By agreeing to take on a lawsuit against Detroit-based Quicken Loans, the U.S. Supreme Court will rule on what constitutes illegal fees for mortgage lenders during the closing of a home sale, the Wall Street Journal said. It will clarify the interpretation of the 1974 Real Estate Settlement Procedures Act that prohibits mortgage lenders from receiving kickbacks or referral fees.

The Obama administration and the U.S. Department of Housing and Urban Development have interpreted the law as a clear order against lenders collecting unearned fees. But lower courts have ruled that the law doesn’t explicitly ban all unearned fees, rather it merely prohibits the payment or receipt of kickbacks. [more]

Attorney General Eric SchneidermanFrom the September issue: When New York State Attorney General Eric Schneiderman took office earlier this year, some critics feared he would do more ideological grandstanding than consumer protection and reform.
After eight months on the job, the former Democratic state senator (and ex-deputy sheriff) appears to be winning over some skeptics while enraging others.
The relatively low-profile Schneiderman exploded into the national spotlight last month when he filed a last-minute motion to block a proposed $8.5 billion settlement between Bank of America and investors in 530 New York trusts represented by Bank of New York Mellon.
The blockbuster move alleged that Bank of New York effectively tried to carve out a sweetheart deal for itself at the expense of the investors it was supposed to be representing. [more]

Federal Reserve Governor Elizabeth Duke is calling for a more aggressive approach to rescuing the housing market by allowing more homeowners to refinance and by converting some foreclosures into rental housing, the Wall Street Journal reported. “Clearly the market is not functioning as it should,” she said in a speech Thursday in Washington.
Duke advised that policy makers should improve upon an already-existing White House initiative designed to facilitate more refinancing of loans guaranteed by government-supported mortgage firms Fannie Mae and Freddie Mac, the Journal said. Allowing more homeowners to take advantage of low interest rates would bolster the weak U.S. economic recovery, she said. [more]

One of the Obama administration’s proposals for improving the housing market is allowing homeowners with federally-backed mortgages to refinance at the current, historically low rate. Christopher Mayer, a real estate finance and economics professor at Columbia University, told NPR the plan would work because it would offer middle-class homeowners the same advantage — the ability to get out from under debt and borrow less — that has helped many businesses become profitable. Though he acknowledges the damage it would do to bondholders, he explained that ultimately the entire country would be better off with what’s effectively a $70 billion tax cut for middle-income households. [more]

New York State Attorney General Eric Schneiderman is hindering federal efforts to negotiate a foreclosure settlement with Wall Street banks on behalf of homeowners, the Wall Street Journal said, by insisting banks should pay for investor losses, too.

In combating the robo-signing practice, the Obama administration “is very far down the road for a settlement that will create servicing standards, and will also result in a significant financial contribution towards helping homeowners,” an administration official said, that is believed to be worth nearly $25 billion. [more]

Drastic changes are needed to stimulate a housing recovery according to a New York Times editorial, which urged President Barack Obama to push forward plans for principal reductions on home mortgages and easier refinancings.

The editorial argued that the overall economy won’t improve until the “tens of millions of Americans… crushed by the overhang of mortgage debt” get some relief. Because nationwide housing prices have declined 33 percent since the market’s peak, 14.6 million homeowners are underwater on their mortgages. Lowering interest rates, the argument goes, simply is not enough. [more]

You may have seen reports that the federal government is proposing new mortgage finance rules under which only home purchasers who can afford a minimum 20 percent down payment on a conventional loan would get a shot at the best available interest rates and terms.

That is correct, and it’s deeply sobering news for large numbers of first-time and moderate-income buyers who can’t come up with that much cash or afford to pay higher rates.

But some of the other requirements that federal agencies and the Obama administration are proposing in the same plan have gotten much less attention, yet could prove just as troublesome for consumers: [more]

Click to enlarge (source: PropertyShark)

Newly scheduled residential foreclosure auctions in New York City hit another low in January, continuing the downward trajectory that began in the aftermath of the so-called “robo-signing” controversy late last year.

According to new data from PropertyShark.com, which tracks the number of foreclosure auctions scheduled for the first time there were just 106 such filings in January, down from 247 in October 2010, when the scandal surfaced and lenders began to impose temporary foreclosure freezes. The city’s peak was 473 newly scheduled foreclosure auctions in June 2009.

Each building class — including co-ops, condos, single-family homes and two-family homes — saw similarly dramatic declines in scheduled auctions of between 40 and 60 percent on a year-over-year basis.
[more]

Could Congress’ ambitious second round of home purchase tax credits — especially the $6,500 repeat buyer credit — turn out to be a wimp in terms of economic stimulus clout?
With the April 30 deadline to sign home purchase contracts for both the $8,000 first-time buyer credit and the $6,500 version looming, some real estate and building experts are concerned that fewer consumers may be motivated by the credits this spring than last fall.
The $6,500 credit, in particular, appears to be generating relatively little buzz among shoppers. As Gloria Ruesch, a broker with N.P. Dodge Real Estate in Omaha, Neb., put it, “I don’t think most people have any idea about it, or just don’t understand it. No one’s talking about it.” [more]

The Obama administration plans to use $4.25 billion in economic
stimulus money for the creation of subsidized rental housing units in
cities across the country. The money would pay for both the
construction of new apartment buildings and the refurbishment of
foreclosed homes. An additional $4 billion of the $14 billion that the
Department of Housing and Urban Development received from the federal
stimulus package will go toward repairing the nation’s current public
housing stock. The program marks a drastic shift from former President
George W. Bush’s “ownership society,” the idea that the ultimate goal
for all Americans should be home ownership. But opponents of the Obama
administration’s proposal warn that sometimes rent can be more
expensive than a mortgage. [more]