U.S. regulators are barring certain law firms from assisting in eliminating foreclosure abuses, citing potential conflicts of interest, the Wall Street Journal reported.  In one case, the Federal Reserve rejected a GMAC mortgage proposal that Alabama-based attorney Bradley Cummings would assist with an independent, U.S.-mandated review of past home seizures, given that his firm had previously defended GMAC is a foreclosure-related lawsuit.
This is just the latest hurdle in a long-fought battle by U.S. bank regulators to have banks rectify shoddy foreclosure practices. [more]

In his second ever press conference as chairman of the Federal Reserve, Ben Bernanke was asked a question about the housing market, and the Wall Street Journal published his response. Bernanke said that while lower mortgage rates and falling housing prices have helped some homebuyers, those falling prices present a double-edged sword: people are afraid of “buying into a falling market.” That’s why he called on lenders to either modify loans where appropriate, or speed the process of foreclosure, so that owners’ confidence is restored and those homes weighing down on prices are taken “out of the pipeline.” Once those homes are off the market, Bernanke implied, housing prices will no longer appear so low and stability will be restored to the housing market. [WSJ] [more]

Disagreements are underway in Washington over how much to punish the banks involved in mortgage fraud abuse and over who should benefit from a settlement, the New York Times reported. The newly created Consumer Financial Protection Bureau is pushing for $20 billion or more in penalties, a measure which is supported by the attorneys general and the Federal Deposit Insurance Corporation. But other regulators, including the Office of the Comptroller of the Currency, which oversees national banks, and the Federal Reserve, do not favor such a large fine, contending that a small number of people were the victims of flawed foreclosure procedures. Comments

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Though recent changes have helped make loan documents more understandable for borrowers, some people with more complicated mortgages are still struggling to grasp the terms, and the Federal Reserve is now addressing that issue. As of Jan. 30, lenders will be required to provide more detailed, easier-to-read disclosures of the interest rates and monthly payments associated with all mortgages, most significantly adjustable-rate mortgages, or ARMs, the New York Times reported. The Fed guidelines also apply to other types of variable mortgages, including negative-amortization loans, interest-only loans and introductory loans, among others. [more]

You may have missed it, but the Federal Reserve proposed far-reaching new rules last week that could affect home real estate appr [more]

You may have missed it, but the Federal Reserve proposed far-reaching new rules last week that could affect home real estate appr [more]

Federal banking regulators are examining whether the nation’s largest mortgage companies — including Bank of America and Ally Financial’s GMAC — cut corners on their own procedures when they foreclosed on people’s homes, Federal Reserve Chairman Ben Bernanke said today. Preliminary results of the review are expected to be released next month, according to CNBC. “We are looking intensively at the firms’ policies, procedures and internal controls related to foreclosures and seeking to determine whether systematic weaknesses are leading to improper foreclosures,” Bernanke said. “We take violation of proper procedures seriously.” See video above for more. 

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In light of the robo-signing foreclosure crisis, the Federal Reserve is working with other agencies to review practices and is actively encouraging efforts to find viable alternatives to foreclosure, according to Bill Dudley, president of the Federal Reserve. “Foreclosure is a necessary part of the housing market returning to normal conditions, but the extent of the documentation problem and its economic ramifications remain uncertain,” CNBC’s Steve Liesman said in the video above, recapping Dudley’s remarks. According to Liesman, Dudley also said that the economic situation is “wholly unsatisfactory.” Homeowners can expect increased mortgage refinancing to continue over the near term, while the housing situation will remain uncertain for the foreseeable future, Liesman said.

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The Federal Reserve is planning a renewed effort to buoy the economy by reinvesting the proceeds from its vast mortgage portfolio into long-term Treasury securities, officials announced today. The central bank bought $1.25 trillion worth of mortgage-backed securities in its first attempt to prop up the economy, plus an additional $200 billion in debt owed by government-backed companies like Fannie Mae and Freddie Mac. The purchases were completed in March, and while the central bank had previously planned to allow its mortgage holdings to diminish over time, officials suggested today that the economy isn’t yet ready to recover on its own. “The pace of economic recovery is likely to be more modest in the near term than had been anticipated,” the Federal Open Market Committee said in a statement. “To help support the economic recovery in a context of price stability, the Committee will keep constant the Federal Reserve’s holdings of securities at their current level.” [Bloomberg] and [NYT]

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Though the Wall Street and banking features of the giant financial industry reform bill taking shape on Capitol Hill have drawn most of the attention, homebuyers and mortgage applicants should be major winners when the legisla [more]