TheMReport — News and strategies for the evolving mortgage marketplace.
Issue link: http://digital.themreport.com/i/105753
Retrospective JULY AUGUST SEPTEMBER OCTOBER NOVEMBER DECEMBER A survey from Zillow displayed a year-over-year rise in home values for the first time since 2007. Releasing the results of the company's second-quarter index, Zillow reported that U.S. homes increased in value by 0.2 percent to $149,300 over 2011's second quarter, adding that values increased for the fourth month in a row. However, Zillow's chief economist Stan Humphries tempered the survey's findings, noting, "Looking forward, we expect home values to remain relatively flat as the market works through a backlog of foreclosures and high rates of negative equity." The Treasury Department revealed plans to accelerate the return of taxpayer funds from the governmentsponsored enterprises, heralding more aggressive efforts to alter the role of Fannie Mae and Freddie Mac in the U.S. housing market. As per the revised plan, the GSEs would return all profits to the government versus the quarterly 10 percent preferred stock dividend. The proposal also encompassed a speedier path to winding down the entities' investment portfolios by driving the annual rate to 15 percent. Following the Federal Reserve's third round of quantitative easing initiatives, EganJones announced its decision to downgrade the U.S. credit rating from AA to AA-, underscoring concerns regarding an impending "fiscal cliff " for the country. "From 2006 to present, the U.S.'s debt to GDP rose from 66 percent to 104 percent and will probably rise to 110 percent a year from today under current circumstances," stated Egan-Jones. Moody's Investor Services backed the company's decision, warning that it would initiate its own rating downgrade if the president and Congress failed to negotiate a deal to resolve the nation's deepening economic conflict. Stats from the Bureau of Labor Statistics (BLS) indicating that unemployment had reached a 44-month low of 7.8 percent generated wide-ranging feedback, with Alan Krueger, chairman of the White House Council of Economic Advisors, stating that "there's a lot more work to be done . . . we are digging our way out of a very deep hole." Paul Ashworth, chief U.S. economist, offered a more skeptical perspective, commenting, "This means the unemployment rate has now fallen by 0.5 percent in two months . . . That probably doesn't qualify as the 'substantial' improvement the Fed is looking for, but it would do in the unlikely event that this rate of decline continued." President Obama's re-election turned the spotlight on the administration's plans for housing, with Clear Capital underscoring the importance of developing a collaborative relationship with the mortgage industry to reduce regulatory uncertainty. Pointing to somber statistics, the group reiterated that prices remain 37.6 percent below the peak, and Clear Capital's director of research and analytics, Dr. Alex Villacorta, explained, "President Obama's housing policies must evolve to turn the recovery's sprint into a marathon." The company added that if "regulations are clarified in a reasonable way, credit will thaw. This will support phase two of the housing recovery, as more of the middle class can qualify for home loans." Rumors surrounding the dismissal of the Federal Housing Finance Agency's (FHFA) director, Edward DeMarco, grew rampant, as major news outlets reported that his dismissal from the post appears imminent. According to the Wall Street Journal, "people familiar with the discussions" claimed that the White House is preparing to nominate a new director. Those same sources told the newspaper that officials are still in the process of gathering names for potential nominees; DeMarco's opposition to principal reduction initiatives and his oftenunpopular stances on various policy issues are believed to have destabilized his status with the FHFA. The M Report | 15