Government

Citing improvements in manufacturing, tourism, commercial and residential real estate and in the financial sector, the Federal Reserve Wednesday said the nation's economy ""continued to increase at a modest to moderate pace"" from late May through early July. The assessment in the periodic Beige Book was tempered by ""mixed"" conditions in the agricultural sector and the absence of improvement in labor markets. ""Hiring,"" the Beige Book said, ""held steady or increased at a measured pace.""

The Federal Reserve will continue its current policy of buying up $40 billion in agency mortgage-backed securities (MBS) and $45 billion in Treasuries per month as long as economic conditions warrant such measures, explained Federal Reserve Chairman Ben Bernanke during a testimony given Wednesday before the House of Representatives Committee on Financial Services. ""I emphasize that, because our asset purchases depend on economic and financial developments, they are by no means on a preset course,"" Bernanke said.

With the sudden jump in mortgage rates, market spectators are wondering what the impact might be on the housing recovery. After analyzing previous instances when mortgage rates increased significantly, Mark Palim, VP of Fannie Mae's Economic and Strategic Research Group, determined history suggests rate increases won't stop the current recovery. Instead, a rapid rise in rates is ""more likely to contribute to a decrease in home purchase volume and an increase in the market share of adjustable-rate mortgages (ARMs),"" wrote Palim in a recent commentary.

Market participants reacting to speculation that the Federal Reserve may taper its bond purchases later this year should refrain from acting too hastily, Freddie Mac says in its U.S. Economic and Housing Market Outlook for July. According to Freddie Mac's metrics, the 30-year fixed-rate mortgage has jumped a full percentage point since mid-May as ""taper talk"" rules the day. Rates are expected to gradually move higher, closing out 2013 in the range of 4.6 to 4.7 percent.

The Federal Housing Finance Agency Office of Inspector General (FHFA OIG) argued in a report released Tuesday that the FHFA should define specific performance goals for encouraging private participation in the mortgage credit risk market. For example, FHFA has not defined what it considers ""increased private sector investment"" nor determined how much it must raise guarantee fees to achieve this goal, according to the report. Similarly, FHFA has not set specific goals for its pricing initiatives with FHA.

Despite soaring builder confidence, new housing permits and starts fell in June, with new construction falling to the lowest level in 10 months, the Census Bureau and HUD reported Wednesday. The seasonally adjusted annual rate of new housing permits tumbled 7.5 percent--the largest month-over-month decline since January 2011--while starts fell 9.9 percent, the second-largest drop since February 2011. Builders completed homes at an annual adjusted pace of 755,000 in June, 6.3 percent more than May's 710,000.

Servicers provided nearly 74,000 modifications for distressed homeowners in May, up from 70,000 in April, according to data from HOPE NOW, an alliance of mortgage servicers, investors, mortgage insurers, and nonprofit counselors. This raises the total for modifications to 6.47 million since 2007, which is when HOPE NOW began keeping track. Short sales also ticked up in May, rising slightly to 28,000, up from 27,000 in April. Since 2009, the industry has provided about 1.29 million short sales to help homeowners avoid foreclosure.

The Senate Banking Committee reached a milestone in its efforts to stabilize the Federal Housing Administration (FHA) with the release of a discussion draft of a new bill Monday. The Federal Housing Administration Solvency Act of 2013, authored by Committee Chairman Sen. Tim Johnson and Ranking Member Sen. Mike Crapo (R-Idaho), has provisions to strengthen underwriting, make lenders more accountable, and strengthen the FHA’s reverse mortgage program.

The U.S. Senate voted Tuesday to confirm Richard Cordray as director of the Consumer Financial Protection Bureau (CFPB). According to the Senate website, Cordray was confirmed in a 66-34 vote. News of the confirmation came hours after an announcement of a 71-29 vote for cloture, effectively putting to an end the debate surrounding Cordray's nomination.

Close to 2.9 million borrowers who received a payout under the foreclosure review settlement have cashed or deposited their check, the Office of the Comptroller (OCC) announced Friday. The cashed payments represent a value of $2.5 billion. So far, Rust Consulting, the paying agent, has sent out 3.9 million checks worth more than $3.4 billion to eligible borrowers.