Complain about a product or service

The States Take On the Housing Crisis

"Think globally, act locally" may be key to helping homeowners out of foreclosure

By Broderick Perkins

October 10, 2008

Mortgage Crisis? Act Now to Avoid Foreclosure • Avoiding Foreclosure Takes More Than Hope --- • Home Prices Fall, But News Is Less Bad For Homeowners • Marketing Analysis Suggests Housing Bottom • Mortgage Rates Dip As Inflation Fears Ease • Have Mortgage Rates Hit Bottom? • Ex-Countrywide CEO Faces Fraud Charges • Pending Home Sales Surge in April • Foreclosure Starts Hit 1 Million For the Year • Mortgage Delinquencies At Record High • Existing Home Sales Rise in April • U.S. Home Values Now 32 Percent Below Their Peak • Bankruptcy Not Helping People Keep Their Homes • Home Values Plunge 14 Percent In First Quarter • One In Five Homeowners Underwater • Pending Home Sales Turn Around In March • Senate Defeats Mortgage 'Cram Down' Bill • Mortgage Rates Keep Falling • Home Sales Fall in March • Home Prices Show Surprising Gain in February • Foreclosures Up 9% in First Quarter • Southern California Home Sales Up Again in March • Mortgage Applications Rise Sharply • Obama Administration Targets Mortgage Fraud • Homeowners Still Behind On Modified Mortgages • Consumers Fall Further Behind on Loan Payments • Pending Home Sales Show Some Life • Home Prices Down To 2003 Levels in January • Fed Action Spurs Refinance Frenzy • Existing Home Sales Jump Five Percent in One Month • California Authorities Arrest "Loan Modification" Scam Artists • Southern California Home Sales Up Again • Loan Modifications Can Reduce Foreclosures, Study Says • Scammers Use Forged Bank Letterhead to Con California Consumers • Foreclosure Activity Up Six Percent in February • States Battle Feds To Enforce Lending Laws • Mortgage Delinquencies Continue to Climb • Obama Begins Mortgage Rescue Program • One Of Five U.S. Mortgages Under Water • Florida Court Blocks Loan Modification Company's Fees --- • More ...

Hope for the best, but prepare for the worst in the housing market.

The fury of foreclosures and the crunch on credit have crippled consumer confidence and pushed the national economy to the brink of recession.

Home prices are down and they aren't likely to get up anytime soon.

Luckily, you may have to look no further than your state to find ways to save your home from foreclosure.

Standard & Poors/Case-Shiller's 10-City Composite and the 20-City Composite Home Price Indices through July 2008 reached new record annual declines of 17.5 percent and 16.3 percent, respectively.

Markets hardest hit were Las Vegas, NV, with an annual home price decline of 29.9, followed by Phoenix, AZ, down 29.3 percent; Miami, FL, down 28.2 percent; Los Angeles, CA, down 26.2 percent; San Diego, CA, down 25 percent and San Francisco, CA, down 24.8 percent.

Expect more of the same.

Sixty-three percent of those answering a Deadline Newsroom poll "When Will Housing Recover?" say the housing market won't come back until 2010 or later. Nearly a third, 29 percent, say housing won't recover until after 2010.

The poll gets some credence from PMI Mortgage Insurance Co.'s Fall 2008 U.S. Market Risk Index which says the risk for home price declines in the next two years increased in 94 percent of all 381 Metropolitan Statistical Areas (MSAs) the survey tracks.

The risk of future home price declines rose by more than 10 percent in 16 of the nation's top 50 MSAs -- typically areas where home prices boomed before the bust. Among the top 50 MSAs, 17 ranked in the highest risk category and 16 of those were in California, Florida, Nevada, and Arizona.

Risk scores translate directly into an estimated percentage risk that home prices will be lower in two years.

For example, the Fort Lauderdale-Pompano Beach-Deerfield Beach, FL MSA, where the risk score was 99.5 percent, area prices have a nearly 100 percent chance of being lower in two years. The area had the highest risk of home price declines in the survey.

At the top of the high-risk areas were Riverside-San Bernardino-Ontario; CA (99.5 percent); Orlando-Kissimmee, FL (99.4 percent); Miami-Miami Beach-Kendall, FL (99.3 percent); and Tampa-St. Petersberg-Clearwater, FL (99 percent). Areas with a less than one percent risk of home prices were Texan MSAs -- Fort Worth-Arlington; Dallas-Plano-Irving and Houston-Sugar Land-Baytown -- as well as Pittsburgh, PA.

Falling home values and the credit squeeze makes it ever more difficult for financially challenged home owners to refinance or sell out without a loss. The Mortgage Bankers Association says loan applications are off nearly 30 percent from a year ago, thanks also to risk averse lenders yanking loose underwriting rules.

More than 3 million home owners will default in 2007 or 2008 and an estimated 2 million of them will lose their homes. And those who manage to keep their homes will suffer value declines from foreclosures in the neighborhood. Home owners are estimated to lose some $365 billion in home values due to the downward price pressure from foreclosures.

Few can escape the mortgage squeeze. Well-off borrowers, with high credit scores, steady incomes and assets, who once qualified for prime loans also have a tough time refinancing or borrowing against their equity. Many home owners wouldn't be able to buy the same home today they bought two or more years ago.

Luckily, a growing number of home owners and buyers can turn to state level housing efforts to help them ward off housing woes.

The dissertation "Defaulting on the Dream: States Respond to America's Foreclosure Crisis", by the Pew Charitable Trusts, reveals some state efforts that address financial woes of homeowners, lenders, local communities and state budgets.

Check with your state housing, consumer, social or community agencies to determine what home owner and mortgage programs and assistance are available to help see you through hard times.

• To help borrowers avoid foreclosure and keep their homes, 20 states (including California, Colorado, New York and Nevada) have launched formal foreclosure intervention or prevention initiatives.

• Sixteen states (along with those above, including, Indiana, Maryland, Massachusetts, Michigan, New Jersey, Ohio and Pennsylvania) have enacted both high-cost lending and foreclosure intervention laws.

• Thirteen states (among them Arizona, Illinois, Indiana, Iowa and Minnesota) have created counseling hotlines to help the foreclosure-at-risk, and several states are encouraging (too often reluctant) lenders to work with borrowers to find alternatives to foreclosure.

• Nine states (including Delaware, Maryland, Michigan and Ohio) have established loan funds that can be used to refinance borrowers who have loans they cannot afford or to provide short-term loans to help borrowers overcome financial difficulties.

• To protect vulnerable borrowers from unscrupulous real estate investors, nine states have created laws regulating firms that claim to "rescue" borrowers from default. Since the downturn, rescue operations have preyed upon vulnerable home owners.

• And in an effort to prevent problematic loans from being made in the first place, 31 states (among them, Arkansas, Georgia, Kentucky, Oklahoma, Texas and Utah ) have implemented laws that address predatory lending.

---
Broderick Perkins parlayed 30 years of old-school journalism into a digital real estate news service, the DeadlineNews Group, offering "News that really hits home!"™. The Silicon Valley bootstrap includes the Web site DeadlineNews.Com and the back shopDeadline Newsroom. Contact him at news@deadlinenews.com.

Report Your Experience
If you've had a bad experience -- or a good one -- with a consumer product or service, we'd like to hear about it. All complaints are reviewed by class action attorneys and are considered for publication on our site. Knowledge is power! Help spread the word. File your consumer report now.

Back to the top |