Foreclosure’s Continue, but could be Slowing
Around 13% of U.S. households with mortgages was in foreclosure or behind on its home loan payment during the second quarter of 2009, which puts added pressure on federal programs aimed at preventing foreclosures. However, foreclosures have slowed on the subprime loans that initially ignited the mortgage and banking crisis, loans extended to borrowers with good credit are deteriorating at a faster rate as falling home prices and mounting job losses effect more American households.
How can the situation to improve for the financial and real estate markets? There has been little reform of the housing finance system in this country. Fannie, Freddie, and the FHA still provide almost all finance for housing. Mortgage originators, the ones who make the borrower-by-borrower lending decisions, still retain absolutely no risk on the mortgages they originate. They still originate to sell, instead of selling to private investors, they sell to the government. The answer is in legislation.
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