Government

A new law requires that Arkansas homeowners receive critical documents prior to a foreclosure and encourages loss mitigation or loan modification efforts before the foreclosure is initiated. Mortgage servicers must now provide borrowers facing foreclosure with copies of the note, mortgage, and any assignments; the physical location of the note; and payment history. Homeowners must also receive information about assistance programs that are available.

Federal regulators split from state attorneys general last week to cut their own deal with mortgage servicers as part of a settlement for the robo-signing mess that surfaced last fall. Critics of the side deal are calling for federal regulators to withdraw their agreements and work with the states to hold banks accountable. But even in the attorney general camp there has been dissension. A study released Tuesday by three economists says the original settlement proposal backed by state counsels could increase the foreclosure inventory by $297 billion.

The Illinois Supreme Court announced on Monday the formation of a special committee to study and formulate proposals to help families facing foreclosure. The committee will also work to improve the judicial process in mortgage foreclosures throughout the state. Supreme Court justices noted that Illinois' foreclosure crisis is not easing. At the end of 2010, there were approximately 70,000 mortgage foreclosure actions pending in Cook County alone.

RxOffice, a default management technology platform from IndiSoft, was recently enhanced to meet the updated Home Affordable Foreclosure Alternatives (HAFA) eligibility rules and forms, such as the Dodd-Frank affidavit. Specifically, the RxOffice short sale module supports the capture of data needed to execute either a HAFA or traditional short sale.

The American Securitization Forum (ASF) is opening a Washington, D.C. office. The organization is headquartered in New York but with all the new rules and regulatory changes coming down from Washington, ASF says a physical presence there will help further its advocacy efforts on behalf of the securitization markets. In conjunction with the office opening, ASF has named Jim Johnson managing director of public policy. Johnson previously served as senior counsel to the U.S. Senate Banking Committee for Ranking Member Richard Shelby.

Fannie Mae announced Monday that borrowers purchasing a Fannie Mae-owned property through HomePath, the GSE's REO disposition operation, will receive up to 3.5 percent in closing cost assistance. The company has implemented this temporary buyer assistance program fairly regularly since the beginning of last year -- a strategy aimed at helping the GSE unload a bloated supply of repossessed homes. Fannie Mae acquired 262,078 single-family REO properties through foreclosure in 2010, compared with 145,617 in 2009.

The Federal Housing Administration's Mortgagee Review Board has settled with Massachusetts mortgage lender First American Mortgage Trust (FAMT) for failing to verify whether borrowers could sustain mortgage payments prior to refinancing loans. FAMT agreed to pay $72,500, reimburse FHA for past insurance claims, and indemnify FHA's insurance fund for any claims to be paid on certain mortgages should they default within the next 60 months.

Four fair housing organizations have released their findings of a year-long undercover investigation of 80 loan modification companies, which reveal a host of corrupt practices scammers employ to target homeowners in distress. According to the report, 55 percent of loan modification companies required an upfront fee to start work or a low initial fee to conduct minimal work, such as reviewing loan documents. Twenty-four percent advised or encouraged homeowners to stop making mortgage payments or stop contacting their lenders.

The Mortgage Bankers Association (MBA) has announced the promotion of Jim Gross to VP of financial accounting and public policy. In this capacity, he will advise Steve O'Connor, MBA's SVP of public policy and industry relations on emerging industry policy issues and assist in setting strategic priorities.

After a two-week lull in which no banking institution was shuttered by regulators, the FDIC stepped in this weekend to seize Western Springs National Bank and Trust in Illinois and Nevada Commerce Bank headquartered in Las Vegas. The two closings bring the total number on the FDIC's failed bank list for the 2011 calendar year to 28. Bank failures have slowed recently. During the first quarter of this year, 27 insured banks went under. It's the lowest quarterly tally since the second quarter of 2009 when bad real estate loans were forcing near-record numbers to close their doors weekly.