Government

While state attorneys general continue to work towards a settlement on robo-signing cases, investigations are still ongoing surrounding the practice. Two media outlets released reports this week alleging the practice is still prevalent in some states. That's prompted a response from lawmakers. Sen. Sherrod Brown says his subcommittee will hold another hearing on robo-signing, and letters have been sent to regulators from both congressional chambers requesting details on the steps servicers are taking to prevent illegal foreclosures.

The Federal Trade Commission is mailing 450,177 refund checks worth almost $108 million to homeowners who were allegedly overcharged by subprime lender Countrywide. According to the FTC, homeowners who were in default were charged excessive and unlawful fees for services such as property inspections, lawn mowing, and other services meant to protect the lender's interest in the property. The agency alleges that Countrywide also added fees and escrow charges to the accounts of borrowers in bankruptcy without notice.

A new California law bars junior lien holders from pursuing borrowers to collect outstanding loan balances after a short sale has been completed. Gov. Jerry Brown has signed SB 458 into law, which requires all lenders that agree to a short sale to accept the approved sale price as payment in full of the outstanding balance of all first and secondary mortgage loans. Local Realtors are hailing the new law as a victory for California homeowners and the state's distressed property market.

State and federal regulators shut down four community-based financial institutions over the weekend two in Georgia and one each in Florida and Arizona. These latest closings bring the total number of names on the FDIC's failed bank list to 55 for the 2011 calendar year.

President Obama on Sunday announced his pick to lead the new Consumer Financial Protection Bureau (CFPB) - Richard Cordray, former attorney general for the state of Ohio. Cordray was selected to build out the Bureau's enforcement team in December. The president plans to formally nominate Cordray for the top post at the CFPB on Monday. His appointment must still be approved by the Senate.

Five years into the housing slump, and home sales remain weak with prices falling again in many parts of the country as foreclosures and short sales are ramping up. Mark Zandi, chief economist for Moody's Analytics, says while it certainly won't be the popular move, it may be time for the government to step up temporary support for the housing market. Zandi underscores three policy recommendations that he believes could help ensure housing stays on course.

Last year, banks seized more than one million properties. Lax underwriting standards during the boom years served as the catalyst for a housing bust that upended not only the mortgage market but the entire U.S. financial system, and has left scores of foreclosures, delinquencies, and vacant homes in its wake. In order to see what changes the lending community has made, the ratings agency DBRS decided to do a side-by-side comparison of the criteria for obtaining a prime mortgage in 2007 versus today's requirements for prime qualification.

The Federal Trade Commission will no longer enforce most provisions set forth in the Mortgage Assistance Relief Services Rule, according to a recent statement. The MARS Rule required real estate agents to make several disclosures when assisting distressed homeowners in obtaining short sales from their lenders or servicers. The rule also banned advance fee collection and prohibited false or misleading statements. After the Rule was enacted by Congress, several real estate agents complained that the disclosures often confused homeowners or misled them.

The Helping Responsible Homeowners Act, which aims to help underwater homeowners refinance their loans at historically low interest rates, is gaining support. Sen. Barbara Boxer of California says her bill, which was introduced in January, is now being co-sponsored by Sen. Johnny Isakson of Georgia, who previously ran one of the largest independent real estate brokerages in the country. The Helping Responsible Homeowners Act would eliminate barriers blocking millions of non-delinquent homeowners from refinancing.

New York Attorney General Eric Schneiderman is seeking client information from several companies as part of an investigation into Bank of America's recent proposed $8.5 million settlement. Schneiderman specifically asked for lists of clients affiliated with New York government agencies, public authorities, and nonprofit and charitable organizations. At the same time, Walnut Place LLC filed a petition contesting the proposed Bank of America settlement. The group expressed their concerns over the secrecy in which the proposed settlement was negotiated.