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Tag Archives: Federal Reserve

Fed Governor Calls for Revised Incentives for Servicers

The current compensation structure for mortgage servicing needs to be revised so servicers' incentives will align with those of borrowers and investors, stated Federal Reserve Governor Sarah Bloom Raskin in a speech Tuesday. Raskin says it is imperative that servicers have adequate incentives to perform payment processing efficiently on performing mortgages, and to perform effective loss mitigation on delinquent loans. She also believes investors need methods to allow them to monitor servicer performance.

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States Can Learn from New England’s Foreclosure Prevention Programs

As delinquencies and impending foreclosures rose, New England states responded with foreclosure prevention programs, generally falling into one of two categories: foreclosure mediation and financial assistance. The Federal Reserve Bank of Boston examined these efforts to determine ways other states can learn from them. Five of the six New England states have their own mediation programs, and Massachusetts created a program allowing negotiation without a mediator.

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Fixed Mortgage Rates Sink to Lowest on Record

Fixed mortgage rates fell to all-time record lows this week following the Federal Reserve's announcement of ""Operation Twist."" Data released by Freddie Mac Thursday puts the average 30-year fixed-rate mortgage at 4.01 percent for the week ending September 29, and the 15-year fixed-rate at 3.28 percent. Interest rates for adjustable-rate mortgages (ARMs), however, were virtually unchanged. The 5-year ARM averaged 3.02 percent and the 1-year ARM came in at 2.83 percent.

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Fed Uncovers Sharp Drop in Lending in Foreclosure-Ridden Areas

Mortgage lending has declined sharply in neighborhoods with high levels of foreclosures, according to the Federal Reserve. The U.S. central bank looked at what the Neighborhood Stabilization Program (NSP) identified as ""highly distressed"" census tracts. Based on information gathered under the Home Mortgage Disclosure Act (HDMA), the Fed found that home-purchase lending in these highly distressed tracts was 75 percent lower in 2010 than it had been in these same tracts in 2005, and primarily reflects tighter credit for higher-income borrowers.

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Mortgage Rates Mixed This Week but Expected to Head Lower

Interest rates on home loans offered up a mixed bag of results this week. Freddie Mac says fixed-rate mortgages showed no change or dipped slightly and adjustable-rate mortgages ticked upward. Even with the inconsistencies, rates remain near their record lows. Those lows may drop farther with the Federal Reserve's announcement Wednesday that it's planning a new buying spree of mortgage-backed securities and Treasuries. Leading indicators in the bond market since the Fed's statement suggest mortgage rates will again start falling.

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New Fed Stimulus: Mortgage Bonds and Treasuries on the Shopping List

Driving home its rationale for new stimulus measures, the Federal Reserve on Wednesday reiterated the pains many Americans are living with every day - economic growth remains slow, unemployment remains elevated, and housing remains depressed. With these and other downside risks holding back recovery, the Federal Reserve says it will begin reinvesting its money into mortgage-backed securities issued by Fannie Mae and Freddie Mac, and it will purchase another $400 billion in Treasury bonds.

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CFPB, Other Federal Agencies Developing National Servicing Standards

The Consumer Financial Protection Bureau (CFPB) is working alongside other federal agencies to create ""common-sense national servicing standards,"" according to the Treasury's advisor on the bureau Raj Date. One of the issues Date plans to address through national servicing standards is what he says has been a lack of incentive for originators and others involved in the front end of the lending process to ensure a borrower has the ability to repay their loan.

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Neighborhood Stabilization: A Nationwide Community Effort

Nonprofits across the country are partnering up with lenders and government agencies to minimize neighborhood blight caused by vacant foreclosed properties. The topic was part of the curriculum at the Five Star Default Servicing Conference and Expo, and the panelists found themselves speaking to a full house. Paul Kaboth with the Federal Reserve Bank of Cleveland started the discussion by stressing that a marketplace strained with high levels of REOs and vacancies will persist for at least another five years.

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Fed’s Field Contacts Report on Weak Spots in Housing

The Federal Reserve has published a new rendition of its market-gauging Beige Book, which indicates economic activity across the country is expanding at only a modest pace. Residential real estate markets were described as ""weak"" overall, however, a few districts did report slight improvements. Markets in the New York district are seeing an increasing share of foreign buyers paying cash. Florida contacts report a rise in sales activity but a decline in bank-owned homes.

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NY Fed Economists Suggest State Aid for Unemployed Homeowners

Two economists from the Federal Reserve Bank of New York suggest states may be able to help stabilize the housing market by making bridge loans to temporarily unemployed homeowners who struggle to make their monthly mortgage payments. James Orr and Joseph Tracy base their recommendations on a successful Pennsylvania program started in 1982 -- the Homeowners' Emergency Mortgage Assistance Program (HEMAP). In fact, 80 percent of HEMAP borrowers have been able to retain their homes and have repaid their loans.

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