homeowner

A new settlement is being promoted by the Obama administration to force the largest US banks to pay for reductions in loan principal worth billions of dollars following breakdowns in mortgage servicing.

According to the Wall Street Journal report if the settlement is reached some state attorneys general are also pushing for banks to pay more than $20 billion of civil fines or to fund a similar amount of loan modifications for troubled borrowers.

The Federal Trade Commission is taking further steps to wrestle deceptive mortgage advertising practices with a new rule proposal to ban misrepresentations for all mortgages while allowing the FTC and the states to seek civil penalties against those who violate the rule.

The proposed rule would prohibit all material misrepresentations in advertising about consumer mortgages. The proposed rule lists 19 examples of misrepresentations about fees, costs, obligations, and other aspects of credit that would be violations.

American taxpayers who are at present about to pay some $145 billion in housing losses connected to Fannie Mae and Freddie Mac loans may face higher bill to cover the debt of the mortgage giants.

According to the Congressional Budget Office, the losses could balloon to $400 billion. And if housing prices fall further, the cost to the taxpayer could hit as much as $1 trillion.

CitiMortgage and CitiFinancial North America, both units of Citigroup, today announced a national foreclosure suspension program for Citi-owned mortgages to allow distressed homeowners to remain in their homes through the holiday season. During the 30 day suspension, effective December 18, 2009 through January 17, 2010, borrowers with first mortgage loans owned by CitiMortgage and CitiFinancial North America and who meet certain other criteria will not be subject to foreclosure sales or foreclosure notifications.

 Citi announced that its active measures taken in Florida have successfully helped distressed homeowners avoid potential foreclosure at nearly three times the rate of a year ago. The company third quarter data shows that Citi’s loss mitigation successes in the state outnumbered foreclosures completed by a ratio of almost 16 to one compared to almost six to one in the third quarter of 2008.