Loss Mitigation

In a long-running debate, Edward DeMarco, acting director of the Federal Housing Finance Agency, stated again this week that he does not support principal reductions and does not endorse their use at Fannie Mae and Freddie Mac. After stating his position, he immediately faced criticism and opposition from a broad spectrum of individuals, especially throughout the government. However, DeMarco's decision received a few words of praise as well.

Starting September 1, Fannie Mae and Freddie Mac will lower their standard modification interest rate from 4.625 percent to 4.25 percent. The GSEs stated the rates are adjusted based on market conditions.

Fannie Mae announced Wednesday that it is opening an extension of its Los Angeles Mortgage Help Center. The Los Angeles Mortgage Help Center serves the Inland Empire region as part of the GSE's nationwide effort to educate families about their options and tools for avoiding foreclosure.

FHFA Acting Director Edward DeMarco released a statement Tuesday reiterating his stance that offering principal reduction for Fannie Mae and Freddie Mac loans is not in the best interest of the GSEs and taxpayers. DeMarco has faced a barrage of criticism for not allowing the GSEs to apply the Home Affordable Modification Program Principal Reduction Alternative (HAMP PRA) program to underwater loans and has been urged by lawmakers to reconsider his position. After what DeMarco said was extensive analysis, he stated, ""FHFA has concluded that the anticipated benefits do not outweigh the costs and risks.""

In June, 60,000 homes turned into completed foreclosures compared to 80,000 foreclosures a year ago, CoreLogic reported Tuesday. The analytics company stated the yearly drop puts completed foreclosures at 2007 levels. Month-over-month, there was no reported change in completed foreclosures for June. The number of homes in national foreclosure inventory in June stood at 1.4 million, or 3.4 percent of all homes with a mortgage.

Personal income rose $61.8 billion in June but consumers held on to it as personal spending fell 1.3 billion in the month, the Bureau of Economic Analysis reported Tuesday. The increase in income - 0.5 percent - topped expectations of a 0.4 percent boost, but the 0.01 percent decline in spending fell short of the 0.1 percent increase economists had expected.

Home prices rose sharply in May cutting the year-year drop in prices to 0.7 percent from 1.8 percent in April, Standard & Poor's reported Tuesday in its Case-Shiller Home Price Index. Prices in the 20 cities surveyed rose 2.2 percent month-month. The 10-city index also improved 2.2 percent in May, shaving the year-year decline in prices to 1.0 percent in May from 2.2 percent in April. The month-month increase fell short of the 2.3 percent gain registered in June 2004. Economists had expected the 20-city index to grow 1.2 percent in May.

The delinquency rate for commercial real estate loans reached another all-time high in July, according to a report from Trepp. Spiking up another 18 basis points, the CMBS delinquency rate stood at 10.34 percent, up from 10.16 percent in June and 10.04 percent in May. July's increase is the fifth monthly rise and means the delinquency level is up 97 basis points since February. The analytics company said the continued increase is due to a wave of five-year loans that matured in the first half of 2012 and could not refinance.

Former President Bill Clinton will stop off at the Democratic National Convention (DNC) in Charlotte, North Carolina, before making his way to the Five Star Conference and Expo in Dallas, Texas, where he is scheduled to address the mortgage industry's largest gathering of default servicing professionals. Media outlets were abuzz Monday with news that Clinton is slated to give the official nomination speech naming President Barack Obama as his party's presidential candidate on Wednesday, September 5, just two days before his speech at the 2012 Five Star Conference.

After being known as one of the hardest-hit cities, Phoenix has been gaining recognition for its rapidly rising prices. DataQuick reported the median sale price of a home in the Phoenix metro area in June rose for the seventh month in a row to $152,000, the highest level since late 2008. One of the reasons for the upswing in prices is the decline in foreclosure resales, according to DataQuick. Foreclosure resales fell to 21.2 percent of the resale market in June. The figure is the lowest level since January 2008, when foreclosure resales accounted for 18.6 percent of the resale market.