Government

The Pennsylvania Department of Banking means business. According to a quarterly report, the department took 26 enforcement actions and suspended three mortgage licenses during the second quarter of this year. Among the enforcement actions taken, the department issued six cease-and-desist orders against companies engaged in unlicensed loan modification activities, and the department entered consent agreements with 10 mortgage loan companies for violations of the Mortgage Licensing Act and/or unlicensed activity.

In just the first three months of operation, Fannie Mae's mortgage help center in South Florida has been able to provide assistance to more than 700 Miami-Dade metro area mortgage borrowers seeking to avoid foreclosure. The center, which offers free mortgage and financial counseling to homeowners at risk of foreclosure, was opened in late February through a partnership between Fannie Mae and Neighborhood Services of South Florida.

A new initiative announced Monday by HUD will give state and local governments and nonprofit groups participating in the department's Neighborhood Stabilization Program (NSP) preference to acquire homes from its inventory of foreclosed properties at discounted rates. This temporary program will provide NSP grantees an exclusive option to purchase HUD's REO properties before they are marketed to other purchasers. Furthermore, NSP purchasers will receive a 10 percent discount off the appraised value of the home.

Two banks in Maryland and one each in New York and Oklahoma were shut down over the weekend by their respective regulators, bringing the total number of failed FDIC-insured institutions to 90 so far this year. The FDIC says it expects bank closings to peak in the latter half of 2010, but already the industry is well on pace to far exceed the 140 bank failures that characterized 2009.

The Federal Housing Finance Agency (FHFA) is putting a host of private-label mortgage-backed securities (MBS) under the microscope in an effort to examine their role in losses suffered by Fannie Mae and Freddie Mac. As conservator of the nation's two largest mortgage investors, FHFA has issued 64 subpoenas seeking documents related to the GSEs' investments in private mortgage bonds. The agency is looking into whether the MBS issuers should be held liable and forced to buy back bad mortgages.

According to an article recently released by the Federal Reserve Bank of Cleveland, much can be gleamed by studying the historic link between foreclosure and unemployment rates--including the fact that according to past patterns, we can expect the current high foreclosure rate to persist for some time. This finding was based on the observation that states that experienced boom-bust housing cycles in the past (such as Texas, Oklahoma, Massachusetts, and California) had elevated foreclosure starts for years after the peak in foreclosure starts and inventory, and these previous boom-bust cycles were small in comparison to the current cycle.

The average guarantee fee charged by Fannie Mae and Freddie Mac on single-family mortgages fell to 22 basis points in 2009, a dip from 25 basis points in 2008, according to a report released by the Federal Housing Finance Agency (FHFA). FHFA said this decline resulted from a significant improvement in the credit profile of the single-family mortgages the government-sponsored enterprises acquired relative to 2008. On a year-over-year basis, there were improvements across the product, credit score, and loan-to-value ratio spectrums.

John C. Dugan announced Thursday that he will leave his role as Comptroller of the Currency on August 14, 2010. This departure comes as Congress is in the final stages of considering the Financial Reform Bill. If passed, this legislation will preserve and expand the Office of the Comptroller of the Currency's role as a dedicated prudential supervisor of federally chartered banks and thrifts. Dugan said this exclusive supervisory focus will serve the nation well in the future when the banking system is tested once again, as it surely will be.

As of Thursday morning, shares of Fannie Mae and Freddie Mac are trading exclusively on the over-the-counter (OTC) market. This announcement comes shortly after the Federal Housing Finance Agency directed the companies to voluntarily delist their common and preferred stock from the New York Stock Exchange and any other national securities exchange. Fannie Mae's common stock will commence trading on the OTC Bulletin Board under the symbol ""FNMA,"" and shares of Freddie Mac's common stock will now trade under the symbol ""FMCC.""

The U.S. Small Business Administration recently announced the first nine loan pool originators authorized by the agency to assemble and sell pools of 504 program first mortgage loans. The federal agency called this a major step to jump-starting a secondary market that will make financing more accessible for small businesses.