Foreclosure rate steadies as banks hold back - Mortgage Mess- msnbc.com

Foreclosure rate steadies as banks hold back - Mortgage Mess- msnbc.com

JMO:
The most significant part of this article was the statement that home buyers with good credit and conventional fixed rate loans are now the fastest growing group of foreclosures. This means that it can no longer be blamed on sub-prime, adjustable rate borrowers. This is a good indication that something will change soon because if the good borrowers are now being turned into sub-prime borrowers we will need to see new loan programs created otherwise the real estate market is likely to stall. On a side note: we are starting to see year-over-year appreciation in certain markets in the U.S. (16.2% appreciation in the Phoenix Metro Area according the NAR). If homes continue to appreciate and rates go up (very likely), you will see the pool of qualified buyers drop significantly. At this point the only thing I can see happening is for the Fed to artificially suppress interest rates to allow for property values to continue to rise. This would serve two purposes: 1. It would benefit banks by bringing values up and mitigating some of their losses and 2: it would stimulate home buying.