Government

Fannie Mae has issued a new bulletin to lenders underscoring the GSE's requirement that every mortgage loan delivered to Fannie Mae be underwritten to ensure the borrower has the willingness and ability to repay the debt. To this end, Fannie Mae said it expects lenders to have procedures in place to facilitate borrower disclosure of changes in financial circumstances throughout the origination process. This, however, does not mean lenders must pull a second credit report on the borrower prior to closing.

For the second weekend in a row, regulators shut down only one financial institution. It was Palos Bank and Trust Company in Palos Heights, Illinois that found regulators at its doors last Friday evening. It marked the 110th bank failure this year, and the 14th in Illinois, making the state home to the second most collapsed banks in 2010, second only behind Florida.

The Federal Housing Administration (FHA) has decided to delay the planned adjustments to its insurance premium structure by one month, after the industry expressed concerns about being ready in time. The premium fee changes will become effective October 4, 2010. Lawmakers gave the federal mortgage insurer enough leeway to increase the annual fee it charges borrowers three-fold, up to 1.55 percent. But the annual premium is not going to go that high. It will increase from 0.55 percent to between 0.85 percent and 0.90 percent of the loan amount.

The Federal Housing Finance Agency (FHFA) has proposed the establishment of an Office of the Ombudsman to field complaints related to FHFA's regulations and supervision. The Office of the Ombudsman would be responsible for considering grievances and appeals from entities overseen by FHFA, including Fannie Mae, Freddie Mac, and the Federal Home Loan Banks, as well as any person that has a business relationship with a regulated entity or the Office of Finance.

Struggling Atlanta homeowners with Fannie Mae-owned home loans can now take advantage of the company's new mortgage help center. The third facility in a series of planned, nationwide mortgage help centers, the Atlanta center provides counseling and other services for borrowers to help them avoid foreclosure. Both English- and Spanish-speaking housing counselors will be on hand to explain options to homeowners and help finalize documentation for modifications or other loan workouts.

More than one million homeowners have received counseling through the National Foreclosure Mitigation Counseling program since its launch in January 2008. The program, which is administered by NeighborWorks America, has been appropriated $475 million in federal funding to provide free, community-based counseling to distressed homeowners. Lawmakers are pushing for another $113 million to be made available for the program through fiscal year 2011.

The Federal Housing Finance Agency wants to restrict Fannie Mae and Freddie Mac from purchasing mortgages with private transfer fee covenants, also referred to as Wall Street home resale fees. These fees are sometimes worked into home purchase contracts, and require that a percentage of the sale price be paid to the original owner of the property every time the property is sold, typically for 99 years. FHFA says ""the fees fund purely private streams of income for select market participants and do not benefit homeowners.""

When the Treasury Department released its latest progress report for the Home Affordable Modification Program (HAMP) in late July, it showed the redault rate for permanently modified loans to be around the two percent mark. An outcry from analysts - and some of you discerning DSnews.com readers - immediately followed, questioning the validity of the government's math. Last week, the Treasury quietly corrected its redefault assessment. The revised numbers are between 6 and 10 percent.

Undoubtedly, the model of home financing is in for a change. And the structural bastions of the nation's mortgage system - Fannie Mae and Freddie Mac - are at the very center of the debate. Ideas range from completely eliminating the two GSEs to turning them into official government agencies. Next week, Treasury will host a conference in Washington, D.C. on the subject, to gather input and suggestions from industry stakeholders. On Thursday, the administration released its guest list for the event.

The Obama administration said Wednesday that it will provide additional support to help unemployed homeowners through two targeted initiatives. The Treasury will make another $2 billion available to housing finance agencies in 17 states and the District of Columbia to implement local programs for unemployed homeowners. HUD is also launching a $1 billion program to provide up to 24 months of assistance to homeowners who are at risk of foreclosure because of lost income.