Must read new information released today. If there is any doubt that this market requires that you learn the new skills and techniques that HREU offers…read this post. Also, share this post with your sellers. (Use this information to help understand the importance of pricing their homes to sell…and sell now. )

If you are not yet enrolled in the Harris Real Estate University Agent Short Sale Secrets class you must do so now. Knowing how to do short sales is not longer an option.

In a troubling report, the Federal Reserve said Americans’ equity in their homes has fallen below 50% for the first time since 1945.

Home equity is the percentage of a home’s market value minus mortgage-related debt.

The Fed’s flow of funds report shows home equity slipped to a revised 49.6% in the second quarter 2007 and fell further, to 47.9%, in the fourth quarter. It marks the first time homeowners’ debt on their houses exceeds their equity since the Fed started tracking the data in 1945.

Economists expect equity to drop even further as declining home prices eat into the value of most Americans’ largest asset. Read that again…that means that the fed is telling us that millions of homeowners will need the services of an agent who knows how to do a short sale.

Moody’s Economy.com estimates that 8.8 million homeowners, or about 10.3% of homes, will have zero or negative equity by the end of the month. Even more disturbing, about 13.8 million households, or 15.9%, will be “upside down” if prices fall 20% from their peak. That is, they will owe more than the home’s current market value.

The latest Standard & Poor’s/Case-Shiller index showed U.S. home prices plunging 8.9% in the final quarter of 2007 compared with a year ago, steepest decline in the 20-year history of the index.

Pending home sales flat

Also Thursday, industry data showed that January pending home sales were below analysts expectations and remained at the second-lowest reading on record.

The National Association of Realtors said its seasonally adjusted index of pending sales for existing homes held at 85.9, the same reading as December and just short of a revised record low of 85.8 in August, at the start of the worldwide credit squeeze. The reading was 19.6% below year-ago levels.

Foreclosures hit record

The Mortgage Bankers Association, in a quarterly snapshot of the mortgage market, said the proportion of all mortgages nationwide that fell into foreclosure shot up to a record high 0.83% in the October-to-December quarter. That passed the previous high of 0.78% in the prior quarter.

“Clearly, it’s the worst it’s been,” chief association economist Doug Duncan said.

More homeowners, meanwhile, fell behind on monthly payments.

The delinquency rate for all mortgages climbed to a seasonally adjusted 5.82%, up from 5.59% and highest since 1985. Payments are considered delinquent if they are 30 or more days past due.

The percentage of subprime adjustable-rate mortgages that entered foreclosure soared to 5.29% from 4.72% in the prior quarter, the previous high. Late payments rocketed to a record 20.02%, up from 18.81% — the previous high.

Against this backdrop, Bernanke called for additional relief and urged lenders to help distressed owners by lowering the principal amount of their loans. “This situation calls for a vigorous response,” Bernanke said in a speech Tuesday.

Bernanke’s recommendation for lenders to reduce the amount owed on troubled home loans. In other words he is suggesting that Short Sales are the tool to use to resolve the current real estate crisis. Agents, enroll now in HREU’s Agent Short Sale Secrets course.

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