Government

The landmark financial reform legislation approved by House and Senate leaders on Friday includes a provision which offers a remedy to the growing number of unemployed homeowners who are facing foreclosure. The amendment provides $1 billion to ensure homeowners who've lost their jobs don't lapse on mortgage payments. Qualified homeowners will be able to borrow up to $50,000 to assist them with monthly payments, provided they have ""a reasonable prospect"" of resuming mortgage payments within 24 months.

Mortgage giant Freddie Mae reduced the size of its mortgage portfolio in May, while the delinquency rate of single-family home loans it guarantees stood unchanged from the previous month. According to the GSE's monthly summary report, its total mortgage portfolio decreased at an annualized rate of 4 percent last month. The drop can be largely attributed to the company's purchases of home loans it had sold to investors that were 120 or more days past due.

House and Senate leaders have reached an agreement on a reconciled version of their respective chambers' financial reform bills - a historic piece of legislation, which was prompted by a national mortgage crisis that pushed the country's entire financial system to the brink of collapse. The legislation will now go to the full Congress for endorsement. Lawmakers have pledged to have an approved bill on President Obama's desk by the July 4th holiday. Administration officials say the bill that has emerged is ""strong.""

Mortgage servicers completed 112,088 loan modifications through their own proprietary programs in May, according to a report released this week by HOPE NOW. That compares to 47,724 new permanent modifications under the government's Home Affordable Modification Program (HAMP) during the same month. Altogether, just over 159,000 mortgage modifications were completed in May, as well as 213,000 other workouts, such as repayment and forbearance plans.

Ocwen Financial Corporation continues to find its name at the top of the list of key performance metrics when it comes to the federal government's Home Affordable Modification Program (HAMP). Ocwen is one of only two servicers who have been able to achieve a three-month turn time on trial to permanent conversions. Most other servicers' trial plans are significantly longer, extending up to seven months for some of the largest banks.

More than 180 foreclosure rescue companies with customers in New York have been sent cease-and-desist letters from the office of state Attorney General Andrew M. Cuomo. These letters, which came as a result of Cuomo's ongoing investigation into the mortgage rescue industry, warn the companies to immediately end all misleading and illegal conduct. According to Cuomo, thousands of New Yorkers have been affected by foreclosure rescue scams.

A breakdown in fraud controls allowed prison inmates to apply for and receive $9.1 million in homebuyer tax credits from the federal government, according to an audit conducted by a Treasury inspector general. More than 1,200 prison inmates, including 241 serving life sentences, cashed in on the home purchase tax incentive. The audit also found that the IRS allowed multiple claims on the same home and laid out $17.6 million for homes purchased before the tax credit program began.

Performance of home mortgages serviced by the largest national banks and thrifts improved earlier this year, for the first time in more than 24 months. According to a new report from the Office of the Comptroller of the Currency, home loan delinquency rates dropped during the first quarter of 2010, with improvements in prime, Alt-A, and subprime categories. Foreclosure statistics increased, though, with the largest institutions initiating more than 370,000 new foreclosures and 1.1 million already in process.

To sway homeowners from the growing trend of strategic default, Fannie Mae has announced several policy changes designed to encourage borrowers to work with their servicers and pursue alternatives to foreclosure. Under these changes, borrowers who strategically default will be ineligible for a new Fannie Mae-backed mortgage loan for a period of seven years from the day of foreclosure. In addition, Fannie Mae said it will take legal action to recoup the outstanding mortgage debt from strategic defaulters in jurisdictions that allow for deficiency judgments.

In response to the pressing need to provide housing-related assistance to stabilize communities affected by high levels of foreclosures, the federal bank and thrift regulatory agencies recently announced a proposed change to the Community Reinvestment Act regulations. This change, the agencies said, would specifically encourage depository institutions to support the Neighborhood Stabilization Program administered by HUD.