Market Studies

Home prices in the U.S. slipped 0.4 percent between July and August, CoreLogic reported Thursday. It marks the first time in four months the company's index has recorded a decline. Based on CoreLogic's assessment, national home prices were down 4.4 percent in August when compared to a year earlier. That figure includes distressed sales, such as short sales and REO transactions. Take the distress factor out, and prices are down by just 0.7 percent year-over-year.

The average rate for the conventional 30-year fixed mortgage has dropped below the 4 percent mark for the first time in history, according to numbers released Thursday by Freddie Mac. The GSE's market analysis also shows that the 15-year fixed rate - which has become a popular refinancing option among existing homeowners - fell to its lowest level on record for the sixth consecutive week. Freddie's national survey puts the average rate for a 30-year mortgage at 3.94 percent and the 15-year rate at 3.26 percent.

Clear Capital has released its forecast for home prices heading into the first part of next year. The company says the market is flirting with a ""triple-dip"" by next spring. Last spring prices did a double-dip, dropping below this cycle's previous low point. While prices have ticked up in recent months, Clear Capital is projecting a drop of 1.6 percent over the last three months of this year, and another 3.2 percent by next April, moving prices dangerously close to the levels seen at the end of the first quarter of 2011.

Treasury released a new progress report on its Home Affordable Modification Program (HAMP) Wednesday. The number of modifications granted continues to slip - fewer than 26,000 in August - but each month's results are chipping away at the pool of eligible borrowers who fit the HAMP criteria. Treasury's report comes just one day before a House subcommittee is scheduled to hold a hearing on the administration's response to the housing crisis, and one of HAMP's most outspoken critics is heading to Capitol Hill to testify.

After two very sharp moves over the previous two months - a huge jump in July and a big dip in August - the delinquency rate of loans held in commercial mortgage-backed securities (CMBS) stabilized in September, according to Trepp LLC. The company says for at least one month, the reading reverted to its pattern from earlier in the year when modest bumps in the rate were the norm. Trepp reports the CMBS delinquency rate inched up just 4 basis points between August and September to 9.56 percent.

Data released by Lender Processing Services (LPS) Monday shows that foreclosure starts were up in August by 19.7 percent when compared to the previous month. However, overall foreclosure starts were down more than 12 percent from August of last year. At the same time, LPS says the number of loans in the 90-plus day delinquency bucket on which foreclosure has not been initiated has contracted to levels not seen since 2008, and the loan deterioration rate is less than half that seen in 2009.

A new quarterly survey of bank risk professionals from FICO paints a decidedly pessimistic picture of housing's future. The company describes its latest results as a reversal of the growing optimism seen in late 2010 and early 2011. The survey shows that bankers expect mortgage defaults and foreclosures to remain elevated for at least five more years, and housing prices nationally to hold below the pre-crisis levels of 2007 until the year 2020.

If all of Fannie Mae's and Freddie Mac's borrowers paying interest rates that are higher than the median rate were to refinance at 4 percent, the savings would total $63 billion. While such an option would not bring the total $63 billion in savings to fruition, Moody's chief economist, Mark Zandi, says ""even a fraction would be a big plus."" According to Zandi, the single most effective policy move for the housing market would be to facilitate more mortgage refinancing.

One in three Americans would be unable to make their mortgage or rent payment beyond one month if they lost their job, according to the results of a national survey taken in mid-September. Job loss has become the primary driver of mortgage defaults. With the state of the labor market posing one of the biggest obstacles for struggling homeowners and their lenders, a number of programs at both the national and state level have been launched to assist unemployed homeowners, but so far the expected results haven't materialized.

As delinquencies and impending foreclosures rose, New England states responded with foreclosure prevention programs, generally falling into one of two categories: foreclosure mediation and financial assistance. The Federal Reserve Bank of Boston examined these efforts to determine ways other states can learn from them. Five of the six New England states have their own mediation programs, and Massachusetts created a program allowing negotiation without a mediator.