Loss Mitigation

President Obama has made a public call for mortgage lenders and servicers to provide struggling homeowners with longer-term modifications and principal reductions when it fits the situation. Referring to the bailout of the banking system, which the president described as probably the most unpopular thing the government has ever done, Obama said American taxpayers were there for the banks when they got into trouble, and now it's time for the banks to be there for the American people.

Nearly twice as many underwater borrowers think it is okay to walk away from their mortgage than harbored this sentiment a year ago, according to the results of a survey conducted by Fannie Mae. A separate academia study, however, found that the number of cases in which the homeowner defaulted even though they cold afford their payments - at least as perceived by their neighbors - appears to be trending down. The researchers also asked about respondents' feelings on robo-signing penalties.

Mortgage servicing in general, and default servicing in particular, is in for its own form of modification. Based on testimony given before a Senate subcommittee Thursday and comments from the senators themselves, national mortgage servicing standards are in the cards. The topic has taken center stage in light of recent documentation errors related to foreclosures, and a growing number of industry analysts and mortgage banking groups are voicing their support.

A new rule from the Federal Trade Commission that aims to protect homeowners from mortgage relief scams may impact real estate professionals who represent clients involved in short sale transactions. The Mortgage Assistance Relief Services rule bans all upfront fees for renegotiating mortgage terms and mandates certain consumer disclosures. It is primarily directed at companies offering modification services, but the National Association of Realtors says certain conditions also apply to practitioners working with short sales.

The New Jersey HomeKeeper Program officially launched this week to provide payment assistance to homeowners in the state who are at risk of losing their homes to foreclosure as a direct result of unemployment or underemployment. The zero percent interest rate loans offered through the program will be forgiven in full as long as the homeowner remains in the home for at least 10 years. The latest figures from the state reveal New Jersey's unemployment rate rose to 9.3 percent in March.

Wells Fargo says as of March 31, the company had 664,195 loans in active trial or permanent mortgage modifications. Eighty-six percent, or 568,548, were through Wells Fargo's own modification programs. Loans restructured through HAMP tallied 95,647. At the same time, 7.22 percent of all first mortgage and home equity loans serviced by the company were past due or in foreclosure in the first quarter, down from 8.02 percent. While past-dues are dropping, litigation expenses related to foreclosures are expected to rise.

A new product from Aon Underwriting Managers will offer financial institutions that own or service mortgage loan portfolios the ability to combine insurance coverage. Aon's Global Portfolio Protection Program (GP3) offers mortgage impairment protection, mortgagee errors and omissions coverage, foreclosed/real estate-owned property and liability insurance, and force-placed hazard and flood insurance in one insurance policy.

MLSListings, Inc., a not-for-profit, California mutual benefit corporation formed by eight Northern California Realtor associations, will participate in the Fannie Mae Short Sale Assistance Desk program. MLSListings, which represents more than 18,000 subscribers in 6,000 firms in an area covering 28,000 square miles, is the first multiple listing service (MLS) in California to participate.

Hawaii Gov. Neil Abercrombie has signed into law a measure aimed at stemming foreclosures in the state by bringing homeowners and their lenders together to negotiate an alternative resolution. Based on first-quarter foreclosure activity, RealtyTrac reports that Hawaii had the 11th highest foreclosure rate in the nation, with one in every 201 homes in the state receiving a filing during the first three months of this year.

Integrated Mortgage Solutions (IMS), a provider of property preservation and rehabilitation services to mortgage lenders and servicers, will offer a new remediation process for Chinese drywall, which releases dangerous sulfur compounds into the air, particularly in warm, moist environments. IMS' biochemical remediation process does not require the complete removal of existing wallboard. The on-location, ""in-situ"" process is completed in as little as one-third the time of traditional methods and reduces overall costs by up to 50 percent.