April, 2012

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SECONDARY MARKET ANALYTICS SERVICING ORIGINATION THE LATEST ORIGINATION FOMC Confirms Continued Low Rates Citing flagging home pricing, FOMC will persist in keeping rates at historical lows. E choing the statement issued following the January meeting, the Federal Open Market Committee (FOMC) said recently that though "the economy has been expanding moderately" in the last two months, the housing sector "remains depressed." The FOMC made the comments after announcing its decision, established by a 9-1 vote, to keep the federal funds rate at historically low levels. The committee said that while "la- CFPB Calls for Draft Mortgage Statement for Borrowers Government bureau moves forward with proposal to require a mortgage statement for borrowers. T he Consumer Financial Protection Bureau (CFPB) called for public comment on a draft it recently proposed for a mortgage statement required for borrowers under the Dodd-Frank Act. If approved, mortgage servicers and assignees of the loan would need to distribute the statement to borrowers with information that includes the principal loan amount, current interest rate, any late payments and penalties, and 38 | THE M REPORT contact information for both the servicer and a housing counselor. A draft version of the statement shows that servicers would also need to break down past pay- ments and notify borrowers of any important news or information. "This draft statement shows consumers the breakdown of their mortgage payments—what money goes to the loan prin- cipal, interest, and fees," CFPB Director Richard Cordray said in a statement. He billed the rule as one that would "help consumers stay on top of their mortgage costs and hold their mortgage servicers accountable for fixing errors that crop up." He added, "Given the wide- spread mortgage servicing prob- lems we've seen over the past few years, consumers need clear disclosures they can count on." The CFPB said it would pro- pose a rule that finalizes the bor- rower statement later this year. bor market conditions have improved further . . . the unemployment rate has declined notably in recent months but remains elevated." The FOMC went on to add that it "anticipates that economic condi- tions—including low rates of resource utilization and a subdued outlook for inflation over the medium run—are likely to warrant exceptionally low lev- els for the federal funds rate at least through late 2014." The president of the Federal Reserve Bank of Richmond, Jeffrey Lacker, cast the sole dissenting vote because, the FOMC statement said, he "does not anticipate that economic conditions are likely to warrant excep- tionally low levels of the federal funds rate through late 2014." The FOMC noted, "Strains in global financial markets have eased, though they continue to pose signifi- cant downside risks to the economic outlook. The recent increase in oil and gasoline prices will push up inflation temporarily, but the committee antici- pates that, subsequently, inflation will run at or below the rate that it judges most consistent with its dual man- date" of price stability and maximum employment. The FOMC also said it would con- tinue a "highly accommodative stance" for monetary policy: low interest rates. Despite the low rates, housing—argu- ably the sector most affected by low rates—remains mired in a slump. Additionally, the FOMC decided to continue its program to extend the average maturity of its holdings of

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