Featured Story

Despite an improvement in home sales, industry experts say prices will continue to fall during the remainder of 2009.

Home Sales Going Up, but Prices Should Continue to Drop

By Brian Collins

Recent reports that home sales may have bottomed out appear to have stirred some optimism that the worst of the housing crisis could be over.

Unfortunately, house prices and loan performance are lagging indicators in a recovery — and this downturn has seen the biggest price drops and the worst loan performance since the Great Depression.

Historical patterns show that house prices will fall and defaults and foreclosures will continue to rise until there is an improvement in the job market. If the employment numbers start to increase in mid-2010, as many expect, the turnaround in prices and delinquency rates may not come until the first quarter of 2011.

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Additional Features

• Commercial Mortgages Are Landing in the Ditch
• Builders Start to See Light at the End of the Tunnel

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Data Map

Foreclosure Inventory Rate Increases for FHA Loans

During the first quarter of 2009, the foreclosure inventory rate increased 61 basis points for prime loans (from 1.88% to 2.49%) and 63 basis points for subprime loans (from 13.71% to 14.34%). FHA loans saw a 33 basis point increase in the inventory rate (from 2.43% to 2.76%), while the foreclosure inventory rate for VA loans increased 27 basis points (from 1.66% to 1.93%).

Compared with the first quarter of 2008, the rate increased 127 basis points for prime loans and 360 basis points for subprime loans. The foreclosure inventory rate increased 36 basis points for FHA loans and 69 basis points for VA loans.

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Editor's Note

Is Mediation the Answer?

By Jennifer Harmon

Foreclosures are costly to the borrower, servicers and the investors who take losses on the sale of those properties. It’s also expensive to the taxpayers in the communities where these foreclosures are taking place. Foreclosures drive down property value. They often result in an increased level of blight and crime, and property tax revenue decreases because of the decline in value.

The Obama administration is doing everything in its power to reduce foreclosures through the Home Affordable Modification Program. While many are focusing on the refi and modification components of the plan, the Center for American Progress says that mandatory mediation should be incorporated into that process to make sure that the people who are eligible for these programs will in fact get the assistance that they need.

The report, “It’s Time We Talked: Mandatory Mediation in the Foreclosure Process,” outlines how foreclosures can be reduced by as much as 75% if the federal government takes a more direct role in providing opportunities for mediation.

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Focus

Loss Mitigation Conference Slated for July

In July, a workshop will be held in Dallas for real estate agents on overcoming obstacles in arranging short sales and a keynote address by an executive in Fannie Mae’s servicing division highlight the first day’s agenda at the SourceMedia Best Practices in Loss Mitigation Conference.

The first-time event is being held at the Sheraton Dallas Hotel, July 20 and 21.

The keynote presenter is Javid Jaberi, vice president of Fannie Mae’s national servicing organization. Prior to joining Fannie Mae, he worked for GMAC for 10 years as managing director and senior vice president, responsible for asset performance servicing, managing over $370 billion of mortgage loans.

The workshop on short sales precedes Mr. Jaberi’s speech as the conference’s opening event. Its aim is to give attendees a better understanding of how to make the short sales transaction smoother for all of the parties involved.

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