Reuters provides us with an image of how the housing market fared in July of 2009.
Foreclosure activity jumped 7 percent in July from June and 32 percent from a year earlier as one in every 355 households with a loan got a foreclosure filing, RealtyTrac said on Thursday.This is, more or less, unsurprising. It is more evidence that a turnaround in the housing market is nowhere on the horizon yet. Most of these foreclosed properties will take quite a while to make their way onto the market due to the backlog that lenders are facing.
Obama's housing rescue is gaining traction in altering terms of loans for struggling borrowers, but slowly.I thought this was an interesting comment on the part of Reuters. They're referring to this. I'll let them speak for themselves:
Earlier this month the U.S. Treasury Department detailed the progress of the top servicers in modifying loans and prodded them to step up efforts to stem foreclosures.
Eleven of the largest 25 mortgage service companies are helping less than 5 percent of eligible borrowers, while the most effective servicers are helping as many as one in four eligible borrowers, according to Treasury data.This isn't the complete story, of course. Some smaller banks are modifying loans at rates higher than 20%. However, I thought it was an interesting bit of spin. In the context of the July housing article, the government's loan modification program is presented as a positive factor in favor of the housing market. If we dig deeper, however, we see that the program is quite troubled and, in its current state at least, unlikely to make much of an impact in stemming the wave of foreclosures.
"It's safe to say we're disappointed in the performance of some of the servicers," said Michael Barr, Treasury assistant secretary for financial institutions. "We expect them to do more."
Bank of America, the biggest U.S. bank by assets, is aiding just 4 percent of eligible borrowers, while No. 4 bank Wells Fargo is reaching only 6 percent, the Treasury said.
Anyway, back to the article on July's housing numbers ....
California, Florida, Arizona, Nevada accounted for almost 57 percent of total U.S. foreclosure activity in July.This is pretty troubling. California alone makes up a huge percentage of economic activity in the U.S. Of course, I'll be the first to state that it'll be nice to see California's housing prices come back in line with reality. However, that kind of correction could come at a pretty steep cost. We'll likely see more destruction of equity and wealth in California as prices continue to decline and in turn we'll see less investment and capital available. Despite what some may think, that *will* have repercussions throughout the rest of the United States.
Illinois had the fifth-highest total filings, spiking nearly 35 percent from June, in an example of how moratoriums often delay rather than cure an inevitable loan failure.
Meanwhile, things are, well, horrible in Nevada.
Nevada had the highest state foreclosure rate for the 31st straight month, with one in every 56 properties getting a filing, or more than six times the national average.Tourism, hospitality and, of course, gambling have already taken a huge hit. Now we're seeing that 1 out of every 56 properties in Nevada has gotten a foreclosure filing. Anecdotal evidence, as well as simple population statistics, make it clear that most of those filings are probably in the Las Vegas region. I can't say I envy those of you in Las Vegas right now. Of course, real estate development in Las Vegas is as much commercial as it is residential. Various economists and commentators have already pointed to the commercial real estate market as the next major pillar of the economy to face major problems so we should pay close attention to Las Vegas as a test case of where the national economy might be headed. Times sure are looking tough in Nevada right now.