Government

With a lone dissent, the Federal Open Market Committee Wednesday voted no change in the target federal funds rate but agreed to expand its program to stimulate the economy by purchasing Treasury securities. While voting no change in the target Fed Funds rate, the FOMC said it would purchase Treasury securities with remaining maturities of 6 years to 30 years at the current pace and to sell or redeem an equal amount of Treasury securities with remaining maturities of approximately 3 years or less. The action is expected to keep mortgage rates at record lows.

Lender Processing Services, Inc. (LPS) offered a peak into mortgage performance in May 2012 and revealed a slight increase in the delinquency rate. The total delinquency rate, which includes all loans 30 days or more past due but not yet in foreclosure, was 7.20 percent, a 1.1 percent increase from the month before in April. Compared to May 2011, the delinquency rate is still down significantly by 9.6 percent. In April 2012, the delinquency rate increased slightly by 0.4 percent from the month before after 9 months of declines.

California Attorney General Kamala Harris announced Tuesday that the Assembly Public Safety Committee passed a piece of the California Homeowner Bill of Rights designed to protect the state's homeowners from scams.

A California real estate agent pled guilty to conspiracy to commit real estate fraud after collecting short sale fees he was not entitled to, the California Department of Real Estate announced in a statement Monday. In October 2010, the DRE filed an action against Matthew Wayne Stewart and alleged that he received illegal profits in two short sale transactions in Placer and Nevada counties. Stewart was accused of requiring buyers in the two transactions to pay additional short sale negation fees that were hidden and not disclosed to the lenders or sellers.

The revised figures for economic growth in the year's first quarter were disappointing, but Fannie Mae's Economic & Strategic Research Group is still forecasting moderate growth for the remainder of 2012. A report released by the group Tuesday projected 2.2 percent growth for all of 2012. Several factors presented risks to the economic outlook, including a slowing trend in job growth, potential contagion in the euro zone from Greece's financial issues, the slowing Chinese economy, and the potential of a fiscal drag in the United States. Consumer attitudes also influence the economic outlook.

Housing permits soared in May to their highest level since September 2008, surging 7.9 percent to 780,000, the Census Bureau and Department of Housing and Urban Development reported jointly Tuesday but housing starts dropped 4.8 percent to 708,000 giving back all of April's gain. At the same time, permits for April were revised upward to 723,000 from the originally reported 715,000. April housing starts were also revised upward to 744,000 from the originally reported 717,000.

The middle class seemed to take another drubbing Monday with news that U.S. median household net worth fell 35 percent between 2005 and 2010. Excluding home equity, the Census Bureau found that median household net worth ticked up by 8 percent during the financial crisis. Who got hit the hardest? Of the many age groups, heads of households from 35 to 44 accounted for nearly 60 percent of the decline in net worth during the five-year period. But they weren't alone: Median net worth also declined for all age groups between 2005 and 2010.

Home prices and mortgage delinquencies appear to be stabilizing, but how well U.S. residential mortgage backed-securities (RMBS) issued before 2008 perform will depend on three key variables, according to a Standard and Poor's report. Those three variables are collateral performance, the effectiveness of structural protections, and the behavior of transaction parties such as servicers and bond trustees.

As an additional measure against fraud, the FHFA announced an initiative requiring Fannie Mae, Freddie Mac, and the Federal Home Loan (FHL) Banks to notify the agency when an act of fraud is committed by an individual or company the regulated entities conduct business with. The initiative is called the Suspended Counterparty Program and will take effect August 15, 2012. The FHFA stated it is taking this additional step to ensure the regulated companies are not exposed to unnecessary risk from business dealings involving those who have a history of fraudulent conduct.

At a Long Island Housing Partnership event Monday, New York Attorney General Eric Schneiderman announced the launch of the Homeowner Protection Program, a commitment of $60 million over three years to fund housing counseling and legal services for the state's homeowners.