Bankers Expect Mortgage Issuance To Plummet In 2010

US federal homebuyer incentives helped lift sales of affordable housing far above that of higher-end properties, but with the government scaling back its involvement, the health of the …

US federal homebuyer incentives helped lift sales of affordable housing far above that of higher-end properties, but with the government scaling back its involvement, the health of the nation’s housing market remains in question. The Mortgage Bankers Association is predicting a 40% drop in mortgages issued for 2010, and despite HAMP assistance to over a million at-risk homeowners, foreclosures jumped higher in 2009. For more on this, see the following article from Property Wire.

Real estate markets in most parts of the US are showing mixed results, according to the latest report from the Federal Reserve.

In all seven of its districts, sales of lower priced property outpaced those of higher priced homes by a wide margin, the Fed reported.

It credited the government homebuyer tax credit for boosting interest in less-expensive properties. And the extension of the tax credit could boost transactions. ‘The extension of the credit into 2010 could give an added impetus to the expected seasonal sales upturn this spring,’ the report says.

Concerns about the continued housing recovery abound among policymakers and the chattering class, however. Both the tax credit and the Fed’s purchase of mortgage backed securities are slated to end in the coming months, and it’s unclear whether there will be sufficient demand for home purchases without those stimuli.

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The latest forecast from the Mortgage Bankers Association anticipates that mortgage issuance will fall 40% in 2010 and the decline will be led by a plummeting rate of home refinancing.

Adding to the concern is the annual foreclosure figures for 2009 which show that a record 2.8 million properties received a foreclosure filing, a 21% jump from 2008 and a 120% increase from 2007.

The figures from RealtyTrac also show that 2.2%, or one in every 45 properties, received at least one foreclosure filing during the year. That number increased from 1.84% in 2008, 1.03% in 2007 and 0.58% in 2006.

The fact that foreclosure filings increased to record levels in a year highlighted by the launch of the Home Affordable Modification Program (HAMP), which many industry insiders credit with strongly slowing the pace of foreclosures that would have otherwise been seen, sheds light on how high the numbers could have been.

According to the latest Treasury report, HAMP offered more than one million three month trial period modifications to borrowers in distress. ‘As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry related delays in processing delinquent loans,’ said James Saccacio, chief executive of RealtyTrac.

In December, typically a slow month for foreclosures, new filings climbed 14% to encompass more than 349,000 homes, up 15% from 2008’s levels in the same month.

Nevada had the highest foreclosure rate in 2009, RealtyTrac said, with more than 10% of all housing units in the state receiving at least one foreclosure filing, the third straight year the state has led the nation in pace of foreclosure activity.

Arizona was second worst with more than 6% of its housing supply receiving a foreclosure filing during last year and Florida came in third, with 5.93% of statewide housing units receiving a filing.

More than 50% of all foreclosure filings occurred in California, Florida, Arizona and Illinois, indicating that the nation’s foreclosure crisis remains concentrated within hard hit bubble states.

This article has been republished from Property Wire. You can also view this article at Property Wire, an international real estate news site.

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