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Mortgage Investors Push for Principal Writedowns

Mortgage principal - to cut or not to cut - has grabbed a fair share of the media spotlight in recent weeks, with a number of experts plugging principal reduction as a practicable means of ensuring homeowners don't redefault on their modified loan. While lenders are often prohibited from trimming the principal by agreements with investors, one such group, representing holders of some $100 billion in mortgage securities, is lobbying Congress to enact legislation that addresses the problem of underwater mortgages by reducing the debt.

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Defaults on FHA Loans Surpass 9%

Even with improvements beginning to peek through the debris of the housing crisis, mortgage defaults continue to rise at an incredible rate, and the story is no different for the federal government's mortgage insurance agency. The latest numbers from the Federal Housing Administration (FHA) show that loans at least 90 days past due hit 9.12 percent at the end of 2009. That figure is up from 6.82 percent one year earlier. Foreclosures also soared 41 percent, but short sales as a means of avoiding foreclosures outpaced even that figure, increasing 140 percent.

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White House Dropped 5% in Value in 2009

Not even the nation's most recognized and iconic home can escape the deterioration that typifies today's real estate landscape. The value of the White House fell 5.1 percent last year, according to the online real estate marketplace Zillow.com. In January 2008, the company put the value of the White House at $308 million. Twelve months later, and the 132-room mansion built in 1792 is worth $292.5 million.

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Homeownership Hits Lowest Mark in a Decade

With foreclosures still rising and potential homebuyers still reluctant to get into the market, homeownership in the United States has hit a 10-year low. According to the Census Bureau, the homeownership rate fell to 67.2 percent at the end of last year. Homeownership has been on a steady downward slope since 2006, when housing woes began to eat away at the government's long-time push to make the American Dream a reality for anyone that wanted it.

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House Committee to Investigate Obama’s Modification Program

The House Committee on Oversight and Government Reform has launched an official investigation into the federal government's foreclosure prevention program. According to a statement from the head of the committee, the probe was triggered by complaints that servicers have been slow and inconsistent in modifying loans under the Making Home Affordable (MHA) program, and are not communicating clearly with eligible homeowners.

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Minnesota Bank Shuttered by Regulators

Multiple bank closures have become commonplace on Friday evenings, but last week, regulators shut the doors on just one institution-1st American State Bank of Minnesota. The bank operated two local branches in Hancock, with $16.3 million in deposits and $18.2 million in total assets. It was acquired by Community Development Bank, also in Minnesota.

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FTC Rule Bans Up-Front Fees for Modifications

The Federal Trade Commission has proposed a new rule that would prohibit third parties, including loan modification specialists and loss mitigation attorneys, from collecting payment for foreclosure prevention services until after they obtain a documented offer from a lender or servicer for a modification or other form of mortgage relief.

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Biggert Bill Calls for Public Transparency into Fannie, Freddie Operations

U.S. Rep. Judy Biggert of Illinois has introduced new legislation designed to ramp up congressional oversight of the government-controlled mortgage giants Fannie Mae and Freddie Mac. The bill would require the two companies to submit regular reports to Congress and the public disclosing the intricacies of their businesses, including executive bonuses, foreclosure mitigation, and investments.

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Comptroller Warns of Over-Regulating Secondary Market

A key Treasury official is publicly speaking out against new rules that would require lenders to retain some of the risk on mortgages and other assets sold to investors. At the American Securitization Forum's annual convention this week, Comptroller of the Currency John Dugan urged policymakers to focus reform efforts on improving loan underwriting standards, rather than risk retention proposals that could hamper an already-tenuous securities industry and further diminish credit availability.

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PNC to Repay $7.6B in Bailout Funds

PNC Financial Services Group said Tuesday that the company has reached an agreement with banking regulators and the U.S. Treasury to pay back the $7.6 billion it received under the Troubled Asset Relief Program (TARP). To fund the repayment, the Pittsburgh-based company has priced a $3 billion offering of common stock and sold off its investment servicing business.

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