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Home prices notched their strongest year-to-date gains since 2005, climbing 5.9 percent through July and signaling the housing market's steady trudge toward recovery, the Wall Street Journal reported today. The rising prices in Standard & Poor's/Case-Shiller 20-city index released yesterday could play a pivotal role in changing consumer sentiment toward housing and drawing in buyers from the sidelines. Home prices typically are strongest in the summer, the busiest season for home sales, before declining later in the year, according to experts. But the 5.9 percent rise far surpasses the 0.4 percent gain seen through the same period last year and the 2 percent gain in 2010.

Mortgage firms including Bank of America Corp. that repeatedly ignored rules meant to improve service for struggling homeowners said they are on the verge of complying with standards ordered in a $25 billion settlement, Bloomberg News reported today. After failing to adhere to at least two separate sets of servicing guidelines since 2010, lenders are preparing for more than 300 rules that take effect next month on loan modifications, fees, foreclosures, and the treatment of military personnel. For the first time, banks face a watchdog dedicated to keeping them honest, Joseph A. Smith, North Carolina’s former commissioner of banks. Bank of America, JPMorgan Chase & Co, Wells Fargo & Co. and Ally Financial Inc. representatives have said they will conform to the new standards by Oct. 2.

Mortgage lending declined to its lowest level in 16 years in 2011 amid weak demand for mortgages and tighter lending standards, according to a report released by federal regulators yesterday, the Wall Street Journal reported today. Banks funded about 7.1 million mortgages in 2011, down 10 percent from the year before, and the lowest tally since banks issued 6.2 million mortgages in 1995. The Federal Reserve analyzed data submitted by more than 7,600 lenders under the Home Mortgage Disclosure Act. Loans funding home purchases fell by 5 percent last year and stood 64 percent below the level of 2006, when the housing market reached its peak. Refinances, which are more sensitive to modest swings in interest rates, fell by 13 percent in 2011 from 2010 but rebounded at the end of the year after the average 30-year fixed-rate mortgage dropped below 4 percent.

The owners of stalled New Jersey development Medford Village said in court documents that it belongs in chapter 11, despite creditor Lennar Corp.'s arguments that the project's filing was made in "bad faith," Dow Jones Newswires reported yesterday. The 280-acre project by developer Stephen Samost called the Miami home builder's allegations that it filed for bankruptcy in bad faith "disingenuous at best," according to documents filed with the U.S. Bankruptcy Court in Camden, N.J. "The record ultimately shows that the debtor properly and adequately exercised state-court remedies available to it before filing its bankruptcy petition to reorganize its affairs. In short, these improper-conduct contentions have no merit and must be rejected in their entirety," Medford said. Late last month, Lennar filed a motion asking the court to dismiss Medford's bankruptcy case so it can execute a foreclose judgment and move forward with a sheriff's sale of the Medford project.

The Federal Reserve took aim at the nation’s wobbly housing market last week with its biggest stimulus action in two years, but that firepower is doing little to lower mortgage rates or make home loans more available for Americans, the Washington Post reported today. Instead, banks are set to see a windfall since the Fed’s actions will immediately lower the cost of issuing loans. It may take months or longer for benefits to trickle down to consumers, analysts say. The emerging scenario highlights the limitations of the Fed’s ability to jump-start the housing market on demand: Rather than intervene directly with consumers, the Fed must rely on banks, brokers and other industry actors to offer borrowers better terms. Banks say that they are keeping rates high right now because lowering them any further would overwhelm them with customers. They say that over time, as volume thins out, rates could come down to attract new borrowers. Critics argue that banks are simply maximizing profits at the expense of consumers. Mortgage bankers are recording higher gains from home loans as the gap widens between the interest rate they charge consumers and the rate they must pay investors who finance the loans by buying mortgage securities.

New Jersey’s judicial review of all foreclosures, which delays seizures to help borrowers, threatens to hold down prices for years as properties remain subject to repossession and then may be sold at a discount, according to a Bloomberg News analysis today. The state passed Nevada in the second quarter in the rate of homeowners with seriously delinquent loans -- those 90 days late or in foreclosure -- according to the Mortgage Bankers Association. Only Florida had a higher rate of serious delinquencies, and that fell 1.2 percentage points from a year earlier to 17.5 percent of mortgages. In comparison, New Jersey’s rose 1.3 percentage points to 12.7 percent. While home values increased in July from a year earlier in 42 states, New Jersey prices fell 0.8 percent, according to CoreLogic, a real estate services company based in Santa Ana, Calif.

The Federal Housing Finance Agency (FHFA) Inspector General said that Fannie Mae did not give Bank of America Corp. special consideration when it agreed to pay the lender more than $500 million to transfer the servicing of 384,000 high-risk mortgages to firms more likely to prevent their foreclosure, Bloomberg News reported today. Still, the taxpayer-owned company paid more than legally required to Bank of America and 12 other lenders when it spent $1.5 billion in termination fees for servicing rights on 1.1 million loans between 2008 and 2011, according to the inspector general's report released today. The transfers were part of a Fannie Mae initiative designed to reduce losses on mortgages considered at greatest risk of default. The specialty servicers that Fannie Mae hired to handle the loans, including Ocwen Financial Corp. and Nationstar Mortgage LLC, typically do more outreach to distressed borrowers than regular servicers and have a better track record of keeping loans current. "The amount Fannie Mae paid was consistent with the amounts it had paid to other servicers from which it had purchased mortgage-servicing rights under the program," the inspector general reported. Bank of America ultimately received $421 million in the 2011 deal because some of the loans were paid off or refinanced by the time it was completed.

Waypoint Real Estate Group LLC, a major investor in U.S. foreclosed homes, has secured a $65 million loan from Citigroup Inc. to help add to its portfolio of properties, the Wall Street Journal reported today. Bankers and investors said that the debt-financing deal is a milestone for the burgeoning business of renting out houses that were previously in foreclosure. Waypoint, an Oakland, Calif., investment firm, is working with Citigroup on a bigger, longer-term financing deal that is expected to close in the coming weeks. Investors have spent billions of dollars in recent months snapping up foreclosed homes, betting that they will profit from the rental income the properties produce.

Rep. John Campbell (R-Calif.) yesterday introduced a bill titled "The Defending American Taxpayers from Abusive Government Takings Act" which would prohibit the four major government sponsored mortgage providers from buying loans in any community that considers using eminent domain to seize and restructure troubled mortgages, Mortgage News Daily reported today. Chicago, Berkeley and San Bernardino County, Calif., are considering a proposal to invoke eminent domain to take underwater mortgages from investor pool and restructure them to reflect the current market value of collateral to provide relief to homeowners. The municipality would then package the loans into pools and sell them on the secondary market. All opposing parties maintain that such seizures constitute an unconstitutional use of the eminent domain power and an unwarranted abridgement of investors' property rights. Campbell bases his legislation on a claim that if seizing of mortgage loans becomes widespread, the GSEs will sustain losses of up to 30 percent in their private-label residential mortgage-backed securities portfolio putting taxpayer dollars at risk. He further maintains that current and future retirees are also at risk because of the significant amounts of these securities held in public and private retirement funds, 401(k) programs and other investment vehicles. He further maintains that any takings would break a private contract agreed to by homeowners and their lenders.

Nearly four years after Lehman Brothers touched off a worldwide financial crisis when it filed for bankruptcy protection on Sept. 15, 2008, the estate of the failed investment bank continues to control more than $10 billion of real estate assets in its $40.5 billion portfolio, the New York Times reported today. Its largest asset is Archstone, the Colorado-based apartment giant whose $22 billion takeover in 2007 helped create Lehman’s fatal mountain of debt. One of the largest apartment owners in the nation, Archstone had 59,419 rental apartments in 181 properties as of March 31. Last month, Lehman registered Archstone for a public offering, hoping to use those proceeds to help pay its creditors. The company's plan has been to wait for better days in the real estate markets and eventually sell everything at prices unattainable in the financial crisis. And while Lehman was waiting for property values to recover from recessionary lows, the real estate team initiated plans to restructure troubled financing, correct other problems and fill its rentable buildings with tenants before offering them for sale.