Tag Archives: Federal Reserve

Household net worth jumped by $3 trillion in the first quarter as real estate values grew $836 billion, the Federal Reserve reported Thursday in its quarterly Flow of Funds report. With a drop in mortgage debt, owners' equity in real estate increased a sharp 2.5 percentage points to its highest level since 2007. Owners' equity as a percentage of real estate value has been on a steady upward trajectory since dropping to 36.3 percent in the first quarter of 2009.

The nation's economy grew at a ""modest to moderate pace"" from early April through the end of May, the Federal Reserve said Wednesday in its periodic Beige Book. From late February through early April, the last Beige Book released described economic growth simply as ""moderate."" The sole bright spot in Wednesday's report was in the Dallas Federal Reserve District, which had ""strong economic growth."" The Beige Book reported slowdowns as a result of federal budget sequestration, which forced a mandatory cutback in spending.

As of the end of May, borrowers have cashed or deposited 2.6 million foreclosure review checks, according to the latest update from the Office of the Comptroller of the Currency (OCC). The checks are valued at $2.3 billion and are part of a foreclosure settlement reached in January between the OCC, the Federal Reserve Board, and 13 servicers.

Encouraging economic data helped lift fixed mortgage rates to their highest level in the past year this week, according to surveys from Freddie Mac and Bankrate.com. Freddie Mac's survey showed the 30-year fixed rate rising to an average 3.81 percent (0.8 point) for the week ending May 30, up from last week's 3.59 percent. Since the beginning of May, the 30-year fixed average has jumped up nearly half a percentage point. The 15-year fixed-rate mortgage (FRM) also soared this week, rising to 2.98 percent (0.7 point) from last week's 2.77 percent.

Recent reports from the National Association of Realtors and the Census Bureau/HUD showed sharp increases in unit sales and prices, as well as increases in the inventory of homes for sale for April. Has housing turned the corner? Look again. Sales up, prices up, what's wrong with this picture? The last time both prices and sales of new homes increased in the same month was last September. In all of 2012, sales and prices moved in opposite directions in seven of the 12 months. What of course is missing from the two data sets is any indication of demand.

Economists usually do it with models, so it's rare in economics to be able to conduct a laboratory experiment. Currently, though, we're watching two experiments in different corners of the world that support the idea that stimulus works to repair a troubled economy and austerity doesn't. Japan and the eurozone are, through their actions, demonstrating how economies can move in opposite directions with Japan's stimulus plan succeeding and the eurozone's austerity program failing.

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.

""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.

While originations are down across the board, ""[t]he drop in originations has been most pronounced among borrowers with lower credit scores,"" said Federal Reserves Governor Elizabeth A. Duke. From 2007 to 2012, purchase originations among borrowers with credit scores higher than 780 declined by 30 percent. In contrast, purchase originations for borrowers with credit scores between 620 and 680 declined by 90 percent, and originations among borrowers with credit scores below 620 were ""virtually nonexistent,"" according to Duke.

About 96,000 borrowers who received a check under the foreclosure review settlement should expect a second payment since their checks were for a lesser amount than what they should have received. The second round of payments to make up for the difference is only for eligible borrowers who had their mortgage serviced by former subsidiaries of Goldman Sachs and Morgan Stanley. Rust Consulting, the paying agent, announced the supplemental checks are scheduled to be sent around May 17. In a release, Rust Consulting said ""a clerical error"" led to the lesser amount.