Government

In the hearing, as Think Progress reports, Warren refers to a settlement made in January between federal regulators and several major banks in which regulators "abandoned a case-by-case review of foreclosure fraud conducted by some of the nation’s largest banks in favor of a $9.3 billion settlement," letting big banks off the hook.

Regulators are now withholding information about how frequently the banks actually broke the law—a number which far exceeds what was originally agreed upon in the watered down January settlement.

http://www.commondreams.org/headline/2013/04/12-1

Nearly 100,000 troubled borrowers were shortchanged on payments from Goldman Sachs Group Inc. and Morgan Stanley & Co., the Federal Reserve said — money intended to compensate for possible errors and abuses during foreclosure proceedings in 2009 and 2010.

The company hired to distribute the money, Rust Consulting, sent checks to about 96,000 borrowers on May 3 that “were smaller than the amounts that the Federal Reserve had specifically instructed Rust to send,” the central bank said Wednesday.

http://www.latimes.com/business/la-fi-mo-foreclosure-settlement-incorrec...

Instead, the Fed has kindled speculation. Investors are desperate for yield and are paying up for riskier assets. In areas like real estate, structured finance and equities, the markets are ahead of the fundamentals. It doesn’t look to me like a bubble yet. But I would call it the Dysplasia Stage, abnormal growth that looks precancerous.

It’s not just an economic or financial issue, it’s cultural and psychological. We seem to have unlearned what real growth is and simply substituted speculative bubbles. Policy makers are either paralyzed or barrel forward because this is all they know how to do.

http://dealbook.nytimes.com/2013/04/17/efforts-to-revive-the-economy-lea...

Borrowers with mortgages backed by Fannie Mae (FNMA) or Freddie Mac (FMCC) will have until the end of 2015 to obtain new loans under the Home Affordable Refinance Program, the Federal Housing Finance Agency said today.

HARP previously was scheduled to expire at the end of 2013. The program allows borrowers to cut their loan payments by refinancing at lower interest rates even if they are stuck in homes that have lost value. 

http://www.bloomberg.com/news/2013-04-11/fannie-mae-regulator-extends-ha...

Mortgage bond investors in Fannie Mae and Freddie Mac securities fear the replacement of current acting director Ed DeMarco of the Federal Housing Finance Agency will devestate the secondary market, given the fact that he's held off principal reduction programs that likely would have accelerated prepayments.

That possible fear reared its head Wednesday as Wall Street felt the ground shake when reports from Rep. Elijah Cummings office noted that Congressman Mel Watt, D-N.C., is said to be President Barack Obama’s pick to lead the FHFA.

http://www.housingwire.com/news/2013/05/01/reported-fhfa-head-replacemen...

When federal regulators announced the abrupt ending of the Independent Foreclosure Review in place of a new agreement, the conclusion to the review process led to more questions than answers.

To identify challenges in the foreclosure review process, the Government Accountability Office (GAO) undertook its own investigation. In a report, the GAO identified three hurdles that prevented the Office of the Comptroller of the Currency (OCC) and Federal Reserve from achieving their goals through the foreclosure review: complexity of the reviews, overly broad guidance, and limited monitoring. 

http://www.dsnews.com/articles/watchdog-report-identifies-flaws-in-forec...

Warren sent a letter to the Justice Department, as well as to the Securities and Exchange Commission and the Federal Reserve, asking them for evidence on how a settlement that doesn't require a bank to admit guilt would be better policy than taking the bad apple to trial. If regulators at least show that they are willing to play tough, she argued, it will help deter bad behavior and allow regulators to negotiate bigger fines in the event of a later settlement. Here are a few snippets:

There is no question that settlements, fines, consent orders, and cease and desist orders are important enforcement tools, and that trials are expensive…But I believe strongly that if a regulator reveals itself to be unwilling to take large financial institutions all the way to trial…the regulator has a lot less leverage in settlement negotiations and will be forced to settle on terms that are much more favorable to the wrongdoer…If large financial institutions can break the law and accumulate million in profits, and if they get caught, settle by paying out of those profits, they do not have much incentive to follow the law.

http://www.motherjones.com/mojo/2013/05/elizabeth-warren-obama-put-bad-banks-trial

For more than a decade, four of the nation’s largest mortgage insurers paid millions of dollars in kickbacks to home lenders in exchange for business, raising insurance prices for consumers, the Consumer Financial Protection Bureau said Thursday.

The consumer watchdog agency fined Genworth Mortgage Insurance Corp., United Guaranty Corp., Mortgage Guaranty Insurance Corp. and Radian Guaranty Inc. a total of $15.4 million for an alleged scheme that the bureau said was a common practice in the lead-up to the nation’s housing meltdown. 

http://www.washingtonpost.com/business/economy/consumer-bureau-fines-mor...

Upon request from Congress, the CBO studied the mortgage and foreclosure market and concluded that principal reduction should be the keystone of policy for Fannie and Freddie because it is a win-win that will return money to the taxpayers, spur the economy with an fiscal stimulus with a program that costs nothing, increasing GDP and employment. The CBO unequivocably recommended immediate implementation of large-scale reductions in mortgage principal.

http://livinglies.wordpress.com/2013/05/03/cbo-principal-reduction-best-...