People get discouraged from taking mortgage loan modifications that are in their best interest by countless paperwork steps and little support from servicers, according to a Harvard University behavioral economist who says he has a solution. Piyush Tantia, the executive director of ideas42, a nonprofit behavioral economics research and development lab at Harvard, has been experimenting with how people respond to foreclosure. Behavioral economics blends psychology and economics to analyze and predict decisions based on how people actually behave. Tantia found that people often did not ...

It would be “wholly inappropriate” for the Treasury Department and the Federal Housing Finance Agency to permit Fannie Mae and Freddie Mac to pursue a potential role in a new yet-to-be-launched $2 billion bond program, according to the top Republican members of the House Financial Services Committee.In an effort to shut down thoughts of potential expansion of the two government-sponsored enterprises into a new line of business, Committee Chairman Spencer Bachus, R-AL, Vice Chairman Jeb Hensarling, R-TX, and four of the committee’s subcommittee chairman dispatched a letter last week to Treasury Secretary Tim Geithner and FHFA Acting Director Edward DeMarco to express their “concern.”

Freddie Mac late last week issued its own set of servicing guidelines in keeping with its mandate from the Federal Housing Finance Agency that mirror the guidelines that its fellow GSE Fannie Mae released in June.The FHFA’s Servicing Alignment Initiative, announced in late April, requires Fannie and Freddie to align their servicing requirements in four key areas: borrower contact, delinquency management practices, loan modifications and foreclosure timelines.

Freddie Nears Proposed TBW SettlementFreddie Mac and defunct mortgage servicer Taylor, Bean & Whitaker Mortgage Corp. have entered into a proposed settlement that would grant the GSE an unsecured claim of $1.022 billion that mostly represents past and future repurchase claims.The proposed settlement, filed with the Bankruptcy Court for the Middle District of Florida two weeks ago, would result in a distribution between $40 million to $45 million, which is less than the outstanding repurchase requests, according to Freddie Mac’s filing with the Securities and Exchange Commission.

The former chairman and owner of Taylor, Bean & Whitaker was slammed with a 30 year prison sentence and ordered to forfeit approximately $38.5 million for his key role in orchestrating a $2.9 billion fraud scheme that led to the failure of TBW and Colonial bank and counted Freddie Mac as among its victims.

Mortgages modified by Fannie Mae slightly outperformed those modified by Freddie Mac in the short term while Freddie’s loans performed moderately better a year after modification, even as the performance of mortgages serviced by the two GSEs improved during the first three months the year, according to the first quarter Mortgage Metrics report issued by the Office of the Comptroller of the Currency and the Office of Thrift Supervision.Fannie loan mods had a 12.5 percent re-default rate three months after modification, while Freddie mods saw a 13.3 percent rate. At the six-month mark, the GSEs tied at 21.4 percent.

There is a good chance that criminal charges will be brought by the U.S. Department of Justice against the major mortgage servicers following a nationwide probe into robo-signing and other foreclosure processing issues. Officials representing the Financial Fraud Enforcement Task Force, a broad coalition of federal agencies working with state and local officials, said during a recent hearing in the Senate Judiciary Subcommittee on Administrative Oversight and the Courts, that further investigations and prosecutions stemming from ...

Facing a growing coalition of dissatisfied non-agency mortgage-backed security investors, Bank of America announced this week that it plans to settle a large portion of its non-agency MBS claims related to buybacks and servicing. The action sets a precedent for the sector, making settlements with other non-agency MBS issuers more likely. “Bank of America has charted...[Includes one graph]

Following signs that the Consumer Financial Protection Bureau may been far more involved in the 50-state servicer settlement discussions than it has publicly let on, key Republican House committee chairmen have called upon Treasury Secretary Timothy Geithner to provide documents and records related to the CFPB’s role in the negotiations, un-redacted, by no later than July 5. In their request, the lawmakers cited a copy of a CFPB settlement presentation that recommended goals, provided…