"Poor underwriting and abuses in the subprime mortgage market are having a significant negative impact on the housing markets and the U.S. economy. In the coming months, large numbers of subprime adjustable rate mortgages will reset to higher interest rates and borrowers will generally be facing default and possible foreclosure. In addition, a wave of nontraditional mortgage resets is looming in the next year."
"Current market conditions indicate this negative trend will continue, as a significant rebound in housing market activity or home prices is unlikely during the coming year."
The statement focuses on the mortgage industry performance, foreclosures and financial distress she offered this observation regarding the housing industry;"The combination of declining home prices and scarce refinancing options will stress borrowers with subprime hybrid ARMs and other nontraditional mortgage loans and could result in hundreds of thousands of additional mortgage foreclosures over the next two years. These foreclosures, if they occur, will inflict financial harm on individual borrowers and their communities as they drive down home values. Studies show that property sales associated with foreclosures tend to reduce average home prices in the surrounding neighborhood, placing stress on remaining homeowners and their communities."
The complete statement can be found here.
Related Florida real estate views:
FDIC – Home ownership declines with income levels
FDIC offers suggestions to obtain the best mortgage terms
FHA expected to help thousands avoid foreclosure
- Greg Staker - Watson Realty Corp. - 407-304-0255
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