Current Housing Indicators |
| CURRENT | PREVIOUS | ||
| Existing Home Sales | 4.49m | ▼ | 4.74m |
| New Home Sales | 309,000 | ▼ | 344,000 |
| Housing Starts | 583,000 | ▲ | 477,000 |
| Building Permits | 547,000 | ▲ | 531,000 |
| HMI | 9 | UNCH | 9 |
| Existing Home Prices | $170,300 | ▼ (annually) | $199,800 |
| New Home Prices | $201,100 | ▼ (annually) | $232,400 |
More Videos
- Treasury On Mortgage Modifications
- Citi Mortgage Reveals What Treasury Won't
- Investors May Skew Housing Reality
- 100% Mortgage Financing From USDA
- Despite Government Aid, Foreclosure Crisis is Not Improving
- Housing Data Delivers Mixed Messages
- Appraisals Now Center Stage in Housing Recovery
- Underwater Mortgages Could Sink Even Deeper
- First Time Buyers Rescue Housing: Realtors
- Housing Recovery 'Still In Uncharted Territory': HUD Secretary
MOST SHARED
- Ritz-Carlton ?Struggling? in the US: President
- Garlic Price Rises Surpass Gold, Stocks in China
- Half of Banks' Losses May Still Be Hidden: IMF Head
- New-Home Sales Jump 6.2% To Highest Level in Over Year
- S&P Stocks Trading at New 52-Week Highs
- Oil Price to Average $75.40 in 2010: Poll
- Consumer Mood Improves, But Anxiety Over Personal Finances
- Americans Ditch Planes for Trains this Thanksgiving
- Jobless Claims Below 500,000, Durable Orders Slip
- US Bonds Pare Losses After 7-Year Auction
- Consumers Catching the Holiday Spirit
- It's Beginning To Look A Lot More Riskless
- Crescenzi: Claims Level Suggests End to Job Losses
- Hedge Funds Take Early Lead in Warren Buffett's 'Big Bet'
- S&P Stocks Trading at New 52-Week Highs
- 4 Food Stocks to Stuff in Your Portfolio: Analyst
- S&P at 1050-1200 Trading Range Next Year: Strategist
- Treasury On Mortgage Modifications
- Blue Jeans Expected to See Another Green Christmas
- For Many in US, It Will Be a Scaled-Down Holiday Season
- Judge Erases Couple's $525,000 Mortgage Payment
- Where Do Pardoned Turkeys Go?
- Foreign Demand Boosts US 7-Year Treasury Sale
- New-Home Sales Jump to Highest Level in Over Year
- Consumers Catching the Holiday Spirit
- Jobless Claims Below 500,000, Durable Orders Slip
- Activision Prepares to Double Dip on ‘Modern Warfare 2’
- Garlic Price Rises Surpass Gold, Stocks in China
RSS FEED
Realty Check
Text Size 
 |
CNBC.com |
I've heard a lot of arguments against, but today I read the most compelling testimony from David Kittle, Chairman of the Mortgage Bankers Association before the Senate Judiciary Committee:
First, no one should make filing for bankruptcy appear attractive. There are real and severe consequences for consumers who declare bankruptcy. Bankruptcy stays on a credit report for seven to ten years. It makes it very difficult to acquire future credit for a new home or car. It can stand in the way of getting insurance. It can make it harder to get a new job or even to rent a home or an apartment.
Two-thirds of those people who file for bankruptcy are unable to fulfill the terms of their repayments plans. Two thirds. In other words, two-thirds of those who file will still lose their home, and still have the bankruptcy on their record.
Second, changing the law will force lenders to impose tougher standards on people trying to get a mortgage. Cramdown legislation would add new risks to the calculation lenders make in setting prices. For the first time, lenders will have to pay more attention to markets with the most volatility and those with higher risks, such as rural areas, inner cities and new subdivisions, where history shows the greatest fluctuation of home values. This could even lead to a new era of redlining. Lenders would be forced to demand larger down payments and raise interest rates to balance the risk from judges who could change the mortgage contract and cause lenders or investors to suffer an economic loss.
Third, as you know, our financial markets are incredibly fragile right now. Cramdown legislation will only add more instability. The only option for many low-income borrowers today is to get an FHA-insured loan, where the government minimizes the risk to the lender of making a low-down payment loan. Cramdown legislation would make it harder for borrowers to get an FHA loan, because lenders would face the possibility that FHA insurance would not cover the loss from a principal reduction. The same is true for VA lending. In effect, Congress would end the only meaningful lending option currently available to most low-income borrowers - almost overnight.
I have to say I've never focussed on that last one regarding FHA loans. FHA's slice of the mortgage pie (sorry, Thanksgiving on the mind) has grown exponentially in the last year, and therefore so too has its importance as a driver of the housing recovery.
To put the FHA loans farther out of reach would, I fear, be even more detrimental than making bankruptcy more attractive. Also, given how risk-averse the current financial system is, adding to it with the unknown random judges making near-random decisions on loans, could throw yet another wrench into the mortgage-backed securities market, which, as we all know, is basically on life support as it is.
Questions? Comments?
Data is a real-time snapshot *Data is delayed at least 15 minutes