Government

The number of bank closings has slowed in recent months, and that's given the FDIC reason to believe that the worst phase of institutional collapses is behind us. The FDIC's board of directors has approved a $3.96 billion operating budget for 2011, which the agency described as ""down slightly from the 2010 budget,"" when the board raised the amount by 55 percent to cope with an elevated number of bank failures. Officials are touting the fact that no increase is planned for the upcoming year as a sign the financial sector is at least stabilizing.

The Florida Office of Financial Regulation (OFR) sent a notice earlier this month to mortgage professionals warning them that they may be out of work at the first of the year if they fail to submit required applications. The new Nationwide Mortgage Licensing System contains more stringent requirements and all industry licensees including individuals, companies, and branch offices, are required to re-apply under it by no later than December 31, 2010.

The board of the California Public Employees' Retirement System (CalPERS) says it is suspending its Member Home Loan Program. The board cited limited member usage, increasing costs, and rising delinquencies for the suspension. Once the suspension begins, CalPERS will no longer accept mortgage applications, but loans currently in the pipeline are expected to be completed over the next three months. Since 2004, the program has averaged between 1,000 and 4,500 home mortgage loans a year.

After more than a year-long investigation, the Financial Crisis Inquiry Commission has pushed the release date of its findings to January 2011, instead of December 15, 2010, as mandated by Congress. The four Republican members of the 10-person committee, though, broke ranks and published their own report this week. They are placing blame for the housing bubble that brought the nation's economy to its knees squarely on the shoulders of the federal government, going all the way back to the mid-1990s.

The U.S. Department of the Treasury added three members to its senior leadership lineup for the Consumer Financial Protection Bureau (CFPB). Ohio Attorney General Richard Cordray will lead the enforcement team. In addition, Federal Reserve Director Leonard Chanin will oversee the rule writing team, and former AFL-CIO Director David Silberman will head the card markets division.

The Financial Crimes Enforcement Network (FinCEN) said this week that suspicious activity reports (SARs) indicating mortgage loan fraud increased seven percent in the first half of this year. Banks and thrifts filed 35,135 mortgage-related SARs from January to June 2010. The federal agency found that reports referencing the term short sale appeared 827 times, and SARs referencing broker price opinion appeared 41 times during the first quarter of this year alone.

Senior technology leadership is now in place for the Consumer Financial Protection Bureau (CFPB) implementation team, according to an announcement from the Treasury Department. Tim Duncan will lead technology operations, and David Forrest will lead the online engagement team. Currently housed at Treasury, the CFPB will have statutory oversight of mortgage lending and the power to set new rules for home loans and other consumer-facing credit products.

According to the fourth quarter issue of Southwest Economy, published by the Federal Reserve Bank of Dallas, banks in the Eleventh Federal Reserve District are performing well, although signs of stress are still apparent. The report states that about 30 percent banks in the district, which includes Texas, northern Louisiana and southern New Mexico, find that even after restructuring troubled loans to give borrowers easier terms, many of the loans become delinquent again.

Federal regulators on Wednesday announced changes to the Community Reinvestment Act (CRA) parameters to support communities affected by high foreclosure levels. The final rule encourages depository institutions to finance development projects in areas that qualify for HUD's Neighborhood Stabilization Program (NSP). Institutions will receive CRA credit for any NSP-eligible activities, such as loans extended to grant recipients to buy foreclosed homes or a donation of REO properties to a nonprofit housing organization.

New Jersey Governor Chris Christie signed A. 2861 into law last week, banning Wall Street Home Resale Fees, or private transfer fees. New Jersey becomes the 19th state to restrict the use of these fees. On the federal level, the Federal Housing Finance Agency (FHFA) has issued guidance that restricts Fannie Mae and Freddie Mac from investing in mortgages with these fees. A bill currently being considered in the House would ban the fees across the country.