From the New York Times - Housing Woes Bring New Cry: Let Market Fall

Bad news in the forecast for homeowners on Labor Day? The New York Times prints, "Housing Woes Bring New Cry: Let Market Fall."

The unexpectedly deep plunge in home sales this summer is likely to force the Obama administration to choose between future homeowners and current ones, a predicament officials had been eager to avoid.

The Obama administration has been trying to pull a rabbit out of the hat when it comes to the falling value of American homes and poor market demand.

Over the last 18 months, the administration has rolled out just about every program it could think of to prop up the ailing housing market, using tax credits, mortgage modification programs, low interest rates, government-backed loans and other assistance intended to keep values up and delinquent borrowers out of foreclosure. The goal was to stabilize the market until a resurgent economy created new households that demanded places to live.

With the exception of the tax credits gimmick, these programs have not been successful. The mortgage modification program has been an outright disaster.  Maybe drastic action is in order.

Some economists and analysts are now urging a dose of shock therapy that would greatly shift the benefits to future homeowners: Let the housing market crash.

When prices are lower, these experts argue, buyers will pour in, creating the elusive stability the government has spent billions upon billions trying to achieve.

There is a lot at play here; financially and emotionally. We've complained before about "strategic defaults" where a homeowner walks away from his home because its market value has fallen below the value of the mortgage. And we've mentioned that every seller thinks her home is worth a million dollars when it's listed for sale.

Maybe the "shock therapy" is what is needed.

Read the full column, and let us know what you think.

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if you have questions about what you see here, contact

Stephen M. Flatow, Esq.

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Mortgage modification program looks like a bust with a 50% dropout rate

We have previously written about the Obama Administration’s program to encourage mortgage modifications.  Well, the news is in and it’s not good.

According to the Associated Press,

“Nearly half of the 1.3 million homeowners who enrolled in the Obama administration's flagship mortgage-relief program have fallen out.

“The program is intended to help those at risk of foreclosure by lowering their monthly mortgage payments. Friday's report from the Treasury Department suggests the $75 billion government effort is failing to slow the tide of foreclosures in the United States, economists say.”

 “Approximately 630,000 people who had tried to get their monthly mortgage payments lowered through the government program have been cut loose through July, according to the Treasury report. That's about 48 percent of  those who had enrolled since March 2009. And it is up from more than 40 percent through June.”

 Who is to blame?

“Many borrowers have complained that the government program is a bureaucratic nightmare. They say banks often lose their documents and then claim borrowers did not send back the necessary paperwork.

“The banking industry said borrowers weren't sending back their paperwork. They also have accused the Obama administration of initially pressuring them to sign up borrowers without insisting first on proof of their income. When banks later moved to collect the information, many troubled homeowners were disqualified or dropped out.”

 One thing is clear—we are facing more foreclosures.

Read the full report.

If you have questions about what you see here, contact
Stephen M. Flatow
Stephen's Title Agency, LLC
www.stephenstitle.com
StephensTitle@comcast.net

Obama administration to send $112M to N.J. for mortgage assistance

Some New Jersey residents stand to benefit from mortgage assistance coming out of Washington, D.C.

Staying out of foreclosure in this economy can be tough enough. Try keeping up with the mortgage after losing a paycheck.

To try to help prevent more defaults, the Obama administration today said it will send $112 million to New Jersey to design a program to help unemployed homeowners stay in their homes while looking for work.

New Jersey is one of 17 states with persistently high unemployment rates to share $2 billion in funding through the program, dubbed the "Hardest Hit Fund."

The state still has to come up with a plan on how the money will be dished and no one is predicting, yet, how many people will actually benefit from the program.  Of course, there’s a risk of abuse—money going to the wrong people—but this is New Jersey, after all.

In any event, hats off to the folks in Washington for sending this money our way.

Read the full report from the Star-Ledger.

If you have questions about what you see here, contact 

Stephen M. Flatow 

Stephen's Title Agency, LLC 

StephensTitle@comcast.net