Foreclosures Still Haunt the Housing Market

Despite glimmers of hope in the unemployment statistics and other economic indicators, housing remains in a slump. New Commerce Department data show that new homes sales fell 1.6 percent in February, which follows a decline in January. The number of foreclosed homes on the market—and the threat of more to come—continues to drag down sales.

“It is unlikely that home prices can recover on a sustained basis until the number of distressed properties is significantly reduced,” Steven Wood, president of Insight Economics, told Bloomberg News.

There are signs that lenders may be stepping up their efforts to tackle the problem. Bank of America is starting a program to help delinquent homeowners avoid foreclosure. Borrowers will be able to hand their title to the bank, then remain in the house while renting it for up to three years at or below market rates. The pilot will start with fewer than 1,000 borrowers in Arizona, Nevada, and New York. The idea behind so-called Right to Rent programs have had support among progressives such as Dean Baker, co-director of the Center for Economic & Policy Research, who has advocated the measures for several years. Read More