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Tag Archives: Forbearance

Little Change in Quarterly Performance of Loans, OCC Reports

Overall, little change was reported in the performance of first-lien mortgages serviced by national and federal savings banks during the 2011 fourth quarter, but the percentage of initiated foreclosures did see a steep drop, according to the Office of Comptroller of the Currency (OCC) Mortgage Metrics report. The percentage of current and performing loans decreased to 87.9 percent, a mere 0.1 percentage point drop from the previous quarter, but a 0.4 percent increase compared to the same period a year ago.

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NPR and ProPublica Report GSEs Considering Principal Reduction

NPR reported Friday that Fannie Mae and Freddie Mac might consider principal reduction as a means to help underwater homeowners. Edward DeMarco, acting director of the FHFA, has stood firm in his decision to not allow for principal reduction, despite mounting criticism from Democrats and petitioning from organizations to have DeMarco fired. ""NPR and ProPublica have learned that both firms have concluded that giving homeowners a big break on their mortgages would make good financial sense in many cases,"" NPR stated in its story.

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GSEs Complete Nearly 1.1M Mods but Number of Mods Still Declining

Since the September 2008 conservatorship, Fannie Mae and Freddie Mac have completed nearly 1.1 million permanent loan modifications, according to the FHFA's latest foreclosure prevention report. Data from the Office of the Comptroller of the Currency show that in the two years ending in the third quarter of 2011, modifications on Fannie Mae and Freddie Mac loans accounted for 40 percent of all loan modifications. Overall, the GSEs have completed more than 2.1 million foreclosure prevention actions since being taken over by the federal government.

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California AG Appoints Professor as State’s Settlement Monitor

Katherine Porter, a professor at the University of California, Irvine School of Law was appointed as the California monitor to ensure compliance from the five largest servicers - Bank of America, JPMorgan, Wells Fargo, Citigroup, and Ally Financial - as stated in the $25 billion settlement, announced Attorney General Kamala D. Harris. Upon federal court approval of the settlement, Porter will verify if the lenders are meeting their obligations to California homeowners.

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FHFA Criticized for Arguments Used Against Principal Reduction

The FHFA's decision to not allow for principal reductions on Fannie Mae and Freddie Mac loans came under sharp criticism during a Senate subcommittee hearing Thursday. John DiIorio, CEO of 1st Alliance Lending, a mortgage origination firm, argued in support of principal reduction, even when analyzing the benefits from a bottom-line perspective, not simply as a form of aid. Laurie Goodman, senior managing director of Amherst Securities, said there were a number of flaws in an FHFA study used to defend the decision to not apply principal forgiveness, and discussed three major criticisms and ""technical flaws.""

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AMI Warns $25B Settlement Will Cost Innocent Investors

The Association of Mortgage Investors (AMI) says the $25 billion settlement signed by the five largest servicers is expected to draw billions of dollars from uninvolved investors, which include seniors and unions. While HUD acknowledges the settlement could affect some investor-owned loans, the agency stated that when considering the projected losses from foreclosures on investors, applying loan modifications, including principal reductions, will actually cost less. AMI, on the other hand, fears the cost of improperly applied modifications will lead to re-defaults.

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After More Than a Month, $25B Settlement Filed in Court

The $25 billion mortgage servicing settlement agreement was filed in federal court Monday, according to an announcement from the Justice Department, HUD, and 49 state attorneys general. The court documents provide details of the servicers' financial obligations under the agreement, which include payments to foreclosed borrowers, more than $20 billion in consumer relief, and new servicing standards that will change foreclosure practices and policies for foreclosure prevention.

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When Excluding Distressed Sales, Home Prices Show Monthly Gain

While home prices declined on a year-over-year basis in January 2012, a month-over-month gain was seen when excluding distressed sales, according to CoreLogic's January Home Price Index (HPI). Prices declined 3.1 percent in January 2012 compared to a year ago in January 2011. But, when excluding distressed sales, year-over-year prices declined by 0.9 percent, and a month-over-month gain of 0.7 percent was seen for January. Distressed sales include short sales and REO transactions.

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DeMarco Stands Firm as Principal Reduction Debate Wages On

The principal reduction debate wages on with the Federal Housing Finance Agency (FHFA) standing firm in its resolve that the strategy is not the best option for the GSEs. ""Both companies have been reviewing principal forgiveness alternatives. Both advised me they do not believe that it is in the best interest of the companies to do so,"" FHFA Acting Director Edward DeMarco told the Senate Banking Committee. One senator asked why banks then are turning to principal forgiveness for 20 percent of modifications on their own loans.

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Fitch Expects Residential Loans to Continue Causing Losses for Banks

Despite recent reports of modest improvement in the health of the housing economy, Fitch expects the real estate sector to continue to depress the performance of banks, according to Fitch Ratings. Residential real estate is the largest exposure for banks since they make up $2.5 trillion, or roughly one-third of total loans, according to the agency. Home equity represents about 30 percent of this amount, with 1-4 family first lien mortgages making up the balance.

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