We find it to be really funny how the so called ‘experts’ think that housing woes will be over within the next few months. What actual numbers are they reading?

Don’t let anybody fool you, the housing/mortgage bubble will last well into 2009 and here is why and we will keep it short…

From May 2008 to September 2008 Census data states that we will see about 2 million adjustable rate mortgages that will reset and come due. This is double what we saw in 2007 and we had some serious problems.

All the FHASecure and ‘Interest Rate Freeze’ programs have guidelines that are strict and should only assist approximately 15 to 25% of the affected families. Now add an average of 2 months in reserves that most families have. This takes us to somewhere in the neighborhood of September 2008. The quickest a home can be foreclosed on in some states in 6 months, like California and the longest is about 18 months like New York, so lets say an average of nine months to foreclose. Now we are at June of 2009! After 3 consecutive years of this foreclosure and depreciating home value problem, who is going to buy then?

We feel that the first time the national real estate market will flatten on an overall average will be during the 2010 buying season

Federal Reserve Panel Voiced Foreclosure Concern

Members of the Federal Reserve monetary policy committee are concerned that rising foreclosures and the huge supply of unsold homes on the market could put additional downward pressure on house prices and lead to “further disruptions in the financial markets.”

The minutes of the Dec. 11 Federal Open Market Committee also reveal that members did not expect that the housing market would continue to deteriorate after their last meeting on Oct. 31 or that the reduced availability of jumbo mortgages would last so long.

The FOMC members “agreed that the housing correction was likely to be both deeper and more prolonged than they had anticipated in October,” the Dec. 11 minutes say. The committee voted to lower the target federal funds rate 25 basis points to 4.25%.

Boston Federal Reserve Bank president Eric Rosengren advocated a more aggressive cut due to a “deteriorating housing sector, slowing consumer and business spending, high energy prices, and ill functioning financial markets.”

FHASecure Will Refinance Interest Only Mortgages and Some Option ARMs

The Federal Housing Administration is willing to refinance certain delinquent borrowers with interest-only and payment-option adjustable rate mortgage under the FHASecure program, which is designed to rescue subprime borrowers.

However, the delinquency on an IO or option ARM must be the result of an interest rate reset or the full amortization of the mortgage, according to the Department of Housing and Urban Development.

Shortly after HUD launched FHASecure on September 5, lenders began asking whether IO and option ARMs would be eligible.

Mortgage industry consultant Bud Carter pointed out the revision. “FHA will refinance almost any loan, except a conventional fixed rate mortgage that is delinquent,” he said. Mr. Carter is with Potomac Partners in Washington.

FHA Secure Act. Washington steps in to prevent recession brought by home foreclosures.

FHA Secure Act. Oct. 05, 2007. 10:37 PM EST. Washington steps in to prevent recession brought by home foreclosures

The Department of Housing and Urban Development estimates that the Federal Housing Administration could help about 240,000 homeowners facing resets on their adjustable rate mortgages avoid foreclosure.

“Of the 2 million loans expected to reset by the end of 2008, we estimate about 500,000 will actually foreclose,” HUD Secretary Alphonso Jackson told the House Financial Services Committee.

“Through FHA, we estimate that we can help about half those homeowners.” The secretary noted that HUD can help these homeowners under its new FHASecure refinancing program. However, the FHA could help even more struggling homeowners if Congress passes FHA reform legislation, he said.

Government Will Tighten Lending Standards. Sep. 04, 2007. 02:00 PM EST. Bush’s Subprime Help - Analysis and Discussion with Thomas Gallagher, Senior Managing Director at ISI: Markets Overreacted to Bush Proposal; Congress Returns

BUSH ADMINISTRATION TO HELP NEARLY ONE-QUARTER OF A MILLION HOMEOWNERS REFINANCE, KEEP THEIR HOMES
FHA to implement new “FHASecure” refinancing product

WASHINGTON - President George W. Bush today announced that HUD’s Federal Housing Administration (FHA) will help an estimated 240,000 families avoid foreclosure by enhancing its refinancing program effective immediately. Under the new FHASecure plan, FHA will allow families with strong credit histories who had been making timely mortgage payments before their loans reset-but are now in default-to qualify for refinancing.

In addition, FHA will implement risk-based premiums that match the borrower’s credit profile with the insurance premium they pay-i.e., riskier borrowers pay more. This common-sense, risk-based pricing structure will begin on January 1, 2008.

A press release showed up on HUD’s Web site with some interesting details about the announcement by President Bush of an assistance plan for some troubled borrowers. Among them is a disclosure that the FHASecure lending program designed to help troubled subprime borrowers will utilize a risk based pricing system that will allow the FHA to price insurance premiums by a borrower’s risk profile.

The system is targeted for implementation by January 1. Also in the press release is an important number - 240,000. That is the estimate of the total number of at-risk borrowers that the FHASecure program will keep out of foreclosure, with expected Congressional reforms to FHA program guidelines making help available to more. Keep in mind that most estimates now assume that the total at-risk subprime population numbers around 2.4 million, so today’s announcement would appear to mean that help is available for roughly 10 percent of the troubled subprime population. That assumes all FHA borrowers are subprime, of course, which need not be the case. And, of course, this doesn’t count for run-off (those who have already defaulted) or for a likely understatement of the at-risk population.