Expect An Increase in REO's

Mortgage lenders are likely to put their growing supply of repossessed homes up for sale in the months to come. According to the Mortgage Bankers Association, 10 percent of home loans was either delinquent or in the foreclosure process at the end of September; and Fannie Mae and Freddie Mac saw repossessions grow nearly 25 percent to 15,196 homes from the second quarter to the third quarter of 2008. Lenders may have to reduce the principal balance on loans to do more than slow down the foreclosure process for many borrowers.
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SB 49 - Up to $10,000 Tax Credit

SB 49 has just been introduced in the California Senate and would allow for the purchaser of a qualified principal residence, after March 1, 2009 and before March 1, 2010, to obtain up to a $10,000 credit against state net taxes. The principal residence must be new or previously unoccupied. This bill is supported by builders and would create incentives to purchase newly constructed homes.

How Much Lower Can We Go

Home prices are not close to turning around, according to the risk index of mortgage insurer PMI Group. More than 25 percent of U.S. metropolitan areas are likely to have lower home prices two years from now, and the risk of lower prices in the third quarter of 2010 has risen in 97 percent of the 381 markets. California's Inland Empire, the greater Miami area, Lake Havasu City-Kingman, Ariz., and Cape Coral-Fort Myers, Fla., are most likely to have lower prices in two years; while the Dallas-Fort Worth area, greater Houston and Pittsburgh are l east likely to see declines.
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