“Housing is not going to be the engine to get us out of this recession,” said Robert Eisenbeis, chief monetary economist for Vineland, New Jersey-based Cumberland Advisors Inc., and former research director at the Federal Reserve Bank in Atlanta.

Sheila Bair, Chairman of the FDIC indicated that there’s still distress in the Mortgage market, to be sure. But loan modifications are having a positive affect. Typically people are willing to stay in their homes and honor commitments even if they are in a state of negative equity. The cases when homeowners are more likely to walk away from a mortgage are when they fall on hard times due to personal issues, like a lost job, or health problems. Loan modifications are not going to be the source of the larger economic recovery but they seem to be enabling troubled homeowners to ride the apparent rising tide of the economic stability.

Ending a two day slide, traders bought insurance and housing stocks as a result of some indications that the housing market may be close to a rebound. The recent slide seems to be the result of jittery investors worries about upcoming quarterly earning reports.

Today a $1.3 billion deal between Pulte Homes Inc. and rival Centex Corp. gave investors some reason to think that the new company, now America’s largest homebuilder was a reason for optimism in the homebuilding sector. The optimism didn’t ripple throughout the rest of the industry as other homebuilders, were mixed.

Homeowners are increasingly falling into delinquency in spite of programs implemented by mortgage lenders intended to prevent further foreclosures. 

The report, by the Office of Thrift Supervision and the Office of the Comptroller of the Currency, which regulate mortgage lenders, has shown that in spite of a massive effort on the part of the government and Lenders, it has not been possible to draw a line in the sand and prevent further foreclosures. Moreover, decreasing labor markets are expected to exert upward pressure on foreclosure rates.

As Reported in Reuters, Moody’s Economy.com published a report today with some hopeful news about U.S. housing markets. While the report first predicts declines in home values exceeding 20% in 100 metropolitan areas nationwide, it goes on to predict that the housing markets may bottom out in the fourth quarter of 2009. This depends on the government taking some drastic steps to stabilize the greater economy. It’s been three years since prices began correcting and it appears as though the end may finally be in sight. How this news affects individual communities around the country will vary. New York is only just beginning to see a downturn in their robust housing markets. Meanwhile places like Stockton, California, that had relatively high rates of exposure to subprime and investor lending and have long since hit catastrophic foreclosure rates.

Millions of low income children and certain groups of legal immigrants are the first recipients of the sweeping change that was the foundation of Barack Obama’s campaign. Acknowledging that it falls short of far reaching healthcare reform, California Democrat Henry Waxman called it a ‘down payment’. The passage of the bill is further evidence of the changing climate in Washington. Only six months ago, George W. Bush was threatening states who insured too many children through the State Children’s Health Insurance Program with penalties. Under this bill, as many as four million children will be insured by 2013. Expansion of this program has been resisted by Republicans. Steve King (R Iowa) has called it “a foundation stone for socialized medicine.” Dissenters aside, the bill passed with the votes of 40 house Republicans.

The US trade gap narrowed in the third quarter to just over $174 billion (4.8% GDP) from a downwardly revised $180.9 billion (5.1% GDP )in the second quarter. After a long dry spell, mortgage applications began to increase last month. The mortgage rates being offered were so low that almost everyone who’s not in a state of negative equity could benefit. Lending standards have tightened, so there are many individuals who can’t benefit from the low rates, or the market stimulus that came from the Fed’s pledge to buy billions of dollars of mortgage bonds. The Fed’s rate cut to near zero has put the dollar at near record lows against the Japanese Yen which has also stimulated the mortgage market. All in all, the  application activity index maintained by the Mortgage Bankers Association rose 2.9 percent to a 841.4 (seasonally adjusted) in the week ending December 12.

In the wake of the mortgage meltdown, many mortgage professionals are starting over and there is no better way to start than simple, quick and easy. Only that and those which are guaranteed to drive revenue remains.

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The debate about how high gas prices might affect auto insurers has been supplanted by concerns over how their balance sheets may look in light of investments that have turned sour in recent weeks. How individual companies will be affected by the economic slowdown will vary in the short term, but it seems likely that overall they will have some difficulties. The credit crisis comes at a particularly bad time for the auto insurance industry as their prices have fallen in recent years due to competition pressures. The government seizure of AIG also portends some upcoming shifts in market dynamics. AIG has indicated it is likely to sell off assets to repay federal loans, and with no announced buyer, the degree to which this will affect market concentration remains to be determined.