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Could More Be Done to Bolster a Housing Recovery?

Today, foreclosure and filing for bankruptcy go hand-in-hand for many people. An article published by the National Association of Consumer Bankruptcy Attorneys (NACBA) addressed the need to accelerate the housing recovery. The author echoed the opinion of U.S. Federal Reserve Chairman Ben Bernanke in an address about the housing market that he gave to central bankers in August of 2011. He said housing market would stabilize and begin to grow again, but that good, proactive housing polices could help speed that process. The article affirmed the broadly held opinion by many economists that housing debt has underpinned the nation's slow economic recovery.

A subject frequently broached but not yet brought to fruition is the fact that borrowers with underwater mortgages should be able to gradually earn an accelerated principal reduction. Underwater mortgages are ones where mortgages are more than the homes’ value. The majority of troubled housing loans are with the federal government under Freddie Mac and Fannie Mae. The government made changes in the mortgage modification rules that allowed homeowners with under water mortgages to refinance loans. This change provided some help, but many feel not enough.

On a brighter note, the National Association of Home Builders reported in June 2012 that U.S. housing market showed "measurable and sustained improvement" in 80 metropolitan areas. There was shifting in some markets that indicate the nature of housing recovery is still fragile. Some areas from May dropped lower. However, many new areas emerged, which showed improvement. The local economic and job market conditions are the driving factors for individual housing markets. The three major statistics analyzed were Bureau of Labor Statistics on employment growth, Freddie Mac on house price appreciation, and the U.S. Census Bureau on single family housing permit growth.

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