From now until the end of the year could be the worst period yet for mortgages because of the high number of adjustable rate loans that are expected to reset upward. At least that’s what Steve Preston, the new HUD secretary, told the editorial board when he stopped by after giving a speech Wednesday to the Detroit Economic Club.

He said he hopes that by mid-2009 there will be some “positive energy” in the housing market, i.e., some of the backlog of homes for sale might start to clear up.

But he was pretty straightforward about how different Michigan’s problems are from the rest of the country (including a 17-month backlog of unsold homes around here, compared to 9½ months nationally). It’s not clear whether helping people here move from an adjustable rate to a fixed-rate mortgage will even work, if their problems include a lost job or a big pay cut, etc.

Preston stressed, among other things, that most of the solutions that HUD has come up with so far have been at little or no cost to taxpayers – and that a lot of what’s worked came after Treasury/HUD/FHA got the lenders and all the other big financial players in one room so they wouldn’t keep saying it was the other one’s responsibility.

We all see empty houses in our neighborhoods these days. Do you know anyone who got help and re-negotiated their mortgage so they could stay in their house? (Maybe people who’ve gotten help don’t talk about it, so they’re totally invisible?)

There is still a bit more help to come. There will be some loosening of who can qualify (starting Monday, people who’ve missed up to three payments can still get help through the FHA) and the mortgage bill supposedly coming out of Congress has some other assistance, but I wonder if too many Michiganders are already too far behind.

It doesn’t help either that one of Republican presidential candidate John McCain’s economic gurus is standing by his comments that America is in a “mental recession.” John Dingell blasted Phil Gramm today for suggesting “that this recession is all in our heads” and said in his statement, “Phil Gramm should come to Michigan and tell the 8½% of our workforce that is unemployed, the 12,000 or so families with a home in foreclosure in the last month, or the millions who are being squeezed by higher prices for gas and groceries that they are whiners.”

Anyway, if the next six months are the peak for adjustable rate mortgage re-sets, maybe we ain’t seen nothin’ yet.

This entry was posted on Saturday, July 12th, 2008 at 10:51 am and is filed under Real Estate News. You can follow any responses to this entry through the RSS 2.0 feed. Responses are currently closed, but you can trackback from your own site.