Robert E. Story, Jr., CMB, Chairman of the Mortgage Bankers Association, today issued the following statement after the U.S. House of Representatives passed the conference report for H.R. 3288, the Consolidated Appropriations Act. The bill contains at least $80 million for technology upgrades and $20 million for fraud detection programs at the Department of Housing and Urban Development and the Federal Housing Administration (FHA), as well as additional funds for fraud detection and prosecution at the Department of Justice.

For the first time, today, the U.S. Department of Treasury is releasing the number of trial mortgage modifications in its $75 billion Home Affordable Modification Program that went permanent.

On December 9, the House passed H.R.

CIT Shares Rise as Firm Emerges From Bankruptcy

There is a long investigative piece in the Washington Post on Ginnie Mae, titled . “More than a dozen lenders with Ginnie’s endorsement have made loans that are now delinquent at rates far in excess of what regulators consider acceptable. And some of these lenders have been accused of misleading both borrowers and the government about these loans. Created more than four decades ago to help expand homeownership, Ginnie Mae works in the guts of the financial system, offering a secondary layer of government insurance that helps make it easier for mortgage lenders to provide financing for home buyers. The first layer of government backing comes primarily from the Federal Housing Administration, which principally seeks to help first-time home buyers who have impaired credit or little money for down payments. The FHA insures the mortgages made to these borrowers, promising that the lender will ultimately be repaid if the borrower defaults. The FHA has the primary responsibility for monitoring the lenders. Then Ginnie Mae enters the picture. Mortgage lenders often want to bundle the loans they’ve made into securities and sell them to investors. Ginnie Mae guarantees those securities, ensuring that investors continue to get their principal and interest without interruption if any of the loans go bad or lenders are otherwise unable to make payments to investors. This additional insurance makes the securities easy to sell, generating new cash for lending.” Ginnie Mae has evolved into a monsterously large portion of the otherwise nonfunctioning mortgage securitization market. In 2009, Ginnie Mae guaranteed “nearly one in five new mortgages” that were securitized. Note that there are huges differences between the current issues at Ginnie Mae, and the erroneous blame heaped upon Freddie and Fannie for the credit crisis and the subsequent collapse of the economy. Do not conflate the two: By the time Fannie was involved in sub-prime securitization, it was all over but the crying. The...

The DOL reports on weekly : In the week ending Dec. 5, the advance figure for seasonally adjusted initial claims was 474,000, an increase of 17,000 from the previous week's unrevised figure of 457,000. The 4-week moving average was 473,750, a decrease of 7,750 from the previous week's revised average of 481,500. ... The advance number for seasonally adjusted insured unemployment during the week ending Nov. 28 was 5,157,000, a decrease of 303,000 from the preceding week's revised level of 5,460,000. Click on graph for larger image in new window. This graph shows the 4-week moving average of weekly claims since 1971. The four-week average of weekly unemployment claims decreased this week by 7,750 to 473,750. This is the lowest level since October 2008. Although falling, the level of the 4 week average is still high, suggesting continuing job losses.

Everett Collection Controlling the dinosaurs in “Jurassic Park” proved difficult. As he appeared before the House Financial Services Committee Tuesday to discuss the slow progress of government efforts to force lenders to ease payment terms on home mortgages, Anthony B. Sanders was reminded of the movie “Jurassic Park.” It might be possible to bring dinosaurs back to life, but does that make it a good idea? Similarly, says Dr. Sanders, a professor of real estate finance at George Mason University, it might be possible to slash interest rates on millions of loans, but that doesn’t mean we should. What if the government’s Home Affordable Modification Program somehow finally gains traction and manages to reduce interest rates to 2% on millions of loans and extend their terms to 40 years? That would just create fresh problems, Dr. Sanders says. “Our banking industry, Fannie Mae, Freddie Mac and our Federal Reserve would now be sitting on trillions of dollars of mortgages, many at super-low interest rates and stretched maturities to 40 years,” he writes. Any rise in inflation and interest rates would then slash the value of those mortgages. “When one considers the precarious balance sheets of our lending institutions and our government agencies, we should think very, very carefully about loading up their balance sheets with these mortgages,” he warns, adding: “Congress and the Administration should bear in mind that it is not just the banks that will suffer, but our pension funds, our own government agencies and the viability of the economy going forward.” Banks would be “stuck with low-interest, long-maturity loans on their books that will prevent them from lending to other borrowers or small businesses for a long, long time.” The solution, he says, is to encourage financial institutions to sell distressed loans and mortgage securities at big discounts from face value to private investors, who could then restructure the loans on realistic terms related to today’s house prices...

By Michael Antoniak Appraiser Tony Bamert, Bamert & Associates, Champaign, IL, feels he’s been asked to assume some new and unwanted responsibilities on recent appraisal orders and wonders if his are isolated concerns or issues other appraisers are grappling with as well. “Traditionally, with any conventional appraisal, I’m not asked to touch the mechanical systems in a [...]

From KTLA: (ht WestSac_grrl) Three suspects are under arrest after a violent home invasion robbery in a gated Newport Beach community ... The home is owned by Daniel Sadek, a prominent former subprime lender. ... Police did not immediately know whether the men who invaded Sadek's home were collecting on a debt or were there to rob him. They were taking cash and jewelry ... Sadek made and lost a fortune in the subprime mortgage business. Quick Loan Funding, which he founded in 2002, wrote about $4 billion in subprime mortgages before it collapsed in 2007 The house was the scene of a fire two weeks ago. There is no evidence of a connection to the collapse of Quick Loan.

People's increasing willingness to abandon their own piece of America illustrates a paradoxical change wrought by the housing bust: Even as it tarnishes the near-sacred image of home ownership, it might be clearing the way for an economic recovery.