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WASHINGTON — The Federal Reserve signaled Wednesday that a full economic recovery could take nearly three more years, and it went further than ever to assure consumers and businesses that they will be able to borrow cheaply well into the future.
The central bank said it would probably not increase its benchmark interest rate until late 2014 at the earliest — a year and a half later than it had previously said.
The new timetable showed the Fed is concerned that the recovery remains stubbornly slow. But it also thinks inflation will stay tame enough for rates to remain at record lows without igniting price increases.
Chairman Ben Bernanke cautioned that late 2014 is merely its “best guess.” The Fed can shift that plan if the economic picture changes. But he cast doubt on whether that would be necessary.
“Unless there is a substantial strengthening of the economy in the near term, it’s a pretty good guess we will be keeping rates low for some time,” he said.
The Fed has kept its key rate at a record low near zero for about three years. Its new time frame suggests the rate will stay there for roughly an additional three years.
The bank’s tepid outlook also suggests it’s prepared to do more to help the economy. One possibility is a third bond-buying program that would seek to further drive down rates on mortgages and other loans to embolden consumers and businesses to borrow and spend more.
Information obtained from the Calif. Asso. of Realtors with permission.
Article printed in the Mercury News and A.P.  Jan. 25,  2012.
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Key points
• The new year is a great time to reevaluate where you stand financially.
• Consider these five resolutions to reshape your finances in 2012, including tips on budgeting, estate planning and more.
• Helpful information for everyone, regardless of age or income.
It wouldn’t be the new year without resolutions. But whether it’s trimming your waistline or firming your financial profile, the key isn’t making the list, it’s sticking with it! That’s particularly true now, given the recent bear market and economic downturn.
Here are five steps to get you started. You don’t have to do everything at once. Just get going. We believe that, as you move from one step to another, you’ll feel stronger—and closer to achieving your goals.
  Resolution No. 1: create a budget for life Financially speaking, life can be viewed as a series of cash inflows and outflows. Saving and investing during your working years should hopefully lead to a rising net worth over time, enabling you to achieve many of life’s most important goals, like funding your retirement. Creating your own budget and net worth statement can help you build your road map and stay on track, even during tough times.
  Resolution No. 2: manage your debt Debt is neither inherently good nor bad—it is simply a tool. For most people, some level of debt is a practical necessity. That said, problems arise when debt becomes the master of the borrower, not the other way around. Here’s how to stay in charge.
  Resolution No. 3: invest with a plan Getting better investment results are a goal we all share. But investing is a means to an end, not an end unto itself. So stay focused on your goals. Create a plan that will help you stay disciplined in all kinds of markets. Follow it and adjust it as needed.
  Resolution No. 4: prepare for the unexpected Risk is a fact of life. Your financial life can be upended by all kinds of nasty surprises—an illness, job loss, disability, death, natural disasters or lawsuits. If you don’t have enough assets to self-insure against major risks, resolve to get your insurance in shape.
  Resolution No. 5: protect your estate Without an estate plan, the fate of your assets or minor children may be decided by attorneys, government bureaucrats and tax agencies. Taxes and attorneys’ fees can eat away at your estate, and delay the distribution of assets just when your heirs need those most. Here’s how to protect your estate—and your loved ones.
Finally, remember you don’t have to do everything at once. Take one step at a time. Make some real progress on your journey in 2012.

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Last year, more than two million people were turned down for home loans, according to federal data, often because the applicants didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic. With lenders’ underwriting criteria becoming more strict in recent years, it’s important buyers know the most common triggers for mortgage-loan rejection. 

Insufficient income: Lenders want to be sure borrowers can afford to make the mortgage payments. Lenders typically look for at least a two-year track record of income, which could hurt those who have changed jobs recently.
Cloudy financial picture: Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of a borrower’s adjusted gross monthly income. Overtime and bonuses are included only if the borrower has worked for the same employer at least two years, and has a history of receiving them.
Poor credit: Lenders typically reject applicants with FICO scores below 620.
Low appraisal: One of the predominant reasons buyers are turned down for home loans is because the appraisal on the property is too low.
Property problems: Sometimes issues turn up within a house, like a major repair or safety issue that needs to be addressed, before an application can be approved.
Information mix-ups: Approximately 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

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We are now in the fifth year of a housing crisis in which more than 3 million Americans have lost their homes to foreclosure, with millions more still at risk.
Every initiative to stem the tide of misery has fallen short in the face of continued economic gloom.
Over the next few weeks, several initiatives aimed at reforming the foreclosure process, holding mortgage lenders and services accountable for their past abuses, and creating more effective mortgage workouts are coming to a head.
Typically, banks and other lenders retained almost no financial interest in the mortgages they originated, other than the duty to service them — collect payments and pursue delinquent borrowers, say — for which they received a fee.
Several drawbacks to that system emerged when the housing economy crashed. Because the loans weren’t going to stay on their books, the lenders hadn’t been too careful about whom they lent to and on what terms.
Perhaps the biggest problem is that although the servicers, which include huge banks such as Bank of America and Wells Fargo, are burdened with the responsibility to renegotiate mortgages to keep borrowers out of foreclosure, their authority to do so on behalf of investors is murky.
As a result, though the investor, the borrower and the economy in general benefit if a home is kept out of foreclosure, even if that means its owner makes lower payments than were required by the original mortgage, the servicing banks are leery of renegotiating too aggressively.
The most closely followed remedial effort involves the 50 state attorneys general under the leadership of Iowa Atty. Gen. Tom Miller.
Last March, the group produced propsal for foreclosure reforms that drew fire from some consumer advocates for being too lenient — its provisions include mandates that banks comply with state law in dealing with borrowers, as if that’s a novel concept — and from business interests for putting too much pressure on banks to reduce principal balances for homeowners having trouble keeping up payments on homes with values that have fallen below the mortgage balance.
Information obtained by the Calif. Asso of Realtors & the L.A. Times. For the whole story: http://articles.latimes.com/2011/aug/14/business/la-fi-hiltzik-20110814
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