Want to buy or sell your home? Contact us by clicking HERE!
Behind on your mortgage payments? Contact us by clicking HERE!
Tax Credit extended
The Senate voted yesterday to pass an extension of the first-time homebuyer tax credit until April 2010. 98 Senators voted in favor of H.R. 3548, with zero votes against (two Senators did not vote). H.R. 3548 is a bill is primarily concerned with extending unemployment benefits. The bill is currently amended to include the extension of an $8,000 tax credit for those buying their first homes as well as an $6,500 tax credit for some borrowers buying a home for a second time. “This critical program has already enabled hundreds of thousands of Americans to become first-time homebuyers,” said Business Roundtable, an association of CEOs of leading U.S. companies. the tax credit can still be removed from the final wording of the bill, if placed under further review. However given recent lobbying efforts in the industry and a feeling of presidential support, this remains unlikely.
Unemployment up
The Labor Department says the number of newly laid-off workers filing claims for unemployment benefits fell last week to the lowest level in 10 months, but companies are reluctant to hire and economists expect the unemployment rate will tick up to 9.9 percent when October's figure is reported Friday. The jobless rate hit a 26-year high of 9.8 percent in September. First-time claims for jobless benefits fell by 20,000 to a seasonally adjusted 512,000. That's better than economists' estimates of 523,000. The four-week average, which smooths fluctuations, dropped to 523,750, its ninth straight decline. That's 135,000 below the peak for the recession, reached in early April but well above the 400,000 that will signal job creation. Another 4.1 million people claimed extended unemployment benefits in the week ended Oct. 17, the latest data available, an increase of about 100,000 from the previous week. Congress has added 53 weeks of emergency aid on top of the 26 weeks typically provided by states.
FHA audit delayed
An independent actuarial study of the Federal Housing Administration (FHA) has been delayed as the firm conducting the review completes additional tests. The supplemental tests come after FHA questioned the accuracy of the actuary’s modeling. “FHA asked the independent actuary, IFE [Integrated Financial Engineering], to run additional economic scenario testing above and beyond what was going to be included in the actuarial study to better understand a broader range of risk scenarios,” said FHA commissioner David Stevens. “Based on these results, we raised questions about the accuracy of IFE’s modeling and IFE therefore advised us that we should not treat the report as final. IFE is now running additional tests to ensure that the final report is accurate.” FHA, which insures lenders against default-related losses on qualifying mortgages, is congressionally mandated to maintain a 2% capital reserve ratio. Stevens said in mid-September that the actuarial review w
ould show the FHA’s reserve ratio dipping below that required level.
Productivity up
The Labor Department says that productivity is rising at an annual rate of 9.5 percent in the July-September quarter, much better than the 6.4 percent gain economists had expected. Unit labor costs fell at a 5.2 percent rate. It is typical for productivity to soar in the early stages of an economic recovery as businesses continue to aggressively cut costs even as output rebounds. However, the concern is that the continued squeeze on workers' incomes will depress consumer spending in the months ahead, putting the economic recovery at risk. The third quarter productivity rise reflected the fact that the overall economy, as measured by the gross domestic product, grew for the first time in a year, expanding at an annual rate of 3.5 percent. The higher output came as companies continued to lay off workers, meaning there was more output with fewer employees which translates into higher productivity and lower unit labor costs. The 5.2 percent drop in unit labor costs in the third quarter marked the third straight decline and was larger than the 4 percent decrease economists were expecting.
Interest rates stay low
The Federal Reserve kept its key interest rate near zero once again yesterday, and added in a statement that it intends to stay the course. While it was widely assumed that the central bank would leave its federal funds rate in a range of 0% to 0.25%, economists and investors were eager to see how the Fed described the economy in its statement. As it turned out, it merely repeated language from earlier statements indicating that economic conditions are "likely to warrant exceptionally low levels of the federal funds rate for an extended period." The central bank said low inflation expectations, among other things, justify the low rates. Some critics are worried about inflation and have been urging the Fed to raise rates sooner rather than later. The Fed did trim its plans to purchase debt of mortgage finance firms Fannie Mae and Freddie Mac back to $175 billion, down $25 billion from its previously announced target. It is going ahead with plans to buy $1.25 trillion of mortgage securities backed by those firms though, and anticipates completing all the purchases by March. Those purchases are part of the Fed's efforts -- beyond low interest rates -- to pump money into the economy and the battered housing market.
Blog written by: Chris Mclaughlin with Short Sale Riches
Comments(0)