Category — Foreclosures

Home prices are falling at an alarming rate and the rate is accelerating. Full Story.

The shear number of homes on the market that have been dumped by speculators is just now being assessed. Many investors purchased multiple units with no money down and no documentation as to their ability to pay. As these empty homes are jettisoned, the prices of neighboring dwellings are depressed.

It’s going to take a year or two for this glut of abandoned homes to be assimilated into the normal mix of real estate investments. In the meantime, prices will continue to decline until the cost of the monthly mortgage is more in line with the cost to rent.

With the sub-prime mortgage melt down threatening a larger credit crisis, the Federal Reserve is searching for ideas to lessen the blow to the economy.

One idea being floated is to freeze the teaser rates on the “2 and 28 mortgage loans and extend the initial low rate for 5 to 7 years - discussed in billpayersguide.com, Chapter 4.8.

No doubt there will be many forces resisting this move, not the least of which are the lenders holding the bag on some of these loans that were obtained by no-doc applications. The freeze may require ignoring the underlying mortgage fraud issue.

The problem is huge: “Estimates of mortgage resets vary. Federal Reserve officials estimate that 2 million mortgages face resets and as many as 500,000 of these could lose their homes” (from Reuters News service)

Congress has proposed bills HR 3648 to offer relief to homeowners.