Scheduled economic news was scarce last week; actual economic news was another matter. Not surprisingly, the mortgage and housing markets garnered most of the headlines on what was reported.
To state the obvious, the economy's fate still hangs on the value of home prices. On that front, the news was discouraging. According to Zillow.com, a real estate data service, 39% of people who purchased a home two years ago owe more than they own. Adding insult to injury, Fannie Mae reported that it expects home prices will decline 4.5% this year and 2.6% in 2009.
Fortunately, more help is on the way. Congress passed an economic stimulus plan that raised the maximum loan sizes for some conforming and Federal Housing Administration-insured mortgages. The new conforming limit will vary by metropolitan area. In some places it will remain $417,000; in pricier areas, like San Francisco, it will rise to $729,750. Most of the country though will fall between these bookends.
Project Lifeline, a federal government and mortgage-servicer sponsored program for people on the verge of losing their homes, offers additional hope. Project Lifeline is unique in that unlike previous government programs, the benefits won't be confined to borrowers with adjustable rate mortgages. On the other hand, it will exclude anyone who is currently bankrupt, who hasn't missed more than three months of payments, or who is less than 30 days away from foreclosure. It will also exclude vacant or investment properties.
Eric P. Egeland
RE/MAX ADANCED (Deerfield)