News

Experts blame the massive inventory of existing homes on the market for hindering the housing sector's recovery. The overhang has been inflated by large volumes of foreclosures, and it's expected to grow with millions more coming down the pipeline. One economist says it will take 6.5 million new household formations to absorb the excess inventory. He expects it will take five years to achieve that goal and emerge from the self-defeating cycle of oversupply pushing prices down, the negative equity triggering defaults, and in turn, further increasing the oversupply.

Michigan Attorney General Bill Schuette issued criminal investigative subpoenas this week against several third-party firms that provide support to national mortgage servicers. The move is part of the Office of the Attorney General's investigation into questionable mortgage documentation filed with the state's Register of Deeds offices during the current foreclosure crisis. The primary target is the firm DocX. Three other firms affiliated with DocX have also been subpoenaed.

Freddie Mac released its weekly survey of mortgage interest rates Thursday, which showed that the 30-year rate edged up 1 basis point while the 15-year rate dropped 1 basis point. The GSE's measurements for adjustable-rate mortgages (ARMs) - which have been gaining popularity among some borrowers - mirrored the same, with rates on the 5-year ARM slipping and the 1-year ARM rising slightly.

CoreLogic, a provider of information, analytics, and business services, now helps regulated financial institutions meet the federal Interagency Appraisal and Evaluation Guidelines for lending decisions via its new property condition report. The company's new product, OnSite, covers 98.7 percent of parcels in the country, contains local market conditions, and complements automated valuation model (AVM) reports.

The U.S. Conference of Mayors and Wells Fargo Home Mortgage have joined forces to create a national alliance focused on foreclosure prevention, property disposition, homeownership promotion, and community development. The three-year initiative will address housing issues with strategies and outreach initiatives involving mayors and their constituents. With the challenges facing the nation, the parties say it is important that the private and public sectors work together on options that address cities' individual needs.

RealtyTrac released a new report Thursday detailing foreclosure activity for the month of May. Filings dropped 2 percent from April and were down 33 percent from a year earlier. RealtyTrac attributed the decline to ongoing processing delays stemming from last fall's documentation issues. But the company says it's seeing hints of renewed activity, with spikes in various stages of the foreclosure process in some states. Georgia, for example, saw a 79 percent increase in new REOs last month.

Underwater borrowers have become a focus of numerous industry surveys and analyses, and a growing concern for market participants due to the potential of negative equity to trigger default. A recent study by CoreLogic delved deeper into the statistics to examine the distribution of negative equity by default status. Aggregate negative equity among mortgage borrowers was $750 billion as of the end of last year. CoreLogic says 8 percent of that total balance involved mortgages that were in foreclosure.

According to Freddie Mac's latest market outlook, over the first four months of 2011, sales of existing homes are up 5 percent from the pace of 2010 - in line with the GSE's earlier projections of a 5 percent annual increase in existing-home sales this year. Regardless, Freddie's economists say going forward, their forecast for sales growth remains dampened by declining consumer confidence and economic uncertainty. They point out that news of still-falling home prices has potential homebuyers waiting for a clear signal that home values have firmed.

MortgageKeeper Referral Services, the developer of a national database that connects financially strapped homeowners with qualified nonprofit and government agencies for assistance, has released its May Homeowner Needs Status Report. The company says more than 40,000 homeowner assistance referrals were issued last month - a 15 percent increase over April.

Indiana has enacted a new foreclosure law surrounding the state's pre-judgment mediation program, outlining changes related to borrower notification and loss mitigation documentation. Senate Bill 582 passed both chambers of the state Legislature by a near unanimous vote, with only one senator casting a nay, and was quickly signed into law by Gov. Mitch Daniels. The law becomes effective for all new residential foreclosure filings as of July 1.