Mortgages Loans News

Financial Crisis Victims

2009-01-10T10:18:00.000-08:00

From MortgageLoan.com: Mutual Funds: Financial Crisis Victims
Skeptical and scared, investors are checking their personal finances and pulling out of the market.

When nobody trusts the stock market, good sense flies out the window. Even a small financial crisis can throw the market into fits of unreasonable up and down swings. A large one, like the great panic of 2008, can throw the safest of investments under the bus.

Incoming SEC chairwoman Mary Schapiro says that, "investor trust is the lifeblood of our financial markets." Oh boy...does she have a challenge on her hands!
Irrational swings

Mutual funds are a great way for individual investors to diversify their personal finances. Managed by professionals for a reasonable fee, no-load funds gives you an easy way to ride the fluctuations of the stock and bond markets without investing much of your own time into research and trading decisions.

Exactly because mutual funds are so comfortable and useful, they also serve as great barometers of the market. When times are good, investors pour bucketloads of money into stock funds; when the economy goes south, that cash flows right back out. Due to the mutual fund's popularity, these moves have a profound effect on the stock market itself.
No safe harbor in this storm

Given these facts, it's no surprise to hear that mutual funds have seen lots of money flowing in and out of their coffers in recent months. One week in November 2008, Wall Street staged a bit of a rally, and investors put $10.4 billion more into mutual funds than they took out. But the next week, fortunes reversed once again, and $12 billion flowed out of the stock mutual fund industry.

Usually, when that happens, the money moves over to bond funds, because they're supposed to rise when stocks fall, and vice versa. Not this time, however. Bond funds mirrored the stock mutual funds exactly, just on a slightly smaller scale. These days, investors don't seem to trust either stock or bonds any further than they can throw them. It's almost as if they're suggesting that it's better to stuff that cash into your mattress, or maybe an FDIC-insured savings account.
Mutual fund choices

Fund managers are forced to roll with the punches. When you look at your personal finances, and then at the markets, and finally decide to get out of that good old index fund, its manager has to pay out your share. Usually, they have cash lying around for that purpose; but when sales happen too fast, they have to start selling stocks and bonds to keep up. This drives market prices down even further, pouring gasoline on the fire. Investors eventually come to their senses and start seeing deep values everywhere they look, which creates the opposite overreaction.

A patient investor can wait for the inevitable mega-drops, buy in, and then sit out the irrational swings for months or years. Short-term traders with too close an eye on the newswire and ticker tapes are bound to get burned.

House Democrats to Submit TARP Reform Bill on Friday Afternoon

2009-01-09T13:18:00.000-08:00

From mortgagenewsdaily.com: House Democrats to Submit TARP Reform Bill on Friday Afternoon
House of Representatives Democrats will submit a bill to modify the terms detailed in the $700 billion Troubled Asset Relief Program to put additional constraints on how the U.S. Treasury disperses the second half of the funds.

Throughout the day, newswires have been reporting that the new bill, which will allow the Treasury to access to the second tranche of the funds, will require some minimum amount allotted to home foreclosure relief, funding to small U.S. banks, and aid to municipalities.

The bill also calls for quarterly disclosures of how firms will be spending the funds.

Earlier on Friday, the Washington Post said that incoming Treasury Secretary Timothy Geithner was working on an overhaul of the program to include some of the measures discussed by House Financial Services Committee Chairman Barney Frank.

However, much of the funding has already been promised to various institutions, with the Treasury having pledged billions to General Motors and its financing arm GMAC, which recently became a bank holding company.

U.S. Treasury Secretary Henry Paulson told Bloomberg Television that the root of the problem in the United States remains the housing sector. He defended his initial handling of the $350 billion of the TARP funds, saying that his actions were done to stabilize the financial system.

Timing is Right for First Time Homebuyers First Mortgage

2009-01-09T00:34:00.000-08:00

From MortgageLoan.com: Timing is Right for First Time Homebuyers First Mortgage
If you're a first time homebuyer, you're probably wishing for a crystal ball. In the slumping home market, it's hard to know if you should make that mortgage loan purchase on a new house. Mortgage rates are low, and could possibly get lower. Is this the right time to buy?

How low can mortgage rates go? That's the big question on the mind of the typical first time homebuyer. Home values have endured a precipitous drop, and many potential buyers are eager to make that mortgage loan purchase. But how long should you wait until you make a buy?
Low mortgage rates, good values

It's nearly impossible to pick the bottom of a bursting market bubble. The only time that you'll know when the housing bubble has struck bottom will be several years from now. Right at this moment, even the pundits are clueless, especially in light of the recent economic upheaval.

Nevertheless, there are some compelling reasons to consider making a home purchase now. First, mortgage rates are at historic lows. Many banks and credit unions are offering mortgage rates just slightly higher than 5 percent for a 30-year fixed-rate loan, and there's talk that the federal government may try to push mortgage loan rates down around the 4 percent mark.

Second, home values have already slid dramatically. In some areas where values skyrocketed during the housing boom, such as California, Florida, and New York, it's not uncommon to hear stories about home values dropping more than $100,000 below previous prices. Some pundits believe prices will drop even further.
Making the tough decision

How do you know when the time is right? Probably the best route to take, and the one that will allow you to sleep best at night, is to set your sights on a reasonable home price, and act when the market reaches that number. To find that figure, look at current home prices and compare them with previous highs. Sooner or later, home values should resume their upward climb. That means that you may lose some value in the short-term, but in the long haul, you could profit handsomely.

Another important question to consider: Are you financially ready to make a purchase, and take on a mortgage loan? Do you have a stable income, with decent savings, and minimal credit card debt? If you're in a profession that can make it through these tough economic times and you have good credit, this could be a perfect time to buy. Purchasing a house now, then waiting for a return to previous housing price levels would feel like a boom. It's the perfect case of buying low and selling high.

If you have bad credit and heavy consumer debt, it may not be wise to become a first time homebuyer in the current housing market. However, if you're in reasonable financial shape, it's the ideal time to take advantage of slumping house prices and low mortgage loan rates. There may never be a better time to buy.

Is Economy Headed for a Depression?

2009-01-09T00:29:00.000-08:00

From MortgageLoan.com: Is Economy Headed for a Depression?
The U.S. is in a recession, and some predict that it will turn into the next Great Depression. Before you get worried, however, remember the protections you have now that weren't available in the 1930s.

The economic road ahead is poorly lit. Voices from the backseat are whispering that this route is leading straight towards the dead-end of depression. How reliable are those backseat drivers?

In October, CNN/Opinion Research conducted a poll to measure Americans' thoughts on the possibility of another Great Depression. Survey respondents were told that the Great Depression was characterized by 25 percent unemployment, as well as rampant homelessness and hunger. They were then asked to measure the likelihood that these conditions could again befall the U.S. Nearly 60 percent of them indicated that a depression is either "very likely" or "somewhat likely."

Clearly, the media and Internet blogs have done a great job sewing the seeds of panic during the current recession. It's true that there are similarities between the events preceding the Great Depression and what's happening now. Back then, bank failures were common, the stock market was unstable, unemployment was rising, and the mortgage industry was working through increasing foreclosures. But it's also true that there are some major differences between 2008 and 1929-and those differences are likely to dictate the outcome.
A world without deposit insurance

During the Great Depression, more than 9,000 banks around the country collapsed. These failures resulted in depositor losses of $140 billion. The money simply vanished, and depositors had no recourse to get it back.

Compare that to what's happened so far in this current recession. As of mid-December, 25 banks have failed. Notably, depositors have been reimbursed by the FDIC for 100 percent of their insured funds. The FDIC has reimbursed a portion of uninsured deposits, as well. And, as a precautionary measure against additional failures, Congress raised the individual insurance limit significantly, from $100,000 to $250,000.
Unemployment insurance benefits

The 25 percent of American workers who lost their paychecks during the Great Depression were left to fend for themselves financially. Unemployment insurance didn't exist in this country before 1932, and it didn't become widely available until after 1935. Since most households during that era were supported by one wage earner, a single job lost would often put several people out on the street.

Today, U.S. workers can rely on unemployment compensation to cover their basic needs. And, because of the current recession, Congress recently took action in this arena also, lengthening the maximum unemployment assistance period by seven weeks. Those households that have two wage earners will have to lose two jobs and run out of unemployment eligibility before they'll feel the same kind of hardship felt during the Great Depression.

The protections of bank deposits and unemployment insurance, not to mention Medicare and Social Security, should go a long way towards limiting the destitution created by this current economic recession. The road ahead may be dark, but another Great Depression isn't likely.

Paulson Officially Turns Over the Mortgage Crisis to Obama

2009-01-07T23:02:00.000-08:00

From MortgageLoan.com: Paulson Officially Turns Over the Mortgage Crisis to Obama
In a Wednesday statement, outgoing US Treasury Secretary Henry Paulson pointed to President-elect Barack Obama as the "decision maker" for the allocation of the balance of $700 billion in TARP bailout funds.
Although a few weeks from inaugurationPaulson has handed off the bailout fund that has already injected $354 billion into capital for banks, loans to automakers, and various rescues to financial institutions and consumer credit.

The Paulson Treasury will continue to work on plans for the future allocation of the remaining TARP funds. However, Paulson was clear in asserting that these plan would be merely recommendations to the Obama transition team.

The Treasury Department must formally request the second $350 billion tranche of TARP funds from Congress--a task that will be left to the new Obama administration.Paulson assured the questioners following his speech that he would be collaborating with successor Timothy Geithner, and would help to expedite the request if asked.

Paulson's recommendations in today's statement included turning Fannie Mae and Freddie Mac in to a "public utility-like" mortgage guarantor andsecuritizer. This continues to raise the discussion as to the appropriate amount of government subsidy for a healthy housing market. Paulson in earlier statements, seems to believe there must be a firm decision between private or public stating, "any middle ground is a recipe for another crisis."

Short-term crisis demands Fannie Mae and Freddie Mac remain in government hands, but it will be interesting to see the direction Obama holds or turns on these recommendations.

Is Now the Time for a Mortgage Loan Refinance?

2009-01-07T22:59:00.000-08:00

From MortgageLoan.com: Is Now the Time for a Mortgage Loan Refinance?
Mortgage rates have fallen recently on the news of greater federal foreclosure prevention efforts. If you want to achieve lower monthly expenses, now's the time to evaluate the savings you might realize with a mortgage loan refinance.

When 5:30 rolls around every morning, the sound of your radio tells you it's time to get up. But while you can find an alarm clock that will dock your iPod, you can't find one that will sound an alarm when it's time to refinance. The good news is that you can answer the mortgage loan refinance timing question on your own-in a few simple steps.
Home equity hurdle

Given the way housing values have moved lately, your refinance mortgage analysis must begin with a quick calculation of your home equity. If you find that your home equity is minimal or even negative, you've answered your dilemma: unless you're willing to pay down your loan balance, you won't be able to refinance right now.

Calculate your home equity using a current estimate of your home's value. To complete a mortgage loan refinance, you normally need to maintain 20 percent equity in the property.
Defining your purpose

As a next step in your refinance mortgage analysis, clarify your objective. The two most common objectives are to lower your monthly costs, or to shorten your loan term. It's far easier to achieve one or the other, rather than both. So pick your priority, and remember that when you begin evaluating your mortgage loan refinance options.
Awaken your inner mathematician

Now you're ready to develop a working understanding of your refinance mortgage numbers. First, budget for closing costs. Conservatively estimate that they'll be 3 percent of the loan amount. If your current mortgage has a prepayment penalty, get an estimate from your existing lender, and add that amount to your closing costs. Any monthly savings you create by refinancing will go towards paying back those upfront costs. The trick is to pay them back within a few years, and definitely before you move or do a refinance mortgage again. Keep that in mind once you start receiving refinance offers.

Next, use a mortgage calculator to start running payment scenarios. Find the daily national interest rates, and then add or subtract 50 basis points to see how the rate will affect your principal and interest payment. Remember to add in estimated taxes and insurance, if applicable, when comparing the new payment to your existing one. If the savings potential looks reasonable, relative to the upfront costs of the refinance mortgage, you're ready to start shopping.
Shop around

The last step is to contact a handful of lenders and talk to them about your situation. Your income, debt level, and credit profile will dictate how much money you can borrow and at what rate. The lender will be the one who ultimately sounds the mortgage loan refinance alarm, by confirming that you qualify for the loan and rate that you want.

Are Home Equity Loans Good Options for Debt Consolidation?

2009-01-07T01:42:00.000-08:00

From MortgageLoan.com: Are Home Equity Loans Good Options for Debt Consolidation?
To consolidate debt or not to consolidate debt used to be a foregone conclusion. When housing prices were rising and home equity was plentiful, debt consolidation via a home equity loan was a no-brainer. Today's plummeting market, however, has changed the playing field.

Debt consolidation used to be the mantra of people with heavy consumer debt. With budgets squeezed tight from excessive spending, consumers used a variety of debt consolidation methods to lower their monthly payments.

On paper, the idea of increasing your cash flow every month seemed like a great idea. Indeed, it spurred millions to use their home equity to erase high interest credit card debt. Problems in subprime lending, and a poor housing market, however, have caused people to rethink the old ideas behind debt consolidation.
Home equity loan not always the answer

Using home equity for consolidation has significant advantages. If you take out a second mortgage-either an adjustable-rate home equity line of credit (HELOC) or a fixed-rate home equity loan-you'll generally have a loan at a very low interest rate. Furthermore, the interest you pay will be tax-deductible, as the loan uses your home as collateral. (Interest payments on a first mortgage are tax-deductible, too.) However, using mortgages for debt consolidation can be tricky. Just ask the millions of people in foreclosure.

The problem with using debt consolidation is twofold. First, your home is at risk. If you can't make your mortgage payments, you could lose your property to the lender. Second, you need to be particularly careful about the type of mortgage loan you use for debt consolidation. Many of the problems with the subprime lending crisis can be attributed to the fact that people used adjustable-rate mortgages. When these loans adjusted upwards from their low introductory rates, shrinking home values prevented homeowners from re-qualifying for a new mortgage loan. Use caution, and select a debt consolidation mortgage that makes sense.
Other methods of debt consolidation

If a home equity loan isn't the answer, what other choices do you have? Surprisingly enough, credit cards may be a good choice for consolidating debt. If you can find a credit card with an interest rate lower than the rate on your current cards, you'll instantly save money on interest charges. Unfortunately, while credit cards often offer a low introductory rate for balance transfers, these rates tend to increase after a six- or nine-month period.

Non-secured debt consolidation loans are another alternative, although some carry high interest rates. They may beat the rates on certain credit cards, but you should approach this type of loan with caution.

The best choice for debt consolidation is to pay off your debts in a regular, disciplined manner. More importantly, resist the temptation to max out your plastic once they're clear. Recovering from heavy debt is extremely difficult, and it's a painful process that you don't want to experience twice.

Fed Begins Buying MBS, Pushing Down Mortgage Rates

2009-01-07T01:40:00.000-08:00

From MortgageLoan.com: Fed Begins Buying MBS, Pushing Down Mortgage Rates
Yesterday the Fed bought their first round of mortgage securities guaranteed by Fannie Mae, Freddie Mac, and Ginnie Mae. This kicks off the Federal Reserve's plan to buy $500 billion in mortgage-backed securities by mid-2009, right on schedule. One of many historically unique programs to drive down the affordability of home buying and return much needed buyers to the market.

Early indications in bond markets are that the buying is having its intended effects. Yield spreads are tightening as mortgage bond yields continue to move downward. The net effect is mortgage rates are expected to decline. The simple announcement of the program on November 25 sent the average 30-year fixed-rate down to near 5 percent from 6 percent. The actual buying is expected to take even more out of that rate, potentially down to the much discussed 4.5 percent.

Despite the good news on mortgage rates some pundits are hesitant to celebrate. Rates are simply one component of getting mortgages closed and housing inventory moving. Already experiencing a record jump in mortgage applications, lenders are struggling with capacity. Of course, a surge without capacity and aggressive capital markets leads to little incentive to open up lending, or approval guidelines.

However, there are signs that the securities is moving in the right direction. Reports from bonding trading insiders are indicating that the momentum is flipping from unloading mortgage securities to looking buy them back.

The markets are certainly at a consensus that recovering the housing sector is a pre-requisite to recovering the broader economy. And, buying a ninth of agency-owned MBS market seems like a bold way to purchase recovery.

Low rates, government guarantees, and return of investor confidence in mortgage assets seems to be moving the needle on the housing market.

Are Lower Mortgage Rates Key to Success?

2009-01-05T23:35:00.000-08:00

From MortgageLoan.com: Are Lower Mortgage Rates Key to Success?
To put a floor under home prices, the Treasury may take direct steps to reduce mortgage rates. Doing so could spark a real estate buying spree. On the other hand, it might have no real impact, since rates are already low and people still aren't buying.

One of the newest strategies under review in Washington is for the Treasury to possibly "buy down" interest rates. That means that the Treasury-and ultimately the taxpayer-would inject money into banks and mortgage lending companies to pay down rates. In return, lenders would then offer lower mortgage rates of just 4.5 percent to homebuyers.

The idea is getting lots of support and attention, and has strong backing from the National Association of Realtors (NAR), among others. The NAR recently conducted a study that they say validates the idea that even a 1 percent lowering of mortgage rates would translate into half a million home sales. The surge of sales activity, the NAR believes, would happen regardless of which Treasury plan caused mortgage rates to fall. Plans include a buy down program, or the Treasury's purchase of mortgage-backed securities.
Contrarian mortgage rate view

Many people are not as optimistic as the NAR. They cite fresh evidence that Americans aren't in a buying mood, but are instead starting to save and conserve money, something most citizens haven't done for years. They claim that pushing mortgage rates down to 4.5 percent isn't even a full percentage point cut from current levels, so it may not have a significant impact on the housing markets.

By mid-December, for example, mortgage rates on 30-year fixed loans from major lenders, including Wells Fargo, were down to just slightly higher than 5 percent. That level is already an historically attractive one in any market cycle. As a result, pushing them down an extra half or three quarters of a point now, while people worry that we're heading into the worst economic period since the Great Depression, may not make a dramatic difference in consumer spending.
Credit problem still exists

Then again, a half-percentage drop in mortgage rates recently sent mortgage applications up more than 37 percent, according to the Mortgage Bankers Association. But that doesn't mean that all of those loan applications were actually approved. There's still a serious credit freeze problem, as banks remain reluctant to lend, and borrowers face tighter loan application guidelines and bigger down payment demands. Without accessible credit, it doesn't matter how cheap loans become. Nobody will be able to borrow if, as the saying goes, "the more things change, the more they remain the same."

What may be even more important to note is that the Treasury buy-down concept being discussed now would only apply to mortgage rates for those wanting to buy a home. It would do nothing to make it more affordable for those wanting to refinance out of bad loans into more manageable ones, which is at the heart of the real estate crisis.

Low Mortgage Rates and Sale of IndyMac Bank Ring in New Year

2009-01-05T23:34:00.001-08:00

From MortgageLoan.com: Low Mortgage Rates and Sale of IndyMac Bank Ring in New Year
In a mortgage market clamoring for good news, homeowners and investors get a couple of silver linings to kick off 2009.

Mortgage rates start the year at 37 year lows and promise to head lower, giving hope to homeowners. Meanwhile, investor confidence shows its return in $14 billion purchase of IndyMac Bank by private equity. Together these events signal strength in the two critical sides of the mortgage market, supply and demand.

Mortgage rates plunging into the low 5 percent range was the intended consequence of the Federal Reserve's plan to buy $500 million in mortgage-backed securities. First announced in late November, the 30-year fixed-rate mortgage has quickly descended from 6 percent. This is prior to any actual buying of securities by the Federal Reserve. Actual buying of mortgage-backed securities is expected to trigger even lower rates--potentially into the 4.5 percent range often mentioned as a Federal "target" mortgage rate.

These historically unique mortgage rates have triggered a refinancing frenzy driving up mortgage applications to equally historic levels. Lawmakers and monetary policy analyst are hoping for similar strength in new home buying. The core objective of federal subsidies is to engineer this floor to falling housing prices.

Giving strong Federal support to the mortgage market is having another beneficial effect. The enormous taxpayer investment into financial and mortgage markets is creating a very attractive risk environment for private investors.

There was no bigger indicator of that than the $14 billion acquisition of IndyMac Bank. This move signaled two important markers for long-term recovery. First, and most important, is that private investors are again interested in the mortgage market. This sends an indicator that investors believe in a recovering market for mortgage assets--reversing some of the fears of illiquid "toxic" assets. Second, the FDIC has sufficient confidence in their clean-up and the overall market to return IndyMac Bank back to the free markets.

These are certainly two important benchmarks in hopes for a mid-2009 economic recovery.

From Gratitude to Rage

2009-01-04T23:58:00.000-08:00

From MortgageLoan.com: Taxpayers and the Bailout: From Gratitude to Rage
Love it or hate it, the $700 billion bailout is here to stay. Tempers are flaring on both sides of the issue, as responsible homeowners feel slighted, and at-risk homeowners feel gratitude.

Nineteenth century poet Josh Billings once wrote, "I hate to be a kicker, I always long for peace, But the wheel that does the squeaking, Is the one that gets the grease." Right now, our Congress is using taxpayer money to grease a whole collection of squeaky wheels-and that's not sitting well with those who aren't going to get any of the help.
A growing rift

Federal efforts to shut down the foreclosure crisis are causing a rift between two classes of taxpayers: those who pride themselves on making responsible decisions, and those who don't. The former group includes renters and homeowners who remain financially solvent because they've been deliberately conservative with their finances. The latter includes those who stretched their budgets impossibly thin to buy a home, or who drained their home equity to buy cars, fund expensive home remodels, or go on nice vacations.
Bailout wars

At issue is a $700 billion taxpayer-funded bailout known as the Troubled Asset Relief Program (TARP). In its short life, the TARP has logged a history that's as troubled as the mortgage-related assets for which it's named. So far, half of the TARP money has been used to fund equity investments in various banks. The investments haven't produced much in the way of measurable results. Now, Rep. Barney Frank (D-Mass.) has said he won't release the remaining bailout funds unless some of it can be deployed directly to prevent foreclosures.

The recipients of that direct help will be at-risk homeowners. Likely uses of the TARP money include various measures designed to convert an unaffordable mortgage into an affordable one: interest rate reductions, debt forgiveness, and principal deferrals. These actions will create big monthly savings for those at-risk homeowners, but those savings will be partially funded by the tax dollars of the responsible homeowners-the folks who won't get a dime of government relief.
Tempers rage online

A dialogue is now raging online between the two camps. Blogs and financial media websites are collecting emotional comments from the taxpayers who want the help, and the taxpayers who feel punished for being responsible. In early-December, for example, Yahoo! Finance columnist Laura Rowley outlined a bailout proposal that would stimulate the economy by giving assistance to responsible mortgage borrowers. In less than two weeks, her piece had collected more than 550 fervent responses from readers who either hailed or skewered the idea. News stories pertaining to the TARP are generating a similar frenzy of commentary and blogging.

Try as they might, the responsible homeowners aren't going to squeak as loud as their at-risk counterparts. And at the end of the day, our lawmakers will continue down the only path they know: bailing out those in need, and asking everyone else to pay for it.

Mortgage Loan Delinquencies and Foreclosures

2009-01-04T01:54:00.000-08:00

From MortgageLoan.com: Upward Trend: Mortgage Loan Delinquencies and Foreclosures
Delinquencies and defaults on mortgage loans, as well as foreclosures on homes, are soaring, despite the well-advertised efforts of politicians and economists. New waves of foreclosures and delinquencies could be up ahead, too, as the recession continues.

According to the Mortgage Banker's Association (MBA), the number of people in the U.S. who are behind on their mortgage loans hit a new record in the third quarter of 2008. Now, almost seven out of every 100 home loans is in delinquency. That means that the volume of pending foreclosures is also rising as the housing crisis continues to steam ahead without signs of stopping.

Although MBA reports also show a slowdown in the number of actual foreclosure filings, the positive news was little consolation. The MBA still projects more than 2 million foreclosure proceedings for the year-despite the positive impact of efforts such as foreclosure moratoriums.
Aggressive programs saved mortgage loans

Many experts interpret positive numbers with a grain of salt, pointing out that many more loans would have gone into foreclosure had it not been for aggressive programs, such as loan modifications, that have been instituted by lenders and government agencies.

While mortgage loans are under review for these kinds of programs, they remain reported as delinquencies that haven't turned into full-fledged foreclosures yet. And while fewer foreclosures were recorded, the volume of mortgage loans that are at least 90 stays into default has gone up dramatically.

Twenty states showed declines in the rate of foreclosure activity between the second and third quarters of this year. But at the same time, every state in the Union, with the exception of Alaska, saw a significant increase in the number of delinquent loans that are at least 90 days past due.

Sooner or later, many of these delinquencies will push homes to the auction block and will, in turn, add to the overall number of actual foreclosures.
Future sees more delinquencies

The real estate business doesn't operate in a vacuum, and the problems that began in the housing sector are now spread across the entire economy. That translates into higher rates of unemployment as job losses mount, and less spending as the availability of credit dwindles. With less money to spend, Americans are more inclined to avoid purchases-especially homes, which are the biggest ticket item for most people.

In some of the hardest hit foreclosure regions, like California, Florida, Michigan, and Nevada, a dismal job outlook is stoking the fires of foreclosure, just as those states are trying to recover from the real estate whiplash. Within the past 12 months, Florida racked up more than 150,000 job losses, California tallied at least 100,000, and Michigan surrendered in excess of 70,000. Across the U.S., job losses for the month of November topped half a million--the worst performance since the 1970s. Unemployment is now the highest it's been in 15 years, and the numbers keep growing.