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44 FED ANNOUNCES END OF QUANTITATIVE EASING e Federal Open Market Committee (FOMC) of the Board of Governors of the Federal Reserve System announced its asset purchase program, known as QE3 (quantitative easing), would end in October, citing sufficient economic growth. Following months of speculation of the end of the program, Fed made the announcement following the FOMC's seventh of eight meetings this year. Unlike the Fed's first two QE programs, which were launched in 2008 and 2010, QE3 allowed for the unlimited purchase of mortgage- backed securities; the Fed planned to continue the stimulus program until the economy was deemed healthy enough. e Fed suggested in the FOMC statement that U.S. economic activity was expanding at a "moderate pace" since the committee's last meeting on September 17. e committee cited several factors in its assessment of the state of the economy. Since the start of September, the nation has experienced solid job gains and posted the lowest unemployment rate in six years, and labor market indicators show a gradual diminishing in the underutilization of labor resources. e housing sector has been slow to recover from the crisis of 2008, but household spending rose moderately and business fixed investment is advancing. With the substantial improvement in the outlook for the labor market, as judged by the committee, since the inception of the QE3 asset purchase program two years ago and the broader economy's underlying strength to support ongoing progress toward maximum employment in a price stability context, the committee decided to conclude the QE3 program this month. "e committee is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage- backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction," the committee's statement said. "is policy, by keeping the committee's holdings of longer-term securities at sizable levels, should help maintain accommodative financial conditions." In order to support continued progress toward maximum employment and price stability, the committee decided that the current zero to one-fourth percent target range for the federal funds rate is still appropriate. e committee will assess both realized and expected progress toward the objectives of maximum employment and 2 percent inflation in order to determine how long to maintain the current target range for the federal funds rate. e committee said it will use a wide range of information to determine how long the current target range will be appropriate, including labor market conditions, inflation pressures and expectations, and financial development readings. e current target range could be in place for a while, the committee said. Increases in the target range for the federal funds rate could come more quickly if the committee's employment and inflation objectives are met sooner than expected, the committee said. If information indicates that the committee's employment and inflation objectives are taking longer than anticipated to be met, then an increase in the federal funds rate target range could come much later than expected. REPORT: HIGHEST PERCENTAGE OF SERIOUSLY UNDERWATER LOANS IN Q3 ORIGINATED DURING HOUSING BOOM e highest percentage of residential mort- gage loans that were seriously underwater in this year's third quarter were originated during the housing bubble between 2004 and 2008, according to RealtyTrac's U.S. Home Equity & Underwater Report for Q 3 2014. RealtyTrac reported that about 15 percent of all residential properties with a mortgage in the U.S. were seriously underwater in Q 3, meaning the combined loan amount secured by the property is at least 25 percent higher than the property's estimated market value. About 40 percent of the mortgage loans origi- nated in 2006 were seriously underwater in Q 3 2014, the highest percentage for any year after 2004, according to RealtyTrac. e number of Q 3's seriously underwater mortgages that were originated in the years following 2006 has declined steadily with each year before inching back up in the last two years. e percentage of seriously underwater mortgages in Q 3 originated in 2007 was 35 percent; in 2008, it was 25 percent; and for every year, it declined until hitting a low of 7 percent in 2012. e percentage of mortgage loans originated in 2014 that were seriously underwater in Q 3 was 10 percent. Meanwhile, the highest percentage of equity-rich homeowners, which are those with at least 50 percent equity in their properties, were those who bought or refinanced their homes between 1994 and 1998, according to RealtyTrac. e highest percentage of seriously underwater homeowners in Q 3, according to RealtyTrac, were those who owned homes that were worth less than $200,000. About 55 percent of homes worth less than $50,000 were seriously underwater in Q 3, while only 10 per- cent of homes in that price range were equity rich. About 34 percent of homes in the price range of $50,000 to $100,000 were seriously underwater, while 13 percent were equity rich. Homes worth more than $200,000 had lower percentages of seriously underwater homeowners and higher percentages of equity rich homeowners in Q 3, according to Realty- Trac. For example, about 6 percent of home- owners with homes worth between $500,000 and $750,000 were seriously underwater, while 31 percent of homeowners with homes in that price range were equity rich.

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