- The Washington Times - Wednesday, April 30, 2008

From combined dispatches

NEW YORK — The erosion of house values is accelerating and foreclosure filings are doubling, new data showed yesterday.

A closely watched index of home prices in 20 cities fell almost 13 percent in February from a year earlier, a record for the seven-year-old S&P;”s/Case-Shiller Home Price index. The report follows news that foreclosure filings from January to March also hit a new high and comes a day after the government said the number of vacant homes on the market also reached a record.

“Month to month, it gets consistently worse,” said David Blitzer, chairman of the index committee at S&P;, noting that February also marked the sixth straight month that all 20 cities experienced declines. “The slope is one direction. There is no sign of a bottom.”

He said 17 of the metro areas that the index tracks reported record annual declines, led again by Miami and Las Vegas.

In Washington yesterday, a senior Bush administration housing official said Congress should take steps to limit the government”s exposure to risky mortgages as it considers proposals to help homeowners facing foreclosure.

Any future legislation to overhaul the Federal Housing Administration should prohibit down-payment assistance from the seller, Roy Bernardi, the acting secretary of the Department of Housing and Urban Development, said in a speech. Such loans are three times as likely to face foreclosure, he said.

“The administration favors responsible, specific efforts to save homeowners, and Congress is moving toward a broader federalization of the housing market,” Mr. Bernardi said in prepared remarks. “Many people, including myself, want to avoid the temptation of extensive government intrusion.”

The House Financial Services Committee is scheduled to vote this week on legislation, backed by Democrats, to create a federal program guaranteeing up to $300 billion in troubled mortgages. The panel voted Thursday to reject a Republican alternative.

In the home price index, Charlotte, N.C., was the only city to post an annual gain of 1.5 percent, but Mr. Blitzer noted that Charlotte’s positive returns continue to diminish with each month and that it was the last city in the index to reach its peak.

The lopsided market, of course, means that home buyers with good credit have an abundance of options.

Jody Hanson and her boyfriend, Scott Harrison, want to buy a two-story house with at least three bedrooms in Las Vegas for no more than $225,000. So far, they have been outbid on four foreclosed homes.

“There are just a ton of people here getting foreclosed upon,” Mr. Hanson said, “so there are just so many deals waiting for you.”

Half of all sales in Las Vegas are foreclosures, said Karen Wilson, a local Century 21 agent, though the glut of homes on the market has started to wane and transactions have picked up.

Nevada posted the country”s worst foreclosure rate in the first quarter, RealtyTrac Inc. said yesterday, with one in every 54 households receiving a foreclosure-related notice.

Nationwide, one in every 194 households received a foreclosure filing during the quarter, more than double the same period last year.

The most-recent quarter marked the seventh consecutive one of rising foreclosure activity.

“What would normally alleviate the foreclosure situation in a normal market is people starting to buy properties again,” said Rick Sharga, RealtyTrac”s vice president of marketing.

However, people without perfect credit and a significant down payment are having trouble getting loans, and that is slowing the market”s recovery, he said.

Falling home prices are driving up the number of loan defaults and foreclosures, deepening the toll lenders are paying for their reckless lending practices during the housing boom.

Yesterday, Countrywide Financial Corp. said it lost $893 million in the first quarter after setting aside $1.5 billion to cover losses on unpaid home loans. The staggering lender agreed in January to sell itself to Bank of America Corp. for about $4 billion in stock.

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