Banks may soon get the opportunity to test drive new mortgage disclosure policies before they are enacted, according to a plan outlined by the Consumer Financial Protection Bureau this week.

Though this idea is not finalized, the proposed plan—called Project Catalyst—would allow banks to make recommendations on how best to communicate disclosures to borrowers. The CFPB is expected to announce these new rules next month.

Project Catalyst is part of a broader initiative launched in 2011 to outline mortgage disclosures that are required under Dodd-Frank.

Proponents of the plan applaud the CFPB’s efforts to create trial programs that will benefit both financial institutions and consumers.

To read the CFPB’s full proposal, click here.

Interthinx, a provider of risk-management data for the mortgage industry, released its Mortgage Fraud Risk Report for Q3 of 2012.

The report states that Florida has now surpassed Nevada as the riskiest state in the country for mortgage fraud.

California, meanwhile, came in at #5; however, California is home to 6 of the 10 riskiest metropolitan statistical areas (MSAs). This includes five of the 10 riskiest MSAs for appraisal fraud and eight of the 10 riskiest MSAs for employment/income fraud risk. This is not good news for honest property owners in those neighborhoods – in fact, it might make it harder for honest buyers to qualify for loans.

The report also lists Merced, CA as the riskiest MSA in the nation.

Read the full report here.

According to the country’s largest mortgage servicers, they have provided $26.1 billion in relief to struggling homeowners through September as part of a national settlement of foreclosure problems.

The aid has gone to more than 300,000 borrowers from March 1 to Sept. 30, for an average of about $84,385 per person, according to the Office of Mortgage Settlement Oversight, which was set up to monitor the progress of the banks.

The servicers covered by the settlement — Bank of America Corp., JPMorgan Chase & Co., Wells Fargo & Co., Citigroup Inc. and Ally Financial Inc.– reported completing $21.9 billion in relief to homeowners through short sales, and reduced monthly payments on first and second mortgages.

In addition, the banks said they had $4.2 billion in assistance in trial programs, the report said.

But those figures have yet to be confirmed by the settlement’s monitor, former North Carolina banking commissioner Joseph A. Smith Jr.

The payments are part of a complex, $25-billion agreement reached in February to settle federal and state foreclosure abuse investigations.

But the amount of reported homeowner relief doesn’t mean banks have fulfilled their requirement. Banks get less than a dollar’s worth of credit for each dollar of relief.

The credits vary. For example, each dollar forgiven in a short sale is worth a 45-cent credit if the bank owns the loan and 20 cents if investors hold it. Under the settlement, 60% of relief must come through principal reductions that keep people in their homes.

So far, half of the aid nationally — 50.2% — has been in the form of forgiven mortgage balances through short sales.

The figure is higher in California. About 68% of the $8.4 billion in relief extended to the state’s homeowners has been through short sales, according to UC Irvine law professor Katherine Porter, who was appointed by the California attorney general’s office to monitor the deal.

The Consumer Financial Protection Bureau and the Federal Trade Commission launched six formal investigations of lenders, suggesting the firms may have violated the law by releasing misleading mortgage ads. A dozen other firms received warning letters about their advertising practices this week.

The agencies announced Monday that the six companies under the bureau’s lens are being checked out for serious violations of the law. The probes focus on a myriad of advertising practices, especially those targeting senior citizens and members of the military.

The practices drawing scrutiny include alleged misrepresentations about the products potentially having government affiliations, inaccurate information about interest rates and potentially misleading comments about the cost of reverse mortgages and the amount of credit or cash available to a borrower.

The letters mailed and the launched investigations stem from the CFPB and the FTC’s review of 800 randomly selected mortgage ads released across the country. The ads were for mortgage loans, refinancing programs and reverse mortgages, the CFPB said. All of the ads reviewed came from newspapers, the Internet and mass-mail solicitations.

Any investigation that leads to a finding of fault will be tied back to the 2011 Mortgage Acts and Practices Advertising Rule, which governs mortgage advertising standards.

The CFPB and FTC claim some of the reviewed products for reverse mortgages promised no payments to borrowers even though reverse mortgages generally come with monthly payments or tax and insurance payments.

Other ads may have promised pre-approval for a certain loan amount even though the person had additional steps to take to become qualified.

Lynn Truong, aka Linh Thi Truong, 40, of Clovis, has been sent to prison for 21 months for a conspiracy to defraud lenders while buying homes to use to grow marijuana, according to U.S. Attorney Benjamin Wagner.

In April Ms. Truong pleaded guilty to one count of conspiracy to commit mail fraud. In pleading guilty, she admitted that she had conspired with her mortgage broker, Monique Nguyen, aka Monique Dzu Le, 62, to defraud GreenPoint Mortgage Funding Inc. in order to obtain a $545,000 loan to purchase a residential property in Willits.

She overstated her income, misrepresented her job title, and made other false statements.

The house was converted into a marijuana cultivation operation. Mendocino County Sheriff’s deputies seized 856 marijuana plants from the Willits property, and grow lights and equipment from Ms. Truong’s residence in Clovis. Ms. Nguyen was convicted of mortgage fraud in this case.

“You took a mammoth risk and lost,” said U.S. District Judge Lawrence O’Neill in handing down the sentence.

Now that the race for the White House is over, still-President Obama must move quickly to answer the housing-related challenges facing the federal government. Inman News looks closer at decisions that will have to be made in the coming weeks:

1. The “fiscal cliff”: The fiscal cliff is a series of tax increases and spending cuts that will go into effect unless U.S. lawmakers come up with an alternative plan to reduce the federal deficit by $1.2 trillion as required by the Budget Control Act of 2011. The spending cuts, known as “sequestrations,” would automatically go into effect on Jan. 2 and be split evenly between defense spending and domestic spending.

2. The mortgage interest deduction (MID): Revamping the mortgage interest deduction is one of the solutions proposed to head off the fiscal cliff and could be part of a broader plan to streamline the tax code by eliminating some loopholes and deductions. Some experts have said the MID, which costs the government about $90 billion a year, is unlikely to survive in its present form, though what would take its place, if anything, is unclear.

3. Mortgage debt forgiveness: Another homeowner tax break may be on the table in fiscal negotiations: the Mortgage Debt Relief Act of 2007, which is set to expire at the end of this year. The law exempts up to $2 million in mortgage debt forgiven by a lender in a short sale, loan modification or foreclosure from federal taxation. The law applies only to mortgage debt incurred to fund the purchase or improvement of a principal residence.

4. Qualified mortgages: Now that we know the Dodd-Frank Wall Street Reform and Consumer Protection Act is here to stay — presidential candidate Mitt Romney had vowed to repeal it — there are two controversial rules contained within the law that are waiting to be finalized: the qualified mortgage (QM) and the qualified residential mortgage (QRM).