Government

Political pressure is growing for lenders to cut mortgage principal. Executives from the nation's four largest banks pushed back against that pressure Tuesday, arguing to lawmakers that a large-scale principal forgiveness program could have dire ramifications for the future of housing finance. It's estimated that some 11 million borrowers owe more on the mortgage than their home is worth. JPMorgan Chase projects it would cost $700 billion to $900 billion to bring these underwater borrowers ""even.""

A newly enacted California law provides a tax break to borrowers whose mortgage debt was forgiven through a foreclosure, short sale, or loan modification. The bill landed on Gov. Schwarzenegger's desk and he inked his approval just days before the April 15th tax deadline. The state's Franchise Tax Board says the new provision will cost California about $34 million in tax revenue, but will provide relief to approximately 100,000 borrowers in the hard-hit state.

In another win for Standard & Poor's and Moody's Corp., U.S. District Judge Jed Rakoff dismissed a lawsuit claiming the companies defrauded investors who relied on their ratings before buying $63 billion of investment-grade mortgage-backed securities. This isn't the first lawsuit investors have filed against the two credit ratings agencies. And it isn't the first one to be dismissed either.

Following the severe flooding in Rhode Island, HUD recently instituted a 90-day moratorium on foreclosures of Federal Housing Administration (FHA)-insured mortgages in four counties across the state, including Kent, Newport, Providence, and Washington. While the foreclosure suspension is only mandated for FHA-insured mortgages in these counties, Rhode Island's Attorney General, Patrick Lynch, is asking all lenders to consider voluntary moratoria on non-FHA mortgages as well.

Last November, the board of commissioners of Cook County, Illinois, agreed to include a $3 million amendment in the county's budget in order to create a mortgage foreclosure mediation program. The program, which applies to Cook County residential properties that are owner-occupied, single family homes or individual condominium units and owner-occupied residential properties with four units or less, officially launched on Monday.

Despite servicers' efforts to modify unprecedented volumes of troubled mortgages and a large-scale government-led program put in place to stem the nation's viral foreclosure epidemic, they haven't been enough to keep up with the rapid pace of loan deterioration, according to new data from Lender Processing Services (LPS). An LPS market report released Monday shows that the total number of delinquent loans as of the end of February was 21 percent higher than it was a year earlier, and the foreclosure rate represents a 51 percent year-over-year increase.

Oklahoma Housing Finance Agency (OFHA) announced Monday that it will release $75 million in mortgage revenue bonds on April 27 through its OHFA Advantage program, marking one of the agency's largest single distributions in recent years. This $75 million is just part of the $300 million OHFA anticipates releasing this year through the utilization of the New Issue Bond Program.

According to Bank of America's monthly Home Affordable Modification Program (HAMP) progress report to the Department of Treasury, the Charlotte, North Carolina-based bank has completed nearly 33,000 permanent HAMP modifications, including more than 12,000 since the previous monthly report. As of April 8, 2010, 32,900 Bank of America customers had been placed into completed mortgage modifications with affordable payments under HAMP, up from 20,666 reported a month earlier. This marked the bank's most productive month to date.

Beach First National Bank in Myrtle Beach, South Carolina, was shut down this weekend by the Office of the Comptroller of the Currency. It's the 42nd FDIC-insured institution to fail this year, and the first in South Carolina since March 1999. The FDIC brokered a deal with Bank of North Carolina out of Thomasville, North Carolina to take over the shuttered institution's operations.

There's plenty of finger-pointing and opinions to go around in the heated debate over what caused the nation's financial meltdown of 2007. To get to the true triggers, President Obama formed the Financial Crisis Inquiry Commission. This week, two former top execs from Fannie Mae found themselves in the hot seat. They said it was Wall Street firms muscling in on the mortgage-backed securities market, unrealistic housing goals, and a public-private business model that led the GSEs to take greater risks in the years before the mortgage crisis.