More Positive Predictions

The National Association for Business Economics, or NABE, survey of 48 forecasters predicts the US economy will expand by 3.1% this year, close to November’s prediction that US gross domestic product would rise by 3.2%. The economy is seen growing by 3.1% in 2011.

“We see a healthy expansion under way, although it will take time to reduce economic slack and repair damaged balance sheets,” said NABE President Lynn Reaser, chief economist at Point Loma Nazarene University.

On the positive side, the panelist forecast that the stock market will continue to improve and that the S&P 500 Index to increase 23% overall. “Not a single forecaster is predicting a decline in stock market values.”

The economists agreed “the housing market rebound is considered ongoing and sustainable.” They see home prices increasing by 1.6% in 2010 and 2.6% in 2011, which will likely keep up with projected inflation. They also expect gains in housing starts and residential investment.

About three-quarters see interest rates rising by .5 percent or less.

Putting the Brakes on Foreclosures

New guidelines proposed by the US Treasury would give borrowers more time to qualify for Home Affordable Modification Program, known as HAMP.

The proposals include:

• Borrowers would have 30 days to respond and appeal after being denied a modification on their loan term.
• Servicers would be required to provide a “written certification” that a borrower isn’t eligible for HAMP before a foreclosure sale can be held.
• Additional notification requirement could further backlog the foreclosure process which is already moving at a snail’s pace.

An estimated 2.9 million households are 90 days or more behind on payments, but not yet in foreclosure, nearly triple the total of two years ago, according to LPS Applied Analytics. On average, those households are nine months behind on payments, according to the Wall Street Journal.