Loss Mitigation

In the second quarter of this year, filers submitted 17,476 Mortgage Loan Fraud Suspicious Activity Reports (MLF SARs), marking a 41 percent yearly decrease, according to a report from Financial Crimes Enforcement Network (FinCEN). Even though reports of MLF activity made a steep drop and continue to fall year-over-year, reports of foreclosure rescue scams have been increasing. If foreclosures rescue SARs continue at the current pace into the remainder of 2012, the yearly total for foreclosure rescue reports will be significantly higher than 2011.

Home equity installment balances rose 0.3 percent in August--the first monthly increase since November 2007, according to Equifax. After plummeting 49 percent over the past four years to just $143 billion, the company contends August's uptick could signal ""a possible turning point in mortgage demand."" Equifax says amid signs the contraction in mortgage debt is slowing and delinquencies are trending down, it looks like positive growth may finally be taking hold in the mortgage market.

As part of the Servicing Success Program, Freddie Mac and Fannie Mae are aligning their expectations for servicers regarding a variety of criteria. However, while basic criteria will align, the weights and targets for various criteria may differ between the GSEs, according to an announcement from Freddie Mac. Freddie Mac recently released a bulletin to detail changes to the Servicer Success Scorecard, repurchase timelines for servicer violations, updates to compensatory fee requirements, and revisions to the GSE's servicer termination and transfer requirements.

Overall, major subprime servicers improved their ability to limit losses on delinquent loans in the second quarter, according to the Servicer Dashboard report from Moody's Investors Service. Moody's uses a cash flow efficiency metric to measure how much cash a servicer collects relative to losses. The report revealed that the cash flow efficiency metric increased for subprime servicers, rising from 0.27 in Q1 to 0.29 in Q2, the highest level obtained over the past five quarters.

Home-related loans struggled in the second quarter of 2012, while bank card delinquencies fell to an 11-year low, according to a report from the American Bankers Association.

In September, Mortgage Guaranty Insurance Corporation (MGIC) wrote $2.2 billion in primary mortgage insurance. MGIC, which is a principal subsidiary of MGIC Investment Corporation, also reported it began the month with 150,388 loans in delinquent inventory and ended with 148,885 loans.

On Friday, Treasury released the Making Home Affordable Program report, which details performance from the nine largest servicers participating in the Making Home Affordable (MHA) program. The most recent August servicer report provided data on servicers’ ability to reach out to delinquent homeowners who are at least 60 days behind to inform them of the program. In addition, the report revealed servicers' performance when converting eligible trials into permanent modifications.

The nation's unemployment rate fell to 7.8 percent in September–the lowest level since January 2009—as the economy added a below-average 114,000 jobs, the Bureau of Labor Statistics (BLS)reported Friday. The 0.3 percentage point improvement in the unemployment rate is the largest since January 2011, when the unemployment rate dropped from 9.4 percent to 9.1 percent.

Residential mortgage servicer Vericrest Financial, Inc., announced Thursday that it has relocated its Texas Center of Excellence from Dallas to Irving, Texas. Vericrest's Texas center houses the company's corporate functions, as well as asset management, business development, technology, and servicing operations. The company says its plans for future expansion could create potentially hundreds of new jobs.

Performance on vintage prime residential mortgage-backed securities (RMBS) continues to degrade, Fitch Ratings revealed in a report. The ratings agency announced a downgrade on 6 percent of its rated prime RMBS classes, many of which fall into the pre-2005 category. Fitch attributed the downgrade to increased delinquency rates in certain pools.