Foreclosure

Negotiation talks continued this week between state attorneys general and the nation's largest mortgage servicers to settle robo-signing allegations, and those on the states' side of the table began throwing out big numbers to convince servicers they should ante up. Attorneys general advised representatives from the five largest servicing shops that they would be on the hook for at least $17 billion from civil lawsuits alone if the two parties don't reach a settlement agreement.

In an effort to align and communicate with the vendor community, the REO property preservation firm Field Asset Services has formed a Vendor Advisory Council. This panel brings together field service providers from across the country and will provide the company with guidance regarding responsiveness, predictability, quality, turn times, bid response rates, and technology adoption.

With millions falling behind on their mortgage payments and declining property values eating away at home equity, short sales are increasingly being looked to as an alternative to foreclosure. CoreLogic says the number of short sales has tripled in the last two years, and they're expected to increase another 25 percent in 2011. Such growth, though, can open the gate for fraudulent activity. CoreLogic estimates lenders, servicers, and investors may incur potential losses in excess of $375 million this year from ""suspicious"" short sales.

Quandis, Inc., a provider of default management technology solutions, recently launched a service that runs searches on active military personnel. The technology was developed to allow mortgage servicers to comply with the Servicemembers Civil Relief Act (SCRA), which dictates that servicers and foreclosure attorneys must follow certain processes before foreclosing on an active person in the U.S. military.

The U.S. housing market could experience a severe double-dip contraction marked by lower home sales and depressed house prices if Congress fails to raise the federal debt ceiling, according to the Center for American Progress, a nonprofit research group. The Center says inaction to raise the debt limit would spark a return of the economic pain of the past few years as foreclosures would remain at record highs for an even longer stretch. Not raising the limit by early August threatens to put the U.S. itself on the verge of default.

Data released by the FDIC Tuesday show that lenders' are seeing considerable improvement in the quality of loans and becoming more confident that fewer borrowers will default. First-quarter loan loss provisions totaled $20.7 billion, less than half the $51.6 billion set aside to cover bad loans a year ago, and loans and leases 90 days or more past due or in nonaccrual status fell for a fourth consecutive quarter. At the same time, though, the number of banks on the FDIC's so-called ""problem list"" is at its highest level since 1993.

Consumers who only defaulted on their mortgage during the economic recession pose far less of a risk than consumers who went delinquent on multiple credit accounts, according to TransUnion. The credit bureau says its study showed that consumers with mortgage-only defaults performed better on new loans than those with multiple delinquencies, and this was evident across all credit scoring ranges. TransUnion also says it found no evidence that borrowers who stopped paying their mortgage had an increased cash flow in the short term.

Prommis Solutions, a provider of outsourced services for the mortgage default resolution process, has promoted five executives. Kevin Phelan, Brandy Green, Matthew Thigpen, Michelle Ansley and Steven Collier have all been promoted to new executive positions, giving them new responsibilities in support of the company's growth plans for the remainder of 2011 and into 2012.

MMREM, a national asset management firm for federal agencies and private sector servicers, investors, and insurers, launched its partial subsidiary Sperlonga Data and Analytics last week. Sperlonga provides servicers, title agents, real estate brokers, appraisers, and originators with a centralized repository of homeowner association (HOA) information and payment demands.

California Attorney General Kamala Harris announced the creation of a 25-person task force on Monday charged with protecting homeowners from mortgage fraud. Within the last year, the California Department of Justice says it has received thousands of complaints related to foreclosure scams and mortgage servicing practices. In addition to fraud on the default side of the business, the task force will be on the lookout for misconduct and false claims involving investments and securities tied to subprime mortgages.