Secondary Market

Servicers have been ordered to institute a clear resolution process for consumer complaints. Accountability when it comes to dealing with distressed borrowers has become a central focus of mortgage servicing reform, but an audit conducted by the Federal Housing Finance Agency's inspector general found that the GSEs' regulator is itself lacking in this area. The report says the agency has let complaints alleging fraud, abuse, and improper foreclosures slip through the cracks with no oversight of their resolution. FHFA says it will take actions to remedy the issue.

Oklahoma-based a la mode announced this week that a second major technology provider has selected the company's Mercury Network to ensure compliance with Fannie Mae and Freddie Mac's Uniform Mortgage Data Program (UMDP). Lender Processing Services' LSI division is the latest to sign on to a la mode's system. Last week, the company said CoreLogic has also chosen its Mercury Network for appraisal management that meets the GSEs' requirements.

Fannie Mae announced Wednesday that the company has hired Susan McFarland to serve as EVP and CFO, effective July 11. McFarland will also take a seat on Fannie Mae's executive committee. She joins Fannie Mae from Capital One Financial Corporation, one of the top 10 banks in America, where she was EVP and finance and principal accounting officer, and led a team of 500 professionals.

Home prices in the U.S. rose in April for the first time since last spring, the Federal Housing Finance Agency (FHFA) reported Wednesday. The agency's House Price Index recorded a 0.8 percent seasonally adjusted increase between March and April - the first month-over-month gain since May 2010. The index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae and Freddie Mac.

The Securities and Exchange Commission said Tuesday that JPMorgan Chase has agreed to pay $153.6 million to settle charges that it misled investors in a complex mortgage securities transaction just as the housing market was starting to plummet. JPMorgan noted in a statement that its securities affiliate named in the SEC complaint ultimately lost nearly $900 million in connection with the deal. The SEC, though, says the company failed to disclose that the hedge fund involved in structuring the deal stood to profit if the assets defaulted.

DebtX, a loan sale advisor for commercial, consumer, and specialty finance debt, says it is working with a number of financial institutions to provide loan portfolio due diligence services to evaluate merger and acquisition (M&A) transactions. The company's M&A advisory service offers asset evaluation, loss forecasting, and cash flow analysis for buying and selling institutions considering strategic transactions.

The delinquency rate on loans included in commercial mortgage-backed securities (CMBS) fell four basis points in May to 9.18 percent, according to Moody's. The dollar balance of past due loans was approximately $56 billion. While loans totaling $3.4 billion became newly delinquent, previously delinquent loans totaling $4.1 billion became current, worked out, or were disposed. The top 25 metros continue to outperform the broader market with a delinquency rate of 8.48 percent, 70 basis points below the national average.

Litigation related to mortgage servicing surged during the first quarter, after last fall's robo-signing issues raised questions about servicers' procedures and garnered widespread attention from mainstream media. Mortgage servicing litigation increased 88 percent over the first three months of this year, according to industry data released Monday. Investor-related litigation, however, eased, as did actions related to loan modification disputes.

Kentucky-based PBI Bank expects to enter into a consent order with the FDIC and the Kentucky Department of Financial Institutions, according to the bank's parent company, Porter Bancorp, Inc. The move will create benchmarks for the bank to improve its business, including enhancing asset quality, reducing loan concentrations, and maintaining capital levels.

Delinquencies on U.S. commercial real estate loan collateralized debt obligations (CREL CDOs) decreased last month, reversing the previous month's increase, according to the latest index results from Fitch Ratings. From March to April, the delinquency rate rose from 14.1 percent to 14.8 percent. But by the end of May, Fitch says it had fallen back to 14.1 percent. Last month's late-pays dropped as nine new delinquencies were offset by the resolution of 18 formerly delinquent assets.