Low Sales and Record Foreclosures
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Pending Home Sales Sink in July
Pending Sales of Existing Homes Fell in July to Lowest Level Since September 2001
WASHINGTON (AP) -- A near-record low for an index that forecasts near-term home sales suggests borrowers in expensive areas are struggling to finalize home purchases amid mortgage market troubles.
The National Association of Realtors said Wednesday its seasonally adjusted index of pending sales for existing homes fell 16.1 percent in July from a year ago and 12.2 percent from the prior month. July's reading of 89.9 was the second-lowest ever for the index and its lowest since September 2001, when the economy was jolted by the terrorist attacks.......
......"Numbers like this should put to rest the belief that we've reached the bottom" in the housing market, said Joel Naroff, chief economist for Commerce Bancorp Inc. "There's still a lot of pain that's ahead of us."
Stock markets slumped after the real estate data were released.
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Lawrence Yun, senior economist at the real estate trade group, said the weak pending sales data stem from the fact that government-sponsored mortgage giants Fannie Mae and Freddie Mac cannot package "jumbo" home loans above $417,000 into securities sold to investors.......
.......The Dow Jones industrial average dropped nearly 150 points Wednesday afternoon as Wall Street reacted to the report on pending home sales. Shares of Fannie Mae fell $2.66, or 4.1 percent, to $63.05, while those of Freddie Mac slid $2.30, or 3.7 percent, to $59.96.
In an effort to provide support to the mortgage market, Democratic lawmakers -- and the Realtors' association -- have called for Fannie Mae and Freddie Mac to be allowed to purchase loans above the current limit in high-cost areas along the East and West coasts.
So far the Bush administration has rejected calls to raise this limit, as well as limits on the amount of mortgages and mortgage-backed securities that Fannie and Freddie can hold on their books.
Bush on Friday announced his administration's first attempt to help borrowers in danger of foreclosure. He detailed plans to help about 80,000 additional borrowers by using the Federal Housing Administration, an agency that backs loans for low-income borrowers, to insure more loans.
Investors around the world have been spooked by the U.S. mortgage market's problems amid uncertainty about how much they will grow. The Federal Deposit Insurance Corp. estimates that 2.5 million mortgages given to borrowers with weak credit will reset at higher rates and sometimes dramatically higher monthly payments by the end of next year.
As of June, 17.5 percent of subprime loans given to borrowers with weak credit nationwide were either 60 or more days delinquent or in foreclosure -- more than double the last year's rate, according to FirstAmerican LoanPerformance, a research firm that tracks loans that aren't backed by Fannie Mae and Freddie Mac.
New Mortgage Foreclosures Set Record
WASHINGTON (AP) -- The number of homeowners receiving foreclosure notices hit a record high in the spring, driven up by problems with subprime mortgages.
The Mortgage Bankers Association reported Thursday that mortgage-holders starting the foreclosure process in the April-June quarter reached 0.65 percent, marking the third consecutive quarter that this figure has set an all-time high.
The delinquency rate, which tracks the number of people who are behind in their payments but have not yet entered the foreclosure process, was also up sharply during the spring, rising to 5.12 percent of all loans, up nearly three-fourths of a percentage point from the same period a year ago.
Doug Duncan, the MBA's chief economist, said the worsening performance was driven by two factors -- heavy job losses in the Midwest states of Ohio, Michigan and Indiana and the collapse of previously booming housing markets in California, Florida, Nevada and Airzona........
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Pending Home Sales Sink in July
Pending Sales of Existing Homes Fell in July to Lowest Level Since September 2001
WASHINGTON (AP) -- A near-record low for an index that forecasts near-term home sales suggests borrowers in expensive areas are struggling to finalize home purchases amid mortgage market troubles.
The National Association of Realtors said Wednesday its seasonally adjusted index of pending sales for existing homes fell 16.1 percent in July from a year ago and 12.2 percent from the prior month. July's reading of 89.9 was the second-lowest ever for the index and its lowest since September 2001, when the economy was jolted by the terrorist attacks.......
......"Numbers like this should put to rest the belief that we've reached the bottom" in the housing market, said Joel Naroff, chief economist for Commerce Bancorp Inc. "There's still a lot of pain that's ahead of us."
Stock markets slumped after the real estate data were released.
-
Lawrence Yun, senior economist at the real estate trade group, said the weak pending sales data stem from the fact that government-sponsored mortgage giants Fannie Mae and Freddie Mac cannot package "jumbo" home loans above $417,000 into securities sold to investors.......
.......The Dow Jones industrial average dropped nearly 150 points Wednesday afternoon as Wall Street reacted to the report on pending home sales. Shares of Fannie Mae fell $2.66, or 4.1 percent, to $63.05, while those of Freddie Mac slid $2.30, or 3.7 percent, to $59.96.
In an effort to provide support to the mortgage market, Democratic lawmakers -- and the Realtors' association -- have called for Fannie Mae and Freddie Mac to be allowed to purchase loans above the current limit in high-cost areas along the East and West coasts.
So far the Bush administration has rejected calls to raise this limit, as well as limits on the amount of mortgages and mortgage-backed securities that Fannie and Freddie can hold on their books.
Bush on Friday announced his administration's first attempt to help borrowers in danger of foreclosure. He detailed plans to help about 80,000 additional borrowers by using the Federal Housing Administration, an agency that backs loans for low-income borrowers, to insure more loans.
Investors around the world have been spooked by the U.S. mortgage market's problems amid uncertainty about how much they will grow. The Federal Deposit Insurance Corp. estimates that 2.5 million mortgages given to borrowers with weak credit will reset at higher rates and sometimes dramatically higher monthly payments by the end of next year.
As of June, 17.5 percent of subprime loans given to borrowers with weak credit nationwide were either 60 or more days delinquent or in foreclosure -- more than double the last year's rate, according to FirstAmerican LoanPerformance, a research firm that tracks loans that aren't backed by Fannie Mae and Freddie Mac.
New Mortgage Foreclosures Set Record
WASHINGTON (AP) -- The number of homeowners receiving foreclosure notices hit a record high in the spring, driven up by problems with subprime mortgages.
The Mortgage Bankers Association reported Thursday that mortgage-holders starting the foreclosure process in the April-June quarter reached 0.65 percent, marking the third consecutive quarter that this figure has set an all-time high.
The delinquency rate, which tracks the number of people who are behind in their payments but have not yet entered the foreclosure process, was also up sharply during the spring, rising to 5.12 percent of all loans, up nearly three-fourths of a percentage point from the same period a year ago.
Doug Duncan, the MBA's chief economist, said the worsening performance was driven by two factors -- heavy job losses in the Midwest states of Ohio, Michigan and Indiana and the collapse of previously booming housing markets in California, Florida, Nevada and Airzona........
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It makes me feel all warm and fuzzy inside.