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CAPITOL
State adds funds to help people in housing crisis
Those facing foreclosure can get assistance
BY VALERIE BAUMAN The Associated Press

    It had been about three months since Gloria Collery was able to pay her mortgage, and she was scared.
    “I started waking up in the middle of the night and thinking ‘Oh my God, I may not be sleeping in this bed in a month,’ ” she said.
    State lawmakers are hoping that $25 million in counseling and legal assistance approved this month will be enough to help people with subprime mortgages like Collery avoid losing their homes. That’s more than 60 times the $388,000 set aside for mortgage counseling last year.
    Collery’s interest rate on her mortgage spiked more than 3 percentage points in February 2007, or by about $330 a month. By the beginning of 2008, the 46-year-old mother with two teenagers at home just couldn’t keep up. She worked three jobs — as a yoga instructor, massage therapist and personal assistant to the disabled — to make ends meet.
    The economic slowdown sent the cost of food and other necessities up, leaving Collery with fewer massage and yoga clients. Still, she tried to save money, cutting off cable television and the cellphone. Instead of using her oil furnace, she took care of a friend’s horses in exchange for firewood.
    Collery found a counselor through the NeighborWorks organization who has helped her work with the mortgage company to come up with a temporary payment plan. The Greenwich, N.Y., resident is taking steps to modify or re-negotiate her loan to a more manageable rate.
    The U.S. housing downturn has spooked investors around the world and sent stock markets on a rocky ride since August. As home prices continue to fall, foreclosure rates soar and dozens of lenders have shuttered their doors.
    Subprime loans target marginal borrowers with weak credit or questionable incomes who previously might not have gotten a loan at all. An estimated 2 million adjustable rate mortgages started resetting last year at sharply higher interest rates, which caused monthly payments to rise sharply.
    At least nine states including New York are proposing bills that would give homeowners like Collery better access to foreclosure counseling. California lawmakers have introduced at least nine proposals related to foreclosure, including one that would require lenders to help put a homeowner in default in touch with a licensed credit counseling agency. Kentucky, Illinois, Colorado, Louisiana, Massachusetts, New Jersey and Rhode Island have also considered counseling to combat home foreclosures.
    The latest New York state budget dedicates $347 million to affordable housing issues — nearly tripling the amount of assistance offered in each of the past 10 years.
    Hilary Lamishaw, the director of the NeighborWorks Alliance of New York State, said the influx of affordable housing dollars will help the struggling market overall.
    “In time, as the money gets out the door, people will be able to have access to new apartments, to new affordable home ownership opportunities, to be able to repair their homes, perhaps through small repair programs,” she said. “I think that what we’ll see is the stock of affordable houses increase and the conditions of the existing housing improve.”
    The grants for New Yorkers who have risky subprime loans will go through the state Division of Housing and Community Renewal to nonprofit organizations that provide counseling and legal services to homeowners facing foreclosure or who are in default. The program will also help subprime borrowers caught in the national foreclosure crisis restructure the terms of their loans to allow them to continue to live in their homes.
    But some say this isn’t enough.
    A bill that was pushed by the Assembly — and failed — would have provided $150 million to help bail out New Yorkers before they lost their homes. To qualify for the funds, homeowners would have had to enroll in counseling and work with lenders to find a realistic payment plan.

MIKE GROLL/THE ASSOCIATED PRESS
Gloria Collery poses with her dog Pluto at her home in Greenwich recently. Collery’s interest rate on her mortgage spiked more than 3 percentage points in February 2007, or about $330 a month. By the beginning of 2008 the 46-year-old mother with two teenagers at home just couldn’t keep up.

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Most housing programs to get boost in funding
The Associated Press

    New York and other states are spending more money and dedicating more legislation to affordable housing issues.
    The extra funding is a response to the subprime mortgage crisis, but the money goes to all kinds of housing programs. In New York, most housing programs will get big boosts in the next year:
    Access to Home, which provides funds to property owners to make homes and apartments more accessible to the disabled, will get $14 million. Last year it received requests for $15 million in assistance, but only had $5 million allocated.
    A new program dedicates $15 million to help families that qualify in the Southern Tier and Catskill regions sell flood-damaged property to local governments so they can relocate to areas less vulnerable to flooding.
    The Affordable Housing Corporation, a public benefit corporation created in 1985, is receiving $45 million to promote homeownership for low- to moderate-income people. Last year the corporation received $25 million.
    The Mitchell Lama program is receiving $54 million. The program provides financial incentives for property owners to offer affordable housing. Last year, the program awarded $39.8 million through second mortgages to keep Mitchell Lama owners in the program.
    For these programs the state has a network of not-for-profi ts throughout the state called Local Program Administrators, which apply the programs at the local level. They apply for the funds, and New Yorkers who need assistance can apply directly to the LPA in their community. A list of all LPAs and other housing agencies is available at http://www.dhcr.state. ny.us/ahd/.
    The Housing Trust Fund Corporation will get $73 million to oversee programs that create affordable housing through the rehabilitation of existing housing and new construction. Last year the corporation received $29 million. Developers who want to apply for those funds can go to http://www. dhcr.state.ny.us/ocd/ufmaterials. htm.

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Mortgage Apps Plunge 14 Pct. as Rates Rise

Wednesday, April 23, 2008

NEW YORK -- Mortgage applications plunged last week, largely reflecting a drop in demand for home refinancing loans as interest rates surged, an industry group said on Wednesday.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ended April 18 fell 14.2 percent to 637.6.

The U.S. housing market is currently suffering one of the worst downturns in its history. Last week's drop in demand may indicate what is in store for the hard-hit sector this spring, which traditionally is the peak of the home-buying season.

Borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.04 percent, up 0.30 percentage point from the previous week.

Interest rates were below year-ago levels of 6.13 percent.


The MBA's seasonally adjusted purchase index dropped 6.4 percent to 357.3. The index came in below its year-earlier level of 411.0.

The group's seasonally adjusted index of refinancing applications plummeted 20.2 percent to 2,286.3.

Consumers seeking to refinance their existing home loans tend to be highly sensitive to shifts in interest rates.

A sub-index of purchase applications for loans backed by government programs, largely those from the Federal Housing Administration, decreased 2.7 percent to 216.6, but it is up significantly from 87.2 a year ago.

Borrowers have increasingly looked to FHA programs in recent months after lenders that once courted them have now closed or severely tightened requirements for getting a loan.

HOUSING HEADACHE

The MBA's soft report followed data this week that also pointed to weakness in the hard-hit sector.

The National Association of Realtors said on Tuesday existing home sales fell 2 percent in March to an annual rate of 4.93 million units, down from 5.03 million in February.

Later this week, lawmakers on a banking committee of the U.S. House of Representatives are due to draft legislation that would let the largest government homeowner aid program buy more troubled loans.

Expanding the FHA is seen by proponents as a crucial step in stabilizing home prices and putting the brakes on the sliding market.

The Commerce Department on Thursday will release data on new U.S. single-family home sales in March.

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Report shows home values falling faster Number of vacant properties hits new record
BY J.W. ELPHINSTONE The Associated Press

    NEW YORK — In a bad omen for sellers and lenders this spring home selling season, the erosion of house values is accelerating and foreclosure filings are doubling, new data showed Tuesday.
    A closely watched index of home prices in 20 cities fell almost 13 percent in February from a year earlier, a record for the seven-year-old S&P’s/Case-Shiller Home Price index. The report follows news that foreclosure filings between January and March also hit a new high, and comes a day after the government said the number of vacant homes on the market also hit a record.
    “Month-to-month, it gets consistently worse,” said David Blitzer, chairman of the index committee at S&P, noting that February also marked the sixth straight month that all 20 cities experienced declines. “The slope is one direction. There is no sign of a bottom.”
    He said 17 of the metro areas the index tracks reported record annual declines, led again by Miami and Las Vegas.
    Charlotte, N.C., was the only city to post an annual gain of 1.5 percent, but Blitzer noted that Charlotte’s positive returns continue to diminish with each month and it was the last city in the index to reach its peak.
    The lopsided market, of course, means home buyers with good credit have an abundance of options.
    Jody Hanson and her boyfriend Scott Harrison want to buy a twostory house with at least three bedrooms in Las Vegas for no more than $225,000. So far they have been out-bid on four foreclosed homes.
    “There are just a ton of people here getting foreclosed upon,” Hanson said, “so there are just so many deals waiting for you.”
    Half of all sales in Las Vegas are foreclosures, said Karen Wilson, a local Century 21 agent, though she said the glut of homes on the market has started to wane and transactions have picked up.
    Nevada posted the country’s worst foreclosure rate in the first quarter, RealtyTrac Inc. said Tuesday, with one in every 54 households receiving a foreclosure-related notice.
    Nationwide, one in every 194 households received a foreclosure filing during the quarter, more than double the same period last year.
    The most recent quarter marked the seventh consecutive quarter of rising foreclosure activity.
    “What would normally alleviate the foreclosure situation in a normal market is people starting to buy properties again,” said Rick Sharga, RealtyTrac’s vice president of marketing.
    However, people without perfect credit and a significant down payment are having trouble getting loans, and that is slowing the market’s recovery, he said.
    Falling home prices are driving up the number of loan defaults and foreclosures, deepening the toll lenders are paying for their reckless lending practices during the housing boom.
    On Tuesday, Countrywide Financial Corp. said it lost $893 million in the first quarter after setting aside $1.5 billion to cover losses on unpaid home loans. The staggering lender agreed in January to sell itself to Bank of America Corp. for about $4 billion in stock.
    The housing crisis, coupled with soaring food and fuel prices, are making consumers more pessimistic. A widely watched gauge of consumer sentiment hit a five-year low, a private research group said Tuesday, which doesn’t bode well for a housing turnaround.

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Foreclosures in Albany area on sharp rise
The Business Review (Albany) - by Michael DeMasi The Business Review

The number of homes in some stage of the foreclosure process in the Albany, N.Y., region grew by more than five times in the first quarter of 2008 compared to a year earlier, according to RealtyTrac Inc.

A total of 608 homes in the Albany-Schenectady-Troy metropolitan statistical area were in some phase of foreclosure during the first three months of the year, compared to 111 in the same period of 2007.

The metropolitan statistical area (MSA) includes five counties: Albany, Rensselaer, Saratoga, Schenectady and Schoharie.

Of those, Albany County had the highest rate, with one out of every 437 homes in some stage of foreclosure, according to RealtyTrac, an Irvine, Calif.-based company that markets foreclosed properties online.

Albany County's rate was the eighth highest in the state.

RealtyTrac tracks three types of filings: default notices, notices of trustee or foreclosure sale and bank repossessions.

Default notices are typically filed about three months after a homeowner misses a mortgage payment; from that point, it can take two to 10 months before the property is sold at a court-ordered foreclosure sale or auction, according to the New York State Banking Department.

Of the 608 foreclosure filings in the Albany-Schenectady-Troy MSA during the first quarter of this year, 60 percent had moved beyond the default notice step of the process, according to Realty Trac.

That is higher than New York state as a whole, where about 30 percent of the 14,377 foreclosures had moved beyond the default notice step, or "Lis Pendens," which is Latin for "suit pending," according to the state Banking Department.

"The large number of borrowers still entering the foreclosure process is a clear indicator that we are not near the end of the crisis," said New York State Banks Superintendent Richard H. Neiman. "As adjustable rate mortgages reset over the next 18 months, the number of families affected will continue to increase."

Nationwide, the state ranked 30th in terms of the overall foreclosure rate, with one of every 550 households in some stage of foreclosure compared to one of every 194 households in the country.

Nevada, California and Arizona had the highest rates of foreclosure during the first quarter. In Nevada, one of every 54 households had received a foreclosure filing.

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CAPITAL REGION
Local foreclosure rates rise fivefold
BY JAMES SCHLETT Gazette Reporter

    The stream of foreclosures that began to hit Capital Region homeowners last year turned into a flood in the first three months of this year, and neither bankruptcy court nor various foreclosure prevention efforts are providing much help.
    The number of area properties in various stages of foreclosure increased more than fivefold during the three-month period ending March 31, compared with a year earlier, according to RealtyTrac. com, an Irvine, Calif., nationwide foreclosure tracking firm.
    During the quarter, the five-county region had 608 foreclosure filings, which include default and auction notices and bank repossessions. A year earlier, there were 111.
    That means one out of every 622 households in Albany, Rensselaer, Saratoga, Schenectady and Schoharie counties got foreclosure notices. That is a much better track record than Stockton, Calif. — ground zero of the mortgage crisis, where one out of every 30 households received a foreclosure filing. And it is also better than the nationwide foreclosure rate, one out of every 194 households.
    The foreclosure statistics, which RealtyTrac released Tuesday, showed the state has the nation’s 30th highest foreclosure rate. Nevada has the highest.
    New York Department of Banking Superintendent Richard Neiman said the statistics are a “clear indicator that we are not near the end of this crisis,” which will worsen as rates on adjustable rate mortgages reset over the next 18 months. An estimated $514 billion in variable-rate loans are projected to reset to higher rates this year, followed by $398 billion in 2009, according to Banc of America.
    New York’s Foreclosure Prevention Working Group last week reported that seven out of 10 seriously delinquent borrowers had not taken significant loss mitigation actions or steps to avoid foreclosure. The foreclosure group was formed last July and consists of state bank and mortgage regulators plus representatives from the Attorney General’s Office.
    Without working out a deal with lenders, many cash-strapped borrowers’ only other recourse to save their home lies in the U.S. Bankruptcy Court system. By filing for Chapter 13 rehabilitation, borrowers can stop the foreclosure process and develop a court-sanctioned payment plan for their mortgage.
    Non-business Chapter 13 filings increased during the first quarter at the U.S. Bankruptcy Court in Albany, but only by a tiny amount compared to the heightened foreclosure activity — 13 percent. And non-business Chapter 7 liquidation filings actually declined by 3.5 percent.
    “It’s certainly possible there could be a lag between the commencement of foreclosures and the bankruptcy filings,” said Francis Brennan, an Albany bankruptcy attorney and the former president of the Capital Region Bankruptcy Bar Association.
    Brennan noted the first quarter tends to be a slow bankruptcy fi ling period because consumers are reeling from the holidays. But the process of receiving a bankruptcy court’s protection has also become more costly and onerous since Congress reformed the bankruptcy system in 2006.
    Before filing, bankruptcy petitioners need to collect six months worth of pay stubs, for example. And the court fees are now higher. Those reforms have pushed bankruptcy out of reach of many low-income homeowners who are already struggling with higher food and fuel prices on top of higher monthly payments for their adjustable rate mortgages.
    The nation’s annualized infl ation rate climbed to 4 percent in March while wage growth slowed to 3.6 percent, according to the U.S. Bureau of Labor Statistics.
    “People are literally making the choice between feeding their children, getting to work and paying their mortgage,” said Capital Region Bankruptcy Bar Association President James Doern, a Saratoga Springs bankruptcy attorney.
    However, the foreclosure crisis is not limited to the region’s poorest neighborhoods. Foreclosure filings in Saratoga County surged during the first quarter, climbing to 137 from six a year earlier. Albany County led the region in foreclosure activity, with 305 filings compared with 40 during the first quarter of 2007. Schenectady County filings jumped to 101 from 17.
    Regionwide, RealtyTrac said 177 properties had been foreclosed upon and repurchased by a bank. Latham bankruptcy attorney Barbara Whipple said some borrowers are letting homes fall into foreclosure because they are not worth saving, especially when their assessed value falls below the amount of their mortgage.
    “A lot of people are just walking away from their house because they’re finding they are just so under water,” said Whipple, who is also the president-elect of the CRBBA.
    The problem of walk-away borrowers has been less pronounced in the greater Capital Region, where home values have largely held steady or even increased. In March, the region’s single-family home median sale price rose 3 percent over the year while that value tumbled 8.3 percent nationwide.

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Confidence slumps amid housing crisis
BY J.W. ELPHINSTONE The Associated Press

    NEW YORK — Not since George H.W. Bush ran the White House have consumers felt so downbeat about the economy. And the catalyst for much of the gloom — the housing slump — shows no signs of abating, new data Tuesday showed.
    With Americans losing sleep over rising inflation and tight credit, the housing market is unlikely to rebound soon, spelling more pain for the economy.
    “The consumer has no more money to spend,” said Dan Alpert, managing director at the investment bank Westwood Capital. “The only way the economy is not going to recede is if someone cooks the books.”
    Consumer sentiment fell to its lowest level since October 1992 when the economy was coming out of a recession, the New York-based Conference Board said Tuesday. Economists monitor sentiment because consumer spending accounts for more than two-thirds of the nation’s economic activity.
    Retiree Irene Arnold, of Butler, Wis., is uneasy about the economy, especially as she watches food prices skyrocket each trip to the store.
    “You go to the store and you can’t get too many groceries for your money,” said Arnold, who is cutting back on pricier items like meat, milk and fruit. “It seems like you don’t have to have too much in your basket and the cost is really high.”
    Gas prices top Becky Diedrich’s list of worries. The 43-year-old accountant in Franklin, Wis., is looking to replace the family minivan and most likely will go with a hybrid to help save at the pump.
    She wonders how high gas will go. “I don’t think it’s over yet. And I think it’s going to have a lasting effect on consumers,” she said.
    Gas prices hit another record high on Tuesday at almost $3.94 a gallon — just a day after the unofficial start of the summer driving season, according to a survey of stations by AAA and the Oil Price Information Service.
    While higher food and gas prices eat into Americans’ wallets and incomes, falling home prices are eroding the value of their largest asset.
    U.S. home prices dropped at the sharpest rate in two decades during the first quarter, the Standard & Poor’s/Case-Shiller national index showed Tuesday, a somber indication that the housing slump continues to deepen.
    Prices tumbled more than 14 percent during the quarter and are at levels not seen since the third quarter of 2004. While the index is still up 60 percent from 2000, millions of homeowners who bought in the past four years with little or no money down now owe more than their homes are worth.
    Meanwhile, the government reported Tuesday that new home sales unexpectedly rose 3.3 percent from March to April, driven by a surge of purchases in the Northeast. It was the first increase in six months and what seems like, on face value, a hint of rosier days ahead.
    But April’s sales also looked better in part because of a large downward revision to the March numbers. And the median home price fell 4.2 percent last month to $246,100.
    Inventory also edged lower in April, but David Seiders, chief economist for the National Association of Home Builders, waved off any hint of good news because the numbers don’t include contract cancellations by nervous buyers.
    “There are still major uncertainties on the supply side,” Seiders said.
    A bottom isn’t in sight, he thinks, and with reports like S&P/Case-Shiller’s home price index, which he called “chilling,” skittish buyers will continue to sit on the sidelines until prices stop falling.
    Greg Johnson in San Diego is looking to buy a four-bedroom house in the northern part of the county. The 38-year-old sold his condo two years ago at the peak of the market and has been renting a house ever since.
    “I fully expect that pricing will continue to drop,” he said. “Some of my buddies speculate there will be a lot more product dropped on the market because of foreclosures. So I’m just waiting and watching how things go.”
    Already, he can afford houses in areas that were once out of his reach, like in Carlsbad, Calif. He’s seen properties listed six months ago for $700,000 slashed to $450,000.
    “I can be a bit choosier,” Johnson said. “I don’t feel so rushed to jump in.”

MICHAEL DWYER/THE ASSOCIATED PRESS
Above, a man solicits handouts of money in front of a defunct retail store in Boston on Tuesday. Soaring gas prices and weakening job prospects left shoppers gloomier about the economy in May, sending a key barometer of consumer sentiment to its lowest level in almost 16 years. All is not gloom, however: Sales of Spam, below, are on the increase as consumers try to make ends meet.

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Foreclosures hit record — and more coming
BY JEANNINE AVERSA The Associated Press

    WASHINGTON — The foreclosure hammer is hitting ever harder. People lost their homes at the highest rate on record in the first three months of the year, and late payments soared to a new high, too — an alarming sign that the housing crisis and its damage to the national economy may only get worse.
    Dumping more empty homes on an already glutted market also is likely to put a further drag on home prices — extending a vicious cycle.
    Slumping home values are being blamed in large part for the rising tide of foreclosures. Troubled borrowers are left owing more to the bank than their homes are worth. They can’t sell without taking a huge financial hit, so they just walk away.
    In fact, Americans’ equity in their homes — usually their single biggest asset — now has dropped to the lowest level on record in figures going back to the end of World War II. Homeowners’ portion of equity fell to 46.2 percent, which means the amount of debt tied up in their homes exceeds the equity they have built up.
    Watching their home values sink, consumers have pulled back on spending, a factor in the economy’s slowdown. Buoyed by rebate checks, shoppers did get back in the buying groove in May, but analysts predict that consumers — pounded by galloping gasoline prices — will still be cautious.
    “The economy is treading water, and the housing market is one of the undercurrents trying to pull it down,” said Stuart Hoffman, chief economist at PNC Financial Services Group.
    Nearly 1 percent, or roughly 447,723 loans, fell into foreclosure during the Janu- ary-to-March period, the Mortgage Bankers Association said Thursday in its quarterly snapshot of the mortgage market. That surpassed the previous high of 0.83 percent over the last three months in 2007.
    The report also found that more homeowners slipped behind on their monthly payments. The delinquency rate jumped to 6.35 percent — or 2.87 million loans — compared with 5.82 percent for the previous three months. Payments are considered delinquent if they are 30 or more days past due.
    Both the rate of new foreclosures and late payments were the highest on record going back to 1979.
    With prices expected to keep dropping, foreclosures and late payments “are going to continue to go up,” Jay Brinkmann, the association’s vice president of research and economics, told The Associated Press.
    Homeowners with tarnished credit who have subprime adjustable-rate loans took the hardest hits. Foreclosures and late payments for these borrowers also swelled to alltime highs in the first quarter.
    The percentage of subprime adjustable-rate mortgages that started the foreclosure process climbed to 6.35 percent. The rate was 5.29 percent in fourth quarter, the previous high. Late payments rose to 22.07 percent from 20.02 percent, the previous high.
    The association’s survey covers just over 45 million home loans.
    More problems also cropped up with loans to more creditworthy borrowers.
    The percentage of such loans falling into foreclosure was 0.54 percent, compared with 0.41 percent at the end of last year. Late payments rose to 3.71 percent from 3.24 percent.
    The numbers were higher for those prime borrowers with adjustable rate mortgages. Initially low rates reset to much higher ones, making it difficult, if not impossible, for homeowners to keep up with monthly mortgage payments.     

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U.S. Foreclosure Filings Surge 48 Percent
Friday, June 13, 2008 5:30 AM

WASHINGTON -- The number of U.S. homeowners swept up in the housing crisis rose further last month, with foreclosure filings up nearly 50 percent compared with a year earlier, a foreclosure listing company said Friday.

Nationwide, 261,255 homes received at least one foreclosure-related filing in May, up 48 percent from 176,137 in the same month last year and up 7 percent from April, RealtyTrac Inc. said.

One in every 483 U.S. households received a foreclosure filing in May, the highest number since RealtyTrac started the report in 2005 and the second-straight monthly record.

Foreclosure filings increased from a year earlier in all but 10 states. Nevada, California, Arizona, Florida and Michigan had the highest statewide foreclosure rates.

Metropolitan areas in California and Florida accounted for nine of the top 10 areas with the highest rate of foreclosure. That list was led by Stockton, Calif. and the Cape Coral-Fort Myers area in Florida.

Irvine, Calif.-based RealtyTrac monitors default notices, auction sale notices and bank repossessions. Nearly 74,000 properties were repossessed by lenders nationwide in May, while more than 58,000 received default notices, the company said.

In Nevada, one in every 118 households received a foreclosure-related notice last month, more than four times the national rate. In California, one in every 183 households faced foreclosure.

The combination of weak housing sales, falling home values, tighter mortgage lending criteria and a slowing U.S. economy has left financially strapped homeowners with few options to avoid foreclosure. Many can't find buyers or owe more than their home is worth and can't get refinanced into an affordable loan.

Making matters worse, mortgage rates have been rising, reflecting increased concerns about what the Federal Reserve might do to battle inflation. Freddie Mac, the mortgage company, reported Thursday that 30-year fixed-rate mortgages averaged 6.32 percent this week, the highest level in nearly eight months and up sharply from 6.09 percent last week.

Efforts by government and the mortgage industry to stem the tide of foreclosures aren't keeping up with the rising number of troubled homeowners, and critics say a Bush administration-backed mortgage industry coalition, dubbed Hope Now, is falling far short.

Rick Sharga, RealtyTrac's vice president of marketing, said foreclosures are unlikely to peak until sometime this fall, as more loans made to borrowers with poor credit records reset at higher levels. "I don't think we've seen the high point," he said.

About 50 to 60 percent of borrowers who receive foreclosure filings are likely to lose their homes, Sharga said. The rest are likely to be able to sell or refinance.

A new government report released Wednesday found that among mortgages held by Bank of America, Citigroup Inc. and seven other large banks, foreclosures climbed to 1.23 percent of all loans in March from 0.9 percent in October.

As foreclosed properties pile up, they add to the inventory of homes on the market and drag down home prices. The trend is most dramatic in many parts of California, Florida, Nevada and Arizona, where prices skyrocketed during the housing boom and are now falling precipitously.

Sales of foreclosures, vacant new homes and other distressed properties now dominate some markets, causing grief for individual homeowners who need to sell for other reasons, like a job in a new city.

Nationwide, one out of every four sales between January and March was a distressed sale, and that figure jumps to more than 50 percent in the hardest-hit areas like Las Vegas, Detroit and distant suburbs of Los Angeles, according to Moody's Economy.com.

In some neighborhoods, lenders are slashing prices dramatically to rid themselves of an unprecedented number of foreclosed properties, sparking bidding wars and multiple offers.

While that's a positive for the real estate market, buyers in other parts of the country are still holding back.

"I think a lot of people are waiting to see if we really have hit the bottom," Sharga said.

Lehman Brothers economist Michelle Meyer said in a report Thursday that U.S. home sales are likely to hit bottom at the end of this summer, but said a recovery in sales is likely to be "feeble." Home prices, she wrote, are still expected to fall another 10 percent by the end of 2009.

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Weak economy evokes simpler, cheaper era

    The way our economy is slowly slipping into a recession may be a wake-up call for all of us.
    We have gotten too complacent in how we conduct our lives. We have gotten used to wanting and having everything now — we don’t plan for something we want and save the money to get it — we just run out and buy it and figure out how to pay for it later.
    Our parents were frugal, not because they wanted to be, but because they had to. They planted gardens, canned and froze everything edible — nothing was wasted. I’m sure the food was far more nutritional than the pre-packaged stuff we eat today. The furniture they had, new or secondhand, lasted for many years; they didn’t worry about style or the latest trends. The big treat on Sunday was a ride around the lake and an ice cream cone — if we were good. Our clothes were washed and hung on the line to dry, no electricity was wasted on a dryer. In the winter the clothes hung on a line in the kitchen (I hated that).
    This is just a small picture of how things were done a few years ago. They had a pay-as-you-go lifestyle — if you didn’t have it, you went without.
    I think we need to step back, live within our means and stop borrowing on future earnings. Sometimes if we slow down a bit, we can enjoy the little things that don’t cost anything. Our children, a front porch, family get-together (everyone brings a dish), a nice fuzzy puppy or kitten, what more in life do we really need?
    MARTY SHANTY
    Charlton

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Economic justice for all

By CHARLES STEELE JR.
First published: Tuesday, June 24, 2008

The subprime mortgage fiasco is sending tremors through Wall Street and has brought the U.S. economy near (if not into) recession. For African-Americans and Latinos -- the primary victims of the debacle -- the mortgage meltdown may widen the considerable gap in wealth that already exists between whites and people of color. Even worse, some proposals to fix the problem of limited access to credit may end up doing more harm than good.
     
"We estimate the total loss of wealth for people of color to be between $164 billion and $213 billion for subprime loans taken during the past eight years. We believe this represents the greatest loss of wealth for people of color in modern U.S. history," United for a Fair Economy noted in its report "Foreclosed: State of the Dream 2008."

To understand how the damage goes far beyond these mortgages, one has to understand the importance of owning a home. It is the cornerstone of the American dream. For many, it is also the first step to creating wealth. As with numerous aspects of American society, there is a wealth gap in this country: According to the Census Bureau, the median net worth of a household headed by a white adult in 2004, the latest year for which data are available, was $118,300, compared with just $11,800 for black-headed households. The bureau also reported that three-fourths of white households owned their homes in 2004; less than half of black households owned theirs. A variety of factors, some economic, some based on racial discrimination, account for that gap.

As a result of laws enacted to address housing discrimination, the rate of African-American homeownership rose from 42.3 percent in 1994 to 49.1 percent in 2004, the highest level in U.S. history. As great an achievement as that is, a 49.1 percent rate is about where white U.S. ownership stood in 1900.

The Bush administration made expanding homeownership a top priority, some say while ignoring signs of an impending crisis in the subprime mortgage market.

Our government should protect every consumer -- regardless of race, religion or credit score -- from fraud and fly-by-night lenders. Policymakers should also promote a consumer credit market that helps people whose credit scores are less than stellar to bridge their way back to prime.

Lack of access to credit for those with low or no credit scores is an important and growing problem. Credit scores, traditionally used for mortgages and auto loans, are increasingly used in determining eligibility for employment, auto insurance, apartment rentals, utility connections, and opening and maintaining checking accounts.

Like homeownership, credit is a cornerstone of wealth creation. The FDIC recently stated that "it is very difficult to build wealth without access to credit." That's an extreme understatement. It is almost impossible to build wealth in America without credit.

Dr. Martin Luther King Jr. often said that the cause of economic justice is the cause of social justice. We must continue to work together to achieve that timeless goal in lending and in our nation's economic sector.

Charles Steele Jr. is president and chief executive of the Southern Christian Leadership Conference. He wrote this article for The Washington Post.