Government

Treasury says servicers participating in the Home Affordable Modification Program (HAMP) are getting better at evaluating homeowners for eligibility. Its latest performance assessment found no company in need of ""substantial improvement."" OneWest Bank and Select Portfolio Servicing performed at the highest level, needing only minor improvement. As part of the $25 billion settlement announced last month, Treasury has agreed to release incentives previously withheld from Bank of America and JPMorgan Chase.

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.

While mortgage originations are at their lowest level since 2001, investigations for mortgage fraud have shot up in recent years. As of December 31, 2011, the FBI reported 2,590 pending mortgage fraud investigations with 71 percent involving losses of more than $1 million. With increased levels of foreclosures and delinquencies over the past few years, schemes targeting distressed homeowners as victims have surged. Through FY 2011, FBI investigations resulted in 1,082 convictions of mortgage fraud criminals.

The Department of Justice reached a settlement today with Empirian Property Management Inc. regarding allegations that the management company refused to terminate leases for military members after the members received permanent change of station orders, the Justice Department announced today. The military members involved were on active duty in the Air Force and were assigned to Offutt Air Force Base in Sarpy County, Nebraska.

The first details on how mortgage servicers must fulfill their end of the $25 billion federal-state settlement can be found within the 233 pages of Wells Fargo's annual filing with the Securities and Exchange Commission. As expected, first-lien principal reductions carry the most weight in terms of credit towards each servicer's financial obligation. Forgiveness of past due payments for unemployed homeowners garner dollar-for-dollar credit, as do costs associated with demolishing vacant, foreclosed properties.

For the tenth consecutive quarter, FDIC insured banks and savings institutions reported year-over-year increases, with earnings at $26.3 billion for the 2011 fourth quarter. This is $4.9 billion more from the $21.4 billion reported last year for the 2010 fourth quarter. Overall, the 2011 fourth quarter ended 23 percent higher than the fourth quarter last year. The $26.3 billion is still a decrease compared to the $35.3 billion in earnings from the previous 2011 third quarter.

Principal reductions have been approached with some reluctance and much debate throughout the industry, but as part of the recent $25 billion settlement with the state attorneys general, the nation's largest servicers have agreed to administer the loss mitigation tactic. Fitch maintains the issue of principal reductions is not a simple ""yes"" or ""no"" question, and ""if not implemented carefully, a wide-ranging principal reduction program could potentially increase defaults among borrowers who would otherwise remain current.""

In order to clear up the backlog of properties in foreclosure in Florida, a judicial state known for its long foreclosure time frame, a bill was pushed through the state's House to streamline and speed up the process.

In a recent New Jersey Supreme Court ruling, it was determined that the name of the company which owns a loan and its contact information must be included in notifications related to pending foreclosure action. Oftentimes, only the servicer which collects the debt on the loan, not the originator of the loan, is listed.

Personal Income rose 0.3 percent in January, compared with market expectations for an increase of 0.5 percent. Personal income grew 3.6 percent in the last year. Consumer Spending grew 0.2 percent, compared with market expectations for an increase of 0.4 percent.