Government

Following the recent enhancements to the federal government's HOPE for Homeowners (H4H) program, Wolters Kluwer Financial Services has updated its library of H4H mortgage documents and consumer education materials. HUD's enhanced program includes several provisions meant to increase lender and borrower participation, including reduced program fees, streamlined borrower certification requirements, and new underwriting guidelines.

One of America's largest homebuilders is getting into the loan restructuring business. Lennar Corporation has purchased two loan portfolios from the FDIC worth $3 billion. Lennar paid $243 million for the portfolios, which include 5,500 distressed residential and commercial real estate loans from 22 failed banks. The Miami-based builder says acquiring and working out troubled real estate loans was an ""extremely profitable"" part of its business during the last real estate down cycle.

Federal Reserve Chairman Ben Bernanke on Wednesday laid out the central bank's plan for exiting the private credit market and pulling back the trillions of dollars its funneled into the economy to stave off a repeat of the Great Depression. Bernanke stressed that the programs were implemented with no cost to taxpayers, have helped to restart the flow of credit, and are already being ""substantially"" phased out.

Rep. Kenny Marchant (R-Texas) has introduced a new bill, the Mortgage E-Verify Act. As a condition for modification of a home loan held by Fannie Mae or Freddie Mac, or insured by the Federal Housing Administration (FHA), it would require a homeowner to be verified under the E-Verify program, a system run by the U.S. government to certify a person's legal status.

Following in the steps of its sibling company, Fannie Mae has announced that it too will be buying back bad loans from mortgage-backed securities (MBS) investors in bulk. The GSE said it will begin ""significantly"" picking up the pace of its purchases of loans that are at least 120 days past due, beginning in March. Fannie did not disclose an exact dollar amount of the repurchases, but did say that as of December 31, the total of such loans was $127 billion.

Freddie Mac said Wednesday that it will purchase ""substantially all"" mortgages that are 120 days or more delinquent from the company's fixed-rate and adjustable-rate mortgage Participation Certificate (PC) securities. With new accounting rules that took effect January 1, the company said it is cheaper to buy and hold these nonperforming loans on its books than to pay guarantee fees to security investors. As of December 31, 2009, the aggregate balance of such loans was just over $71 billion.

Mortgage principal - to cut or not to cut - has grabbed a fair share of the media spotlight in recent weeks, with a number of experts plugging principal reduction as a practicable means of ensuring homeowners don't redefault on their modified loan. While lenders are often prohibited from trimming the principal by agreements with investors, one such group, representing holders of some $100 billion in mortgage securities, is lobbying Congress to enact legislation that addresses the problem of underwater mortgages by reducing the debt.

Even with improvements beginning to peek through the debris of the housing crisis, mortgage defaults continue to rise at an incredible rate, and the story is no different for the federal government's mortgage insurance agency. The latest numbers from the Federal Housing Administration (FHA) show that loans at least 90 days past due hit 9.12 percent at the end of 2009. That figure is up from 6.82 percent one year earlier. Foreclosures also soared 41 percent, but short sales as a means of avoiding foreclosures outpaced even that figure, increasing 140 percent.

Not even the nation's most recognized and iconic home can escape the deterioration that typifies today's real estate landscape. The value of the White House fell 5.1 percent last year, according to the online real estate marketplace Zillow.com. In January 2008, the company put the value of the White House at $308 million. Twelve months later, and the 132-room mansion built in 1792 is worth $292.5 million.

With foreclosures still rising and potential homebuyers still reluctant to get into the market, homeownership in the United States has hit a 10-year low. According to the Census Bureau, the homeownership rate fell to 67.2 percent at the end of last year. Homeownership has been on a steady downward slope since 2006, when housing woes began to eat away at the government's long-time push to make the American Dream a reality for anyone that wanted it.