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Rate changes by the Fed can affect consumers' budgets. Here's how the Fed's announcement affects mortgage shoppers and ARM holders.
The main headline this morning doesn’t come from the markets, which are mixed on light trading, but from the Treasury, which closed its guarantee on money market mutual funds as scheduled.
The S&P 500 is up 0.04% to 1,066, pushing the weekly gain to 2.21%. The Dow is doing better with a 0.30% gain to 9,813, and the Nasdaq is edging up 0.03% to 2,127. ...(read more)
The Federal Housing Administration (FHA) today announced several significant policy changes that are intended to improve the housing agency's exposure to risk. The changes, effective January 1, include: Modification of Procedures for Streamline Refinance Transactions, Adoption of Home Valuation Code of Conduct Guidelines, Updated Appraisal Validity Period, New Appraisal Portability Regs, New Requirement of Lenders to Submit of Audited Financial Statements for Review, Adjustments to the Approval Process for Participation in FHA Loan Origination, and Increased Net-Worth Requirements for Le
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The government agency protecting mortgage lenders against losses has been burning through its liquidity as it attempts to stem the rising tide of foreclosures, the Washington Post reported. An independent audit said the reserve fund of the U.S. Federal Housing Administration will drop below the minimum levels required by Congress, spurring talk that the agency would need to seek government assistance.

An audit last year found that the reserve fund had shrunk to 3% as of Sept. 30, compared with 6.4% a year earlier, the Post said. “The fund's value was estimated at $12.9 billion,
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down from $21.2 billion the previous year.”

David H. Stevens, FHA Commissioner, acknowledged that the agency's reserves will slide below the 2% level required by Congress as the new fiscal year begins on October 1....(read more)
The goal of the Federal Reserve's agency MBS program is to provide support to mortgage and housing markets and to foster improved conditions in financial markets more generally. Only fixed-rate agency MBS securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae are eligible assets for the program. The program includes, but is not limited to, 30-year, 20-year and 15-year securities of these issuers....(read more)
HR 3146, passed the House of Representatives on a voice vote Tuesday afternoon. The bill permits flexability in hiring and compensating staff, provides authority to update agency information systems, and encoursages officials to increase the borrowing capacity available to qualified mortgage lenders.
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Retail sales posted their strongest monthly gain in three years and other fresh news was mostly supportive of growth in the third quarter, but market reactions have been mixed. However, in the past hour all three indexes rallied into positive territory, even as Federal Reserve chairman Ben Bernanke warned of “ongoing headwinds.”

Bernanke said the recession, from a technical standpoint, “is very likely over at this point,” but he stressed that the economy will feel weak to consumers as the labor market takes its time to re-adjust to the new reality.

"The general view
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of most forecasters is that that pace of growth in 2010 will be moderate, less than you might expect given the depth of the recession because of ongoing headwinds," the Fed chairman said at the Brookings Institution....(read more)
With no fresh data to trade on, US equity markets took a cue from global exchanges and opened lower this morning. Leading up to the day’s key event, a speech from President Barack Obama on Wall Street, stocks inched towards positive territory, but gains were pared as Obama said some investors were “misreading” the moment and failing to learn lessons from the crisis.

“We will not go back to the days of reckless behavior and unchecked excess at the heart of this crisis, where too many were motivated only by the appetite for quick kills and bloated bonuses,” Obama said at Federal Hall,
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just outside of the New York Stock Exchange. “Those on Wall Street cannot resume taking risks without regard for consequences, and expect that next time, American taxpayers will be there to break their fall.”...(read more)
The week begins on a light note with no major data scheduled for release. However, one week ahead of the Federal Reserve’s Open Market Committee meeting, markets will hear three central bank officials voice their opinions on policy, regulation, and the economic outlook.

Equity futures are looking to extend Friday’s losses, which put an end to five straight daily advances. Despite the slide on Friday, the benchmark S&P 500 gained 2.6% on the week as a series of fresh data points helped investors overcome the sentiment that equities were overheated. Since hitting a 12-year low in
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early March, the S&P 500 has advanced by 52.6%, marking the fastest spurt since the 1930s and putting the index at its highest level in 11 months.
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The benchmark S&P 500 has gained 52% since early March and investors continue to be optimistic about buying equities. The last five days have seen consecutive gains in the markets, pushing the index up another 1.25%, and futures are looking to extend those gains early this morning.

Pretty soon the climb could match the even more robust 64% gain in China’s Shanghai Index. Its 2.2% rise earlier this morning, set off by better than expected data in industrial production, retail sales and lending, is a major factor in boosting sentiment around the globe today. ...(
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