Because of the holidays, it seems that many foreclosure auctions in Bergen County were pushed back, with only a little more than 100 auctions scheduled for November and December 2008 combined.

About the same as the number of Sheriff Sales scheduled for October 2008 alone, which was the highest month for 2008.

But the homeowners facing foreclosure didn't get a Christmas miracle, their auction dates were just pushed back into 2009. As you can see from the current snapshot of scheduled foreclosure auctions, 2009 doesn't look good. There are currently over 300 foreclosure auctions scheduled for January.

This number is likely to decrease as auctions are rescheduled into later months for various reasons including postponements, cancellations and I wouldn't be surprised if the sheer volume might be too much to handle in one month.

 Higher priced neighborhoods aren't immune to foreclosures. Upper Saddle River has 8 properties scheduled for auction in the first 3 months of 2008 while it only had 3 for the last quarter of 2008.

Or at the very least behaved like one. You know what they say, if it looks like a duck, swims like a duck and quacks like a duck, it's likely a duck. I've covered some of these topics earlier but want to bring together some new factors that show that house prices are not sustainable and have been artificially inflated, along with some new charts to illustrate the point.

While I'm pretty good at math, I'm not a mathematician. What I can do is recognize and relate patterns. So there won't be any complex formulas as in a more advanced proof, but it should also be easier to understand.

I'm also going to try and debunk the myth that interest rates made house prices affordable, even though prices had grown so fast. Using conservative calculations a responsible buyer should use when deciding how much to spend on a house, it appears that in 2006 houses were selling for almost twice what the median household could afford.

Thanks to grim over at njrereport.com for putting together a comprehensive post regarding David Lereah's spin during the real estate bubble. The post provides a good collection of articles of Lereah's past comments on the housing market.

David Lereah was one of the Chief Economists for NAR, the National Association of Realtors, during the bubble years. He voiced very optimistic projections on the house prices, as does his successor Lawrence Yun.

One of Lereah's quotes from the CNN Money article reads:

I worked for an association promoting housing, and it was my job to represent their interests. If you look at my actual forecasts, the numbers were right inline with most forecasts. The difference was that I put a positive spin on it It was easy to do during boom times, harder when times weren’t good. I never thought the whole national real estate market would burst.

Not only did the top dogs at NAR spin the truth, they encourage their Realtors to do the same. To make it easy, NAR has their Surround Sound Program, to provide optimistic reports to their agents. The goal of the program is to surround prospective buyers with enough positive noise that the real bad news gets drowned out.

CNNMoney.com has a list the 10 worst real estate market projections for the top 100 real estate markets. Eight of the top ten markets are in CA.

It's surprising that the NY Metro area, which contains Bergen County, NJ, is absent from the list, considering back in August New York City was the least affordable housing market. That was the first time the top spot when to a city outside of California.

With this region being so unaffordable, and with the decline in home values being less than other areas, it doesn't make much sense to me. Many areas in California and Florida have already seen dramatic declines in house prices. Some people have even tried to call the bottom in places like LA. According to these projections, that doesn't seem to be the case and 9 of the worst 10 housing markets are expected to continue to decline into 2010.

Back in May, CNN Money listed house price forecasts for the top 100 markets, where the NYC real estate market was projected to see house prices drop 13.2%.

There have also been some notable changes in forecasts since May. Sacremento's forecast had the worst change. The forecast dropped 13.3 percentage points to -22.2% from the -8.9% forecast in May 2008.

Miami showed slight uptick of 2.1 points in the forecast, going from -24.9% in May to -22.8%.

You can see the rest of the changes in forecasts in the table below:

 

	2008 Median House Price	2009 Forecast	2010 Forecast	May 2005 Forecast	Change from May 2005
Los Angeles,CA	$375,340	-24.9%	-5.1%	-16.8%	-8.1
Stockton, CA	$248,050	-24.7%	-4.0%	-16.8%	-7.9
Riverside, CA	$256,540	-23.3%	-4.8%	-16.9%	-6.4
Miami-Miami Beach, FL	$293,590	-22.8%	-6.4%	-24.9%	2.1
Sacramento, CA	$225,140	-22.2%	2.3%	-8.9%	-13.3
Santa Ana-Anaheim, CA	$532,810	-22.0%	-3.5%	-15.2%	-6.8
Fresno, CA	$257,170	-21.6%	-3.3%	-14.3%	-7.3
San Diego, CA	$412,490	-21.1%	-2.9%	-9.7%	-11.4
Bakersfield, CA	$227,270	-20.9%	-2.5%	-13.6%	-7.3
Washington, DC	$343,160	-19.9%	-5.7%	-13.2%	-6.7

I've discussed the lack of success people were having with getting their mortgage modifications in past posts. Either because the banks aren't willing to renegotiate a mortgage with terms that reflect that currect fair market value of a home, dragging their feet in processing requests to modify mortgages or because borrowers are having a hard time getting the necessary paperwork done in time.

The $300 billion Housing Rescue Bill set up a program to help get 400,000 homeowners in trouble into better mortgages. The FDIC has also been working on getting mortgages modified for banks that have failed such as IndyMac.

And now today Reuters is reporting that the rate of defaults for mortgages that have already been modified is rising.

The data showed that after six months, nearly 37 percent of mortgage loans modified in the first quarter were 60 or more days delinquent. After three months, 19 percent were 60 or more days delinquent or in the process of foreclosure.

"One very troubling point is that, whether measured using 30-day or 60-day delinquencies, re-default rates increased each month and showed no signs of leveling off after six months or even eight months," John Dugan, head of the Office of the Comptroller of the Currency, said in a statement.

Lenders may need to get more aggressive with their modifications if they want to keep homeowners in their homes. They should have an incentive to do so because the current real estate market is very soft and they would have a hard time unloading their REOs.

But with all the money the US has been siphoning into the coffers of these big banks through the Federal Reserve and the various bailout programs, do they really care? They got their money. Why shouldn't they work on repairing the broken housing market?

What more could they want? More importantly, do they really think there is much more to give?

Today, more news on the failure of the Housing Rescue Bill to help homeowners that are having trouble paying their mortgages and possibly facing foreclosure.

The three-year program was supposed to help 400,000 borrowers avoid foreclosure. But it has attracted only 312 applications since its October launch because it is too expensive and onerous for lenders and borrowers alike, Preston said in an interview.

312 is far short of the goal of 400,000. Back in September I wrote on how the $700 billion Wall St bailout was not likely to provide homeowners with foreclosure help. Part of that discussions was about how hard it was for homeowners to get loan modifications.

I believe part of the reason for the failure was that lenders were able to choose if they wanted to participate or not. To do so, they would have to be willing to write down the mortgage to less than the current fair market value of the home. Since house values had already dropped significantly, this would mean a decent chunk of change.

You would think that the alternative of having to take posession of the home in the hopes of selling it in this market, where inventory is high and demand is low, wouldn't be very attractive. But when you factor in the billions in bailouts the banks have been getting it seems like a sweet deal. The lenders get the cash AND they get to take the house back.

It's a shame because getting people into these types of mortgages could have greatly helped with the foreclosure epidemic we're seeing.

Another part of the Housing Rescue Bill dealt with setting aside $3.92 billion to acquire and redevelop foreclosures. This partly helps out the communities by having homes that are unoccupied due to foreclosure not sit idle and unmaintained, becoming a blight in the neighborhood that would further reduce property values.

The big benefit though, again goes to the lenders. These homes have an owner. The lenders that took posession of them as a result of a foreclosure. The banks hold them, don't maintain them so they become an eyesore then federal (taxpayer) money is used to buy the homes from the banks and fix them up.