Late last week, the Justice Department issued a filing that attempts to reinforce the release limitations set by the foreclosure fraud settlement, stopping Wells Fargo from reimagining the deal as a broader release of liability on various mortgage claims. However, a judge will have to make the final decision.

The US sued Wells Fargo in late October over issuing insurance claims on FHA loans while knowing that the loans did not meet underwriting requirements set by the agency. Wells charged in court that these specific charges were covered under the foreclosure fraud settlement. I actually thought Wells made a fairly compelling case on that front, but the DoJ disagrees.

I don’t know why I felt so insulted by Ben Bernanke’s housing speech yesterday, but it really stuck with me. Probably because he managed to give an entire speech on housing – one that at points implicitly blamed homeowners for their predicaments – without mentioning the word “fraud.” Or saying “I’m sorry.”

It was very much a forward-looking rather than backward-looking speech. But he describes the foreclosure crisis as the prime contributor to the Great Recession without bothering to mention that his agency had oversight responsibility over the mortgage market throughout the inflation of the housing bubble. The Greenspan Fed rejected consumer protection or regulation of any kind as a matter of ideology. And Bernanke wasn’t about to let that fact be known to the Operation HOPE audience. In fact, his message was that originators aren’t writing ENOUGH loans at this point

FHA’s balance sheet is currently in a precarious position, but CAP argues that the expansion of that balance sheet, which now totals $1.1 trillion, helped keep credit flowing since the collapse of the bubble. “Home prices would have plummeted even further, households would have lost much more wealth than they already did during the crisis, and even more families would have lost their homes to foreclosure,” the paper claims. CAP further alleges that FHA will not require a sustained injection of public funds to keep going (through a standing line of credit it holds with the US Treasury but has never tapped), as the mortgages it insured in recent years look to be profitable. And even if FHA did need to pull funds from the line of credit, that would represent a solid investment for taxpayers, given the support that FHA provided the economy.

I mentioned in passing yesterday this federal civil lawsuit against Wells Fargo for its conduct on some FHA loans. “Mentioned in passing” is all that the suit deserved, but I see that the PR shop at DoJ tried to turn this into a big deal, with the media playing along. So maybe I should put together a short and sweet FAQ on this lawsuit, to place it in the proper context.

A variety of links to articles/interviews/speeches/videos on current issues that may be of interest.

I went through last week why I don’t think Ed DeMarco will be fired. Now Neil BArofsky, who has a passing knowledge of the individuals involved, entered this debate. Geithner has used the moral hazard/strategic default argument plenty of times over the past few years. Now it could be that Treasury has magically turned the corner and gotten the message that the economy needs widespread debt relief. But the fact that this lines up perfectly with the upcoming Presidential election is enough to make one skeptical.

Despite the heavily lobbied narrative that housing is in the midst of a recovery, the reality is far more stark. New-home and existing-home sales fell last month, and what stability we’re seeing on prices comes in large part from a massive shadow REO that isn’t sustainable. Mortgage delinquencies actually rose in June. And you have 11 million underwater homeowners who are sitting ducks to fall into delinquency, with one financial shock potentially putting them into that category. What’s more, many of them are unable to take advantage of low mortgage rates for refinancing.

The Administration’s efforts on this front have been sadly lacking. But Senator Jeff Merkley is out with a plan that should have been adopted years ago.

I mentioned yesterday, when reporting on the whistleblower allegations of Bank of America defrauding HAMP, that the bank made some sort of side deal in the foreclosure fraud settlement that would deliver deeper relief to a certain subset of borrowers. What was not reported was that this will get BofA off the hook for $850 million of their obligation.

The Administration will release details on its mass refi proposal today, which is a bid to increase funds in the hands of homeowners at a low cost to the government. This is a stimulus policy, which could be effective depending on the scale. But refis aren’t enough to save people’s homes, and certainly not underwater homes.

When a newspaper abandons journalistic standards in its news pages one hardly expects to find much commitment to truth on its opinion pages. Therefore it is not surprising that the Washington Post opened its pages to Tennessee Senator Bob Corker to spread the story that government support for homeownership through Fannie Mae and Freddie Mac was the cause of the housing bubble.