risk management experts.

After estimations that state attorneys general would reach a settlement with banks by Christmas failed to pan out, word today is the settlement is weeks away. Negotiation talks between state counsels and the nation's five largest servicers are entering their second year, and a few attorneys general have already left the table. The parties are supposedly ""very close"" to a settlement that would provide 1 million homeowners with principal reductions, according to remarks from HUD Secretary Shaun Donovan on Wednesday.

Freddie Mac expects a 2 percent to 5 percent increase in home sales in 2012 amid moderate economic growth over the year, according to the GSE's U.S. Economic and Housing Market Outlook for January. Approaching the year with ""cautious optimism,"" Freddie Mac's chief economist Frank Nothaft says there are some positive signs in the job market and consumer confidence levels, and even housing is starting to raise hopes for a continuing, gradual economic recovery.

One Ohio congressman is taking the plight of homeowners in his foreclosure-ravaged state straight to federal regulators. Sen. Sherrod Brown says guidance issued to mortgage servicers last month by the Office of the Comptroller of the Currency (OCC) amounts to ""a free pass"" for banks to abandon foreclosed homes, a practice Brown says undermines neighborhoods and property values and leaves local taxpayers on the hook for maintenance and cleanup costs.