With the feds taking over IndyMac one might speculate that the mortgage industry couldn’t be hit much harder.  That very well could be the case, but I expect not.  Fannie Mae & Freddie Mac are also shakin’ in their boots a bit after big losses in the stock market this week due to losing investor confidence.  While the Fed tries to reassure us that Fannie & Freddie aren’t going anywhere, it doesn’t take much of an intellectual leap to at least see the possibility.  Early this year, most economic and real estate gurus were predicting recovery this year, then late spring we started hearing that next year will be a year of rebuilding, and now we are just starting to hear “no end in sight”.  Well, yeah.  No one has a crystal ball.

The one glimmer of hope is that the suits in Washington are working on it.  They just passed a Senate bill, under threat of veto, that would offer relief to both homeowners and banks.  The bill would raise the limit on mortgage amounts that Fannie could buy, offers funds to banks to rehab foreclosed properties, and also offers a nice $8000 tax break to first-time homebuyers.  There is also some verbiage about helping people avoid foreclosure through a sort of re-finance.  The items the White House doesn’t like are all “fixable” and should be worked out this week.  Although it didn’t pass notice that this bill relies heavily on Fannie & Freddie to continue to fullfill their roles in the market.  And should Freddie & Fannie suffer to the point of Fed take over, how much more of a deficeit can our country handle?  And the question needs to be asked, is it too little, too late?  How many more families and homes are going to hit bottom before the effects of the new bill are really in play?

So to answer the question, is the fat lady singin’? Have we seen the worst yet?  In the bigger picture, hopefully.  On Main St., USA, nope.  Any improvements and gains seen in the mortgage market, month over month, are modest and can be attributed to normal seasonal highs and lows.  Year over year, the numbers are still staggeringly low in most markets.  Here in Portland, we really are taking a softer hit than most markets, but we are still feeling the affects of the mortgage meltdown.  Property values continue to decline, rents are starting to soar, new construction is all but halted with builders moving into the remodel business, and everyday I see more and more short sale and foreclosure homes hit the market.  I think that we have a long, hard winter ahead of us.

Opinions expressed in this article are the opinions of author, and not to necessarily the opinions of Meadows Group Inc.
All rights reserved on all original content, non-original content is given credit | Michelle Berry | 2009