Loss Mitigation

A federal investigation into Wall Street and the economic crisis has honed in on Washington Mutual, making the bank that was absorbed by JPMorgan Chase in 2008 the poster child for what went wrong with the nation's financial system. After two days of hearings, the Senate Permanent Subcommittee on Investigations has concluded that federal banking regulators failed to step in and curtail shoddy lending practices and ignored excessive risk-taking at what was once the sixth largest U.S. bank.

Fannie Mae has updated several policies regarding borrowers' future eligibility to obtain a new mortgage loan after experiencing a pre-foreclosure event, including a deed-in-lieu or short sale. The waiting period for a new loan will now be based on the loan-to-value ratio, occupancy of the property, and whether extenuating circumstances played a part in the borrower's inability to make mortgage payments. The GSE says the updated policies will further support overall market stability and reinforce the importance of borrowers working with their servicers.

The performance of subprime loans made during the real estate boom continues to worsen, putting investors on an even bigger hook. This week, Moody's Investors Service downgraded its ratings on a total of $42.2 billion of residential mortgage-backed securities (RMBS) made up of subprime home loans. The agency said the downgrades are a result of ""continued performance deterioration in subprime pools,"" which is likely to worsen further as still-falling home prices and high unemployment trigger more defaults.

Posting back-to-back losses in the third and fourth quarters of 2009, the second half of last year was, to say the least, rough for Bank of America. But a new year marks new beginnings, and things seem to be turning around for the nation's biggest bank. According to the company's earnings report released Friday, Bank of America earned $3.2 billion in the first quarter of 2010. That's a huge improvement compared to the net loss of $194 million reported in the fourth quarter of 2009.

The end of the housing correction is looking closer, as the job market finally turns the corner, investors step up home purchases, and the Obama administration revamps its foreclosure mitigation efforts, according to Moody's Investors Service. The credit ratings agency says it has lifted its outlook for home prices, and with the wide-ranging changes to the Home Affordable Modification Program, the foreclosure crisis just might end earlier than anticipated.

The House Financial Services' housing subcommittee held a formal hearing this week on the administration's new initiatives to provide help to underwater and unemployed homeowners through the Home Affordable Modification Program (HAMP). Most of the industry participants testifying on Capitol Hill applauded the Treasury's efforts to tackle these foreclosure triggers, but there are some who are questioning the logistics and the true effectiveness of the new program enhancements.

Effective April 19, 2010, Anthony Tony Renzi will assume the role of EVP of single family portfolio management at Freddie Mac, the McLean, Virginia-based company announced Thursday. In this newly-created position, Renzi will be responsible for managing and minimizing the losses on Freddie Mac's $1.8 trillion single-family guaranteed portfolio and will oversee Freddie Mac's loss mitigation activities.

HOPE LoanPort, the new Web-based housing counselor tool that streamlines the submission of completed loan modification applications, has inked commitments from Bayview Loan Servicing and Ocwen Loan Servicing.

ServiceLink, a provider of origination and default services and Fidelity National Financial's national lending platform, announced Thursday the opening of one new office in Rancho Cucamonga, California and the expansion of an existing operation in Buffalo, New York. Both are in support of the company's growing loss mitigation operations, ServiceLink explained.

Wells Fargo & Co. said it initiated or completed three modifications for every one foreclosure sale on owner-occupied properties from October 2009 through March 2010. As of March 31, the lender had 523,336 active trial and completed modifications through its own modification programs and the federal Home Affordable Modification Program (HAMP).