Government

House lawmakers have introduced a bipartisan plan that would replace Fannie Mae and Freddie Mac with a group of private firms to fill the role of issuing government-guaranteed mortgage-backed securities. The bill's authors say it would not only protect taxpayers but would ensure financing for home loans and products like the 30-year fixed-rate mortgage remain available to middle-class families. Market observers say the proposal is the only one so far that could win sufficient support from both sides of the aisle.

Indiana Governor Mitch Daniels recently signed legislation to restrict Wall Street home resale fees, also known as private transfer fees. Indiana is the 28th state to ban the use of these fees. The fees require that a private third-party receive a percentage of the final sale price of a home every time the property is sold, typically for 99 years. The Federal Housing Finance Agency has issued a proposed rule that would prevent the GSEs from investing in mortgages with these fees.

Mortgage servicing in general, and default servicing in particular, is in for its own form of modification. Based on testimony given before a Senate subcommittee Thursday and comments from the senators themselves, national mortgage servicing standards are in the cards. The topic has taken center stage in light of recent documentation errors related to foreclosures, and a growing number of industry analysts and mortgage banking groups are voicing their support.

The city of Chicago is working to alleviate the impact of vacant foreclosure properties on its neighborhoods with a new program that has garnered participation from major mortgage servicers and local law firms. Bank of America has agreed to identify and register with the city 150 vacant properties in default under the Cook County ""Vacant and Abandoned Building Court Call."" The program will move empty homes through the foreclosure process more quickly in order to return them to viable housing or make way for new uses of the land.

A new rule from the Federal Trade Commission that aims to protect homeowners from mortgage relief scams may impact real estate professionals who represent clients involved in short sale transactions. The Mortgage Assistance Relief Services rule bans all upfront fees for renegotiating mortgage terms and mandates certain consumer disclosures. It is primarily directed at companies offering modification services, but the National Association of Realtors says certain conditions also apply to practitioners working with short sales.

The New Jersey HomeKeeper Program officially launched this week to provide payment assistance to homeowners in the state who are at risk of losing their homes to foreclosure as a direct result of unemployment or underemployment. The zero percent interest rate loans offered through the program will be forgiven in full as long as the homeowner remains in the home for at least 10 years. The latest figures from the state reveal New Jersey's unemployment rate rose to 9.3 percent in March.

State attorneys general are holding meetings with the nation's largest mortgage servicers this week to negotiate a settlement agreement for the robo-signing issues that surfaced last fall. The most controversial piece of the AGs initial proposal - mandated principal write-downs - has reportedly been dropped from the discussions. The primary issue now is the amount of fines to be levied, which the states want to use to help struggling homeowners avoid foreclosure.

Hawaii Gov. Neil Abercrombie has signed into law a measure aimed at stemming foreclosures in the state by bringing homeowners and their lenders together to negotiate an alternative resolution. Based on first-quarter foreclosure activity, RealtyTrac reports that Hawaii had the 11th highest foreclosure rate in the nation, with one in every 201 homes in the state receiving a filing during the first three months of this year.

The FDIC confirmed Monday that Sheila Bair will step down from her post as chairman of the federal agency, effective July 8. Chairman Bair had previously announced her intention to depart the agency following the expiration of her term. No replacement has yet been named.

The Federal Reserve Bank of New York says it's seeing ""signs of healing"" in consumer credit markets, as evidenced by a decline in new foreclosures, bankruptcies, and mortgage delinquencies during the first three months of this year. About 368,000 borrowers had a foreclosure notation added to their credit reports in the first quarter, while new bankruptcies dropped to 434,000. At the same time, about 2.4 percent of current mortgage balances transitioned into delinquency, the second straight quarterly improvement in this measure.