“The housing market surely will double dip,” Whitney told “Worldwide Exchange.”

Government programs to support housing have been “murky” and when the modifications caused by them come to an end, a lot of supply may come to the market and that’s when the real-estate market is likely to go down, she explained.

Hopes that an improvement in liquidity and continuing investment from China in US assets will prop up mortgage-backed securities (MBS) and Treasurys are exaggerated, Whitney also said.

“The asset classes of MBS and Treasurys are priced for a material correction in my opinion,” she said. “The only buyers of agency MBS are the Fed and banks so you see how precarious that market is.”

“If the Fed pulls back, that’s a really big deal… because there’s no substitute buyer.”

Banks Model Is Broken

The Federal Reserve can’t make banks start lending again because the business model financial institutions used before the crisis is broken, Whitney also said.

“I don’t think there’s much the Fed can do to get banks to start lending again. That’s a structural problem the model is broken,” Whitney told “Worldwide Exchange.”

Before the financial crisis erupted in 2007 banks were able to offer customers low-priced mortgages because they were making money on securitizing these mortgages and selling them on, she explained.

But now that the securitization market is effectively closed, the prices of mortgages for consumers have not risen to compensate banks for that loss of revenue, so banks have been playing defense for the past two years, Whitney added.

The Federal Open Market Committee holds a meeting later Tuesday to decide on monetary policy. Fed officials have been saying that interest rates are likely to remain low for an “extended” period of time.

Whitney said she will be watching for anything regarding the Fed’s stance on buying mortgage-backed securities in the statement after the meeting.

“The Fed has been supporting the housing market, a third of the Fed’s balance sheet is tied to mortgages,” she said.

“The banks aren’t issuing anything (in terms of mortgages) to hold, they’re issuing everything to dump on” Fannie Mae, Freddie Mac and Ginnie Mae, Whitney added.

Much of the profit banks made last year was due to their performance in capital markets and this is “unreplicable” this year, Whitney also warned.

“I think that people that expect an earnings handoff to a normalized scenario are going to be disappointed,” she said.

“Normal will not be what it has been over the last 20 years and there’s disappointment baked into that.”

In the last year 1440 homes sold in this community and about 51 percent of the distress sales there went in foreclosure. 13 percent qualified for short sales by showing evidence of hardship, such as a job loss, illness or death in the family. 36 percent of the sales were regular sales but 64 percent were short sales and foreclosures.

From March of 2009 until March of 2010 there were 1440 sold properties out of which 64% were either short sales or bank owned. From September 2009 to March 2010 there were 748 sold properties out of which 65% were either short sales or bank owned. From December 2009 to March 2010 there were 376 sold properties out of which 65% were either shorts sales or bank owned.

In this area the rate of foreclosure stayed higher than the rate of the short sales. A year ago there were 733 foreclosures versus 195 short sales, 6 months ago 370 foreclosure versus 117 short sales and 3 months 182 foreclosures versus 62 short sales. Also prices went down about 15% from a year ago.

The employment market has still not seen the improvement that we all hoped for but buyers are taking advantage of the tax credits, low interest rate and low prices. Also, investors who were able to see the downturn of the real estate market and waited for better deals now are coming out and buying real bargains.

Saint Cloud Homes for Sale
Saint Cloud Short Sales
Saint Cloud Foreclosures

Windermere FL Homes for Sale
Windermere Short Sales
Windermere Foreclosures

Kissimmee Florida Homes for Sale
Kissimmee Short Sales
Kissimmee Foreclosures

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Baldwin Park Short Sales
Baldwin Park Foreclosures

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• Dr. Phillips Foreclosures
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• Altamonte Springs Short Sales
• Apopka Short Sales
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• Celebration Short Sales
• Clermont Short Sales
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• Longwood Short Sales 

• Maitland Short Sales
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• Oviedo Short Sales
• Saint Cloud Short Sales
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• Windermere Short Sales
• Winter Garden Short Sales
• Winter Park Short Sales
• Winter Springs Short Sales

Florida’s court system expects to have nearly a half-million homeowners in foreclosure proceedings when the ball drops on the New Year later this week, flooding court dockets statewide. Quince noted in her administrative order that “the crisis continues unabated.”

The high court’s Task Force on Residential Mortgage Foreclosure Cases recommended earlier this year that the state adopt a uniform managed-mediation program to deal with the deluge of cases clogging Florida courts. Under the program, all residential-foreclosure cases involving homestead owners would be referred to mediation, unless the plaintiff and borrower agree otherwise or have already gone through pre-lawsuit mediation.

“Referral of the borrower to foreclosure counseling prior to mediation, early electronic exchange of borrower and lender information prior to mediation, and the ability of a plaintiff’s representative to appear at mediation by telephone are features of the model administrative order,” Quince wrote.

Florida’s high court balked at some of the costlier measures recommended by its experts, such as setting up a Web-based system for mediators to exchange documents, because of budget constraints.

Court mediation would need to occur within two to four months after a mortgage case is filed in court, and only nonprofit, court-certified mortgage managers would be allowed to handle cases.

Original Post by OrlandoSentinel