The situation, we fear, will only get worse in months to come. Rates already are starting to rise as lenders brace for the Fed to curtail support for mortgage lending as early as the end of March. The home buyer’s tax credit is scheduled to expire at the end of April. And a new flood of foreclosed homes is ready to hit the market.
It is increasingly clear that the Obama administration’s anti-foreclosure effort — which pressed lenders to reduce interest rates — isn’t doing nearly enough. High unemployment rates also mean that many borrowers who did qualify for aid have been unable to keep up with even reduced monthly payments.
As a result, an estimated 2.4 million foreclosed homes will be added to the existing glut in 2010, driving prices down by another 10 percent or so.
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