Little light shining thru, but not out of the woods yet.

Economists are forecasting faster growth, (3.3 percent this year) according to a quarterly survey from the National Association for Business Economics. For 2012, the panel expects the economy to grow 3.4 percent. Editor's note: It may have reached 3.7 percent if not for rising oil prices.

Personal incomes received a 2 percentage point reduction from the Social Security tax cut, giving consumers the biggest jump in their incomes in nearly two years. Personal savings also rose in January, with households saving 5.8 percent of their after-tax incomes.

Unemployment will stay high though, with the rate averaging 9.3 percent in the first quarter of this year and inching slightly lower to 9 percent in the fourth. By the last quarter of 2012, the joblessness rate will still be high -- 8.2 percent.

The outlook for consumer spending has improved, and is expected to grow 3.2 percent this year. In 2012, spending is expected to rise by 2.9 percent, which is the same as the annual growth rate over the past 20 years. Economists closely watch consumer spending because it accounts for 70 percent of economic activity. Business spending is a bright spot in 2011 and 2012, with double-digit percentage growth in spending on equipment and software.

BP will pay for Florida Agent's Losses & Extension

After months of negotiations between Florida Realtors and representatives from the Gulf Coast Claims Facility (GCCF), oil spill czar Ken Feinberg has reversed his decision to not pay real estate licensees for losses related to residential transactions as a result of the Gulf of Mexico oil spill.

Last August, Feinberg took over the oil spill compensation process from BP. He decided early on that the GCCF would only cover losses for lost rental income, not for losses incurred because buyers didn’t go to contract on a home or cancelled a sales contract.

For these individuals, Florida Realtors and other gulf coast state Realtor associations convinced Feinberg to set up a special fund for real estate industry claims. But the deadline for filing claims against the real estate industry fund was Nov. 23, 2010.

With the new decision, licensees have another opportunity to file claims for damages due to the oil spill. Here are the options:

• Interim Claim. This claim may be filed at the end of each quarter from April 2010 until the GCCF claims process ends in August 2013. Claims reviewers will consider documented losses due to the oil spill back to April 2010. There is no cap on documented loss of income on previous earnings, and claimants to do not have to sign a Release of Claims against BP.

• Quick Final Payment Claim. This claim pays $5,000 per individual and $25,000 per business. You must sign a document releasing BP and all others from future claims relating to the oil spill.

NOTE: In order to receive a Quick Final Payment, a claimant must have received a prior payment from BP, GCCF or the Real Estate Fund. There is no emergency payment requirement for an interim or a full final payment.

• Full Final Payment Claim. This is a negotiated final settlement between you and the GCCF based on a specific formula, and requires that you sign a document releasing BP and all others from future claims relating to the oil spill.

A Few Recent Housing Stats and Trends

$113 billion worth of home equity in the USA has evaporated since the housing market peaked in 2006.

Home prices are down almost 55% on average from the real estate market peak.

An amazing 43% of homeowners in Miami-Dade and Broward Counties of Florida have negative home equity.

25% of the country’s foreclosed homes are located in Florida

Nearly 1 in 5 homes are in foreclosure or are delinquent on their mortgage payments

Of all the foreclosures in Florida, 25% are strategic defaults (an economic decision by the owner). The Mortgage Banker’s Association says there are 50 times more walk-aways then there were five years prior.

It takes a lender nearly 25 months on average to go from initiating foreclosure to actually seizing a home.

Lenders in Florida can pursue defaulters for deficiency judgements for the difference in the value of the mortgage and the value of a foreclosure sale for up to five years after the default.

Short sales accounted for 20% of existing home sales in South Florida in 2010. Almost half of all home sales were at a loss.

Mortgage rates are expected to increase in 2011

Home prices are expected to bottom out this year, and, by 2012, the house-price metric shows a gradual increase

Home construction is expected to increase 21 percent from last year

The vacation rental market is expected to grow 13.1% in 2011

Home sales in 2010 were up 14 percent in Hilton Head Island, SC, 40 percent in Palm Beach, FL, and 300 percent on Mercer Island, WA.

Eight out of 10 owners of vacation homes who rent them expect their rental business will be the same or stronger in 2011 than last year.

Florida Hardest Hit Fund for Keys Homeowners

A $7.6 billion federal effort to help unemployed homeowners avoid foreclosure will soon be running in all 18 states sharing the funds.

The Hardest Hit Fund, announced by President Obama a year ago and expanded to more states since then, largely targets lower-income jobless or underemployed homeowners. Those eligible receive forgivable loans for mortgage payments, or they may tap other programs, such as one to help them get current on mortgage payments. Generally, the loans are forgiven after five years if borrowers stay in the homes and keep current on payments.

The government targets areas hit hard by unemployment or fallen home prices. States’ programs have different rules and benefits.

In Florida, the most a homeowner will get is $35,000.

An eligible Florida homeowner:

•Must be a Florida resident;

•Must occupy property as primary residence (the property cannot be vacant, abandoned or rented);

•Must have suffered an approved hardship that makes the first mortgage unaffordable;

•Must have documented total income at or below 140% of the area median income (AMI), adjusted for household size (in Lee County, the total income for a household of four cannot be more than $86,240);

•May not have unencumbered assets of $5,000, or three times the current monthly mortgage payment (whichever is greater);

•Cannot have a bankruptcy that has not been discharged or dismissed; and

•Cannot have been convicted of a mortgage-related felony in the last 10 years.

The current mortgage:

•Must be serviced by a participating lender, who agrees to accept payments on behalf of the homeowner;

•Must not be more than 180 days past due at the time of application;

•Must have been originated on or before January 1, 2009; and

•Must have an existing principal balance of less than $400,000.

The Florida Hardest Hit Fund currently operates only in Lee County under a pilot program in preparation for a statewide rollout expected in March.

More information can be found by going to Florida's Official hardest hit website

Fannie n Freddie going away?

The Obama administration laid out three broad options Friday for reducing the government's role in the mortgage market. (The government currently owns or guarantees more than 90 percent of new mortgages). All three of the options would almost certainly lead to higher interest rates and costs for borrowers.

The administration said the government should withdraw its support for the mortgage market slowly, over five years or more, winding down the troubled mortgage giants Fannie Mae and Freddie Mac.

But rather than making a single recommendation, the administration offered Congress three scenarios and will let lawmakers shape the final policy.

The options are:

-- No government role, except for existing agencies like the Federal Housing Administration.

-- A government guarantee of private mortgages triggered only when the market is in trouble.

-- Government insurance for a targeted range of mortgage investments that already are guaranteed by private insurers. The government guarantee would kick in only if those private companies couldn't pay.

The private sector will assume a greater role in housing finance under all of the options.

The bailouts of Fannie and Freddie have so far cost taxpayers nearly $150 billion.

A near-complete withdrawal by the government probably would end the popular 30-year fixed rate mortgage or, at least, make it more expensive. Banks would prefer adjustable-rate mortgages that would fluctuate with the markets.

Administration officials said the proposals will end the hybrid model of public-private companies that left the public on the hook for billions when Fannie and Freddie failed.

Issued jointly by the Treasury Department and the Department of Housing and Urban Development, the plan suggests several short-term measures that would effectively increase the cost of taking out a government-backed mortgage. Other financing options would become more competitive, drawing private dollars back into the market.

These include reducing the maximum size of mortgages purchased by Fannie and Freddie by more than $100,000, to $625,000, by October. The companies would require 10-percent downpayments for all loans. And the fee for the government guarantee would increase.

Another schizophrenic and disappointing jobs report - Important!

Despite improving profits, rising demand and generally positive flow of economic data, companies did not meaningfully increase their hiring in January. Only 36,000 payroll jobs were added in the month, much lower than expected.

On the other hand, the unemployment rate dropped, from 9.4 percent in December 2010 to 9.0 percent in January 2011, marking a decline of 0.8 percent in just two months.

How could the unemployment rate drop so much when the number of payroll jobs barely budged? The Bureau of Labor Statistics compiles the two numbers – jobs added and the unemployment rate – from two different surveys. The payroll figure comes from the establishment survey – the government asks companies how many people are on their payrolls. The unemployment rate is taken from the household survey – the government asks people about their work status.

The unemployment rate is calculated by dividing the number of people who say they are unemployed into the number of people who say they are in the labor force. The rate can fall when people leave the workforce or quit looking for jobs. And it can fall when fewer people report they are unemployed. When both happen in the same month, that can cause the unemployment rate to drop rapidly. In the past two months, that’s precisely what happened. Since November, the size of the labor force has fallen by 764,000 while the number of unemployed has fallen by 1.178 million. Meanwhile, the number of people who report they are working has risen by 414,000.

36,000 jobs. Is that your final answer? Fortunately, no. Each month, the payroll jobs numbers originally reported in the prior two months are revised. And in January, as has been the trend, data reported in previous months was revised upwards.

In other words, BLS discovered a bunch of new jobs. November’s figure, first reported in December as a 39,000 job gain, was revised in January to a 71,000 job gain, and was revised upward once again – to a gain of 93,000 jobs. The results for December, first reported as a gain of 103,000 jobs, have been revised upwards to 121,000.

Isn’t the government creating lots of jobs? No. The jobs recovery, such as it is, has been largely a private sector affair. Deficits may be on the rise, but government employment – especially at the city and state level – is falling. In January, once again, the private sector added jobs while the government slashed them. Manufacturing added 49,000 jobs in the month. But government jobs declined by 14,000, and have fallen by 335,000 since last May.

Does the headline rate paint the best picture of the labor market situation? Not really. The reality is that there is an enormous amount of slack in the U.S. labor market. That’s why inflation remains contained, despite the rise in commodity prices. As BLS reports, “in the past 12 months, average hourly earnings have increased by 1.9 percent.”

Workers have been unable to demand higher wages in part because so many other workers are sitting on the sidelines. Aside from the headline number, people should look at the BLS’s “alternative measures of labor force underutilization,” which can be seen here.

Aside from those who say they are out of work, BLS aims to estimate:

-- The number of people who are working part-time but would prefer to be working full-time.

-- The number of people who are “marginally attached to the labor force” (i.e. people who are sitting on the sidelines and not really working).

-- “Discouraged workers” (people who have essentially given up because they view their prospects as too dim.

The BLS calls this tally the U-6 measure, better known as the "real unemployment rate". You can also think of it as a truer picture of the sum total of worker frustration.

In January, the U-6 stood at 16.0 percent. That’s down from 17 percent last fall, and marks the lowest such figure since April 2009. But it still highlights the fact that one in six workers isn’t employed to the degree he or she wants to be.

In short, the January employment report shows a snapshot of a labor market that is improving, but at a painfully slow rate.

The American dream drops to a 12-year low

Click image to enlarge

More seeking mortgage modifications

Americans made loan modifications to 1.76 million mortgages last year, with about two-thirds of the modifications performed through private mortgage servicers, and one-third of them through the federal government’s Home Affordable Modification Program (HAMP).

The data, released on Wednesday by the private coalition of mortgage lenders HOPE NOW, also showed that mortgage modifications jumped more than 40 percent from 2009 to 2010. There were 1.24 million loan modifications in 2009.