HOUSING RECOVERY????? WHAT HOUSING RECOVERY?-OVER 25% OF ALL USA RESIDENTIAL REAL ESTATE IS WORTH LESS THAN ITS MORTGAGE!

Let's get real-did we really think that the GOVERNMENT could fix the housing market turmoil? Therefore as expected by us "regular " people, nothing that the government is doing has any noticeable effect on housing prices, house refinancing or financing other than normal market reaction.

Home prices are still declining-they are declining because every buyer has got to be nuts not to make a bid that is lower, or much lower, than the asking price of any hose he wants to buy.

That makes sense, that is the way it works in a "buyer's" market. The buyer is king, he sets the market price. The market is overvalued-let's face it when you see the wild prices points for the homes in markets like Florida and California, they become unsustainable.

It is not possible for a working average family to afford a home when it reached price levels that are no longer financially prudent.

The financing options which existed a year or two ago are no longer available, thus with financing options being limited, home sales MUST decline. That is just common sense.

The average FICO credit scores have declined across the country to 620-670, thus further causing an erosion of the availability of financeable consumers. Less consumers/buyer now quality for a mortgage, and many do not want to go with a government backed option, further reducing the financing possible.


Financing options such as the stated income loan is gone....and this option produced the most mortgage financing applications in the past. Of course it also created abuses simply by having the applicant overstate his income in order to qualify for a loan, and then at the first sign of a problem like smaller income or job loss, he was unable to pay the mortgage.

After reading the requirements of how to qualify for a mortgage or how to qualify for the government assisted plans put forth, they are clearly not meant to do what they were described as doing.

The payments to lenders who help homeowners are paltry, carry lots of conditions and the homeowners most affected will not see any real help either due to onerous conditions and requirements.

So, nothing really changed, other than the government's meddling has caused a further reduction, not increase in mortgage money availability.

How can there be an improvement if very few qualify, and the financing options are stifled?

So how can the housing situation change?

Mortgage applications in the U.S. fell last week by the most since February, defying efforts by President Barack Obama’s administration to revive the housing market.

The Mortgage Bankers Association’s index of applications to purchase a home or refinance a loan dropped 19 percent to 444.8 in the week ended June 26 from 548.2 the prior week. The group’s refinancing gauge declined 30 percent to the lowest in seven months, while the index of purchases fell 4.5 percent.

Unemployment, which touched a 26-year high in May, and rising borrowing costs have discouraged homeowners from refinancing, while rising foreclosures thwart builders’ efforts to clear a glut of unsold houses. It would take about 9.6 months to sell the nation’s 3.8 million unsold homes at the current sales pace, according to the National Association of Realtors.

“The worst is behind us but we’re a long ways off from a recovery in housing,” said Mark Vitner, a senior economist at Wachovia Corp. in Charlotte, North Carolina. “Inventories are still elevated. We’re not expecting any strength in housing until the second half of 2010.”

The mortgage bankers’ refinancing gauge decreased to 1,482.2, the lowest reading since November, from 2,116.3 the previous week, today’s report showed. The purchase index fell to 267.7 last week from a two-month high of 280.3.

The share of applicants seeking to refinance loans plunged to 46.4 percent of total applications last week from 54 percent.

The average rate on a 30-year fixed-rate loan fell to 5.34 percent from 5.44 percent the prior week. The rate reached 4.61 percent at the end of March, the lowest level since the group’s records began in 1990.

Mortgage Rates

At the current 30-year rate, monthly borrowing costs for each $100,000 of a loan would be $558, or about $62 less than the same week a year earlier, when the rate was 6.33 percent.

The average rate on a 15-year fixed mortgage dropped to 4.81 percent from 4.93 percent the prior week. The rate on a one-year adjustable mortgage decreased to 6.52 percent last week from 6.54 percent, according to the mortgage bankers.

Home loan rates tracked by McLean, Virginia-based mortgage buyer Freddie Mac climbed along with Treasury yields through late May and early June on investor concern that a greater supply of government debt being sold to fund federal spending would fuel inflation.

Falling Home Values

In February through April, the Federal Reserve purchases of mortgage bonds guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae brought down the yields on those securities, allowing lenders to reduce rates on new loans and still sell them at a profit.

Still, falling home values and rising foreclosures are sidelining many would-be buyers. This year the number of foreclosures may rise to 2.5 million, the highest on record, according to Lawrence Yun, chief economist of the Realtors’ group.

About 20.4 million of the 93 million houses, condos and co- ops in the U.S. were worth less than their loans as of March 31, according to Seattle-based real estate data service Zillow.com.

Builders including Los Angeles-based KB Home are slashing prices and reducing the size of houses to compete with foreclosures.

KB Home’s revenue fell 40 percent last quarter to $384.5 million and net orders dropped 31 percent to 2,910 homes, the company said June 26.

“Although key economic indicators remain mixed, we are beginning to see signs that some negative housing market trends may be moderating,” Chief Executive Officer Jeffrey Mezger said in a statement last week.

The Washington-based Mortgage Bankers Association’s loan survey, compiled every week, covers about half of all U.S. retail residential mortgage originations.