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THE LATEST ORIGINATION FOMC Says 'No' to Stimulus Plan Confirming its decision to forgo maneuvers to stimulate the economy, the committee continues its hands-off approach. A "growth in employment has been slow in recent months, cknowledging "econom- ic activity decelerated somewhat over the first half of this year" and ing in July, the FOMC instead said it would maintain its low interest rate policy and continue previously announced programs to reinvest proceeds of matur- ing Treasury securities it already holds and extend the average maturity of its portfolio. Those actions will not directly Open Market Committee (FOMC) remains committed to taking no new actions to stimulate growth. Concluding a two-day meet- " the Federal offered a subdued view of the economy with the only mar- ginally positive comment an acknowledgement that inflation has declined and "longer-term inflation expectations have re- mained stable," the same language the FOMC used at the end of its last meeting. "Household spending appears In that statement, the Fed to be rising at a somewhat slow- er pace than earlier in the year," the FOMC said in its statement, adding "despite some further signs of improvement, the hous- ing sector remains depressed." The FOMC voted to main- address the Federal Reserve's two policy mandates: price stability and maximum sustainable eco- nomic growth—usually measured by the unemployment rate. Even the benign inaction drew HUD Investigates SunTrust's a dissent from Jeffery Lacker, president of the Richmond Fed, because he wanted to omit the time period over which rates would be exceptionally low. The FOMC said it would keep interest rates at current levels through the end of 2014. There was no hint in the FOMC's end- of-meeting statement of addition- al quantitative easing or a move toward price level, inflation, or nominal GDP targeting. tinues to anticipate keeping the funds rate at "exceptionally low levels" through late 2014 because relatively soft economic growth, relatively low levels of resource utilization, and subdued inflation are expected to continue. The committee said it expects tain the target funds rate in a range of 0 percent to 0.25 percent, where it has been since December 2008. In addition, the Fed said it con- S "economic growth to remain moderate and then pick up very gradually" but that "the unem- ployment rate will decline only slowly." The major downside risk continues to be "strains in global financial markets." "Household spending appears to be rising at a somewhat slower pace than earlier in the year . . . despite some further signs of improvement, the housing sector remains depressed." — Federal Open Market Committee made its investigation known to the Atlanta-based company on April 25, a recent filing from the bank noted, "The company is co- operating with the investigation." (At the time of this publication, SunTrust could not be reached for further comment.) According to the filing, HUD's investigation pertains "generally to origination practices for FHA loans. "It's like a hangover that stays with you from the party," Christ Marinac, a bank analyst at Atlanta-based FIG Partners, told the Atlanta Journal-Constitution. "There was a mortgage party in the industry and [SunTrust was] there dancing." The Wall Street Journal re- ported in June that HUD issued unTrust is under investi- gation by HUD regarding its FHA loan origination practices. While HUD Origination Practices The Georgia bank is responding to the government's look into its FHA loan activity as scrutiny intensifies. subpoenas to SunTrust, MetLife, and U.S. Bancorp regarding FHA loan originations. According to the June article, HUD has already reached settle- ments with Bank of America, Deutsche Bank, Citigroup, and Flagstar Bancorp after launching similar investigations into their FHA loans. News of the HUD investiga- " tion comes shortly after SunTrust reached a settlement with the Justice Department regarding alleged biased loan origination practices between 2005 and 2009. The Justice Department alleged the bank discriminated against minorities by writing them loans with higher interest rates and fees than comparable non-minor- ity customers. SunTrust reached a $21 million settlement but did not admit to wrongdoing. THE M REPORT | 43 ORIGINATION SERVICING ANALYTICS SECONDARY MARKET