The Fed’s Bernanke speaks out on housing
The Federal Reserve, in a Jan. 4 report sent to members of Congress who sit on banking committees, warned that mortgage lending standards are holding back the nation’s economy.
The 26-page white paper was an unusual foray into the housing sector for an agency concerned primarily with monetary policy. But Federal Reserve Chairman Ben Bernanke stated: “Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery.”
While acknowledging that lending standards were “lax, at best” during the housing boom, the report noted that “extraordinarily tight standards … currently prevail” and creditworthy borrowers often can’t qualify for mortgages. Obstacles include stricter underwriting, higher fees and interest rates, more stringent documentation requirements, larger required down payments, stricter appraisal standards and fewer available mortgage products, the report said. These conditions have stymied the Fed’s attempts to jump-start the housing market with record low interest rates to make houses more affordable.
The role of Fannie Mae and Freddie Mac, which operate under a mandate to minimize losses, might need to be adjusted, the report argued. Loan modifications, mortgage refinancing and the disposition of foreclosed properties might involve “near-term losses and risk exposure, [while] promoting a faster recovery in the housing market.”
One such example involved the conversion of foreclosed homes into rental units on a large scale, a process now made difficult by banking institutions and housing agencies. This proposal was discussed in some detail, as were “land banks,” typically public or nonprofit entities that purchase, rehabilitate, rent, sell or demolish low-value real estate.
To read a full copy of “The U.S. Housing Market: Current Conditions and Policy Considerations,” click here.
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The ongoing problems in the
The ongoing problems in the U.S. housing market continue to impede the economic recovery. House prices have fallen an average of about 33 percent from their 2006 peak, resulting in about $7 trillion in household wealth losses and an associated ratcheting down of aggregate consumption.
This is a right time to boost
This is a right time to boost the market for the housing industry since its increase has fluctuated in the past year. Many homeowners are struggling with their mortgages because there are lots of policies that are deemed irregular. A higher standard in these new regulations will reflect a good market industry in the future.
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Hurd Windows and Doors realigns operations
Superseal Windows and Doors has converted its South Plainfield, N.J., manufacturing facility to a distribution and service center. The move is part of the company’s plan, which began in early 2011, to centralize its manufacturing capability in its facility in Merrill, Wis., near Superseal’s parent company, Hurd Windows and Doors.
“While New Jersey will continue to be home to Superseal’s distribution and warranty parts center, as well as our customer and field service operations, we felt it was critical to centrally locate the manufacturing plant as we take the Superseal brand to a national and international level,” said Hurd president and CEO Dominic Truniger.
Truniger also noted that Hurd is making significant investments in Superseal, including upgrading products and options, and expanding the technological sophistication of its state-of-the-art e-Bid ordering process.
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Increase in container imports tied to housing recovery
A 5% rise in containerized import volume last November can be credited to the turnaround in home sales, according to a report in the Journal of Commerce/PIERS. The year-over-year increase to 1.48 million 20-foot equivalent units included a 7% gain in shipments of furniture, a top import commodity.
Pending home sales continued to gain in November and reached the highest level in 19 months, according to the National Association of Realtors.
"A healthy housing market is key to the revival of U.S. containerized imports growth, as many of the goods consumers purchase to furnish a home are imported," said Mario Moreno, economist for The Journal of Commerce/PIERS. He pointed to additional expansion in November of imported cooking and heat appliances, lamps and parts, and kitchenware. Growth in these other commodities contributed to the increase in imports from China — up 4.1% in November 2011 in year-over-year comparisons — the country’s first rise in eight months.
"The question is, ‘Are we seeing a self-sustained recovery in home sales?’ " Moreno said. "This will depend very much on how many jobs the economy can generate every month. Over the last 12 months through November, the economy generated an average of 132,000 jobs per month. We are not there yet, but getting closer."
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