An interesting and thought provoking article in the New York Times about the mortgage modification program that the government has been pushing as their “remedy” to the housing problems. A couple of main points:
It has failed to provide permanent relief for struggling homeowners and has therefore raised false hopes and encouraged people to avoid making the difficult decisions that they should be making.
By delaying people from making the difficult decisions, the government is prolonging the housing market’s necessary adjustment and working through the pricing adjustments needed to get back to the point at which incomes and house prices are in line.
With the unemployment situation as it is (I think it’s over 7 million jobs lost since this all started?) there are a lot of people who are in homes that they can’t afford any more. The sooner we, as an entire housing and mortgage industry, can adjust to that fact, the more quickly we can return to health.
I think there are two things that this article doesn’t take into consideration:
One of the main reasons that the modifications aren’t working well is because they aren’t substantial enough to get to the point of people actually being able to afford to keep their house. Whether your interest rate is 2% or 8%, if you don’t have enough income to make the payments, it’s not going to matter. It’s called principal reductions. Without principal reductions, the loan modifications aren’t going to work.
The “justification” of giving breaks to some people when they are struggling but not others? According to the last statistics that I saw, 85% of the loans that Fannie Mae and Freddie Mac have are making their payments on time. So how do you mesh those two statements? How do you mesh the problems with those who don’t have problems?
The Obama administration’s $75 billion program to protect homeowners from foreclosure has been widely pronounced a disappointment, and some economists and real estate experts now contend it has done more harm than good………
Since President Obama announced the program in February, it has lowered mortgage payments on a trial basis for hundreds of thousands of people but has largely failed to provide permanent relief. Critics increasingly argue that the program, Making Home Affordable, has raised false hopes among people who simply cannot afford their homes…….
Some experts argue the program has impeded economic recovery by delaying a wrenching yet cleansing process through which borrowers give up unaffordable homes and banks fully reckon with their disastrous bets on real estate, enabling money to flow more freely through the financial system.
The Treasury Department publicly maintains that its program is on track. “The program is meeting its intended goal of providing immediate relief to homeowners across the country,” a department spokeswoman, Meg Reilly, wrote in an e-mail message.
But behind the scenes, Treasury officials appear to have concluded that growing numbers of delinquent borrowers simply lack enough income to afford their homes and must be eased out.
Note – I originally sent this out by e-mail on New Years Eve to those who subscribe to my Mortgage Market Week in Review. The response has been so positive that I’ve decided to repost it here as well.
So Long 2009!
Rather than doing my normal Mortgage Market Week in Review, I thought I’d send out something a bit different. I’m going to, instead, take a look back at what I think were the three biggest issues in the mortgage market in 2009. On Monday, I’m going to take a look at the top 5 issues that I believe we’ll be facing going forward in 2010.
Neither one of them is going to be an extremely pleasant list, but I can guarantee you that they’ll be honest lists!
Without a doubt, the number one issue facing the mortgage market the past year was the Fed’s decision to purchase $1.25 Trillion in mortgage backed securities. We saw probably the most dramatic one day drop in mortgage rates I recall in the 22 years I’ve been in this business. The mortgage industry ended up writing literally millions of new loans at lower interest rates because of what the Fed did and that changed the ball game for lenders (both individual lenders and financial institutions).
But this subsidizing of the the mortgage market hasn’t been without it’s costs as well. We’ve gone from a market that was relatively “free” to a market that has become much more dependent on the government and that’s not healthy in the long run. Plus it makes you wonder, “what’s going to happen when the government stops?” (That’s a topic for Monday’s update).
2.
The second biggest issue that faced the mortgage world in 2009 was property values. We started out the year being quite severely limited in terms of what we could do as property values fell. Then Fannie and Freddie basically threw their rules out the window and essentially said, “If we have the loan, and we’re going to increase the customer’s likelihood of making their payments, then we’ll do the refinance.” The program is saving Fannie and Freddie’s borrowers literally millions of dollars if not more. But a couple of things that need to be said:
A lot of the clients that I talked to and did loans for weren’t really at risk of losing their home without refinancing. Probably, (anecdotal reference only), no more than 10% of the people who took advantage of the new program were at risk of foreclosure. But the vast majority of them were well over 80% loan to value even if they weren’t when they bought the house. It showed how substantial the deterioration in values was.
The loan modification portion of the program (for those who couldn’t qualify to refinance) has been an abject failure. Why? I think mainly because of this one fact – the borrowers either can’t afford the modified payments any way (not a big enough incentive) or they are so far under water in terms of the value of the house vs. the balance owed that they said, “Here bank, you have the keys, I’m out of here.”
The property value issues started in the lower price ranges and it has crept up the food chain. The higher price areas are now getting hit just as much if not more than the lower priced areas.
3.
Government intervention is the third big issue that the mortgage world dealt with during 2009. A couple of main points:
The First Time HomeBuyer Tax Credit supposedly generated 350,000 (depending on who you talk to) new sales, but since 1. 8 million homeowners are anticipated to take advantage of it for 2009, that works out to a cost of over $43,000 per sale generated for a $8,000 tax credit. Ouch.
Give them the Checkbook – On Christmas Eve, the Treasury essentially gave Fannie and Freddie their checkbook and said they will back them for as much as it takes to keep them from going under. They didn’t do it with any restrictions or controls of how they manage their business. We’re going to see the ripple effects of that decision for a long time, I’m afraid.
HVCC – Home Valuation Code of Conduct – a set of rules that basically make it a criminal offense for a loan officer to talk to an appraiser. Has it improved the quality of appraisals? I don’t see it. Has it saved the customer money? Nope, cost them $50 or more extra per appraisal. Has it sped things up? Nope, it’s slowed them down. I’ll agree that there were some issues of undue influence, but it’s not addressing it the right way.
Reg Z – what does Reg Z do? It basically gives the customer a 5 day period to look over the paperwork and then decide if they want to do the loan. What’s the end result? It does give the borrower a little more control which is good, but it also slows the process down.
The Three F’s control everything. I couldn’t tell you how many times I’ve told people that there are three sources of money in today’s market – Fannie, Freddie and FHA and if you can’t get them to give you the money, you are…… destined to fail. In all seriousness, the non-governmental mortgage market is non-existent. There are some big issues that are going to have to be dealt with going forward. Will we have the guts to make the tough decisions? I don’t know.
I could go on for hours on each one of these topics, but I have to admit that time is running out on the year. So consider this an overview of the things that I see have made a big difference in the last year.
It has been a lot of fun and a distinct privilege getting to know and communicate with all of you over the year. I’ll have an overview on Monday of what I see are the 5 biggest issues the mortgage world will deal with in 2010.
Pretty much a nothing day in the numbers arena. And other financial news was pretty sparse, too. There was one report at 10am, the Consumer Confidence Report that showed that consumers were feeling better about the economy, but that is still a feeling. What counts are the numbers and until the fourth quarter corporate reports begin to appear the middle of next month, the Big Guys are not going to respond to confidence reports or any other kind of reports.
My S&P Keyline chart just held its own today, as you can see in the Numbers Section below. Most other numbers were very quiet too, except bonds. Today, bond market buyers clearly outnumbers sellers, as bonds rose 15/32 or nearly
Jumbo loans, those over $417,000 and not guaranteed by Fannie and Freddie (aka you and me), are starting to see growing performance issues. The delinquency problems are moving up the price “food chain.”
So let me ask you, if delinquencies are rising, do you think that it’s going to be easier to get a jumbo loan any time soon?
Moody’s Investors Service placed $143 billion of jumbo-mortgage bonds under review for downgrades … The revisions were prompted by “the rapidly deteriorating performance of jumbo pools in conjunction with macroeconomic conditions that remain under duress,” Moody’s said.
… An “overhang of impending foreclosures will impact home prices negatively,” with values likely to decline 9 percent more … U.S. unemployment will rise to peak at about 10.6 percent …
Moody’s also said it expects the U.S. government’s effort to curb foreclosures to be less effective than it previously expected because the programs have “failed to gain traction.”
Bloomberg has the story about how the Treasury yield curve is steepening. So what difference does that make? A couple of quick points:
It means that short term money is significantly cheaper than longer term money. If you want to borrow for money for 2 years, it’s a lot cheaper than if you borrowed money for 10 years.
The main reasons are the fear of inflation and the fear of the tsunami of debt that is going to be hitting the markets as the government needs to pay for all of the bailouts and the stimulus funding that they’ve had to do.
It means that the financial markets are starting to take it seriously that the Fed is actually going to stop buying mortgage backed securities and that’s going to begin putting pressure on mortgage rates.
So, what does it mean for mortgage rates? A couple of things:
They probably won’t be going down.
Barring any dramatic movements in the market, the overall trend will probably be a slow increase in rates, not a huge spike upward.
My recommendation – if you need a mortgage within the next 60 days, the odds are stacked against rates being cheaper in a month than they are now, so get it while you can.
The Treasury yield curve, a barometer of the health of the U.S. economy, widened to a record as investors bet an accelerating recovery will fuel inflation and hurt demand for unprecedented sales of government debt.
The difference between 2- and 10-year Treasury note yields increased to 282 basis points before the government announces Dec. 23 how much it plans to auction in 2-, 5- and 7-year securities next week. It rose from 145 basis points at the beginning of the year, with the Federal Reserve anchoring its target rate at virtually zero and the U.S. extending the average maturity of its debt. A report tomorrow is forecast to show the world’s largest economy expanded in the third quarter.
CURRENTBUY – 100% of portfolio stock allocation $$$
KEYLINE 7-25-09 BUY 50% allocation only (S&P @ 970)
SIGNAL 10-9-09 BUY balance of 50% (S&P @ 1071)
Well, Christmas is upon us. Not much to report here in Columbus, Ohio when you look for snow, but the kids are all having fun, anyway. But, for this guy, it is really hard to realize that the year 2009 is on its last few days! Where did it go? Well, for those of you that are my older generation readers, you know. And for the rest of you, well, the day will come when you will wonder the same thing. For now, just enjoy the fact you don’t have to think on such things!
If you have been reading the daily MUNCHIN’ Report, you know that the markets have been a bit more active that I usually see the Christmas holiday bring. But, most of that I still attribute to the times we are in. I told you in the Tuesday MUNCHIN’ that the exact reasons are not very obvious, but that the fears this year are quite different than in Christmas’ of the past 10 years or so. This time, jobs, tight money, and just plain uncertainty about a lot of political questions are weighing on the minds of many investors. Which ones are the strongest, as I said, I just haven’t a clue. But, the pressure is there.
THE MAJOR KEYLINE CHARTS
Moving on to the charts this week, I included the S&P Keyline Chart last week and I am including it again this week, as we closed Friday on the Headline, in fact a tad below it. I don’t give that tad a lot of weight, however, and will just settle by calling it as closing on the Headline. While it is no big deal (yet), it is a concern that has me watching this chart quite closely. I will be giving you a MUNCHIN’ report tonight (12-21) and update what I see, but I will be out of town for the rest of the Christmas week, so it will be next Monday (12-19) before the next report update on this matter. That is, of course, unless the market’s fall apart during the week, in which case, look for a special report. But, I don’t see that happening, at the moment.
Note, also, on the S&P chart that the MOMENTUM SECTION green line (fast stochastic) turned down for the week. I mentioned this last Wednesday in the MUNCHIN’ and the outlook from such a move remains. I look for the green line to move lower, say into the 40-60 area, and hope that as it does the S&P price move is minimal or nothing. This would mean that the MOMENTUM SECTION correction was a prelude to some higher prices. If prices drop along with the green line, well, then I may not be such a happy camper. With a quiet week (hopefully), the former will be the chart action
I am also including the 30 yr Bond Chart for your review. You can’t see the Keyline number here, but it stands at 116 27/32. The action in bonds has been of concern to me for several weeks, as I told you last week in several of the MUNCHIN’s. For the last several years, prices have held pretty much above the Keyline, Earlier this year we touched it, true, but the general action has been all above the Keyline. You will note that once in 2006 and in 2009, we dipped below the Keyline. But, in both cases, in relatively short order, moved back above the Keyline. That occurred in very difficult market activity (remember?), but that seems behind us now (I hope). And you have seen the chart’s huge spike in late 2008 before, and by now know from my earlier remarks, that it was all due to money seeking a haven in the crash of October 2008.
I point out this historic stuff because, right now, my main bond chart concern is that a move below the Keyline could also be followed quickly by a rise in interest rates, as occurred in the last several cross downs of the Keyline. That seemed somewhat blunted by the FOMC written report some days ago, but the bond market is one market that the Fed can’t control. The bond market is just too big. So, if bond traders begin to sense that the Fed will be backed into a corner and be forced to raise rates sooner rather than later, that could be what a Keyline cross down could be telling us. It would also portend a sell off by the stock markets. So, I will be watching all of this for you very closely.
THE REST OF THE STORY
The dollar, also responding to the recent FOMC report, gained last week. Investors are moving away from the dollar to the yen to continue their carry trade activities, as I told you last week. They continue to figure that our interest rates are going up soon and the yen will much more than likely continue to have very low rates. For the carry trade that means move to the yen. With this move, expect that the dollar will continue to see moderate strength for the next month or two. (Note that such an attitude could carry over into the Bond market rather easily, too – yet another reason to watch it closely).
Gold (see the chart in last week’s Weekly Keyline Report) was telling a story of its own, in response to the dollar action. These two tend to move in opposite directions from each other, something I have often remarked upon in this Report. The gold market was due for a correction (I mentioned this to you three weeks or so ago) and it has occurred. But, it has pretty much held in the key support area of $1,100 an ounce. That is good action. I would tell you to continue to be a gold buyer on any dips like this and that my long term outlook for the price of gold has not changed. It is going higher – much higher.
As for Dr. Copper, our surrogate for the inflation index rose again last week, not so good news for those on a fixed income. It has now more than doubled since the first of this year. I am sure you notice it at the grocery store, by this time. Gas prices are less prone to the hit, but even there, prices have moved higher. A side note. You might want to look up on Google or some other browser the rumors that the oil producing countries may try to create a currency of their own that they would issue and would be the only currency they would accept from those that buy its oil. This is not a massive movement by them at this point, but the talk is getting louder. This would not be good for the oil poor nations, at all. I will be talking more about this over the next number of months, but you need to be aware of it now.
THE BOTTOM LINE THIS WEEK
Well, that about all this week. But, before I go, let me give you a quick view of my Bottom Line for this week. I expect that the S&P will trade in a relatively narrow range, but hold the 1,080 key support. I look for the Dow to also hold its current area, but the Nasdaq might work a bit higher on the strength that continues to be developing in the Tech Sector. (You can see the Top 10 Sector report below for the best performers the last six months.) As for the Bonds, I expect to see a possible test of the Keyline this week, but unless some very unexpected news hits, the support in the 117 area should hold. Gold and the dollar will likely be pretty steady until after the New Year, meaning that the oil per barrel price will likely hold in the $72-77 range with no major news to drive it higher (or lower, for that matter). And I expect that copper will inch a bit higher. But, until we get a better picture of the bonds, there will not be any major move here.
To repeat, I will have only one MUNCHIN’ Report his week. That will be tonight and then I will resume the Weekly Keyline Report and the daily MUNCHIN reports’ next Monday (12-28). So, until then, as always, do have a good investing week. And you keep in touch. I do! See you next week.
WEEKLY CHANGES
Closes as of Fri. 12-18-09 WK. CHANGE (cash) KEYLINE# ABV/BLW
If you read the Weekly Keyline Report today, you already know that this will be the only MUNCHIN’ report I will do this week. I will be going to my brother’s home in Louisville Ky. with my mom (yes, my mom who is a very spry 90) for the Christmas holiday.
But, before I leave, the news from the charts. Today was a positive for the markets, but a nosedive for the bonds. We are all the way down to my Keyline on the bond chart and that is a powerful vote by bond traders that they see higher interest rates soon. Of course, if you are retired, that is good news. Your bond investments have been worth very little the last 20 months or so. My bond Keyline is at 116 27/32 and the close today on the continuous contract is right at 116 27/32. If I were to guess, I would have to say that we will close below the Keyline in the next few days, barring some unexpected news that makes bonds a haven again.
The S&P and Nasdaq both did well today right from the bell. But, due to the Christmas season, volume was well below the norm. However, buyers did outnumber sellers and that is what counted at the end. Oil fell over $4, and the dollar continued its sharp climb of the last several weeks. It is still a long way from the Keyline at 79.83, but it has closed the spread a lot lately. If the carry traders have yet to finish their transition to the yen, we could see a serious try to cross up my Keyline. Who would have believed just 4-5 weeks ago! This move could also be forecasting a rise in interest rates, soon, as investors see better returns from holding the dollar. Remember, the bond market is one the Fed can only influence, not control.
Not a whole lot else to report today. Much of what happened had more to do with light volume, as I said, and year end portfolio balancing. Congress is pressing hard to get its Health Bill passed and I am watching to see if it has any potential effect on the day to day markets. So far, I must report, there is little that says investors are very concerned at this point. Even the increase of the U.S. debt limit by nearly $2 Trillion this week didn’t seem to disturb the markets. For the life of me, I can’t understand why the debt increase didn’t really knock the stock market. Well, maybe next month will bring us some answers on that. Why? The big guys are coming back!
So, until next Monday, please have a very Merry Christmas. Enjoy the family gatherings, the gathering of friends, and pray for those that don’t have a way of doing that this year. Until Monday, as always, I do hope your trading day was a profitable one. Will be back here Monday, the Good Lord willin’ and the creek don’t rise.
NEED SOMETHING TO TALK ABOUT TONIGHT?
SIX MAJOR IMPACTS ON THE MARKET TODAY
1. Minneapolis Fed reports seeing gradual recovery in 2010. Markets seemed to like that report.
2. In a bit of a strange move, the dollar gains on good economic news and so does the stock market.
3. Bond prices took a nosedive today as investors begin to smell recovery and higher interest rates.
4. Soaring dollar hits gold market. Gold markets closed below 1,100. I say buy on dips like this.
5. Weekend snow storms said to limit last minute Christmas shopping in east. Season sales may suffer.
6. China announced 2010 goal of 8% economic growth, with 11% goal in manufacturing key ingredient.
That last one about China is an eye opener, for sure. And with the Fed getting in on the upbeat forecast business, maybe investors have been right since March. But let’s see what next quarter brings before we get too excited. Buy gold. Buy gold. See you next Monday.
DAILY CHANGES WEEKLY
Closes as of Mon. 12-21-09 CHANGE (cash) KEYLINE# ABV/BLW
FHA issued an update today which basically said three things:
If you do a short sale just to buy another property at a lower price, FHA doesn’t want anything to do with you.
If you do a short sale and were current on your debts, you’d be “fine.” I’m assuming that this would be the type of situation where someone has to relocate due to taking a new job and short sales their existing house and wants to buy another home? But let me ask you this question, do you know any lender who has ever agreed to a short sale where the seller hasn’t been behind on their payments? So isn’t this sort of impossible?
If a default happens with the short sale, then FHA says that they wouldn’t be eligible for at least three years.
Keep in mind the operative word is eligible, not approved for it. The three years assumes that you’d be able to reestablish good credit almost immediately.
According to the letter (available to download here) and effective immediately, borrowers are not eligible for a new FHA mortgage if they pursued a short sale agreement “to take advantage of declining market conditions” or to purchase another property at a reduced price.
Borrowers are cleared for a new FHA-insured mortgage if they were current on their previous mortgage and other debts at the time of the short sale and if the proceeds from the short sale serve as payment in full.
If a borrower executes a short sale while in default on their mortgage would not be eligible for a FHA-insured mortgage for three years from the date of the pre-foreclosure sale. Some lenders can make exceptions if the default was due to circumstances beyond the borrower’s control such as the death of the primary wage earner.
I must tell you that this holiday trading activity is not like I have often seen on the past. Usually when the big guys go on holiday, the markets are very, very thin (low volume) and trading ranges very low. Not so this time. Don’t ask me if it because the FOMC hit during the holiday, or the health bill overhangs the market, or whatever. Because after looking at all I could think of, a good explanation for this one just eludes me. Understand that does not happen very often after 40+ years in this business.
But, be that as it may, let’s just look at the charts for a moment to see what they are telling us. The S&P pulled down to the Headline (see my Monday Weekly report for a good look at this), but, at the close, it did hold right on it. A quick look at the Momentum section shows the green line (fast stochastic) rolled down and may be telling us it will try to get back to the “neutral ” area (between 40-60) before we will see any attempt at further rally next week. Bottom line – need to watch closely, but S&P is holding its own in spite of the late Wed. and all Thur. assault to sell by the bears. Good news.
Bonds clearly fell off today, as the rush to a “safe haven” slowed and even reversed, as bonds fell by -23 ticks. I would, as I said yesterday, look for them to moderate bit more, but to hold in this 117-119 area until we see more sound evidence of the Fed thinking seriously about tightening rates. They said Wed. that that was still not in the cards for an “extended” period.
Across the board all other key indices were up, dollar, oil, gold, NASDAQ, and the S&P. But remember, this is still a holiday market, albeit a bit strange with such large volumes, sharp moves (when they hit)and general weakness in the stocks, particularly. Usually stocks tend to rally in this key holiday period. Charts are all just about where we started the week when you look at the finish tonight, except for a rise in the dollar and the drop in gold. These two fade one another, so if one moves up, the other generally moves down.
Really not much more to say today on the charts, so let me tell you what the day was like and we will just go on to next Monday, a shortened week because of Christmas and likely one that will be very much like this one. The reason most will give for the market holding its own today was a rally in the Tech sector, fueled by good earnings numbers. Some will say it was the selloff in bonds, as “haven” fears subsided. Some will attribute it all to the overall NASDAQ performance (really fueled by the aforementioned Tech sector). And finally some will say that The Iran-Iraq oil field dispute started a rush on dollars and held the markets back. My take is that it was a very quiet newsday and most of the “powers that be” were on vacation and not much really happened. So, in spite of all the reasons put forward, to me, this was just a non-day, pretty much.
I will have a more detailed summary of the week in the Monday Weekly Report, so do take the time to study it when it is posted Monday – usually by noon, give or take an hour.
So, until Monday, as always, I do hope your trading day was a profitable one. Will be back here Monday, the Good Lord willin’ and the creek don’t rise.
NEED SOMETHING TO TALK ABOUT TONIGHT?
SIX MAJOR IMPACTS ON THE MARKET TODAY
1. Iran took possession of some oil fields it claims it owns. Iraq says no, it’s theirs. Tensions grow.
2. Oil gains as supply falls and demand grows a bit. The sheik woke up on the wrong side this AM.
3. Tech stocks rally as good earnings hit the street. Oracle and RIM make analysts and investors happy.
4. N. Korea executes 12 for resistance to devaluing. Everybody there now equal, all worth $200. Oh, my.
5. Saab bites the dust after leaving many in it over the last 75 years. Sad day for the Swedish car buffs.
6. Georgia bank is 134th to fail in 2009. What will 2010 bring is the big questions on FDIC’s mind tonight.
Scariest is the N. Korean executions because the Govt. stole everyone’s savings and gave all just $200 back. Now everybody is equal say the government. The utopia of socialism is seems. UGH! Was sad about Saab, but many names gone that 10 years ago were vibrant car makers. And Iran want a foreign threat to distract its population – Iraq fills the bill to a “T.” Iran steals some oil fields to get the fight going. Oh. My.
DAILY CHANGES WEEKLY
Closes as of Fri. 12-18-09 CHANGE (cash) KEYLINE# ABV/BLW
The article by Housingwire.com has some good information in it but also some big IF’s in it…
Housing values could significantly recover in the spring of 2010 as low prices attract a blend of owner-occupiers and investors. Heated bidding pushes up prices at foreclosure auctions, and the supply of new and existing homes is declining, according to the report.
They could significantly recover, but I don’t see how this report makes a solid claim that they will.
“Thanks to federal bailout money and a general improvement in their financial health, banks have been relieved of the urgent need to liquidate their assets. As a result, lenders and government entities like Fannie Mae and the FDIC have been able to curtail sales to raise prices and avoid recording losses on properties,” according to the report.
Okay, but this fails to address a couple of things: 1) The Federal Bailout Money is ending. Don’t know for sure when but it is. 2) Have the banks been relieved of an urgent need to liquidate assets or are they attempting to make it look better than it really is by dragging the process out further and further? 3) Avoid recording losses or put off the losses and kick the can down the road?
If the government and the banks can effectively solve the puzzle of mitigating foreclosures, Radar Logic says that home values could even go up in 2010.
IF they can solve the puzzle and we all know how well that has happened so far.
I’m not predicting a collapse in 2010, but I think that we all need to be much more concerned and careful about the “ifs” and “buts” and “coulds” in reports.
The US housing market could be in for some serious trouble in 2010, but predictions of a second collapse are “exaggerated,” according to a report from Radar Logic, a real estate data and analytics company.
Of course, before calling an end to the recession, everyone will keep an eye on unemployment. Many believe the rates will peak in the next two or three quarters and decline. Once that happens, according to the report, housing demand with strengthen even more.
“While we are not out of the woods yet, our view is that housing is showing signs of stability, markets are showing signs of rational behavior and everyone is starting to understand the fundamental problems that brought us here,” according to the report. “As such, we think the bears are overdoing it.”
In all seriousness, the non-governmental mortgage market is non-existent. There are some big issues that are going to have to be dealt with going forward. Will we have the guts to make the tough decisions? I don’t know.
