The housing market is headed on a dangerous path. I’ll have more on this in the coming days, but if you think that an investor-heavy market of house-flippers, with little recourse for those underwater but to sit tight and hope, and a nation of absentee slumlords redlining neighborhoods is something healthy, well you’re in luck, because that’s what we’re getting.
|By: David Dayen Tuesday August 28, 2012 11:45 am|
The housing recovery narrative got a boost today from the Case-Shiller price index, which went positive year-over-year for the first time since a first-time homebuyer’s tax credit goosed the numbers in 2010. So really, this is the first year-over-year increase since the housing bubble collapsed in 2007 2006. And the usual suspects are ecstatic, but there are still troubling signs the market is not yet healthy.
|By: David Dayen Friday August 24, 2012 6:00 am|
We’re supposed to turn away from some of the underlying problems in the housing market, because the fundamentals are strong, and a combination of private equity house-flipping and deliberate blight will bring the market back into positive territory. But the truth is that there are still between 11 and 16 million underwater homeowners in America. This includes half of all borrowers under the age of 40.
|By: David Dayen Thursday July 26, 2012 2:48 pm|
Treasury Secretary Timothy Geithner gave a fairly strong endorsement to Jeff Merkley’s plan to set up an HOLC-type authority to purchase and refinance current underwater mortgages, and plans to work with him to set up pilot programs by the end of the year.
Testifying before the Senate Banking Committee today, Geither was asked by Merkley about the plan, which I profiled here. Geithner’s response was surprisingly positive.
|By: David Dayen Thursday July 26, 2012 7:21 am|
Despite the heavily lobbied narrative that housing is in the midst of a recovery, the reality is far more stark. New-home and existing-home sales fell last month, and what stability we’re seeing on prices comes in large part from a massive shadow REO that isn’t sustainable. Mortgage delinquencies actually rose in June. And you have 11 million underwater homeowners who are sitting ducks to fall into delinquency, with one financial shock potentially putting them into that category. What’s more, many of them are unable to take advantage of low mortgage rates for refinancing.
The Administration’s efforts on this front have been sadly lacking. But Senator Jeff Merkley is out with a plan that should have been adopted years ago.
|By: David Dayen Tuesday July 17, 2012 11:40 am|
The Federal Housing Finance Agency engaged in a little back-patting yesterday for improved HARP figures, which they say are a direct result of their changes to the system to allow for more underwater borrowers to take advantage of low refinancing rates. The truth is a little murkier.
|By: David Dayen Wednesday July 11, 2012 2:00 pm|
One possibility hit on by many observers is the idea of having municipalities use eminent domain laws to take over mortgages and then refinance them for borrowers at market value. But analysts are skeptical whether this could work, and it’s not clear why the specific proposal on the table needs the middle man.
|By: David Dayen Monday June 18, 2012 1:00 pm|
The Wall Street Journal gets around to noticing that the latest version of HARP, the Home Affordable Refinance Program, has been manipulated by the leading mortgage servicers to trap their borrowers. And they add a bit of a twist. Because servicers set the fees from closings on refinances, this trapping of their borrowers also happens to be quite lucrative.
|By: David Dayen Sunday June 3, 2012 9:38 am|
One of the bigger problems in US politics is the relationship between money and power. Just as big a problem, in many ways, is the difficulty that comes with organizing traditionally marginalized groups. It’s hard to organize the jobless, for example, or the poor, because of their transient nature and focus on survival rather than politics.
But thanks to the collapse of the housing bubble, we now have a large constituency that is more definable and able to be mobilized. That would be the nearly 16 million American homeowners who are underwater, who owe more on their homes than what the homes are worth.
|By: David Dayen Sunday May 13, 2012 7:00 pm|
The design of HARP 2.0 has artificially profited banks at the expense of homeowners. The banks, in a very strange and apparently coordinated manner, have unilaterally decided that they will only perform HARP refis for underwater borrowers on the loans they already service. This eliminates competition for those loans. And the immediate effect of that is higher costs for underwater borrowers, who are trapped and cannot get a refi with anyone but their old servicer. So the servicers raise the interest rates they offer on the refi. In some documented cases, the closing costs, which are almost entirely profit for the bank, are higher than the savings on the refinance.