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Half of Mortgage Borrowers Will Be 'Underwater'

July Unemployment Rate Drops
USA TODAY

Employers throttled back on layoffs in July, cutting just 247,000 jobs, fewest in a year, and the unemployment rate dipped to 9.4%. It was a better-than-expected showing that offered a strong signal that the recession is finally ending. The new snapshot, released by the Labor Department on Friday, also offered other encouraging news: workers' hours nudged up after sinking to a record low in June, and paychecks grew after having fallen or flat-lined in some cases.


Half of Mortgage Borrowers Will Be 'Underwater'
CNNMoney.com

Nearly half the nation's mortgage borrowers will soon owe more on their mortgages than their homes are worth, according to a new report. An Deutsche Bank analysis of the battered housing and mortgage markets estimated that 25 million borrowers, representing 48% of all Americans with mortgage loans, will plunge underwater before home prices are expected to stabilize in the beginning of 2011.


Drop in Homeownership Likely to Continue
USA TODAY

The rate of homeownership is forecast to keep tumbling in the next decade to lows not seen since the 1980s, a trend that could redefine a key element of the American dream even after the housing market recovers. The percentage of households that own homes hit a peak of almost 70% in 2004 and 2005. By the second quarter of this year, that slipped to 67.4%, according to the Census Bureau. Now, a University of Utah analysis projects it'll drop to about 63.5% by 2020 — the lowest since 1985. "It will fall steadily by about half a point per year," says Arthur C. Nelson, director of the university's Metropolitan Research Center. "We'll have far more renters in the future."

Providence Mayor Signs Rules to Slow Foreclosures
Boston Herald

Providence Mayor David Cicilline has signed two city ordinances designed to protect tenants whose rental homes are foreclosed upon, and to banks to enter mediation before foreclosing upon homeowners. One requires that renters must be allowed to stay in a foreclosed property for the duration of their lease, and that whoever takes over the property must pay for services such as heat and water. The other ordinance would reject deeds filed by lenders who foreclosed upon a property without undergoing mediation.

Posted: Fri, August 07 2009 7:58 AM by Octavion
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Comments

Mark Sagnep said:

I would like to take this opportunity to invite all Americans to assemble and pressure their local and state legislatures to put forward new city ordinances, state and hopefully federal laws prohibiting real estate property transactions below the home building cost. I support free markets and I am usually skeptic about government interventions but for these foreclosure markets especially in California REGULATION IS NEEDED NOW. While the financial sector is cashing out and allowing bonuses to their executives the construction sector is bankrupt, putting a lot of people out of work. Meanwhile, homeowners live in fear knowing that they owe more on their houses than what the properties are valued in these foreclosure-driven markets. As a result, spending remains down affecting all sectors of the economy as well as economic growth is blocked because nobody is in position to access their home equity to start new businesses or making new investments. Severely under-priced bank-owned properties are not only driving home values down into negative equity, putting a financial burden on homeowners, but also are contributing to the increasing unemployment rate. The current measures are not working. If over-priced properties create the mortgage bubble that let us into a recession, ridiculously under-priced foreclosure houses will let us into a deep depression soon if this vicious cycle continues.

Mark Sagnep

 

# August 16, 2009 11:07 AM
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