News

Through an ongoing investigation into bid rigging, a former executive of a New York tax liens company pleaded guilty Tuesday for his role in rigging bids for tax liens auctioned by municipalities through out the state, according to statement issued by the Department of Justice. Stephen E. Hruby, who supervised the purchasing of municipal tax liens at auctions in New Jersey, was the seventh to plead guilty from the ongoing bid rigging investigation. A felony charge was filed against him in the U.S. District Court in Newark, New Jersey.

Based on a metric devised by Moody’s Analytics, GMAC, SLS, and American Home performed better compared to other subprime servicers in terms of cash collected relative to losses on delinquent loans. This was mainly due to shorter liquidation timelines that resulted in lower loss severities on liquidated or foreclosed properties, according to an article in Moody's ResiLandscape. GMAC's high metric is due primarily to shorter liquidation timelines and because the servicer maximizes cash flow on modified loans by keeping the re-default rates in line with the industry average even though it offers relatively low levels of relief in terms of principal and interest.

Housing permits surged another 4.5 percent in March to a seasonally adjusted annual rate of 747,000, the highest level since September 2008, the Census Bureau and Department of Housing and Urban Development reported jointly Tuesday. At the same time though, housing starts fell for the third time in the last four months to the lowest level since last October. The increase in permits was driven largely by multi-family activity; single family permits fell for the first time since last September.

Ally Financial has agreed to extend the maturity of its secured debt facility with its wholly owned mortgage subsidiary Residential Capital LLC (ResCap). Shortly following the announcement, Fitch Ratings issued a research note on the action, saying that Ally's decision is in line with the agency's expectation of continued moderate support to ResCap from its parent company. That moderate support, however, may be short-lived. With the debt renewal only extended through mid-May, Ally may be planning for a bankruptcy resolution in the near future.

The head of one of the world's most powerful financial policy bodies has tossed her hat into the debate over mortgage principal reductions. Christine Lagarde, managing director of the International Monetary Fund (IMF), says ""the housing problem in the U.S. is something that needs to be addressed"" and it is ""a matter of urgency."" Lagarde tipped her hat in favor of the administration's proposal of principal reductions, but said the problem is that ""the big boys and girls - Fannie and Freddie - have to be part of that equation.""

After 16 months of declines, median home prices in California posted a year-over-year gain, according to the California Association of Realtors (C.A.R.). The median price of a single-family home was $291,080, a 1.6 percent increase compared to a revised $286,550 for March 2011, and a 9.2 percent increase compared to February's median price of $266,660. The month-over-month increase is the largest since March 2004. C.A.R. reported that California's housing inventory declined, with the Unsold Inventory Index for existing, single-family homes down to 4.1 months in March, compared to a revised 5.4 months in February and a 5.4 month supply in March 2011.

The Consumer Financial Protection Bureau (CFPB) issued a bulletin Friday reminding financial institutions that they may be held accountable for violations under contracted service providers. The agency said that banks and nonbank entities need to supervise their third-party vendors with due diligence, consistently request and review their internal controls and training materials, and establish clear expectations about compliance. The CFPB is reaffirming its role as both a formal supervisor and informal trendsetter in the industry.

Builder confidence fell three points in April to 25, matching the lowest point of the year, the National Association of Home Builders reported Monday. The month-over-month decline was the first since last September. All three components of the index - current sales, sales six months out, and buyer traffic - fell in April, with buyer traffic slipping to a four-month low. The builder assessment of present home sales conditions dropped three points to 26. The outlook for home sales in the next six months also fell three points to 32, retreating from a near five-year high. Buyer traffic slid to 18 from 22 in March.

In response to mortgage servicing rules the Consumer Financial Protection announced it may propose, Fitch Ratings issued a statement and said it believes mortgage servicers will incur increased operational, compliance, and reporting expenses if the rules take effect. To create more transparency, the CFPB said it is considering rules which require clear monthly mortgage statements, a warning before interest rates adjust, options to avoid ""force-placed"" insurance, and early information to keep customers out of foreclosure.

Eleven state attorneys general sent a letter to Edward DeMarco, Acting Director of the FHFA, urging him to allow Fannie Mae and Freddie Mac to move forward with principal reductions. Headlined by Massachusetts Attorney General Martha Coakley, the letter doubled down on the FHFA to ""preserve assets and prevent unnecessary foreclosures by implementing loan modifications that include principal write-downs."" State attorneys general said that new reductions ""should consider all of a borrower's debts, not just the monthly mortgage debt, be uniform, transparent, and publicly disclosed.""