Housing Crash to Resume on 7 Million Foreclosures, Amherst Says
September 24, 2009, Bloomberg
The crash in U.S. home prices will probably resume because about 7 million properties that are likely to be seized by lenders have yet to hit the market, Amherst Securities Group LP analysts said. The “huge shadow inventory,” reflecting mortgages already being foreclosed upon or now delinquent and likely to be, compares with 1.27 million in 2005, the analysts led by Laurie Goodman wrote today in a report. Assuming no other homes are on the market, it would take 1.35 years to sell the properties based on the current pace of existing-home sales, they said. “The favorable seasonals will disappear over the coming months, and the reality of a 7 million-unit housing overhang is likely to set in,” they said.
The Foreclosure Pain May Drag on for Years
September 23, 2009, Wall Street Journal
(This is the first installment of a series of posts on the shadow market) Delays in dealing with home foreclosures are stretching out the pain for the U.S. housing market, as we reported in Wednesday’s Journal. That has stirred lots of debate over whether it is better for the nation to face the pain of millions of foreclosures immediately – to get it over with fast — or to draw the process out over several years in hopes that the economy and housing demand will recover. In some of the former bubble markets, including Florida, the problem will be aggravated by looming defaults on option adjustable-rate mortgages (ones that start with minimal payments but require borrowers to face the music later) and high unemployment rates, says Jack McCabe, a housing analyst in Deerfield Beach, Fla. Mr. McCabe says he knows people who haven’t paid their mortgages in more than a year and are still haven’t been evicted. “Some people are saying, ‘I could pay my mortgage bill, but why?’” Mr. McCabe adds: “The distressed real estate market has become the real estate market in many locations, and that isn’t going to change for years.”
Existing Home Sales Slide Unexpectedly
September 24, 2009, CNNMoney.com
Existing home sales fell in August, snapping a four-month streak of increases, according to a report released Thursday. Sales of previously-owned homes fell 2.7% last month from July, but were up 3.4% from a year ago, said the National Association of Realtors. Sales had jumped 15.2% in the previous four months. August home sales hit a seasonally-adjusted annual rate of 5.1 million units, down from 5.24 million in July. That's well below the analyst consensus estimate of 5.35 million annual units compiled by Briefing.com. The median price of homes sold in July was just $177,700, a 12.5% year-over-year drop.
US Home Foreclosure Mediation in Jeopardy, Report Says
September 23, 2009, Reuters
A slew of state and local home foreclosure mediation programs have enormous potential to help homeowners, but most suffer from lack of industry accountability, according to a study released on Wednesday. The nonprofit National Consumer Law Center, or NCLC, in a new review of 25 foreclosure mediation programs in 14 states, warns that there is no data to confirm that foreclosure mediation programs anywhere have led to a substantial number of affordable and sustainable loan modifications. “If the programs continue to demand little or no accountability from servicers, they will likely go the way of federal efforts to control foreclosures that have failed as a result of relying on voluntary compliance by the lending industry," wrote the report's author, NCLC staff attorney Geoffrey Walsh. “It is unfortunate that the industry has so far prevailed in blocking Congressional action on court-ordered loan modifications, the one step that would level the playing field for consumers and ensure the necessary accountability from all parties."