A sign is displayed in front of a foreclosed home in Bridgeport, Conn.
A sign is displayed in front of a foreclosed home in Bridgeport, Conn. - 
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JEREMY HOBSON: Now to the analysis of Julie Niemann, analyst at Smith, Moore and Co. in St. Louis.

Good morning, Julie.

JULIE NIEMANN: Good morning, Jeremy.

HOBSON: So, home prices. We got the closely-watched Case Shiller Index earlier this hour. It said prices of single family homes fell in August after showing strength earlier in the year. What's going on?

NIEMANN: Well 15 out of 20 cities were down. That really says the rest of the U.S. is still sliding. And we're not working off this huge inventory. Right now there are about 5 to 6 million homeowners who are delinquent on their payments and only about 1.7 million have actually been foreclosed. So there's huge overhang here.

HOBSON: And, I did see the five cities that were not down were New York, Chicago, Washington, D.C., Las Vegas and Detroit. Is that a sign of hope or what do you make of it?

NIEMANN: Well Detroit basically is cheap. That's the lowest priced housing in the nation. But for the rest of them, you have economic activity and there's no room to spread out. It's the old argument about buy real estate. Well, it's land, they aren't making any more of it. And all these people have tight land situations.

HOBSON: And finally, Julie let me just ask you about foreclosuregate, briefly. How might that affect home prices -- this issue of documentation.

NIEMANN: Well the big problem is FDIC Chairman Bayer says we've got critical flaws in the foreclosure system. Of the 5.5 million filings they have, they still can't get the rest of it processed. More borrowers are just saying in their homes until the sheriff knocks at the door, and that's on average about eight months after defaulting. So they're living there rent free. All the government programs like CAMP, scheduled to redesign the payments, failed. About half did it, and half are back in default. And the banks aren't pressing the issue because then tehy have to go back out and try and sell it. So who's making money? The title insurance companies, because the new problem is getting clean title. This is so far from over.

HOBSON: Julie Niemann, analyst at Smith, Moore and Co., thanks.

NIEMANN: You bet.