Thousands of homeowners associations and condominiums around the country just sidestepped a potentially costly problem: Earlier this month, a federal agency backed off its controversial plan to make obtaining mortgages in their communities much more difficult, and to dry up a key source of revenue that associations use to pay for improvements and property maintenance. A proposal last August by the Federal Housing Finance Agency would have effectively banned the covenanted transfer fees that many homeowners associations collect when houses or condos resell. Typically, the fees range anywhere from one-quarter of 1 percent of the resale price of the house to three-quarters of a percent. The revenues are then spent on anything from community improvements — upgrading roads, bike paths, recreation facilities — to building up required capital reserves. … [more]

JPMorgan Chase is facing two class-action suits alleging foreclosure fraud after the bank temporarily halted foreclosures nationwide in September, the Wall Street Journal reported. JPMorgan also became the latest big Wall Street bank to disclose a list of lawsuits it is facing that allege that the bank underwrote mortgages used in securitizations which harmed investors. The lawsuits allege “common law fraud and misrepresentation, as well as violations of state consumer fraud statutes.” JPMorgan said it encountered the same lawsuits that other banks — including Citigroup and Bank of America — have said they face. JPMorgan also said it was facing suits from nine Federal Home Loan Banks, Cambridge Place Investment Management and Charles Schwab. [WSJ]

… [more]

Souring mortgage bonds that aren’t backed by the government continued to cause losses for some of the Federal Home Loan Banks during the second quarter, the Wall Street Journal reported. The 12 Federal Home Loan Banks reported $326 million in combined net income for the second quarter, down 71 percent from a year earlier. The $797 million decrease in net income from a year ago resulted from larger provisions for credit losses and net losses on derivatives and hedging activities. Several home-loan banks have been weakened by bad bets on private-label securities that they scooped up during the housing boom in a bid to boost profits. Now, those banks have had to take repeated write-downs on the value of those securities as foreclosures mount, forcing them to reduce or eliminate the dividends paid to their members. The 12 home-loan banks lend to more than 8,000 banks, thrifts and credit unions at below-market rates to finance mortgage holdings. The banks have around $850 billion in debt outstanding, making them one of the world’s biggest borrowers. [WSJ]

… [more]