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US stock market daily report (January 17, 2013, Thursday)

Contributed by Millennium Traders

The Federal Consumer Financial Protection Bureau’s released final rules - scheduled to take effect January 2014 - on Thursday which require servicers - companies that collect borrowers’ payments for loan owners - must provide regular statements to borrowers that detail a payment’s principal, interest, fees and escrow components. Additionally, servicers must also warn borrowers before the interest rate changes on adjustable-rate mortgages, among other actions. Consumer advocates say the implementation date is too long, and that some lenders may accelerate foreclosures to beat the new deadline. “Many servicers failed to provide the basic level of customer service that borrowers deserve, costing them money and dumping them into foreclosure. Dealing with sloppy mortgage servicing became a frustrating nightmare,” said Richard Cordray, CFPB’s director, in prepared remarks. “Servicers failed to answer phone calls, routinely lost paperwork, and mishandled accounts. At times people arrived home to find they had been unexpectedly locked out.” The CFPB is looking to clean up the type of servicer practices that made life more difficult for already struggling homeowners. The new rules by the CFPB’s restrict servicers from starting foreclose proceedings on borrowers who have already applied for an alternative solution, such as a loan modification, when that application is pending. Banning this practice, known as “dual tracking,” is key, consumer advocates say. Servicers are also required to wait until a mortgage is more than 120 days delinquent before making a first foreclosure process notice or filing, among other actions. Small servicers who handle no more than 5,000 mortgages are exempted by the CFPB, from certain requirements. “CFPB is providing mortgage servicers advance notice to do their dirty work before the new regulations go into effect,” said Bruce Marks, chief executive of the Neighborhood Assistance Corporation of America, a nonprofit advocacy and counseling agency. “When the new servicing rules go into effect in 2014 the landscape will be very different with many more communities devastated due to CFPB’s failure as the consumer watchdog.” Industry participants have expressed concerns about costs for the new rules on disclosures and periodic statements. “Our new rules announced today are designed to give strong protections to struggling borrowers. In this market, as in every other, consumers have the right to expect information that is clear, timely, and accurate,” Cordray said. “When it comes to mortgage servicing, they also deserve a fair process. This is all the more true given the high stakes for consumers and the central importance of homeownership in our society.” According to an October comment letter from the American Bankers Association, borrowers already have access to detailed information on their loans in federal tax documents and annual escrow statements, among other sources. “Due to the extensive costs that these additional requirements would impose on thousands of mortgage servicers, we do not believe that there would be a net benefit for consumers to providing this same information on a periodic statement,” according to the ABA.

The U.S. Labor Department reported on Thursday that new applications for U.S. unemployment benefits fell by 37,000 to a seasonally adjusted 335,000 in the week ended January 12. Jobless claims fell to the lowest level since January 2008, but the big drop likely stems from a seasonal-adjustment quirk whose effects could quickly fade and push the numbers back up in the next few weeks. Average new claims over the past month, fell by 6,750 to 359,250. Continuing claims which reflect the number of people already receiving benefits, increased by 87,000 to a seasonally adjusted 3.21 million in the week ended January 5. Nearly 5.82 million people received some form of state or federal benefit in the week ended December 29, up 465,547 from previous week.

The U.S. Department of Commerce reported Thursday that construction on new U.S. homes climbed higher by 12.1% during December to a seasonally adjusted annual rate of 954,000, striking the highest level since June 2008, with gains across the country, as well as in single-family homes and buildings. Construction during November was revised to 851,000; housing starts in the Midwest rose 24.75%; housing starts in the Northeast rose by 21.4%; housing starts in the west rose 18.7% and housing starts in the South rose by a scant 3.8%. By structure size, starts for single-family homes rose 8.1%, and increased 20.3% in buildings with at least two units. Building permits, which indicate a sign of future demand, rose 0.3% in December to a rate of 903,000, striking the highest rate since July 2008. Permits for single-family homes rose 1.8% to a rate of 578,000. Permits for structures with at least two units declined to a rate of 325,000 or 2.1% .

On Thursday, the Philadelphia Fed's manufacturing index reportedly went negative in January, slipping to -5.8 in January from +4.6 in December. Also during December, the new-orders index fell to -4.3 from 4.9; the employment index fell to -5.2 from -0.2 and the prices received index decreased 14 points, from 12.4 to -1.1. Future general activity index increased from a revised reading of 23.7 to 29.2.