Edward DeMarco, acting director of the Federal Housing Finance Agency, which oversees mortgage giant Fannie Mae, ”apparently ha(s) been withholding from Congress” documents showing the potential benefits of the program to taxpayers and homeowners, according to Reps. Elijah Cummins of Maryland and John Tierney of Massachusetts. The two Democrats, in a letter to DeMarco that was released to msnbc.com, said they obtained the documents from an independent source.

Cummins and Tierney cited internal documents at government-controlled Fannie Mae describing the pilot program with Citibank, beginning in 2009, that showed that “principal reduction programs have enormous potential to save U.S. taxpayers significant amounts of money.”

Late Tuesday, Demarco responded by saying that the pilot program was ended largely due to “operational concerns” and that “there was not full agreement to proceed” with the program at Fannie Mae and Freddie Mac.

Since last fall, DeMarco has resisted pressure to reduce principal balances on underwater mortgages despite calls from more than 100 members of Congress, who have argued that the action could help reduce taxpayer losses on government-owned loans and keep more families in their homes. So far the government has spent more than $160 billion in taxpayer funds to prop up Fannie Mae and sister agency Freddie Mac.

DeMarco’s resistance to the idea is based on his “philosophical” opposition to reducing the amount a homeowner owes, according to a former Fannie Mae official quoted in the letter.

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On March 18, 2012, Eve Shreve set fire to the home she was losing. In fact, she used an actual foreclosure notice to generate the flames used in her suicide attempt. While this attempt was unsuccessful (crews rescued Shreve and her adult son after finding her unresponsive from sleeping pills), Shreve was still facing pretty severe criminal charges.

Although she faced 22 years in prison, Mrs. Shreve will spend the next ten years on probation as a result of her attempted suicide. Erie County Judge John Garhart opted not to imprison 48-year-old Eve Shreve, saying her actions were “entirely due to a mental health matter that overwhelms her like a wave.”

Shreve’s lawyer, Thomas Ruth, told Judge Garhart that Shreve now understands the stresses in her life and knows how to deal with her mental-health issue.

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Over Republicans’ objections, the Senate approved an Assembly bill that will be used to create a conference committee to advance the major bills sought by Harris. Seven of the bills in what Harris is calling her Homeowners Bill of Rights package cleared their first committees this week. However, the measures most opposed by the lending industry were never considered in either chamber’s banking committee because they lacked support from Republicans and business-oriented Democrats. Organizations representing lenders and businesses objected that her bills would expand state law beyond the provisions in the national banking settlement, which will expire in three years. They contend that Harris is seeking to address with permanent legislation problems that lenders say were temporary abuses of the system.

Among the other provisions in Harris’ bills are requirements that lenders prove to homeowners that they have a right to foreclose on the property before continuing. The state would also create a new Office of Homeowner Protection to aid borrowers. She also proposes to increase borrowers’ due process rights. Lenders would have to provide a single point of contact starting on July 1, 2013, for borrowers who want to discuss foreclosures or refinancing.

Banking and business groups said in a letter to lawmakers last week that the measures, particularly the provision letting individual borrowers go to court, would slow the state’s economic and housing market recovery. What are intended by Harris as homeowner protections would “result in a de facto moratorium on foreclosures,” the California Bankers Association said.

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After five years of a brutal housing market, many people now view their homes more objectively and with less sentimentality.

- Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs.

“Regardless of legal or ethical issues around strategic defaults, lenders must account for this risk when they evaluate mortgage applications in declining markets. Many homeowners who find themselves upside down on mortgages in the future are likely to consider strategic default as an acceptable exit strategy.”

Concerns about strategic defaults were also reflected in response to a question about the consumer payment hierarchy. When asked if the current generation of homeowners considers their mortgage to be their most important credit obligation, 49% of bankers said no. Only 29% said yes.

Although concerns remain regarding strategic defaults, other signs point to growing stability in the housing market. More respondents (26%) expected delinquencies on mortgages to decline in the coming months than at any previous time in the two years FICO has been conducting this survey. Furthermore, 53% of respondents said the housing market as a whole would improve by the end of 2012, compared to 24% who said the market would deteriorate.

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Until now, counties were allowed to keep excess funds known as “overbid proceeds” if no one claimed them within five years of the foreclosure auction. The new law requires county public trustees who oversee the foreclosure process to give the unclaimed funds to the state treasurer. The treasurer’s fund is held indefinitely for its rightful owner or heir to claim at any time.

The legislation comes as a result of a Denver Post report exposing how many counties did little or nothing to track homeowners who were due money after their houses were foreclosed and liens paid. In some cases, county treasuries pocketed hundreds of thousands of dollars in large part because homeowners due the money weren’t notified or didn’t know they were entitled to excess proceeds.

Previously, counties were only required to advertise the availability of the funds once a week for five weeks, often in weekly newspapers that were in communities far from where the foreclosed property was located. In addition, counties were only required to mail a single notice to the homeowner at their last known address – usually the foreclosed home that they’d already left behind.

Under the new law, counties are required to make an effort to locate homeowners and notify them. If not located, the money is then turned over to the state treasurer for safe-keeping. The state payback fund advertises the names of people due money once a year. It also requires counties to notify homeowners during the foreclosure process that they could be due money – which occurs when a home is auctioned for more money than is owed on it. Once all liens are paid, any money left over is due the homeowner.

Provisions of the law kick in September 1, 2012.

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“The mortgage servicing rules we are considering reflect two basic, common-sense principles – no surprises and no runarounds,” CFPB Director Richard Cordray said in a news release. “For too long, mortgage servicers have not been held accountable to their customers, and the result has been profoundly punishing to homeowners in distress. It’s time to put the ‘service’ back in mortgage servicing.”

Congress has mandated that the new rules be drawn up. The CFPB will formally propose specific regulations this summer, ask for public comment, and enact final rules in January. The CFPB says the new rules are aimed at two problems: lack of transparency and lack of accountability.

“In recent years, many borrowers have complained that they did not receive the information they needed to help avoid foreclosure,” the CFPB writes. “Other borrowers’ troubles worsened because they found it difficult to get answers from their servicers, or get errors corrected when they occurred.”

These are among the proposed rules:

• Clear monthly mortgage statements. Servicers would have to send regular statements that show how payments break down into principal, interest, fees and escrow. If borrowers are behind, the notices should give them information about how to avert foreclosure.
• Warnings before interest-rate adjustments. Borrowers with adjustable-rate loans should be told when the rate will change and what to do if they can’t afford the new payments.
• Ways to avoid expensive “force-placed” insurance. The rule would require advance notice and pricing information.
• Information on ways to avoid foreclosure. Servicers would have to try to contact borrowers in danger of foreclosure and advise them of their options. Plus, if the borrower calls the lender, the servicer would have to provide “timely, complete and accurate information” about options.

Rules under consideration also would require immediate crediting of payments, up-to-date and accessible records, quick correction of errors and easy access to foreclosure-preventi​on staff.

So they’re essentially considering requiring servicers to do what they’re paid for. And legally required to do. Go, Consumer Financial Protection Bureau.

The initiative spawned from the defeat last month of HB-1156, which was killed in a legislative committee following heavy lobbying by a bankers’ group. That bill would have also required banks and lenders to prove they have the right to foreclose on someone’s home by reversing a Colorado law passed six years ago. That law currently allows foreclosures to be processed with only the signature of a lawyer claiming the lender he represents has the right to do so. During consideration for HB-1156, former foreclosure attorney Keith Gantenbein testified that he had signed “thousands” of documents saying a bank had the right to foreclose when all he had was an e-mail or uncertified copy of a loan.

“The law allowed me to foreclose on a property with just the stroke of my pen, whether this bank was the real party of interest or not.”

- Keith Gantenbein

Those opposed to HB-1156 claim that it’s unnecessary to fix a system that isn’t broken. Additional claims by Colorado Bankers Association President, Don Childears, include that if the bill passed, loans “could be more difficult to get” in Colorado and that “you’d see an increase in the cost of credit.” He also stated that “passing this bill would cause banks to say it’s not worth the trouble to do business here.”

The next step for the new ballot initiative is a hearing on April 18th before the Initiative Title Setting Review Board. That body devises the precise wording that will appear on the ballot. After that, backers need to gather more than 87,100 validated signatures from registered voters; a campaign that is likely to cost between $200,000 and $300,000. For that reason, organizers are pressing for a constitutional amendment rather than a statutory one.

“To pass it statutorily, that is to just change the foreclosure laws, would mean we’d likely face this in the Legislature again and again,” Corrine Fowler, economic-justice director of the Colorado Progressive Coalition – the group leading the latest effort, said. “We just want to be sure it sticks.”

Read more here or here.

A federal judge has signed off on the $25 billion foreclosure settlement also less affectionately known as U.S. v. Bank of America Corp. (BAC), 12-00361, U.S. District Court, District of Columbia (Washington).

The settlement, meant to compensate homeowners improperly foreclosed upon and assist those still in distress, was announced in February and filed in court last month. Judge Rosemary Collyer approved the settlement on Wednesday. The signed agreement was entered in court and made public today, April 5, 2012.

The final order says that nothing in the consent judgment can constitute evidence against Ally Financial Inc., Bank of America Corp., Citigroup Inc., J.P. Morgan Chase and Wells Fargo; the five banks that agreed to the deal. Bottom line, they’re still not admitting fault. Surprise, surprise.

The court said the consent judgment would be deemed “final and non-appealable” if no party had submitted a challenge on the day it was entered in court. A less-than-24-hour appeal period hardly seems fair considering the deal is two years in the making, but if this settlement is the best they could come up with after two years of negotiations, I suppose the less delays, the better for those potentially affected. Assuming that no entity has the desire (or ability) to sufficiently refute the terms within the allotted timeframe, the settlement is considered a done deal. What’s next?

Citigroup said in a statement it has been taking calls from customers since March 1, 2012 for its program and has moved “a few hundred” cases into the pipeline to determine whether they qualify. “Assisting distressed homeowners remains CitiMortgage’s number one priority,” the bank said. A few hundred, huh? Well, that ought to make a dent in the 11.1 million distressed homeowners. Way to be proactive, CitiMortgage.

Still better than JP Morgan Chase according to Mira Tanna, a housing advocate in Orlando, Fla., who claims that two Chase employees who work directly with homeowners recently told her that they were not aware of the deal nor of their bank’s pledge to consider principal reduction for underwater borrowers. Thomas Kelly, a Chase spokesman, said in an email, “Chase continues to provide customer-facing employees with information and updates about the settlement and its impact.”

Bank reps should really stop allowing Disney to write their statements.

Again assuming there are no viable objections, a formal monitoring committee, headed by Joseph A. Smith Jr., the former North Carolina banking commissioner, will be appointed within 15 days. We’ll see how long after that the actual programs are implemented. Stay tuned.

Some see this new recommendation as an attempt to push these firms to agree to the terms of the original, broader mortgage settlement. The majority of the original settlement funds are allotted to assist homeowners still in distress. Yet, a recent report indicates that bank reps still aren’t versed in the new programs. Mira Tanna, a housing advocate in Orlando, Fla., claims that two JPMorgan Chase employees who work directly with homeowners recently told her that they were not aware of the deal nor of their bank’s pledge to consider principal reduction for underwater borrowers. Thomas Kelly, a Chase spokesman, said in an email, “Chase continues to provide customer-facing employees with information and updates about the settlement and its impact.” … Riiight.

Although the banks involved in the deal were not made to admit wrongdoing as part of the settlement, they agreed to cease the practices they didn’t admit to committing. In addition, lenders’ standards would also make foreclosure a last resort after other options were explored; stop banks from foreclosing on a home while the owners were being considered for a loan modification; set protocol and a timeline for reviewing loan modification applications and give owners the right to appeal if they are denied; and create a single point of contact and adequate staff to handle questions. As more cases of alleged robo-signing crop up, some are reluctant to believe that anything has changed. This could be more concerning than the increasingly disappointing assistance programs created by the settlement.

Last November, federal banking regulators forced the nation’s largest servicers, including the eight cited by the Fed, to comb through foreclosure records and to rectify any problems. As part of that process, consumers who believe that they have experienced “financial injury” have until July 31 to request an independent review of their foreclosure and potentially receive compensation. So far, only 128,000 people have requested a review according to the Office of the Comptroller of the Currency. According to some housing advocates, this is largely due to borrowers being unaware of this option. One of You Walk Away’s most valuable services is the ability of our members to send in foreclosure documents for verification that they’re standard and an explanation of how they could affect the borrower or foreclosure process. As a result of this service being offered, You Walk Away’s Member Support Representatives have seen every foreclosure related document known to (the U.S.) man. We’ve seen maybe a handful of notices informing homeowners of their ability to request an independent review of their case. This means that even after the banks touted this program as a way to verify the validity of their procedures in the media, they failed to sufficiently inform those who it might actually affect – the homeowners. Hmm… Foreshadowing?

The bill sought to reduce Florida’s mounting foreclosure backlog by allowing any lien-holder, not just the bank, to request a “show cause” hearing if the subject property has been abandoned. These hearings would require the homeowner to quickly prove why the foreclosure should not occur or face an immediate ruling from a judge. The bill also sought to reduce the amount of time a bank could pursue a deficiency judgment from five years as the law currently allows, to one year.

The demise of the bill is considered a victory for homeowner advocates. “In each step of the process you were taking rights away from consumers without giving them any real benefit and making it worse for the courts,” said Lynn Drysdale, an attorney with Jacksonville Area Legal Aid.

The vacation and retirement state suffered greatly during the bubble burst and subsequent housing crash. The resulting backlog of the Floridian court systems has been a widely discussed and debated topic. There are a reported 368,000 foreclosure cases currently being processed in Florida and they’re only going to increase as the $26 billion settlement is said to have revamped lenders’ repossession procedures. In fact, there was a 64% increase in foreclosure filings in Tampa, FL and a 53% increase in Miami, FL during the month of February – two of the states hardest hit metro areas. This may be why the Florida Bankers Association said in its end-of-session newsletter that it will push for similar foreclosure legislation next year.