Market Studies

When the Treasury Department released its latest progress report for the Home Affordable Modification Program (HAMP) in late July, it showed the redault rate for permanently modified loans to be around the two percent mark. An outcry from analysts - and some of you discerning DSnews.com readers - immediately followed, questioning the validity of the government's math. Last week, the Treasury quietly corrected its redefault assessment. The revised numbers are between 6 and 10 percent.

Just how low can mortgage interest rates go? Lately it seems like there's no bottom in site. For months now, rates have been falling to new record-lows week after week, and this week, they headed even lower. Freddie Mac reported Thursday that interest rates for 30-year fixed mortgages are now averaging 4.44 percent, and 15-year fixed-rate home loans are at 3.92 percent. Bankrate's weekly survey puts the average rate for 30-year mortgages at 4.57 percent, and 15-year mortgages at 4.06 percent.

RealtyTrac reported Thursday that foreclosure filings increased four percent in July -- an abrupt departure from the previous three months, which saw consecutive declines in foreclosure activity. However, even with filings on a total of 325,229 properties during the month, July's numbers represented a 10 percent decrease compared to July 2009. It was the 17th consecutive month with a foreclosure activity total exceeding 300,000. One in every 397 U.S. homes received a filing in July.

Mortgage interest rates have been hovering at their lowest levels in decades, but that's done little to sway consumers to buy a home or refinance their mortgage to take advantage of the interest savings. The economists at Freddie Mac point to several reasons for the ""missing"" originations, which they trace back to deteriorating home values. Many borrowers' home equity is so badly eroded that they don't qualify for a refinance, and potential buyers remain nervous about investing in a home absent big incentives.

Homes prices across the country gained ground in the second quarter, with more metropolitan areas showing increases from a year ago, according to the National Association of Realtors (NAR). New data released by the trade group Wednesday shows that during the April to June timeframe, 100 out of 155 metros included in the NAR survey had higher median existing-home prices compared to the second quarter of 2009, including 14 with double-digit increases. NAR say it's evidence that the trend of firming home prices is solidifying.

The chances of home prices falling further lessened in the first quarter of 2010 compared to the previous quarter, according to a new study from mortgage insurer the PMI Group. The company's U.S. Market Risk Index assesses the probability that the price of homes will be lower at the end of the next two years, and it dropped by nearly two full basis points. It was the third consecutive quarterly decrease in the overall reading, and PMI says it signals ""continued improvement in the housing market.""

Integrated Asset Services (IAS) is reporting a modest second quarter price gain for the U.S. housing market. The valuation company's latest IAS360 index shows a 1.1 percent increase in home prices nationally for the three-month period ending in June. But despite the April tax credit and the arrival of the springtime buying season giving at least a short term lift to prices, IAS says its neighborhood trend lines indicate that house prices around the nation are still looking for a bottom.

The number of short sales has more than tripled since 2008, with the estimated annual volume now at 400,000, according to CoreLogic. The company says the hard-hit markets of California, Florida, and Arizona, along with Texas, account for more than half of all short sales. But as with any modus operandi that rapidly picks up steam, this proliferation can open the gate for fraud. Lenders' losses resulting from preventable short sale fraud are estimated to be as high as $310 million by the end of this year, CoreLogic says.

Could the U.S. economy slip back into the throes of the recession that nearly crippled the nation's financial system and protracted any semblance of a housing recovery? The analysts at Moody's think so. They say the odds of a near-term double-dip recession have increased to one in four. And they warn that if the economy sinks back into recession, housing activity will follow. If such a scenario were to play out, Moody's says home prices are likely to fall by another 20 percent before they stabilize in early 2012.

The percentage of borrowers underwater on their mortgage declined during the second quarter, but that welcome change of pace could come to an abrupt end as home values are again beginning to fall in markets across the country. Zillow reported Monday that as of the end of June, 21.5 percent of single-family homeowners with a mortgage owed more on the loan than their home is worth. That's down from 23.3 percent in the first quarter of this year, and 23 percent during the second quarter of 2009.