Government

PMI Group Inc. says its primary subsidiary PMI Mortgage Insurance Co. could be forced to stop issuing new mortgage insurance policies. The company alerted investors of the possibility that its business could come to a halt last week, at the same time it reported a company-wide net loss of $134.8 million for the second quarter. According to a filing with the SEC, PMI Mortgage Insurance's capital holdings have slipped to $320 million below the minimum required by the Arizona Department of Insurance, its primary regulator.

The Office of the Comptroller of the Currency shut down First National Bank of Olathe in Kansas on Friday evening and appointed the FDIC as receiver. So far this year, 64 insured institutions have landed on the FDIC's failed bank list. First National Bank of Olathe is the first Kansas-based institution to make that list in 2011. Enterprise Bank & Trust of Clayton Missouri agreed to take over the failed lender.

Servicers completed 2,213 pre-foreclosure short sales and deeds-in-lieu (DIL) under the government's Home Affordable Foreclosure Alternatives (HAFA) program during the month of June. Treasury's latest report shows the program is beginning to pick up steam. The number of completed HAFA transactions climbed 55 percent compared to the 1,428 transactions completed in May. That follows a 70 percent jump in finalized HAFA deals between the months of March and April.

Delaware Attorney General Beau Biden has announced his opposition to the proposed $8.5 million Bank of America settlement. He sent a petition to the New York Supreme Court expressing his disapproval and requesting permission to intervene in the court's review of the settlement. ""I am intervening to enforce our laws and to protect Delaware investors who may have been harmed by these toxic securities,"" Biden said. ""Intervening in this settlement puts us in position to ensure that the banks are playing by the rules.""

On a national level, mortgage fraud risk has declined 2.3 percent over the year but has remained relatively steady for the last five quarters, according to Interthinx's second-quarter risk report. Three states where the risk of mortgage fraud remains highest are Nevada, Arizona, and California. Separately, the FBI released its own report, citing short sale fraud as a growing problem. The FBI says industry insiders and organized crime groups from overseas are the most common perpetrators of mortgage fraud.

Fannie Mae and Freddie Mac have suspended Republic Mortgage Insurance Company (RMIC) and Republic Mortgage Insurance Company of North Carolina as approved mortgage insurers. According to North Carolina law, mortgage insurers must maintain at least one twenty-fifth of their aggregate insured risk outstanding. RMIC fell below this amount in September 2010 but was granted waivers from the North Carolina Department of Insurance. A recent extension of the waiver is set to expire August 31.

American Home Mortgage Servicing Inc. (AHMSI) signed a settlement with Massachusetts Attorney General Martha Coakley agreeing to implement a consent judgment between the Commonwealth of Massachusetts and Option One Mortgage Corporation, which AHMSI acquired in April 2008. In conjunction with the settlement, Coakley also dismissed claims against Coppell, Texas-based AHMSI. The servicer did not incur civil penalties or any other costs.

Bank of America has sold the servicing rights of 400,000 home loans to Fannie Mae, according to media reports. The unpaid principal balance on the loans is said to be $73 billion. The loans were sold at a price of $500 million. BofA's CEO Brian Moynihan referenced a sale of mortgage servicing rights in a CNBC interview this week, but did not name the purchaser. A BofA spokesperson told DS News the sale is consistent with steps the company is taking to address legacy mortgage issues and position for growth.

The Nevada legislature has set an October 1 effective date for a new law aimed at dissuading homeowners facing foreclosure from vandalizing the property. The law ""prohibits the destruction of real property that is subject to foreclosure with the intent to defraud."" A person who intentionally removes, conceals, or destroys any real property and causes the secured party or lender to suffer a financial loss as a result is guilty of a misdemeanor crime.

Illinois Governor Pat Quinn recently announced the new Mortgage Resolution Fund (MRF) created to permanently modify loans to affordable amounts. The MRF is being funded with $100 million from the state of Illinois and $445.7 million from the Hardest Hit Fund a fund established by the Obama Administration in 2010 to help families in markets hardest hit by the housing and economic crisis. Under the MRF, delinquent loans will be purchased from lenders at present value and modified according to current home values.