WASHINGTON (MarketWatch) - The Federal Reserve's number-two ranking official on Wednesday made the case for keeping interest rates low for some time, arguing the economy will continue to grow only gradually and that the unemployment rate will remain high for years. "Based on such analysis, I consider a highly accommodative policy stance to be appropriate in present circumstances," said Janet Yellen, the Fed's vice chair. She presented at New York University a number of models and rules that, if followed, wouldn't begin interest rates hikes until 2015 and possibly later. Yellen, making her first speech since November, insisted that the Fed's current guidance isn't that the central bank "will" keep rates exceptionally low until at least 2014 - only that it anticipates the economy will evolve in a way that would warrant such policy. She said a new round of asset purchases would only be appropriate if the economy grows more slowly than forecast and said rate hikes would be needed only if the economy grows more rapidly or if the economy's productive potential is less than what she currently forecasts.

The average size of a mortgage purchase application increased 9 percent from December to the end of March, from $214,500 to $233,300 in March, according to the Mortgage Bankers Association.

Sandra B. Henriquez Assistant Secretary for HUD's Office of Public and Indian Housing This entry was co-authored with HUD Assistant Secretary for Policy Development and Research Dr. Raphael Bostic. The connection between housing and health is one that average families feel every day. More than 6.8 million American households pay more than half their income for [...]

by Sarah Jawaid, National Housing Conference FHFA Acting Director Edward DeMarco shared preliminarily analysis that principal reductions could save the GSEs $9.9 billion, which is $1.7 billion more than savings from existing principal forbearance policy, in part due to increased HAMP incentive payments from the Treasury. Speaking at the Brookings Institution April 10, DeMarco bluntly stated he was not yet ready to announce a decision on whether to encourage principal reductions, but he laid out the results calculated thus far. In his remarks, DeMarco also: Offered more detail on principal forbearance. Currently, Fannie Mae and Freddie Mac have several tools available to help struggling borrowers-interest rate reduction, term extension, and principal forbearance. DeMarco's remarks offer more detail about what terms and constraints apply to principal forbearance, which sets aside a portion of principal and requires no payments and accrues no interest on it for a period of time. This can make a significant difference in reducing a too-high monthly payment, but unlike a shared-appreciation modification, principal forbearance does not provide much renewed hope that deeply underwater borrowers can get their heads above water. Were the GSEs to make their policies on the back end clearer (what could be approved as short sales or whether they would pursue deficiency judgments, for instance), there might be more to motivate deeply underwater borrowers. Highlighted concern about borrower response. DeMarco, in essence, stated that the GSEs' large market presence means policy changes on principal reduction are more visible, have to be more standardized, and may be more likely to trigger changes in borrower behavior. He did not discuss specific figures on likelihood of strategic default, but focused rather on simple calculations of to compare cost of strategic defaults to savings generated. Noted operational costs of modification programs. Modifying lots of mortgages requires...

I've been blogging about results from our latest quarterly survey of US bank risk officers - specifically how they expect loan delinquencies to drop and credit availability to expand. Today, I'll focus on survey results from the housing sector. Notably, nearly 2/3 of respondents think strategic defaults will be as big a problem - or even bigger - in 2012 than in 2011. Some 46 percent expect the volume of strategic defaults to increase in 2012, while another 19 percent expect the number to stay the same.After five years of a brutal housing market, many people view their homes more objectively and with less sentimentality. That isn't surprising when as many as 1 in 4 homeowners are underwater. Regardless of legal or ethical issues around strategic defaults, mortgage lenders and servicers must account for this risk. It's clear that many homeowners who find themselves upside down on mortgages consider strategic default as an acceptable exit strategy. Concerns about strategic defaults were also reflected in response to a survey question about the consumer payment hierarchy. When we asked if the current generation of homeowners considers their mortgage to be their most important credit obligation, 49 percent of bankers said no. Only 29 percent said yes.Despite worries about strategic defaults, other signs in our survey point to a growing sense of stability in the housing market. Twenty-six percent of respondents expect mortgage delinquencies to decline in the coming months. While this isn't great, it is higher than at any previous time in the two years we've been conducting the survey. Furthermore, 53 percent said the housing market will improve by the end of 2012, compared to 24 percent who said the market will deteriorate.Ultimately, when bankers are truly convinced that the housing market is back, we should see a strong uptick in the supply of mortgage financing. I don't think we're quite there yet. A majority of survey respondents (56 percent...

(Reuters) - Freddie Mac is planning to sell new seven-year reference notes on Thursday, April 12, said IFR, a Thomson Reuters service.

MEDIA ADVISORY -Report Reveals Potential Size of REO Rental Market in 2012 Is More Than $100 Billion Dollars- CoreLogic ® (NYSE: CLGX), a leading provider of information, analytics and business services, today released its April CoreLogic MarketPulse report. The monthly economic publication provides insight into the current and future health of the U.S. economic climate with particular focus on housing and mortgage metrics. Chief Economist Mark Fleming and Senior Economist Sam Khater authored the articles and commentary. The April MarketPulse report: Indicates "now is a good time to buy," with housing affordability at its highest level ever (as of February 2012), and shows many of the key housing metrics are holding steady through the typically slow winter season. Reports the single-family rental market is strong and vibrant with high and stable rents, low months' supply and a healthy pace of signed rental leasings. The report reveals what markets offer the best return for single-family rental investors. "The potential size of the rental market for REOs this year (and annually over the next few years) is over $100 billion dollars," said Khater in the report. Shows capitalization rates for single-family rental properties in 26 geographically diverse markets. Capitalization rates are the most common metric for determining the profitability of an investment property. Provides a chart of the rent-to-mortgage ratio for Miami, Fla. The chart indicates the point in time when it became cheaper to buy than to rent, providing insight to investors buying and holding rental properties, as well as to new first-time home buyers. For a complete copy of the April CoreLogic MarketPulse report, including a complete set of data and charts, visit http://www.corelogic.com/downloadable-docs/MarketPulse_2012-April.pdf . About CoreLogic CoreLogic (NYSE: CLGX) is a leading provider of consumer, financial and property information, analytics and services to business...

(Reuters) - Bank of America Corp's proposed $8.5 billion mortgage bond settlement received fresh opposition on Tuesday from New York's attorney general, who said the accord appears unfair to investors who may deserve to recover more.

WASHINGTON (MarketWatch) -- Kansas City Fed President Esther George on Wednesday said the most important step in restoring market discipline to the financial system would be to eliminate too-big-to-fail policies, including taking advantage of a provision in the Gramm-Leach-Bliley Act that would force divestitures or termination of new activities within 180 days if a financial holding company isn't well managed or capitalized. Speaking at the 21st annual Hyman P. Minsky Conference in New York, she also said bank capital standards, in particular leverage requirements tied to equity capital, need to be strengthened as she fretted about the lengthy transition period of Basel III. She worries about risk-based capital standards because banks are quick to arbitrage whatever standards there are and because it is hard to say risk weights have been accurate measures of risk. She said she supported the implementation of the Volcker Rule and added there may be more financial activities that are incompatible with public safety nets.

Principal forgiveness on loans guaranteed by Fannie Mae and Freddie Mac would ultimately hurt the housing market and "cost credit unions and their members greatly," NAFCU President and CEO Fred Becker said in a letter Tuesday to Ed DeMarco, acting director of the Federal Housing Finance Agency.

Delinquencies. Defaults. Foreclosures. Let's face it: before the housing crisis, these and many other terms were foreign to many of us. Since 2008, however, they've become much more commonplace across America. There's no doubt that the mortgage servicing market can be confusing for the average consumer to understand and navigate. And it's even more overwhelming [...]