TheMReport

February, 2013

TheMReport — News and strategies for the evolving mortgage marketplace.

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The Latest ANALYTICS Or ig i nat ion s e r v ic i ng Paying a reported $88.9 billion to Treasury last year, the Federal Reserve's distribution showed an improvement over previous annual totals. Improving Markets Index Jumps in January Findings from the NAHB showed that the number of accelerating metropolitan markets reached another record high. T he National Association of Home Builders (NAHB)/First American Improving Markets Index (IMI) continued its trend of marked monthly improvements in January, according to a release from the NAHB. The index rose for the fifth consecutive month in January to reach 242, once again achieving a record high. The index measured 201 in December. The IMI measures the relative growth (from their respective troughs) of markets across the country, using employment, housing permits, and home prices as a gauge. Markets showing at least six straight months of improvement make the list. According to the NAHB, the list of improving markets now includes entrants from 48 states and the District of Columbia. The only states not represented are Kansas and New Mexico. Forty-seven new metros were added to January's list, while six were dropped. New entries include Los Angeles, California; Auburn, Alabama; Des Moines, Iowa; Richmond, Virginia; and Cleveland, Ohio. "We created the improving markets list in September of 2011 to spotlight individual metros where—contrary to the national headlines—housing markets were on the mend," said NAHB Chairman Barry Rutenberg. "Today, 242 out of 361 metros nationwide appear on that list, including representatives from almost every state in the country. The story is no longer about exceptions to the rule, but about the growing breadth of the housing recovery even as overly strict mortgage requirements hold back the pace of improvement." While the IMI has shown remarkable growth since its inception—reaching approximately 20 times its starting total—NAHB chief economist David Crowe warns that the list might slip in coming months as winter sales data comes in. "The IMI has almost doubled in the past two months as stronger demand during the prime homebuying season boosted prices across a broader number of metropolitan areas," Crowe said. "Similar home price gains, and hence the IMI, may be tempered in the future as we see data from typically slower months for home sales." The M Report | 61 se c on da r y m a r k e t T he Federal Reserve announced it paid a record $88.9 billion to Treasury in 2012. In 2011, the Fed distributed $75.4 billion to Treasury. The previous record amount was $79.3 billion in 2010, according to the Fed. The earnings are from Fed programs that were introduced to stimulate the economy and involve the purchase of billions in mortgage-backed securities (MBS) each month to keep interest rates down. Currently, the Fed buys $40 billion in MBS each month and $45 billion in Treasury purchases. Out of the estimated net income of $91 billion for 2012, the Fed reported $80.5 billion came from interest income on purchased securities, such as Treasury securities and GSE mortgage-backed securities (MBS). As a policy, residual earnings of Fed banks go to Treasury after certain costs are provided such as operations. a na ly t ic s Fed Reveals Final Treasury Tally for 2012

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