Hawaii joins $25B mortgage servicing settlement (AP)

HONOLULU – Hawaii has joined what's being called a landmark $25 billion federal-state agreement with the nation's five biggest mortgage servicers.

Hawaii Attorney General David Louie said Thursday the state is sharing in a settlement for foreclosure abuses and fraud committed by banks against homeowners.

The banks involved in the agreement include J.P. Morgan Chase, Wells Fargo, Bank of America, Citigroup and Ally Financial.

Louie says this agreement is a good deal. He says it will give real relief and money to struggling Hawaii homeowners.

Officials say the state's estimated share of the settlement is $71 million. This includes about $8.2 million in relief funds for Hawaii homeowners.

The agreement also addresses reforms for future mortgage loan practices.

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Obama adviser urges new loan servicing standards (Reuters)

RALEIGH, North Carolina (Reuters) – The "robo-signing" of foreclosure documents in the past year underscores the need for a streamlined effort by policymakers, regulators and the banking industry to implement new mortgage servicing standards, a White House adviser said on Monday.

"It is an area that needs to be cleaned up," said James Parrott, a senior adviser at the White House's National Economic Council. "To get to a coherent future of servicing standards, we all need to push in the same direction."

Speaking at a mortgage conference held by the North Carolina Bankers Association, he added that it is a "critical time for housing" and that the administration and the industry could possibly hurt the already shaky sector if new servicing standards are rolled out in an ad hoc manner.

"What we don't need is a patchwork rules of the road," he said.

(Reporting by Margaret Chadbourn; Editing by Andrea Ricci)

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Moody's cuts BofA mortgage servicing ratings (Reuters)

CHARLOTTE, North Carolina (Reuters) – Bank of America Corp's (BAC.N) mortgage servicer quality ratings were downgraded by Moody's (MCO.N) on Tuesday, because of a deterioration in the company's collections and loss mitigation on home loans.

The credit rating agency said it downgraded both BAC Home Loans Servicing LP and Bank of America, N.A. to SQ2 from SQ1 as a primary and special servicer for both first and second lien mortgages.

Moody's action moves BofA down one notch from the highest rating on a five-step scale used by the ratings agency for mortgage servicing. Moody's also said it would maintain a review for possible future ratings cuts, except as a primary servicer of second lien mortgages.

A BofA spokesman Dan Frahm said the downgrade was not a surprise, and the cuts reflected a recent settlement with bank regulators over problems with the industry's foreclosure practices.

Frahm said the bank expected the rating to rise again after the bank complies with the settlement with bank regulators and finishes the overhaul of its foreclosure practices.

Charlotte, North Carolina-based Bank of America is the largest servicer of U.S. home loans and its mortgage operations have been buffeted by controversy in recent months.

Last Fall, the bank temporarily suspended foreclosures after critics argued the industry cut corners with shoddy court documents that were used to repossess homes.

On October 4, 2010, Moody's placed BofA's servicer ratings under review for a possible downgrade, as irregularities in the industry's foreclosure processes came to light.

Investors also fear the bank could be on the hook to repurchase billions of dollars of toxic mortgages held by outside investors through mortgage-backed securities.

(Reporting by Joe Rauch; Editing by Tim Dobbyn)

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