Troubled mortgages for sale
WASHINGTON — The government has opened a program for investors to buy troubled mortgages in hard-hit areas and work out terms with homeowners in an effort to avoid foreclosures. The government on Wednesday announced the planned sale of about 3,500 home loans insured by the Federal Housing Administration in the first four cities: Chicago; Newark, N.J.; Phoenix and Tampa, Fla. The cities have high numbers of homes with FHA-backed mortgages whose borrowers are delinquent and facing foreclosure. The mortgages will be sold at market prices, generally below what the borrower owes on the loan.
Home construction improves
WASHINGTON — Home construction is making a long-awaited recovery that could help energize the U.S. economy. From areas like Phoenix that are finally arising from the housing bust to cities like Chicago and Minneapolis where strong economies have lifted demand, residential construction is healthier than at any time since sales and prices collapsed five years ago. The improvement has been gradual. But builders are responding to interest from buyers drawn by reduced prices, record-low mortgage rates and rising rents, which have made home purchases comparatively appealing. And the supply of new homes has shrunk to near record lows. That's pushing developers to build more.
Growth, hiring slow down in U.S.
WASHINGTON — The U.S. economy expanded modestly in June and early July, but growth and hiring slowed in several parts of the country. The key findings of the Federal Reserve survey echoed the gloomier outlook that Chairman Ben Bernanke offered to Congress this week. Three of the Fed's 12 banking districts — New York, Philadelphia and Cleveland — reported weaker growth, according to the Beige Book survey released Wednesday. A fourth, Richmond, said economic activity was mixed. The report was a shift from the Fed's previous survey, which noted that growth had picked up or held steady in 11 districts from mid-April through May.
Growth is weak, Bernanke says
WASHINGTON — Chairman Ben Bernanke told lawmakers Wednesday that the Federal Reserve's efforts to bolster growth have helped lift the U.S. economy out of the Great Recession. But he acknowledged that growth remains weak and the Fed can only do so much. Bernanke was on the Hill to deliver his twice-a-year report to Congress on the state of the economy. But he spent part of the hearing defending the Fed's previous two rounds of large-scale bond purchases against Republican criticism. The economy has weakened since the start of the year, and Bernanke said the Fed is prepared to take further action if unemployment stays high. He didn't specify what steps the Fed might take or whether any action was imminent.
Bank of America's issues linger
Bank of America can't shake its mortgage headache. In a reminder that the consequences from the financial crisis are far from over, the bank said Wednesday that investor disputes over bad mortgages and mortgage-backed bonds have more than doubled from a year ago. The bank beat Wall Street's profit expectations for April through June, and executives emphasized that the bank is setting aside less money for bad loans overall, a sign that more customers are paying back loans on time. But the growing investor claims suggest the mortgage problem, which has already cost the bank more than $13 billion, is growing.