Government

The U.S. Treasury is moving ahead with a plan to sell off taxpayers' 27 percent ownership stake in Citigroup Inc. The Wall Street bank was one of the biggest bailout recipients among financial institutions, and the Treasury's decision to pull out is being viewed as a testament to just how quickly the big lenders have been able to recapitalize. Treasury has authorized Morgan Stanley to sell up to 1.5 billion shares of Citigroup common stock - the first offering in a larger plan to dispose of all the Treasury's 7.7 billion common shares in the bank.

The state of Illinois saw seven of its locally-based banks closed down by regulators over the weekend. So far this year, 57 institutions have landed on the FDIC's failed bank list. Ten of those are from Illinois. This latest round of Midwest closures is expected to cost the FDIC a combined $973.9 million.

With defaults continuing to mount and declining property values still widespread, the industry is seeing an increase in short sales. Such transactions are expected to burgeon even further now that the federal government has implemented its Home Affordable Foreclosure Alternatives (HAFA) program. With the new policies and still-precarious market conditions, short sales are gaining in popularity among lenders and distressed homeowners alike, but as with any modus operandi that rapidly picks up steam, this proliferation can open the gate for fraudulent activity.

The Loan Modification Scam Prevention Network, led by Fannie Mae, Freddie Mac, the Lawyers' Committee for Civil Right Under Law, and NeighborWorks America, is launching a national campaign to prevent loan modification scams through public education, complaint reporting, and coordination with local, state, and federal enforcement agencies.

With the U.S. Department of Agriculture's (USDA) loan guarantee program said to be just days away from exhausting its federal funding, a bill requiring lenders to fund the program was unanimously passed by the House Financial Services Committee on Thursday. This action clears the bill for consideration by the U.S. House of Representatives, which is expected to take up the bill as early as next week.

President Obama has taken his campaign for financial reform on the road. On Thursday, he headed straight for the New York financial district. Speaking at Cooper Union College in lower Manhattan, just a short distance from the New York Stock Exchange, the president called for limits on the size of banks and the risks they can take and for stronger consumer protections on mortgages and other loans.

IndiSoft, LLC has enhanced its RxOffice platform to meet the new Home Affordable Modification Program (HAMP) request and income documentation requirements announced by the Treasury. Beginning June 1, HAMP servicers will be required to verify a borrower's income and gather all the necessary paperwork prior to initiating a trial mod period. Officials say this change will speed the pace of permanent mod conversions.

The FDIC has completed sales of $2 billion in notes backed by real estate loans seized from two big bank failures - Corus Bank in Chicago and Franklin Bank in Houston, Texas. According to the FDIC, the structured note sales - the first from the agency since the early 1990s - will increase recoveries for the two bank closings and return substantial funds to the deposit insurance fund, which has taken repeated hits with the elevated number of bank failures over the past two years.

Freddie Mac said Wednesday that its full menu of mortgage relief options is being extended to families whose homes were damaged or destroyed by the recent floods in Rhode Island, Massachusetts, New Jersey, and West Virginia. Specifically, the mortgage giant is giving servicers the discretion to reduce or suspend mortgage payments for up to 12 months for borrowers with Freddie Mac-owned mortgages.

The Government National Mortgage Association (Ginnie Mae) announced Tuesday that it guaranteed $22.7 billion in mortgage-backed securities (MBS) in March. Total single-family issuance for March was more than $22 billion. Ginnie Mae II single-family pools lead the way with nearly $14 billion in issuance, while Ginnie Mae I single-family pools totaled nearly $8 billion. In addition, Ginnie Mae's multifamily MBS issuance was nearly $828 million.