Home Loan Wholesale

The U.S. government has been working frantically to pass mortgage reform that would require loan modification licensing.  The U.S. Department of Housing and Urban Development, which oversees compliance with the SAFE Act, has proposed that employees handling loan modifications for struggling homeowners also meet the licensing requirements, a policy opposed by banks.  John Courson, CEO of the Mortgage Bankers Association said that mandating licenses for mortgage loan-modification specialists could slow hiring and hinder efforts to cut home foreclosures.” Courson continued, “We say this is not originating a new home loan, because the loan terms are being reduced on their home mortgage to increase the affordability and reduce the likelihood of a foreclosure.”

The housing department hasn’t set a deadline for a decision, said Lemar Wooley, a spokesman.  According to Anthony Hsieh, CEO of Loan Depot, a home loan lender based in Irvine, California, the process costs $3,000 to $6,000 to train and pay the fees for each new employee to comply with the mortgage licensing system. “The mortgage reform law is supposed to make sure we kick the bad ones out,” said Hsieh. “It could be the opposite, keeping the good loan officers out.”  Read the original article online > Loan Modification Licensing and Mortgage Reform

The number of home loan applications in the U.S. for home purchases fell to a 13 1/2-year low last week, the Mortgage Bankers Association reported Wednesday, in a further sign of the slump in home buying since a federal tax credit concluded at the end of April.  There have been fears for months that the incentive was stealing future sales and would result in a new leg down for the housing market once the support ended. New-home sales sunk to a record in May while pending total sales tumbled 30% from April.

Home loan applications for new homes were down 43% from the Independence Day week last year, said the MBA. The bad news comes even as home mortgage rates sink to new record lows.  Those rate declines have been giving some lift to applications for home refinancing, which hit a 14-month high two weeks ago. But even the MBA refinance mortgage report fell 2.9% last week from a week earlier as its gauge for purchases dropped 3.1%. The share of applications for refinancing was flat at 78.7%.  Read the original Mortgage News

According to Mortgage News Source, Wells Fargo is laying off nearly 4,000 employees from its’ Consumer Finance Division that was responsible for non-prime mortgage lending.  The company announced that they were ceasing to originate subprime mortgages in an effort to mitigate loan portfolio risks.  Mortgage News indicated that Wells Fargo “had been struggling with delinquencies and loan defaults from their own bad credit home mortgages.”  Acquiring the loan portfolios from the Wachovia merger may have pushed their subprime risks too far. 

Wells Fargo announced they were closing 638 Wells Fargo Financial offices, which increased its number of retail branches to 6,600 after the Wachovia merger. The bank also has 2,200 Wells Fargo Home Mortgage offices and will eliminate about 2,800 employees from its Wells Fargo Financial unit and will most likely slash another 1,000 jobs in the next year. Read the original news article, > Almost 4,000 Wells Fargo Mortgage Layoffs

Today, most mortgage brokers that have less to spend so it is imperative that they buy leads cautiously.  Internet mortgage leads can be a very cost effective form of marketing if you know how to purchase leads from lead generation companies.  Be careful of how and where you purchase leads. Ask the account executive at the lead company what their minimums are and be cautious when buying leads in bulk.  If a lead company is generating 50 leads a day and 15 leads a day that meet your filters, you have to wonder how a lead company could send you 250 leads in a 3-day span.  Clearly these are either old or brokered leads. In a recent article, Bryan Dornan the founder of mortgage lead generation company, the Lead Planet reminded mortgage companies to “Consider more than just the cost per lead.”  Dornan suggests that “the cost per funding is the bottom line.”  See the original mortgage lead buying post at the Mortgage Lead Vault > Cost to Funding Ratio Matters with Mortgage Leads

In a recent article, Mortgage Refinancing Buzz compares conventional and FHA refinancing in a side by side analysis.  The mortgage advisor notes that both types of refinance loans have their pros and cons so it all comes down to selecting a refinance program that best meets you individual needs.  In 2010 there were many revisions to underwriting criteria for conventional and FHA loan requirements.  MRB recommends finding out what your loan qualifications are with a mortgage lender you trust.  

A conventional refinance loan is a traditional mortgage used to refinance an existing mortgage that stays within the conforming loan limits of $417,000.  FHA streamline refinance allows FHA customers to refinance anytime the market rate drops into a position that would save them money.  During turbulent the FHA refinance loan provides some assurances that if the rates drop, the FHA borrower can reap the benefits. 

Read the original Mortgage Refinancing Buzz article > Comparing Conventional Refinance Loans to FHA Refinancing

The Lead Planet published a press release Friday discussing the state of the mortgage lead market.  The mortgage lead generation company, released their 2 cents on buying leads and partnering with the right lead company.  They recommend that lead buyers focus on building a relationship with a lead company that doesn’t sell their leads too many times.  The Lead Planet also stresses the importance of purchasing leads from a direct lead source. (a company that generates their own online mortgage leads, rather than buying leads sold to them from a lead broker)

Just a few days ago Freddie Mac published a report indicating that home loan applications had reached a 13-year low. Is this a true indication of the demand for home financing or the reality of the lending guidelines and underwriting for mortgage loans has tightened to the point that most borrowers already know they do not qualify?

The Lead Planet reminds us that there are enough challenges in this mortgage market just finding loan applicants who even qualify.  Conventional, VA and FHA mortgage lending guidelines have all implemented stiffer requirements for home buying and mortgage refinancing.  Read the original article at the Lead Planet Blog > Mortgage Lead Buying Secrets or call the lead support team at 619-600-5720.

Freddie Mac announced today that the current mortgage interest rates are the lowest they have been in 2010. The Wall Street Journal reported that home builder stocks rallied in early trading follow a reported spike in mortgage loan applications last week as homeowners take advantage of some of the lowest home mortgage rates since March. 

The Mortgage Bankers Association’s seasonally adjusted index of home loan applications, which includes both purchase mortgage and refinance loans, rose 3.9% for the week ended May 7th. The four-week moving average of mortgage applications, which removes some of the volatility of weekly changes, was up 4.4%. Mortgage refinancing led the way; the MBA’s seasonally adjusted index of home refinance applications rose 14.8%. A 30-year fixed-rate mortgage, including lending fees, averaged 4.96%, the lowest level since week ended March 12th. Refinance rates were still higher the 4.76% last year and the all-time low of 4.6%.  The demand for mortgage loans for buying new homes dropped following the expiration of the heavily publicized federal home buyer tax credits.

Fannie Mae announced that it will tighten lending requirements for its interest-only loans and adjustable rate mortgage loans. If a borrower wants an interest only mortgage through Fannie Mae, for example, he or she will have to make down payments of 30% of the sale price. For ARM’s, Fannie will only buy those underwritten to ensure that borrowers could still afford payments even if their interest rates reset to the higher of either one of the home loan’s initial interest rate plus two percentage points or 2) the maximum the interest rate the loan can rise to, known in the industry as the cap rate. As an example, for a home mortgage loan with a beginning rate of 5% and a cap rate of 6% borrowers would have to demonstrate they could still keep up payments even if the mortgage rate rose to 7%. If the cap rate is 8%, borrowers would have to be able to afford an 8% mortgage. For an ARM with a fixed period (ie. 5/1 ARM) any initial period with 5 years or less qualify at greater of note rate +2% or fully indexed rate, and interest only mortgage loans will have a maximum LTV 70% and a minimum FICO of 720 with 24 months minimum reserves. Balloon Loans, unless they receive special approval, are going away entirely with Fannie.

The recent mortgage meltdown caused jumbo mortgage rates to soar and the availability for non-conformning loans shrunk significantly. However signs are indicating that jumbo rates are declining and lenders are more willing to make loans that top the limits for Freddie Mac, Fannie Mae and the FHA. 

Phil Kelly had 18 more months to go before the fixed rate on his $2.5-million mortgage became adjustable.  But when Kelly, a former computer executive living in Rancho Santa Fe, learned he could knock his interest rate down by a full percentage point by mortgage refinancing, he went for it.  “It’s always tough to pick the exact bottom or top of anything,” Kelly said. “But I think this rate is about as low as you’re going to get.” For most California borrowers, jumbo mortgage refinance options have been few and far between.

Jumbo Mortgage Rates:  For home loans greater than $729,750 in counties with the highest-cost housing — shot up during the financial crisis as lenders and loan investors shunned anything tainted with even a whiff of higher risk. Rates on big mortgages were especially high relative to those on smaller loans.  But in a boon for borrowers in California’s expensive housing markets, the jumbo-home loan market is starting to return to normal.

According to rate tracker Informa Research, two weeks ago, the average interest rate on 30-year fixed-rate jumbos dropped to 5.79%, a nearly five-year low, Services of Calabasas. It edged up to 5.88% on Tuesday, still very attractive by historical standards. The average has dropped from the 7% in late 2008.  Today, fewer borrowers qualify for jumbo home mortgage loans, because stated income loans have disappeared.

Jumbo rates are even lower on hybrid adjustable mortgage loans. With these hybrid ARM’s, the interest rate is fixed for three, five, seven or ten years before it becomes an adjustable rate loan. (ie. 3/1, 5/1, 7/12, 10/1 ARM)

Banks are also relaxing slightly some of their requirements for jumbo mortgage loans. That’s an encouraging sign because the market for jumbos, in contrast with the rest of the mortgage business, isn’t being supported by government backed bonds.  Unfortunately million dollar home loans are not supported by the Obama Administration.

The lower jumbo mortgage rates and somewhat easier terms reflect newfound confidence among banks in the housing market. That’s because, jumbos loans exceed the maximum loan amounts that Freddie Mac and Fannie Mae have agreed to insure.  In addition, the private market for mortgage-backed bonds dried up when the meltdown hit. So mortgage lenders offering jumbo mortgage loans in today’s market are willing to take the risk of servicing them in their portfolios.

The maximum amounts for Freddie Mac and Fannie Mae “conforming” mortgages, and for FHA mortgages, are set by Congress. The cutoff for single-family homes was $417,000 from 2006 until February 2008, when lawmakers increased it temporarily to $729,750 in certain high-cost areas, including Los Angeles, Orange and Ventura counties. Conforming loans top out at $500,000 in Riverside and San Bernardino counties and $697,500 in San Diego County.

The increased upper limits, which have been extended until the end of this year, have created a three-tier system in expensive areas, mortgage professionals say: loans of up to $417,000, which are the easiest to obtain and carry the lowest rates; “conforming jumbos” from $417,000 to $729,750, which are somewhat harder to get and have slightly higher rates; and true jumbos, with the toughest standards and highest rates.

In the boom years of 2005 and 2006, jumbo mortgage rates were typically no more than a quarter of a percentage point higher on jumbo loans than on conforming loans, according to Informa Research. That widened as the mortgage meltdown intensified and home prices dropped in late 2007. The spread ballooned to nearly 1.7 percentage points in early 2009 after the entire credit system froze.

But this year the rate spread has narrowed to less than a percentage point. It could shrink more if conforming-loan rates rise as expected after the Federal Reserve wraps up a $1-trillion-plus program to support the market for conforming loans next month.

In addition to lower rates, down-payment requirements are being relaxed in some cases. For example, to write a jumbo loan in coastal areas of Los Angeles and Orange counties, Wells Fargo Home Mortgage looks for a 20% down payment or that percentage of equity, down from 25% last year, said Brad Blackwell, a national mortgage sales manager at the lender.

The reason: Wells believes high-end home prices are stabilizing in those coastal counties. But the bank still requires higher down payments in the Inland Empire and other battered housing markets such as Florida, Nevada and Arizona, where prices for jumbo-size homes don’t appear to be stabilizing, he said.

Jumbo loans remain much harder to get than before the credit crunch and recession. Borrowers typically must have a credit score of at least 700, compared with boom-era minimums in the 600s, though Laguna Niguel mortgage broker Jeff Lazerson said at least one lender was again making sub-700 jumbos available.

What’s more, unless their down payments are very large, borrowers must provide evidence of high income, have sizable bank accounts as a cushion against the unforeseen and occupy the houses themselves.

But there are clear signs that the jumbo market has loosened. One is an increasing availability of “stated income” loans — those that don’t require proof of income — of as much as $2 million to borrowers with at least a 40% down payment, said mortgage broker Gary Bluman, owner of Real Estate Resources in Brentwood.

Also, instead of a true jumbo loan, some “piggyback” second mortgage loans are available again to help certain borrowers with 25% down payments pay for high-priced homes, Lazerson said.

Of course, adjustable, stated-income and piggyback loans were big contributors to the mortgage meltdown. But such provisions are less risky if a borrower has 25% to 40% equity.  Despite the confidence in the market that such terms imply, lenders and mortgage investors are still dealing with piles of bad jumbos made during the boom.

Delinquencies of 60 days or more on prime jumbo loans that were packaged into securities jumped to 9.6% in January, up from 3.7% a year earlier, Fitch Ratings reported this month.  The jumbo delinquency rate in California climbed to 11.3% from 4.1% a year earlier.

For now, the jumbo market remains limited to the volume of loans that banks are willing and able to keep on their books. But there is hope for a return to private outside funding. Although no jumbo loans have been turned into securities for at least two years, packages of delinquent jumbos have begun to be sold again to “vulture” investors, a sign that the secondary market for the home loans may revive, said Michael Fratantoni, vice president of research at the Mortgage Bankers Assn.  “The ice sheet,” he said, “is starting to crack here and there.”

According to data released by the Commerce Department’s Census Bureau and the Department of Housing and Urban Development, the expansion to the homebuyer tax credit, an exceptional government stimulus measure was passed to boost housing activity, new home sales took a 7.6% decline in December. The results come on the heels of National Association of Realtors (NAR) reports of similar December declines in existing home sales.  First time home buyer loans have seen a recent spike in loan application volumes since the tax credit news hit the street.

The homebuyer tax credit extended for first time homebuyers and expanded to include existing homeowners requires buyers have a contract in place by April 30 athnd close by June 30th. The problem, homebuilder insiders and real estate agents tell HousingWire, is that consumers who tried to take advantage of the tax credit too late in the fall before realizing there wasn’t enough time to close a deal by the original November 30th expiration date have yet to reengage themselves in the home loan process.  FHA mortgage lending continues to support a majority of the first time homebuyer loans.  “With new homes, the homebuilders ran out of everything they could close by the end of November,” Burns said. “There were people that wanted to buy in these communities that didn’t because they couldn’t close in time.” 

As HousingWire previously reported, the JBREC December monthly builder survey showed optimism among 264 home building industry executives from public and private companies. The belief that builders will have increased community count, better orders and slightly higher prices has 57% of respondents planning for more revenue in 2010 than in 2009.

Another confidence booster is the tax credit many builders are receiving from the temporary extension of the terms of net operating carry-back laws, which let builder recoup losses from taxes paid in profitable years.  “It’s given them more confidence in their cash balances and they want to start more speculative homes because of the extra cash that they now have,” Burns said.

The average mortgage rate on a 30-year home loan with fixed rates climbed to 5.02% last week from 5%, MBA said.  The mortgage rate reached 4.61% at the end of March, the lowest since the group’s records began in 1990.  At the current thirty-year mortgage rate, monthly borrowing costs for each $100,000 of a home loan would be $538.04 which is about $12 less than a year ago when the rate was 5.22%.

A report later today may show sales of new homes rose 3% in December to a 366,000 annual rate, according to the median projection in a Bloomberg News survey.   Sales of existing U.S. homes plunged last month, reflecting the expected expiration of the government’s first-time buyer tax credit on November 30th.

The average rate on a 15-year fixed mortgage rose to 4.34% from 4.33 % a week earlier. The rate on a one-year adjustable mortgage increased to 6.84% last week.   The share of applicants seeking to refinance a loan dropped to 67.6% last week, the lowest level in almost three months, from 71.7% the prior week.

Mortgage lenders continue to see muted demand for financing.   “The residential mortgage and home equity line portfolios also continued their downward trend,” SunTrust Banks Inc. Chief Financial Officer Mark Chancy said on a conference call January 22nd. The Atlanta-based lender said it lost $248.1 million in the fourth quarter as loans soured in the Southeast real estate market.  The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail mortgage loan originations.

FHA announced they will continue to allow borrowers to finance the upfront mortgage insurance premiums.  FHA will pursue legislative authority to allow flexibility to bring the annual premium, which borrowers pay on a monthly basis, higher. Also, seller concessions will be reduced to 3% from 6%.  In a recent blog post, the FHA Mortgage Lending Blog stated that the Administration will expand mortgage refinance guidelines sometime in 2010.

Frank Black, who managed a Wells Fargo branch in California said, “After reviewing the changes to the FHA requirements, I believe FHA mortgage lenders will agree that the new rules make sense and are needed to keep the government financing alive. A few years ago, many brokers and lenders took advantage of FHA underwriting by pushing the envelope with risky home loans.”  See the original article > FHA Loan Guidelines Require 10% Down for Low Fico.

The home mortgage industry added 200 full-time employees to their payrolls in November, the first jump in industry employment since July. The U.S. Bureau of Labor Statistics reported that employment in the mortgage broker/ bankersector rose to 255,700, compared to 255,500 in October. The BLS data shows the increase is entirely due to more mortgage brokers having jobs. Employment at mortgage broker and banking firms was flat in November. Overall, the home loan industry experienced a 10% drop in its workforce over the past 12 months. Major mortgage lenders have relied on outsourcing and temporary workers to deal with fluctuating demand. Meanwhile, the nation’s unemployment rate held steady at 10% in December, but 85,000 workers were laid off, according to the new jobs report. This disappointed analysts who were looking for a sign that the job market had finally turned the corner.

The struggling mortgage giant, Residential Capital more than halved and its bonds surged on Monday after the company last week benefited from new government funds from its parent company GMAC . A still weak capital position and the risks of further home mortgage loan losses and lessened government support, however, may still weigh on the mortgage company’s debt. GMAC, which converted into a bank holding company last year to benefit from government mortgage refinancing programs, said on Wednesday it would receive another $3.8 billion from the U.S. Treasury, and would inject $2.7 billion into ResCap.

The cost of insuring ResCap’s debt in the credit and home loan default swap market on Monday plunged to a spread equivalent of around 887 basis points, or $887,000 per year for five years to insure $10 million in debt, from more than 2,200 basis points, indicating significantly lower expectations of a default, according to Markit Intraday. ResCap’s 8.375 percent bond due 2010 jumped to 94 cents on the dollar from 61 cents in mid-December, when it was last actively traded, according to MarketAxess.  “Treasury pumped in another $3.8 billion into GMAC largely so that GMAC could support ResCap, which is ring-fenced off from GMAC and lacks a compelling ongoing business model,” CreditSights analysts Adam Steer and David Hendler said in a report. “We are at a loss for words over the complete lack of logic behind using tax dollars to support ResCap,” they added.  

The continuing support for ResCap is likely to reflect political efforts to improve housing markets by encouraging lenders to offer FHA refinance or loan modification options to homeowners struggling to make payments.  “You don’t want to put a mortgage servicing company under because they are important now in the restructuring of mortgage loans … you don’t want that kind of disruption,” said Ricardo Kleinbaum, trading sector specialist at BNP Paribas in New York.  The move nonetheless came as a surprise as most had thought government support for GMAC had been targeted at helping shore up mortgage lending to the troubled auto industry

According to Zillow, the mortgage rates for 30-year fixed home loans rose to 4.93% in both the U.S. last week, up substantially from the previous week.  Just two weeks ago, national average thirty year fixed mortgage rates were 4.77%.

The volume of mortgage requests fell 26% nationally last week and of those requests, 63% were for purchase loans, 35% were for refinance loans and 2% were for home equity loans.  Zillow also reported that mortgage rates for 15-year fixed mortgages also rose nationally.

Slowly rising mortgage interest rates along with relatively sluggish home sales will have repercussions in the mortgage industry over the next few quarters according to the Mortgage Bankers Associations Mortgage Finance Forecast for the Fourth Quarter of 2009.  “The most important factor driving recent declines in real estate market activity and increases in home loan delinquencies and foreclosures has been the ongoing job losses and rising unemployment rates stemming from the most severe recession the country has experienced in a generation.

Current mortgage interest rates, home prices, and household incomes all impact affordability. Today, mortgage rates remain near record lows, and with the continued decline in home prices, for those with resources, it is a buyers’ market like we haven’t seen in years. Obviously, the problem is that there are not enough potential homebuyers who have the income and down-payment, and who feel confident both that the housing market will recover, and that their job situation is secure, to boost demand despite the improvements in affordability.”

MBA economists expect long term mortgage interest rates to raise slowly from the average of 4.9 % expected for the fourth quarter to 5.2% in the first quarter of 2010 and 5.7% in the fourth quarter.  Rates will climb to 6.0% during the second quarter of 2011.  One year adjustable rates are projected to be almost completely flat over the next year.  At 4.6% this quarter, they will trade between 4.7 and 4.8% throughout 2010 and rise to an average of 5.3% in 2011.  At the same time, sales of existing homes, estimated at nearly 5 million this year will continue at that pace through the first three quarters of 2010 before increasing in the fourth quarter for total of 5.55 million sales for that year.  Sales are expected to reach 6 million in 2011.  New home sales, projected to reach an estimated annualized rate of 442,000 in the fourth quarter and 391,000 for the year will move around in a narrow annualized range of 468,000 to 508,000 during the four quarters of 2010 and finish the year with around 483,000 sales. New home sales will total 609,000 in 2011.  All of the above outlined circumstances are expected to result in a slow year for home mortgage originators with home loan originations increasing but not strongly enough to make up for a plunge in home refinancing.  It is expected that purchase mortgages will total 718,000 for this year; 804,000 in 2010 and 896,000 in 2011.  FHA refinance activity is forecasted to be strong, even though HUD recently announced new FHA mortgage lending revisions.

During the fourth quarter it is expected that 238,000 households will seek refinance loans.  This will be the slowest quarter of the year, down substantially from the 426,000 transactions in the second quarter and 296,000 in the third.  The estimate for the entire year is 1,246,000 mortgage refinance loans.  However, next year with interest rates up and much of the demand for refinancing wrung out of the system the number of refinances is expected to plummet to little more than half the 2009 number; 2010 will be even worse.  Refinancing in the first quarter of 2010 will be 175,000 units compared to 287,000 during the first quarter of this year and the total in Q4 will be 140,000 compared to 238,000 this quarter.  MBA is projecting a total of 693,000 refinances in 2010 is estimated at 693,000 and in 2011 the total will be 591,000.  

California homeowners have taken quite a hit in home values over the last few years.  Many local residents are hoping the record low interest rates will help soften their losses.Just a few weeks ago California mortgage rates hit a new all time record low of 4.375% on a 30 year fixed mortgage. The current California mortgage rates have crept up slightly for conventional, FHA, VA and jumbo home loans. As a result the 10 year treasury yield, used to forecast mortgage rates, has also steadily risen over the past 2 weeks and sits at 3.482% as of close on Thursday afternoon. California home prices have stabilized as pending home sales are at a 2 year high.

Current California Mortgage Rates

FreeRateUpdate.com reported the latest rates for wholesale mortgage lenders in California mortgage rates shows California interest rates are up from record lows but holding at present levels. The buy rate for California thirty-year fixed rate is currently at 4.75%.  The current rate for California fifteen-year fixed rate is 4.25%, up from 4.125% last week.

FHA Mortgage Rates

Check the California FHA Loan Limits for restrictions by county.  Today’s California jumbo 30 year fixed mortgage rate is 5.875%, up from 5.75% last week. California FHA mortgage rates are near record lows. Today’s California FHA mortgage rates start at 4.75% 30 years fixed, up from 4.375% 2 weeks ago.

The Federal Reserve, which meets next week to discuss their interest rate policy, is likely to stay the course to buy $1.45 trillion in mortgage loan securities despite potential resistance from a few regional Fed presidents.  Central-bank officials plan to discuss winding down those purchases over the coming months to limit disruption to the market when the buying comes to an end.  Some regional Fed policy makers have suggested the Fed might halt the program before it finishes its purchases of $1.25 trillion in mortgage-backed securities and $200 billion in bad credit mortgage debt from Fannie Mae and Freddie Mac announced in the past year. But they are a small minority across the Fed system.  Top Fed officials believe such a move would tighten overall monetary policy at a time when they still worry about the durability of the economic recovery. The Fed has completed about two-thirds of its purchases, almost $1 trillion worth, and is likely to complete the rest unless prospects for the economy improve radically in the coming months.

At the Federal Open Market Committee’s September 22-23 meeting, the central bank’s policy makers including the 12 regional Federal Reserve presidents will assess the early signs of improvement now taking shape across the economy. Officials are encouraged by the rebound in financial-market conditions and initial indications that the housing market is coming out of its recession.  But they are hesitant to bank on a strong recovery. The sizable growth expected in the third quarter is due in part to short-term effects such as companies replenishing inventories and the government’s “cash for clunkers” auto-rebate program. Higher saving by households is casting doubt on consumer spending. And even the moderate growth that Fed officials expect next year wouldn’t be enough to bring down the unemployment rate substantially.  “The economy seems to be brushing itself off and beginning its climb out of the deep hole it’s been in,” San Francisco Fed President Janet Yellen said in a speech Monday. “But I regret to say that I expect the recovery to be tepid. What’s more, the gradual expansion gathering steam will remain vulnerable to shocks.”  The economy has so much slack that officials expect core inflation — excluding food and energy — to drift lower next year. Barring a surge in commodity prices or inflation expectations, most Federal Reserve officials see little reason to raise mortgage interest rates from near zero in the first half of next year as futures markets have forecast recently.