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The federal government is about to back mortgages of nearly $1 million for the first time, the Wall Street Journal reported. The maximum size of home-mortgage loans eligible for backing by Fannie Mae and Freddie Mac is expected to jump sharply in 2022, a reflection of the rapid appreciation in home prices nationally over the past year. The increase may make it easier and cheaper for some borrowers to buy a home, particularly in more expensive areas of the country, but the higher limits are also likely to elevate debate about how big of a mortgage is too big to be backed by the government. “Housing prices are expensive,” said Steve Walsh, president of Scout Mortgage in Scottsdale, Ariz., adding that some of his clients are unable to qualify for loans for modest-sized homes under the current limits. “I don’t believe these people are looking for a castle, just a three-bedroom house with a backyard,” Mr. Walsh said. By law, the loan limits are updated annually using a formula that factors in average housing-price increases nationwide. Currently, the government-controlled mortgage companies can back single-family mortgages that have balances as high as $548,250 in most parts of the country and up to $822,375 in expensive housing markets, including parts of California and New York.

The city of Boston has set aside $5 million in emergency funds to help local homeowners avoid foreclosure, the Associated Press reported. Eligible residents can apply for assistance under the program, which is open to local residents who are at least 90 days behind on payments and who meet income guidelines. Boston Mayor Kim Janey announced the program Thursday, saying it was an effort to address pandemic-related job losses and the local residents who are now struggling to make ends meet. The city is working with local non-profit agencies to oversee the fund. Recipients will also be offered foreclosure counseling to help them learn how to avoid the risk of foreclosure in the future. “The pandemic has exacerbated inequities in our city, and highlighted the importance of safe, stable housing,” Janey said in a statement. Boston is using federal pandemic relief funds to pay for the program.

Sales of new homes jumped 14% in September to the fastest pace in six months as strong demand helped offset rising prices, the Associated Press reported. The Commerce Department reported Tuesday that sales of new single-family homes rose to a seasonally adjusted annual rate of 800,000 units last month, well above what economists had been expecting. However, the government revised lower its estimates for sales in the previous two months, with August now showing a 1.4% decline to a rate of 702,000 units. The September sales pace was the strongest since sales reached an annual rate of 873,000 in March. The median price of a new home, the point where half the homes sold for more and half for less, rose to a record $408,800 in September, up 9.5% from a year ago. The average sales prices in September increased to $451,700, up 11.5% from a year ago.

The Consumer Financial Protection Bureau (CFPB) and U.S. Department of Justice (DOJ), in cooperation with the Office of the Comptroller of the Currency (OCC), took action today to put an end to alleged redlining by Trustmark National Bank, according to a CFPB press release. The CFPB and DOJ allege that Trustmark discriminated against Black and Hispanic neighborhoods by deliberately not marketing, offering, or originating home loans to consumers in majority-Black and Hispanic neighborhoods in the Memphis metropolitan area. The CFPB and DOJ also allege that Trustmark discouraged consumers residing in or seeking credit for properties located in these neighborhoods from applying for credit. If entered by the court, the settlement would require Trustmark to put $3.85 million into a loan subsidy program for impacted neighborhoods, increase its lending presence there, and implement proper fair lending procedures. The order would also impose a $5 million civil money penalty against the bank, and will credit the $4 million penalty collected by the OCC toward the satisfaction of this amount.

Foreclosures are starting to surge as government and private sector programs designed to help homeowners deal with the economic fallout of the COVID-19 pandemic have begun to expire, CNBC.com reported. Mortgage lenders began the foreclosure process on 25,209 properties in the third quarter, a 32% increase from the second quarter. On a year-over-year basis, it’s a 67% increase from the third quarter of 2020, according to ATTOM, a mortgage data firm. While the increases in foreclosures are dramatic, they are coming off extreme lows that were created by the forbearance programs. New foreclosures, also known as starts, usually number around 40,000 per month. They fell to as low as 3,000 to 4,000 in the first year of the pandemic, when forbearance programs were in full force. Government and private-sector relief programs allowed borrowers with financial difficulties to delay their monthly payments for up to 18 months. The missed payments could then be tacked on to the end of the loan period or repaid when the home was sold or the mortgage refinanced.

Close to half a million low-income homeowners in the United States, many of them minorities, are nearing the end of mortgage forbearance plans that allowed them to halt loan payments during the COVID-19 pandemic, presenting a test for the mortgage service firms tasked with helping struggling borrowers move onto payment plans they can afford, Reuters reported. The number of borrowers exiting the plans is expected to surge over coming weeks as people who signed up early on in the pandemic reach the 18-month limit for forbearance. While close to 80% of homeowners who entered programs at some point inthe pandemic have since exited them, the remaining 20% tend to live in areas with higher shares of minorities, or have lower credit scores and lower incomes, research shows. Their missed payments could add up to a "forbearance overhang" of more than $15 billion in postponed mortgage payments, or about $14,200 per person, according to Brookings Institution research. "When coupled with unemployment insurance expiring and other things happening at the same time, it’s not clear that these folks will have an easy time coming out of this," said Amit Seru, a professor at Stanford Graduate School of Business and a senior fellow at the Hoover Institution. Many borrowers will be able to push missed payments to the end of their loans, and others will be able to capitalize on a hot housing market to refinance or even sell their homes. Homeowners facing hardships who signed up for forbearance in later months may still be eligible for additional extensions. The pandemic worsened racial disparities among homeowners. Black and Hispanic homeowners, disproportionately affected by pandemic-related job losses, were 30% more likely to fall behind on mortgages than the average borrower in the early months of the crisis, between April and November of 2020, according to the Federal Reserve Bank of Philadelphia. Some 7.6 million borrowers have been in forbearance at some point during the pandemic, representing about 15% of all mortgage holders, and about 1.25 million borrowers were still in forbearance plans in mid-October, according to Black Knight, a mortgage technology and data provider. It estimates that about 850,000 homeowners who participated in forbearance were in plans set to expire by the end of this year, including those who already exhausted their options. Roughly half of those homeowners have loans backed by the Federal Housing Administration or the Department of Veterans Affairs.