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Details of the $25 billion settlement involving state and federal officials and the five largest servicers will change how liens are prioritized, and in turn, opponents say, will benefit banks but hurt investors. Typically, in cases involving delinquent loans, the second liens are written off before a first lien takes any losses. Under the settlement, first and second liens will share in the losses equally, with both getting written down proportionally instead of wiping out the second lien, which tends to yield a higher return since it includes a higher risk.

Appraisers, lenders, and investors appear to be routinely overestimating the values of homes prior to foreclosure, especially in the weakest housing markets, according to two economists with the Federal Reserve Bank of Cleveland. Their report suggests that more accurate pricing could speed the clearing of REO inventories, save lenders money by reducing the carrying costs associated with bank-owned homes, and bring greater stability to housing markets across the country.

Rates for all mortgage loan products headed higher this week as positive employment indicators rolled in, with job growth over the last six months the strongest it's been since 2006. That, coupled with the Greek debt restructuring on the international front and the results of the Federal Reserve's stress tests pointing to a stronger U.S. banking system, boosted investor confidence and drove bond yields higher. Studies from both Freddie Mac and Bankrate showed the same measurable increases in rates across-the-board.

The FHFA's decision to not allow for principal reductions on Fannie Mae and Freddie Mac loans came under sharp criticism during a Senate subcommittee hearing Thursday. John DiIorio, CEO of 1st Alliance Lending, a mortgage origination firm, argued in support of principal reduction, even when analyzing the benefits from a bottom-line perspective, not simply as a form of aid. Laurie Goodman, senior managing director of Amherst Securities, said there were a number of flaws in an FHFA study used to defend the decision to not apply principal forgiveness, and discussed three major criticisms and ""technical flaws.""

The Federal Housing Finance Agency (FHFA) released its final rule regarding private transfer fees Thursday. After reviewing the 4,200 comments it received in response to its proposed guidance, the FHFA is issuing a rule that restricts Fannie Mae, Freddie Mac, and the Federal Home Loan Banks from taking on mortgages and related securities encumbered by certain types of private transfer fee covenants, also known as Wall Street home resale fees.

While foreclosure inventory showed a year-over-year decline for January 2012, REO inventory held by servicers grew faster in January than the pace at which REO properties sold, according to CoreLogic's National Foreclosure Report for January 2012. The distressed clearing ratio, which calculates the rate at which REO properties are sold, was 0.69 for January 2012, down from 0.80 in December 2011. A higher ratio indicates a faster pace of REO sales relative to the pace of completed foreclosures. On a year-over-year basis, the number of foreclosures actually dropped, going from 80,000 in January 2011 to 69,000 in January 2012, according to CoreLogic's National Foreclosure Report.

First time claims for unemployment insurance fell 14,000 in the week ended March 9, the Labor Department reported Thursday, the first drop in four weeks. Continuing claims, reported on a one-week lag, also fell, dropping 81,000 to 3,343,000, after two straight weekly increases. The four week moving average for initial claims was flat at 355,750, unchanged from the previous week, while the four week average for continuing claims declined 25,250 to 3,394.250.

Depending on whether the data was based on a judicial or non-judicial state, foreclosure activity told differing stories in RealtyTrac's Foreclosure Market Report released today for February 2012. When clumping states together based on foreclosure processes, February foreclosure activity in the 26 judicial states increased 24 percent from February 2011 and 2 percent from the previous month of January. For the 24 non-judicial states, the numbers moved in near opposite directions, with foreclosure activity decreased to 23 percent from February 2011 and down 5 percent from January, according to a RealtyTrac release.

Oklahoma residents seeking restitution under the state's mortgage settlement with the nation's largest mortgage servicers must apply for benefits by September 13, 2012. The agreement between Attorney General Scott Pruitt and Bank of America, Citigroup, Ally's GMAC, JPMorgan Chase, and Wells Fargo gives the state $18.6 million, all of which will be used to compensate residents wronged in the foreclosure process. Under the nationwide settlement, Oklahoma would have received an estimated $10.2 million, and most of it would have been ""paid"" in the form of credits for loss mitigation activities fulfilled by the servicers.

First Guaranty Mortgage Corp. (FGMC) will partner with MortgageKeeper referral services, which will provide FGMC access to a database that links individuals in financial distress to available community services. FGMC customer service representatives will have continuous, web-based access to over 6,000 nonprofit and government services through the partnership.