Government

In its August 2011 Budget and Economic Outlook update, the Congressional Budget Office (CBO) predicts the government will spend $35 billion less on Fannie Mae and Freddie Mac in 2011 than in 2010. The CBO estimates it will spend $5 billion on the GSEs in 2011 after having spent $40 billion last year. The CBO says the decrease is mostly due to lower projections in losses for the GSEs in upcoming years. This updated 2011 estimate is $6 billion lower than the CBO's previous estimate.

Iowa Attorney General Tom Miller has announced the removal of New York Attorney General Eric Schneiderman from an executive panel of state officials working with servicers on a settlement for alleged improper foreclosure practices. Miller, who is head of the committee, says the state of New York has actively worked to undermine the very same multi-state group it had been working very closely with over the previous nine months. He called Schneiderman's actions ""unacceptable.""

After recently establishing a partnership with Fannie Mae to offer Fannie Mae Short Sale Assistance Desk (SSAD) training for real estate professionals, the Five Star Institute has just announced a second partnership with Wingspan Portfolio Advisors. Wingspan will promote Five Star's beginning and advanced short sale courses within its extensive network of real estate professionals - the Wingspan Real Estate Network (WREN). Conversely, Five Star will promote WREN to agents who sign up for its short sale and SSAD training.

American Home Mortgage Servicing, Inc. (AHMSI) is pursuing legal action against Lender Processing Services (LPS) and affiliate DOCX to recover millions of dollars in losses the servicer allegedly incurred from improper documentation related to more than 30,000 mortgages and services preformed between April 2008 and November 2009. For its part, LPS said it was ""surprised"" by AHMSI's action and is prepared to vigorously defend itself against the allegations.

Bad real estate loans from the heyday of the boom have weighed heavy on banks' balance sheets, forcing 365 FDIC-insured institutions to close up shop over the last two-and-a-half years. The FDIC keeps a list of banks it considers to have a high-risk of failure. This so-called ""Problem List"" has declined for the first time since the third quarter of 2006. The number of ""problem"" institutions under the FDIC's watchful eye fell from 888 at the end of the first quarter to 865 at the end of the second.

The state of Hawaii has enacted House Bill 320, a statute that permits a licensed real estate broker or real estate salesperson to prepare broker price opinions (BPOs) and charge a fee for their service. Under previous legislation, if a real estate licensee charged a fee for a BPO other than the commission involved in the normal sale of a property, then the licensee was in violation of the state's legal code for real estate appraisals. The change, which took effect in July, came about through a unified effort by a number of industry groups, and it's been a long time coming.

New York, Nevada, Massachusetts, and Delaware attorneys general continue to voice opposition to a blanket settlement with the nation's top servicers, but HUD and the Justice Department are taking steps to persuade at least one of them to comply. Officials from both agencies are specifically asking New York Attorney General Eric Schneiderman to abandon his objections and approve the settlement. He's reportedly holding out to ensure he can pursue his own legal actions related to the securitization side of the business.

This year's failed-bank tally has hit 68 with the closings of four more FDIC-insured lenders. The latest casualties can be found in Florida, Georgia, Illinois, and Pennsylvania, and collectively are expected to cost the FDIC an estimated $374.8 million. Lydian Private Bank, based out of Palm Beach, Florida, was the largest of the seizures in this latest round. It operated five branches, with $1.24 billion in deposits and $1.70 billion in assets.

The Arizona Department of Insurance has placed two subsidiaries of PMI Group, Inc. -- PMI Mortgage Insurance Co. (MIC) and PMI Insurance Co. (PIC) -- under the department's supervision and ordered them to cease issuing new mortgage insurance. PMI alerted investors of the possibility of such actions earlier this month. PMI says further measures by the regulator could result in up to $735 million of the parent company's outstanding debt coming due, obligations which the PMI Group would be unable to pay.

The Federal Housing Administration (FHA) released a notice outlining new guidelines for trial payment plans for FHA loss mitigation actions. The new rules go into effect October 1. When offering permanent modifications or partial claims, servicers must implement trial payment plans for any borrowers who have missed at least two payments in the past year; have failed a HAMP trial payment plan; have a net surplus income of less than 20 percent of their total net income; or whose mortgage was originated fewer than 14 months ago.