HOUSING RECOVERY, HOUSING IMPROVEMENT;THE MYTH VERSUS THE REALITY-THINGS WILL GET WORSE BEFORE THEY GET BETTER

There's been a lot of talk lately about a recovery in the housing market – even reports of bubbles re-inflating in certain markets.

Elizabeth Warren, chair of the Congressional Oversight Panel, isn't buying it.

"We see things getting worse in the housing market," Warren says, citing the pernicious effects of foreclosures, which rose 5% in the third quarter to a total of 937,840, according to RealtyTrac.

"The long-term impact of high foreclosure rates on our housing market and overall economy would be disastrous," Warren warns, citing estimates that 10 to 12 million U.S. homes could ultimately go into foreclosure. "We have to get foreclosures under control."

Why the sense of urgency? A single foreclosure property brings prices down an average of $5000 for every house in a two-block radius and costs investors an average of $120,000, she says.

In its most recent report, Warren's panel criticized the Treasury's foreclosure modification efforts as "inadequate" and "targeted at the housing crisis as it existed six months ago, rather than as it exits right now."

Specifically, the Treasury program is targeted at subprime borrowers hit with ballooning mortgage payments vs. prime borrowers hit by job losses. As for the "morality question" of whether the government should be bailing out homeowners, Warren says "I'm passed that," noting "there's plenty of unfairness to go around."

More importantly, "ultimately the American taxpayer -- thanks to Fannie, Freddie and FHA -- is going to stand behind many of these mortgage," she says. "We need to be thinking more globally what is cheapest possible way to bring this crisis to an end."

One solution: Force investors holders these mortgages who may be betting on a government bailout to take a haircut, as occurred with GM and Chrysler creditors.

"That's why they call it investing," Warren says. "You make profits in good times, take losses in bad times. That's the fundamental part of this [modification effort] that's missing."

Mortgages will get harder to obtain if the mortgage investors lose their government backing.

There are lower comps, lower apraisals, more forclosures, higher unemployment, higher gas prices, lower FICO scores, lower rents... sure housing is recovering... ...and Goldman sucks rakes in record profits. the disconnect between wall street and main street widens.

"One solution: Force investors holders these mortgages who may be betting on a government bailout to take a haircut" ------ Got any more solutions? Problem with this solution is that it's like trying to make a single strand of straw from a bale of hay. Who knows who the ultimate investors are? How will you get them all to agree? I suppose if it were considered to be an "involuntary conversion" it may possibly work. All solutions end with a lot of pain for someone (investors), and doing nothing ends in a lot of pain (in theory, homeowners). Either way, it's going to hurt. Meh, I think we're heading for some serious deflation. It looks like it may be inflation because of all the printing, but what would happen today if every loan on everyone's books were written off? That's extreme, but write-off's are happening in many areas of business. When that happens, people get laid off because there isn't that expected source of cash flow (debt repayment). Ugh, not pretty.
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JustinT
JustinT -

The American taxpayer has once again fallen for the catatonic tonic known as the stock market - Keep Your Eye On The DOW ------- Meanwhile, BIG Banks with their taxpayer-supported bail-outs and mega-volume computerized stock trading are once again sucking the last remaining wealth and life blood from John Q. Public, Joseph/ine Six-Pack, et.al. ------- BUT, nevermind that rubish, keep your eye on the DOW! ... you may someday know a BIG banker who can buy you a beer, or tip you for shining their shoes. Complicity is KING, and will save your soul!!! ------- BIG banks WIN, American TAXPAYER LOSES! ------- Yep, America taxpayer snoozes and loses
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RivrB
RivrB -

Those clowns on campidiot.com were right! Hyperdeflation is coming! 5 years from now nobody will be able to afford a $500 starter home!
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marx
marx -

Why buy a house when I can buy gold and an RV


It's simple. We can all take a page from the banksters accounting book. We can stop the Mark to Market value of our homes, just like Washington allowed their bankster buddies to do with their trillions of dollars crap assets.
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JARAA
JARAA -

wait a minute... why do we have to be thinking "globally"? that's how we lost the American jobs to outsourcing in the first place. forget about the international community and globalism... put America first for a change.
Mark
Mark -

Why all this focus on keeping house prices artificially high? This just makes it overly expensive for first-time home buyers. Houses had typically been about 2.5x income, and a return to that level should bring long-term stability to the market. All this governmemt (taxpayer) debt being added on to keep the market inflated is plain stupid for more reasons than I can list.
if they can turn a bad bank to a good bank .and turn a good bank to a bad bank .just think what they CAN /HAVE done to MORTGAGE LENDERS ..LITERALLY GET THEM TO CHANGE ALL THE MORTGAGE RULES FOR A SHORT SIGHTED "POLITICAL AGENDA "FOR THE PAST 20 YEARS AT LEAST.... try this BITE OFF MORE THAN YOU CAN CHEW....TILL YOU CHOKE...and hope barney and the crowd knows the Heimlich maneuver.,,you know what i mean .A KICK IN THE CHEST..


Why doesn't the Fed just change the term of Investor to Government Contractor? Just cause you invest in something doesn't mean your guaranteed to make money on the deal!
san -

What they did in the UK in the 1990s they doubled the term of your loan and if you were unemployed the government paid the interest on the loan because it was cheaper than kicking you out into rented property.

Warren your right, nothing is fair in all of this mess. The Rich will continue to be bailed out at the Taxpayers expense, and they will get Richer no matter what. When the dust settles the middle class will be no more. When all that is left is the haves and have-nots then the shooting and bloodshed will begin.

You can't artifically support asset prices Liz! She is just another bailout shill - smoother, more polished than the rest of the shills.

Interesting talk as other headlines are stating that there is a recovery.