MSN Money

Foreclosure “crisis” is overblown

Although the national foreclosure rate rose 79 percent between December 2006 and December 2007, the rate was still only 1.033 percent of all homes. This is a regional problem, not reflective of the overall real estate market.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Foreclosure statistics are rarely presented in context. Because about 30 percent of homes are owned free and clear, only seven-tenths of 1 percent of all homes were in foreclosure last year.
• If you rank the top 100 foreclosure areas identified by RealtyTrac as reported by MSN Money, only 34 areas had foreclosure rates above the group average.
• Fifty-one areas had foreclosure rates of 1 percent or less.
• Foreclosure rates actually fell in 14 of the top 100 foreclosure areas.

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  The New Yorker

Home Economics

As many as 15 million homeowners now owe more on their mortgages than their homes are worth. Homeownership isn't building wealth for these people, James Surowiecki editorializes.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Interest rates on home equity lines of credit are far below the rates of most credit cards, so homeowners who are able to tap those lines for emergencies accumulate less debt than renters forced to charge expenses at higher rates. A $30,000 home equity loan is running at about 5.75 percent this week, according to Bankrate.com.
• Overall, the median net worth of a lower-income homeowner is more than 13 times that of a renter with comparable income, according to Harvard University’s Joint Center for Housing Studies.
• Ownership is forced saving. Typically, payments in the first few years of a mortgage are applied to interest. As time passes, however, more and more of each payment is applied to the outstanding loan amount, accumulating equity that can be recaptured, if needed, through an equity line of credit or when the house sells.

To read the full story, please click here.
 
  National Public Radio

Bernanke Warns of More Foreclosures, Despite Aid

More home foreclosures are coming, Federal Reserve Chairman Ben Bernanke warned on Tuesday. A “vigorous response” is needed.

MAKING SENSE OF THE STORY FOR CONSUMERS

• Although high concentrations of foreclosures can be found in certain communities, these neighborhoods are not representative of the state as a whole. Foreclosure rates vary widely between neighborhoods, cities and counties.
• The declining home prices that have resulted from the large numbers of foreclosures in some areas have put entry-level homes within reach of many would-be home buyers who couldn’t afford homes in previous markets.
• There are several private and public initiatives already underway or in the works to help distressed home buyers.

To read the full story, please click here.