In a white paper entitled “The U.S. Housing Market: Current Conditions and Policy Considerations” that was released last week, Federal Reserve Board calls for alternatives to foreclosures.

“While the total stock of REO properties is difficult to measure precisely, perhaps one-fourth of the 2 million vacant homes for sale in the second quarter of 2011 were REO properties,” the white paper says.

“The combination of weak demand and elevated supply has put substantial downward pressure on house prices, and the continued flow of new REO properties–perhaps as high as 1 million properties per year in 2012 and 2013–will continue to weigh on house prices for some time,” the white paper further says.

Based on the data from Lender Processing Services, Inc., a leading provider of data and analytics to the mortgage and real estate industries, reported that as of November last year, 6.26 million properties were 30 or more days delinquent or in foreclosure. The data and analytics provider added that as of November of last year, 2.11 million properties were in the process of foreclosure.

The sad truth, Federal officials say in the recently released white paper, is that in spite of the potential for targeted forbearance programs and loan modifications to prevent unnecessary foreclosures, many borrowers will still not be able to keep their homes.

Federal officials say that foreclosures inflict economic damage beyond the personal suffering and dislocation that accompany them as properties sit idle for months and even years.

As an alternative to foreclosures, Federal officials propose that short sale be actively pursued. In a short sale, a home is sold to a third-party buyer offering less than the amount owed by the homeowner.

Meanwhile, last Wednesday, days after it released its white paper, the Federal Reserve Board released a Beige Book. In the Beige Book, Federal officials say that the pace of single-family home sales remained quite sluggish throughout the country. The exception for this sluggish home sale is the Dallas District whereby modest increase over the prior reporting period has been reported.

“Prices were largely stable on a short-term basis in most areas but in many instances were below their levels from twelve months earlier,” the Beige Book of Federal officials say.

The Federal officials report added that in Boston, Richmond, Chicago, and San Francisco Districts, extensive inventories of distressed properties were reported to be a source of price restraint.

Whether you are a first time buyer, first time seller, empty nester, thinking about selling or buying a home, do contact the Guldi Real Estate Group. In Southern Maryland, the Guldi Real Estate Group is the number one real estate team.

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