The media is certainly paying a lot of attention to the sub-prime mortgage situation, every time you pick up a newspaper or watch the news there is a new story and each one sounds scarier than the next. But since all Real Estate is local, this week Cherie and I sorted through some of the scarier headlines and analyzed just what it means for buyers and sellers in Southern New England: 1: FHA Gives Chance to Help: FHA is allowing sub-prime borrowers with good payment histories and at least 3 percent in home equity to refinance to safe financing. For those who qualify, the new policy opens the door for borrowers in high-risk financing to move into a fixed, long-term mortgage that's far safer. Details of the new policy, called FHASecure, are available in a HUD MORTGAGEE LETTER. This is one of the first tangible changes to come out of the federal government's efforts to curb defaults in the subprime market. 2: Foreclosures Hit All-Time Highs: The percentage of foreclosure notices hit record highs in the second quarter, reaching 0.65 percent, up from 0.58 percent in the first quarter, according to the Mortgage Bankers Association data released Thursday. Were it not for the increases in California, Florida, Nevada and Arizona, we would have seen a nationwide drop in the rate of foreclosure filings. Thirty-four states had decreases in their rates of new foreclosure and the increases were very modest in the states with increases, other than those four. Whether rate increases in subprime ARMs are causing major problems for those four states or whether local market conditions that are causing prices to drop are the main culprit because the lower prices are making it more difficult for people in unaffordable loans to refinance is hard to tell. These four states are markets that have experienced a high share of investor loans. The share of non-owner-occupied loans that are 90 days or more past due or in foreclosure - as of June 30, was 32% in Nevada, 25% in Florida, 26% in Arizona and 21% in California, compared to 13% of these loans were in default in the rest of the country. 3: NAR pending sales index nears 6-year low: Pending sales dropped in July to its lowest level since September 2001, the National Association of Realtors reported this week. NAR's chief economist says, "mortgage disruptions play a role but there are no serious problems for the majority of buyers who qualify for conventional financing and in fact, mortgage applications rose 1.3 percent last week, according to the Mortgage Bankers Association. Regionally, the July index dropped 21.8 percent in the West, 15.8 percent in the Midwest, 15.2 percent in the South and 10 percent in the Northeast compared to the same month last year. So, at least we are in better shape than the rest of the country.This Week's Real Estate Insight: While it appears we have dodged a full out recession bullet, it will take years for the housing Market to recover fully. If you want to stay on top of the mortgage news, subscribe to Dow Jones MarketWatch Daily Round up
