WASHINGTON – HOME CONSTRUCTION PLUNGES: Builders broke ground on the fewest homes in nearly two years. Home construction fell 22.5 percent in February from January to a seasonally adjusted 479,000 homes, according to the Commerce Department.

PERMITS PLUMMET: Building permits, an indicator of future construction, fell 8.1 percent last month to the lowest level in more than 50 years. Permit requests for single-family homes, which represent nearly 80 percent of the market, saw the biggest decline.

RECOVERY YEARS AWAY: Economists say it will be years before the pace of building returns to a more healthy level of 1.2 million units a year.

DETROIT – A federal jury in Detroit says Quicken Loans doesn’t owe overtime to more than 300 former mortgage brokers who claimed their jobs amounted to sales for the online mortgage giant.

The Thursday verdict means jurors were convinced sales was not the brokers’ primary job when they made calls and tried to get people to agree to loans between 2002 and 2006.

Quicken argued an administrative exemption for certain financial industry employees applied to the brokers. Company attorneys compared the workers to other white-collar professionals who don’t get overtime.

Millions of dollars potentially were at stake because plaintiffs sought overtime on top of salary and commissions already received.

Quicken founder Dan Gilbert calls the verdict a “total victory.”

Plaintiffs’ attorney Don Nichols says he’ll press ahead with other lawsuits against Quicken.

WASHINGTON (Reuters) – A comprehensive settlement between U.S. authorities and banks over alleged mortgage servicing abuses needs to be reached quickly to help the housing market heal, Treasury Secretary Timothy Geithner said on Tuesday.

Geithner said such a settlement will help dispel legal uncertainty that has been plaguing mortgage lenders and clogging the foreclosure process.

“It is very important that we try to bring this to bed as quickly as we can,” Geithner told the Senate Banking Committee. “I think all parties, not just the servicers, but the state AGs and the federal agencies have a strong stake in doing that.”

A group of 50 state attorneys general and 12 federal agencies are probing bank mortgage practices that burst into public view last year, including the use of “robo-signers” to sign hundreds of unread foreclosure documents a day.

The negotiators are struggling to reach a single agreement on financial penalties and higher standards for banks handling troubled home loans.

A “global” settlement with the authorities would relieve a potentially large legal liability and reputational black eye for the banks, as they could face numerous lawsuits and fines without a universal agreement.

Geithner declined to discuss details of the talks.

Negotiations have focused on the top U.S. mortgage servicers, including Bank of America Corp (BAC.N), JPMorgan Chase & Co (JPM.N), Citigroup Inc (C.N), Wells Fargo & Co (WFC.N) and Ally Financial.

Democratic Senator Jack Reed said the banks are facing a massive legal threat unless a comprehensive deal is reached. He cited the potential for numerous suits from state AGs, repurchase demands from bondholders who invested in billions of dollars in mortgage-backed securities, and lawsuits from individual homeowners.

“This would have, I would assume, a very deleterious effect in the marketplace and the standing of the companies that you’re talking to right now,” Reed told Geithner.

Many housing experts say home prices cannot recover as long as buyers believe a backlog of foreclosed properties remains poised to come on to the market.

Foreclosure tracker RealtyTrac reported that foreclosures in February were down 27 percent from the same month last year, bringing foreclosure activity to a 36-month low.

The report attributed a hefty portion of the decline to court rulings challenging banks’ documentation, which have led banks to hold back on filing foreclosure cases.

CHANCES FOR GLOBAL DEAL UNCERTAIN

John Walsh, a top bank regulator, said earlier on Tuesday that U.S. federal and state authorities still hope to reach a single settlement proposal they can present to the banks over alleged abuses.

“We each have our own separate responsibilities and areas of jurisdiction, but to the extent possible we are trying to coordinate our actions,” Walsh, acting head of the Office of the Comptroller of the Currency, told an American Bankers Association conference. “Whether this is possible remains to be seen.”

On March 3, state attorneys general sent banks aspects of a proposed settlement endorsed by some federal agencies but not the OCC or the Federal Reserve, the main banking regulators involved in the discussions.

The 27-page document proposed changes to how the mortgage servicing industry operates and advocated reducing loan balances for struggling borrowers as a way to help them avoid foreclosure, a proposal banks have not supported in the past.

State and federal authorities continue to negotiate over the key aspect of any settlement: what fine or penalty banks will have to pay.

At least some of the officials who endorsed the proposal sent out earlier this month have been pushing for a fine of about $20 billion, which would be used in part to help struggling homeowners.

Iowa Attorney General Tom Miller, who is leading the states’ probe of mortgage servicing problems, said last week that he hoped to have a settlement with the nation’s biggest banks in the next two months.

Critics of the disjointed settlement negotiations, including a group of House of Representatives Republicans, have argued the early proposal is an abuse of power that could harm financial markets.

Questions have been also been raised about whether the new Consumer Financial Protection Bureau is playing too large a role in settlement negotiations, especially in pushing for principal writedowns in troubled mortgages, because it won’t assume its formal regulatory powers until July.

Elizabeth Warren, the special advisor setting up the consumer agency, warned on Tuesday against politicizing the probe. “Political attacks against federal and state law enforcement officials for responding to alleged legal violations are dangerous,” she said in a statement released to Reuters.

(Reporting by Dave Clarke and Rachelle Younglai; Editing by Dave Zimmerman and Tim Dobbyn)

NEW YORK – Fixed mortgage rates tumbled this week and the 15-year loan dipped below 4 percent for the first time in three months. Rates followed the yield on U.S. Treasury bonds, which fell on worries that the crisis in Japan could slow economic growth.

Freddie Mac said Tuesday the average rate on the 15-year fixed mortgage, a popular refinance option, dropped to 3.97 percent from 4.15 percent. The last time the rate was below 4 percent was in mid-December. It reached 3.57 percent in November, the lowest level on records dating back to 1991.

The average rate on the 30-year fixed mortgage fell to 4.76 percent from 4.88 percent the previous week. It hit a 40-year low of 4.17 percent in November.

Mortgage rates tend to track the yield on the 10-year Treasury note. Those yields have tumbled as investors sought safer investments.

Low mortgage rates haven’t been enough to jumpstart the housing market. Home construction last month plunged to its lowest level in almost two years, while building permits, an indicator of future housing activity, sank to a five-decade low, the government said this week.

Homebuilders remain pessimistic about the outlook for housing. High unemployment, a record number of foreclosures and tough credit standards have kept many people from buying homes. And most economists don’t expect home values to bottom out until midyear, another factor dissuading potential homebuyers.

To calculate average mortgage rates, Freddie Mac collects rates from lenders across the country on Monday through Wednesday of each week. Rates often fluctuate significantly, even within a single day.

The average rate on a five-year adjustable-rate mortgage fell to 3.57 percent from 3.73 percent. The five-year hit 3.25 percent last month, the lowest rate on records dating back to January 2005.

The average rate on one-year adjustable-rate home loans slipped to 3.17 percent from 3.21 percent. That is the lowest level in a year for the one-year ARM rate.

The rates do not include add-on fees, known as points. One point is equal to 1 percent of the total loan amount. The average fee for the 30-year fixed loan and 15-year fixed loan in Freddie Mac’s survey was 0.7 point. The average fee for the five-year ARM and the 1-year ARM was 0.6 point.

Who can get Stafford loans?

Graduate students who are U.S. citizens or legal permanent residents, haven’t defaulted on other federal student loans, and attend school at least half time are eligible

How much can I borrow from the Stafford program?

Graduate students can borrow up to $20,5000 for each nine-month academic year. Those attending 12-month programs can borrow up to $26,667. But the government won’t make any additional Stafford loans to students who hit the cumulative graduate Stafford debt cap of $138,500.

Medical students have higher maximums. They can borrow up to $40,500 a year and up to $224,000 in total through the Stafford program.

How much do Stafford loans cost?

Staffords charge a maximum fixed rate of 6.8 percent, plus up-front fees of up to 1 percent of the amount borrowed, for a total annual percentage rate of 7.1 percent.

Students who qualify as “needy” in the 2011 academic year can get “subsidized” Stafford loans of up to $8,500 that don’t charge any interest while they are in school. The subsidized Stafford loan program for graduates has been targeted for cuts, however, and may be eliminated in 2012.

How do I get a Stafford loan?

You must fill out a FAFSA.

[Find out how a sock puppet can help you fill out the FAFSA.]

Does every grad student get approved for a Stafford loan?

No. Students who have defaulted on other college loans, who are not U.S. citizens, or who are attending school only part time do not qualify.

What if I have bad credit?

You can get a Stafford loan if you’ve defaulted on a mortgage, car, credit card, or medical bills. The federal government does not do a regular credit check for Stafford loans. It only rejects applicants who have defaulted on other federal education loans.

What if I need more money than the Stafford maximums?

You can borrow up to your full cost of attendance from the federal Graduate PLUS program. But those have higher fees and interest and are not awarded to students with bad credit.

[Read FAQs about Grad PLUS loans.]

How is the credit crunch affecting Stafford loans?

Stafford loans are funded and made entirely by the federal government. So they remain available to all qualified students.

Are Stafford loan payments tax deductible?

It depends on your income when you start repaying. Generally, for a single person, education loan interest is deductible only if you earn less than $70,000.

When do I have to start repaying my Stafford loan?

The first bill comes due six months after you’ve left school, whether that’s after graduation or after you’ve dropped out.

What happens if I lose my job or get into other financial trouble?

Call the Department of Education and sign up for Income-Based Repayment. If that doesn’t bring your payments down to an affordable level, you can also ask for either “deferral” or “forbearance” of your payments. The National Consumer Law Center also has some good advice.

What are the advantages of a Stafford loan?

Stafford loans have a comparatively low fixed interest rate, so the size of your payment won’t increase if interest rates rise. Through Income-Based Repayment, Stafford borrowers can ask to have their payments capped at 15 percent of their disposable income. And public servants who make 10 years worth of income-based repayments can have their remaining Stafford debts forgiven.

[Learn the 11 steps to relief from student loans.]

What are the downsides of Stafford loans?

Unlike credit card debt and mortgages, which can be canceled if you file for bankruptcy, education loans of all types–whether federal or private–must be paid. Most bankruptcy courts will not cancel them unless your situation is extremely dire.

Searching for a grad school? Get our complete rankings of Best Graduate Schools.

Ladies and gentlemen, the near-impossible has happened: A Republican and a Democrat have jointly proposed a sensible law. Congressmen Charles Boustany (R-La.) and John Larson (D-Conn.) have introduced the Medical Flexible Spending Account Improvement Act (H.R. 1004) bill, which could help Americans setting aside money for medical expenses keep more of what they’ve saved.

Flexible Spending Accounts (FSAs) let you sock away pre-tax dollars from your salary to spend on qualifying medical expenses. Right now, your employer determines the limits on your FSA contributions, although a new limit of $2,500 will apply beginning in 2013, with adjustments for inflation thereafter.

Don’t underestimate the FSA’s power. If you earn $50,000 per year, and contribute $4,000 annually to an FSA for health-care expenses, you’ll reduce your taxable income to $46,000. At a 25% marginal tax rate, that will save you $1,000 in income taxes!

The catch — and the fix
But up until now, this wonderful tool’s had a “use-it-or-lose-it” rule; if you don’t spend all of your allotted money in a given year, whatever’s left vanishes. That may explain why, as of 2010, only 20% of U.S. workers were using FSAs, according to Hewitt Associates. As Joe Jackson, chairman of Save Flexible Spending Plans and CEO of benefits provider WageWorks, explains, “Unfortunately, the ‘use it or lose it’ rule creates an unnecessary risk for FSA participants and a deterrent for non-participants.”

It’s estimated that a quarter of participants forfeit some of their money each year. A tool that was meant to help workers save money actually ends up costing them a total of about $85 per forfeiture, which ends up in employers’ coffers.

Boustany and Larson propose changing the rules so that any money left in the account at year’s end isn’t forfeit. Instead, it can be withdrawn, with the worker paying the previously avoided tax on the sum. Presto — a simple fix.

If you’ve got an opinion on this proposal, consider contacting your representatives in Congress, to let them know.

Spend smart
Until or unless the rules get revised, you’re stuck with the use-it-or-lose-it provision. If you fear ending up with leftover funds, take a closer look at eligible expenses — you may be able to apply more of your health-related costs than you think. Qualifying expenses include hearing aids, psychiatrist visits, weight-loss or smoking-cessation programs, co-pays, X-rays, teeth cleanings, glasses, and much more. Your FSA can even cover transportation costs to receive medical care.

By making the most of FSAs — especially if the use-it-or-lose-it provision is erased — you can save lots of money. Visit the following sites for many more tips on how to be tax-savvy:

Get all your finances under control and positioned optimally by following our 13 Steps to Investing Foolishly.

We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.

Longtime Fool contributor Selena Maranjian appreciates your comments. The Motley Fool is Fools writing for Fools.

WASHINGTON (Reuters) – Housing starts posted their biggest decline in 27 years in February while building permits dropped to their lowest level on record, suggesting the beleaguered real estate sector has yet to rebound from its deepest slump in modern history.

Groundbreaking on new construction dropped 22.5 percent last month to an annual rate of 479,000 units, according to Commerce Department data released on Wednesday. This was just above a record low set in April 2009 and way below the estimates of economists, who had been looking for a smaller drop to 570,000.

January’s figure was revised up to 618,000 units from 596,000. But that did not change the tenor of the report, which confirmed that the sector is failing to recover despite interest rates near record lows.

Building permits, a hint of future construction demand, fell to a record low of 517,000 units from a revised 563,000, and were down by about 20 percent from levels seen in February 2010.

Housing was at the epicenter of the financial crisis of 2007-2009.

One key impediment to the sector’s recovery is a vast backlog of unsold inventory, while a shaky job market has also made consumers reluctant to embark on any major new financial commitments. Making matters worse, a glut of foreclosures, stalled in recent months by revelations of improper loan documentation, is depressing the market.

(Reporting by Pedro Nicolaci da Costa, Editing by Chizu Nomiyama)

WASHINGTON (Reuters) – President Barack Obama would veto a Republican-backed bill killing his signature mortgage foreclosure prevention program if Congress passes it, his administration said on Tuesday.

The Republican-controlled U.S. House of Representatives Financial Services Committee has approved a measure that would shutter the Home Affordable Modification Program (HAMP), which aims to help struggling borrowers win lower mortgage payments.

The Obama administration “strongly opposes” House action to eliminate HAMP, and if the legislation was presented to the president for his signature into law “his senior advisors would recommend that he veto the bill,” it said in a statement.

The program is designed to prevent mortgage foreclosures by giving lenders incentives to permanently lower monthly mortgage payments to help struggling owners stay in their homes.

It aimed to reach up to 4 million U.S. households when it was launched in 2009. So far only about 500,00 borrowers have had their loan payments lowered under the program, but the White House said it was helping the battered housing market.

“As tens of thousands of responsible American homeowners struggling with their mortgages receive permanent assistance each month from HAMP, the Administration believes that continuation of HAMP is important to the Nation’s sustained economic recovery, it said.

(Reporting by Alister Bull; Editing by Cynthia Osterman)

NEW YORK (Reuters) – Applications for U.S. home mortgages dipped last week despite increased refinancing, an industry report said on Wednesday, suggesting still-stunted demand as the spring selling season nears.

The Mortgage Bankers Association said its seasonally adjusted index of mortgage application activity, which includes both refinancing and home purchase demand, fell 0.7 percent in the week ended March 11.

The MBA’s seasonally adjusted index of refinancing applications rose 0.9 percent, marking its second straight week of greater volume. The MBA’s gauge of loan requests for home purchases fell 4 percent.

Fixed 30-year mortgage rates averaged 4.79 percent in the week, down from 4.93 percent the week before.

(Reporting by Al Yoon, Editing by Chizu Nomiyama)

WASHINGTON – Builders broke ground last month on the fewest homes in nearly two years and cut their requests for permits to start new projects to a five-decade low. The decline in construction activity is the latest evidence that the housing industry is years away from a recovery.

Home construction plunged 22.5 percent in February from January to a seasonally adjusted 479,000 homes, the Commerce Department said Wednesday. It was the lowest level since April 2009 and the second-lowest on records dating back more than a half-century.

The decline followed a surge in highly volatile apartment construction in January, which pushed the overall construction rate up to more than 600,000 units — the fastest rate in 20 months. Still, the building pace has been far below the 1.2 million units a year that economists consider healthy.

Single-family homes, which make up roughly 80 percent of home construction, fell 11.8 percent in February. Apartment and condominium construction dropped 47 percent, reversing much of January’s gains.

Building permits, an indicator of future construction, fell 8.1 percent last month to the lowest level on records dating back to 1960. Permit requests for single-family homes saw the biggest decline. Apartments and condos remained flat.

Falling prices, sluggish sales and the weak construction rate all point to a housing market that is “stuck at a bottom of a steep hill,” according to Moody’s Analytics Economic Research.

“There are really large structural problems with the housing market,” said Dan Greenhaus, chief economic strategist with Miller Tabak + Co. “This is not a run-up in oil prices. This is a multiyear build up in the housing market that is going to take more than several months or several quarters to get through.”

For a housing recovery to take hold, the job market needs to improve and builders need to gain access to hard-to-get credit.

“Credit is flowing freely to large companies but not so much to the small builders,” said Patrick Newport, U.S. economist for IHS Global Insight. “If builders cannot get financing to build new homes, housing will remain in the dumps.”

Analysts said year-end building code changes in California, Pennsylvania and New York caused an artificial spike for permit requests in December and housing starts in January. Builders in those states rushed to file new permits before those changes went into effect.

Even with those gains, the housing market has struggled. Millions of foreclosures have forced home prices down and more are expected this year. Tight credit has made mortgage loans tough to come by. And some potential buyers who could qualify for loans are hesitant to enter the market, worried that prices will fall further.

The drop in home construction activity was felt coast to coast. It fell 48.6 percent in the Midwest, 37.5 percent in the Northeast, 28 percent in the West and 6.3 percent in the South.

The volatile housing market is weighing on the overall economic recovery. Each new home built creates, on average, the equivalent of three jobs for a year and generates about $90,000 in taxes, according to the National Association of Home Builders.

The trade group said Tuesday that its index of industry sentiment for March improved slightly to 17. That was the first gain in five months after four straight readings of 16. Still, any reading below 50 indicates negative sentiment about the housing market’s future. The index hasn’t been above that level since April 2006.