Banks to Play Ball as Public Outrage Grows

Posted on April 16, 2009. Filed under: Banking, Foreclosure Defense, Housing, Loan Modification, Mortgage Audit, Mortgage Law | Tags: , , , , , , |

Hopes for a bottom in the housing market took a serious knock Thursday as the government reported housing starts fell 10.8% in March while building permits fell 9% to a record low.

The starts number is volatile because it’s weather dependent – February, for example, saw a surprising spike – but “the permits are a little more reliable,” says Nariman Behravesh, chief economist at IHS Global Insights. “The fact they’re down is a little worrisome.”

As rates and home prices have fallen, mortgage applications have risen sharply and affordability has improved dramatically, says Behravesh. But “we’re not out of the woods yet,” he says, forecasting another 5% to 10% decline in average home prices nationwide.

One major obstacle to finding a floor in housing is the tension between the government and the banks over issues like repaying the TARP funds and their lack of eagerness to participate in Tim Geithner’s Public Private Investment Program, Behravesh says.

“Somewhere along the line, Congress and the administration need to get the picture that if they want banks to take the money, there’s limits on how much political beating up they can do,” says the economist and author of Spin-Free Economics.

via Housing Dilemma Govt. Needs Banks to Play Ball as Public Outrage Grows: Tech Ticker, Yahoo! Finance.

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