Government

With an upsurge in demand, banks resumed tightening standards for residential mortgage loans, the Federal Reserve reported Monday (April 30) in its quarterly survey of bank lending standards. According to the survey, a net 30.2 percent of banks surveyed in the Senior Loan Officer Opinion Survey reported increased demand in the first quarter for traditional mortgage loans compared with a net 3.8 percent reporting stronger demand in the fourth quarter. According to the survey though, a net 1.9 percent of survey respondents reported tightening loan standards compared with the first quarter when a net 5.7 percent said they were easing standards.

After what seemed to be a slow month for bank closings, with just one closing April 20, the FDIC announced five bank closings Friday, raising the national tally of failed banks to 22 so far this year. Regulators ceased operations for Bank of the Eastern Shore, HarVest Bank of Maryland, Inter Savings Bank, Plantation Federal Bank, and Palm Desert National Bank.

The nation’s homeownership rate (seasonally adjusted) dropped to 65.4 percent in the first quarter, its lowest level since the first quarter of 1997, the Census Bureau reported Monday. The homeownership rate fell in all four census regions in the first quarter – the steepest drop in the Northeast, 1.2 percentage points to 62.5 percent. The homeownership rate fell 0.8 percentage points in the South to 67.5 percent; 0.5 percentage points in the Midwest to 69.5 percent, and 0.2 percentage points in the West to 59.9 percent. At the same, the homeowner vacancy rate fell to 2.2 percent nationwide, down from 2.6 percent in the first quarter of 2011, and the rental vacancy rate dropped to 8.8 percent from 9.7 percent one year earlier.

Consumer spending grew just 0.3 percent in March, down from the 0.9 percent growth in February, the Bureau of Economic Analysis reported Monday. Economists had expected spending to be up 0.4 percent. At the same time, personal income grew 0.4 percent in March, BEA said, slightly faster than February's 0.3 percent growth and consensus expectation of 0.3 percent. Personal savings as a percentage of disposable (after tax) income edged up to 3.8 percent in March from 3.7 percent in February; it had been 4.3 percent in January.

According to a preliminary report released by LPS, 2,060,000 properties are in foreclosure inventory. As of the end of the 2011 fourth quarter, 11.1 million borrowers were reported to be underwater, according to CoreLogic. That's a lot of potential debt to be forgiven, and through the Mortgage Debt Relief Act of 2007, homeowners get a break from paying taxes on their forgiven debt, whether it was forgiven through a short sale, foreclosure, or a modification. The act though, is set to expire at the end of this year.

The US economy grew at a disappointing 2.2 percent in the first quarter, the Bureau of Economic Analysis reported Friday, down from the 3.0 percent growth rate in the fourth quarter and below expectations. Economists had expected GDP to grow at 2.5 percent in the first quarter. In dollar terms, GDP increased $73.4 billion, most of which was an increase in personal consumption - $68.1 billion. A slowdown in government spending subtracted $19.0 billion, most of which was a $15.0 billion drop in federal spending in the first quarter from the fourth.

Lawmakers seated on the Senate Banking Committee convened a hearing Wednesday to discuss ways to make HARP a more effective and accessible option for responsible, underwater borrowers. Laurie Goodman, senior managing director at Amherst Securities Group, said her number one suggestion is to allow for competition by permitting a different servicer to refinance a borrower on the same terms that apply to the current servicer. Currently, only mortgages backed by Fannie Mae and Freddie Mac are eligible for refinancing under HARP.

The California Association of Realtors (C.A.R.) announced its support for a bill that will prevent California homeowners from going into foreclosure if they have negotiated a short sale with their lender or servicer. Assembly Bill 1745 (Torres, D-Pomona) prevents lenders or servicers from recording a notice of sale if a short sale has been approved. The bill is scheduled for hearing on April 30 by the Assembly Banking and Finance Committee.

Before a senate subcommittee Thursday, HUD Secretary Shaun Donovan revealed details of his department's 2013 fiscal year budget and presented a breakdown on what programs the funds will help. Overall, HUD's budget for the fiscal year 2013 provides $44.8 billion for housing programs, an increase of 3.2 percent or $1.4 billion compared to 2012. However, Donovan further explained that the program funding level is offset by $9.4 billion in projected FHA and Ginnie Mae receipts, which means the budget is actually $35.4 billion, or 7.3 percent below the fiscal year 2012 level of $38.2 billion.

With a lone dissent, the Federal Open Market Committee Wednesday voted no change in the target federal funds rate. The economy has been expanding moderately, the FOMC said in the statement issued at the conclusion of its two-day meeting, echoing language in the statement following its meeting last month. After the meeting, the FOMC released its quarterly forecast of the economy and interest rates with more members of the Committee seeing higher rates in 2014 than in the prior forecast.