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Inside Washington (11/16/2012)
  • WASHINGTON (11/19/12)--Despite signs of recovery, the housing market is "far from being out of the woods," Federal Reserve Board Chairman Ben Bernanke said Thursday. House prices nationally have increased for nine consecutive months, residential investment has risen about 15% from its low point, and sales of both new and existing homes have edged up, Bernanke noted. However, construction activity, sales, and prices remain much lower than they were before the crisis. About 20% of mortgage borrowers owe more than their homes are worth. Despite marked improvements in overall credit quality, 7% of mortgages are either more than 90 days overdue or in the process of foreclosure. Tight credit was also an important factor in the weak recovery, Bernanke said. The Federal Reserve''s Senior Loan Officer Opinion Survey on Bank Lending Practices indicates that lenders began tightening mortgage credit standards in 2007 and have not significantly eased standards since. "Terms and standards have tightened most for borrowers with lower credit scores and with less money available for a down payment," Bernanke said …
  • WASHINGTON (11/19/12)--An independent audit released Friday reported that the Federal Housing Administration (FHA) incurred $16.3 billion in projected losses as of the end of the third quarter of this year (American Banker Nov. 16). The Banker article said that the losses may require the first taxpayer bailout in the agency's 78-year history. The audit found the FHA's reserve ratio had fallen to the negative (-1.44%). There is a statutory requirement that FHA maintain at least a 2% reserve. The article noted that the Department of Housing and Urban Development, which oversees FHA, was expected to announce a series of changes late Friday intended to bolster the flagging capital reserve and avoid the likelihood that FHA would have to draw from the U.S. Treasury …

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