Loss Mitigation

Foreclosure filings - default notices, scheduled auctions and bank repossessions - totaled 188,780 in April 2012, which is the lowest monthly total since July 2007, according to RealtyTrac's Foreclosure Market Report. April foreclosure activity also fell 5 percent from the previous month and was down 14 percent from a year ago in April. When analyzing foreclosure activity according to judicial processes, non-judicial states declined both yearly and monthly, while judicial states decreased monthly but not yearly.

On a national level, delinquency rates and foreclosure starts decreased on a quarterly and yearly basis in the first quarter of 2012, with foreclosure inventory the exception, which increased slightly compared to the previous quarter, according to the Mortgage Bankers Association. The delinquency rate was 7.40 percent on a seasonally adjusted basis in the first quarter of 2012 compared to the 2011 fourth quarter rate of 7.58 percent and the year ago quarter's 8.32 percent. Foreclosure inventory, on the other hand, saw a small quarterly increase of 1 basis point after ending at 4.39 percent in the 2012 first quarter.

The Consumer Distress Index, published by CredAbility, found the average U.S. household is under less financial stress these days, most likely due to factors such as added jobs and the mild winter weather this year. Overall, U.S. households scored 69.9 out of 100 points, with a score under 70 indicating a state of financial distress. While still 0.1 points shy of rising above the distress category, the score is an improvement from the previous quarter's 67.6. Also, 69.9 is the highest score since the 2008 third quarter and the 2.3 point increase from the previous quarter is the highest quarterly jump in seven years.

With vacant homes stretching the capacity of banks' balance sheets and homebuyer demand lackluster at best, short sales are becoming a top loss mitigation choice for private lenders and investors, particularly in especially hard-hit markets. According to Barclays Capital, the benefits of pursuing a short sale are compelling for servicers and investors who are able to liquidate delinquent loans in an expedited fashion with fewer payment and interest (P&I) advances and who take ""quasi"" possession of the property in better condition and at better prices than REO, lowering severities.

According to a report from Foreclosure-Response.org, the serious delinquency rate, which includes loans 90 or more days past due plus foreclosures, increased for the first time after a downward trend between December 2009 and June 2011. Serious delinquencies rose from 9.2 percent in June 2011 to 9.7 percent in December 2011 for the nation's 100 largest metropolitan areas. While the 90-plus delinquencies component of the percentage was flat at 3.8 percent and has remained largely unchanged for the past four quarters, foreclosure rates continue to rise, and now stand at 5.9 percent. In June 2011, the foreclosure rate was 5.5 percent.

At a time when mortgage rates have hit record-low numbers, HUD Secretary Shaun Donovan stressed urgency in getting housing refinance bills on President Barack Obama's to-do list for Congress passed. During a teleconference Friday, which preceded Obama's stop into Reno, Nevada, to boost support for the housing proposals, Donovan outlined three bills that were introduced to Congress that week. Donovan says the bills would save homeowners an average of $2,500 to $3,000 a year.

As one of the hardest hit states during the real estate downturn, Florida often pops up in market reports as having a noticeably higher foreclosure rate than other states. Even so, the state is also becoming recognized for how quickly some of its markets are climbing out of the housing slump. For example, the National Association of Realtors recently cited data from Move Inc. showing the top 10 turnaround markets. Seven out of 10 were in Florida. Yet, a recent report from Florida Realtors stated that while Florida is in a revival period, distressed properties will remain a big factor for the next 10 years.

Freddie Mac said Thursday that its board of directors has selected Donald H. Layton to serve as the company's new CEO. Layton will join the GSE on May 21, and will also have a seat on the board of directors. In October 2011, the Federal Housing Finance Agency announced that Charles E. Haldeman, Jr. had informed Freddie Mac's board of his desire to step down within the year. Haldeman served as the GSE's CEO since August 2009. Layton has had a long career in the private banking and financial services sectors. He worked for nearly 30 years at JPMorgan Chase and its predecessors and more recently, served as chairman and CEO of E*Trade Financial.

Starting June 1, military homeowners who are permanently displaced by a job-related move may still be able to be considered owner-occupants when applying for the Home Affordable Modification Program (HAMP). This change means more people could become eligible for the government's modification program to assist struggling homeowners.

Fannie Mae said Wednesday that it brought in $2.7 billion dollars in net income during the first quarter of this year, and for the first time since it was seized by the government in September of 2008, the company does not need a draw of taxpayer funds from Treasury to get out of the red. Fannie Mae says its improving numbers can be traced to lower credit-related expenses as the decline in home prices slowed and the company shed some of its REO holdings.