Economy Watch: Mortgage Modifications Still Sluggish
- Dec 23, 2010
December 23, 2010
By Dees Stribling, Contributing Editor
The U.S. Department of the Treasury and HUD said that about 30,000 homeowners received permanent mortgage modifications in November through the Making Home Affordable Program. Still, roughly 774,000 homeowners have dropped out of the program, the government’s main effort to forestall foreclosures, as of the end of the month. That’s a 54 percent dropout rate, since about 1.4 million homeowners have entered the program all together.
For those who have successfully transitioned from a temporary modification to a permanent one–about 505,000 households–the change can be good. Average monthly payments have been cut by about $500 through various means, such as lowering interest rates and extending the life of the loan.
Getting to that point is more than half the battle, however. A constant complaint among borrowers is that documentation sent to lenders mysteriously goes missing, often more than once, and that lenders are less than communicative when it comes to action that might get in the way of a foreclosure. Less convincingly, lenders claim borrowers often don’t submit the right paperwork.
AIA Billings Index Edges Up
The American Institute of Architects said on Wednesday that its Architecture Billings Index rose more than three points from October to November, breaking the 50 threshold and ending at 52. A reading over 50 means an increase in demand for design services–and eventually construction, since the index is a leading indicator.
As such, the index reflects the roughly nine- to 12-month lag time between architecture billings and construction spending. Another leading indicator, the new projects inquiry index, was 61.4 in November, down slightly from a mark of 61.7 in October.
“While this is heartening news, it would be premature to say the design and construction industry is out of the woods yet,” said Kermit Baker, AIA’s chief economist, in a statement. “We continue to hear a wide mix of business conditions, with a good deal of it still indicating flat or no demand for design services. Once we see several months in a row of increasing demand, we can feel safe saying we have entered a recovery phase.”
FHFA Homes Prices Inched Up in October
The Federal Housing Finance Agency’s monthly House Price Index was up 0.7 percent in October, compared with a 0.7 percent decrease in September, the agency reported. For the 12 months ending in October, however, U.S. home prices dropped 3.4 percent. The index is calculated using the purchase price of houses with Fannie Mae- or Freddie Mac-backed or sold mortgages.
Wall Street scored a modest up day on Wednesday, but that was enough to take the major indexes to two-year highs. The Dow Jones Industrial Average gained 26.33 points, or 0.23 percent. The S&P 500 advanced 0.34 percent and the Nasdaq was up 0.15 percent.