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Tag Archives: Principal Writedown

Watt Confirmed as FHFA Director

Following a play by Democrats to defang Republicans' filibuster powers, the U.S. Senate voted Tuesday to confirm Rep. Mel Watt (D-North Carolina) as director of the Federal Housing Finance Agency (FHFA). The vote went 57-41 in Watt's favor, the Wall Street Journal reports. All Senate Democrats voted in favor of confirmation; they were joined across the aisle by Sens. Rob Portman (R-Ohio) and Richard Burr (R-North Carolina).

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New Head of FHFA Expected

Analysts expect to see a new face at the helm of the Federal Housing Finance Agency (FHFA) now that Senate Democrats have changed the rules so that a filibuster can't be used to block presidential appointments. Now only needing a simple majority for confirmation, Mel Watt's 56 votes in the Senate's first decision on his nomination mean he has enough support to become director of the FHFA--a change analysts say raises policy risk but also credit availability.

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More Homeowners Receiving Principal Reductions Under HAMP

As of September, more than 1.2 million homeowners have received a permanent modification through the Home Affordable Modification Program (HAMP). Homeowners currently in permanent HAMP mods have been granted an estimated $12.1 billion in reduced principal, Treasury reports. In fact, officials say of all non-GSE loans eligible for principal reduction entering HAMP in September, 72 percent included a principal reduction feature.

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Fitch Notes Inconsistencies in Principal Forbearance Reporting

Fitch Ratings has observed inconsistencies in the way servicers report losses in cases of principal forbearance. According to the agency, before 2010, pooling and servicing agreements did not require servicers to report forborne principal as losses. Nationstar Mortgage announced it is revising losses on loans with principal forbearances acquired in 2012 from Aurora Bank FSB and Aurora Loan Services.

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Commentary: Eminent Digression

In a newly published paper posted on the New York Federal Reserve website, Robert Hockett, a Cornell University professor of financial and monetary law, proposes using government's eminent domain authority as a solution to underwater mortgage debt. In reviewing Hockett's suggestion, the Wall Street Journal concentrated not on the idea itself, but on the fact that Hockett ""turns out to have been on the payroll of none other than Mortgage Resolution Partners."" There may be a lot of good reasons to discard Hockett's suggestion, but his past relationships are not among them. His idea deserves a fair hearing, not a digression.

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Fed Report Proposes Use of Eminent Domain for Underwater Mortgages

There's a mortgage debt ""overhang"" that threatens the health of the national economy, and one possible solution to the problem comes in the form of eminent domain, according to a new report authored by Robert Hockett. Of the roughly 11 million underwater mortgages, about 3 or 4 million are in default, foreclosure, or foreclosed and awaiting liquidation, the report, Paying Paul and Robbing No One: An Eminent Domain Solution for Underwater Mortgage Debt, found.

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Report: Foreclosures Led to Loss of $192B in Wealth in 2012

While the worst of the foreclosure crisis appears to be over, foreclosures led to the loss of $192.6 billion in wealth for Americans in 2012, according a report from the Alliance for a Just Society, national coalition of eight state-based grassroots community organizations. On average, the estimated loss in wealth last year comes out to about $1,700 per household for 114.7 million households in the nation, according to the coalition. The report also suggested the crisis is not yet over.

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Obama Nominates New FHFA Leader

President Obama announced Wednesday his nomination of Rep. Mel Watt (D-North Carolina) to serve as FHFA's director, a role played by Edward DeMarco since he was appointed acting director in August 2009. Watt has represented his district for more than 20 years. In his time as a congressman, Watt has made it part of his mission to put a spotlight on predatory lending practices and to ensure access to mortgages for low-income borrowers. ""He's helped protect consumers from the kind of reckless risk-taking that led to the financial crisis in the first place,"" Obama said in his personnel announcement.

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Redfin: 45% of Sellers Say Now Is a Good Time to Enter Market

After showing some reluctance at the beginning of the first quarter, homeowners polled for Redfin's second-quarter Real-Time Seller Survey seem far more interested in entering the market. According to responses collected by Redfin, 45 percent of sellers believe now is a good time to sell, up from just 22 percent in the first quarter and 15 percent in last year's fourth quarter.

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Attorneys General Demand New Leader for FHFA

A coalition of nine state attorneys general is petitioning the national government to replace Federal Housing Finance Agency (FHFA) Acting Director Edward DeMarco. The coalition charged DeMarco with positioning Fannie Mae and Freddie Mac as a ""direct impediment to our economic recovery"" and called for his replacement in a joint letter to the president, the Senate majority leader, and the Senate minority leader Friday. The attorneys' general complaint stems from DeMarco's refusal to allow the GSEs to engage in principal reductions for struggling and underwater homeowners.

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