So then the question is should the Feds and other major bank players move forward with bulk sales and try to get rid of the distressed property issue more quickly or dribble them out over time so as not to cause a stampede of downward spiraling prices in homes.
With large sums of private equity already beginning to enter the market, and thousands of investors already active in the market it would seem that a quicker cure is better than taking two aspirin and waiting four to five years for the backlog of foreclosures to clear the market. But there are just as many who think that dumping would cause more severe price declines. There does not appear to be a clear answer. _rttEconomy Continues String of Monthly Improvements The economy added 243,000 net new jobs in January 2012 with a large private sector gain offsetting continued declines in public sector employment. The unemployment rate dropped to 8.3 percent from 8.5 percent the month earlier. This is the sixth month in row of improving employment.
Note that as of December home sales had also risen for five months in a row and anecdotal information we are aware of indicates that January home sales will show a marked improvement on a year over year basis and likely better than Decembers home sales rate as well. Whether housing is causing employment to improve or employment improvement is bettering housing sales is unclear and perhaps it doesn't matter much so long as both are heading in the right direction. _rttReport Says Freddie Betting Against Refinancing Options
A report by NPR says that GSE Freddie Mac has been investing in high rate mortgage securities, which locks them into a position of not wanting to allow those with high rate mortgage to refinance. Essentially Freddie, which is in control of whether these homeowners can get refinancing, is locking in profits on high yielding mortgage securities.
And we thought that Federal control over the GSE's would provide some benefit to the American homeowner. Those running Freddie are making the investments in these securities obviously to strengthen their own financial position. However it puts them at odds with those who want the mortgage giants to help provide stimulus to the housing market. It will be interesting to see how the Feds sort this out.