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» AGENCY EXPECTS MORE SHORT SALES IN 2013 WITH DEBT RELIEF ACT'S EXTENSION YouWalkAway.com, a foreclosure agency, conducted a survey of its clients to find 78 percent were walking away from their primary residence. The company also noted that 74 percent of those respondents would be eligible for tax relief under the Mortgage Debt Relief Act of 2007. The Mortgage Debt Relief Act allows debt forgiven through a short sale, loan modification, or foreclosure to be excluded as taxable income. The act faced expiration December 31, 2012, but on January 1, Congress voted to extend the act for another year. "This extension hasn't been well publicized, but it is important to homeowners and Realtors nationwide," said Chad Ruyle, YouWalkAway.com co-founder. "Had this law not been extended, it could have brought a drastic halt to short sales and had a devastating effect on underwater homeowners." The foreclosure agency says the oneyear extension is not likely to encourage a new wave of mortgage defaults in early 2013. While some have argued the act only provides an incentive for underwater homeowners to strategically default, YouWalkAway.com does not expect to see an increase in borrowers shirking payments on a mortgage they can afford. YouWalkAway.com expects the one-year extension, for the most part, to benefit only those homeowners already in the foreclosure process. Since the timeline in most states has lengthened well beyond 12 months, new defaulters would miss Congress' one-year window of reprieve on forgiven mortgage debt. On average, 85 percent of YouWalkAway. com clients have not made a monthly mortgage payment in 14 months. Thus, the agency concludes, a 12-month extension does not encourage strategic default. Instead, it should motivate homeowners to seek options outside of the lengthy foreclosure process such as a short sale, deed-in-lieu, or a modification, the agency explained. VISIT US ONLINE @ DSNEWS.COM CASE-SHILLER'S OCTOBER INDEX RECORDS FIRST DROP SINCE MARCH By Mark Lieberman, Economist for the Five Star Institute Home prices fell in October of last year for the first time since March, according to the monthly S&P/Case-Shiller Home Price Index released in late December. Both the 10-city index and the 20-city index decreased 0.1 percent from September to 158.77 and 146.08, respectively. The value of the 10-city index fell 0.1 percent and the 20-city index dropped 0.09. The 10-city index for October was 3.4 percent higher than it was in October 2011 and the 20-city index showed a 4.3 percent year-year gain. Economists expected the 20-city index to dip 0.3 percent in October but show a 4.1 percent yearyear improvement. The Federal Housing Finance Agency's index for October, reported a week earlier than Case-Shiller, showed a 0.5 percent month-month increase and a 5.6 percent year-year gain. The median price of an existing single-family home, according to the National Association of Realtors, fell 0.8 percent in October but still registered a 10 percent year-year increase. According to the Case-Shiller Index, prices fell in October in 12 of the 20 cities tracked compared with September when prices fell monthmonth in seven cities. Prices increased in 19 of the 20 cities in July and August and in all 20 cities in May and June. Prices declined 1.5 percent in Chicago in October as the unemployment rate there rose to 9.9 percent from 9.4 percent in September. Prices dropped 1.4 percent in Boston and Phoenix in October though the unemployment rate in Boston improved to 6.3 percent in October from 6.5 percent in September. The unemployment rate in Phoenix was unchanged in the month remaining at 7.1 percent. Price drops in the other nine cities where prices fell in October were less than 1 percent. Half of the cities that showed price drops were in the South, three in the Midwest, two in the Northeast, and one in the West. Prices rose 2.8 percent in October in Las Vegas, which also saw its unemployment rate improve in the month to 11.6 percent from 11.9 percent. In San Diego, prices were up 1.3 percent; there, the unemployment rate fell to 8.5 percent from 9.8 percent one month earlier. Price gains in the other five cities that showed improvement were less than 1 percent. Prices were unchanged in the month in Denver. Year-year prices improved in 18 of the 20 cities in October, matching September. Only Chicago and New York showed annual price declines: 1.3 percent in Chicago and 1.2 percent in New York. The unemployment rate in Chicago dropped from 11.6 percent in October 2011 to 9.9 percent in October 2012 but in New York rose to 9.2 percent from 9.1 percent one year earlier. Phoenix showed the strongest year-year price increase, up 21.7 percent from October 2011 to October 2012 with Detroit a distant second, recording a 10 percent price gain. While the unemployment rate in Phoenix fell 1.6 percentage points year-year, it increased 0.3 percent points to 18.9 percent in Detroit from October 2011 to October 2012. The 10-city index in October was down 29.8 percent from its June 2006 peak and the 20-city index is down 29.3 percent from its July 2006 peak. 49

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