“December’s advance was the largest monthly gain since December 2010, reflecting strong job creation across most industries,” said Carlos Rodriguez, president and CEO of ADP, in a statement. “Small and medium-sized businesses were hiring at a similar pace. Job creation among large employers was also encouraging.”
What’s more, the number of Americans filing for unemployment fell for the fourth time in five weeks, and consumer holiday spending appeared to be solid. So far, so good, right?
But the Federal Reserve isn’t taking any chances with an apparently healing economy.
The white paper, which was sent to Congress on Jan. 4, seems short on specifics, but the Federal Reserve is asking Congress to get more directly involved by helping credit-worthy consumers get mortgage loans. It could also curb the number of homeowners forced into foreclosure, a market deemed by the Federal Reserve to be “inefficient and overburdened.”
The report also came with a personal message from Federal Reserve Chairman Ben Bernanke. “Restoring the health of the housing market is a necessary part of a broader strategy for economic recovery,” Bernanke noted in a letter to Congress.
One idea floating around Washington is to turn hundreds of thousands of foreclosed properties into rental units, as the rental market has seen increased demand during the past few years.
The Fed also may have some bad news for the two major quasi-governmental mortgage providers (known as government-sponsored enterprises, or GSEs), Freddie Mac (Stock Quote: FRE) and Fannie Mae (Stock Quote: FNMA), which have required a $150 billion taxpayer-funded infusion of cash just to stay afloat.
Again, without being too specific, the paper says that “some actions that cause greater losses to be sustained by the GSEs in the near term might be in the interest of taxpayers to pursue if those actions result in a quicker and more vigorous economic recovery.” That could mean reducing mortgage balances for underwater homes, and accelerating loan modification programs.
It’s a good sign the Fed is keeping the pedal to the metal on the housing market. Now, if it can just convince Congress to go along for the ride.
For all the latest news on the housing market, check out MainStreet's "Real Estate" topic page for more!