It could take a lot more government prodding and pushing, but there are signs that the housing market is nearly done collapsing and may now start treading recessionary waters. Both RealtyRac and report a sharp decline in month-over-month foreclosures in January. RealtyTrac, which measures default notices, auction sale notices and bank repossessions, reported a 10 percent decrease from December 2008. Completed foreclosures declined 25.7 percent in January, according to, and pre-foreclosure filings fell 12 percent.

“The freeze in foreclosures by Fannie Mae, Freddie Mac, and other institutions, and spreading adaptation of the FDIC’s loan modification plan accounts for most of the dip,” says Alexis McGee, president of With the modifications, “a lot fewer homeowners are being forced through the foreclosure process—their loans are not ending up as a trustee’s deed,” McGee notes. “Lenders are becoming more accommodating, giving borrowers more rope.” Recidivism is expected: “The point is not to have them [foreclosures] hit all at one time.”

And the Obama economic team has promised to move quickly on a five-step plan to deal with the foreclosure crisis. Under the program, the Federal Reserve will continue to buy GSE mortgage-backed securities and GSE debt; $50 billion will go to foreclosure prevention through loan modifications; loan modification standards will be established; financial institutions receiving federal capital will be required to adopt loan modification plans; and flexibility will be added to Hope for Homeowners and FHA efforts to help distressed homeowners.

Citigroup on Thursday announced a moratorium on “all Citi-owned first mortgage loans that are the principal residence of the owner as well as all loans Citi services where we have reached an understanding with the investor,” according a statement by Citi CEO Vikram Pandit. JPMorgan Chase made a similar move.

Beyond the foreclosure mess, the overall housing market may be regaining its equilibrium, if painfully. “Builders aren’t building, and supplies are falling,” says McGee. “In California, there’s a six-month supply of new houses, compared to 13 months worth a year ago.”

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