Unemployment, the $25 billion bank settlement, and a housing recovery?

Although, the job market seems to be improving slowly, the housing recovery is still in a state of transition and confusion. While houses are selling, there may be a few buyers still on the fence. It's still early yet. However, I am seeing a lot more activity since this time last year already which is a positive sign. The warm weather has been very helpful for a great start to the new year and with percentage rates still remaining low, there are a lot great deals out there.  

Last week's Initial Jobless Claims came in at 358,000, just lower than the 370,000 expected, suggesting the labor market was finally strengthening. Meanwhile, that’s from those who still claim unemployment and there are others that just gave up and are not accounted for....so what can we believe?

The Federal Reserve Chairman Ben Bernanke said that high unemployment continues to weigh on the housing markets - really? That there are still a high number of people who remain out of work, OR are under-employed. Bernanke will continue to keep interest rates low through 2014. (Maybe he should raise them, so those ON the fence will get off it)?

A new $25 billion bank settlement agreement has been reached with five of the largest home (mortgage) servicing banks: Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Citigroup Inc., and Ally Financial Inc.  

They agreed to settle alleged foreclosure abuses, including the infamous "robosigning" NIGHTMARE. Bank employees were signing documents they hadn't read or used fake signatures to foreclose on homes which affected nearly 8 million Americans - between September 2008 and December 2011: http://www.msnbc.msn.com/id/44365184/ns/business-real_estate/t/robo-signing-scandal-may-date-back-late-s/

The $25 billion in funds will be dispersed as follows:

• $17 billion would go toward reducing the principal that struggling homeowners owe on their mortgages.
• $5 billion would be placed in a reserve account for various state and federal programs; a portion of that would cover the $1,800 checks sent to those homeowners affected by the deceptive practices.
• $3 billion would help homeowners refinance at 5.25 percent.

As stated in The Sun Sentinel article: http://www.sun-sentinel.com/business/realestate/fl-mortgage-settlement-20120124,0,933797.story

Also, according to Business Week:

Examiners are tough and have been really scrutinizing banks for their “practices” to get this economy back on track. Tensions have been seriously mounting between both banks and regulators since this financial crisis. http://www.businessweek.com/news/2012-02-17/regulators-make-nice-as-u-s-banks-bristle-over-tough-examiners.html

DSNEWS reports:

People who need an extension to have their foreclosures checked by a third party to see if they were rightfully foreclosed upon: http://www.dsnews.com/articles/deadline-to-request-independent-foreclosure-review-extended-three-months-2012-02-15

So what can all this possibly mean? 

Well, thank goodness our area has not been hit so hard. Certainly, all the banks want to keep homeowners in their homes. The fewer homes being defaulted on - means fewer homes entering the market as foreclosures. Creating more demand and hopes towards stability. Understand, also, foreclosed homes drive the prices downward affecting the neighboring homes that are not having issues who are trying to sell...

BUT, what will happen to the properties that were on hold for foreclosure now that the settlement has been reached?

Another concern, will the Mortgage Forgiveness Debt Relief Act be extended?

To be continued...