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A top administrator of the Troubled Asset Relief Program (TARP) said recent
changes to the program could lead to increased fraud.

"Frequent changes to the programs provide opportunities for experienced
criminal elements to prey on desperate homeowners," the program's Inspector
General Neil Barofsky wrote in a quarterly report issued Tuesday.

Barkofsky pointed out that the program has already spawned several scams in
which borrowers are fraudulently persuaded to pay upfront fees for
nonexistent modifications.

He complained that the Treasury Department isn't requiring appraisals in
advance of principle reductions, making it easier for lenders to
fraudulently qualify for incentive payments.

"No program of this type and scale can be considered well designed without
robust protections of taxpayer funds against the predation of criminals,"
the report said.

Source: Associated Press, Christopher S. Rugaber (04/20/2010)

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The cost difference between buying and renting is as narrow as it has been
since 1993, according to a study on homeownership by Marcus & Millichap Real
Estate Investment Services for the Associated Press.

The study examined rent and home prices in 45 metropolitan areas and
concluded that gap between a payment on a median-priced home and median rent
on a similar property is on average only $256.

Marcus & Millichap calculated the number using median home prices for the
last three months of 2009, assuming a 10 percent down payment on a 30-year
fixed-rate loan at 5.07 percent. It factored in mortgage insurance, but
didn't include either repair costs or tax benefits.

The difference is narrowest in such hard-hit markets as Detroit, Las Vegas,
Atlanta, Cleveland, Indianapolis, and Orlando.

Renting remains significantly cheaper in New York, Los Angeles, Seattle, San
Diego, San Francisco, and San Jose, Calif.

Source: Associated Press (04/19/2010)

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The residential property sector is stabilizing, concur Fannie Mae analysts,
who expect the economy to expand 3.1 percent this year.

However, they conclude that a glut of properties on the market will continue
to impede recovery. New homes are moving at a record low pace and will
remain sluggish, according to the report, but there is some evidence of a
pickup in resale activity.

Source: Washington Post (04/20/10)

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Buying a first home can be a daunting experience. Here are five common and
costly mistakes that novice home buyers make:

1. Ignoring the costs of having a low credit score. Lower-score borrowers
pay thousands of dollars in increased interest rates over the life of the
loan.
2. Muddying the waters by shopping for other things before closing. Lenders
continue to check credit scores right up until the time of closing. Too much
shopping could cause the lender to take back the loan.
3. Scrimping on an inspection. Being surprised by the need for expensive
repairs can be financially devastating.
4. Buying without contingencies. Buyers should give themselves an out if the
inspection turns up problems or the bank raises the interest rates.
5. No money for insurance. Insurance can be surprisingly pricey. Buyers who
don't budget for it can face a nasty surprise.

Source: CNNMoney.com, Les Christie (04/19/2010)

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A federal investigation into Wall Street and the economic crisis has honed
in on Washington Mutual, making the bank that was absorbed by New York's
JPMorgan Chase in 2008 the poster child for
what went wrong with the nation's financial system.

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After two days of hearings this week, the Senate
Permanent
Subcommittee on Investigations has concluded that federal banking regulators
failed to step in and curtail "shoddy lending practices" and ignored
excessive risk-taking at what was once the sixth largest U.S. bank.

A $300 billion thrift, Washington Mutual became the largest bank failure in
U.S. history, and according to the Senate panel, played a major role in
proliferating the bad loans and shady financial practices that sent the
economy into its tailspin.

"The bank originated and sold hundreds of billions of dollars in high risk
loans to Wall Street in return for big fees, polluting the financial system
with toxic, and sometimes fraudulent, mortgages," according to Sen. Carl
Levin (D-Michigan), chairman of the subcommittee.

The findings released by Levin and his colleagues say that WaMu used shoddy
lending practices riddled with credit, compliance, and operational
deficiencies to make tens of thousands of high risk home loans, and as a
business practice, knowingly steered borrowers into mortgages they could not
afford, enticing them with low initial payments that in time "shot up."

The bank securitized over $77 billion in subprime mortgages and billions
more in other high-risk home loans. At times, WaMu selected and securitized
loans that it had identified as likely to go delinquent, without disclosing
its analysis to investors, the panel said. The bank also securitized loans
tainted by fraudulent information, without notifying purchasers of the fraud
that was discovered, according to the panel's report.

The senators determined that WaMu's compensation system rewarded loan
officers for originating large volumes of high risk loans, and paid bonuses
to loan officers who overcharged borrowers or added stiff prepayment
penalties.

In the midst of all this financial jeopardy, regulators looked the other way
and obstructed each other from taking any real action.

The Senate subcommittee said, from 2003 to 2008, the Office of Thrift
Supervision (OTS) repeatedly identified significant problems with Washington
Mutual's lending practices, risk management, and asset quality, but failed
to force adequate corrective action to stop the bank's origination and sale
of loans with fraudulent borrower information, appraisal problems, errors,
and "notoriously high rates of delinquency and loss."

The panel said OTS went so far as to impede the FDIC's oversight of
Washington Mutual by blocking the agency's access to bank data and refusing
to allow it to participate in bank examinations.

The FDIC, the backup regulator of Washington Mutual, was unable to conduct
the analysis it wanted to evaluate the risk posed by the bank and did not
succeed in its fight against the OTS to gain access, senators said.

"Federal bank regulators undermined efforts to end unsafe and unsound
mortgage practices at U.S. banks," the panel said in its report. Both "OTS
and FDIC allowed Washington Mutual to reduce its own risk by selling
hundreds of billions of dollars of high risk mortgage backed securities that
polluted the financial system, undermined investor confidence in the
secondary mortgage market, and contributed to massive credit rating
downgrades, investor losses, disrupted markets, and the U.S. financial
crisis."

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In an effort to support overall market stability and reinforce the
importance of borrowers working with their servicers when they have
difficulty repaying
theirhttp://ping.fm/PdyMj

debt, Fannie Mae has updated
several policies regarding borrowers' future eligibility to obtain a new
mortgage loan after experiencing a pre-foreclosure event, including a
deed-in-lieu of foreclosure, pre-foreclosure sale, or short sale.

Under these new policies, Fannie Mae is changing the waiting period required
for a borrower to be eligible for a mortgage loan after a pre-foreclosure
event. The waiting period, which commences on the completion date of the
pre-foreclosure event, may now vary on the loan-to-value (LTV) ratio for the
transaction, occupancy of the property, and whether extenuating
circumstances played a part in the borrower's inability to pay his or her
mortgage.

Current waiting-period requirements are four years for a deed-in-lieu of
foreclosure, two years for a pre-foreclosure sale, and no policy currently
exists specific to short sales. But under the new guidelines, waiting
periods will be determined by LTV ratios, not the type of pre-foreclosure
event.

Borrowers with 80 percent maximum LTV ratios will be required to wait two
years to obtain a new mortgage, and

90 percent maximum LTV borrowers will have to wait four years. Borrowers
with LTV ratios higher than 90 percent may have to wait seven years.

The new policies also include waiting-period exceptions for borrowers with
extenuating circumstances. Borrowers with 90 percent maximum LTV ratios will
only have to wait two years before becoming eligible to obtain a new
mortgage if they can prove extenuating circumstances, such as loss of
employment, contributed to their financial hardship.

In addition, Fannie Mae is updating the requirements for determining that
borrowers have re-established their credit after a pre-foreclosure event.
Borrowers must meet three specific requirements before their credit will be
considered re-established:

* The waiting period and the related requirements must be met.
* The loan must receive a recommendation from Desktop Underwriter (DU)
that is acceptable for delivery to Fannie Mae or, if manually underwritten,
meets the minimum credit score requirements based on the parameters of the
loan and the established eligibility requirements.
* The borrower must have traditional credit as outlined in Fannie
Mae's Selling Guide. Nontraditional credit or "thin files" will not be
considered acceptable.

These policies are effective immediately. Fannie Mae's DU will be updated in
June to reflect the deed-in-lieu of foreclosure policy changes, but the new
policies for pre-foreclosure sales and short sales will not be included, as
they cannot be identified by DU at this time.

However, effective for loan application dates on or after July 1, 2010,
lenders will be required to determine during their review of the credit
report if there is a pre-foreclosure sale or short sale and must manually
apply the new policies to all loan case files underwritten through DU.

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Posting back-to-back losses in the third and fourth quarters of 2009, the
second half of last year was, to say the least, rough for Bank of America.
But a new year marks new
beginnings, and things seem to be turning around for the nation's biggest
bank.

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According to the company's earnings report released Friday, Bank of America
earned $3.2 billion, or $0.28 per diluted share, in the first quarter of
2010. That's a huge improvement compared to the net loss of $194 million, or
$0.60 per share, reported in the fourth quarter of 2009. However, profits
were still down from the bank's net income of $4.2 billion, or $0.44 a
share, this time last year.

The notable quarter-to-quarter increase in earnings surprised many, as
analysts only expected the bank to earn $0.09 per share, according to
Thomson Reuters.

Bank of America said two main factors drove results in the first quarter.
First, provision for credit losses fell by $3.6 billion from the same period
in 2009, reflecting an improvement in credit quality. And strong capital
markets activity, including record sales and trading driven by
industry-leading corporate and investment banking positions, helped drive
results for global banking and markets.

"With each day that passes, the 2010 story appears to be one of continuing
credit recovery, and our results reflect a gradually improving economy,"
said Brian T. Moynihan, CEO and president of the Charlotte, North
Carolina-based bank. "Our customers - individuals, companies, and
institutional investors - increasingly see the value of our integrated
capabilities. We are also seeing ample indications that those integrated
capabilities hold promise for longer-term shareholder value."

Revenue, at $32.3 billion, was up 27 percent from the fourth quarter of 2009
but down 11 percent from $36.1 billion a year ago. The bank said the
year-over-year decline was due to the absence of a year-earlier
credit-related gains on Merrill Lynch structured notes, the sale of an
equity investment, and lower mortgage banking volume and income.

Bank of America's net loss in home loans and insurance widened to $2.1
billion as higher credit costs continued to

negatively impact results. Net revenue decreased 31 percent due to lower
mortgage banking income, driven by less favorable mortgage servicing rights
results and lower production volume and margins resulting from a decrease in
refinance activity.

In addition, the provision for credit losses in the bank's home loans and
insurance division rose to $3.6 billion, driven by higher reserve additions
amid continued stress in the housing market. Also propelling the increase
was the impact of certain modified loans where carrying value is based on
the underlying collateral value and higher home equity net charge-offs
related to loans that were consolidated in the quarter as a result of new
accounting guidance. The bank said these increases were partially offset by
lower reserve additions on the Countrywide home equity purchased
credit-impaired portfolio, compared with the year-ago period.

During the quarter, Bank of America extended $150 billion in credit,
according to preliminary data. Credit extensions included $70 billion in
first mortgages, which helped more than 320,000 people either purchase homes
or refinance existing mortgages. This funding also included $17.4 billion in
mortgage made to nearly 115,000 low- and moderate-income borrowers.

The extension of credit to new borrowers is a vital factor to the bank's
success; but the foreclosure crisis is far from over, so the bank is
stepping up its efforts to keep customers in their homes.

In an effort to help struggling borrowers, Bank of America continued its
ongoing homeownership prevervation efforts and even developed a new
initiative. As DSNews.com previously reported
, the bank introduced an earned principal
forgiveness approach to modifying certain types of mortgages that are
severely underwater. In addition, Bank of America Home Loans expanded its
default management staff by nearly 7 percent to more than 16,000 during the
quarter.

Since the start of 2008, Bank of America and previously Countrywide have
provided homeownership retention opportunities to customers for
approximately 819,000 home loan modification transactions. This includes
569,000 loan modifications and approximately 251,000 consumers who were in
trial-period modifications under the government's Making Home Affordable
program at March 31, 2010. During the quarter, 77,000 loan modifications
were completed with total unpaid principal balances of $17.8 billion,
including 33,000 customers who converted from trial-period to permanent
modifications under the Making Home Affordable program.

"We will continue to support our customers through these and other
initiatives aimed at helping restore their financial health," Moynihan said.
"We want to ensure quality relationships with our customers and earn their
trust and future business. This will benefit not just our customers, but our
company and our shareholders."

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