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U.S. Households Barely Out of Financial Distress in Q1

U.S. households experienced higher levels of financial distress in the first quarter as they faced budget constraints and a drop in the savings rate, according to the CredAbility Consumer Distress Index. With a score below 70 indicating a state of financial distress, households barely stayed out of distress with a score of 70.7 out of 100 in the first quarter of this year, down from 71.77 in the previous quarter, CredAbility reported.

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Ally Reaches Claims Settlement with ResCap and Creditors

Ally Financial Inc. announced an agreement that settles any existing and potential claims from Residential Capital--its bankrupt mortgage subsidiary--and ResCap creditors, according to an announcement Tuesday. The plan ""fully releases Ally from any claim,"" including representation and warranty claims, that could be brought on by ResCap and its third parties, but makes an exception for securities claims by the Federal Housing Finance Agency (FHFA) and the Federal Deposit Insurance Corporation (FDIC), a release stated.

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Household Debt Recedes with Mortgage, Credit Card Balances

In the first quarter of this year, mortgage originations increased, but total outstanding mortgage debt decreased, according to the Household Debt and Credit Report from the Federal Reserve Bank of New York. Delinquencies also improved over the quarter while foreclosure notices declined, according to the report. Total household debt--including mortgages, credit card debt, student loans, and auto loans--declined 1 percent to $11.23 trillion. The two main drivers of the quarterly decline were abating mortgage and credit card debt.

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GSEs Make New Simplified Mod Program Available Immediately

Fannie Mae and Freddie Mac are offering the new Streamlined Modification Program to distressed borrowers before the effective date of July 1. As part of the program, Fannie Mae and Freddie Mac borrowers who are at least 90 days delinquent but no more than 720 days past due may be eligible for a modification that does not require the borrower to submit financial or hardship documentation.

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Freddie Mac: Financial Assets Can Be Used as Qualifying Income

Freddie Mac is hoping to spread information about a rule that allows people to leverage financial assets such as retirement accounts as qualifying income when applying for mortgage loans.Individual Retirement Accounts (IRAs), 401(k)s, distributions from retirement accounts, and funds acquired from the sale of a business can all contribute to a potential borrower's qualifying income, according to Freddie Mac. In order to contribute to a borrower's qualifying income, these financial assets must be accessible.

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New York Bound for Economic Recovery Despite Foreclosure Backlog

New York may be dealing with a heavy foreclosure burden, but the state is still bound for a strong economic recovery, according to a report released by HUD and Treasury. While foreclosures are improving across the country, New York has remained a concern due to its long foreclosure timelines and backlog of distressed inventory. Despite the obstacle, a report from the Obama administration highlighted factors that show how the market has proven itself in other ways. For one, the New York metropolitan area is the largest job market in the nation, and the area has shown economic resilience through the Great Recession.

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Autos Boost April Retail Sales; Retail Space Under Siege

Driven by stronger auto sales but held back by falling gasoline prices, total retail sales increased an unexpected 0.1 percent in April Census Bureau reported Monday. Economists had expected sales to fall 0.3 percent. In March, retail sales fell a revised 0.

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Commentary: Seven Little Words

""Fiscal policy,"" simply put, is the means by which a government adjusts its levels of spending in order to monitor and influence a nation's economy. At the heart of the spending/growth disparity is a philosophical debate over the role of government: those who believe government should be run like a business and avoid debt and those who see the role of government as spending counter-cyclically, that is increasing spending when the nation's economy is challenged to avoid further struggles. direct a country's economic goals.

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Report: Payment Reduction Key to Mod’s Sustainability

While the likelihood of re-defaulting on a HAMP modification is smaller compared to private sector modifications, borrowers can become disqualified from the program if they miss three consecutive payments. According to the most recent Making Home Affordable Program report for March released by Treasury, the key to strengthening the chances a borrower won't become disqualified is to provide a significant payment reduction. ""Payment reduction is strongly correlated with permanent modification sustainability,"" the report concluded.

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