The News Roundup

The housing market had quite a Thursday. First the good news:

Massachusetts residents can borrow significantly more money at low interest rates, to buy homes or to refinance, after the federal government broadened its loan guarantee program. The Federal Housing Administration guarantees to repay lenders if borrowers don't, allowing banks to loan money at lower interest rates. The maximum the government will guarantee increased to $523,750 in the Boston area.

One nice thing about FHA loans: You're much more protected against foreclosure. The government forces lenders to help borrowers who fall behind.

An interesting piece in the Wall Street Journal reviews the history of the FHA program, which began during the Great Depression and is now being revived. By several measures this is the worst housing slump since the Great Depression, so perhaps it's appropriate that the government is resorting to measures developed in the 1930s. It's certainly a reminder of just how grave the current situation has become.

Speaking of the Great Depression, the Federal Reserve yesterday reported the astonishing news that Americans now own less of their homes than banks. If a house was worth a dollar, the average American now has 48 cents of equity and 52 cents of mortgage debt. It's the first time total home equity has dipped below 50 percent of the total value of homes since at least 1945.

The immediate reason is that home values are falling. The primary reason is that we like borrowing money.

Other news:

The National Association of Realtors reported that pending sales remain at the second-lowest level since the group started counting in 2001. (The NAR naturally has a nicer way of saying this.)

And the Mortgage Bankers Association reported that the pace of foreclosures reached record levels again in the fourth quarter. In Massachusetts, 3.17 percent of outstanding loans are either in foreclosure or the last payment is at least 90 days overdue, which means they're about to be in foreclosure.

Perhaps today will be sunny.