Government

The three major banks that received downgrades from Moody's this week responded with assertions of their value. Bank of America's and Wells Fargo's long-term credit ratings were downgraded, while Citigroup was hit with a downgrade of its short-term credit rating. Moody's says the downgrades stem from its belief the government is more likely now than during the financial crisis to allow a large bank to fail. The banks say that assessment is more a reflection on systemic support than their own liquidity profiles.

Home prices are expected to grow at an average annual rate of just 1.1 percent through 2015, according to a survey released Wednesday by the research firm MacroMarkets. The company polled 111 individuals, ranging from economists and real estate experts to investment and market strategists. In addition to documenting home price projections, the survey asked respondents about the government's role in the housing market. Half say further government intervention is ""unnecessary.""

Driving home its rationale for new stimulus measures, the Federal Reserve on Wednesday reiterated the pains many Americans are living with every day - economic growth remains slow, unemployment remains elevated, and housing remains depressed. With these and other downside risks holding back recovery, the Federal Reserve says it will begin reinvesting its money into mortgage-backed securities issued by Fannie Mae and Freddie Mac, and it will purchase another $400 billion in Treasury bonds.

The Consumer Financial Protection Bureau (CFPB) is working alongside other federal agencies to create ""common-sense national servicing standards,"" according to the Treasury's advisor on the bureau Raj Date. One of the issues Date plans to address through national servicing standards is what he says has been a lack of incentive for originators and others involved in the front end of the lending process to ensure a borrower has the ability to repay their loan.

At a Senate hearing titled, ""New Ideas to Address the Glut of Foreclosed Properties,"" industry experts shared varying opinions on the concept of Fannie Mae and Freddie Mac conducting bulk sales of REOs to investors, but most agreed that long-term investors from the private sector should be part of the solution. One analyst with Amherst Securities says investors are the only potential buyers for many distressed homes likely to hit the market over the next five to six years.

Fannie Mae and Freddie Mac will begin raising the fees they charge lenders for guarantees on mortgage loans next year. According to the companies' regulator, it's a step toward readying the market for private-sector reinforcements and weaning the nation's housing sector off of low-cost government support. FHFA's director says it ought to be clear at this point that the two mortgage giants will not be able to emerge from conservatorship. He argues that more progress should have been made on housing finance reform by now.

The Office of the Comptroller of the Currency (OCC) is calling for independent reviews of almost 4.5 million loans. After examining 200 loans from each of 14 major servicers, regulators determined enforcement actions were necessary, but said their review was not nearly enough to answer all questions. In addition to assessments of individual cases, the OCC is implementing a complaint process for borrowers who feel they faced financial harm as a result of an improper foreclosure action.

A recent study by Jihad C. Dagher and Ning Fu of the International Monetary Fund (IMF) found a correlation between the increase in originations from ""lightly regulated"" non-bank lenders and the rise in foreclosures and unemployment in the United States. The authors believe stricter regulation of non-bank mortgage originators could have prevented the housing crisis altogether or at least averted some of the volatility seen in the current housing environment.

Gerner & Kearns, Co., L.P.A. (G&K) recently announced that it has been designated by the FDIC as outside counsel in the states of Indiana, Kentucky, Ohio, and Michigan. The firm's practice areas include foreclosure, bankruptcy, evictions, origination and REO closings, loss mitigation, and commercial litigation with respect to the industry's residential and commercial portfolios.

Rep. Darrell Issa of California has sent a letter to the Federal Housing Finance Agency (FHFA) expressing his concerns and requesting information about an alleged deal between Fannie Mae and Bank of America. Issa references an August 10th report detailing a deal between Fannie and the bank in which the GSE reportedly purchased the mortgage servicing rights of 400,000 troubled loans for $500 million. Issa says the transaction is ""worrisome"" and appears to have shifted risk from BofA to Fannie Mae.