Tag Archives: Federal Reserve

Federal banking regulators have been conducting reviews of foreclosure practices at the nation's largest mortgage servicers. They say the robo-signing controversy has exposed widespread breakdowns in the process, and some are pushing for Congress to enact legislation to establish federal standards for foreclosure procedures. Federal Reserve Governor Dan Tarullo says the industry will need to make ""substantial investments"" to fix the problems and should consider ""fundamental structural changes"" to the current mortgage system.

Federal regulatory agencies issued guidelines Thursday on sound practices by financial institutions for real estate appraisals and evaluations. The guidelines explain the agencies' minimum standards for appraisals and incorporate the agencies' recent supervisory issuances on appraisal practices. The 70-page document will replace the former guidelines which were written in 1994, and officials say it will ensure consistency in the application and enforcement of appraisal regulations.

The Federal Reserve's latest rendition of its popular Beige Book shows that economic conditions across the country continued to improve. Housing markets, though, remain ""depressed,"" according to district contacts in the field. Many brokers, most notably in Florida, reported that recent servicer moratoriums on distressed sales led to a stall in activity. Areas in the Dallas and New York districts noted weakened demand for lower-priced properties but increased interest for high-end homes.

The Government Accountability Office just completed a study of what is called ""bank walkaways"" - when a lender initiates foreclosure but then doesn't complete the process because the cost outweighs expected proceeds from the property's sale. Officials argue the practice intensifies market deterioration and complicates stabilization efforts. But the agency found that abandoned foreclosures are rare - representing less than 1 percent of vacant homes between January 2008 and March 2010 - but concentrated in specific areas of the country.

Federal banking regulators are in the process of conducting an in-depth review of foreclosure practices at the nation's largest mortgage servicers, which includes on-site evaluations and examinations of loan files. Officials say in cases where problems are found, regulators will require lenders and servicers to correct not only the faulty documents but the faulty systems that allowed them to occur. One Federal Reserve governor says institutions with ""widespread problems"" could also be subject to fees and penalties.

Mortgage interest rates rose dramatically this week, after lingering around half-century lows for months. The upsurge comes just two weeks after the Federal Reserve announced plans to purchase another $600 billion in Treasury securities, a move that is meant to hold interest rates down. Rates are still extremely low by historical standards, but the sharp increases seen in just one week's time - long-term rates jumped by about 20 basis points in two separate industry studies - serve as an abrupt reminder that trends can reverse on a dime.

Consumer demand for home loans plummeted last week as mortgage rates shot up against the backdrop of the Federal Reserve's announcement to pump more money into the economy - an initiative that's designed to keep interest rates low. The total volume of new mortgage applications sank 14.4 percent. It's the biggest week-to-week drop of 2010 and the lowest reading in four months. Rates for 30-year fixed mortgages rose 18 basis points during the one-week period, but analysts say it's too soon to conclude the Fed got it wrong.

Interest rates on home loans sunk to new lows this week, according to figures released by Freddie Mac Thursday. The GSE surveyed 125 lenders across the country and found that rates on 30-year mortgages are now averaging 4.17 percent, while the average rate for 15-year loans dropped to 3.57 percent. The GSE's chief economist expressed concern that although rates are at their lowest level in more than a half century, they've done little to pull would-be buyers from the sidelines as the housing recovery continues to slow.

The number of applications submitted by consumers for mortgage loans rose last week, as interest rates held low. The Mortgage Bankers Association (MBA) reported that applications for home purchases were up 5.5 percent from one week earlier, marking their third consecutive weekly increase. MBA's index for refinance applications also rose, jumping 6.0 percent from the previous week.

During the third quarter, 2.7 percent of current mortgage balances transitioned into delinquency, according to the New York Federal Reserve. That's up from 2.6 percent that became newly delinquent in the second quarter. Fed officials called the increase ""slight"" but noted that the rise follows a full year of declines in new delinquencies. According to the federal bank's report, about 457,000 individuals received home foreclosure notices on their credit reports between July 1 and September 30, 2010.