Loss Mitigation

First time claims fell a surprising 27,000 to 365,000 for the week ended April 28, the Labor Department reported Thursday after revisions drove the prior week’s report up by 4,000 to 392,000, the highest level in five months. Economists had expected initial claims would decrease to 378,000.

Total delinquent first mortgage balances are under $500 billion in March 2012, the lowest since January 2009, according to Equifax's March National Consumer Credit Trends Report and Creditforecast.com, a joint product of Equifax and Moody's Analytics. As of March 2012, the number of outstanding first mortgages was 49.5 million, a nearly 11 percent decrease from the March 2008 peak when it reached more than 55 million. According to the report, the decline was caused by high foreclosures, loan payoffs, and low homebuyer demand.

While delinquencies saw a decline and reached their lowest level since August 2008, foreclosure inventory stayed near historic highs, according to data from the March Mortgage Monitor report released by Lender Processing Services (LPS). The rate for delinquencies was 7.09 percent in March, down 6.3 percent when compared to the previous month and down 8.8 percent compared to a year ago in March. When broken down by judicial processes, non-judicial states had a significantly lower rate of properties in foreclosure inventory at 2.45 percent, while judicial states were above the national average at 6.51 percent.

Based on documents Reps. Elijah Cummings (D-Maryland.) and John Tierney (D-Massachusetts) received, Acting Director Edward DeMarco's reason for not allowing principal reduction appears to be based on ideology, not analysis, according to a May 1 letter they wrote to the director. The letter states beginning in 2009, Fannie Mae officials worked with Citibank to develop a ""shared equity"" principal reduction pilot program that was ""suddenly suspended"" in July 2010. In the letter, the representatives stated that on February 8, a former Fannie Mae employee informed them the pilot program on principal reduction was terminated by officials who were ""philosophically opposed to writing down principal balances.""

After just over two years as executive vice president over the single-family mortgage business at Freddie Mac, Anthony Renzi is stepping down. According to documents filed with the Securities and Exchange Commission Monday, Renzi submitted his resignation on April 24 and will officially depart from the organization on May 11. Renzi was responsible for managing and minimizing losses on Freddie Mac's nearly two trillion-dollar single-family guaranteed portfolio, which included overseeing the company's loss mitigation activities.

Just two months after matching its lowest reading in a year, the Trepp CMBS Delinquency Rate reversed course and is now close to matching the highest reading of all time. At 9.80 percent, the April 2012 rate for 30-day plus delinquencies is just 8 basis points shy of the July 2011 record when it was 9.88 percent, according to Trepp, a provider of information, analytics and technology to the CMBS, commercial real estate, and banking markets. April's rate jumped 12 basis points from March after already increasing 31 basis points from the month before in February.

Year-over-year, the number of completed foreclosures decreased about 19 percent to 69,000 in March 2012 compared to 85,000 in March 2011, according to CoreLogic's National Foreclosure Report for March. Month-over-month, with the number of completed foreclosures in February 2012 at 66,000, foreclosures increased about 4.5 percent in March 2012. In addition to the yearly decrease in completed foreclosures, the number of loans in the foreclosure inventory decreased by nearly 6 percent, or 100,000, in March 2012 compared to the year before.

Studies indicate the foreclosure crisis and its community-debilitating aftereffects are having a disproportionate impact on minorities and minority-owned real estate businesses. The National Association of Real Estate Brokers (NAREB), the oldest African American trade group of real estate professionals in the country, has positioned itself alongside members of Congress, minority businesses, and granting agencies like the Salvation Army to face this challenge head-on. NAREB is hosting the State of Housing in Black America Issues Forum (SHIBA) on Wednesday, May 2, in Washington, D.C., with special appearances by Reps. Elijah Cummings and Eleanor Holmes Norton.

The California Association of Realtors (C.A.R.) announced its support for a bill that will prevent California homeowners from going into foreclosure if they have negotiated a short sale with their lender or servicer. Assembly Bill 1745 (Torres, D-Pomona) prevents lenders or servicers from recording a notice of sale if a short sale has been approved. The bill is scheduled for hearing on April 30 by the Assembly Banking and Finance Committee.

While 114 out of 212 metropolitan areas with a population of 200,000 or more saw increases in foreclosure activity during the 2012 first quarter, activity was still down compared to the same quarter a year ago, according to RealtyTrac's 2012 first quarter Metropolitan Foreclosure Market Report. Last year, 135 out of 212 metros areas saw increases in foreclosure activity in the first quarter.