The North Bronx’s Co-op City has ranked as the hardest hit neighborhood in New York City, according to data compiled by research group ESRI. The 10475 zip code — most of which is taken up by Co-op city, a small community of 35 high-rise apartments — saw its jobless rate hit 12.3 percent in July, nearly double its rate at the same time a year ago. Council member Larry Seabrook, who represents the neighborhood, said that many area residents had been employed in construction or finance, two of the hardest hit industries in the financial crisis. “The impact of the financial crisis has an effect on Wall Street, but it has an effect on Co-op City Boulevard as well,” Seabrook said.

Unemployment has become a more significant driver of foreclosures than
subprime mortgages, bankers and economists said, which will make the
foreclosure crisis even more complicated. About 1.8 million borrowers
are likely to lose their homes to foreclosure this year, compared to
1.4 million last year, according to Moody’s Economy.com. Home losses
due to unemployment are harder to address, economists said, because it
is easier to work with lenders to modify mortgages than to create jobs
for struggling homeowners. [more]

Home prices in metropolitan areas across the country are at a higher risk of falling in 2011,  according to a new report from mortgage insurer PMI Group. David Berson, current chief economist at PMI and former chief economist at Fannie Mae, told CNBC that although the economy is showing signs of recovery, as long as unemployment rates keep rising, home prices will continue to fall, preventing a complete recovery in metropolitan areas that have been hardest hit by the housing crisis. While investors and first time homebuyers are spurring sales in troubled states such as California and Arizona, the large numbers of homes for sale are keeping prices low. “Those are the markets where risks for additional price declines still remain the biggest,” Berson said. He also predicted that national home prices will flatten out next year. [more]

According to national survey released today by Realtor.com, 53 percent
of potential homebuyers are not taking the plunge anytime soon. Nearly
a third cited concerns about job security as the main reason for not
entering the housing market. Meanwhile, one in five potential
homebuyers said they would be interested in buying a home if it was
steeply discounted, but nearly two-thirds surveyed said they would be
unlikely to purchase a foreclosed home due to the complicated process.
Also, while 41 percent of those surveyed said they didn’t think the
Obama administration’s $50 billion dollar foreclosure prevention plan
is working, 15 percent said they are looking to take advantage of the
$8,000 first-time homebuyer tax credit. [more]

The Obama administration is considering altering its loan modification
program to match the current foreclosure landscape. The program was
created to address the subprime crisis, but now most foreclosures are
driven by unemployment and underemployment. The current program gives
mortgage servicers and investors incentives to reduce mortgage payments
to 31 percent of homeowners’ incomes, but many homeowners now no longer
have sufficient income to qualify for refinancings under this system
due to job losses or pay cuts. Around 27 percent of homeowners who
called the mortgage industry’s “Hope Hotline” in the second quarter of
this year said unemployment was the primary or secondary reason for
their mortgage payment problems, up from 9.7 percent of callers in the
second quarter of 2008. The administration may create more specific
guidelines for borrowers on dealing with homeowners who have lost jobs. [more]