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FHA Announces New Details for Distressed Loan Sale

During a conference call Wednesday, Acting Federal Housing Administration (FHA) Commissioner Carol Galante announced applications are now being accepted for the Distressed Asset Stabilization Program, which is scheduled to hold its next sale in September. About 40 percent of the loan sale will be concentrated in four hard-hit metro areas: Chicago, Newark, Phoenix, and Tampa, where about 3,500 loans are to be sold. For the next round of sales, there will be new neighborhood stabilization requirements for the selected hard-hit metros. In those areas, no more than 50 percent of the loans may be sold as REOs.

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Risks of Eminent Domain in California: Fitch

In a commentary, Fitch stated the proposed uses of eminent domain in California could negatively affect private label RMBS performance. Recently, the board of supervisors of San Bernardino County voted to form a joint powers authority with California cities Fontana and Ontario to look into the option of using eminent domain to seize underwater mortgages. Fitch said one proposal, which is of particular concern, indicates that only current and delinquent mortgages, not those in foreclosure, would be eligible. Thus, borrowers who would have stayed current on their payments could have their mortgage seized by the local, state, or county government. If eminent domain was to be used in such a way, then holders of the seized homes could experience losses, Fitch said.

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CoreLogic: 23.7% of Mortgages are Underwater, Down from 25.2%

While negative equity still continues to hinder the housing market's recovery, CoreLogic reported Thursday that the share of underwater mortgages declined. In the first quarter of 2012, the total number of underwater homes was 11.4 million, accounting for 23.7 percent of all residential properties with a mortgage. In the fourth quarter of 2011, 12.1 million properties, or 25.2 percent, were underwater. In addition, more than 700,000 households saw their equity move into the positive territory in the first quarter of this year.

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Seasonal Factors Drive Initial Claims to 4-Year Low

First-time claims for unemployment insurance fell 26,000 for the week ended July 6 to 350,000 the lowest level since March 2008, the Labor Department reported Thursday. The prior week's total was revised up to 376,000 from the originally reported 374,000.

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Foreclosure Starts Up for First Time Since 2009: RealtyTrac

In the first half of this year, over 1 million U.S. properties received a foreclosure filing, according to a midyear foreclosure report released by RealtyTrac. The exact figure - 1,045,801 - marks a 2 percent increase from the previous 6-month period and an 11 percent decrease from the first half of 2011. Second quarter foreclosure starts totaled 311,010, a 9 percent increase from the previous quarter and a 6 percent increase from a year ago. The increase is the first yearly rise in quarterly foreclosure starts since the fourth quarter of 2009.

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Price Declines Inevitable for Many States Due to Backlog: Agency

Based on its database, YouWalkAway.com foresees an inevitable decrease in property values due to backlog and delays in processing foreclosures. In Florida, 45 percent of YouWalkAway.com clients are in pre-foreclosure status, and on average, they are 17 months past due and still have not received their first formal foreclosure notice. In California, 59 percent of the agency's clients are in pre-foreclosure status, and on average, they are 15 months behind and still haven't received a foreclosure notice. ""This data points to significant backlog, eventual foreclosure activity and predicts a drop in value for home prices,"" said YouWalkAway.com CEO Jon Maddux.

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Settlement’s Impact on Foreclosures and Principal Reduction: Fitch

The most significant impact of the $25 billion robo-signing settlement has been the clarification of foreclosure standards for servicers, which has led to a higher number of initiated foreclosures, Fitch Ratings said in a note. Foreclosure initiation rates rose to roughly 12 percent in June, the highest figure since first half-2009, according to Fitch. While there has been an increase in principal reductions, Fitch said the growing use of principal reduction may be a continuation of an earlier trend, not a result of the settlement. In February, state and federal officials reached a landmark settlement with five of the largest servicers - Bank of America, JPMorgan Chase, Wells Fargo, Citi, and Ally over foreclosure practices.

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