Senate panel begins crafting cybersecurity bill

Erin Kelly, USA TODAY | January 28, 2015
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WASHINGTON — A key Senate panel took the first step Wednesday toward crafting legislation to give businesses greater incentives to share information about cyber threats with the federal government.

The Senate Homeland Security and Governmental Affairs Committee asked corporate leaders and civil liberties experts how best to write a bill that would boost information-sharing while still protecting consumers’ personal data.

“One of our missions for this Congress is to address the cybersecurity threat,” said the committee’s new chairman, Sen. Ron Johnson, R-Wis.

Lawmakers appear to be moving quickly to take up a bill in the new Congress as President Obama and a coalition of tech and business groups push for action in the wake of the high-profile hack of Sony Pictures in November. In addition to Wednesday’s Senate hearing, House committees held two hearings on cybersecurity issues Tuesday.

The U.S. Chamber of Commerce, American Bankers Association, Telecommunications Industry Association and about 20 other business groups sent a letter to Senate leaders this week calling on them to pass an information-sharing bill as quickly as possible.

“Cyberattacks aimed at U.S. businesses and government entities are being launched from various sources, including sophisticated hackers, organized crime, and state-sponsored groups,” the letter reads. “These attacks are advancing in scope and complexity … congressional action cannot come soon enough.”

Johnson cited a recent study by the Center for Strategic and International Studies that estimated the total economic loss of cyber-attacks are as high as $100 billion a year. A separate study commissioned by HP Enterprise Security estimated the mean annualized cost of cybercrimes in the USA to be $12.7 million per company.

Sen. Tom Carper of Delaware, the senior Democrat on the Homeland Security panel, said he is anxious to work with Johnson, the Senate Intelligence Committee and the White House to move bipartisan information-sharing legislation.

An information-sharing bill would encourage companies to share information with the government — most likely the Department of Homeland Security — so that federal law enforcement officials can help stop and catch cyber criminals. A bill would give companies protection from lawsuits for sharing information with federal agencies and with one another.

“Often times, legal ambiguities make companies think twice about sharing cyber threat information with the government or their peers,” Carper said. “In some cases, companies are uncertain about what they can do to defend their own networks. Legislation can fix these problems.”

Johnson asked the five witnesses at Wednesday’s hearing what the biggest obstacle would be in passing a bill. All of them cited ongoing privacy concerns by Americans in the wake of the 2013 revelations by former National Security Agency contractor Edward Snowden about the NSA’s mass collection of data from Americans’ phone records.

“There is a deficit of trust in the security community,” said Richard Bejtlich, chief security strategist for FireEye, which provides software to companies to stop hackers and help companies recover from cyber attacks.

Gregory Nojeim, of the non-profit Center for Democracy and Technology, said any bill must require companies to take reasonable steps to remove consumers’ personally identifiable information — data that is not related to the cyber threat — before it is is shared with the government. He said DHS should do the same before it shares the data with any other federal agencies such as NSA.

“Quite simply, the American public should not — and need not — be forced to choose between being hacked by cyber criminals and being snooped on by the government,” Nojeim said.

Federal Reserve Won’t Raise Interest Rates Before June, at Earliest

Federal Reserve Won’t Raise Interest Rates Before June, at Earliest

MY TIMES | By BINYAMIN APPELBAUM | JAN. 28, 2015
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WASHINGTON — The Federal Reserve kept its options open on Wednesday, signaling that it would not raise short-term interest rates any earlier than June, while leaving unresolved how much longer it might be willing to wait before lifting its benchmark rate from near zero, where the central bank has held it for more than six years.

Treating the recent turmoil in markets as essentially meaningless noise, the Fed issued its most upbeat assessment of economic conditions since the recession, after its first policy-making meeting of the year, in a statement that noted solid economic growth and strong job growth.

But the optimistic tone was tempered by the Fed’s acknowledgment that inflation has slowed markedly in recent months and is likely to slow even more, making it harder for the Fed to determine how quickly to retreat from its stimulus campaign.

Fed officials for more than a year have pointed to the summer of 2015 as the likely time for the central bank to increase its benchmark interest rate, but investors are increasingly convinced that the sluggish pace of inflation will force the Fed to wait until fall at the earliest.

The Fed, for now, is basically watching economic developments to see what happens.

“They don’t want to exclude June from the range of options at this point,” said Tim Duy, an economist at the University of Oregon who follows the Fed closely. “June is still five months off, and they have no intention of deciding just yet.”

The Fed has tried for years to spur faster job growth, and it seems to be working. Average monthly job gains have increased in each of the last five years, reaching 246,000 a month last year. The unemployment rate fell to 5.6 percent in December, closing in on its prerecession level of around 5 percent.

The economic expansion is gaining strength as confident consumers spend more, heartened by the rise in employment and the fall in oil prices.

The weakness of the global economy received only a passing mention, in a sentence noting that the Fed would pay attention to “international developments.” Michael Gapen, chief United States economist at Barclays Capital, said Fed officials seemed relatively sanguine about the problems of other developed nations.

“Altogether, we believe the Fed sees the combination of central bank actions and lower oil prices as outweighing the negative effects on growth and inflation from a stronger dollar,” Mr. Gapen wrote in a note to clients on Wednesday.

But the Labor Department’s Consumer Price Index rose 0.8 percent in 2014, the slowest pace during a time of economic growth in half a century.

The Fed’s stated goal is to keep prices rising at an annual rate of about 2 percent, part of its effort to support economic growth and grease the wheels of commerce. But it has not hit that target in more than two years, and it is increasingly unlikely to achieve it this year.

The rapid fall of oil prices is largely responsible for the decline, and the statement reiterated the view of most Fed officials that inflation will rebound “as the labor market improves further and the transitory effect of lower energy prices and other factors dissipate.”

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The short-term fluctuations, however, make it harder for the Fed to determine how much of the recent decline in inflation might reflect more enduring economic weakness.

Wage growth remains weak as companies continue to find an abundant supply of potential employees. Recent research by the Federal Reserve Bank of Chicago suggests that the decline in the unemployment rate overstates the recovery of the labor market because some people who have stopped looking for work are likely to return as the recovery gains strength. Moreover, those who continue to look for work are disproportionately older and better educated, groups with historically lower rates of unemployment, suggesting that the Fed may be able to push the overall unemployment rate below 5 percent without unleashing significantly higher inflation.

Mr. Duy predicted that wage growth would play a critical role in determining the Fed’s timing. Average hourly earnings rose only 1.7 percent in 2014, reflecting an abundance of job seekers. Moreover, until wages rise more quickly, higher inflation most likely would not endure because it would erode real wages, reducing demand.

“They really need to see some wage growth in order for them to move in June,” Mr. Duy said. “Unless you have enough pressure on labor markets to generate higher wages, it’s tough to see how you get to sustainably higher inflation.”

The statement was passed by a unanimous vote, a contrast with the three dissents at the previous meeting in December of the Federal Open Market Committee, the Fed’s policy-making body, which also met on Wednesday. The change, however, does not necessarily reflect greater internal harmony. Instead, the three regional reserve bank presidents who dissented in December rotated out of voting seats on the committee and were replaced by three members of the majority.

The statement, as expected, said for the second consecutive meeting that the Fed “judges that it can be patient in beginning to normalize the stance of monetary policy.” Janet L. Yellen, the Fed’s chairwoman, said after the Fed’s December meeting that the language indicated that the Fed would wait at least two meetings before raising rates. Its inclusion in the latest statement means the Fed does not intend to act at its meetings in March or April.

That puts the focus on the Fed’s meeting in June.

Fed officials have long pointed to that June meeting as the most likely date for a first rate increase, and some analysts continue to regard that as a good bet.

“The statement leaves the door open to the first hike in June, if the labor data continue on their current path,” wrote Ian Shepherdson, chief economist at Pantheon Macroeconomics.   “We are surprised markets seem more interested in the acknowledgment of the (obvious) near-term downside inflation risks.”

But investors are increasingly skeptical. Measures derived from asset prices suggest that investors do not expect a first rate increase until autumn. The yield on the benchmark 10-year Treasury bond fell 10 basis points on Wednesday.

David Mericle, an economist at Goldman Sachs, wrote last week that the Fed “would find it hard to justify” a rate increase while inflation continued to decelerate.

Goldman still predicts that the Fed will raise rates this year. Morgan Stanley, on the other hand, predicted on Monday that the Fed would not raise rates until 2016.

“We believe the F.O.M.C. would risk entrenching inflation expectations at levels inconsistent with its 2 percent goal if it were to push forward with rate hikes as early as June,” Morgan’s economic forecasters wrote in a research note.

Some Fed officials have cautioned that the difference between June and September may matter to investors, but it does not have much economic significance.

“After six years of recovery and considering all that has both transpired and been accomplished, I don’t think we policy makers should get too rigid about liftoff a little earlier or later,” Dennis Lockhart, president of the Federal Reserve Bank of Atlanta, said in a speech this month.

Mr. Lockhart and other officials have also sought to emphasize that the first rate increase will not end the Fed’s stimulus campaign because the Fed is likely to keep rates at unusually low levels for years to come.

A version of this article appears in print on January 29, 2015, on page B1 of the New York edition with the headline: Fed Won’t Raise Rates Before June, at Earliest.

5 Things Lennar’s Results Tell Us About the New-Home Market

15 Jan 2015 | By Kris Hudson
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1) New-home sales are gaining a little steam

Lennar, based in Miami, posted a heady gain of 22% for sales contracts inked in its quarter ended Nov. 30, to 5,492, over the same period a year earlier. That comes after KB Home on Tuesday posted a 10% increase in sales contracts for its fourth quarter.

Economists are hoping that sales of new homes make big strides this year. Some have made quite bullish predictions for  home construction. Part of that is based on the assumption that entry-level buyers will make a comeback.

The National Association of Home Builders estimates that the construction of one single-family home creates three full-time jobs for a year. And more home construction means more choices for home buyers and less momentum for home prices.

2) Price gains are slowing

Lennar’s average price on finalized deals increased by 7.2% to $329,000 in its fourth quarter compared with a year earlier. That’s a marked slowdown from the previous year, when its average closing price increased by 17.6%.

A slowdown in new-home prices is welcome news for buyers, given that the median price of a newly built home in the U.S. stood at $280,900 in November, up 31.1% over the past three years.

Price appreciation will slow as builders shift to constructing a larger number of less-expensive homes to cater to the entry-level market. Many entry-level buyers have been sidelined in recent years by sluggish job growth, high home prices, student debt and stringent mortgage-qualification standards. But job growth has picked up and credit conditions are starting to ease. Lennar said Thursday it anticipates building more entry-level communities this year.

3) Home builder gross margins are shrinking

Declining home prices plus high land costs yield an unwelcome result for investors.

Lennar and other builders have posted historically high gross margins in recent years as they focused mostly on selling high-priced homes to better-heeled buyers who could qualify for mortgages. But those margins now are receding as price momentum wanes and construction shifts to less expensive homes.

Lennar said Tuesday its gross home-sales margin in 2015 likely will average 24%, down from 25% in 2014. That comes after KB Home said this week its first-quarter margins will decline from a year ago and it won’t reach its previous goal of posting 20% margins this year.

4) Incentives are on the rise

Lennar and other builders are rolling out more promotions, such as free upgrades and financial assistance with closing costs, to spur sales. Such enticements, called incentives, tend to dent builders’ profitability, but they’re a boon for home buyers.

Lennar’s incentives in its latest quarter marked a rare increase from a year earlier, amounting to $23,100 per home, or 6.6% of the builder’s home sales revenue. A year earlier, they were $20,600 per home, or 6.3%. Other builders, namely D.R. Horton Inc. and KB Home, also recently reported boosting their use of incentives.

Nationally, builders have been more likely to increase their use of incentives since mid 2013 than earlier in the recovery, according to a monthly survey of 150 home-builder sales representatives conducted by Wells Fargo Securities. That eased a bit in the fourth quarter.

5) Sales aren’t taking a hit in Houston—yet

Economists, builders and investors have kept a close watch in recent months on home sales in Houston specifically and Texas in general, concerned that the steep decline in oil prices will sap the strongest U.S. housing market.

Builders such as KB Home and Taylor Morrison Home Corp. say they haven’t seen a falloff in Houston yet.  But Lennar said Thursday it has seen a slight impact in Houston, and that factored into its projections that its gross margin will recede a bit this year.

“We haven’t seen a significant change in that market condition,” said Lennar president Rick Beckwitt. “We’ve seen a little, at the higher end, of a pullback. We’ve anticipated…that there will be further reconciliation in that marketplace.”

State of the Union | January 20, 2015

If you were unable to listen to or watch the State of the Union address on Tuesday, January 20th, here is the video available for you to watch.

http://www.whitehouse.gov/sotu

Castro: It’s Time to ‘Remove the Stigma’ Promoting Homeownership

Author: Brian Honea | posted January 13, 2015

Secretary for the U.S. Department of Housing and Urban Development (HUD) Julián Castro told the audience at the National Press Club Tuesday afternoon that it was time for the nation to “remove the stigma” promoting homeownership.

During his hour-long speech at the Press Club in Washington, D.C., which included a question and answer session, Castro spoke of the economic progress the nation made in 2014, such as experiencing the fastest job growth rate in 15 years, and he addressed HUD’s initiatives which are aimed at promoting, increasing, and expanding opportunities for Americans to own a home.

“Homeownership is still the cornerstone of the American Dream — a fact you can see in the lives of everyday folks,” he said. “It’s a source of pride.  It’s a source of wealth, providing both a nest and a nest egg. And it strengthens communities and fuels growth in the overall economy.”

Castro addressed last week’s announcement that the Federal Housing Administration (FHA) would lower its mortgage insurance premiums down by 50 basis points to 0.85 percent. He said the National Association of Realtors (NAR) estimated that high premiums prevented nearly 400,000 creditworthy borrowers from purchasing homes in 2013, and that the administration expects about two million homeowners to save an average of about $900 a year on premiums. He said he estimates the lowering of the premiums will help about 250,000 new borrowers purchase their first home.

“This is a common sense step — FHA’s premiums will still be 50 percent higher than pre-crisis levels,” Castro said. “This premium change only makes an FHA loan more affordable for qualified families. All other FHA requirements will remain the same, including verification of a person’s ability to pay.  Families still have to qualify for an FHA loan – but when they do, they will find a more affordable path to homeownership waiting for them.”

Critics of the Obama Administration’s initiatives to increase homeownership, particularly relaxing lending standards, say that these initiatives will result in another housing bust and financial crisis similar to the one the nation experienced in 2007-08.

“Some have been surprised by this focus,” Castro said, referring to the administration’s focus of expanding homeownership. “A few have even suggested that this is a return to the mania that fueled the crisis.  It’s not. Our nation is smart enough to heed the lessons of the past without forsaking our future. The answer isn’t to deny responsible Americans homeownership — it’s to do it right.”

The administration doesn’t believe that taxpayers should foot the bill when mortgage loans default, as they have been forced to in the past, Castro said. Government-sponsored entities Fannie Mae and Freddie Mac remain under conservatorship of the FHFA, as they have been since 2008, which in recent months has become a subject of heated debate as the two GSEs continue to roll in profits.

“The administration supports housing finance reform that gets the taxpayers off the hook, were we ever to experience the kind of housing crisis that we did a few years ago,” he said. “We believe there is a sensible way to accomplish that.”

On the subject of today’s tight lending standards, which have also been a source of debate, Castro said he believes there is room for them to loosen up.

“Underwriting standards are too strict,” he said. “We went from one extreme, where it was too easy to get a home loan, to another extreme today, where it is too difficult to get a home loan. Strong, sensible middle ground where we have good safeguards in place so we don’t slide back to the past, but at the same time, folks who are ready and responsible to own a home can get access to credit. ”

Castro said the administration’s focus on expanding homeownership is part of improving the lives of Americans.

“This is what we’re about — we’re about people,” he said. “We’re about making their lives a bit better and giving them the chance to thrive, and that’s why we’re so focused on homeownership. . .HUD is ready to help and to make 2015 a year of housing opportunity.”

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Bankrate.com: Expect Fed to move on interest rates by mid-year

But don’t expect mortgage rates to go as high as 5% in 2015

published on housingwire.com | by Trey Garrison | January 5, 2015

As 2014 closed, oil prices cratered, quantitative easing finally went away, and the Federal Reserve is likely to start raising rates, according to Bankrate.com.

“The Federal Reserve is likely to boost its short-term interest rate target around the middle of next year if economic growth continues to be solid as the Fed – and we – currently expect,” predicts Lynn Reaser, chief economist for Point Loma Nazarene University in San Diego.

Reaser thinks the Fed will move gradually, increasing the rate to around 1% by mid-year.

“Bond yields and mortgage rates will begin moving higher as the timetable for Fed interest rate hikes comes into focus, with rates on credit cards, auto loans and home equity lines of credit responding after the fact,” says Greg McBride, CFA, Bankrate’s chief financial analyst. “The bulk of next year’s increases will come in the back half of the year.”
McBride expects the 30-year fixed-rate mortgage to stay below 5% in 2015, but it could experience some volatility.

“We’ll see rates near 4% on the low side if there’s an economic stumble or geopolitical crisis, and rates as high as 4.8 or 4.9% if the Fed missteps or misspeaks,” McBride says.

National Association of Realtors chief economist Lawrence Yun said he expects the Fed to act sooner, raising its short-term rate in the first half of 2015, due to inflationary pressures of rising wages and rents, while Realtor.com chief economist Jonathan Smoke expects 5% sometime in 2015.

The Mortgage Bankers Association has said it expects the Fed to wait until after mid-year before any action.

Homeowners might see higher rates for home equity loans if the Fed nudges short-term rates up in 2015.

“But even then, we’re talking about very measured increases and an environment of strong lender competition. That works in favor of home equity borrowers,” McBride says.

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Why Real Estate Could Soar in 2015

By Matthew Frankel | January 3, 2015

Following double-digit gains in 2012 and 2013, U.S. home prices grew at a much slower pace in 2014, with the average home increasing in value by less than 3%.

So what’s in store for 2015? While it’s impossible to know for sure what the future will hold, there are a few good reasons to believe 2015 could be an excellent year for real estate.

It’s getting expensive to be a renter
According to a report from Zillow, U.S. renters paid almost 5% more rent in 2014 than in 2013. Some areas of the country saw much sharper rent increases. For example, San Francisco saw its average rent rise by 14% in the past year. And because home prices rose by less than 3% in 2014, it’s fair to say that rent is getting expensive faster than home ownership is.

As rent increases, it simply makes more sense to buy a home. With home prices stabilizing in 2014 and rent continuing to rise at twice the rate of income growth, we could see a lot of people decide that homeownership is the better choice.

Fannie and Freddie are creating more buyers
One big problem with the U.S. housing market is the lack of affordable mortgages for people who can’t make 20% down payments. FHA loans have gotten very expensive over the past few years — to the point where it makes more sense to rent in many cases.

For 2015, this is changing. Fannie Mae and Freddie Mac are both introducing mortgage programs that require as little as 3% down, which will open up homeownership to millions of people with good credit and good jobs who simply don’t have large amounts of cash to put down on a home. Sure, there will still be mortgage insurance, but it’s likely to be much cheaper than the FHA version.

This could be a real boost, especially to first-timers, who generally don’t have a lot of cash. According to the National Association of Realtors, first-time buyers made up the smallest share of the housing market in 27 years. And, the Federal Reserve found that 45% of renters delayed buying a home simply because they couldn’t afford a down payment.

So, the combination of high rent and easier mortgages might be just the incentive many renters need to finally jump into homeownership.

Mortgages are still cheap — but for how long?
This could be the biggest “wild card” in the housing market over the next year. The average 30-year mortgage rate in the U.S. is currently just under 4%, which is still extremely low on a historical basis.

However, a lot of experts are predicting that 2015 will be the year when rates finally begin to rise. With continued improvement in the U.S. economy, it’s only a matter of time before the Federal Reserve pulls the trigger on a rate hike, and this will create upward pressure on the mortgage market.

If rates spike to say, 5%, it could definitely cause a slowdown in the real estate market. However, it’s fair to say that more people are expecting rate hikes this year than last year, so it will be interesting to see if buyers try to take advantage of low rates when this year’s “selling season” begins.

Will 2015 be a great year for real estate?
With lots of renters currently sitting on the sidelines, and the new easier-to-afford mortgage programs, there is definitely the potential for an influx of new homebuyers in 2015. If mortgage rates cooperate by staying low, we could easily see a very strong real estate market in 2015. We’ll just have to wait and see.

Matthew Frankel has no position in any stocks mentioned. The Motley Fool recommends Zillow. The Motley Fool owns shares of Zillow. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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Foreclosure vs. Short Sale

By: Jeffrey Glen | dated December 31st, 2014 | investorguide.com

In some circumstances homeowners can find themselves in a difficult position when it comes to their mortgage, whether they are struggling to make payments or the value of the mortgage exceeds that of the actual home. Two processes that commonly take place in these cases are a foreclosure or a short sale. This article will explain the differences between the two and assist with choosing the best option between foreclosure or a short sale.

Foreclosure

A foreclosure occurs when a homeowner has fallen behind on their mortgage payments and after a certain time has passed (typically 3 to 6 months) the lender will send a notice that the home will be put in foreclosure and sold. The owner then has a period to pay back the balance owed, with the length of time varying from state to state. If that time passes without the homeowner catching up in payments the lender will then sell the home at auction, with the winning buyer usually having to pay in cash within 24 hours.

The impact of a foreclosure can be significant on the homeowner as not only will they lose their home but they will also face significant financial implications. Credit scores take a significant hit (200-400 points) and the foreclosure will remain on a credit report for 7 years. Purchasing a new home later is difficult also, only allowed after 5 years with some restrictions, or 7 years with no restrictions.

Short Sale

A short sale can occur if payments are in default or in situations where the homeowner finds themselves with a mortgage worth more than the home but is still current on payments. While the sale is managed by the homeowner the lender has to approve both a short sale being made and actually approve the offer once it has been received. Depending on the terms negotiated with the bank the homeowners may still have a balance remaining to pay the lender, or they may get relief for the loan balance.

The impact of a short sale is still significant for the homeowner but less so than under a foreclosure. Credit scores will take a hit (50-150 points) and if the debt is written off through the agreement the lender may notify credit reporting agencies, showing this negative item on credit reports. A key difference from a foreclosure is that after a short sale the homeowner can buy a new home immediately and not have to wait several years.

Foreclosure vs. Short Sale

For banks and homeowners a short sale can often be preferred as it typically results in more funds being received for the home. Foreclosures can often see homes being sold at a significant discount to market value, due to the auction based nature of the sale. The downside to a short sale is that it can often take far longer to close and execute the sale of the home, lenders can often hold the process up if they don’t like an offer or take a long time to approve it. The impact on credit scores and future ability to buy a home is also a major incentive for the homeowners to prefer a short sale.

For Buyers

As a buyer you can typically get a far better purchase price in an auction but there are risks attached to this discount. Often the purchase will be “as is” so if there are any major issues or repairs required you will have to pay them yourself. Additionally, as payment is usually required within 24 hours the buyer doesn’t have time to have the home inspected professionally.  The last major concern is that there are some mechanisms where redemption laws allow a homeowner to re-claim their foreclosed home, potentially seeing you lose the home later.

Short sales also come at a discount for buyers, though usually not as steep of a discount. One downside with short sales is that they can take a long time, and most buyers don’t want to wait up to a year to complete the process. Additionally, if the selling homeowner has obtained additional loans with the home as security but hasn’t listed them those lenders can make a claim on the home after the purchase.

Considering these issues and the points above will ensure that as a buyer or a seller you are better prepared when approaching the foreclosure vs. short sale decision.

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