The National Association of Realtors is stating that this is the third straight month where beyond new homes, existing home sales have increased. They are citing that there is a 4.6% increase in pending contracts for existing rooms.  Other news, inventory of houses across the country is dropping because there has been some oversupply in other areas of the country. And percentage of home ownership, increased last month.  In addition, interest rates continue to stay historically low, the $8,000 tax credit is still available for first time homebuyers, and home sales in general continue to rise. 

Realtytrac: Foreclosures Up 11% in Last Qtr.

The coordinated actions were part of a national law-enforcement effort by 2 federal and 23 state agencies to crack down on loan modification scams.  “Operation Loan Lies,” has targeted loan modification companies that allegedly promised to obtain modifications or stop foreclosures, but the companies actually did nothing. Advance fees charged by the loss mitigation firms were equal to one or more mortgage payments, but no loan negotiations ever took place.  See the original article at FTC Shuts Down Loan Modification Scams.

Recent foreclosure news suggests that short sales and re-defaults from unsuccessful loan modification plans, may be misleading the severity of the foreclosure crisis in Southern California.

Los Angeles County’s median sales price of $320,000 was down 32% from December 2007, while Orange County’s median price fell 30% to $397,000. San Diego’s median price dropped 30% from December 2007, to $300,000. Ventura County’s $338,000 median December sales price was down 36% from the prior year.  Reduced sales prices drove the number of Southern California homes sold in December up by 51% over the previous year.  “It does look like the spigot is being opened a little bit, at least for low-cost home purchases,” said John Walsh, MDA DataQuick president.  The typical monthly mortgage loan payment that California homebuyers committed themselves to paying was $1,239 last month, down from a revised $1,380 for the previous month, and down from a revised $2,060 for December year ago. Read the complete LA Times article.

Watch this video to learn more about the real estate market reaching the low point. 

According to KMG president Jason Cardiff, “Timing the real estate market is very difficult.”  Cardiff continued, “Like the stock market, predicting the bottom can be a great way to make money quickly, but even most experts are unable to call the bottom.”  Sign up now and have the latest real estate news delivered to you as it is reported.

Two large Federal lending programs are still being ramped up. In one, the central bank will buy up to $600 billion of debt issued or guaranteed by Fannie Mae, Freddie Mac and other government-backed mortgage businesses. So far, the Fed has only committed $8 billion to purchasing bad credit home loans. Officials have been relieved that mortgage rates have come down since announcing the program.  

According to HSH Associate, mortgage rates for conforming thirty year home loans dropped from 6.64% to 5.28% since the Fed’s last meeting, a financial publishing firm. It has been one of the few areas in financial markets where credit costs have shown substantial improvement in the past few weeks.  “Over the next few quarters the Federal Reserve will purchase large quantities of agency debt and mortgage-backed securities to provide support to the mortgage and housing markets, and it stands ready to expand its purchases of agency debt and mortgage-backed securities as conditions warrant,” the Fed said.

Fed officials have high expectations for a separate program through which they will lend up to $200 billion against high-rated securities backed by car loans, student loans, credit-card debt and small-business loans.  U.S. officials have said the program, which is called the Term Asset-Backed Securities Loan Facility and is expected to be operational in February, can be expanded to other asset classes — such as commercial real estate loans or mortgages not backed by Fannie Mae and Freddie Mac.  FHA loans also got a boost from the Fed’s rate reduction, as FHA mortgage executive, Jeff Moran said, “FHA mortgage applications have surged since last week.”  Moran continued, “Our lending office alone saw a 35% increase new loan application volumes, compared to the previous week.” 

The latest housing data underscored the grim economic setting. The housing downturn is now more than three years old. “November’s report for new home production and permit issuance indicates not only that conditions aren’t improving in the housing market, but that the situation is getting worse,” said David Crowe, chief economist with the National Association of Home Builders.  Real estate news in 2008 has been mostly negative amid the foreclosure crisis and stock market slide.  Kelly Media Group President, Jason Cardiff spoke to reporters in Toronto today as the rate cut news hit the wires.  Cardiff said, “The Federal Reserve has made their move to lower mortgage rates to these historic levels.  Now struggling American homeowner who have been waiting on the sidelines to refinance can now jump into the game.”  Cardiff continued, “Let’s take a moment for have a round of applause…Fixed rates at 5% is good news for American homeowners.”

The Federal Open Market Committee had downgraded its unemployment and economic growth projections at its last meeting on October 29th and things have only gotten worse since then. The unemployment rate, at 6.7% in November, was already above the Fed’s October forecast for the fourth quarter and looks sure to go higher still. 

Economists at Macroeconomic Advisers LLC, a forecasting firm, say the nation’s gross domestic product is on track to contract by 6.5% in the current quarter. If they’re right, it will be the worst quarter since 1980.  “Since the Committee’s last meeting, labor market conditions have deteriorated, and the available data indicate that consumer spending, business investment and industrial production have declined. Financial markets remain quite strained and credit conditions tight,” the Fed said. 

The recent decline in mortgage rates could help revive housing markets. Federal Reserve officials also are focused on reducing other interest rates relative to Treasury benchmarks, a difference that is known on Wall Street as a ’spread.’ Across a wide-range of consumer lending, spreads have remained painfully high since September, a sign of tight credit conditions. 

Forbes: The biggest headline of the moment: The government seems to be planning serious action to lower mortgage rates. But there’s a lot of other news happening. (Anybody notice that an obscure developer named Donald Trump is in a legal fight with his mortgage lenders? Both Radar Logic and Zillow.com have released new data and insights about the housing crisis. Mark Zandi’s colleague at Economy.com, Celia Chen, has asked me to share with you all an interesting study of own vs. rent ratios across the nation that is quite alarming.

Let’s go around the horn about the mortgage rates. Treasury reportedly wants to push mortgage rates down to 4.5% from their current level. It’s unclear how they’ll do this or whether it’s wise public policy. But let’s take the 4.5% mortgage rate on its face.

Spencer, Zillow.com is reporting that the going rate for a 30-year fixed rate amortizing mortgage is around 5.3%. That figure doesn’t include the payment of “points.” I believe a no-points thirty-year home loan is solidly above 6% today. So driving down rates by 150 basis points is just huge. What does this mean to a wealthier person, a Forbes reader, say, who is thinking of buying or selling or holding onto a house?

Spencer Rascoff: What a wild last two weeks. The national average interest rate for a thirty-year fixed mortgage in Zillow Mortgage Marketplace is now down 80 basis points from two weeks ago. This dramatically improves the affordability of real estate to the typical home-buyer and has sparked a refinance boom in the last few weeks.