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Freddie Mac: Economy Needs Fiscal Policy and Fiscal Stimulus

Even while interest rates continue to post record and near-record lows and affordability is relatively high, many consumers choose to rent rather than purchase homes. According to Freddie Mac's chief economist Frank Nothaft, financial worries among consumers are likely holding back home sales, which remain lackluster despite the most affordable home-buying market in decades. Nothaft says a boost in job and income growth would help instill confidence in consumers and in turn, stimulate the housing market.

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OCC: Servicers to Spend One Year or More Reviewing Foreclosures

It will be a long road ahead for the 14 servicers who received consent orders from federal regulators earlier this year. Acting Comptroller of the Currency John Walsh says the servicers will spend the next year or more recompensing for past foreclosure errors. Servicers must hire independent consultants to audit cases from 2009 and 2010, set up dedicated websites and toll-free numbers, and launch massive mailing and advertising campaigns to reach borrowers who may have been affected.

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SEC Considering Legal Action Against S&P for Rating of Mortgage Debt

The nation's foremost securities regulator is considering a civil injunction against Standard & Poor's (S&P) for its rating of a collateralized debt obligation (CDO) linked to high-risk mortgages. S&P's parent company told investors Monday it received notice that the Securities and Exchange Commission (SEC) may proceed with enforcement actions and monetary penalties. At the center of the investigation is a $1.6 billion CDO from 2007, which has been cited as an example of why the financial crisis ran so deep.

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Regulators Shut Down California and Virginia Lenders

State and federal regulators stepped in to close the doors on two community-based lenders over the weekend - one in California and one in Virginia pushing this year's failed bank tally to 73. Citizens Bank of Northern California was acquired by Tri Counties Bank out of Chico, California. Bank of the Commonwealth in Norfolk, Virginia was the larger of the two closings. It was picked up by North Carolina's Southern Bank and Trust Company.

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Fed Uncovers Sharp Drop in Lending in Foreclosure-Ridden Areas

Mortgage lending has declined sharply in neighborhoods with high levels of foreclosures, according to the Federal Reserve. The U.S. central bank looked at what the Neighborhood Stabilization Program (NSP) identified as ""highly distressed"" census tracts. Based on information gathered under the Home Mortgage Disclosure Act (HDMA), the Fed found that home-purchase lending in these highly distressed tracts was 75 percent lower in 2010 than it had been in these same tracts in 2005, and primarily reflects tighter credit for higher-income borrowers.

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Lawmakers Consider Making Florida a Non-Judicial State

Florida has one of the longest foreclosure timelines in the country, and some state lawmakers hope to shorten that timeline by removing the courts from the process. Florida is one of more than 20 judicial states -- states that require foreclosures to funnel through the courts before becoming official. Governor Rick Scott says he is interested in learning more about the prospect of moving to a non-judicial process, but not all state officials are open to the idea.

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Inspector General: FHFA Examination Process Not Up to Par

According to the Federal Housing Finance Agency Office of Inspector General (FHFA-OIG), FHFA's examination process is not up to par. FHFA-OIG says it has identified shortfalls in the agency's examination coverage, particularly in the areas of real estate owned (REO) and default-related legal services. In fact, the inspector general says FHFA has not conducted an examination of the GSEs' management of their REO inventories, despite the surging number of foreclosures, since 2007.

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Divide Widens Within AG Camp Over Robo-Signing Settlement

A year after evidence of robo-signing related to the processing of home foreclosures surfaced, state attorneys general don't seem to be any closer to a consensus on what should and shouldn't be included in the settlement. In fact, dissension among states' lead counsels is growing. Attorneys general from Kentucky and Minnesota have now joined the faction questioning the thoroughness of the investigation. Of particular concern is liability related to securitizations and the use of MERS.

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Illinois Announces $345M Mortgage Assistance Program for Unemployed

Illinois Governor Pat Quinn announced a program last week that he says will help approximately 15,000 homeowners threatened by foreclosure. The Illinois Hardest Hit program utilizes $345 million in federal funds to support families who are having trouble making their mortgage payments due to unemployment or underemployment. Eligible participants will receive up to $25,000 over 18 months as a 10-year loan to keep their mortgages current. The loan is forgiven over the last five years of the 10-year term and carries zero interest.

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Mortgage Rates Mixed This Week but Expected to Head Lower

Interest rates on home loans offered up a mixed bag of results this week. Freddie Mac says fixed-rate mortgages showed no change or dipped slightly and adjustable-rate mortgages ticked upward. Even with the inconsistencies, rates remain near their record lows. Those lows may drop farther with the Federal Reserve's announcement Wednesday that it's planning a new buying spree of mortgage-backed securities and Treasuries. Leading indicators in the bond market since the Fed's statement suggest mortgage rates will again start falling.

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