A record 11.18% of mortgages at least 30 days late

Folks -

It's clear we have got a long way to go to get out of this mess - and what has been done thus far just nibbles at the edges.

Somehow, excess inventory must be removed from the market in order for the housing market to stabilize.  We're in a deep mess - although I fail to see how anyone could have turned things around immediately without broad concensus.

I have a feeling more initiatives will follow - the market will eventually turn, but we have more months of pain coming.

Hang in there!

DEAN & DEAN'S TEAM CHICAGO

It's hard for the media to change their tune with numbers like this 11.18% late on mortgages. Having contacted Countrywide yesterday regarding a loan modification and experiencing the ineptness of their internal system, I'd have to say that the chances of this whole loan modification program stemming the tide of foreclosures and short sales is slim and none. Many people who have Alt-A and option ARM loans already have payments less than 31% of their gross income, but they are upside down due to markets turning and the lenders will only help you if are significantly behind. So there is really not much there for those who have been keeping their committments to the mortgage agreements they signed. A frustrating saga to be sure, and not to mention, the banks hoarding all the monies from the government bailouts and not lending to anyone. LOL

Great conversation starter.  It stuns me to see how ignorant both parties are when it comes to the economy in general and the housing market in particular. 

You can't legislate prosperity. The banks continue to be their own worst enemy, from refusing to underwrite perfectly good borrowers (18 months after they'd loan to anyone who fogged a mirror if you held it under their nose), to making short sales a nightmare.

I have seen some grousing on AR about the NAR. They may have their issues, but any organization that will prevent these banks from entering real estate ought to be supported.

Good post Mark, that's pretty scarey news.

If 20% of homeowners are under water and 11% of homeowners are delinquent, there are a number of homes that are delinquent and yet have positive equity. That's an argument not for a bad real estate market but for an economy that is probably worse than we have been led to believe.

You are correct that all the wrong incentives are being put in place. Investment is the activity that needs to be encouarged.  That means corporate tax reductions, cap gains tax reduction/ holiday and, as you SO correctly stated, a return to pre-1986 tax treatment of real estate.

Have you see this article from USA Today? I think a lot of the public is going to madder than you know what when they see it.

A small number area foreclosures are causing our problems in VERY specific areas. Our area is not one of them.

These big National Banks knowingly invested in mortgages in these areas knowing that markets do go down.

Let them fail!

http://www.usatoday.com/money/economy/housing/2009-03-05-foreclosure_N.htm?csp=34

Wow. That's a large percentage. This has to be very crippling, if not debilitating, for the banking system. Can it even survive?

Mark- An an investor myself I see this administration lacking some basic understanding of how the real estate market operates. First time homebuyers can indeed help out a certain segment of the housing market but not all of it. Lets face it, a first timer does not usually buy a home above median.

How can the present administration not know how real estate operates? Wasn't Mrs Obama a realtor? I'm saying yes in the Chicago marketplace.

Any excitement for the new tax incentive was nixed by the old plan.  So many buyers were turned off at first when the 7500 had to be paid back that the new 8000 did little to get them back in the marketplace.

I think some of the problem is that the people that need the loan modication probably couldnt handle the responsibility of owning a home.  That 60% shows there is a huge issue with these borrowers in general.  It is too bad.  Thanks for the post

spurring demand is going to be the hardest thing, why buy now when prices are still falling. First time buyers don't seem to care about anything right now. They don't trust us, they certainly don't trust NAR.

This is interesting...I guess your response depends on which "street" you are on ---> Wall Street. Main Street, or my street [3 foreclosures here]! Oh, I left out Congress - lets see "Mistreat."

You're right. Plain and simple. And the housing rescue plan will not help nearly as many people as they pitched. it will only help a fraction, and what happens when they do lose their jobs? We are in a wicked whirlpool at the moment...

I think one of the famous quotes from the presidential campaign was, "We are the change that we have been waiting for." Buyers remorse, citizens?

Don't get me started on congress. Their approval rating with me is beneath whale ----. But I'm striving for a better day.

I agree with you that the Tax reform Act of 1986 signed into law by President Reagan simplified the tax code but also eliminated and restricted the tax benefits associated with investment real estate.

However, the Taxpayer Relief Act of 1997 - signed into law by President Bill Clinton together with the Balanced Budget Act of 1997 made significant changes affecting real estate. This law made some major improvements for Home Sellers, Property Owners and First Time Home Buyers. It simplified taxes for 99% of Homes sold in the U.S. Homes used as primary residences.

Since 1997 Home sellers are eligible to exclude up to $250,000 if single or up to $500,000 if married, of the capital gain on the sale of the residence. The home seller must have owned and resided in his home for at least two years of the last five years prior to the sale of the residence. IMHO still a good incentive to buy real estate for the long-term. Real estate goes in cycles.

Prior to the Taxpayer Relief Act of 1997 the tax law allowed rollover that required reinvestment in a home of greater or equal value. The previous law also allowed a one-time capital gain exclusion of $125,000 for taxpayers over age 55 who sold their homes.

As for real estate investors they can still defer taxes with 1031 exchanges. More incentives such as tax abatements for investing in affordable housing, developing empowerment zones like Clinton did with Harlem would stimulate investments.

While my market is declining and sales and prices are down we have not been hit with many foreclosures yet. Our housing market is unique so I'm not sure we will see many foreclosures. 70% of our housing is rental properties. The 30% that is home ownership is 70% coops. Coops have strict financial requirements such as minimum 25% down payment, a 25% debt to income ratio and liquid assets left after the close to cover 1 - 2 years mortgage and maintenance payments.  Approximately 50% of real estate transactions in Manhattan are all cash.

Mark, I totally agree. I was very disapointed with the income cap. In my market it won't even help most first time buyers because there are so few properties priced low enough for someone making less than $100,000 a year to qualify for.

Unfortunately if the mortgage interest deduction is taken away then renting will be a better option for many.