For the first time in a long while foreclosure filings fell for the month of January 2009. The decline was a result of foreclosure moratoriums put in place by mortgage holders Fannie Mae, Freddie Mac as well as others lenders. President Obama’s administration would like to suspend foreclosures for the principle residences of borrowers until a home loan modification program is started as part of the financial bailout program. It is yet to be determined if this idea will be effective. While some feel the moratorium will be productive, others feel that the moratorium is just putting off the inevitable. Past cases have shown a deep drop in foreclosures during the moratorium, only to see them rise as soon as the moratorium is lifted.
Home prices for the fourth quarter of 2008 fell by the largest amount in the past 30 years. This price decline was driven by foreclosure sales and short sales by banks. In a lot of states, distressed home selling is accounting for most of the home sales, and is driving down prices. Banks are sitting with so many properties, and having to maintain these properties, that they are willing to cut prices drastically just to unload them. In addition, the jumbo mortgage market has dried up causing the sales of higher priced homes to slow considerably. However, these lower prices are starting to bring new buyers into the market. It is hoped that the economic stimulus package will help lift the housing market and get the economy back on track.