Jubilee Prosperity

The good old retrospectoscope now shows a 160% countertrend rally in IYR Real Estate iShares that just ran 13% above its 45 target.

Not bad for bottom-feeders.

http://stockcharts.com/charts/gallery.html?iyr

Not only did Real Estate Investment Trust bottom-feeders find value, they got income up to 9%, albeit with the occasional dividend cut from firms with declining cash flow and falling balance sheets.

http://us.ishares.com/product_info/fund/holdings/IYR.htm

Wednesday’s prominent news of BAC, C and WFC forgiving underwater ARM (Adjustable Rate Mortgage) holders up to 30% of their loans may have put in a top for Banks and Real Estate.

http://finance.yahoo.com/news/BofA-to-start-reducing-apf-93222487.html/print?x=0

As usual, the devil was in the details.

A quick read of initial articles suggested several risks:

First, the Mortgage Forgiveness programs require not missing mortgage payments the next five years.

The record shows up to 75% of loan modification programs defaulted a second time.

Without jobs, it can be tough to pay bills on time.

Without economy, defaults may increase.

Second, only 170,000 homeowners signed up for the $75 Billion Obama Mortgage Modification program, with application completion rates fewer than 13%.

The TARP Special Investigator for the TARP Troubled Asset Relief Program said numerous changes in government guidelines and lack of advertising caused confusion and delay.

The Treasury Department estimated at most two million homeowners may complete the Mortgage Modification Program by the end of 2012, about half of original government estimates.

Meanwhile, debt defaults and unemployment continued to grow.

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This entry was posted on Saturday, March 27th, 2010 at 8:17 am and is filed under Money doctor and Counselor. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.