Scott Wall

This is good news for the mortgage industry. The housing bill winding it's way through Congress is most likely not going to include a cramdown provision allowing bankruptcy judges to change mortgage terms.

This will give mortgage writers the confidence that the terms of the mortgage can be upheld and that rates will not rise to counteract the government meddling.

Sen. Richard Durbin, D-Ill., said Monday that a provision granting bankruptcy judges the ability to modify mortgage terms during bankruptcy proceedings would be stripped out of a wider housing bill that will come to the floor of the Senate later this week.

The mortgage term modification provision, known as "cramdown," will instead be offered as an amendment to the bill. It is likely to be defeated with Republicans remaining united in opposition to it, and some moderate Democrats indicating they may vote against it.

The development is a significant defeat for Durbin, the No. 2 ranking Senate Democrat, who first introduced cramdown legislation two years ago. He has been unable to convince the mortgage industry to support the measure, and lend their significant lobbying weight behind his efforts. via WSJ.com.

In an interesting move, foreclosures have been blocked from occurring in the whole state of South Carolina for loans from certain companies. The State Supreme Court has ruled that until the 75 billion dollar federal housing bill has been enacted homeowners should not be evicted and foreclosed upon. Instead, creditors should wait until the homeowner has the chance for a federally sponsored modification.

Now this is good in a way as it provides a specific timetable and rationale, but with homes across the country in foreclosure far exceeding the 75 billion dollar bailout, what happens when the homes are actually foreclosed upon? I will tell you, we will have a glut of foreclosures in the marketplace and the overall market will take a hit.

The actions of the South Carolina Supreme Court will be analyzed for years to come as an activist court measure that may prolong the housing slump in that state.

The Supreme Court of South Carolina halted foreclosures involving loans owned or guaranteed by Freddie Mac, Fannie Mae or other lenders intending to participate in the federal loan-modification program.

Roughly 6,300 properties in the state are in foreclosure proceedings, said Rick Sharga, senior vice president of RealtyTrac Inc., which tracks foreclosure data. The court's order will likely halt at least half of these, he said.

In March, the White House announced a $75 billion plan that offered incentives for lenders to modify some mortgages.

Fannie Mae, which requested the temporary restraining order, said the ruling gives it "additional time to identify borrowers who may benefit from the administration's modification plan and keep more struggling South Carolina homeowners in their homes with a sustainable mortgage." via WSJ.com.

I am from the government and am here to help.

Words that should make any American shudder. And the housing market may be wondering why we got sucked into another black hole of foreclosures and bankruptcies after the massive infusion of FHA loans into the economy.

1 in 8 Federal Housing Administration loans is delinquent. That is a higher rate than any major loan portfolio that the same government is calling irresponsible by a factor of 3.

So when you read about how the government officials are berating banks as being selfish and writing bad loans, just smile on the inside. They are the worst offenders, the true wolf in sheep's clothing, and they are using your money to lend to people who can not pay it back. Thus setting us, the tax payer up to own more and more private property.

Last year banks issued $180 billion of new mortgages insured by the FHA, which means they carry a 100% taxpayer guarantee. Many of these have the same characteristics as subprime loans: low down payment requirements, high-risk borrowers, and in many cases shady mortgage originators. FHA now insures nearly one of every three new mortgages, up from 2% in 2006.

The financial results so far are not as dire as those created by the subprime frenzy of 2004-2007, but taxpayer losses are mounting on its $562 billion portfolio. According to Mortgage Bankers Association data, more than one in eight FHA loans is now delinquent - nearly triple the rate on conventional, non-subprime loan portfolios. Another 7.5% of recent FHA loans are in "serious delinquency," which means at least three months overdue.- WSJ.com.

When you look back at this period of real estate history in the United States you will have to wonder how we kept our sanity. The picture of the stockbroker jumping out of the window is the image from the Great Depression. What will be the image of the Real Estate agent who went through the housing boom and then the losses we are looking at today.

The Case Shiller report for February, 2009 is out and the month over month numbers are ugly across the board, the year over year numbers are scary in many of the markets, but the numbers I dug up from the data is really freaky.

From July, 2006 (the peak of the market numerically) we have 6 major markets down more than 40 percent with Phoenix being down over 50%. With Tampa and Detroit hovering just under the 40 percent line and Washington and Minneapolis down around 30 percent, we have just seen a bubble burst.

Some have been calling a bottom now for a while, I came close a couple of times, but when do you think it will happen? And will it occur before or after inflation starts running rampant devaluing the homes even more?

Metro Area	Feb09     Jan09-Feb09  Feb08-09 	Jul06-Feb09

Phoenix         	111.89  	-4.50%     -35.20%   	50.79%

Las Vegas       	121.06  	-3.60%   	  -31.70%         48.33%

San Francisco   	120.39  	-3.30%     -31.00%   	44.68%

Miami           	154.28  	-3.00%     -29.50%   	44.57%

San Diego       	146.82  	-1.00%      -22.90%   	41.05%

Los Angeles     	163.16  	-2.00%      -24.10%   	40.42%

Detroit         	74.6    	-3.80%      -23.60%   	39.47%

Tampa           	145.25 	-2.70%      -23.00%   	38.99%

Washington      	168.02  	-2.30%       -19.20%   	32.77%

Minneapolis     	116.39  	-3.10%      -20.30%   	31.83%

Chicago         	126.3   	-3.40%      -17.60%   	24.63%

Atlanta         	106.65  	-2.50%      -15.30%   	20.94%

Cleveland       	97.76   	-5.00%      - 8.50%   	20.84%

New York        	178.16  	-1.60%      -10.20%  	17.23%

Boston          	148.77  	-1.30%      - 7.20%   	16.32%

Portland        	150.88  	-1.90%      -14.40%   	16.02%

Seattle         	152.12  	-1.50%      -15.40%   	15.47%

Denver          	120.22  	-1.70%      - 5.70%   	14.29%

Dallas          	112.39  	-0.30%      - 4.50%   	10.35%

Charlotte       	118.94  	-1.60%      - 9.40%    	 7.05%

Full Case Shiller Report

New Realtor stats shows the credit crunch spreading pain nationwide. My trusty spreadsheet tells me only 11 of 152 towns tracked in the fourth quarter by the National Association of Realtors had price gains for sales on single-family residences vs. the third quarter. That's when shaky global financial markets began to make mortgages harder to get. Overall, U.S. prices fell 6.4% between the third and fourth quarters.

The fourth quarter's limited U.S. winners compares to 53% quarterly price gains in 151 U.S. markets in the third quarter. And while the fourth quarter can be weak for pricing, in 2006's fourth quarter saw 17% of the towns tracked by NAR had price gains.

Here's a look at my analysis of NAR's quarterly metropolitan area data: percent of U.S. towns with gains; overall change in U.S. pricing ...

By the way, NAR chose to look at year-over-year data, which is fine. NAR tried to put on an glass-half-full view: "In the fourth quarter, 73 out of 150 metropolitan statistical areas show increases in median existing single-family home prices from a year earlier, including 11 areas with double-digit annual gains and another 12 metros showing increases of 6 percent or more; 77 had price declines including 16 with double-digit drops." In addition, NAR quotes its current president, Richard Gaylord, a broker with RE/MAX Real Estate Specialists ...

"Higher limits for FHA loans, which go into effect March 14, will be a big help to first-time buyers in high-cost markets. Higher limits for conventional loans purchased by Freddie Mac and Fannie Mae will take a bit longer - when they become available, high-income, creditworthy borrowers in high-cost areas will have access to affordable and safer financing, and that will help unleash pent-up demand. ... With the market in a state of flux, it's especially important for consumers to stay abreast of widely varying and changing market conditions. We encourage them to have a traditional long-term view, which means taking the time to thoughtfully research the market" To read more, CLICK HERE