Even though home sales are rising nationwide and price appreciation is currently taking place, the housing industry is still in a crisis, said Alfred Pollard, general counsel of the Federal Housing Finance Agency, at Safeguard Properties' 2012 National Property Preservation Conference.
For example, there was $1 trillion of household debt delinquent in the second quarter of 2012, Pollard said to support his opinion.
Also, foreclosures have slowed down, leading to a shortage of available inventory on the market. Pollard added that state laws, like the one created in Nevada last year, have had a major impact on the default foreclosure process by keeping homes "locked up."
However, 60-day delinquencies have dropped to 2.5 million and there have been 1 million short sales since 2009, Pollard mentioned.
"Our crisis has moved from a capital 'C' to a lower case 'C'". We have lived in an era where homeowners purchased properties as an investment and corporate entities thought they were conduits," Pollard said. "It was an odd culture."
Another factor plaguing the housing industry is that appraisers were not appraising properties high enough or were looking at wrong costs. Pollard said FHFA is receiving phone calls every day about these problems.
During this challenging time, solutions are being crafted to address all of these issues, such as the Home Affordable Modification Program, the Home Assistance Refinance Program and Home Affordable Foreclosure Alternatives program. But Pollard warned that "solutions have consequences" and can either ease or exacerbate the problem.
Meanwhile, the challenge for regulators and legislators, Pollard added, is how to undertake actions to solve the problems because we want to "know everything effecting this industry but we can't."
In order to change the current landscape of housing throughout the country, Pollard said all parties have to work together.
"Each of us [field service providers, appraisers, vendors, servicers] is part of the answer. What you do affects what I do," Pollard added. "We all play a part of what's at stake. Now, even helping homeowners is critical to fixing this crisis."