Government

The House Financial Services Committee voted Thursday to scrap two foreclosure relief programs - one that gives underwater homeowners a federal refinancing option through FHA's Short Refi Program, and a second that provides temporary assistance to unemployed homeowners through the Emergency Mortgage Relief Fund. The two bills now move to the full House for debate. The committee was also planning to consider two separate bills to end the Home Affordable Modification Program (HAMP) and HUD's Neighborhood Stabilization Program, but votes on these have been pushed to next week.

Bank of America is the first major mortgage servicer to leverage the federal government's Hardest Hit Fund to begin pilot programs of principal reductions for Arizona customers who owe more on their mortgages than their properties are worth. Through the Arizona pilot, BofA customers experiencing financial hardship may be eligible to have the amount owed on their mortgages reduced through matching contributions from the state and participating mortgage investors.

On Wednesday, a hearing was held by the Insurance, Housing and Community Opportunity Subcommittee to determine the fate of four federal foreclosure mitigation programs. The Home Affordable Modification Program (HAMP), HUD's Neighborhood Stabilization Program, the Federal Housing Administration (FHA) Refinance Program, and the Emergency Mortgage Relief Fund all have bills in play advocating for their termination. Witness testimony was mixed on whether the programs should continue or come to an end.

Treasury released its new numbers for the Home Affordable Modification Program (HAMP) Wednesday, just hours before a House subcommittee convened a hearing to terminate the government's flagship foreclosure prevention program and three other federal housing programs. As of the end of January, active permanent HAMP mods totaled 539,493, but critics say the numbers aren't high enough and the House subcommittee's looming ""kill-bill"" hearing was a sensitive subject for officials.

The U.S. Department of Veterans Affairs (VA) has issued a notice announcing regulatory changes for modifying VA-guaranteed home loans. According to the department, the new rule makes VA loan modifications more flexible and encourages loan holders to modify more loans. It changes the requirements related to maximum interest rates allowed on modified VA loans and the items that can be capitalized into the modified loan amount.

HSBC Holdings has suspended all foreclosure actions in the United States, according to the company's annual regulatory filing with the Securities and Exchange Commission (SEC). HSBC says it decided to temporarily halt foreclosure proceedings after examinations by federal regulators uncovered what the company described as ""deficiencies"" in its handling of legal paperwork related to foreclosure cases. HSBC is Europe's largest bank. It operates in the United States as HSBC Finance and HSBC Bank USA.

Two more rulings have defended the right of Mortgage Electronic Registration Systems (MERS) to foreclose on behalf of lenders. A case in New Hampshire and another in California affirmed the right of the company to act as a nominee on behalf of its members and foreclose on properties. In recent weeks, courts in Massachusetts and Kansas have also upheld the standing of MERS in foreclosure cases, although a New York court ruled MERS cannot act on behalf of lenders.

According to Empowering and Strengthening Ohio's People, a non-profit foreclosure prevention counseling agency, the Ohio Housing Finance Agency's failure to distribute funding - in addition to federal budget cuts - means turning away some homeowners. Starting Tuesday, the agency says it will be forced to stop taking in homeowners referred from the National Foreclosure Mitigation Counseling program.

The U.S. Department of the Treasury on Monday exercised its right to appoint a member to the Ally Financial Inc. board of directors, naming John D. Durrett of the investment firm Serent Capital. Treasury also announced Tuesday that it will sell some of the $2.7 billion in trust preferred securities (TruPs) received from Ally as part of the government's bailout of the mortgage and auto lender.

Treasury Secretary Timothy Geithner told lawmakers Tuesday that the government played a role in bringing down the housing market. He also blamed the government for creating moral hazard and leaving taxpayers responsible for cleaning up the mess, and said the government made mistakes that were avoidable. As part of his pitch to lawmakers for housing finance reform, Geithner stressed that fundamental change is needed -- change that is based on a shift of what many believe is the ""American Dream.""