The Housing Bill Won’t Help – Continuing Saga

It’s hard to get a reasonable mortgage. It’s touch to buy and sell a home. In this environment 25% of home sales are resulting in a loss. This is a clear sign that The Great Credit Crunch will continue.

The Housing Bill is again too little too late and it only applies for homes bought between January 2005 and June 2007. What good is that? The other major problem is that the Housing Bill puts Fannie Mae and Freddie Mac on the books of the United States of America.

 

Some Banks Will Accept A Short Sale – Where the lending bank accepts payment in full for a home sold at less than what’s owed, and forgives the remaining debt.

 

How does this Housing Bill help nearly a third of all homeowners who bought since 2003, and owe more on their homes than the homes are worth? Without a bank accepting a short-sale, a foreclosure is the only option, and that can be more expensive for the lender. Worse, the home owner simply abandons their home.

 

Statistics often tell a twisted story when it comes to housing. I read a report that stated that nearly 15% of U.S. existing home sales during the last 12 months involved foreclosed homes, and that this trend will continue, adversely affecting neighbors.

 

Loans of almost all types are starting to default. More than $200 billion in adjustable rate mortgages are set to reset in the second of 2008, the problems will only worsen.

 

This could be the Achilles Heel for Wachovia. Sources say that they have more than $200 billion in commercial loans that could trigger more losses as the U.S. economy slides into recession.

 

According to the FDIC commercial and industrial loans have more than doubled to $1.4 trillion.

 

When WCI Communities Inc. went bankrupt on Aug. 4, the Florida home-builder had a revolving credit construction-loan agreement with Wachovia Bank.

 

On Tuesday, August 12, J.P. Morgan Chase & Co.'s warned that it expects "a continued decline in U.S. housing prices." And, announced that a $1.5 billion trading loss related to mortgage-backed securities.

 

A recent report from Barclays Capital estimates that there are 721,000 bank-owned homes nationwide, up from 112,000 two years ago. Barclays expects the total to rise 60% more by late 2009.

 

As of June 30, Fannie Mae had 54,173 homes as “other real estate owned” on their balance sheet.