WSJ: 4 Issues to Watch in 2011

By now, most don’t expect 2011 to be a recovery year. Housing prices are expected to fall at least 5%, and The Wall Street Journal listed four key issues to pay attention to as the new year rolls around.

1. Jobs: Tax credits boosted home sales in early 2010, but without job growth, the market will have a tough time recovering. A poor job market means people won’t be as willing to risk buying a home, and many with mortgages could fall behind on payments. However, if jobs come back, demand could pick up, prices could rise again and fewer homeowners will fall underwater.
2. Foreclosure Delays: Many of the largest banks and lenders suspended foreclosures in the fall while they investigated potentially fraudulent signing procedures. Now lawmakers are stepping in with their own reviews and investigations. If foreclosures become more difficult or expensive to process, banks could start selling more loans and foreclosures in bulk. They could even resort to short sales.
3. Washington: The Obama administration will soon propose how to remake Fannie Mae, Freddie Mac and the mortgage market as a whole. Regulators are looking to create new rules for selling loans. How aggressive will the policy makers be?
4. Lending Standards and Rates: More than nine in 10 loans are backed by the government, either through Fannie Mae, Freddie Mac or other government agencies. But lawmakers might try to make room for more private lenders. Some analysts also say that the Federal Housing Administration’s finances and 3.5% down payments are serious red flags.