Federal Reserve Surprised? Don’t Let Anyone Feed You A Line Of Crap - Housing Woes Till Late 2009

Filed Under Adjustable Rate Mortgage, FHASecure, Federal Open Market Committee - FOMC, Federal Reserve, Home Sales, Housing Market
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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.”

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