In rapid succession over recent days, announcements of new banking fees from Bank of America and Citibank were followed by strong earnings reports by both banks buoyed by improved “credit quality” and greatly diminished contingencies for credit losses.

In plainer terms, Citibank and Bank of America were well-served in the third quarter by loyal credit customers, paying down their cards while mindful of high balances, further risk-taking and avoiding default in economic hard times.

It’s no wonder why the Occupy movement has now seemingly sharpened their focus on these banks, institutions more closely associated with main street ATMs than with the Wall Street investment houses that were a cornerstone of the financial crisis.

Bank of America is launching a $5-a-month debit card fee in January that would be triggered by a single purchase. BofA contends the fee is necessary because of new limits on what banks can charge retailers for processing debit card transactions.

Sen. Richard J. Durbin, D-Illinois, the biggest proponent of this portion of financial reform law, has urged disgruntled BofA customers to switch to other banks. However, other banks are considering or experimenting with similar fees, including Regions Financial, Chase and Wells Fargo.

In BofA’s earnings report, the second-largest U.S. bank said it earned net income of $6.2 billion in the third quarter, up from a net loss of $7.3 billion a year ago. Its U.S. credit card accounts grew by 17 percent in the third quarter, compared to the second quarter of 2011. And credit quality continued to improve as well, with the 30-day-plus delinquency rate by card customers declining for the 10th consecutive quarter.

Its Card Services division reported net income of $1.3 billion, compared to a loss of $9.8 billion a year ago.

Provisions for credit losses were down $2 billion from a year ago to $1 billion, “reflecting improving delinquencies and collections and fewer bankruptcies as a result of improving economic conditions and lower average loans,” Bank of America said.

Starting in December, Citibank will charge $20 a month on mid-level checking accounts, unless the customer has combined balances of $15,000 or more in checking, savings and investment accounts or loan balances. The fee was previously waived for combined balances of $6,000 for that level of account, which offers perks such as interest-bearing checking.

Citibank made a point to email customers that it was not imposing any debit card fee, such as the one announced by Bank of America.

Citigroup reported net income of $3.8 billion for the third quarter of 2011, which was 74 percent higher than the prior year and 13 percent above the second quarter 2011.

Its solid earnings reflected the impact of accounting gains and a $2.6 billion improvement in the cost of credit, which was partially offset by an 8 percent, or $940 million, increase in operating expenses from the prior year period.

The total cost of credit fell 43 percent to $3.4 billion. The improvement in credit costs was driven by a 41 percent decline in net credit losses to $4.5 billion, and a $1.4 billion release of credit reserves.

Much like BofA has driven customers away with its debit card plan, Citibank has seen customers switch institutions over its modified checking account charges.

Todd Sandler, head of product strategy at ING Direct USA, told Time Moneyland that ING saw a 43 percent increase in its fee-free checking account openings in the days following Citibank’s decision.

Raj Date, the Treasury official overseeing the new Consumer Financial Protection Bureau until the Senate approves a full-time director, told the Los Angeles Times that the agency might seek simpler checking account disclosures in the aftermath of the BofA and Citibank announcements.

The agency was created by last year’s financial reform legislation. It has the authority to write rules to protect consumers from predatory, abusive or deceptive practices by banks and non-banks that offer consumer financial services or products, including mortgages, credit cards and payday loans.

The value of each personal and dependent exemption, available to most taxpayers, is now $3,800, up $100 from 2011.

The new standard deduction is $11,900 for married couples filing a joint return, up $300; $5,950 for singles and married individuals filing separately, up $150; and $8,700 for heads of household, up $200.

Nearly two out of three taxpayers opt for the standard deduction, rather than itemizing deductions that often include mortgage interest, charitable contributions, eligible medical expenses, and state and local taxes.

In addition, tax-bracket thresholds have been increased for each filing status. For example, a married couple filing a joint return, the taxable-income threshold separating the 15-percent bracket from the 25-percent bracket is $70,700, up from $69,000 in 2011, the IRS said.

See the full summary of other inflation-based tax benefits from the IRS.

More than 60 million Americans will see a separate financial benefit due in part to inflation. Starting this month, the Social Security Administration has announced that beneficiaries will receive a 3.6 percent cost-of-living adjustment in January. The average retired worker will see a $512 increase in annual benefits — from $14,232 to $14,744 – however some of that amount will be offset by higher Medicare premiums.

The gain comes from a “cost of living adjustment,” or COLA Social Security increase. The increase is suppose to offset a jump in the cost of living based on the Consumer Price index from the third quarter of 2008 through the third quarter of 2011, the Social Security Administration said.

Over the year ending mid-2011, the Census Bureau reported a net increase of 1.4 million households that moved into rental housing, a 4 percent rise in the number of tenant households in just one year.

Despite persistently low housing prices and record low interest rates, homeownership fell from 66.9 percent to 65.9 percent during the second quarter of 2011, according to the U.S. Economic and Housing Market Outlook for October from Freddie Mac, one of the two mortgage-financing giants under U.S. control since the height of the financial crisis three years ago.

Some of the shift toward rental housing can be attributed to financially stressed households facing short sales for foreclosures. But much of the rental demand is coming from “young and newly-formed households who have decided to

postpone homeownership in favor of renting during unsettled economic times,” reads the study.

Homeownership rates have fallen by 4.4 percent (to 21.9 percent) for those under 25 years of age, and by 7.0 percent (to 34.7 percent) for those aged 25 to 29 years.

The move of households toward rentals, combined with the limited new supply of rental units, has pushed apartment vacancy rates lower, the study said.

The Census Bureau reported that rental vacancy rates in buildings with at least five dwellings had fallen by 10 percent during the second quarter, the lowest rate in more than five years.

As a result, apartment rents, which had been flat to falling in many projects during the 2008-2009 recession, have begun to rise slowly. New construction starts of apartments,  in buildings with at least 20 dwellings, has picked up this year — in the second quarter, new construction was the highest since the end of 2008.

“New construction starts are slowly picking up and multifamily lending appears to be rising as well with this year’s origination volume stronger than 2010′s,” said Frank Nothaft, Freddie Mac’s vice president and chief economist. “In part, the rise in originations is related to the low-level of mortgage rates, improving apartment-sector economics, and the return of traditional lenders that had curtailed activity during the recession.”

The 30-year-fixed rate was down from last week’s 4.24 percent. Last year at this time, the 30-year fixed averaged 4.91 percent.

The 15-year fixed dropped from 3.63 percent, compared to last week. A year ago at this time, the 15-year fixed averaged 4.36 percent.

The Federal Reserve’s widely-anticipated new debt purchase program to prop up the economy was a major factor, said Frank Nothaft, Freddie Mac vice president and chief economist.

“Following the Federal Reserve November 3rd policy announcement that it plans to purchase up to $600 billion in government securities, Treasury bond yields initially fell and then gradually rose again,” Nothaft said. “This allowed mortgage rates to fall to record levels this week.”

But historically low mortgage rates, which has seen the long-term rates stay under 5 percent for seven straight months, have yet to make a significant impact on the weak housing market.

“The unemployment rate has remained at 9.5 percent or higher for the past 15 months, while commercial banks tightened lending standards in 16 of the last 17 quarters, according to the Fed’s Senior Loan Officer Opinion Survey,” Nothaft said.

 The most popular mortgage, the 30-year fixed-rate, averaged 4.24 percent this week, up slightly from last week when it averaged 4.23 percent.  Last year at this time, the 30-year FRM averaged 4.98 percent.

The 30-year set a new low last month of 4.19 percent, according to Freddie Mac’s records dating back to 1970.

The 15-year fixed rate this week averaged 3.63 percent, down from last week when it averaged 3.66 percent. A year ago at this time, the 15-year FRM averaged 4.40 percent.

The 5-year Treasury-indexed hybrid ARM (adjustable-rate mortgage) averaged 3.39 percent this week, down from last week when it averaged 3.41 percent. A year ago, the 5-year ARM averaged 4.35 percent. The 5-year ARM has not been lower since Freddie Mac started tracking it in January 2005.

The1-year Treasury-indexed ARM averaged 3.26 percent this week, down from last week when it averaged 3.30 percent. At this time last year, the 1-year ARM averaged 4.47 percent. The 1-year ARM set another Freddie Mac survey low this week.

“With little sign of inflation to push up long-term interest rates, fixed mortgage rates held relatively steady this week, while ARM rates hit new all-time record lows,” said Frank Nothaft, Freddie Mac vice president and chief economist.

Despite seeing below-5 percent fixed rates for more than 6 months, mortgage applications for refinancing remain sluggish. The Mortgage Bankers Association yesterday reported a 6.4 percent decrease last week in its index that measures mortgage refinancing applications, compared to the previous week.

Its index for mortgage applications for the purchase of a home was flat, registering a 1.4 percent increase last week, compared to the previous week.

Fannie and Freddie have already siphoned a total of $148 billion from the U.S. Treasury’s open credit line to cover quarterly shortfalls since the height of the financial crisis and housing market collapse.

The Federal Housing Finance Agency, the regulator over Fannie and Freddie, today issued the worst-case scenario of $363 billion in total bailout money. The best case would be a minimum of $221 billion.

The precise figure depends on “three possible housing price paths,” the FHFA said. The first projects a near-term housing market recovery;, the second a longer-term recovery – but without a double-dip scenario; and the third would anticipate a “deeper second recession,” sending home prices further down or stagnated than other possible outcomes through 2013.

“These projections are intended to give policymakers and the public useful snapshots of potential outcomes for the taxpayer support of Fannie Mae and Freddie Mac,” said FHFA Acting Director Edward J. DeMarco. “These are not predictions; the results reflect the potential effects of a limited set of hypothetical changes in house prices, a key variable driving credit losses for the Enterprises (Fannie and Freddie).”

Fannie and Freddie are the source of heated political debate centered on the overhaul of the mortgage financing system. Obama Administration officials are planning to present Congress with a formal plan to re-structure Fannie and Freddie early next year.

Both entities contributed heavily to the housing market collapse through the acquisition of private securities backed by faltering subprime mortgages and other high-risk debt. The two companies form the primary financing vehicle behind this country’s new home loans. The mortgages of most American are either held or guaranteed by Fannie or Freddie.

The two entites were chartered by Congress, but operated as private, profit-making companies until the fall of 2008, when they become wards of the U.S. government.

See the FHFA’s full report.

See Related Articles:

• Fannie/Freddie Bailout Tally Up to $148 Billion
• Treasury: Overhaul Plan for Fannie, Freddie Set for January
• Fannie Mae Cracks Down on ‘Strategic’ Walk-Away Homeowners
• Regulator: Fannie, Freddie Nearly Done Buying ‘Poorest’ Mortgages

Foreclosure filings were reported on 347,420 U.S. properties – with a total of 102,134 bank repossessions, the foreclosure data firm said.

For the third quarter of 2010, foreclosure filings were reported on 930,437 properties, a nearly 4 percent increase from the previous quarter – but a 1 percent decrease from the third quarter of 2009.

Nonetheless, the record number of bank repossessions and overall month-to-month increase in filings — default notices, scheduled auctions and repossessions – comes as tens of thousands of foreclosure cases are being reviewed by top U.S. lenders.

And the ‘robo-signing” of affidavits in these cases are under investigation by a rare unified front of attorneys general from all 50 states.

Most analysts expect bank repossessions to take a significant dip in the fourth quarter, as foreclosure documentation is reviewed since being called into question in recent weeks. Reports of “robo-signing” paperwork by lender representatives — without reviewing case facts or claims — may lead to fines against the largest U.S. lenders.

“If you’re facing foreclosure the freeze is good news — at least until the inevitable thaw,” says James J. Saccacio, chief executive officer of RealtyTrac. “But a freeze is a temporary event that also brings uncertainty into the marketplace. If you’re waiting for a return to marketplace normalcy — whatever ‘normalcy’ might be — then another kink in the foreclosure process is hardly going to be helpful.”

While shoddy paperwork could re-open some cases – and possibly lead to reversals in favor of borrowers – stagnated foreclosure sales could also have a chilling effect on the housing market. Home sales activity has stalled since the spring expiration of homebuyer tax credits.

Foreclosure activity in the 23 judicial states most affected by the documentation reviews accounted for 40 percent of all foreclosure activity in the third quarter — and 36 percent of bank repossessions, or REOs.

Bank of America, the largest lender by assets, is the only bank to issue a complete freeze in foreclosure proceedings in all states pending paperwork reviews.

JPMorgan Chase has extended its review to more than 115,000 foreclosure cases in more than 40 states.

Another major mortgage lender, Wells Fargo, said it does not plan to initiate a moratorium.

“Our affidavit procedures and daily auditing demonstrate that our foreclosure affidavits are accurate,” Wells Fargo said in a statement.

Despite calls from consumer activists and civil rights leaders for a nationwide moratorium on foreclosures, U.S. officials have refused to issue such an order, fearing a deeper downturn in the sluggish housing market that could hurt an already weak economic recovery.

See Related Articles:

• Reviews Intensify of Shoddy Foreclosure Paperwork; But No U.S. Freeze
• Bank of America Extends Foreclosure Freeze to All States
• Obama Says No to Law That Could Facilitate Foreclosures
• Justice Officials Eye Foreclosure Paperwork Practices by Lenders
• Foreclosure Freeze: Bank of America to Review Paperwork for Errors

This is the 21^st week of the long-term mortgage rates setting new marks or staying in record territory, according to Freddie Mac’s records dating back to 1970 for the 30-year fixed.

Despite the historically low rates, applications for home purchases and refinancing have been sluggish to weak over the same period. High unemployment, stagnant or lower incomes and consumers focused on reducing debt are all factors cited by housing market analysts for the lack of mortgage activity.

The Mortgage Bankers Association yesterday said its refinance index decreased 1.6 percent last week, compared to the previous week — the fourth straight weekly decrease. Its purchase applications index increased 2.4 percent, compared to the previous week.

Also weighing heavily on the housing market is an epidemic of disappearing home equity and “underwater” homeowners who owe more than the value of their homes.

Although there have been some positive reports lately.

“Homeowners have regained $1.0 trillion in home equity as of the second quarter of 2010 after losing more than $7.5 trillion over the three-year period ending in the first quarter of 2009, the Federal Reserve Board reported,” said Frank Nothaft, vice president and chief economist, Freddie Mac.

This helped bolster household balance sheets and lower serious mortgage delinquencies. First mortgages 90-days delinquent or worse fell to 3.16 percent in August, from 4.76 percent a year prior. It was the lowest rate since June 2008, according to the S&P/Experian Consumer Credit Default Indices.

A year ago, the 30-year fixed rate mortgage averaged 4.94 percent. The 15-year fixed rate averaged 4.36 percent last year at this time.

Last year at this time, the 30-year fixed averaged 5.04 percent. Three weeks ago, the 30–year mortgage rate set a record low of 4.32 percent, according to Freddie Mac’s records dating back to 1970.

But the 15-year fixed rate mortgage is still setting records. It hit another new low at 3.82 percent this past week, down from 3.83 percent the previous week. A year ago at this time, the 15-year fixed rate averaged 4.47 percent.

“Interest rates on 30-year fixed mortgages have remained below 5 percent for the last 19 weeks giving people ample opportunity to refinance their existing mortgage debt,” said Frank Nothaft, vice president and chief economist, Freddie Mac. “As a result, homeowners reduced their financial obligations relative to disposable personal income during the second quarter of 2010 to the lowest share in almost eight years, according to the Federal Reserve.”

Currently, four out of five mortgage applications are for refinancing existing mortgage debt, based on figures by the Mortgage Bankers Association, Nothaft said.

The MBA’s Market Composite Index, a measure of mortgage loan application volume, decreased 8.9 percent on a seasonally adjusted basis last week from one week earlier. 

The refinance portion of the MBA’s index fell 10.8 percent, reflecting a pullback in refinancing activity, but the Labor Holiday weekend contributed to some of the reduced activity.

Lenders foreclosed on 95,364 U.S. properties in August, the highest monthly total in the five-year history of the site’s closely-watched report — and about 2 percent higher than the previous peak of 93,777 bank repossessions — also referred to as REOs — in May 2010.

 August REO activity increased 3 percent from the previous month and was up 25 percent from August 2009. Last month marked the ninth straight month where REOs have increased on a year-over-year basis.

Overall foreclosure filings increased 4 percent in August, including default notices, scheduled auctions and bank repossessions. A total of 338,836 properties were hit with a filing. However, that represents a 5 percent decrease from August 2009.

“The trend lines of decreasing default notices and increasing bank repossessions converged in August, with virtually the same number of new default notices and bank repossessions for the month — a clear indication that the clogged foreclosure pipeline is being carefully managed on both ends by lenders and servicers,” said James J. Saccacio, chief executive officer of RealtyTrac.

Foreclosure auctions were scheduled for the first time on a total of 147,003 U.S. properties in August, a 9 percent increase from the previous month and a 2 percent increase from August 2009. T

The August total for scheduled auctions was the second-highest monthly total in RealtyTrac’s monthly reports, which started in April 2005, and was 7 percent below the peak of 158,105 in March 2010.

Nevada, Florida and Arizona posted the top foreclosure rates in August.

Nevada continued to document the nation’s highest rate for the 44th straight month, with one in every 84 housing units receiving a foreclosure filing in August — 4.5 times the national average.

Read RealtyTrac’s full report.