Posted on Monday, April 4, 2011
Reports have recently emerged of homeowners being sued for mortgage fraud after taking out "no-doc" loans -- mortgages that require very little documentation. Courts have even turned to a new form of "debtor's prisons."
WASHINGTON -- More Americans signed contracts to buy homes in February, but sales were uneven across the country and not enough to signal a rebound in the housing market.
Sales agreements for homes rose 2.1 percent last month to a reading of 90.8, according to the National Association of Realtors' pending home sales index released Monday. Sales rose in every region but the Northeast.
Signings were 19.6 percent above June's index reading, the low point since the housing bust. Still, the index is below 100, which is considered a healthy level. The last time it reached that point was in April, the final month people could qualify for a home-buying tax credit.
Contract signings are usually a good indicator of where the housing market is heading. That's because there's usually a one- to two-month lag between a sales contract and a completed deal.
But the Realtors group also noted "a measurable level of contract cancellations" that also occurred in February. Many buyers canceled after appraisals showed the properties were valued much lower than their initial bids.
A sale is not final until a mortgage is closed.
"Therefore, the latest pickup in pending home sales and mortgage applications might not necessarily end up in a measurable pickup in mortgage closings and translate into an increase in existing home sales," said Yelena Shulyatyeva, an analyst at BNP Paribas.
The pace of sales varied from region to region. Signings fell 10.9 percent in the Northeast. They rose 2.7 percent in the South, 4 percent in Midwest and 7 percent in the West.
High unemployment, strict lending standards, and a record number of foreclosures are deterring would-be buyers, who fear home prices haven't reached the bottom.
Sales of previously owned homes fell last year to the lowest level in 13 years. Economists say it will be years before the housing market fully recovers. The rise in foreclosures has pushed the median price of previously occupied homes to its lowest point in nearly 9 years.
New-home sales have fared even worse. Americans are on track to buy fewer new homes than in any year since the government began keeping data almost a half-century ago. Sales are now just half the pace of 1963 – even though there are 120 million more people in the United States now.
THE HUFFINGTON POST