housing crisis: Housing: The Little Engine That Can't - 01/28/12 04:54 AM
Housing, the force that has lifted the economy from almost all previous recessions, now appears to have become the little engine that can’t, as the nation seeks to find another means of raising the U.S. from economic stagnation. One only has to look at the graphs (courtesy of Calculated Risk Blog) to see just how far housing has to go in order to stimulate the economy as it has done following previous recessions. And a look at the unemployment situation shows that “full employment” is still years away.
Instead of seeking ways to artificially stimulate housing—efforts to date have … (43 comments)

housing crisis: When Will Home Prices Return to Pre-recession Levels? - 01/14/12 07:25 AM
With millions of homeowners having lost much of their net worth as a result of the housing crash, many have asked, When will home prices return to pre-recession levels? And the answer is neither simple nor encouraging.
What homeowners really want to know is when their lost equity will return, when they’ll be able to sell and walk away with cash for a down payment, or when they can get a home equity loan to supplement a college fund. Sadly, for many the answer is not soon enough, and for some, never.
Much of the equity … (38 comments)

housing crisis: Housing Can’t Recover Unless the Banks are Honest - 08/31/11 11:21 AM
While many have blamed irresponsible actions by homeowners for the recession and the collapse of housing, much of the problem lies with the big banks; and housing can’t recover unless the banks are honest.  Just yesterday an article on ProPublica described how the state of Nevada is suing Bank of America, one of the prime culprits in the housing fiasco, alleging that, borrowers were duped into unaffordable loans and then victimized again through a misleading mortgage modification program that homeowners tried to use to avoid foreclosure. Finally, the suit alleges, the bank filed fraudulent documents to move forward with the … (60 comments)

housing crisis: Let’s Buy a House Has Become: “Let’s Make a Deal” - 07/29/11 03:54 AM
Homes, like everything else in life, are an ever-changing commodity. Little more than a century ago most had no central heat, no electricity, no plumbing—none of the things we consider necessities today.  And only a few decades ago homes were dramatically smaller with an emphasis on function rather than form. 
In the last few years, however, homes exploded in both size and features.  Everyone wanted their own separate bath, media centers and the latest technology.  Kitchens became enclaves for both cooking and entertainment with appliances that rivaled those in the finest restaurants.  Easy credit helped to fund our desires … (8 comments)

housing crisis: What if the Housing Market Has Already Recovered? - 07/21/11 09:59 AM
What if the housing market has already recovered?  What if today’s sluggish market is the rate at which homes will be sold for ten years or longer?  Could it be that the sales levels of the past decade were just an anomaly fueled by loose lending restrictions and the attraction to phantom “investment” opportunities?  The bursting of the housing bubble was inevitable, and an attempt to stimulate a return to the sales levels of 2005-2006 would be to inflate yet another.  Today’s home sales are much closer to  “normal” than those of 2005-2006; and it’s time for sellers, Realtors® and builders … (76 comments)

housing crisis: Will the Housing Market Ever Return? - 06/02/11 02:03 AM
John Boehner was recently quoted as being “skeptical” that there is “anything government can do” to bring about a recovery in housing; but will the housing market ever return?  The media love such comments as Speaker Boehner’s, and readily plaster them across TV screens and front pages; however, the answer is much more complicated than can be described in headlines.  In an effort to simplify complicated subjects and to appeal to the largest audience, news reports often paint a somewhat distorted picture of what’s actually occurring.  Here are some hard facts about housing:
The downward spiral of home prices. … (9 comments)

housing crisis: Government Can Create Modification Programs That Work - 04/26/11 10:06 AM
While HAMP, the administration’s foreclosure prevention program, has been a dismal failure, efforts in Pennsylvania demonstrate that government can create modification programs that work.  And while the Pennsylvania program is dramatically more effective, it’s also much less costly to taxpayers and less of a hassle for lenders to administer. 
What the Pennsylvania program demonstrates is that such programs don’t have to be complicated—in fact, the more complex such programs are, the less likely they are to achieve success.  Yes, government can create modification programs that work; they just have to think more creatively and less bureaucratically. 
The … (10 comments)

housing crisis: California Court Says Foreclosed Homeowner Can Sue Bank for Fraud - 02/01/11 10:29 AM
California Court Says Foreclosed Homeowner Can Sue Bank for Fraud
Many of the recent news stories about bankers have been less than sympathetic; and a new ruling from a California court provides yet one more illustration of why public opinion of the banking industry has fallen so low.  In what could be a major setback for big banks, often accused of sabotaging loan modification efforts, the court, in a scathing 15 page ruling, found sufficient evidence that U.S. Bank had defrauded a borrower by reneging on a promised loan modification. 
According to the ruling, the lender … (7 comments)

housing crisis: The Economy May Improve in 2011, But MY Economy Will Only Improve if I ____ - 01/14/11 01:12 PM
While economists argue over whether or not Quantitative Easing will bring the nation out of its economic doldrums, whether or not the housing market has reached a bottom, whether inflation will rear its head this year or if the unemployment rate will drop; those factors, while important, do not, of themselves, bring either failure or success to any of us.  The national economy is much less important than what we, as individuals, do to “create” our own success.
The economy may improve in 2011, but MY economy will only improve if I _______.  And understanding what fills in that … (13 comments)

housing crisis: Strategic Default in Reverse - 01/13/11 10:53 AM
An article in the Chicago Tribune describes how some mortgage servicers are exercising strategic default in reverse and are abandoning properties after determining that the costs of foreclosure are greater than the underlying value of the property.  Often in distressed neighborhoods, such properties only add to the decline of communities, as vacant houses become eyesores and havens for criminal activity.  Chicago area foreclosures increased by 20% in 2010, only adding to lower home values and further blight.   
The Tribune article describes the “stewardship relationship” that exists between borrower and lender and how certain loan servicers are failing to … (19 comments)

housing crisis: Fewer Homes Seized as Banks Slow Pace of Foreclosures - 01/10/11 02:55 PM
Major lenders, concerned over the recent challenges to the foreclosure process, have slowed the pace in an attempt to avoid further problems.  With the potential for fines, lawsuits and sanctions, some banks are erring on the side of caution.
And the banks concerns seem justified as all 50 state attorneys general, the FHA, Justice Department, investor groups as well as numerous local courts probe foreclosure documents looking for fraud or improper filings.  And while struggling homeowners may benefit from delayed foreclosure, most will ultimately lose their homes.  In the meantime, it’s difficult to achieve stabilization in housing as an … (7 comments)

housing crisis: Jobs Growth and a Housing Market Recovery Are Still Years Away - 01/08/11 09:19 AM
Federal Reserve Chairman Ben Bernanke, speaking before the Senate Budget Committee, stated that “. . . it could take four to five more years for the job market to normalize fully.”  Despite reports of unemployment falling by more than 500,000 to 9.4% in the most recent data from the Labor Department, the jobless rate continues to plague the housing recovery.  And a little digging into the numbers shows that about 400,000 job seekers simply gave up their search.
And while the lower unemployment rate created a temporary media buzz, the underlying data gives cause for concern.  With 103,000 nonfarm payroll … (12 comments)

housing crisis: 2011 May Be the Year of the Short Sale - 01/06/11 09:22 AM
With new rules from Treasury and pressure from investors, 2011 may be the year of the short sale.  And while the Home Affordable Foreclosure Alternative, HAFA, was intended to speed up the short sale process, real estate agents and sellers know the program has been anything but speedy. 
With millions of homeowners in serious default, many had expected to see short sales increase dramatically in 2010 as HAFA encouraged lenders to increase the pace, but the program lacked sufficient incentives for servicers and ended the year with less than 700 approvals.  However, a report on CNBC describes how … (9 comments)

housing crisis: I Wish I Could Restore My Home’s Value - 12/31/10 08:20 AM
I wish the economy were better, and I wish I could restore my home’s value.  If only wishing could make it so, if only wishing could restore our economy.  If just by thinking a few happy thoughts and ignoring the realities of the most serious recession in decades, we could bring the housing market back, bring financial stability to the markets, stop the declines in employment; we could all live happily ever after.  But remaking our economy isn’t as easy as wishful or positive thinking. 
And while we like to point fingers at our government, to irresponsible homeowners, to … (13 comments)

housing crisis: What to Expect From Home Prices in 2011 - 12/28/10 07:02 AM
Recent news from the housing market has been less than optimistic, and nervous sellers as well as potential buyers both want to know what to expect from home prices in 2011.  And the news for the first group isn’t good.  Home prices in most areas will likely continue to fall throughout most of the coming year; and the reason for falling prices is as simple as supply and demand. 
Most areas have far too many homes on the market for the number of potential buyers.  And a backlog of foreclosures created by the recent scandal over “robo-signing” and improperly … (72 comments)

housing crisis: Looking to Recoup Your Home’s Lost Value? It’s not Happening—Ever! - 12/13/10 10:47 PM
I’m still surprised by the number of people who believe that home values will magically return to those of 5 years ago; and if you are one of those looking to recoup your home’s lost value, it’s not happening—ever.  How can I be so certain?  It’s pretty easy once you look at the facts.
Home values have historically appreciated at a rate near the rate of inflation—once you adjust for the differences in size and discount for geographic anomalies.  However, that trend changed when we began the recovery from the “tech-bubble” of the last decade.  As the Fed encouraged easy … (104 comments)

housing crisis: Home Sales Slide as Inventory Grows - 11/23/10 06:00 AM
Home Sales Slide as Inventory Grows
According to a report released by the NAR, October existing home sales fell by 2.2%, following an increase of 10% in September. Annualized sales numbers came in near expectations at a rate of 4.43 million. Year-over-year sales are down by more than 25%.
While economists and others try to put a positive spin on these numbers, blaming tight credit, the foreclosure moratorium or the end of the homebuyer tax credit; the reality is that the housing market has yet to stabilize or begin a recovery. Many look only at the current inventory of existing … (10 comments)

housing crisis: Housing Starts Fall to Lowest Level in 18 Months - 11/17/10 12:57 AM
Housing Starts Fall to Lowest Level in 18 Months
Construction of new homes fell to an annualized rate of 519,000 in October, well below expectations, indicating a continued lack of confidence by home builders. In addition, October foreclosure inventory rose by 5.2% over that of a year ago. These numbers reflect the weakened condition of housing and with expectations of further price declines, the market shows no sign of recovery.
Click HERE for full report.
The Housing Guru: The expert source for all your housing questions—now featuring daily updates of Today’s Housing News

housing crisis: Banks Add Safeguards to Counter Foreclosure Fraud - 11/13/10 02:43 AM
Banks Add Safeguards to Counter Foreclosure Fraud
An article in ProPublica describes how the foreclosure process has resumed, but that banks have added safeguards to counter issues of fraudulent or erroneous processing. However, a number of judges reviewing subsequent foreclosure cases have disagreed and threatened dismissal of any that are improperly filed.
Judges have also required that attorneys verify the accuracy of foreclosure documents being filed, threatening perjury charges if the documents show otherwise. Attorneys’ fees are also being reviewed. In a case reported in the Wall Street Journal, a judge found attorneys approving charges of $1,630 for actual work … (11 comments)

housing crisis: Paying on an Underwater Mortgage May Create More Problems than it Solves - 11/01/10 02:01 AM
An interesting article in today’s LA Times describes how paying on an underwater mortgage may create more problems than it solves. And while we often speak of the moral hazard of “strategic default,” there are also hazards to staying and paying.
If we honestly analyze the consequences, we may realize that ignoring the problem of negative equity harms all of us and only hampers our chances at recovery. In another POST I describe a possible solution and why negative equity must be addressed.
The Housing Guru: The expert source for all your housing questions—now featuring daily updates of Today’s … (5 comments)

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John Mulkey

Housing Guru

Waleska, GA

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