Monday Morning Cup of Coffee
A look at stories across HousingWire's weekend desk, with more coverage to come on bigger issues:
California Attorney General Kamala Harris sent a letter to Iowa AG Tom Miller backing out of talks with national mortgage servicers Friday. Meanwhile, AGs from several states continue working on a resolution with servicers over mortgage-related issues, including robo-signing.
Harris told Miller the California AG's office will lead its own independent battle going forward. Harris said at a time when her office is negotiating in good faith, foreclosures in California are surging again.
Harris said the AG's mortgage task force will continue investigating all stages of the foreclosure process from securitization to lending and servicing.
The California AG indicated that she threw in the towel after attending a meeting in Washington, D.C., where she found the proposal discussed constructed in a way that would "allow too few Californians to stay in their homes."
The Federal Reserve has the ability to step in with reinforcements if the sluggish economy continues to deteriorate, said James Bullard, president of the Federal Reserve Bank of St. Louis, while speaking at the Annual Dealmakers Event in San Diego.
Bullard said "the FOMC has warned about substantial downside risks." But he asserted, the Fed can and will respond. The Fed chief reassured the crowd that the central bank "has potent tools at its disposal and is not now, or ever, out of ammunition."
Bullard said he personally recommends a policy of embracing "rule-like behavior;" transmitting monetary policy through inflation and expected inflation and remembering what Japan went through in the 1990s as an example of what to do and not to do. He added, "Relying solely on promises of low policy rates for longer and longer periods of time may simply be a path to the Japanese outcome."
Bullard said while most components that make up the real GDP recovered to or beyond their 2007 peaks, investment is still 16% off from its 2007 fourth-quarter peak. This is attributed to the sluggishness of residential investment and investments in nonresidential financial products, according to Bullard.
The Congressional Budget Office says the financial impact of rolling out House Bill 1263 — which amends the Servicemembers Civil Relief Act to provide added protections to servicemembers facing foreclosure — will be small and relatively insignificant. The bill would increase the period of foreclosure protection servicemembers have after leaving active duty to 12 months from the current nine months.
After Jan. 1, 2013, the grace period is expected to decline to just 90 days. However, the act aims to amend the guidelines by having the period extended to 12 months for at least the next six years.
CBO said the costs of extending the foreclosure date to public and private entities "would be small and would not exceed the thresholds established ... for intergovernmental and private-sector mandates ($71 million and $142 million, respectively, in 2011, adjusted annually for inflation)."
The Federal Deposit Insurance Corp. and Texas banking regulators closed First International Bank of Plano, Texas, on Friday. The FDIC was named receiver and all deposits have since been transferred to American First National Bank of Houston. The former First International Bank locations will reopen as branches of American First National Bank.
Write to Kerri Panchuk.
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