Federal Housing Finance Agency Acting Director Edward J. DeMarco said that Congress needs to take action to significantly reduce, if not eliminate, the government’s continued support of the mortgage market and make it more palatable for private capital to enter the market, Reuters reported March 19.

DeMarco made his comments March 19 before the House Financial Services Committee.

While lawmakers on both sides of the aisle agree that government-sponsored enterprises Fannie Mae and Freddie Mac need to be wound down, Republicans and Democrats have thus far been unable to agree on how to make that happen.

“The U.S. housing finance system cannot really get going again until we remove this cloud of uncertainty and it will take legislation to do it,” DeMarco said, Reuters reported. “While FHFA is doing what it can to encourage private capital back into the marketplace, so long as there are two government-supported firms occupying this space, full private sector competition will be difficult, if not impossible, to achieve,” he said.

DeMarco said he doesn’t believe that the government must provide a critical backstop for the mortgage market and told the committee that it’s possible to rebuild a secondary mortgage market that is “deep, liquid, competitive and operates without an ongoing reliance on taxpayers or, at least, a greatly reduced reliance on taxpayers,” Reuters reported.

The FHFA already is making efforts to simplify the GSEs’ combined book of business. And after years of losses, both GSEs are once again profitable, which some worry may dampen Congress’ zeal for instituting major market reform, Reuters reported.

Freddie Mac has failed to promptly and adequately resolve consumer complaints involving possible fraud and improper foreclosure issues, according to an audit report released March 21 by the Federal Housing Finance Agency Office of the Inspector General.

The OIG audit revealed more than 34,000 escalated cases involving servicing fraud and regulatory violations filed with Freddie Mac and its eight largest mortgage servicers during a 14-month period between October 2011 and November 2012.

Freddie Mac pays mortgage servicers to collect loan payments and interact with consumers on a variety of issues, ranging from loan assistance to foreclosure alternatives.

“Freddie Mac’s oversight of service compliance has been inadequate,” the OIG report noted. “Strengthened oversight — through actions aimed specifically at improving servicer compliance with escalated case requirements — can benefit homeowners, Freddie Mac, and taxpayers.”

FHFA requires servicers to report on escalated cases and resolve them within 30 days. More than 20 percent were not taken care of within that window of time and about 98 percent of servicers failed to report on escalated cases as of December 2012.

One of the reasons cited for lack of compliance: cost. Servicers complained that meeting the 30-day timeframe can be expensive and require extra personnel to deal with the issues.

The OIG recommended that Freddie levy fines against servicers who fail to respond promptly to escalated cases.

According to the audit, of Freddie’s eight largest servicers (which handle almost 70 percent of the agency’s $10.6 million in mortgages), four did not even report any escalated cases even though they were handling some during the referenced 14-month period.

The report noted that Bank of America, Citigroup, Provident and Wells Fargo failed to comply with reporting requirements despite the fact that these servicers handled a combined 20,000 such cases. When the OIG contacted the servicers they agreed to begin reporting efforts.

Read the Federal Housing Finance Agency Office of the Inspector General’s audit report.

Even with signs of an improving economy, the Federal Reserve said March 20 that it will continue its bond-purchasing program and hold down long-term interest rates in an effort to further stimulate economic growth, USA Today reported March 20.

The Fed reported that its policy of buying $85 billion a month in mortgage-backed securities and Treasury bonds— known as quantitative easing — will continue until the labor market picks up. In fact, Federal Reserve Chairman Ben Bernanke said he is concerned enough about federal budget cuts slowing economic growth that the Fed may even increase its bond buying.

Bernanke also said the Fed plans to keep benchmark short-term interest rates near zero until at least 2015.

Bernanke did acknowledge that the labor market has shown growth, with non-farm jobs growth totaling 236,000 in February and averaging 205,000 per month for the past four months. However, Bernanke said that the Fed still needs to see sustained improvement — which means several more months of growth. He said the Fed has no plans to discontinue quantitative easing until the unemployment rate drops to 6.5 percent.

The Fed indicated that it expects an improved job outlook in 2013, anticipating the unemployment rate to fall to 7.3 to 7.5 percent this year. It doesn’t expect the jobless rate to reach 6.5 percent until 2015, USA Today reported.

The Fed also lowered its economic growth forecast, saying it expected the economy to grow 2.3 to 2.8 percent in 2013 as opposed to its December forecast of 2.3 to 3 percent.

The Fed also said it expected inflation to remain low, rising only 1.3 to 1.7 percent this year.

While some have expressed concerns that the Fed’s policies could lead to greater economic instability in the future, Bernanke said that the benefits of quantitative easing outweigh the risks, particularly since a payroll tax increase in January and federal budget cuts are likely to cut economic growth by 1.5 percent, USA Today reported.

Freddie Mac filed suit against Bank of America, Citigroup, JPMorgan Chase and 12 other banks, as well as the British Bankers Association for allegedly manipulating the London interbank offered rate causing the government-sponsored enterprise to suffer major financial losses as a result, Bloomberg reported March 20.

The GSE accused the banks of committing fraud, violating antitrust laws and committing breaches of contract by collectively acting to hold down the U.S. dollar compared to LIBOR in an effort to cover up financial problems and boost profits. Some $300 trillion in loans, mortgages and other financial products are linked to LIBOR.

Richard Leveridge, an attorney for Freddie Mac, said in the complaint filing that the “defendants’ fraudulent and collusive conduct caused USD LIBOR to be published at rates that were false, dishonest and artificially low,” Bloomberg reported.

The GSE is seeking damages for financial harm, punitive damages and treble damages for violations of the Sherman Act.

Bloomberg reported that LIBOR manipulation could have cost Freddie Mac — as well as Fannie Mae — a combined $3 billion. Freddie and Fannie both use LIBOR to decide interest payments on their investments in floating-rate financial products like bonds and swaps. Freddie’s complaint alleges that the defendants’ conspiracy lasted from August 2007 through May 2010.

Bank representatives declined to comment to Bloomberg on the suit.

On March 21, Kentucky Governor Steve Beshear signed into law House Bill 120, which created a new appraisal management company recovery fund to replace its current surety bond requirement.

The Kentucky Real Estate Appraisers Board will establish procedures for making claims against the fund and will administer the funds in order to provide restitution to licensed or certified real property appraisers who have suffered pecuniary harm by an AMC. Appraisers will be able to seek reimbursement for “reasonable and appropriate court costs.”

The legislation also extends the Kentucky AMC registration requirements to “portals” that “fulfill requests for appraisal management services on behalf of clients, whether directly or through the use of software products or online.”

The recovery fund is supported by an annual surcharge of up to $800 on each AMC registered in the state. The fund has a cap of $300,000, at which point the surcharge will be suspended until the fund needs to once again be replenished.

View details of the bill.

Goldman Sachs Group will be forced to defend itself against claims it deceived investors about mortgage-backed securities that lost value during the 2008 financial crisis after the U.S. Supreme Court denied its appeal in the case March 18, Reuters reported.

The court's action allows the NECA-IBEW Health & Welfare Fund, which owned mortgage-backed securities underwritten by Goldman, to move forward with its lawsuit on behalf of investors in securities it did not own but that were backed by mortgages from the same lenders.

Darren Robbins, a partner at Robbins Geller Rudman & Dowd representing the plaintiffs, told Reuters that about 10 cases within the 2nd Circuit are affected by the Supreme Court order, including one against JPMorgan Chase that his firm also is handling.

“These mortgage-backed securities are ground zero for the mortgage meltdown,” Robbins told Reuters. “Our clients are certainly very pleased with the outcome. It reiterates the common sense test endorsed by the 2nd Circuit. It's a good day for pension funds and investors, for sure.”

Goldman and other banks continue to face thousands of lawsuits by investors seeking to recover losses on mortgage securities stemming from the financial crisis.

Allstate Insurance Company will pursue fraud claims against Deutsche Bank, Merrill Lynch and Morgan Stanley over residential mortgage-backed securities, alleging that the banks ignored defects in the loans packaged into the securities, misrepresented their underwriting guidelines and manipulated the process of due diligence, Reuters reported March 18.

In 2011, Allstate filed suit against the three banks over the RMBS; Deutsche Bank was sued for $185 million, Merrill Lynch for $167 million and Morgan Stanley for $105 million.

Deutsche Bank had asked a court to dismiss Allstate’s claims, a motion the New York state court denied March 15. Allstate may now be entitled to recover damages for inflated securities prices and for declines in market value, Reuters reported.

Daniel Brockett of Quinn Emanuel Urquhart & Sullivan, the law firm representing Allstate, said he expects the court’s decision to influence other residential mortgage-backed securities cases pending in New York.

A study released March 19 by the University of North Carolina Center for Community Capital shows that owners of energy-efficient homes have a much lower mortgage default risk than owners of conventional residences. The default rates between energy-efficient and conventional houses can differ by as much as 33 percent.

The report also revealed that homes with an Energy Star rating were 25 percent less likely to prepay on loans, which makes these loans more profitable for lenders.

The study indicated that mortgage lenders and servicers could benefit from including an energy audit as part of the mortgage underwriting process and offer more underwriting flexibility for energy-efficient homes. The money homeowners save on energy costs often is rerouted into mortgage payments.

The report noted that U.S. homeowners spend $230 billion each year on energy with residential costs accounting for about 20 percent of total energy consumed.

Robert Quercia, one of the study’s authors, noted that servicers’ failure to address savings in energy- efficient home purchases prevents many middle-income borrowers from fully benefiting from the cost savings of purchasing a more sustainably built and operated home.

Quercia urged Congress to consider the impact of energy-efficient homes when working on changes to mortgage underwriting legislation.

The UNC study was based on a sample of 71,000 mortgages originated between 2002 and 2012 in 38 states and the District of Columbia through data provided by analytics firm CoreLogic. Some 35 percent of residences in the study had Energy Star ratings.

In keeping with the study’s push for an expanded review of energy-efficient features, the Appraisal Institute released its enhanced Residential Green and Energy Efficient Addendum March 7. The form is designed to assist in the valuation of energy-efficient home features.

Read the full UNC report.

Nearly 200,000 homes returned to a state of positive equity during the fourth quarter of 2012, bringing the total number of properties transitioned from negative to positive equity for the year to 1.7 million, analytics firm CoreLogic reported March 19 in its Negative Equity Report.

The report revealed that 10.4 million, or 21.5 percent, of all U.S. residential properties with a mortgage remained underwater at the end of the fourth quarter. That figure was down from 10.6 million properties, or 22 percent, reported by CoreLogic at the end of the third quarter.

“The scourge of negative equity continues to recede across the country” Anand Nallathambi, president and chief executive officer of CoreLogic, said in a news release. “There is certainly more to do but with fewer borrowers underwater, the fundamentals underpinning the housing market will continue to strengthen. The trend toward more homeowners moving back into positive equity territory should continue in 2013.”

The states with the highest percentage of properties still in negative equity are Nevada (52.4 percent), Florida (40.2 percent), Arizona (34.9 percent), Georgia (33.8 percent) and Michigan (31.9 percent). Combined, these states account for 32.7 percent of the nation’s negative equity.

Read CoreLogic’s Negative Equity Report.

After a brief uptick, fixed mortgage rates reversed course this week and dropped slightly, Freddie Mac reported March 21 in its weekly Primary Mortgage Market Survey.

The 30-year fixed-rate fell 0.09 percent since last week to 3.54 percent (down from 4.08 percent a year ago). The 15-year fixed-rate decreased 0.07 percentage points to 2.72 percent (down from 3.30 percent a year ago).

The one-year adjustable-rate mortgage dropped 0.01 percentage points to 2.63 percent (down from 2.84 percent a year ago). However, the five-year Treasury-indexed remained steady at 2.61 percent (down from 2.96 percent a year ago).

“Low and stable inflation is placing downward pressure on fixed mortgage rates,” Frank Nothaft, Freddie Mac vice president and chief economist, said in a news release. “Annual growth in the consumer price index has remained at or below 2 percent for the past four months, and for the producer price index even lower. This, in part, is why the Federal Reserve monetary policy committee on March 20 lowered the upper end of its inflation forecast for 2013. In addition, our March Outlook calls for 30-year fixed mortgage rates to remain below 4 percent throughout this year.”

View Freddie Mac’s weekly Primary Mortgage Market Survey.

The Appraisal Institute Education Trust has established a Candidate for Designation scholarship to assist Candidates who currently are enrolled in the program and need financial assistance to take AI courses in pursuit of an MAI or SRA designation.

The scholarship was developed to cover the costs for all advanced education required to complete the program.

The deadline for applying for a scholarship is July 1.

Find more information on the program here.

Steven G. Elliott, SRA, MRA, chair of the Board of Trustees of The Appraisal Foundation, was announced March 27 as a general session speaker for the 2013 Appraisal Institute Annual Meeting. Elliot will address the future of the valuation profession at the meeting, July 23-25 in Indianapolis.

Elliot has worked in the valuation profession for nearly 40 years, having completed more than 19,000 appraisals for more than 500 commercial residential and industrial clients. He formed the partnership of Elliott, Gottschalk and Associates, Inc., in Ashland, Mass., in 1980 and currently serves as president. Clients include lenders, attorneys, municipalities and individuals. Elliot also is an approved instructor for several Appraisal Institute courses and is an Appraisal Foundation-certified USPAP instructor.

Elliot is the second speaker announced; the Appraisal Institute announced Jan. 23 that Ron Insana, a business reporter with CNBC and MSNBC, will be the keynote speaker.

Annual Meeting attendees will experience first-class education and exciting networking options, the opportunity to earn Appraisal Institute CE credit and state credit, cutting edge exhibits from valuation profession vendors, an awards dinner honoring top valuation professionals, and the chance to explore numerous social and recreational activities in Indianapolis.

Learn more about the 2013 Annual Meeting and register to attend here. Early registration ends May 18.

The deadline for submitting applications for the Y.T. and Louise Lee Lum Award, which recognizes individuals who have made distinguished contributions to the valuation profession during the immediate preceding year, is June 7.

The award is given in recognition of and great appreciation for the distinguished contribution to the furtherance of the high ideals of the profession of real estate appraising and practices, mindful of the fact that this contribution was possible only through the zeal, uprightness, sacrifice, devotion, acumen and ability of the contributor.

Both Appraisal Institute professionals and those who do not belong to AI are eligible.

To enter, please provide a letter of recommendation and a resume for each nominee. Selection of the recipient is made by the Trustees of Appraisal Institute Education Trust and will be announced at the end of the year. The recipient will receive $1,000.

The Y.T. and Louise Lee Lum Award was established in 1963 and honors Y.T. Lum, a prominent member of the American Institute of Real Estate Appraisers, an internationally known speaker and authority on real estate, and his wife, Louise Lee.

Please email letters of recommendation and resumes to educationtrust@appraisalinstitute.org. All materials must be submitted by June 7.