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In an article by the National Association of Realtors, although slightly biased, they announced the following on December 10, 2007: 

“The National Association of Realtors’ index of pending home sales climbed 0.6%, the second month in a row the number has increased. The latest figure, which measures contracts signed in October, was ahead of economists’ forecasts of a 1.0% fall. September’s reading was revised up to a 1.4% increase as well. “We’re not likely to see any further collapse at this point,” said Richard DeKaser, chief economist at National City Corp, who had actually fore-casted a gain. “I’m not optimistic about the outlook for the housing market, but we’re scraping bottom in the fourth

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Source: Hope Now Alliance

The ARM freeze plan presented by the Bush administration today should help some borrowers with their loans. Borrowers can call 1-800-HOPE-NOW (toll free) to receive counseling with mortgage problems. Once you, the borrower make contact the Hope Now Alliance will use a flowchart like the one above to determine if you qualify for the mortgage adjustment.

The plan is not designed to give handouts to folks, but to minimize the damage to the economy. Housing statistics are a major indicator of the health of the economy because the industry is intertwined with so many others. This plan is important to all of us whether or not we hold an adjustable rate mortgage because the “credit crunch” also affects the abilities of banks to lend to other institutions, such as businesses. If you are looking to borrow in the near future, and the bottom of the credit industry falls out, you can bet your bottom dollar higher interest rates will be charged to make up for the lost money in bad credit and foreclosures. Our first article on this issue can be found here, and our first follow up here.

Update:  Seeing as how not everyone who is in a terrible mess with their mortgage will qualify for the rate freeze, there is another option available that would allow your to keep your home from going into foreclosure and save your credit as well.

President Bush is said to be signing a new bill that will allow (force) mortgage companies to freeze arm rates. As discussed in a previous article on this site, this will probably have some ramifications for previous owners that have already foreclosed on their properties. I can imagine that there will be a lot of people looking to cash in on this new bill. This bill will freeze current ARM mortgage rates for a length of up to 5 years so that income can possibly catch up to the interest rate that is being charged.

The way the bills is being signed is such that it will affect those that are currently not defaulting on their loans, but would not be able to survive a future increase in interest rate. Those that are currently defaulting on their loans will not qualify. This should help millions of Americans keep their homes, while we should see a decent amount of foreclosed homes until all the kinks of the system are worked out. Foreclosed homes are expected to increase next year, but should eventually taper off if this bill serves its actual purpose.

 Expect a follow up as the bill is signed and dissected.

Henry Paulson, the Treasury Secretary of this great country, has announced that he hopes mortgage companies will soon freeze their rates. He has also urged congress to push through legislation that would regulate the mortgage industry.

He fell short of announcing a 90 day moratorium on foreclosures, which both the Bush administration and Hillary Clinton are toying with.

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Click here to watch an interesting video on the housing crisis put together by PBS.  Seems to cover both sides of the issue fairly well.  The video is 20 or so minutes.   Add a comment with your thoughts on the video.

Sometimes it is difficult, when so many sources of information are conflicting, figuring out who to believe. The chief economist of the NAR (National Association of Realtors) seems to think things have already bottomed out and are starting to rebound, but he represents Realtors, many of whom are hurting right now from falling prices. Taking a stroll down almost any street in America would tell you otherwise.

Thousands upon thousands of subprime loans have yet to reset to higher interest rates, but when they do, you can expect the market to continue its decline. It looks like the bulk of the subprime loans will reset in 2008.

The increase in reset loans will likely mean more foreclosures if refinancing doesn’t take place, or the lending companies decide to reset rates to what borrowers are currently paying.   Some money has to be better than putting your company out of business, right?

Take a look at this chart from Bank of America Securities and you tell me when this housing funk we’re in might end.  Hopefully we’ll find a way out of this mess soon!

Via USA Today

 Coicides nicely with an article we published a while back on how we got into this mess we’re in.  Visit USA Today for explanations as to what the dots represent on the chart.