Category: Real Estate Market

The Federal Reserve Board, the Fed for short, has a fantastic array of online brochures that you should know about.

The brochures explain in common language the rights and procedures of those who are in the market for home loans as well as other consumer items like credit cards.

Some of the brochures available are:
1.) Choosing a Credit Card
2.) Consumer Guide to Check 21 and Substitute Checks
3.) A Consumer’s Guide to Mortgage Lock-Ins
4.) A Consumer’s Guide to Mortgage Settlement Costs
5.) Consumer Handbook on Adjustable Rate Mortgages
6.) Consumer Handbook to Credit Protection Laws
7.) A Guide to Business Credit for Women, Minorities, and Small Businesses
8.) Home Mortgages:
Understanding the Process and Your Right to Fair Lending
9.) How to File a Consumer Complaint about a Bank
10.) Interest-Only Mortgage Payments and Payment-Option ARMs–Are They for You?
11.) Looking for the Best Mortgage:
Shop, Compare, Negotiate
12.) Protecting Yourself from Overdraft and Bounced-Check Fees
13.) Putting Your Home Loan on the Line Is Risky Business
14.) What You Should Know about Home Equity Lines of Credit
15.) What You Should Know about Your Checks

There are more but I believe that you get the idea. I was quite impressed with these brochures. They are written in a friendly chatty style and are a big step up from the type of dry , almost unreadable brochures associated with the Federal Reserves in the not too distance past.

As you might expect the health of the US housing market is closely tied to the health of the business cycle. At times it is difficult to know which leads or lags the other.

Since the housing market accounts for more than ten percent of economic activity in the US this should not be too surprising.

When the economic is in an expansion period people are feeling more confident, making more money, and buying more houses. When times are good people expect them to be good forever.

However, the housing market boom during the present expansion period is unprecedented and reached a dangerous level of over speculation. Many housing units were sold as investments rather than as a primary residence.

The housing boom was largely caused by the Federal Reserve’s constant expansion of the money supply. The Fed engineered low interest rates which added a lot of fuel to the housing boom.

The housing boom is not sustainable. Nothing goes straight up forever. A tendency of all markets is to return to the mean at some point. After a long period of growth the next housing bust, which is likely now underway, will likely be a major event which will last for a number of years.

Since the performance of the economy is so important to housing and housing is so important to the economy I’ve added a business video feed to this site.

The sub prime loan market is in trouble as foreclosures climb to record levels.

The US government must be concerned as the housing market accounts for about 10% of all economic activity. The US economy can not stand up to a disaster in housing.

As sub prime lenders have had to reduce lending operations as loan defaults and foreclosures increase Fannie Mae and Freddie Mac are coming to the rescue.

The two giant housing finance agencies are increasing their business of guaranteeing sub prime loans at a time when slack lending standards and falling home prices have translated into rising delinquencies and foreclosures among sub prime borrowers.

The agencies involvement will provide alternatives for borrowers anxious to refinance out of existing mortgages that have or will reset to higher monthly payments. These “toxic” loans in some cases nearly double the borrowers monthly housing costs when the higher rate resets kick in.

While the help of Fannie Mae and Freddie Mac the housing market will receive some badly needed support it is still highly unlikely that all of the challenges with the sub prime lending market will be solved.

This is a time when the old real estate fable of how real estate can only go up in value is about to be severely tested.

If you need to arrange the refinancing of your home mortgage it is likely that the sooner you arrange it the better.