Biggest Gain in Home Sales Since July 2003

Written By Patrick Rucker
WASHINGTON (Reuters) - Sales of previously owned U.S. homes rose 5.5 percent last month, the biggest gain since July 2003, and the inventory of unsold homes fell, a hopeful sign for a housing market mired in a long slump.

The National Association of Realtors said on Friday that sales of existing homes rose to a 5.18 million-unit annual rate from the 4.91 million unit pace set in August. Economists had expected sales to rise to only a 4.93 million unit rate.

It was the first time the sales pace had risen above its year ago level in nearly three years, a sign the market could be stabilizing.

The surprisingly large jump in sales pushed the inventory of unsold homes down by 1.6 percent to 4.27 million, or a 9.9 months' supply at the current pace, the lowest since February.

"We're not out of the woods yet by any means when it comes to falling house prices and our fundamental problem of an oversupply of homes, but we're getting near to the bottom every day," said White House spokeswoman Dana Perino.

Home prices, however, showed no signs of escaping their long, deep slide and economists said the number of homes on the market would likely have to fall further before they do.
The median national home price declined 9 percent from a year ago to $191,600, the lowest level since April 2004.

"As the median price continues to decline, seeking out that new equilibrium level, demand is -- slowly and hesitantly -- moving back into the market," said Lindsey Piegza, an economic analyst at FTN Financial in New York.

A Reuters poll taken October 21-24 found economists expect prices to continue to fall through next year. The median forecast from the survey was for a 15 percent drop this year and a 6.4 percent fall in 2009. Economists expect prices to turn up in 2010, but by a meager 1 percent.

'VULTURE INVESTORS'

Rising U.S. mortgage defaults have sent credit markets into a tailspin, threatening economies worldwide. A majority of economists polled said finding a floor for house prices is an essential condition for ending the financial crisis.

In order for prices to recover, the glut of unsold homes needs to be whittled down further, analysts said.

"Most, if not all, the rise in sales is due to vulture investors buying cheap foreclosed homes, but all sales reduce inventory," said Ian Shepherdson, the chief U.S. economist at High Frequency Economics in Valhalla, New York.

"If this continues, people will stop expecting further price falls and activity will start to recover."
Lawrence Yun, the chief economist for the Realtors' trade group, also pointed to a rise in foreclosure and other 'distress' sales in regions hard-hit by the housing downturn.

"In some regions, the lower prices are seeing buyers return to the marketplace," he said. "This was a nice jump and hopefully this trend can continue because the first step to stabilizing the market is an increase in home sales."

Sales jumped 16.8 percent in the West, while rising 4.4 percent in the Midwest and 2.2 percent in the South. In the Northeast, sales fell 1.2 percent.

Sales of single-family homes, which represent the lion's share of the market, rose 6.2 percent. Sales of condominiums held steady.

"We're still struggling with falling home prices and we will for a while, but we're forming a bottom here," said Bob Walters, chief economist at Quicken Loans in Livonia, Michigan.

(Additional reporting by Pedro Nicolaci da DaCosta, Ellen Freilich and Nick Olivari in New York; Polling by Bangalore polling unit; Editing by Andrea Ricci)

Excellent Analysis of the Financial Markets and Economy by Arthur Levitt

Foreclosure Filings Slowed by New State Laws

Foreclosure filing were reported on 765,558 U.S. properties during the third quarter, up more than 3 percent from the second quarter and up 71 percent from the third quarter of 2007, according to RealtyTrac, an online foreclosure market.

In September, foreclosures declined 12 percent compared to August, but that doesn’t appear to be necessarily good news. "Much of the 12 percent decrease in September can be attributed to changes in state laws that have at least temporarily slowed down the pace at which lenders are moving forward with foreclosures," said James J. Saccacio, chief executive officer of RealtyTrac.

Compared with September 2007, foreclosures in September 2008 rose 21 percent.

States with the highest rates of foreclosure in September were Nevada, Florida, California, Arizona, Georgia, Michigan, Ohio, New Jersey, Indiana and Colorado.

Six states accounted for more than 60 percent of U.S. foreclosure activity in the third quarter with California alone accounting for 27 percent. Other states with the most foreclosures were Florida, Arizona, Ohio, Michigan and Nevada.

Source: RealtyTrac (10/23/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/23/08

Analysts: Many Are Underwater on Mortgages

More than 12 million U.S. homeowners are underwater on their mortgages, owing more than their homes are worth.

"When you're underwater and you have some kind of hit to your income or some kind of unintended expense, that's when you default. And so now we've got this noxious mix of millions of people under water and quickly rising unemployment," says Mark Zandi, chief economist at Moody's Economy.com.

Zandi calculates that there will be another 14.6 million homeowners under water by September 2009. Zandi and other economists believe this housing crisis will prove to be much more costly for the U.S. taxpayer than the $700 billion the U.S. government has already promised to recapitalize banks and buy up distressed debt from financial institutions.

"The government is going to have to start filling this negative equity hole and that's just going to be a direct cost to taxpayers," Zandi said. "This is going to be the really costly part, I think, for taxpayers."

Source: Reuters News, Tom Brown (10/21/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/22/08

Home Sales Skyrocket in Southern California

Home sales in southern California rose 65 percent in September compared to the same month a year ago.

A total of 20,497 new and existing houses and condominiums sold last month in Los Angeles, Riverside, San Diego, Ventura, San Bernardino, and Orange counties. It was the largest increase MDA DataQuick has recorded in the 20 years it has been keeping records, the company said Monday.

The increase was fueled by foreclosures, which drove down prices, MDA DataQuick said, pushing the median price down 33 percent from a year earlier to $308,500. Sales so far this month appear to have been slowed by bad financial news, says Andrew LePage, an analyst with MDA DataQuick.

Source: Bloomberg, Daniel (10/20/08)

This article is from Realtor Magazine Online Edition Daily Real Estate News for October 21, 2008

California Association of Realtors® Predicts Increased Home Sales in 2009

The CALIFORNIA ASSOCIATION OF REALTORS® predicted Wednesday that the median price of a home in the state will fall 6 percent to $358,000 in 2009 as compared to the projected $381,000 median for 2008.

At the same time, the association anticipates that sales of existing single-family homes will rise 12.5 percent to 445,000 units, about the same percentage of increase as the state experienced this year compared to 2007.

"The worst is over, but we're still not out of the woods," said Leslie Appleton-Young, the association's chief economist.

Appleton-Young’s prediction calls for sales of distressed properties to decline in the latter half of 2009, slowing the fall of prices. "I would think by 2010 we would be up by mid-single digit (percentages)," the economist said.

Source: The Associated Press, Alex Veiga (10/15/2008)

This article is from Realtor® Magazine Online Edition Daily Real Estate News for 10/16/08

Chief Economist's Commentary as of 10/13/08

2009 Economic Outlook
By Lawrence Yun, NAR Chief Economist

The U.S. economy has entered a recession and will contract for the next three quarters, and the recovery, from the second half of 2009, will be tepid. The unemployment rate will peak at 6.7 percent by midyear next year before steadily heading down. However, existing home sales will be rising despite challenging economic times.

The most important factor driving home sales is affordability. With home prices falling in many parts of the country and mortgage rates still near historic lows, affordability conditions have markedly improved. Even with rising unemployment, nearly 93 percent of households will have jobs. This 93 percent of working households (rather than 95 percent during good economic times) respond to incentives. Added measures, from the first-time homebuyer tax credit to a larger number of mortgage loans qualifying to be purchased by Fannie and Freddie and through the FHA program, will further bring homebuyers to the marketplace.

Back in the previous recession, the economy shed nearly 2 million net jobs from 2001 to 2003. All the while, existing home sales rose from 5.2 million to 6.2 million just as jobs were being cut. New home sales likewise rose from 900,000 to 1.1 million. Mortgage rates were falling and housing affordability was rising during these years. The 2 million job cuts were painful, but the economy still had 130 million job holders.

An early indication that buyers are responding to incentives was the solid jump in the pending home sales in August to the highest level in over a year. The biggest increases were in areas with rising affordability from sharp reductions in home prices in California, Nevada, and Florida. The expansion will broaden to other markets where home prices have markedly fallen, including Rhode Island, Virginia, and Minnesota. Existing home sales, therefore, will likely breakout from the narrow trading range of 4.8 to 5 million of the past 12 months to 5.2 million by the year end and to 5.4 million in 2009. Even with the improvement, the next year's sales level will still be well below the 7.1 million peak sales achieved with rampant speculative buying in 2005.

New home sales will be a different story. There is an overhang of inventory and homebuilders are being forced to cut back sharply. New housing starts have fallen by about 60 percent from peak activity three years back. Because of the cutback in new home construction, the inventory of vacant new homes on the market has fallen to 408,000 as of August from nearly 600,000 just two years ago. The total inventory - new and existing combined - still remains elevated, so further reduction in building by builders will be welcomed. Because of low housing starts, new home sales will continue to tread at soft levels -under 500,000 in 2009 (far below the 1.2 million peak sales in 2005).

On the economic front, recession in itself is not a positive for the housing market because there are fewer job holders. But if a recession is accompanied by rising housing affordability, then home sales can trend higher - as is now. A prolonged deep recession, however - certainly a possibility in light of the most severely tested financial market stress since the Great Depression - can dampen consumer confidence and put up barriers to home buying. Fortunately, the economic downturn appears manageable. Let's explore why by reviewing each of the key economic data points and their projections.

Consumer Spending
Consumer spending accounts for nearly 70 percent of economic activity. Normal, healthy growth is about 3 percent (in real terms above the inflation rate). It grew at only one percent in the first half of this year and is expected to record a mild contraction in the upcoming quarters.

Aggregate personal income is likely to have fallen because of fewer jobs. In addition, there has been a sizable decline in net wealth from falling stock prices and falling home values. The combined income and wealth effects will be such that consumer spending, at best, will add nothing to economic growth in 2009. Another government stimulus plan may temporarily raise consumer spending but will do nothing for a long term sustained rise unless the overall economy recovers and begin adding jobs.

Business Spending
Business spending for equipment turned negative in the recent quarter, not surprising given that corporate profits have fallen for four straight quarters and weak sentiment regarding consumer spending prospects. Construction activity for commercial real estate, which had been growing solidly, will be weakening in light of the credit crunch and rising vacancy rates. One positive picture is on the current lean business inventory conditions. Unlike many past economic downturns when companies had to hold back production because of bloated inventory, the very thin inventory conditions permit companies to ramp up production at the first sign of economic recovery.

Government Spending
Government spending can create jobs. Upgrading and expanding nation's infrastructure, hiring more teachers, or building jets and tanks can stimulate the economy over the short-term. But spending without additional tax revenue over the long run can result in higher interest rates. For the short-term at least through 2009, government spending is expected to rise 1 to 2 percent.

Net Exports
Net exports have been steadily improving in the past year. The U.S. continues to import more items, but the exports have been booming over the past five years, growing at near double-digit pace. The export growth in the second quarter was very impressive, clocking in at a 12.3 growth rate. The weak U.S. dollar has made U.S. products more competitive. However, the dollar has strengthened of late since the start of the global financial crisis. Foreign countries blame the U.S. for the subprime loans and the credit market turmoil, yet people turn to and trust the dollar in times of the crisis. Foreign countries, initially delighted in seeing the U.S. fall, are now in a panic as their stock markets have started crashing even more sharply than the U.S market. Fair or not, the U.S. economic problem has caused a global economic mess. The strengthening of the U.S. dollar this time around should be viewed positively because there is about a two-year lag time in impacting international trade flows from changes in currency. So the net exports continue to be a positive factor for the economy going into 2009. Also oil prices, which are denominated in dollars, fall when the dollar strengthens. Given that REALTORS® are heavy drivers, lower oil prices are welcome.

The Bottom Line
Put it all together and what do we have? A recovering economy will help consumer and business spending to turn the corner and the economy to move to a self-sustaining pace. But it requires a catalyst to get things started. The tumbling housing market and subprime mortgage defaults have caused financial markets to freeze and have pushed the economy into a recession. However, recent rising home sales and some sustained momentum will bring the economy back into the fold. Rising home sales will also thin out the housing inventory and begin stabilizing home prices. The credit market will start to unfreeze once home prices have passed bottom. Simply, the economy will not recover without a housing market recovery.


Fortunately, policymakers and both Presidential candidates clearly recognize the need to get the housing market moving. The two housing stimulus bills (homebuyer tax credit and higher loan limits), $700 billion Treasury plan and the Federal Reserve's actions are designed to assure steady mortgage flow and help revive the housing sector. With it, the economy will expand and create jobs. America and its exceptional ingenuity always find a way to move past crises and back to economic prosperity.

This article is from The Nation Association of Realtors Research Update for October 2008.

Paulson says U.S. planning to Buy Financial Equity Stakes In Banks For First Time Since 1930s

By David Lawder, Writer for Reuters News

WASHINGTON (Reuters) - The United States is developing plans to buy equity stakes in financial institutions, providing another weapon in its war against financial market turmoil, U.S. Treasury Secretary Henry Paulson said on Friday.

Providing the first confirmation of the plan after a meeting of Group of Seven finance chiefs, Paulson said the equity purchases would be made alongside purchases of distressed assets as a way to recapitalize U.S. banks and other institutions reeling from soured mortgages and illiquid securities.

The Treasury will use authority granted by Congress in last week's $700 billion financial rescue legislation to buy largely non-voting common or preferred shares. Paulson said the two-pronged approach would more effectively recapitalize banks.

"We can use the taxpayers' money more effectively and more efficiently, have it go farther and get more for their dollars and more protection if we develop a standardized program for making and encouraging equity participation," he said.

Disclosure of the plan comes as the Treasury is considering a number of other major steps to deal with a worsening crisis of confidence that has frozen credit markets and halted interbank lending.

The Treasury may also push for a global backstop of interbank lending and possibly an unlimited guarantee on bank deposits, according to sources familiar with the discussions. A Treasury spokeswoman said the Bush administration is reviewing a British proposal to guarantee interbank lending.

The direct capital injections would help banks overcome the bad debts weighing down their balance sheets and boost their capacity to lend, complementing the bailout bill's objective of removing illiquid assets.

Bush Says Financial Rescue Plan Aggresive Enough To Work

By TERENCE HUNT, AP White House Correspondent 10/10/08

President Bush said Friday that the government's financial rescue plan was aggressive enough and big enough to work, but would take time to fully kick in. "We can solve this crisis and we will," he said in brief remarks from the White House Rose Garden.

Bush spoke as leaders of the world's top economies gathered in Washington amid frozen credit markets, panic selling in stock markets and a looming global recession.

The president noted that major Western countries were working together in an attempt to stabilize markets and end the spreading panic, including coordinated cuts in interest rates.

"Through these efforts, the world is sending an unmistakable signal. We're in this together and we'll come through this together," Bush said.

Finance ministers and central bankers from the Group of Seven — the United States, Japan, Britain, Germany, France Italy and Canada — were here for a weekend meeting. Bush plans to meet with the leaders on Saturday.

Bush said he understood how Americans could be concerned about their economic future. "That anxiety can feed anxiety and that can make it hard to see all that's being done to solve the problem," he said.

But despite a relentless sell-off that has seen the Dow Jones industrials plunge 20 percent in the past seven trading days, Bush said, "We are a prosperous nation with immense resources and a wide range of tools at our disposal."

The president said the new $700 billion rescue plan that he signed into law a week ago authorizes the Treasury Department to use a variety of measures to rebuild their balance sheets including "purchasing equity of financial institutions."

It was the first time the president has mentioned suggestions that the government buy shares of banks, although it has been mentioned by other administration officials.

Since the bailout package was signed into law, the conversation about how it will be used has shifted from taxpayers buying troubled mortgages to taxpayers buying troubled banks. Or at least pieces of them.

Such a move would amount to a partial nationalization of the U.S. banking industry, a move once considered unthinkable.

The government is authorized under the law to buy "troubled assets."

Those assets include mortgages, but according to the law, they may also include "any other financial instrument" that is "necessary to promote financial market stability ... ."

It is the government's position that this authority extends to bank stocks.

"The plan we are executing is aggressive. It is the right plan. It will take time to have its full impact. It is flexible enough to adapt as the situation changes. And it is big enough to work," Bush said.

He also noted that the Federal Reserve has injected hundreds of billions into the system and with other central banks has made interest-rate cuts that should help thaw frozen credit markets and enable loans to flow again.

Government insurance on bank and credit union deposit accounts has been raised to $250,000 and the Treasury is offering insurance for the first time for money-market funds, he added.
"The federal government has a comprehensive strategy and the tools necessary to address the challenges in our economy," Bush said.

While he sought to reassure Americans that the government is doing all it can, Bush also acknowledged mounting worry among people about their retirement and investment accounts.
Bush said his administration had launched initiatives that "have helped more than 2 million Americans stay in their homes."

He also noted "rigorous enforcement" steps taken by the Securities and Exchange Commission to make sure that some investors don't "take advantage of the crisis to illegally manipulate the stock market."

Stock market volatility continued, with the Dow Jones industrials falling nearly 700 points soon after trading began, regaining all of that deficit to show an advance and then turning lower again.

"Over the past few days," Bush said, "we have witnessed a startling drop in the stock market, much of it driven by uncertainty and fear. This has been a deeply unsettling period for the American people."

Bank of America Will Modify Troubled Loans

Bank of America on Monday said it is launching a "home retention program" on Dec. 1 to modify troubled mortgages for nearly 400,000 customers of Countrywide Financial Corp. Bank of America acquired Countrywide on July 1.

The program, which can reduce up to $8.4 billion in interest payments and principal, was developed in partnership with state Attorneys General to help borrowers that financed their homes with subprime loans or adjustable rate mortgages.

The goal is to "help as many Countrywide customers as possible stay in their homes," says Barbara Desoer, president, Bank of America Mortgage, Home Equity and Insurance Services.

The centerpiece of the program is a proactive loan modification process to provide relief to borrowers who are seriously delinquent or are likely to become seriously delinquent as a result of rate resets or payment recasts.

For more information, visit Bank of America's Web site.

Source: Bank of America

This article is from Realtor Magazine Online Edition for 10/6/08

Fed, Cantral Banks Around the World Cut Key Interest Rates

In an unusual coordinated move, the Federal Reserve and other major central banks from around the world slashed interest rates Wednesday to keep an escalating financial crisis from becoming a global economic meltdown.

The Fed cut its key rate from 2 percent to 1.5 percent. In Europe, which also has been hard hit by the financial crisis, the Bank of England reduced its rate by half a point to 4.5 percent, and the European Central Bank sliced its rate by half a point to 3.75 percent.

The central banks of China, Canada, Sweden, and Switzerland also cut rates. The Bank of Japan said it strongly supported the actions.

"The recent intensification of the financial crisis has augmented the downside risks to growth," the Fed said in explaining the coordinated action, the latest in a series of bold moves intended to spur lending and revive the global economy.

The Fed's action will reduce borrowing costs almost immediately for U.S. bank customers whose home equity and other floating-rate loans are tied to the prime interest rate. Bank of America, Wells Fargo, and other banks cut their prime rate by half a point to 4.5 percent after the Fed announcement.

White House spokesman Tony Fratto welcomed the cooperation among the Fed and other countries' central banks to battle the crisis. "It's important and helpful that central banks are working in a coordinated way to deal with stress in the financial system," Fratto said.
Source: Associated Press, Jeannine Aversa (10/8/08)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 10/8/08.

According To Critics The Bailout Offers Little Help For Homeowners

By Christopher Solomon, MSN Real Estate

The financial rescue plan approved by Congress and signed into law by President Bush aims to prop up Wall Street but may not do much for Main Street.

The historic $700 billion bailout of the American financial services industry signed into law Friday provides few solid assurances of help to struggling U.S. homeowners, housing observers and advocates agreed.

"We feel that this bill does nothing for homeowners," says Kathleen Day, spokeswoman for the Center for Responsible Lending, a nonprofit research and advocacy group. "This is what homeowners will get out of this bill: higher taxes and a continued erosion of home values because this bill does nothing to address the root cause of this problem, which is falling home prices, and they're being caused by the unprecedented tidal wave of foreclosures.

"It's a bailout for Wall Street." Bill Apgar, senior scholar at the Joint Center for Housing Studies at Harvard University, mostly agrees. "Other than trying to stave off the worst recession in 50 years, there's no help for homeowners" here.

Vague language

After the initial bill failed, a new version of the rescue package, with several additions, was passed by the Senate Wednesday and was approved by the House Friday morning.

The law directs the Treasury Department to "maximize assistance for homeowners." But Brenda Muñiz, legislative director of the Association of Community Organizations for Reform Now, or Acorn, was disappointed by the vagueness of such language.

"I think more could have been spelled out in terms of forcing the hand of these financial institutions" to make them assist homeowners, Muñiz says. Treasury Secretary Henry Paulson might be able to use the bill to facilitate loan modifications for homeowners who are in financial straits, she says, "but it also allows for a very passive response. (It) doesn't really have a lot of teeth to it."

Trying to make lenders voluntarily help homeowners with loan modifications won't work, for several reasons, Day says. Those reasons are as varied as the fact that the troubled mortgages are bundled in securities and owned by many different entities to the fact that there are about 6.5 million loans that need modification, Day says. "They don't have the manpower to modify these loans," she says.

A bright spot?

Muñiz says she saw a potential bright spot in an overlooked, one-sentence provision in the 451-page law that permits the Treasury Department to provide credit guarantees and enhancements on entire loans. It reads, "In addition, the Secretary may use loan guarantees and credit enhancements to facilitate loan modifications to prevent avoidable foreclosures."

According to an article published Friday in American Banker, this means, at least in theory, that the Treasury could guarantee certain types of loans in exchange for lenders first making loan modifications.

A tool like this won't solve the underlying problem, says Acorn's Muñiz, but she's anxious to see how far the Treasury will go to help homeowners. "Again, the question is, will the Treasury use all the tools at its disposal?" she asks.

No bankruptcy reform

One of the biggest concerns of observers and homeowner advocates was about a provision that was left on the cutting-room floor. "We wanted a change to the bankruptcy laws," Day says. Today, when a person faces foreclosure "a judge can modify a mortgage on a vacation home, a luxury home, a yacht – but they cannot modify the mortgage on a primary residence." That's ridiculous, she says.

Language to modify this was cut as the bill changed over the past week, Muñiz says. "That would've been one big provision that would've provided some real relief."

Apgar, of the Joint Center for Housing Studies, points out that many of the “no” votes on the Republican side were because the bill was already festooned with $110 billion in tax breaks. Asking the bill to do even more, right now, would have invited another defeat.

"Congress is in triage mode," he says. "I think we move through this and live to advocate another day for additional things that need to happen."

House Passes Historic Bailout Bill

Michael Bloomberg Speaks Out On Origins of Housing & Economic Crisis- Part 1

This is a very good synopsis of why we are where we are concerning the housing and financial crisis. Well worth watching...

WaMU Assets Seized by Government Regulators and Sold to JPMorgan.

This represents the largest bank failure in U.S. history. Over the previous 9 days WaMu customers withdrew $16.7 billion which caused the bank to fail. Most of the deposits withdrawn were over the FDIC limit of $100,000.

Washington Mutual (WaMu) is the the 13th U.S. bank to fail this year and the ninth to fail since July. WaMu had combined assets of $307 billion and total deposits of $188 billion.

WaMu collapsed as its credit rated plummeted to junk and its stock price tumbled. WaMU stocks declined 95% during the past year. With losses in the amount of $19 billion based upon bad mortgage loans, Washington Mutual puts itself up for sale last week. On September 8th, Kerry Killinger, the long time CEO was replaced with Alan Fishman. Fishman was given a $7.5 million signing bonus and a $1 million salary - not bad for working just a few weeks!

After a few days of bidding on WaMU, JP Morgan Chase & Co. emerged as the buyer with the best offer for a price of $1.9 billion. JP Morgan will not acquire WaMu's liabilities as a result of the sale. JP Morgan is in a very good position as a result of the sale by becoming the biggest U.S. bank, as measured by deposits.

The FDIC brought about the purchase of WaMu by JP Morgan and fortunately did not have to bare the costs of the takeover of the bank's assets. The FDIC noted that this was a major victory.

The failure of WaMU is the latest of what is becoming a long line of failures and bailouts experienced of late with the likes of Lehman Brothers, IndyMac, Bear Stearns (also absorbed by JP Morgan Chase), American International Group (AIG), Merrill Lynch, Fannie Mae, and Freddie Mac.

-Written by Ross Gill

Lawmakers Reach Bailout Agreement

NAR President and Chief Economist Speak Out About Current Crisis

Fed Chairman Talks About Serious Threats to Economy

This video is very much worth watching. It's worth the 7:29 minutes it takes to watch it.

Habitat for Humanity Founder Blames Unchecked Spending Habits for Mortgage Crisis

The founder of Habitat for Humanity Millard Fuller blames the mortgage crisis on people who spend more than they can afford.

"What we have got to do is get back to the basics in difficult economic times like this and explain to people that you will not wither up and die if you don't have that wide-screen TV," Fuller says.

Fuller also blames lenders who set adjustable-rate mortgages it knew buyers couldn’t afford to pay. He says such firms should be “ashamed” to make such arrangements with buyers. “What they were doing was irresponsible,” he says.

Source: The Associated Press, Jon Gambrell (09/11/2008)

This article is from Realtor Magazine Online Edition Daily Real Estate News for 9/11/08

Economic Update and Overview of Current Housing Market Conditions by Lawrence Yun, Chief Economist of The National Association of Realtors®