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Tag Archives: Federal Reserve

Fed Holds Direction on Monetary Policy

The Federal Reserve says economic recovery is continuing but at a rate that has been insufficient to bring down unemployment. Following its monetary policy meeting Tuesday, the central bank called progress toward its objectives of creating jobs, stabilizing prices, and fostering economic growth ""disappointingly slow."" Fed officials voted to keep the target range for the benchmark federal funds rate at 0 to 0.25 percent, and reiterated their commitment to purchase another $600 billion in long-term Treasury securities by June 2011.

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Household Wealth Increases Despite Heavy Real Estate Losses

The average American's financial situation improved during the third quarter, according to data released by the Federal Reserve. The news is seen as a positive sign for the nation's mortgage markets, which have been stressed by an elevated number of borrowers struggling to fulfill their mortgage obligations because of deteriorating personal finances. The Fed says household wealth grew by 2.2 percent, or $1.2 trillion, during the third quarter as stock market gains offset the $700 billion that was lost on real estate assets.

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FDIC Launches Investigation of Officials of Failed Banks

In a move reminiscent of the last time the United States was in such dire financial straits, the FDIC announced recently that it has begun an investigation of executives and other employees of failed banks. In the 1980s and 1990s, the savings and loan (S&L) crisis prompted the government to investigate and prosecute hundreds of bank insiders, sending more than 1,000 to prison, and collecting $4.5 billion. This time around, the FDIC has opened more than 200 civil cases and is seeking to recover around $2 billion.

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Fed Governor Urges Congress to Set National Foreclosure Standards

Federal banking regulators have been conducting reviews of foreclosure practices at the nation's largest mortgage servicers. They say the robo-signing controversy has exposed widespread breakdowns in the process, and some are pushing for Congress to enact legislation to establish federal standards for foreclosure procedures. Federal Reserve Governor Dan Tarullo says the industry will need to make ""substantial investments"" to fix the problems and should consider ""fundamental structural changes"" to the current mortgage system.

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Federal Reserve and Other Agencies Release New Appraisal Guidelines

Federal regulatory agencies issued guidelines Thursday on sound practices by financial institutions for real estate appraisals and evaluations. The guidelines explain the agencies' minimum standards for appraisals and incorporate the agencies' recent supervisory issuances on appraisal practices. The 70-page document will replace the former guidelines which were written in 1994, and officials say it will ensure consistency in the application and enforcement of appraisal regulations.

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Fed’s Beige Book Points to Housing as Recovery Stumbling Block

The Federal Reserve's latest rendition of its popular Beige Book shows that economic conditions across the country continued to improve. Housing markets, though, remain ""depressed,"" according to district contacts in the field. Many brokers, most notably in Florida, reported that recent servicer moratoriums on distressed sales led to a stall in activity. Areas in the Dallas and New York districts noted weakened demand for lower-priced properties but increased interest for high-end homes.

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Government Study Finds Banks Rarely Walk Away from a Foreclosure

The Government Accountability Office just completed a study of what is called ""bank walkaways"" - when a lender initiates foreclosure but then doesn't complete the process because the cost outweighs expected proceeds from the property's sale. Officials argue the practice intensifies market deterioration and complicates stabilization efforts. But the agency found that abandoned foreclosures are rare - representing less than 1 percent of vacant homes between January 2008 and March 2010 - but concentrated in specific areas of the country.

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Servicers with Widespread Paperwork Errors May Face Regulatory Fines

Federal banking regulators are in the process of conducting an in-depth review of foreclosure practices at the nation's largest mortgage servicers, which includes on-site evaluations and examinations of loan files. Officials say in cases where problems are found, regulators will require lenders and servicers to correct not only the faulty documents but the faulty systems that allowed them to occur. One Federal Reserve governor says institutions with ""widespread problems"" could also be subject to fees and penalties.

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Are the Days of Rock-Bottom Mortgage Rates Behind Us?

Mortgage interest rates rose dramatically this week, after lingering around half-century lows for months. The upsurge comes just two weeks after the Federal Reserve announced plans to purchase another $600 billion in Treasury securities, a move that is meant to hold interest rates down. Rates are still extremely low by historical standards, but the sharp increases seen in just one week's time - long-term rates jumped by about 20 basis points in two separate industry studies - serve as an abrupt reminder that trends can reverse on a dime.

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Mortgage Apps Suffer Largest Drop of the Year as Rates Jump

Consumer demand for home loans plummeted last week as mortgage rates shot up against the backdrop of the Federal Reserve's announcement to pump more money into the economy - an initiative that's designed to keep interest rates low. The total volume of new mortgage applications sank 14.4 percent. It's the biggest week-to-week drop of 2010 and the lowest reading in four months. Rates for 30-year fixed mortgages rose 18 basis points during the one-week period, but analysts say it's too soon to conclude the Fed got it wrong.

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