A NY Times story discusses the “surprising” drop in home sales in May (down 33%) after the home buyer credit disappeared in April. Is anyone really shocked this happened? You stopped handing out money for a behavior and that behavior immediately slowed down.
They are still trying to paint a rosy picture on this
In a recent interview, [FHA commisioner] Mr. Stevens said his point was misconstrued. “The system is showing signs of stabilizing,” he said. “We’re vastly improved over where we were a year ago.”
To underline that notion, the Obama administration released this week its first monthly “housing scorecard.” It presents an optimistic picture of a housing market saved from the abyss by extensive government intervention.
Some of its good news, however, was distinctly relative. “Home equity up more than $1 trillion since first quarter 2009,” said one headline in the report. But, as the chart clearly indicated, in the three years before that, equity had fallen $6 trillion.
Even in Dallas where we didn’t get hit as hard as the rest of the country the prices are still skewed. The prices are wrong when some houses on my street sit on the market for over a year while my house continues to get marked up in value each year by the county tax assessor.
In order to support this inflated pricing scheme Terence Edwards, Fannie Mae’s executive vice president for credit portfolio management said in a statement
Walking away from a mortgage is bad for borrowers and bad for communities and our approach is meant to deter the disturbing trend toward strategic defaulting.
Still not surprising. Walking away from a mortgage is bad for other borrowers and bad for the bank. It is not bad (or as bad) for the guy walking away. Everyone has to realize the market was over built and over priced and someone has to take the loss. This rhetoric about “don’t walk away” is just intended to force the home owner to take the loss for everyone. Walking away spreads that loss around and seems perfectly rational to me in some cases.
Fannie Mae said it would take legal action to recoup outstanding mortgage debt from borrowers who walk away.
but I’m not really sure what legal action you can take. Your action is to take ownership of the collateral. That is the contract. Its kinda your fault you if you mispriced the collateral.
The system is not going to stabilize until we get prices back to the old levels (which the Feds are adamantly opposed to) and we stop building new properties that even now dilute the value of the old ones.