Wednesday, July 30, 2008

The Housing and Economic Recovery Act of 2008

H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008.
The bill includes the following provisions:

  • GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
  • FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).
  • Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).
  • FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.
  • Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.
  • VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.
  • Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.
  • GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.
  • Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.
  • National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.
  • CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.
  • LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.
  • Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.

Source:National Association of REALTORS® (7/30/08)

Sunday, July 27, 2008

Housing rescue bill heads to Bush for signature to bailout borrowers

WASHINGTON -- Congress passed a housing rescue bill Saturday aimed at sparing 400,000 struggling homeowners from foreclosure. President Bush is expected to sign the measure quickly.

The measure, approved by a 72-13 vote during a rare weekend session in the Senate, lets homeowners who cannot afford their monthly payments refinance into more affordable government-backed loans rather than losing their homes. The bill also offers a temporary financial lifeline to the troubled mortgage companies Fannie Mae and Freddie Mac, and tightens controls over them.

There would be higher limits on loans that Fannie Mae and Freddie Mac can buy and the Federal Housing Administration can insure. The loans would be capped at $625,000.

Those ailing companies back or own $5 trillion in mortgages, or nearly half the nation's total. The rescue plan is intended to prevent the two pillars of the home loan market from failing and causing broader market turmoil.

Bush initially said the proposal was a burdensome bailout for irresponsible borrowers and lenders. But he dropped a threat to veto it this week after Treasury Secretary Henry M. Paulson argued that the support for Fannie Mae and Freddie Mac was vital to calming markets in the U.S. and abroad.

Bush opposed $3.9 billion in the bill that would help neighborhoods devastated by the housing crisis buy and fix up foreclosed properties. The administration argues this would hurt homeowners by giving lenders an incentive to foreclose rather than help people stay in their homes.

Supporters said the bill was a long-overdue response to the mortgage meltdown and would help boost the sagging economy. Democrats bashed Republicans for delaying the measure and forcing the Saturday session.

The House approved the bill on Wednesday.

Source: Los Angeles Times Staff Writer (July 26, 2008)

How housing rescue bill can help you

The legislation - likely to be enacted soon - devotes $300 billion to helping troubled homeowners avoid foreclosure. See if you qualify.

The House on Wednesday passed a $300 billion housing rescue bill aimed at helping troubled homeowners avoid foreclosure and supporting mortgage giants Fannie Mae and Freddie Mac.

If the bill is now passed by the Senate and signed by President Bush, who today withdrew his threat to veto it, thousands of at-risk borrowers will be able to refinance their unaffordable old mortgages into new low-cost fixed-rate loans insured by the Federal Housing Administration (FHA).

The Congressional Budget Office estimates that 400,000 borrowers with $68 billion in loans may benefit from the program - but the bill allows for as many as 1 million or 2 million borrowers to participate in the program.

Here's what homeowners need to know.

Who's eligible?

Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 40% of their gross monthly income on all household debt to be eligible for the program.

They can be up to date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage - and attest that they are not deliberately defaulting just to obtain lower payments.

Before homeowners can get FHA-backed mortgages, they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it's to pay for necessary upkeep on the home.

To get a new home equity loan, borrowers will need approval from the FHA, and total debt cannot exceed 95% of the home's appraised value at the time.

How can I apply?

Borrowers can contact their current mortgage servicer or go directly to an FHA-approved lender for help. These lenders can be found on the Web site of the Department of Housing and Urban Development.

How does the refinancing process work?

This is a voluntary program, so lenders holding the original mortgage have to agree to rework a given loan before things can get started. The bill requires lenders to make major concessions, writing down the value of the loan to 90% of the home's current value. In areas where prices have plummented by as much as 20%, that will mean a substantial loss for the lender.

But lenders won't sign off on a workout unless they think that they'll lose less money on that than they would by allowing a home to go through the costly foreclosure process.

Each loan will have to be underwritten by an FHA lender on a case-by-case basis. That means the banks will do a new appraisal to determine the home's current value, as well as examine and verify income statements, bank accounts, job histories and credit scores.

Based on that new appraised home value, the FHA lender must determine how much the original lender has to reduce the original mortgage, so that it will reflect 90% of the home's market value.

If the original lender agrees to the writedown, the new lender buys the old loan and takes over the reworked mortgage.

As part of the deal, the old lender writes off any fees and penalties on the original mortgage, including prepayment penalties, and accepts the proceeds from the new loan on a paid-in-full basis. Additionally, it pays the FHA an up-front premium equal to 3% of the mortgage principal.

What does it cost?

There should be little up-front costs for borrowers to bear. Loan origination fees will vary by lender, but these can usually be paid by the borrower over the life of the loan in the form of a slightly higher interest rate.

However, the refinanced loans do come with many strings. For one thing, borrowers are responsible for paying an insurance premium to the FHA guaranteeing the loan, which will be 1.5% of the principal annually.

Borrowers also agree to share any profits from future home-price appreciation with the FHA. To do that, they'll pay a "3% exit fee" of the mortgage principal to the FHA when they resell or refinance.

Plus, they'll agree to pay the FHA 100% of any profits they realize from higher home prices if they sell or refinance within a year. So if the original loan principal is $200,000 and the home sells for $250,000, the borrower will owe the FHA $50,000, minus costs.

After a year, borrowers will share 90% of the profits with the FHA. The percentage keeps dropping in 10% increments to 50% after the fifth year, where it stays.

What will I save?

Savings depend on what borrowers are paying for their present loan and where they live, but for most people it will be substantial, even after factoring in the FHA fees.

In areas that have sustained huge price drops, such as Sacramento, Calif., where prices have fallen by about 30% over the past year, some loans might be reduced by more than 40%.

Additionally, the FHA loans carry reasonable interest rates, which are fixed for the life of the loan, as opposed to a subprime adjustable-rate mortgage that can jump higher every six months.

Wednesday, July 23, 2008

Five California Cities on list of fastest Growing

(US Census Press Release; Thursday, July 10, 2008)

No Free Ride for Risky Borrowers

The government's condition-laden plan to aid at-risk borrowers makes it clear: This won't be a free ride.

WASHINGTON -- After six months of haggling and political gamesmanship, a massive housing-relief bill is heading for final approval.

Though it has hundreds of pages and dozens of separate initiatives -- including revamping federal oversight of mortgage giants Fannie Mae and Freddie Mac -- the centerpiece is a $300-billion HOPE program designed to provide refinancing lifelines to as many as 400,000 homeowners in deep trouble on their current loans.

But what are the specifics? Who will be able to qualify for help? How quickly will HOPE be up and running, and how long will it run? Are there any key drawbacks or limitations?

Here's a quick overview:
  • Congress' basic idea is to save people on the edge of the waterfall: families and individuals at immediate risk of losing their homes, but who could avoid foreclosure if their mortgage balances and interest rates were significantly reduced.
  • The program will be entirely voluntary -- and that's a crucial limitation. Lenders and investors who own defaulting mortgages cannot be compelled to allow their borrowers to refinance. If they conclude that they're likely to lose less by allowing delinquent borrowers to go to foreclosure rather than refinance into HOPE loans, they'll be free to do so, even if their borrowers want to participate and qualify.
  • Lenders will have to agree to substantial write-downs of principal and penalty fees currently owed to them. The new maximum HOPE loan amount -- insured by the Federal Housing Administration under a special new fund created by the legislation -- will be 90% of the current market value of the property, not the value of the house when the lender originally made the loan.
  • Plus, the FHA will impose an upfront insurance fee of 3% of the new loan amount, payable out of refinancing proceeds that would otherwise go to the original lender. Lenders also will have to clear away any potential issues with holders of second liens on properties -- typically banks who've extended equity credit lines or second mortgages and have a claim on any refinancing proceeds -- before participating in the HOPE plan.

There are important hurdles borrowers must get over to qualify as well. They must:

  • Demonstrate a "lack of capacity" to pay their current mortgage but have enough income to make regular monthly payments on a smaller, fixed-rate FHA loan. Their current income-to-mortgage debt ratio must be above 35%.
  • Certify to the government that they haven't "intentionally defaulted" on their current mortgage or on any other debt in order to refinance through a HOPE loan. They also must certify that they are telling the truth about all aspects of their financial status and that they have never been convicted of a fraud. Anyone who lies on their application will be subject to severe penalties, including prison sentences of up to five years.
  • Agree to use and occupy the refinanced house as their principal residence, and not own any additional houses.

An important and somewhat unusual feature of the program is the federal government's requirement that homeowner beneficiaries share any appreciation profits or equity gains from sales of their houses in subsequent years. The message here is that HOPE is no free ride. The refinancing process will essentially create new equity stakes for borrowers, because the maximum loan amount will be 90% of the appraised market value of the property.

Borrowers who had been underwater and in serious default will find themselves with 10% equity stakes overnight. But they won't be able to tap that money quickly.

If the home is sold in the first year after the refinancing, the FHA must be repaid the equity created in full. In sales occurring the next four years, homeowners can retain rising percentages of the equity, up to 50%. In addition, the FHA will be entitled to 50% of any appreciation in market value of the house from the date of refinancing to a subsequent sale.Under the legislation, the HOPE program could start as early as Oct. 1, but must end Sept. 30, 2011. Questions hovering over the entire HOPE concept include: Will enough lenders and investors agree to take the upfront losses -- they call them "haircuts" -- required to participate? Congressional estimates suggest that up to 400,000 financially distressed borrowers could be assisted, but nobody knows for sure.

Also, will lenders send only the dregs of their portfolios -- borrowers with the least likelihood of success -- to the FHA? If so, could the program end up being far more costly than Congress anticipated, even with a $300-billion authorization to cover insurance losses?

Friday, July 18, 2008

Investors With Cash Are Kings in Today's Market

Some are calling this the best market for investors since real estate tanked in the early 1980s.

Investors, alone and in groups, are negotiating volume deals as they purchase whole subdivisions and bundles of 10 to 50 defaulted loans for pennies on the dollar.

"What we're seeing today dwarfs [the 1980s] by five or 10 times," says Bob Leonetti, president of SMI Funding, an Austin, Texas, company that originates and acquires private and conventional mortgages. "There are huge opportunities for investors."

"People who have cash positions now are going to do very well," says Central Florida real estate practitioner Mike Norvell of Developers Capital Realty in Leesburg, Fla. "It's just crazy the prices you can buy for right now for cash."

Source: Investor’s Business Daily, Kathleen Doler (07/07/08)

Top 10 Cities to Buy a Home

Financially, at least, the best places to buy houses are those where buying costs less than renting, tax incentives are attractive, and there’s an opportunity to build equity.

Forbes magazine surveyed the 40 largest metropolitan area housing metrics looking for cities where home prices have appreciated over the last two years. It also measured vacancy rates. And it gave extra points to cities where rents are significantly higher than a buyer would pay for the same home.

Texas dominated the magazine’s list because of its healthy job market and growing tax revenues.

Here are the 10 cities that topped Forbes’ best-places-to-buy list:
  1. Houston
  2. Austin, Texas
  3. St. Louis
  4. Philadelphia
  5. San Antonio, Texas
  6. Dallas
  7. Charlotte, N.C.
  8. San Francisco
  9. Jacksonville, Fla.
  10. Atlanta

Source: Forbes, Maurna Desmond (07/14/08)

Fed Issues New Lending Rules

The Federal Reserve on Monday adopted rules designed to protect homebuyers from the kind of loans that drove many into foreclosure.

The new rules apply to all lenders and not just to banks supervised by the Fed. Most are expected to take effect Oct.1, 2009. Escrow requirements won’t go into effect until April 1, 2010.

Here are the new requirements:
  • Prevent loans made without documenting borrower’s income.
  • Require lenders to escrow money to pay taxes and insurance for risky borrowers.
  • Limit and in some cases ban prepayment penalties.
  • Prohibit lenders from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value.
  • Require mortgage advertising to contain information about rates, monthly payments and other features of the loan.
  • Insist lenders credit a mortgage payment to a home owner’s account on the day it is received.
  • Brokers and others are forbidden from "coercing or encouraging" an appraiser to misrepresent the value of a home.

Source: The Associated Press, Jeannine Aversa (07/14/08)

How to reduce your Property Taxes in California! (Proposition 8)

Proposition 8 – What is It?

In 1978, California voters passed Proposition 8, a constitutional amendment that allows a temporary reduction in assessed value when a property suffers a “decline-in-value.” A decline-in-value occurs when the current market value of your property is less than the current assessed value as of January 1.

Eligibility Requirements
  1. You must demonstrate that on January 1, the market value of your property was less than its current assessed value.
  2. You must file a claim form for a Decline-in-Value Reassessment Application (Prop.8) with the Assessor between January 1 and December 31 for the fiscal year beginning on July 1. If December 31 falls on a Saturday, Sunday, or a legal holiday, an application is valid if either filed or mailed and postmarked by the next business day.

The Process

  1. On your claim form, provide the Assessor with information that supports your opinion that the market value for your property is less than the assessed value. The best supporting documentation is information on sales of comparable properties. You should select two comparable sales that sold as close to January 1 as possible, but no later than March 31.
  2. An appraiser will review your claim form and the information you provide. Other sales information available to the Assessor may also be considered. If the market value as of January 1 is less than the trended base value2, your assessed value will be lowered to the market value for the fiscal year beginning on July 1. The adjusted value will be reflected on your annual tax bill.
  3. If the current market value is higher than the trended base value, no change in assessed value will be made. If you disagree with the Assessor’s findings, you may file an appeal with the Assessment Appeals Board. You must file your appeal between July 2 and November 30 for your annual tax bill.

A property was purchased for $500,000. During a three-year period, the real estate market declined and recovered. The property owner filed for a decline-in-value reassessment. The following table shows the trended base value of the property, the market value of the property, and the assessed value of the property. Assumimg a 2% Annual C.P.I.:

Base Value TrendedMarket ValueAssessed Value
Year 1$500,000$500,000$500,000
Year 2$510,000$480,000$480,000
Year 3$520,200$510,000$510,000
Year 4$530,604$550,000$530,604

Frequently Asked Questions

Q. Do properties other than single family residences qualify?

A. Yes. All real property qualifies.

Q. What is a comparable sale?

A. A property sold with features that are similar to your property is a comparable sale. Comparable sales information helps you analyze the value of your home. For example, a property similar in location, zoning, size, number of bedrooms and bathrooms, age, quality and condition to yours that sold in the open market is a comparable sale.

Q. Where can I find comparable sales information?

A. A good place to start is online. The Assessor’s website offers sales information for properties that have sold within the last two years. The same information is available from any Assessor District Office. Also, many websites offer sales information free of charge. A local real estate agent or title agent can also be a valuable source of information.

Q. I filed my Proposition 8 Application by December 31. When and how will I
know if my value will be reduced?

A. You will receive notification by mail before July 1.

Q. If my assessed value is reduced, how long will it last?

A. Proposition 8 reassessments are not permanent, but last at least one year. The assessed value may decrease or increase depending on the market value of your property on January 1 of each subsequent year. Your assessed value will never increase more than the trended base value. It is important to remember, however, that base year values suspended by Proposition 8 reassessment values continue to increase by an annual inflation factor of no more than 2% per year.

How Do I File for Proposition 8 Tax Relief?
A claim form is available from several sources. Choose what is most convenient for you.

Online: Forms are available at the Assessor’s website:

Email: Send us an email at

Phone: Call (213)974-3211

What Form Do I Need?
Decline-in-Value Reassessment Application (Proposition 8)

Tuesday, July 15, 2008

14 Markets With Nowhere to Go but Up

PMI Mortgage Insurance Co., has ranked the nation’s 50 largest metropolitan statistical areas according to the risk that home prices will decline further during the next two years.

The highest risk is in areas where home price growth was the greatest during the housing boom. The lowest risk of prices declining further is in areas where affordability has increased.

PMI identifies these areas as having a less than 1 percent risk of home prices declining further:

  • Milwaukee-Waukesha-West Allis, Wis.
  • Cleveland-Elyria-Mentor, Ohio
  • Austin-Round Rock, Texas
  • Denver-Aurora, Colo.
  • Charlotte-Gastonia-Concord, N.C.-S.C.
  • Kansas City,Mo.-Kan.
  • Columbus, Ohio
  • Cincinnati-Middletown, Ohio-Ky.-Ind.
  • Indianapolis-Carmel, Ind.
  • San Antonio, Texas
  • Houston-Sugar Land-Baytown, Texas
  • Pittsburgh, Pa.
  • Dallas-Plano-Irving, Texas
    Fort Worth-Arlington, Texas

Source: PMI Mortgage Insurance Co. (07/01/2008)

Top 10 Best Counties to Raise a Family

Low cost of living, reasonably priced homes, and short commute times helps add to excellent schools and is what landed 10 communities at the top of Forbes magazine’s best places to raise a family.

To be considered, the communities had to have populations greater than 65,000 and most of the school funding had to come from property taxes. Average SAT and ACT scores must top 1,050 or 22, respectively. These factors reduced the number of counties under consideration to 51.

After that, the magazine considered cost of living, graduation rate, home prices, property tax rates as a percentage of median home prices, percentage of homes occupied by owners, per-capita income, air quality, crime rate and commute times.

Here are the results:

  • Hamilton County, Ind. (near Indianapolis)
  • Ozaukee County, Wis. (near Milwaukee)
  • Johnson County, Kan. (near Kansas City)
  • Geauga County, Ohio (near Cleveland)
  • Delaware County, Ohio (near Columbus)
  • Morris County, N.J. (northern N.J.)
  • Hunterdon County, N.J. (central N.J.)
  • Waukesha County, Wis. (near Milwaukee)
  • Montgomery County, Pa. (near Philadelphia)
  • Chester County, Pa. (near Wilmington, DE)

Source: Forbes, Zack O’Malley Greenburg (06/30/08)

Best Cities for Building Wealth, which provides compensation information, has ranked the best and worst cities in which to build personal wealth.’s salary value index compares local salaries, the cost of living and unemployment rates among U.S. cities with populations greater than 250,000.

Other considerations including diversity of industry, education level of the cities’ population, proximity to post secondary institutions, percent of population below the poverty level and median travel time to work.

“The most favorable cities offer the largest difference between pay and costs," says Bill Coleman, chief compensation officer.

Cities at the bottom of the list typically represent the places where living is the most expensive and pay differentials are not proportionately inflated. Cities at the top are headquarters for large companies, have appealing amenities and are growing.

Here are the five cities at the top and bottom of the list:

Best Cities to Build Personal Wealth
  1. Plano, Texas
  2. Aurora, Colo.
  3. Omaha, Neb.
  4. Minneapolis
  5. Albuquerque, N.M.

Worst Cities to Build Personal Wealth

  1. New York
  2. Washington
  3. Los Angeles
  4. Honolulu
  5. San Francisco

Source: (06/30/08)

Tuesday, July 8, 2008

New California Foreclosure Law (SB 1137)

As a result of the subprime loan market collapse, numerous bills were introduced this year in the California Legislature, including the recently enacted SB 1137. Within this highly charged political environment, the California Land Title Association (CLTA), along with trustees, escrow companies, and lender groups originally opposed this legislation, which subsequently underwent a series of significant amendments before being signed by the Governor earlier this week.

SB 1137 became effective July 8th as an urgency measure. However, requirements pertaining to the notice of default and the posting and mailing of an entirely new notice will not become operative until 60 days after the effective date.

The provisions of the new law outlined below apply to loans secured by owner occupied residential real property and made between January 1, 2003 and December 31, 2007. These provisions will remain effective until January 1, 2013. The requirements are extensive and the full act text should be consulted for details.

  1. A Notice of Default (NOD) may not be filed by the trustee or lender until 30 days after contact is made in person or by telephone with a borrower to assess their financial situation and explore options to avoid foreclosure, or until 30 day after satisfying specified due diligence requirements.
  2. During the initial contact the borrower must be advised of the right to request a subsequent meeting. If a meeting is requested then it must be schedules with 14 days.
  3. An assessment of the borrower's financial situation and discussion of options may occur at the first contact or at the subsequent meeting, but in either case the borrower must be provided a toll-free number for HUD certified housing counseling agencies.
  4. A NOD must include a declaration that the borrower has been contacted or due diligence has been use to try to contact the borrower or that the borrower has surrender the property. Due diligence includes having a link to information on options to avoid foreclosure on the web site of the beneficiary or their agent.
  5. If a NOD was filed prior to the effective date of the new law, without a subsequent notice of rescission, then a new declaration must be included as part of the notice of sale. The declaration must state that the borrower either was contacted to assess their financial situation and explore options to avoid foreclosure or that no contact occurred; in which case the efforts made to contact the borrower must be listed.
  6. A NOD may be filed when a borrower has not been contacted as required by the new law if the failure to contact the borrower occurred despite the due diligence of the lender or their agent. The actions that constitute due diligence are listed in the new law.
  7. A new notice has been created by the law and must be posted and mailed at the same time a notice of sale is posted. The notice advises residents that the property may be sold and that their right to continue to reside in the property may be affected, along with certain other information.

U.S. home slump harder to reverse than usual

The nation's two-year-old housing market downturn is as bad as any since World War II and record foreclosures and tighter credit will make it more difficult to reverse, according to a report issued Monday by Harvard University's Joint Center for Housing Studies. Any housing recovery is unlikely to occur until potential homebuyers believe prices have hit bottom, observers say.

For my Readers:

  • Homebuyers remain on the sidelines as they face the highest mortgage rates in nine months and stricter lending criteria. The Federal Reserve efforts to keep interest rates low with the hope of stimulating buyer activity has largely fallen on deaf ears as potential homebuyers watch prices continue to slide in many areas of the nation courtesy of a large inventory of foreclosed properties for sale.

  • Director Nicolas Retsinas observed that housing markets "historically recover only after the economy has entered a recession and a combination of falling mortgage interest rates and house prices have improved housing affordability. It will take longer to rebound given the unusually high levels of foreclosures and constrained credit markets. The slump in housing markets has not yet run its full course."

  • The report concludes: "...if the economy slips into a recession or job losses keep racking up, household growth and homeownership demand could fall even more."

Source: Reuters (6/23/2008)