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Newer Modifications Less Likely to Re-Default: Barclays

While loans restructured under the federal government's Home Affordable Modification Program (HAMP) have been highly criticized for their propensity to re-default, the analysts at Barclays Capital say newly modified mortgages stand a better chance of staying current. New data also suggests that foreclosure-to-REO roll rates are ticking up while delinquency rates have peaked, signaling that servicers' efforts have caught up to market conditions and they're making progress working through the foreclosure backlog.

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Reno Bank Shut Down by Regulators

For the second weekend in a row, banking regulators closed the doors on just one institution, as opposed to the massive rounds of failures that the industry has grown accustomed to since the financial crisis took hold. This weekend, it was Nevada Security Bank in Reno that met its demise. The closing brings the number of FDIC-insured bank failures for the year to 83. Oregon's Umpqua Bank acquired the seized institution.

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GSEs Extend Forbearance to Borrowers with Chinese Drywall Problems

The damage caused by toxic drywall imported from China has left far too many borrowers in a situation of financial hardship, with replacement costs eating away at their funds to the point that some are unable to make their mortgage payments. Government-backed mortgage giants Fannie Mae and Freddie Mac announced Friday that they will grant forbearances to borrowers experiencing problems as a result of the defective wallboard, which investigations have concluded can cause health problems and corrodes wiring, plumbing, gas pipes, even fire alarms.

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National Creditors Connection Establishes New Short Sales Desk

New incentives intended to stem deteriorating conditions in housing markets, and even spark a revival, encourage the use of foreclosure alternatives for troubled properties. Options such as short sales, deeds-in-lieu, and alternative modifications are becoming more prevalent, and their success is dependent on targeted, effective borrower contact strategies. To address this need National Creditors Connection Inc. has established a ""Short Sales Desk"" to help servicers assess whether delinquent borrowers are good candidates for a short sale or other foreclosure alternative program.

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GMAC Mortgage Faces Lawsuit for Failing to Properly Service Mortgages

Citing mismanaged loan servicing among other accusations, American Residential Equities (ARE) has filed suit against GMAC Mortgage Corporation, a big player in the residential mortgage servicing industry. The complaint accuses GMAC of failing to properly service a number of mortgages and REO properties owned by Miami-based ARE. Additionally, the suit claims ARE was pressured by GMAC into offering preferential treatment and a loan modification to the brother of Georgia State Rep. Joe Heckstall.

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House Republicans Want Penalties for Strategic Defaulters

As tumbling property values push more and more borrowers underwater, the number that are opting to walk away from their mortgage obligation, even if they can afford the payments, is growing. This idea of strategic default has become a universal concern within the industry, and there are some lawmakers who are pushing to impose penalties on those that walk away. House Republicans have passed a provision that would make homeowners who strategically default ineligible for an FHA-insured loan in the future.

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Federal Task Force Arrests 485 for Mortgage Fraud

The Justice Department Thursday announced the results of the largest mortgage fraud sweep in history. Since the nationwide crackdown began in March, Feds have gone after 1,215 criminal defendants who are allegedly responsible for more than $2.3 billion in losses. So far, 485 arrests have been made, and they say there will be hundreds more in the coming weeks. In addition to the arrests made, the Justice Department says the operation has resulted in 191 civil enforcement actions and the recovery of more than $147 million.

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Taylor Bean Chairman Indicted on $2B Mortgage Fraud Scheme

The former chairman and majority owner of the now-defunct mortgage lender Taylor Bean & Whitaker was arrested Tuesday night in Ocala, Florida. Lee Bentley Farkas has been charged in a 16-count indictment for his alleged role in a $1.9 billion fraud scheme that the Department of Justice says contributed to the 2009 failures of both Taylor Bean, once the nation's largest non-depository mortgage lending company, and Colonial Bank, which at the time of its collapse was one of the 50 largest banks in the United States.

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Fitch Projects Steep Re-Default Rates on HAMP Modifications

The government's Home Affordable Modification Program (HAMP) has been widely criticized for its substandard results, and a new report from Fitch Ratings indicates that even the small successes it's made so far may soon be reversed. The company says that within 12 months, as many as 65 percent of the prime loans modified under the federal program will likely re-default. For modifications on subprime loans, the projection is even higher - 75 percent. What's worse is that Fitch called its estimates ""conservative.""

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Senate Approves Extension of Tax Credit Closing Deadline

The U.S. Senate has passed an amendment that would extend the closing deadline of the homebuyer tax credit by three months. Right now, qualifying homebuyers who were under contract by April 30 have until June 30 to close the deal. But because of the large volume of applications for lenders to process, concerns have begun to surface that some buyers may miss out on the tax break simply because of the backlogged pipeline. The Senate's amendment would extend the window to complete transactions to September 30.

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