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44 FED ANNOUNCES SLOW APPROACH TO INTEREST RATE INCREASES IN 2015 e Federal Reserve announced that it intends to take a slow approach to raising interest this year, even as the economy continues to strengthen. In a policy statement released following the last 2014 meeting of the Federal Open Market Committee (FOMC), the central bank reaffirmed its view that the economy is expanding at a "moderate pace," pointing to continued improvements in the labor market tempered by still-high numbers of unemployed and underemployed Americans and slower growth in the housing sector. Given the current climate, the committee hinted that it will take steps to raise short-term in- terest rates in 2015, though it still would not com- mit to a time frame, saying only that "it will likely be appropriate to maintain ... the [current] federal funds rate for a considerable period of time." "Based on its current assessment, the committee judges that it can be patient in beginning to normalize the stance of monetary policy," the Fed said in its statement. While the phrase "considerable period of time"—commonly interpreted by analysts to be around six months—is not a new addition to the Fed's language, policymakers did clarify that they're counting the time from when the central bank ended its asset purchase program in October. If the interpretations hold out, that could signal an increase as soon as April, though many economists expect June is more likely. In a survey, 15 of 17 officials at the Fed predicted an increase in interest rates starting this year, with the other two saying the first hikes will come in 2016. At the same time, their forecast for rates slipped to 1.125 percent by year-end 2015, down from the last outlook in September. Perhaps encouraged by recent monthly payroll numbers, officials predicted the unemployment rate this year will drop to 5.2–5.3 percent, a more optimistic outlook than in September. As of November 2014, the national unemployment rate was 5.8 percent. Economic growth, meanwhile, was pegged at 2.6–3.0 percent for 2015, unchanged despite a rosier outlook for 2014. FORECAST CALLS FOR MODEST GROWTH IN HOME SALES FOR 2015 In keeping with other recently released predictions, the latest housing forecast from market research firm IHS Global Insight calls for modest growth in home sales in 2015, following what's been a disappointing year. In her outlook, IHS economist Stephanie Karol focuses on two major trends that have shaped the housing market in 2014: low household formation and diverging trends for new versus existing homes. According to data from the Census Bureau, the country saw the addition of only 467,000 new households between March 2013 and March 2014, well below the post- recession average of about 600,000 per year. While formations were expected to disappoint again in 2014, Karol predicts this year will see the addition of 1.08 million new households, with economic growth driving up the rate of new formations—and demand for new housing. "As a swell in steady employment joins with rising wages, household formation should climb, boosting homeownership rates," she said. With demand projected to rise, Karol anticipates homebuilders will respond by ramping up housing starts, closing the massive gap between existing single-family inventory and the unsold stock of new homes (which she estimates at nearly 40 to one) and boosting new home sales up to 480,000. Together, both new and existing-home sales are forecasted to rise to 5.34 million annually, the result of improving home equity by spurring more homeowners to sell. "As a result, inventories have expanded— and families, who are no longer being consistently outbid by investors with plenty of cash on hand, have entered the market in sufficient numbers to stabilize median price growth in the 4–5 percent range," Karol said. "Overall, the post bubble landscape will continue into next year, but with slightly smoother terrain." FORMER COUNTRYWIDE EXEC TO COLLECT $57 MILLION FOR WHISTLEBLOWER SUIT Former Countrywide executive, Edward O'Donnell, will receive $57 million for his role in filing a whistleblower lawsuit against Bank of America over the sale of faulty mortgage- backed securities, according to a report from Bloomberg News. A second suit O'Donnell filed against Countrywide was partly responsible for a record $16.65 billion settlement that Bank of America reached with the government in August 2014. Bank of America acquired Countrywide for $4 billion in 2008. at acquisition has cost Bank of America many more billions in settlements, legal fees, and loan buybacks in the last six years. e whistleblower lawsuit, which was filed under the False Claims Act, accused Coun- trywide of misrepresenting the mortgage- backed securities it sold to GSEs Fannie Mae and Freddie Mac through a program known as the High-Speed Swim Lane (HSSL or "Hustle"). O'Donnell filed the suit in 2012 when he learned that Bank of America was in talks with the Justice Department over a pos- sible settlement, according to the report. A judge levied a $1.27 billion pen- alty against Bank of America in July for the "Hustle" case. e bank has been fighting to overturn that verdict in the months since, claiming that the program ended prior to its acquisition of Countrywide. According to newly released documents, O'Donnell filed a second suit in June against a separate Countrywide division over the sales of toxic loans to the GSEs. Bank of America agreed to pay $350 million to settle that claim as part of a much larger settlement —a record $16.65 billion in August, according to the report. Under the False Claims Act, whistleblow- ers can collect between 15 and 25 percent of the money the government recovers. Foreclosure starts were at approximately 74,000 for November 2014, the lowest level since May 2006, according to Black Knight Financial Services. KNOW THIS

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