Government

With a New Year comes new challenges for our industry - and the promise of a better tomorrow. For homeowners. For our economy. For our nation. As it does for many Americans, a New Year offers the mortgage lending and servicing industry a chance to take a step back and reflect. The message we should take from 2011 is clear: The American Dream of homeownership is far from over. Americans want to own their slice of the dream, and one nightmare - namely, a financial crisis - will do anything but soften the strength and ingenuity of a time-tested people.

While the euro-zone crisis continues to depress the economic outlook here stateside, the U.S. economy is growing and we will see a decent close to a tough year, according to Fannie Mae. The GSE says the fourth quarter will end with more than 2.5 percent economic growth, making it the best-performing quarter in 2011. Fannie Mae's report also mentioned ""slight improvements in housing."" However, the GSE predicts the positive momentum will slow as we move into the new year.

Fannie Mae has updated its Selling Guide to reflect the recently announced changes to the Home Affordable Refinance Program (HARP). Most of the revisions were previously disclosed in November, but there's one nuance that stands out. Fannie Mae has removed the ""reasonable ability to repay"" clause from the criteria for vetting borrowers for a new HARP loan. Analysts say the subjective ability-to-pay requirement was one of the significant hurdles to HARP refinancing.

California Attorney General Kamala Harris is asking the court to force Fannie Mae and Freddie Mac to turn over information about their servicing, foreclosure, property leasing, and mortgage securitization activities in the state. Harris issued subpoenas to each of the GSEs last month, outlining 51 questions the attorney general wanted answered. Fannie and Freddie's regulator, however, has reportedly instructed the companies not to respond to the state's request.

The Justice Department announced Wednesday a $335 million agreement to settle allegations against Countrywide of discriminatory lending from 2004 to 2008. This settlement is the largest the department has ever reached regarding fair lending. Countrywide allegedly discriminated against 200,000 minority borrowers by charging them higher interest rates than white borrowers with matching creditworthiness and financial status. The money will go to those borrowers harmed by Countrywide's practices.

First-lien mortgage performance among large national banks' servicing portfolios is stabilizing, with 88 percent current over the third quarter of this year, according to the Office of the Comptroller of the Currency (OCC). Delinquencies - both early stage and serious delinquencies - remained unchanged, with 3 percent of loans 30 days to 59 days delinquent and 4.9 percent 60 or more days delinquent. However, new foreclosures rose 21.1 percent. The OCC says nearly half of the loans modified since 2008 have since redefaulted.

At the height of the financial crisis in 2008, Fannie Mae and Freddie Mac held $2 trillion in high-risk subprime loans, amounting to 42 percent of their single-family portfolios, according to Edward Pinto of the American Enterprise Institute. Pinto, who served as chief credit officer for Fannie Mae until the late 1980s, arrived at this number by relying on data from the Securities and Exchange Commission (SEC), which filed a lawsuit against six former GSE executives for fraud.

Rep. Darrell Issa of California sent a letter to the chairman and ranking member of the Committee on Oversight and Government Reform to inform them that he has found evidence that four current members of the House of Representatives received loans through a VIP loan program that has been under investigation since 2008. The loan program was operated by Countrywide as the ""Friends of Angelo"" program, named for CEO Angelo Mozilo.

Homeowners who receive foreclosure prevention counseling are at least 67 percent more likely to be current on their loans nine months after a loan modification than those who do not, according to NeighborWorks America. Additionally, among homeowners who receive mortgage modifications, those who participate in counseling decrease their monthly payments by $176 more than those who do not. However, NeighborWorks says the reduced redefault rate is more a result of the counseling than the lower monthly payment.

Following a month without a single bank failure, state and federal regulators stepped in over the weekend to seize community-based lenders in Arizona and Florida. This latest pair of closings brings the FDIC's tally of failed banks for the 2011 calendar year to 92. Officials with the FDIC say institutional failures stemming from the real estate downturn have peaked and are now trending lower. The 92 failures as of mid-December this year is indeed well below the 157 that became insolvent in 2010 and 140 in 2009.