Mortgage Pulse for the Week of April 6, 2009
Mortgage rates are down, the refi market is booming, equity markets are edging up. Is the worst over?
No.
House prices are still going down and a huge percentage of sales are short sales or foreclosures. Millions of homeowners are still underwater and getting more so every day. And all the while the promised mortgage modification programs aren’t yet ready to go.
It isn’t enough to just have a policy. The policy must be implemented.
And now two new events are coming along that may make everyone rethink the sighs of relief we’ve started to give:
1) The big banks are talking tough about prices they are willing to accept for their toxic assets, figuring the Treasury and Fed will back down and pay more given;
2) The prospect of a major market correction driven by program trading (a replay of 1987).
If the equity markets hiccup the banks figure they can force the Obama Administration into paying closer to face value for those toxic assets, in which case the banks suddenly AREN’T over-leveraged, they pay back their TARP funds and resume being masters of a tighter and even cliquier universe.
We’re in for a wild ride over the next 2-3 weeks with little prospect that the federal mortgage modification programs will move any faster as a result.
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