Fiscal Cliff Concerns Hinder Consumer Confidence

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.

As budget negotiations begin on Capitol Hill, it seems Americans are growing more concerned about looming tax increases and spending cuts.

“When asked to identify any recent economic news, consumers more frequently made unfavorable references to potential changes in future federal tax and spending programs as well as the inability of the political parties to reach a timely settlement,” a release issued with the survey said.

The November survey is one of only a handful in the past half century in which more consumers “spontaneously mentioned their uncertainty about government policies.” Other past occurrences were also related to taxes, spending, and the federal deficit. While consumers remain optimistic—the index is at its highest level in five years—“that optimism is contingent on the promise of no higher taxes, except on the wealthy.”

While the overall Sentiment Index was slightly above October’s 82.6 (and well above November 2011’s 63.7), the Expectations and Current Conditions sub-indexes moved in opposite directions: The Expectations Index slipped to 77.6 from 79.0 in October, while the Current Conditions Index rose to 90.7 from 88.1. Both components were well above last November.

In addition, more households reported gains in personal finances in November’s survey than in any other survey since March 2008. Although a slightly larger number reported worsening finances, Americans seem to be much better off than they were in November 2011, when worsening finances were reported twice as frequently as improving financial situations.

Anticipated economic gains also boosted consumer expectations about the job market. The survey recorded the most favorable outlook for the unemployment rate since 1984, with nearly one-third of consumers saying they expect a lower unemployment rate in the coming year.

Visit our website today @ http://www.ksiconsultingco.us; where we are making your real estate experience pleasurable…..

Advertisements

Fannie Mae Releases Forecast on Housing, Economy

Given improvements seen in housing, Fannie Maerevised its housing forecast higher for 2012 and 2013 in its November economic outlook report.

According to the GSE, the fundamentals are set in place for a “solid” housing recovery, such as low interest rates, rising prices, and a labor market that’s healing.

Considering these developments in housing, 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.

When combining new and existing-home sales, the increase is expected to be 10 percent this year and an additional 6 percent in 2013. And if there’s any risk in this forecast, Fannie Mae says it’s that housing demand may actually result in stronger housing activity than currently anticipated.

Based on the Federal Housing Finance Agency’s purchase-only index, home prices should see an increase of 2.9 percent for the remainder of 2012 and a 1.6 percent increase in 2013.

Fannie Mae was also optimistic about originations and expects originations to reach $1.81 trillion in 2012 and $1.54 trillion in 2013. The refinance share of originations should rise to 71 percent in 2012 before dropping to 62 percent in 2013, according to the report.

The 30-year fixed-rate mortgage is expected to stay low and average 3.5 percent in 2013.
The GSE also expects the Federal Reserve to continue buying $40 billion in mortgage-backed securities (MBS) each month through 2013.

Unemployment is expected to dip further into 2013 and fall to 7.6 percent. GDP is expected to grow at a rate of 2.2 percent 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.”

The GSE also noted consumer spending was the largest contributor of growth in Q3. However, consumer confidence may be weakened in coming months due to the the fiscal cliff and debt ceiling debate, which “are likely to create the most significant barriers to meaningful growth,” Fannie Mae stated.

In addition, Fannie Mae Chief Economist Doug Duncan cautioned, “While the pick-up of activity in the third quarter is encouraging, it is compared to the weak pace seen in the second quarter and doesn’t portend a robust recovery in the near term.” for questions send us an email @ info@ksiconsultingco.us; where we are making your Real Estate experience pleasurable….

Ocwen, Walter Investment Receive Court Approval for ResCap Bid

Ocwen Loan Servicing, LLC and Walter Investment Management Corp. announced the U.S. Bankruptcy Court for the Southern District of New York approved their bid for Residential Capital, LLC (ResCap).

In October, Ocwen and Walter Investment won a bid priced at $3 billion for ResCap’s mortgage servicing and originations businesses. The two companies outbid Nationstar.

The transaction is expected to close in the first quarter of 2013, according to the announcements. ResCap’s portfolio included an unpaid principal balance (UPB) of $374 billion and 2.4 million loans.

In a release, Ocwen CEO Ron Faris said, “The approval of the Bankruptcy Court is an important next step towards completing our acquisition of ResCap’s private label and Freddie Mac servicing assets which we believe will significantly advance Ocwen’s strategic goals to expand our servicing platform and portfolio.”

In addition to the ResCap bid, Atlanta-based Ocwen alsoentered into an agreement to purchase Homeward Residential. According to Ocwen’s third quarter earnings report, the acquisition of ResCap and Homeward will place Ocwen as the fifth largest servicers in the United States.

For more information; visit our website @ http://www.ksiconsultingco.us; where we are making your Real Estate experience pleasurable……

 

Lingering Headwinds Make Recovery ‘Disappointingly Slow’

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.

Significant among these headwinds is the housing sector itself.

To make his point, Bernanke quoted a few notable statistics.

“House prices declined almost one-third nationally from 2006 until early this year, construction of single-family homes fell two-thirds, and the number of construction jobsdecreased by nearly one-third,” he said.

Home sales, prices, and construction have shown some forward movement this year, which Bernanke said is “encouraging” and expects to see residential investmentbecome a “source of economic growth and new jobs over the next couple of years.”

However, a “powerful housing recovery” is still being prevented, and one of those obstacles is tight lending, according to Bernanke.

Outside the housing market, the credit and capital markets serve as another financial headwind for the nation’s economy. In particular, the financial situation in Europe has been and continues to be a cause of stress and uncertainty.

The third financial headwind Bernanke mentioned is U.S. fiscal policy. This concern can be divided into three major categories – the fiscal cliff, the federal debt limit, andmonetary policy.

“Uncertainty about how the fiscal cliff, the raising of the debt limit, and the longer-term budget situation will be addressed appears already to be affecting private spending and investment decisions and may be contributing to an increased sense of caution in financial markets, with adverse effects on the economy,” Bernanke said.

The fiscal cliff that looms if tax laws remain unchanged “would pose a substantial threat to the recovery,” Bernanke said. Similarly, failing to approve a new federal debt limit would damage the economy.

While the third category, monetary policy, “can do little to reverse the effects that the financial crisis may have had on the economy’s productive potential,” Bernanke asserted the Federal Reserve is doing everything in its power to contribute positively to the economy.

Such actions include additional mortgage-backed-securities purchases and an extension of the maturity of the Fed’s Treasury holdings. While it is still early to assess the impact of these actions, Bernanke says research suggests they are already having a positive effect.

For more information visit our site http://www.ksiconsultingco.us; where we are making your Real Estate experience pleasurable….

 

Case-Shiller Indices Up in September, Momentum Slows

Despite another month of home price improvements, the housing sector stumbled in September as prices fell in five of the 20 cities covered in the monthly Standard & Poor’s/Case-Shiller Home Price Index.

The 10-city index increased 0.3 percent from August to 158.93, its highest level since September 2010. Meanwhile, the 20-city index rose by the same 0.3 percent to 146.22, also the highest in two years. The national index improved 2.2 percent in the third quarter to 135.67, its highest level since Q3 2010.

Economists had expected a slightly faster monthly improvement of 0.4 percent.

Prices had increased in 19 of the 20 cities in July and August and in all 20 cities in May and June. The quarterly report on prices nationally also showed a deceleration: The 2.2 percent 3Q gain was down sharply from the 7.1 percent jump in the second quarter.

The 10-city index showed a 2.1 percent year-year gain, and the 20-city index was up 3.0 percent from September 2011, according to Case-Shiller.

According to the National Association of Realtors, the median price of an existing single-family home dropped 3.6 percent in September, but was up 7.9 percent from September 2011.

The improvement in the Case-Shiller indices—both the 10- and 20-city have risen month-over-month for the last six months—has been increasingly weaker. In the preceding five months, the improvement in the 10-city index averaged 2.4 percent, and the 20-city index averaged 2.3 percent.

Prices dropped in September in five cities, led by a 0.9 percent decline in Cleveland, a 0.6 percent decline in both Boston and Chicago, a 0.3 percent drop in Charlotte, and a 0.1 percent dip in New York. All of those cities showed price gains August.

The cities in which prices improved monthly were led by Las Vegas and San Diego, each of which showed a 1.4 percent gain. Prices had improved 1.6 percent in Las Vegas and 0.9 percent in San Diego in August. Prices rose 1.1 percent in September in Phoenix and Minneapolis, compared with 1.8 percent and 1.2 percent increases, respectively, in August.

Year-over-year, prices improved in 18 of the 20 cities in September, compared with annual gains in 17 of the 20 cities in August.

Prices were down year-over-year in September in New York (2.3 percent, matching the 12-month drop registered in August) and in Chicago (1.5 percent), which had shown a 2.6 percent monthly drop in August.

Yearly price gains were led by Phoenix (20.4 percent) Minneapolis (8.8 percent), Detroit (7.6 percent), San Francisco (7.5 percent), and Miami (7.4 percent).

Even with the increases, the 10-year index remains down 29.8 percent from its June 2006 peak, and the 20-year index is down 29.2 percent from its July 2006 peak.

Forty-One AGs Sign Letter Urging Congress to Extend Debt Relief Act

Forty-one state attorneys general signed a letter Tuesday urging U.S. House and Senate leaders to extend the expiring Mortgage Debt Relief Act of 2007-. The attorneys general argued failure to extend the act would take away from the national mortgage settlement.

“Requiring a homeowner to pay income tax on forgiven or canceled mortgage debt would make the National Mortgage Settlement much less effective,” the letter states.

The act, which is set to expire December 31, 2012, allows taxpayers to be excluded from paying taxes on forgiven debt from a foreclosure, short sale, or loan modification.

In a release, Nevada Attorney General Catherine Cortez Masto explained the act is expiring at a time when homeowners are benefiting from the national mortgage settlement, which obligates five of the largest mortgage services to provide $20 billion in credited consumer relief. The relief must be provided within three years as of March.

“I urge Congress to extend this critical tax exclusion so that families in need are not stuck with an unexpected tax bill or deterred from participating in this historic settlement,” Masto said.

The letter also points out that failure to extend the act could lead to $1.3 billion in tax increases, according to the Congressional Budget Office.

According to report from settlement monitor Joseph Smith, servicers have provided $13.1 billion in relief through short sales, or about or about $115,672 per borrower as of September 30, 2012. In addition, 21,833 borrowers received a first lien principal reduction modification and received $2.55 billion in relief, which averages to about $116,929 in debt forgiveness for each borrower.

In February, the federal government and 49 state attorneys general announced a mortgage settlement with Bank of America, JPMorgan Chase, Wells Fargo, Citigroup, and Ally Financial. Oklahoma Attorney General Scott Pruitt opted out of the settlement and was also one of the attorneys general to not sign the letter.

 

New York AG Targets Credit Suisse in Second RMBS Task Force Suit

New York Attorney General Eric Schneidermanannounced a complaint was filed Tuesday against Credit Suisse Securities (USA) LLC and its affiliates for allegedly misrepresenting residential mortgage-backed securities (RMBS) sold to investors.

The complaint is the result of investigations carried out by the RMBS Working Group, a federal task force created by President Obama in early 2012. The lawsuit marks the second complaint from the group.

The suit alleges that from 2006 to 2007, Credit Suisse led investors to believe the bank carefully evaluated the loansunderlying the RMBS and encouraged originators to implement “sound” practices.

Instead, Zurich-based Credit Suisse “systematically failed to adequately evaluate these loans, and kept investors in the dark about the inadequacy of their review procedures,” the complaint states.

Thus, loans in the bank’s RMBS included loans made to borrowers who were likely to go into default.

The group alleges that from 2006 to 2007, Credit Suisse issued $93.8 billion in RMBS. As of August, losses from those securities reached over $11.2 billion, or about 12 percent of the total.

The New York AG’s complaint seeks to recover investor losses and “other equitable relief.”

In October, the RMBS Working Group brought on its first suit against JPMorgan Chase.

During a conference call, Schneiderman, who serves as co-chair of the group, revealed there are other institutions being “scrutinized,” and says the working group still has a long way to go.

While other financial companies are being investigated, as of now, Schneiderman says there have been no claims brought out against individuals.

visit our website http://www.ksiconsultingco.us