Real Estate Funds Collapse 13% in a Week

The average real estate fund tracked by TheStreet.com Ratings collapsed 13.4% in the week ending Thursday, Feb. 19, dragged down by some of the worst housing reports in decades.

The Commerce Department's January reading of housing starts slid 17% to the slowest pace in more than 50 years. Single-family home construction shrank 12%, while multifamily apartments and townhouses plunged 28%. Why build when the real estate market is being flooded with distressed sellers and foreclosed properties available for a fraction of their previous sale prices?

To loosen up credit and stem the tide of foreclosures, President Barack Obama released details of his $275 billion plan to help Americans stay in their homes by reducing their mortgage payments to 31% of their monthly income. It would work by giving banks the incentive to absorb the cost of lowering payments to 38%, and the government would pick up the tab for the gap to 31%. Obama estimates that 9 million mortgages could be kept current under this plan. ...