FALLING HOME PRICES
Home prices fell 2% in the 3Q following a modest gain in 2009.

Home prices are down 1.5% year over year and off 2% compared to the second quarter, according to the S&P Case-Shiller Home Price Index.

RISING HOMES-FOR-SALE INVENTORY
The inventory of homes for sale is high with nearly 3.9 million on the market in October, according to the National Association of Realtors.

Additionally, there is an enormous shadow inventory of home in the wings. It is believed that much of the shadow inventory is due fraudulent mortgage documents so this inventory will only shrink as the documentation issues are resolved.

In the meantime, the inventory looms over the housing market and buyers back away from REO properties that may be ‘hung up’ in the documentation mess causing delays in or prevent closing.

THE FORECLOSURE MESS
The once hot foreclosed homes market has been hit hard as the big banks sputter in restarting the foreclosure process on the delinquent mortgages they hold. This is slowing the sale of shadow inventories and will exert downward pleasure on housing prices until the inventory is depleted.

It is believed that much of the shadow inventory is due fraudulent mortgage documents so this inventory will only shrink as the documentation issues are resolved.

UNDERAPPRAISED VALUES
Since the HVCC was passed the home appraisal process has come under increasing fire. Now that it has been placed under Consumer Protection tension has increased for two reasons: 1) many appraisers are “low balling” values to cover their behinds, and; 2) other players in the home sales process like Real Estate and Mortgage professionals are kept out of the loop or able to discuss values and comps with the appraiser. Thus, the appraisal can be a deal breaker.

RISING MORTGAGE RATES
Mortgage rates are on the move, at six-month high, threaten purchase, refis and even the Fed.  The Fed does not have room to lower rates and their monetary policy is putting upward pressure on rate.

RELUNCTANCE TO MOVE OR SELL
CoreLogic: 10.8 million US properties with negative equity in Q3. This presents a challenge for homeowners who would otherwise sell their homes and relocate for employment or other personal reasons.