Statistics show loan modification not a panacea

"I do have a concern about money for loan modifications, particularly with such a high range of re-default," Reich told participants at a conference in Washington organized by the Office of Thrift Supervision. "Focusing on job creation is a better way to focus federal dollars than on a loan modification process may be only partially effective."


Office of Thrift Supervision Director John Reich discusses his thoughts on the best way to use government funds to end the financial crisis. He says government money may be better spent creating jobs than modifying mortgages. (Dec. 9)Reich's statement clashed with Federal Deposit Insurance Corporation chairwoman Sheila Bair over the best way to use government funds to end the financial crisis.

Reich's comments were focused, in part, on Bair's controversial proposal that would use $24.4 billion of a $700 billion government bank bailout program to modify loans. Bair argues that her proposal, which isn't supported by outgoing Treasury Secretary Henry Paulson, could avert 1.5 million foreclosures. Reich also referred to a job creation stimulus proposal put forward by President-elect Barack Obama.

Reich told MarketWatch that use of government capital to buy large minority stakes in U.S. savings and loan banks is working, but that it is too early to get a sense of how much lending participating institutions are doing.

Read more here>

America's Best Long-Term Real Estate Bets

Drive along Interstate 80, just outside the city of Sacramento, Calif., and scores of gated and planned communities await. Only they're not what developers envisioned. Sidewalks are empty; homes are unoccupied.

Blame the heady days of the real estate boom. Easy-to-acquire mortgages, plenty of open land and generous zoning provided new homes to scores of buyers. Between 2000 and 2005, Sacramento-area builders doubled production.

But as prices dropped and demand dried up, builders cut back. This year, there are expected to be 6,140 new constructions in the Sacramento metro area. That's down from 20,370 in 2005, according to the National Association of Home Builders (NAHB). Median prices are now $212,000, down from $375,000 in 2005. For many residents, this is old news. Sacramento home builders and buyers engaged in the same behavior leading up to, and following, the Savings & Loan crisis. That's when construction doubled and then quartered once prices fell. Indeed, it's a market prone to booms and busts, which not a good sign for long-term investment.

In Depth: America's Best Long-Term Housing Bets

Read more here>

Foreclosures, delinquencies hit record high

But the number of mortgages on which foreclosure proceedings was started actually fell slightly during the third quarter compared with the second quarter, according to the Mortgage Bankers Association's quarterly delinquency survey. That doesn't necessarily indicate a slowdown in foreclosures, said Jay Brinkmann, MBA's chief economist.

"An initial look at the number of foreclosure starts would seem to indicate at least a leveling off of foreclosures. These numbers, however, are being influenced by several factors including various moratoria on foreclosure filings and by mortgage companies holding loans in the 90-plus-day bucket during the modification and workout process," said Jay Brinkmann, MBA's chief economist, in a news release.

Read more here>

Townhomes Markt Update for ZIP Code 75001 - October

Inventory on The Market - 27

Sold - 2

Pended - 6

Months of Inventor on the Market Based on Closed Sales - 13.5

Avg. Sold Price - $271,000

Avg. CDOM - 106

Median Price - $272,000

The townhouse market for ZIP code 75001 on October has improved compare with September. The months of inventory on the market based on closed sales (13.5) indicate typical buyers market. The inventory on the market has decreased with 19%, while sales has been staying the same. Increasing in pended transaction and median price is a positive sign for November.

Home Prices Snowball

The real estate downturn is picking up speed again. After months of slowed-down price drops that hopeful commenters pegged as signs of a bottom, the third quarter saw record year-over-year price decreases of 16.6%, according to the S&P/Case-Shiller Home Price Index.

Case-Shiller calculated that third quarter prices fell -3.5% against the second quarter; the second quarter had fallen -2.2% versus the first quarter. Month-to-month figures do not auger well for those hoping for firmer home markets going forward. Between August and September home prices fell -1.85%, the fastest clip of the past six months. Prices only fell -0.49% between April and May, giving some real estate watchers hope that the declines were declining.

Read more here>