Housing Bailout Backfires
We’re barely two weeks away from the expiration of the homebuyer tax credit that has been propping up the market since last fall.
And already, signs point to its lugubrious affects wearing off. First, the Home Affordable Modification Program (HAMP) has been a joke. Of roughly 1.4 million “trial modifications,” less than one in five has been made permanent.
But a report out this morning reveals it’s even worse than that. Even those modifications that stuck are blowing up. As of March, 2,879 permanent modifications were canceled – nearly double the total from February.
The panel overseeing TARP on behalf of Congress has issued another report slamming HAMP. “We’re adding about 200,000 families a month to postings for foreclosures,” says Elizabeth Warren, the panel’s chairwoman. “There’s no obvious end in sight… I’m worried. I’m deeply worried.”
But that’s only the beginning. Well over one-quarter of all home sales in January were “distressed sales” – foreclosures, short sales, etc. The exact figure, as calculated by First American CoreLogic, is 29% – a monthly high last reached in January 2009.
Note the correlation between distressed sales and home prices. Both figures have once again started going in the wrong direction for the National Association of Realtors.
It’s too soon to say this is a discernable trend. But whatever happy medium the housing market found with government assistance last summer appears to be in jeopardy once again.