Mixed Reports on Real Estate Recovery

It was reported last week that HUD Secretary Shaun Donovan told the National Association of REALTORS that the First-Time Homebuyers Tax Credit could be “monetized” and used as a down payment under forthcoming HUD guidelines.
Since then, there have been a variety of news reports — some confirming and others denying that this would in fact happen. Some sources have claimed that the government was backing away from this proposal for a variety of reasons including possible IRS complications. In a May 21 news story, however, NAR reaffirmed the original plan:
“The technical details are still being finalized and will soon be published in a mortgagee letter and posted on our Web site,” Lemar Wooley, a HUD spokesperson, told REALTOR magazine.
Under the guidance that’s under development, state agencies and other HUD-approved entities would be able to provide short-term bridge loans that households could use to help with their down payment. The loans would be repaid with the proceeds from the households’ federal tax credit.
[SOURCE: REALTOR Magazine Online]

More mixed results include problems with newly issued modified loans that were to help homeowners about to go into foreclosure.
Fitch Ratings is slated to release a report this week showing that 65 percent to 75 percent of modified subprime loans will still fall behind by 60 days or more within one year of the loan change. Although some experts believe that reducing the principal amount owed is the best way to keep distressed borrowers in their homes, Fitch found that 30 percent to 40 percent of loans that had lowered principal amounts were still redefaulting after 12 months. Borrowers are redefaulting at a high rate because home prices continue to fall, unemployment is rising, and because of public pressure to help homeowners — even those who are still likely to default even after receiving assistance.

And then there is this. The foreclosure rate seems to have stabilized a bit, but get ready for the second round. Experts know that more foreclosures are on the way. If you are selling your Memphis home right now, it is best to get it priced right for a sale now…because waiting may be more painful. There is a great possibility that more property values will decline during the next big wave of foreclosures.
This is the third of three mixed results regarding the “turning of the corner” on the real estate market and economy in general. More bad news on the horizon is the shuttering of car dealerships nationwide.
It would be great to write a peachy keen blog with all good news. I look forward to that day. Unfortunately, the current news is not all great. So here it is. You will need to plan around it, so there is no sense in sugar coating.