US Housing Nearing Bottom, Foreclosures Worrying (Vol 2)
More indication of a bottom forming in the US housing market emerged today courtesy of the Case-Shiller price index. At the same time, further warning signs emerged on the risk of rising foreclosures stifling a housing recovery.
The S&P/Case-Shiller home-price rose on a month-to-month basis for the first time in 3 years and were down 17.1 % from a year earlier, the smallest decline in nine months, following an 18.1 %slide in April.
But both the Washington Post and Wall Street Journal report that loan modification programs are having little impact in forestalling foreclosures, as noted on Research Recap yesterday.
Policymakers often say it’s a good deal for lenders to cut borrowers a break on mortgage payments to keep them in their homes. But, according to researchers and industry experts, foreclosing can be more profitable, the Post reports.
Government initiatives to stem the country’s mounting foreclosures are hampered because banks and other lenders in many cases have more financial incentive to let borrowers lose their homes than to work out settlements, some economists have concluded.
The WSJ reports that An Obama administration effort to reduce home foreclosures by lowering the mortgage payments of struggling borrowers before they fall behind is failing to help as many people as expected.
“Some homeowners are being told they must be behind on their payments to receive help, which runs counter to the aim of the program. In other cases, delays are so long that borrowers who are current on their payments when they ask for a loan modification are delinquent by the time they receive one. There is also confusion about who qualifies.”
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