Government

John McGeough and Anthony Lamacchia, founders of McGeough Lamacchia Realty Inc. traveled to Washington, D.C., last week to educate policy makers on the benefits of short sales. McGeough Lamacchia Realty is a full-service real estate firm in Waltham, Massachusetts, specializing in short sales. The company's two principals conducted meetings with officials at Capitol Hill, the FDIC, the U.S. Treasury, and the National Association of Realtors.

The Federal Reserve Board on Tuesday requested public comment on a proposed rule under Regulation Z that would require lenders to determine a borrower's ability to repay a mortgage before making the loan and would establish minimum mortgage underwriting standards. The revisions to the regulation, which implements the Truth in Lending Act (TILA), are in response to new consumer protection directives laid out by the Dodd-Frank Reform Act. The proposal provides four options for complying with the ability-to-repay requirement.

Industry data released this week shows that the dollar volume of mortgage loans associated with fraud has dropped to a three-year low, cut by more than half over the past 12 months to $900,000. Likewise, the number of fraud cases tracked has declined to push the index to its lowest level since early 2008. The drop coincides with the U.S. Department of Justice's late 2010 sting involving 120,000 fraud victims who lost more than $8 billion. However, recent activity suggests the lull might only be temporary.

Washington Governor Chris Gregoire signed the Foreclosure Fairness Act of 2011 into law Thursday. The new law goes into effect July 13. It gives homeowners facing foreclosure access to housing counselors, including meeting with the bank and an independent mediator to review options to keep their homes. Support for such mediation will be funded, at least in part, by lenders, who will pay a $250 fee for every new notice of default they file.

The headline business news Monday was Standard & Poor's notice that its outlook for the United States has turned negative. The agency maintained its AAA rating but warned that there is a one-in-three likelihood the long-term rating could be lowered over the next two years. The main culprit is the nation's growing debt and discord in Washington over the budget, but the agency also cited outlays to mortgage giants Fannie Mae and Freddie Mac as a substantial risk, warning that taxpayer support for the two firms could go as high as $685 billion.

Mortgage servicing practices have taken center stage on Capitol Hill, with a flurry of bills being penned to make servicing reforms the law of the land. Rep. Maxine Waters of California has revised a bill she's brought to the table several times before that would compel lenders to engage in what she says are ""reasonable loss mitigation activities"" for all delinquent homeowners. The legislation would place responsibility for modifying first and second liens with the servicer of the primary mortgage and would institute several reforms outlined in recent settlements with regulators.

State and federal regulators closed the doors of six community-based lenders on Friday - two in Alabama, two in Georgia, and one each in Minnesota and Mississippi. This latest round of closings brings the total number of FDIC-insured bank failures to 34 for the year, and represents the most shut-downs in a single day since mid-December. Birmingham's Superior Bank was the largest of the closings and marks the first multi-billion dollar bank failure of 2011.

Ginnie Mae, which provides a guaranty on mortgage securities backed by Federal Housing Administration loans, has announced a new policy regarding the pooling of past-due loans. For single-family securities with an issue date of June 1, 2011, and after, servicers can no longer package loans that are delinquent by more than the monthly installment of principal and interest that is due on the issue date. This fall, the federal agency will also begin requiring issuers to supply new data elements, such as loan-to-value ratios and pre-modification qualities.

Washington Governor Christine Gregoire recently signed legislation to restrict Wall Street home resale fees - also known as private transfer fees. The new law, sponsored by Sen. Nick Harper, places a ban on these fees. Rep. Roger Goodman sponsored the companion bill in the state's House of Representatives. Washington is the 25th state to restrict the use of these fees.

Lawmakers in both the House and Senate are seeking to legislate changes to servicing practices. On the heels of the cease and desist orders issued by federal regulators to a handful of mortgage servicers to address process deficiencies uncovered by robo-signing investigations, four bills have been introduced aimed at reforming the way delinquent borrowers are handled industry-wide and aligning servicer incentives with those of investors and homeowners.