Government

Freddie Mac said in a bulletin to lenders that performance of loans with loan-to-value ratios of less than 5 percent has been ""unacceptable,"" and starting June 1, the GSE will no longer purchase them. At that time the company will require borrowers to have at least a 5 percent down payment. Currently Freddie accepts loans with a 3 percent down payment. The GSE says the change is part of an effort to support responsible lending and sustainable homeownership.

The Federal Trade Commission (FTC) has requested documents and information from Ocwen Financial related to its loan servicing activities as part of a civil investigation, the company said in its annual regulatory filing with the Securities and Exchange Commission. The Florida-based specialty loan servicer, which focuses on bringing highly distressed loans back to performing status, is the latest mark in a number of investigations by government agencies targeting the mortgage servicing industry.

With North Carolina facing a budget deficit of $2.7 billion, the State Employees' Credit Union (SECU) is fine-tuning its Mortgage Assistance Program to better assist state government employees facing potential job cuts. Developed in January 2009 with the objective of helping members stay in their homes, the institution's mortgage program so far has assisted 7,000 North Carolina families.

While both the House and Senate seem to have similar ideas - that changes in foreclosure prevention are needed, and fast - the groups seem to have completely different takes on how to achieve those changes. This week members of a House committee reviewed proposals advocating for the termination of four foreclosure prevention programs and voted to send two of those proposals to the full House. Meanwhile, senators sent a letter to several government agencies, urging them to modify the very programs the House will consider terminating.

With 305,000 California borrowers receiving notices of default and more than 170,000 families losing their homes to foreclosure in 2010, Sen. Mark Leno (D-San Francisco) and Senate President Pro Tem Darrell Steinberg (D-Sacramento) are again pushing for legislation that would help prevent what they deem as ""wrongful foreclosures."" Their California Homeowner Protection Act would require that borrowers be given a decision on a loan modification before the foreclosure process can begin.

The nation's two largest mortgage companies saw the number of actions carried out to prevent foreclosures on their loans more than double in 2010 when compared to 2009. Servicers of Fannie Mae and Freddie Mac loans completed 946,305 foreclosure prevention workouts in 2010, according to data from the GSEs' regulator, the Federal Housing Finance Agency (FHFA). In 2009, they completed 431,098. FHFA also stressed that the performance of recently modified loans has improved relative to loans modified in earlier periods.

On Thursday banks received the much awaited proposal that many speculated would detail the potential ramifications for their part in the foreclosure and robo-signing mess. According to various reports, the proposal could force banks to reduce principal loan balances for borrowers who are delinquent or underwater, or pay a multi-billion dollar fine. Reports have surfaced that banks are pushing back against proposed mandatory write-downs, claiming that such a practice could invite fraud.

The national unemployment rate fell to 8.9 percent in February, as employers added 192,000 jobs to their payrolls, the Department of Labor reported Friday. The rate is down from 9.0 percent in January and 9.4 percent as recently as December. The Labor Department described the latest numbers as ""little changed,"" noting that 44 percent of the 13.7 million unemployed have been jobless for 27 weeks or more. However, the 192,000 jobs that were added in February represented the largest monthly net gain since mid-2010.

The Federal Reserve released a new rendition of its popular Beige Book this week. Reports from all 12 Fed districts indicated that overall economic activity continues to expand, but all said housing activity remains a key risk - a point reiterated by Fed Chairman Bernanke in his semiannual report to Congress this week when he explained to lawmakers that the housing market remains weak, with the overhang of foreclosed houses still weighing heavily on prices and potential homebuyers concerned about further declines in home values.

As the House prepares to debate on the future of the Federal Housing Administration's Short Refinance option, FHA Commissioner David Stevens implored House subcommittee members to give the program a chance. The program is a voluntary option for lenders to agree to offer principal write downs and restructure loans for underwater borrowers. Stevens said as of February 11, 23 FHA-approved lenders are participating in the program and 245 FHA case numbers have been requested, of which 44 loans have been endorsed.