Government

Capital One agreed to pay approximately $12 million to settle a lawsuit alleging the bank did not uphold certain protections in the Servicemembers Civil Relief Act (SCRA), the Justice Department announced Thursday.

Nearly three-quarters of economists surveyed said they would continue making their mortgage payments even if they were deeply underwater, Zillow reported Thursday. In Zillow's Home Price Expectation survey for June, 71 percent of economists said they would not choose strategic default, even if they owed at least 40 percent more on their mortgage compared to the home's current value. The industry experts were also questioned on their position concerning a government-sponsored program to forgive principal for underwater homeowners. Seventy-two percent said they opposed a principal reduction program, while 28 percent were in favor of one.

The Aloha State recently passed three new bills related to mortgage servicing and mortgage origination. All three went into effect at the beginning of this month.

In hard-hit state Nevada, more than 60 percent of homeowners are underwater, and about one in 16 properties received a foreclosure notice in 2011, according to a 2012 Face of Foreclosure study released by the Nevada Association of REALTORS (NVAR). With negative equity and foreclosures seeming so commonplace in the state, the stigma of strategic default appears to be fading. ""This year's report shows it's more socially acceptable to strategically default on your mortgage,"" said NVAR President Blane Johnson. When surveyed on the topic, 51 percent of those who were foreclosed on said there is nothing wrong with strategic default as a financial decision while 36 percent said homeowners should not choose to strategically default.

In Oregon, homeowners who are falling behind on payments can talk face-to-face with their lender to work out an agreement outside of foreclosure. Senate Bill 1552, which took effect July 11, allows struggling homeowners to meet with their lender with a mediator in a neutral location. Senate Bill 1552, which took effect July 11, allows struggling homeowners to meet with their lender with a mediator in a neutral location.

First-time claims for unemployment insurance fell 35,000 for the week ended July 21 to 353,000, the Labor Department reported Thursday. Economists surveyed by Bloomberg had expected 380,000 initial claims. The prior week’s total was revised up to 388,000 from the originally reported 386,000.

Sen. Jeff Merkley(D-Oregon) announced a plan Wednesday to allow underwater homeowners to refinance at lower interest rates through the creation of a Rebuilding American Homeownership Trust. His plans call for a one-time trust he says is similar to the Homeownership Loan Corporation created during the Great Depression. As banks refinance underwater homeowners, the trust would purchase the loans from the banks. Meanwhile, the trust would receive funding from bond sales.

New home sales fell to a five-month low, 350,000, in June, the Census Bureau and Department of Housing and Urban Development reported jointly Wednesday. Economists had expected sales to inch up slightly from the preliminary sales report in May. May sales were revised up to 382,000 from the originally reported 369,000.

Defendants who operated a national loan modification scam were ordered to pay more than $4 million in penalties and restitution, including $2 million to consumers who were falsely promised loan modifications, California Attorney General Kamala D. Harris announced Tuesday in a statement.

Richard Cordray, director of the Consumer Financial Protection Bureau (CFPB), laid out the agency's aims to reform mortgage lending standards before a Congressional subcommittee Tuesday. Speaking before the House Oversight and Government Reform Subcommittee on TARP, Financial Services, and Bailouts of Public and Private Programs, Cordray acknowledged that although the Dodd-Frank Act has had a hand in improving most consumer lending markets, tight mortgage lending standards have kept creditworthy borrowers out of homes.