Archive for the ‘Foreclosures’ Category

Why Home Ownership Is At a 50-Year Low

Monday, May 15th, 2017

After eight years of historically low interest rates, and with the unemployment rate having fallen to a point near what experts consider to be full employment, it would be logical for home ownership to be at an all-time high.

It’s not. In fact, it was recently at its lowest level in 50 years.

In 2016, there were nearly a million fewer homeowners in the U.S. then there were in 2006, even while the number of households rose by 7.5 million, according to “Homeownership in Crisis: Where are We Now? a new report from Rosen Consulting Group and the Fisher Center for Real Estate & Urban Economics.

If the housing market had returned to normal levels by 2016, according to the report, more than $300 billion would have been added to the national economy, which would have boosted growth in gross domestic product by 1.8%. In other words, instead of the anemic 2% growth we’ve experienced over the past eight years, growth could be exceeding the 3.3% average.

As recently as 2004, 69.2% of Americans owned homes. As of 2016, only 63.4% were homeowners. While there are recent signs of improvement, why has home ownership been so low?

The Housing Bubble

Many factors had an impact, as we noted when we wrote about the housing market a couple of years ago. Ironically, a major one was the government effort to increase home ownership.

The Community Reinvestment Act (CRA), which became law in 1977, was meant to encourage lenders to make more mortgage loans to low-income Americans. While the CRA initially helped many struggling Americans become homeowners, over time it morphed into an abandonment of lending standards. (more…)

The “Mortgage Deal From Hell”

Thursday, February 16th, 2012

In a deal with the U.S. Justice Department, the Department of Housing and Urban Development, and 49 out of 50 state attorneys, five of the country’s largest lenders have agreed to a $26 billion settlement – that’s more than $5 billion per lender.

Their crime, as nationalmortgagesettlement.com put it, is that “they routinely signed foreclosure related documents outside the presence of a notary public and without really knowing whether the facts they contained were correct.”

Dick Bove, bank analyst for Rochdale Securities, called it “the mortgage deal from hell.”

“Homeowners who made large down payments on their homes or made the terrible mistake to pay down the principal on their mortgages do not qualify,” he said.  “Homeowners who made minimal or no down payments will get the windfall benefit of a lower principal repayment or a cash payment.”

If the deal is from hell, the devil must be in the details … except that there are no details, because, as American Banker reported, “a fully authorized, legally binding deal has not been inked yet.”

Yet, as zerohedge.com points out, the settlement agreement appears to have been “robosigned” as well.  Keep an eye out for the settlement document on nationalmortgagesettlement.com, which says
it is “coming soon.”

It’s yet another example of “do as I say, not as I do.”

As President Obama said, the settlement is just “a start.”  Stay tuned for others.