Government

State regulators closed Fidelity Bank of Dearborn, Michigan over the weekend, the first bank in Michigan to fail and the 16th in the nation to go dark.

The city of Los Angeles, California, is putting its Neighborhood Stabilization Program (NSP) funds to work with the launch of a new initiative to create jobs rehabilitating foreclosed properties in communities impacted by the housing crisis. The new ""Bridges to Business Success"" program is a public-private initiative providing small minority business owners with procurement training and contract opportunities to create and retain jobs. Los Angeles has been awarded $143 million in NSP funds.

For 2011, investment purchases increased significantly, according to data from the National Association of Realtors, and with more individual investors absorbing REO properties, the organization thinks it is time to limit bulk REO sales to large institutions. Investment-home sales increased 64.5 percent last year to 1.23 million, NAR reports. In a letter to federal regulators, NAR urged policymakers and lenders to focus on expanding the availability of financing for qualified homebuyers and investors to reduce the number of REOs on the market.

With numbers from a CoreLogic report revealing 22.8 percent of borrowers are underwater, principal reduction has been eyed as a key solution to keep borrowers in their homes. The Center for American Progress has released a report detailing solutions to the ""moral hazard"" issue. One is to make principal reduction a one-time program open to borrowers already delinquent; another is to open the program only to current borrowers who are at-risk of default; and the third is ""shared appreciation"" modifications.

Consumer spending grew 0.8 percent in February, the Bureau of Economic Analysis reports. The latest numbers are fueling expectations for a stronger first-quarter economic surge than economists had forecast. Consumer spending grew faster than the 0.6 percent market consensus. However, personal income grew just 0.2 percent in February, which was half the growth rate expected by economists. In dollars, spending increased $86 billion in February while income grew $28.2 billion. Consumer spending represents about 70.6 percent of the nation's gross domestic product.

Real gross domestic product - the output of goods and services produced by labor and property located in the United States - increased at an annual rate of 3.0 percent in the fourth quarter of 2011, the Bureau of Economic Analysis reported Wednesday, unchanged from the estimate issued a month ago, consistent with market expectations.

First time claims for unemployment insurance fell 5,000 to 359,000 for the week ended March 24, the Labor Department reported Thursday. However, the previous week's report and all data reports back to 2007 - were revised to show a jump for the week ended March 17 to 364,000 instead of the originally reported 348,000.

Overall, little change was reported in the performance of first-lien mortgages serviced by national and federal savings banks during the 2011 fourth quarter, but the percentage of initiated foreclosures did see a steep drop, according to the Office of Comptroller of the Currency (OCC) Mortgage Metrics report. The percentage of current and performing loans decreased to 87.9 percent, a mere 0.1 percentage point drop from the previous quarter, but a 0.4 percent increase compared to the same period a year ago.

The Urban Land Institute released its Real Estate Consensus Forecast Wednesday morning, and overall, the 38 real estate economists and analysts surveyed project broad improvements for the economy. With signs of improvement in the housing sector already emerging, participants expect to see housing starts nearly double by 2014, and project home prices will begin to rise in 2013. The average home price, which has declined somewhere between 1.8 percent and 4.1 percent over each of the past three years, according to FHFA data, is expected to stabilize in 2012, followed by a 2 percent increase in 2013, and a 3.5 percent increase in 2014.

After a forecast from Moody's Analytics hinted that the Federal Housing Administration (FHA) is at risk of requiring a taxpayer bailout, the FHA released a myths and facts sheet and categorized speculation about a bailout as myth. ""Sweeping changes enacted by FHA since 2009, including an important series of recent steps such as the enforcement actions that resulted in over $900 million in compensation to FHA from settlement agreements with major banks, and further increases to FHA's insurance premiums, it is unlikely that FHA would require additional resources from the U.S. Treasury in FY 2012,"" the FHA stated.