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Loss Mitigation

Fed’s Duke Addresses Concerns for Borrowers with Low Credit Scores

While originations are down across the board, ""[t]he drop in originations has been most pronounced among borrowers with lower credit scores,"" said Federal Reserves Governor Elizabeth A. Duke. From 2007 to 2012, purchase originations among borrowers with credit scores higher than 780 declined by 30 percent. In contrast, purchase originations for borrowers with credit scores between 620 and 680 declined by 90 percent, and originations among borrowers with credit scores below 620 were ""virtually nonexistent,"" according to Duke.

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REO, Short Sale Fraud Continue to Evolve

Most mortgage fraud takes place in the short sale and REO space, according to Rob Hagberg, associate director of fraud investigations at Freddie Mac. ""This area is ripe with fraud,"" he said during a webinar hosted by CoreLogic. While servicers and others in the industry have adapted to some fraud schemes and put measures in place to detect and prevent fraud, schemes continue to evolve as fraudsters find new ways to manipulate sales. Both short sale and REO fraud often require fraudsters to convince servicers a home is worth less than it actually is.

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NAR: Metro Area Home Price Gains Stay on Course in Q1

Metro areas continued to post price gains in the first quarter, rising alongside national median price increases, the National Association of Realtors reported. Out of 150 metro areas the NAR tracks, 133 displayed price growth in the first quarter of this year compared to the same quarter a year ago. The association also provided first quarter data on national median prices and found the median price for an existing single-family home rose 9.3 percent year-over-year.

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MBA: Delinquency Rate Rises from Previous Quarter, Foreclosures Fall

The national mortgage delinquency rate ticked up to 7.25 percent on a seasonally-adjusted basis in the first quarter compared to 7.09 percent in the fourth quarter of last year, the Mortgage Bankers Association (MBA) reported in its delinquency survey. While the rate increased 16 basis points from the previous quarter, it's still 15 basis points lower compared to the rate a year ago the same quarter. The share of loans that began the foreclosure process in Q1 remained at its record low level of 0.70 percent, which is the lowest it's been since Q2 2007.

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Survey Finds Buyers, Owners Lack Basic Mortgage Knowledge

According to Zillow, homebuyers participating in its Mortgage Marketplace Survey answered basic questions on mortgage information incorrectly nearly one-third (32.5 percent) of the time. For example, 34 percent of first-time homebuyers are not aware that they might be able to get a home loan with a down payment of less than 5 percent. Prospective buyers aren't the only group who demonstrated a lack of basic mortgage knowledge. About one in five homeowners said they did not believe underwater borrowers could refinance.

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Foreclosure Filings Drop to 74-Month Low, Judicial State Auctions Rise

Foreclosure activity in April fell to a 74-month low across the country, but many judicial states are experiencing rising foreclosures. Furthermore, judicial foreclosure auctions reached a 30-month high, according to RealtyTrac's April U.S. Foreclosure Market Report. April's scheduled judicial foreclosure auctions, which reached their highest level in 30 months, demonstrated a 22 percent monthly increase and a 31 percent yearly increase. In contrast, non-judicial foreclosure auctions reached an 88-month low, having fallen 43 percent from last April.

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Fannie Mae Sets Another Record in Q1, Will Pay $59.4B to Treasury

In the first quarter of this year, the mortgage giant reported pre-tax income of $8.1 billion, the largest in its history. Fannie Mae attributed the improvement to ""strong credit results driven by an increase in home prices, including higher average sales prices on Fannie Mae-owned properties, a decline in the number of delinquent loans, and the company's resolution agreement with Bank of America."" The GSE also announced it will pay $59.4 billion to Treasury.

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TransUnion: Delinquency Rate Sees Biggest Improvement Since 1992

TransUnion reported the national mortgage delinquency rate recorded its biggest improvement since the credit bureau began keeping track in 1992. In the first quarter of this year, the mortgage delinquency rate, which includes 60-plus delinquencies, stood at 4.56 percent. The figure represents a 21 percent decline from a year ago and a 12 percent decrease from the fourth quarter of last year. In addition to the improvement on a national level, all 50 states plus Washington D.C. saw their mortgage delinquency rates fall over the last year.

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Freddie Mac Records 2nd Largest Profit in Q1

Freddie Mac's first-quarter earnings came in slightly ahead of last year's final quarter, the company revealed in its quarterly filing. First-quarter net income at Freddie Mac was $4.6 billion, barely above the $4.5 billion recorded in Q4 2012 but well above the $577 million in last year's first quarter--and the second largest in company history.

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Home Prices on Path to Stabilization This Year

After coming to a ""turning point"" last year, the housing market is now stabilizing, according to Clear Capital's monthly Home Data Index. ""2013's forecasted trajectory is one of moderation and stabilization,"" according to Clear Capital. Home prices rose 7.2 percent on an annual basis in April. Last April's annual price change was a decline of 1.4 percent year-over-year.

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