For the first time in years, the number of people facing foreclosures is declining.  This means that the end of the crisis is in sight.  There is a long road back to stability ahead of us, but it does not look like things will get worse. 

This long road ahead is due to the fact that the housing values have dropped to roughly half of their peak.  These deeply discounted houses will put pressure on home prices for years to come.  Mike Larson, a real estate analyst with Weiss Research said, “Housing is on a path to recovery but it’s going to be a very long, gradual process.”

The good news is that it has begun to change.  The percentage of borrowers who missed just one payment on their home loans fell to 3.6 percent in the October-to-December quarter from 3.8 percent in the third quarter, according to the Mortgage Bankers Association. This is especially surprising because delinquencies usually rise at that time of year due to higher heating bills and holiday spending. Also, the number of borrowers who had missed at least one payment but were not yet in foreclosure also fell for the first time since the beginning of 2007.

Banks are delaying the foreclosure process, traditionally between four and six months. If banks unload these borrowers suddenly, “it will be much more detrimental to the housing recovery than if it’s a slow, gradual bleed,” said Michelle Meyer, a Barclays economist.

More good news - Obama recently announced that housing agencies in the five hardest-hit states of Arizona, California, Florida, Michigan and Nevada will receive $1.5 billion in financial rescue money.

Although we won’t feel the financial strain lift overnight, we can begin to rest a little easier as we start seeing small changes.


Posted by Carlos German on


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