Sales of Existing Homes Rise, but so do Foreclosures
Sales of existing homes rose by the largest amount in more than five years in September, a real estate trade group said Friday. The National Association of Realtors said Friday that sales of existing homes rose by 5.5 percent in September compared to August, the best showing since a 5.6 percent increase in July 2003, during the five-year housing boom.
By region of the country, sales soared by 16.8 percent in the West and rose a more moderate 4.4 percent in the Midwest and 2.2 percent in the South. The only region of the country which saw a decline was the Northeast, where sales fell by 1.1 percent.
Foreclosures continue to be a problem.
Each day from July through September, more than 2,700 Americans lost their homes in foreclosure, up from 1,200 a year ago. While there has been some progress in curbing foreclosures, signs indicate that the mortgage industry and government programs have done little to help troubled homeowners.
“We are behind the curve. We are falling behind,” Sheila Bair, head of the Federal Deposit Insurance Corp. told a Senate hearing Thursday. “There has been some progress, but it’s not been enough, and we need to act. And we need to act quickly, and we need to act dramatically to have more wide-scale, systematic (loan) modifications….”
In a further effort to bolster the housing market and deal with record high levels of mortgage defaults, Blair is pushing Treasury to include in the $700 billion rescue package for the financial system a new program to prevent more mortgage foreclosures. Under Bair’s proposal, the government would provide guarantees for mortgages that have been reworked by banks to lower the payment schedules to more affordable levels.
Housing prices still continue to fall.
The median home price in the U.S. dropped 9 percent in September from a year ago to $191,600, and is down 17 percent from the peak in July 2006, the National Association of Realtors said Friday.
Already, 23 percent of homeowners with a mortgage owe more on their loans than their homes are worth, and that figure is expected to rise to 28 percent by this time next year, according to Moody’s Economy.com
Sophie Lapointe, a mortgage broker and owner of Five Star Mortgage in Las Vegas, has found there’s little that can be done to help people who owe more than their homes are worth. “The biggest problem is negative equity,” she said.
When homeowners in that position ask her about refinancing, Lapointe tells them to contact their current lender and ask about a loan modification because she already knows no new lender will give them a loan.
Loan modifications are needed to help curb foreclosures.
Loan modifications vary depending on many conditions, but can include deferring payments, allowing partial payments, lowering the interest rate and lowering the principal balance. Some states are passing laws to further promote loan modifications. The foreclosure problem needs to be resolved in order for housing prices to stabilize. Otherwise, the housing crisis will continue. An increasing number of lenders are willing to help because loan modifications are becoming a more attractive option to them due to the falling home prices.
Contact your lender ASAP. The sooner you start the process, the sooner you can stop the foreclosure process. If you’re having problems getting your lender to respond to your loan modification proposal, all is not lost. You may qualify for FHASecure, which is due to expire on 12/31/08 or the new FHA Hope for Homeowners program. For more information on what options you may have, fill out the free loan quote form on this page.
