Tag Archives: Fiscal cliff

The Center for Responsible Lending, a nonprofit group dedicated to protecting consumers from predatory lending practices, and the Financial Services Roundtable, a group of representatives from the nation's largest financial institutions, have come together to ask Congress to extend the Mortgage Forgiveness Debt Relief Act, which will otherwise expire at the end of this year. The two groups argue that if lawmakers fail to act, it will make it difficult for struggling homeowners to accept short sale, and even loan modification, offers.

Despite a number of potentially damaging headwinds, the ongoing housing recovery will remain sustainable for the foreseeable future, analysts for Capital Economics say in a recently released report. The housing industry's rapid rebound took many experts by surprise--even the researchers who authored the report admit they ""have been slightly taken aback"" by the recovery's speed. However, they point to several major indicators that show the current upturn is more than a temporary blip or a false recovery.

Fixed mortgage rates showed little signs of movement in the last full week of November, hovering near record lows as market worries heightened over the impending fiscal cliff. Freddie Mac puts the average 30-year fixed mortgage rate at 3.32 percent and the 15-year rate at 2.64 percent. Analysts say uncertainty surrounding the fiscal cliff has businesses, consumers, and financial markets all feeling uncertain themselves, which will keep mortgage rates at these levels as long as talks drag on in Washington.

The Federal Reserve painted a picture of a split economy with concerns about the ""fiscal cliff"" in its periodic Beige Book released Wednesday. The economy, according to the Beige Book, expanded ""at a measured pace"" in seven of the 12 federal reserve districts--Cleveland, Richmond, Atlanta, Chicago, Kansas City, Dallas, and San Francisco. According to the Beige Book, business leaders and others ""expressed concern and uncertainty about the federal budget, especially the fiscal cliff.""

After reaching a year-to-date high in October, consumer confidence continued to climb in November, according to The Conference Board's recently released Consumer Confidence Index. The index, which is based on survey conducted for The Conference Board by Nielsen, ""posted a moderate increase"" in November, rising to 73.7 from 73.1 previously. According to Lynn Franco, director of economic indicators at The Conference Board, the index is now at its highest level in more than four and a half years.

With revenue up and the housing market showing a sustained recovery, Fitch Ratings says the outlook for the U.S. title insurance industry is ""stable."" According to the ratings agency, its stable rating outlook is based on its belief that ""ratings actions for the industry will on balance approximate current levels over the next 12-18 months as financial performance has improved recently."" Operating profit margins for Fitch's title universe rose to 10.3 percent in the first nine months of 2012, a dramatic jump from 6.1 percent during the same period in 2011.

Consumer confidence hit the wall in November as Americans sweat the rapidly approaching fiscal cliff, according to monthly survey results released by Thomson Reuters and the University of Michigan. The Thomson Reuters/University of Michigan Survey of Consumers showed confidence over the economy increased just 0.1 percent from October to November, hitting 82.7 on the Index of Consumer Sentiment. Preliminary data released earlier in November put the index at 84.9, and economists polled by Reuters expected a median index of 84.5.

Given improvements seen in housing, Fannie Mae revised its housing forecast higher for 2012 and 2013 in its November economic outlook report. The GSE's Economic & Strategic Research Group anticipates single-family housing starts will jump 25 percent this year, then rise by another 22 percent in 2013. Existing-home sales should also rise and see a 9 percent increase in 2012 and a 4 percent gain in 2013. Even though reports on the housing sector give reasons to be optimistic, Fannie Mae still warned ""data continue to show a sluggish recovery overall.""

While various economic reports hint at improvements in the nation's economy since the economic crisis was in full swing, improvement is meek and recovery seems too strong a word to describe the progress thus far. Federal Reserve Chairman Ben Bernanke calls the pace of recovery ""disappointingly slow."" In a speech before the New York Economic Club Tuesday, Bernanke pointed out some of the lingering headwinds preventing the economy from more momentous progress.