Home Loans

Bank of America has agreed to reduce the loan balances of underwater homeowners more aggressively than other banks, saying that by next month it will start contacting 200,000 borrowers who may qualify. The pledge is part of a side deal that BofA signed when it and other large providers of mortgage customer service reached a recent $25-billion foreclosure-abuse settlement with state and federal government agencies. Writing down the balance of home loans for underwater borrowers — people who owe more than their homes are worth — is a controversial practice.

In a setback for federal regulators, a federal judge threw out many of the fraud allegations against former IndyMac Bancorp Chief Executive Michael W. Perry in a case stemming from the collapse of the onetime Pasadena mortgage lender. U.S. District Judge Manuel Real tossed five of seven public filings late Monday that had supported civil claims filed by the Securities and Exchange Commission. He also ruled that Perry could not be forced to repay allegedly ill-gotten gains. Perry's lead attorney, Jean Veta of Covington & Burling in Washington, said the SEC suit "should never have been filed" and that she would contest the remaining accusations at a non-jury trial scheduled for June 26 before Real.

A newly streamlined government plan to reward homeowners who diligently pay their underwater mortgages is proving a bonanza for banks, which by one estimate may pocket $12 billion in extra revenue by refinancing loans. The revisions to the Obama administration's 3-year-old Home Affordable Refinance Program have yielded mixed results for homeowners, analysts and mortgage professionals say. Some responsible homeowners are indeed getting lower-interest loans despite owing far more than their homes are worth.

In another flicker of hope for the battered housing markets, home loans in foreclosure or at least one payment past due have declined to the lowest level since 2008, according to a Mortgage Bankers Assn. delinquency report .  The quarterly study, released Wednesday morning, said 7.4% of all loans on 1-unit to 4-unit properties were past due at the end of the quarter, taking seasonal factors into consideration. That was down from 7.58% at the end of the fourth quarter and 8.32% a year earlier.

Most borrowers never come into contact with mortgage finance giants Fannie Mae and Freddie Mac. That's because the companies work with lenders rather than consumers. Nevertheless, Fannie and Freddie play an essential role in the mortgage industry and the economy in general. Here are answers to some basic questions about these companies and your stake in them: -- What are Fannie Mae and Freddie Mac? They are called government-sponsored enterprises because they initially were formed by the federal government.

A nation still struggling to clear up one housing debacle has run smack into another - soaring rents. The foreclosure mess has pushed millions of former homeowners with tarnished credit into a competitive apartment market across the U.S. Add fresh demand from young workers, few new units and tight standards for home loans, and the result is rental sticker shock not seen in years. Rents are surging from New York to Los Angeles. The average monthly U.S. rent for apartments hit $1,008 in the first quarter, pushing past the all-time high set in the third quarter of 2008, according to the data firm RealFacts.

Wells Fargo & Co. has become so dominant in the mortgage business that major investors and federal regulators are worried that a financial hiccup at the giant bank could roil the already beleaguered real estate market. Wells originates 34% of all home loans - more than the combined total of the next seven biggest mortgage lenders. That's why regulators are closely watching the San Francisco bank, Paul J. Miller, a former Federal Reserve bank examiner, said Thursday. "The problem is there's a lot of systemic risk when one company has that much of the market," said Miller, an analyst specializing in mortgages at FBR Capital Markets & Co. Wells Fargo's balance sheet is viewed by analysts as being among the strongest of the nation's banks, and a major distress in its mortgage business is seen as unlikely.

WASHINGTON - Pressure is mounting on a key federal regulator to allow Fannie Mae and Freddie Mac to reduce loan principal amounts for struggling homeowners, after disclosures that a plan to do that was scuttled even though it was aimed at saving taxpayer money and helping to heal the housing market. Fannie Mae officials in 2009 supported principal reductions in some cases and crafted a pilot program that would have cost only $1.7 million to implement but could have provided more than $410 million worth of benefits to homeowners, according to internal company documents cited by two House Democrats.

You can love or you can hate the recent $25-billion federal-state mortgage foreclosure settlement, but there's no getting around one simple fact: There's a huge, gaping hole right in the middle of it. The hole is that if your home loan has been bought from your lender by Fannie Mae or Freddie Mac, you're not eligible for the mortgage relief encompassed by the deal. Since Fannie and Freddie control well more than half of all outstanding mortgages, this shortcoming looks to be what engineers would call "non-trivial.

Some banks are finding ways to make money from mortgages despite the continuing difficulties many homeowners are having in making their home payments. The country's two biggest home lenders, Bank of America Corp. and Wells Fargo & Co., posted fourth-quarter earnings Wednesday that were bolstered by better-than-expected profits in their mortgage operations. These profits, however, had little to do with the health of the companies' mortgage portfolios, which are still generating a wave of defaults and losses for the banking giants.

It's not quite a check in the mail, but certain distressed mortgage borrowers at Bank of America Corp. will be happy they opened the letter anyhow. The Charlotte, N.C., lender said Tuesday it has begun contacting about 200,000 customers who have fallen behind on home loans and owe more than their current home values. It is notifying them that they may qualify to have their loan balances reduced as much as $100,000 as part of a $25-billion, 49-state settlement over foreclosure abuses.

A newly streamlined government plan to reward homeowners who diligently pay their underwater mortgages is proving a bonanza for banks, which by one estimate may pocket $12 billion in extra revenue by refinancing loans. The revisions to the Obama administration's 3-year-old Home Affordable Refinance Program have yielded mixed results for homeowners, analysts and mortgage professionals say. Some responsible homeowners are indeed getting lower-interest loans despite owing far more than their homes are worth.

A nation still struggling to clear up one housing debacle has run smack into another - soaring rents. The foreclosure mess has pushed millions of former homeowners with tarnished credit into a competitive apartment market across the U.S. Add fresh demand from young workers, few new units and tight standards for home loans, and the result is rental sticker shock not seen in years. Rents are surging from New York to Los Angeles. The average monthly U.S. rent for apartments hit $1,008 in the first quarter, pushing past the all-time high set in the third quarter of 2008, according to the data firm RealFacts.

Wells Fargo & Co. has become so dominant in the mortgage business that major investors and federal regulators are worried that a financial hiccup at the giant bank could roil the already beleaguered real estate market. Wells originates 34% of all home loans - more than the combined total of the next seven biggest mortgage lenders. That's why regulators are closely watching the San Francisco bank, Paul J. Miller, a former Federal Reserve bank examiner, said Thursday. "The problem is there's a lot of systemic risk when one company has that much of the market," said Miller, an analyst specializing in mortgages at FBR Capital Markets & Co. Wells Fargo's balance sheet is viewed by analysts as being among the strongest of the nation's banks, and a major distress in its mortgage business is seen as unlikely.

Has Wells Fargo Home Loans grown uncomfortably large amid concerns over too-big-to-fail banks? The Wells Fargo & Co. unit has become so dominant in the mortgage business that federal regulators are worried,  according to veteran analyst Paul J. Miller of FBR Capital Markets. "The government is concerned about Wells Fargo's concentration," Miller, a former bank examiner for the Federal Reserve Bank of Philadelphia, told Bloomberg News in a story published Thursday. Miller couldn't be reached.

WASHINGTON - Pressure is mounting on a key federal regulator to allow Fannie Mae and Freddie Mac to reduce loan principal amounts for struggling homeowners, after disclosures that a plan to do that was scuttled even though it was aimed at saving taxpayer money and helping to heal the housing market. Fannie Mae officials in 2009 supported principal reductions in some cases and crafted a pilot program that would have cost only $1.7 million to implement but could have provided more than $410 million worth of benefits to homeowners, according to internal company documents cited by two House Democrats.

Bank of America Corp. has tentatively joined a nascent housing industry movement in which homes in or near foreclosure are sold to investors as rental properties. The bank on Friday began a test program for 1,000 homeowners headed into foreclosure in Nevada, Arizona and upstate New York - borrowers it has been unable to help with loan modifications but hopes to keep on as renters. If successful, the program could be tried in California and rolled out nationally. Consumer advocates maintain it often would be better for homeowners, communities and the banks themselves to keep troubled borrowers on as renters rather than kick them out. Seizing and selling empty homes creates neighborhood blight and accelerates downdrafts in housing prices, they contend.

The federal government is seeking more than $1 billion from Deutsche Bank in a fraud lawsuit that could open a new front in a campaign to punish companies that churned out the low-quality mortgages blamed for sparking the financial crisis. The lawsuit filed Tuesday in Manhattan federal court says the German financial giant's New York-based home lender, MortgageIT, recklessly approved 39,000 mortgages for government insurance from 1999 to 2009 "in blatant disregard" of whether borrowers could make the required monthly payments.

City Nationa l Corp. shares were trading higher following the L.A. bank's earnings report saying  profit rose 17% during the first quarter, with deposits and assets each up 11%. The bank, which mainly serves businesses and wealthy individuals, earned $46.3 million, 86 cents a share, compared with $39.7 million, 74 cents a share, in the first quarter of 2011. Revenue was $276 million compared with $275 million a year earlier, but down 4% from the fourth quarter.

WASHINGTON - The federal government's consumer finance watchdog is considering tough new rules on banks to provide homeowners with more - and clearer - information about their mortgages. Banks could be required to make monthly statements easier for customers to understand. And they may have to provide borrowers with warnings before their interest rates adjust. In addition, the rules could make it easier for homeowners to avoid foreclosure. Richard Cordray, director of the Consumer Financial Protection Bureau, will outline the possible measures Tuesday as part of an effort to bring greater transparency to the mortgage-servicing industry.