HOPE FOR HOMEOWNERS within the U.S. FORECLOSURE PREVENTION ACT OF 2008

People ask whether there is HOPE for them from possible foreclosure in the new law signed by President Bush on July 30, 2008 (U.S. Housing & Foreclosure Prevention Act of 2008).

Everyone should be careful about this and get the advice from qualified Realtors and mortgage professionals.

We set forth below a copy of the actual text of this part of the legislation.

Posted by Harrison K. Long, Explore Properties Group, July 31, 2008
Source: Government Bill Tracking

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U.S. Housing and Foreclosure Prevention Act of 2008
H.R. 3221
TITLE IV--HOPE FOR HOMEOWNERS
SEC. 1401. HOPE for Homeowners Act of 2008

SEC. 1402. ESTABLISHMENT OF HOPE FOR HOMEOWNERS PROGRAM.
(a) Establishment- Title II of the National Housing Act (12 U.S.C. 1707 et seq.) is amended by adding at the end the following:

SEC. 257. HOPE FOR HOMEOWNERS PROGRAM.

(a) Establishment- There is established in the Federal Housing Administration a HOPE for Homeowners Program.
(b) Purpose- The purpose of the HOPE for Homeowners Program is--

(1) to create an FHA program, participation in which is voluntary on the part of homeowners and existing loan holders to insure refinanced loans for distressed borrowers to support long-term, sustainable homeownership;
(2) to allow homeowners to avoid foreclosure by reducing the principle balance outstanding, and interest rate charged, on their mortgages;
(3) to help stabilize and provide confidence in mortgage markets by bringing transparency to the value of assets based on mortgage assets;
(4) to target mortgage assistance under this section to homeowners for their principal residence;
(5) to enhance the administrative capacity of the FHA to carry out its expanded role under the HOPE for Homeowners Program;
(6) to ensure the HOPE for Homeowners Program remains in effect only for as long as is necessary to provide stability to the housing market; and
(7) to provide servicers of delinquent mortgages with additional methods and approaches to avoid foreclosure.

(c) Establishment and Implementation of Program Requirements-
(1) DUTIES OF THE BOARD- In order to carry out the purposes of the HOPE for Homeowners Program, the Board shall--‘(A) establish requirements and standards for the program; and‘(B) prescribe such regulations and provide such guidance as may be necessary or appropriate to implement such requirements and standards.
(2) DUTIES OF THE SECRETARY- In carrying out any of the program requirements or standards established under paragraph (1), the Secretary may issue such interim guidance and mortgagee letters as the Secretary determines necessary or appropriate.

(d) Insurance of Mortgages- The Secretary is authorized upon application of a mortgagee to make commitments to insure or to insure any eligible mortgage that has been refinanced in a manner meeting the requirements under subsection (e).

(e) Requirements of Insured Mortgages- To be eligible for insurance under this section, a refinanced eligible mortgage shall comply with all of the following requirements:

(1) LACK OF CAPACITY TO PAY EXISTING MORTGAGE-
(A) BORROWER CERTIFICATION-
(i) IN GENERAL- The mortgagor shall provide certification to the Secretary that the mortgagor has not intentionally defaulted on the mortgage or any other debt, and has not knowingly, or willfully and with actual knowledge, furnished material information known to be false for the purpose of obtaining any eligible mortgage.
(ii) PENALTIES-
(I) FALSE STATEMENT- Any certification filed pursuant to clause (i) shall contain an acknowledgment that any willful false statement made in such certification is punishable under section 1001, of title 18, United States Code, by fine or imprisonment of not more than 5 years, or both.
(II) LIABILITY FOR REPAYMENT- The mortgagor shall agree in writing that the mortgagor shall be liable to repay to the Federal Housing Administration any direct financial benefit achieved from the reduction of indebtedness on the existing mortgage or mortgages on the residence refinanced under this section derived from misrepresentations made in the certifications and documentation required under this subparagraph, subject to the discretion of the Secretary.‘

(B) CURRENT BORROWER DEBT-TO-INCOME RATIO- As of March 1, 2008, the mortgagor shall have had a ratio of mortgage debt to income, taking into consideration all existing mortgages of that mortgagor at such time, greater than 31 percent (or such higher amount as the Board determines appropriate).

(2) DETERMINATION OF PRINCIPAL OBLIGATION AMOUNT- The principal obligation amount of the refinanced eligible mortgage to be insured shall--
(A) be determined by the reasonable ability of the mortgagor to make his or her mortgage payments, as such ability is determined by the Secretary pursuant to section 203(b)(4) or by any other underwriting standards established by the Board; and‘(B) not exceed 90 percent of the appraised value of the property to which such mortgage relates.

(3) REQUIRED WAIVER OF PREPAYMENT PENALTIES AND FEES- All penalties for prepayment or refinancing of the eligible mortgage, and all fees and penalties related to default or delinquency on the eligible mortgage, shall be waived or forgiven.

(4) EXTINGUISHMENT OF SUBORDINATE LIENS-
(A) REQUIRED AGREEMENT- All holders of outstanding mortgage liens on the property to which the eligible mortgage relates shall agree to accept the proceeds of the insured loan as payment in full of all indebtedness under the eligible mortgage, and all encumbrances related to such eligible mortgage shall be removed. The Secretary may take such actions, subject to standards established by the Board under subparagraph (B), as may be necessary and appropriate to facilitate coordination and agreement between the holders of the existing senior mortgage and any existing subordinate mortgages, taking into consideration the subordinate lien status of such subordinate mortgages.

(B) SHARED APPRECIATION-
(i) IN GENERAL- The Board shall establish standards and policies that will allow for the payment to the holder of any existing subordinate mortgage of a portion of any future appreciation in the property secured by such eligible mortgage that is owed to the Secretary pursuant to subsection (k).‘(ii) FACTORS- In establishing the standards and policies required under clause (i), the Board shall take into consideration--‘(I) the status of any subordinate mortgage;‘(II) the outstanding principal balance of and accrued interest on the existing senior mortgage and any outstanding subordinate mortgages;‘(III) the extent to which the current appraised value of the property securing a subordinate mortgage is less than the outstanding principal balance and accrued interest on any other liens that are senior to such subordinate mortgage; and‘(IV) such other factors as the Board determines to be appropriate.

(C) VOLUNTARY PROGRAM- This paragraph may not be construed to require any holder of any existing mortgage to participate in the program under this section generally, or with respect to any particular loan.

(5) TERM OF MORTGAGE- The refinanced eligible mortgage to be insured shall--‘(A) bear interest at a single rate that is fixed for the entire term of the mortgage; and‘(B) have a maturity of not less than 30 years from the date of the beginning of amortization of such refinanced eligible mortgage.

(6) MAXIMUM LOAN AMOUNT- The principal obligation amount of the eligible mortgage to be insured shall not exceed 132 percent of the dollar amount limitation in effect for 2007 under section 305(a)(2) of the Federal Home Loan Mortgage Corporation Act (12 U.S.C. 1454(a)(2)) for a property of the applicable size.

(7) PROHIBITION ON SECOND LIENS- A mortgagor may not grant a new second lien on the mortgaged property during the first 5 years of the term of the mortgage insured under this section, except as the Board determines to be necessary to ensure the maintenance of property standards; and provided that such new outstanding liens (A) do not reduce the value of the Government’s equity in the borrower’s home; and (B) when combined with the mortgagor’s existing mortgage indebtedness, do not exceed 95 percent of the home’s appraised value at the time of the new second lien.

(8) APPRAISALS- Any appraisal conducted in connection with a mortgage insured under this section shall--‘(A) be based on the current value of the property;‘(B) be conducted in accordance with title XI of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 3331 et seq.);‘(C) be completed by an appraiser who meets the competency requirements of the Uniform Standards of Professional Appraisal Practice;‘(D) be wholly consistent with the appraisal standards, practices, and procedures under section 202(e) of this Act that apply to all loans insured under this Act; and‘(E) comply with the requirements of subsection (g) of this section (relating to appraisal independence).

(9) DOCUMENTATION AND VERIFICATION OF INCOME- In complying with the FHA underwriting requirements under the HOPE for Homeowners Program under this section, the mortgagee shall document and verify the income of the mortgagor or non-filing status by procuring (A) an income tax return transcript of the income tax returns of the mortgagor, or(B) a copy of the income tax returns from the Internal Revenue Service, for the two most recent years for which the filing deadline for such years has passed and by any other method, in accordance with procedures and standards that the Board shall establish.

(10) MORTGAGE FRAUD- The mortgagor shall not have been convicted under Federal or State law for fraud during the 10-year period ending upon the insurance of the mortgage under this section.

(11) PRIMARY RESIDENCE- The mortgagor shall provide documentation satisfactory in the determination of the Secretary to prove that the residence covered by the mortgage to be insured under this section is occupied by the mortgagor as the primary residence of the mortgagor, and that such residence is the only residence in which the mortgagor has any present ownership interest.

(f) Study of Auction or Bulk Refinance Program-
(1) STUDY- The Board shall conduct a study of the need for and efficacy of an auction or bulk refinancing mechanism to facilitate refinancing of existing residential mortgages that are at risk for foreclosure into mortgages insured under this section. The study shall identify and examine various options for mechanisms under which lenders and servicers of such mortgages may make bids for forward commitments for such insurance in an expedited manner.
(2) CONTENT-
(A) ANALYSIS- The study required under paragraph (1) shall analyze--‘(i) the feasibility of establishing a mechanism that would facilitate the more rapid refinancing of borrowers at risk of foreclosure into performing mortgages insured under this section;‘(ii) whether such a mechanism would provide an effective and efficient mechanism to reduce foreclosures on qualified existing mortgages;‘(iii) whether the use of an auction or bulk refinance program is necessary to stabilize the housing market and reduce the impact of turmoil in that market on the economy of the United States;‘(iv) whether there are other mechanisms or authority that would be useful to reduce foreclosure; and‘(v) and any other factors that the Board considers relevant.
(B) DETERMINATIONS- To the extent that the Board finds that a facility of the type described in subparagraph (A) is feasible and useful, the study shall--‘(i) determine and identify any additional authority or resources needed to establish and operate such a mechanism;‘(ii) determine whether there is a need for additional authority with respect to the loan underwriting criteria established in this section or with respect to eligibility of participating borrowers, lenders, or holders of liens;‘(iii) determine whether such underwriting criteria should be established on the basis of individual loans, in the aggregate, or otherwise to facilitate the goal of refinancing borrowers at risk of foreclosure into viable loans insured under this section.‘(3) REPORT- Not later than the expiration of the 60-day period beginning on the date of the enactment of this section, the Board shall submit a report regarding the results of the study conducted under this subsection to the Committee on Financial Services of the House of Representatives and the Committee on Banking, Housing, and Urban Affairs of the Senate. The report shall include a detailed description of the analysis required under paragraph (2)(A) and of the determinations made pursuant to paragraph (2)(B), and shall include any other findings and recommendations of the Board pursuant to the study, including identifying various options for mechanisms described in paragraph (1).‘(g) Appraisal Independence-

(1) PROHIBITIONS ON INTERESTED PARTIES IN A REAL ESTATE TRANSACTION- No mortgage lender, mortgage broker, mortgage banker, real estate broker, appraisal management company, employee of an appraisal management company, nor any other person with an interest in a real estate transaction involving an appraisal in connection with a mortgage insured under this section shall improperly influence, or attempt to improperly influence, through coercion, extortion, collusion, compensation, instruction, inducement, intimidation, nonpayment for services rendered, or bribery, the development, reporting, result, or review of a real estate appraisal sought in connection with the mortgage.

(2) CIVIL MONETARY PENALTIES- The Secretary may impose a civil money penalty for any knowing and material violation of paragraph (1) under the same terms and conditions as are authorized in section 536(a) of this Act.‘(h) Standards To Protect Against Adverse Selection-‘(1) IN GENERAL- The Board shall, by rule or order, establish standards and policies to require the underwriter of the insured loan to provide such representations and warranties as the Board considers necessary or appropriate to enforce compliance with all underwriting and appraisal standards of the HOPE for Homeowners Program.

(2) EXCLUSION FOR VIOLATIONS- The Board shall prohibit the Secretary from paying insurance benefits to a mortgagee who violates the representations and warranties, as established under paragraph (1), or in any case in which a mortgagor fails to make the first payment on a refinanced eligible mortgage.

(3) OTHER AUTHORITY- The Board may establish such other standards or policies as necessary to protect against adverse selection, including requiring loans identified by the Secretary as higher risk loans to demonstrate payment performance for a reasonable period of time prior to being insured under the program.‘(i) Premiums- For each refinanced eligible mortgage insured under this section, the Secretary shall establish and collect--‘(1) at the time of insurance, a single premium payment in an amount equal to 3 percent of the amount of the original insured principal obligation of the refinanced eligible mortgage, which shall be paid from the proceeds of the mortgage being insured under this section, through the reduction of the amount of indebtedness that existed on the eligible mortgage prior to refinancing; and‘(2) in addition to the premium required under paragraph (1), an annual premium in an amount equal to 1.5 percent of the amount of the remaining insured principal balance of the mortgage.‘(j) Origination Fees and Interest Rate- The Board shall establish--‘(1) a reasonable limitation on origination fees for refinanced eligible mortgages insured under this section; and‘(2) procedures to ensure that interest rates on such mortgages shall be commensurate with market rate interest rates on such types of loans.

(k) Equity and Appreciation-
(1) FIVE-YEAR PHASE-IN FOR EQUITY AS A RESULT OF SALE OR REFINANCING- For each eligible mortgage insured under this section, the Secretary and the mortgagor of such mortgage shall, upon any sale or disposition of the property to which such mortgage relates, or upon the subsequent refinancing of such mortgage, be entitled to the following with respect to any equity created as a direct result of such sale or refinancing:

(A) If such sale or refinancing occurs during the period that begins on the date that such mortgage is insured and ends 1 year after such date of insurance, the Secretary shall be entitled to 100 percent of such equity.
(B) If such sale or refinancing occurs during the period that begins 1 year after such date of insurance and ends 2 years after such date of insurance, the Secretary shall be entitled to 90 percent of such equity and the mortgagor shall be entitled to 10 percent of such equity.
(C) If such sale or refinancing occurs during the period that begins 2 years after such date of insurance and ends 3 years after such date of insurance, the Secretary shall be entitled to 80 percent of such equity and the mortgagor shall be entitled to 20 percent of such equity.
(D) If such sale or refinancing occurs during the period that begins 3 years after such date of insurance and ends 4 years after such date of insurance, the Secretary shall be entitled to 70 percent of such equity and the mortgagor shall be entitled to 30 percent of such equity.
(E) If such sale or refinancing occurs during the period that begins 4 years after such date of insurance and ends 5 years after such date of insurance, the Secretary shall be entitled to 60 percent of such equity and the mortgagor shall be entitled to 40 percent of such equity.
(F) If such sale or refinancing occurs during any period that begins 5 years after such date of insurance, the Secretary shall be entitled to 50 percent of such equity and the mortgagor shall be entitled to 50 percent of such equity.

(2) APPRECIATION IN VALUE- For each eligible mortgage insured under this section, the Secretary and the mortgagor of such mortgage shall, upon any sale or disposition of the property to which such mortgage relates, each be entitled to 50 percent of any appreciation in value of the appraised value of such property that has occurred since the date that such mortgage was insured under this section.

(l) Establishment of HOPE Fund-
(1) IN GENERAL- There is established in the Federal Housing Administration a revolving fund to be known as the Home Ownership Preservation Entity Fund, which shall be used by the Board for carrying out the mortgage insurance obligations under this section.
(2) MANAGEMENT OF FUND- The HOPE Fund shall be administered and managed by the Secretary, who shall establish reasonable and prudent criteria for the management and operation of any amounts in the HOPE Fund.

(m) Limitation on Aggregate Insurance Authority- The aggregate original principal obligation of all mortgages insured under this section may not exceed $300,000,000,000.

(n) Reports by the Board- The Board shall submit monthly reports to the Congress identifying the progress of the HOPE for Homeowners Program, which shall contain the following information for each month:‘(1) The number of new mortgages insured under this section, including the location of the properties subject to such mortgages by census tract.‘(2) The aggregate principal obligation of new mortgages insured under this section.‘(3) The average amount by which the principle balance outstanding on mortgages insured this section was reduced.‘(4) The amount of premiums collected for insurance of mortgages under this section.‘(5) The claim and loss rates for mortgages insured under this section.‘(6) Any other information that the Board considers appropriate.

(o) Required Outreach Efforts- The Secretary shall carry out outreach efforts to ensure that homeowners, lenders, and the general public are aware of the opportunities for assistance available under this section.

(p) Enhancement of FHA Capacity- Under the direction of the Board, the Secretary shall take such actions as may be necessary to--‘(1) contract for the establishment of underwriting criteria, automated underwriting systems, pricing standards, and other factors relating to eligibility for mortgages insured under this section;‘(2) contract for independent quality reviews of underwriting, including appraisal reviews and fraud detection, of mortgages insured under this section or pools of such mortgages; and‘(3) increase personnel of the Department as necessary to process or monitor the processing of mortgages insured under this section.

(q) GNMA Commitment Authority-‘(1) GUARANTEES- The Secretary shall take such actions as may be necessary to ensure that securities based on and backed by a trust or pool composed of mortgages insured under this section are available to be guaranteed by the Government National Mortgage Association as to the timely payment of principal and interest.‘(2) GUARANTEE AUTHORITY- To carry out the purposes of section 306 of the National Housing Act (12 U.S.C. 1721), the Government National Mortgage Association may enter into new commitments to issue guarantees of securities based on or backed by mortgages insured under this section, not exceeding $300,000,000,000. The amount of authority provided under the preceding sentence to enter into new commitments to issue guarantees is in addition to any amount of authority to make new commitments to issue guarantees that is provided to the Association under any other provision of law.

(r) Sunset- The Secretary may not enter into any new commitment to insure any refinanced eligible mortgage, or newly insure any refinanced eligible mortgage pursuant to this section before October 1, 2008 or after September 30, 2011.

(s) Definitions- For purposes of this section, the following definitions shall apply:‘(1) APPROVED FINANCIAL INSTITUTION OR MORTGAGEE- The term ‘approved financial institution or mortgagee’ means a financial institution or mortgagee approved by the Secretary under section 203 as responsible and able to service mortgages responsibly.‘(2) BOARD- The term ‘Board’ means the Board of Directors of the HOPE for Homeowners Program. The Board shall be composed of the Secretary, the Secretary of the Treasury, the Chairperson of the Board of Governors of the Federal Reserve System, and the Chairperson of the Board of Directors of the Federal Deposit Insurance Corporation, or their designees.‘(3) ELIGIBLE MORTGAGE- The term ‘eligible mortgage’ means a mortgage--‘(A) the mortgagor of which--‘(i) occupies such property as his or her principal residence; and‘(ii) cannot, subject to subsection (e)(1)(B) and such other standards established by the Board, afford his or her mortgage payments; and‘(B) originated on or before January 1, 2008.‘(4) EXISTING SENIOR MORTGAGE- The term ‘existing senior mortgage’ means, with respect to a mortgage insured under this section, the existing mortgage that has superior priority.‘(5) EXISTING SUBORDINATE MORTGAGE- The term ‘existing subordinate mortgage’ means, with respect to a mortgage insured under this section, an existing mortgage that has subordinate priority to the existing senior mortgage.‘(6) HOPE FOR HOMEOWNERS PROGRAM- The term ‘HOPE for Homeowners Program’ means the program established under this section.‘(7) SECRETARY- The term ‘Secretary’ means the Secretary of Housing and Urban Development, except where specifically provided otherwise.

(t) Requirements Related to the Board-‘(1) COMPENSATION, ACTUAL, NECESSARY, AND TRANSPORTATION EXPENSES-‘(A) FEDERAL EMPLOYEES- A member of the Board who is an officer or employee of the Federal Government shall serve without additional pay (or benefits in the nature of compensation) for service as a member of the Board.‘(B) TRAVEL EXPENSES- Members of the Board shall be entitled to receive travel expenses, including per diem in lieu of subsistence, equivalent to those set forth in subchapter I of chapter 57 of title 5, United States Code.‘(2) BYLAWS- The Board may prescribe, amend, and repeal such bylaws as may be necessary for carrying out the functions of the Board.‘(3) QUORUM- A majority of the Board shall constitute a quorum.‘(4) STAFF; EXPERTS AND CONSULTANTS-‘(A) DETAIL OF GOVERNMENT EMPLOYEES- Upon request of the Board, any Federal Government employee may be detailed to the Board without reimbursement, and such detail shall be without interruption or loss of civil service status or privilege.‘(B) EXPERTS AND CONSULTANTS- The Board shall procure the services of experts and consultants as the Board considers appropriate.

(u) Rule of Construction Related to Voluntary Nature of the Program- This section shall not be construed to require that any approved financial institution or mortgagee participate in any activity authorized under this section, including any activity related to the refinancing of an eligible mortgage.

(v) Rule of Construction Related to Insurance of Mortgages- Except as otherwise provided for in this section or by action of the Board, the provisions and requirements of section 203(b) shall apply with respect to the insurance of any eligible mortgage under this section.

(w) HOPE Bonds-
(1) ISSUANCE AND REPAYMENT OF BONDS- Notwithstanding section 504(b) of the Federal Credit Reform Act of 1990 (2 U.S.C. 661d(b)), the Secretary of the Treasury shall--‘(A) subject to such terms and conditions as the Secretary of the Treasury deems necessary, issue Federal credit instruments, to be known as ‘HOPE Bonds’, that are callable at the discretion of the Secretary of the Treasury and do not, in the aggregate, exceed the amount specified in subsection (m);‘(B) provide the subsidy amounts necessary for loan guarantees under the HOPE for Homeowners Program, not to exceed the amount specified in subsection (m), in accordance with the provisions of the Federal Credit Reform Act of 1990 (2 U.S.C. 661 et seq.), except as provided in this paragraph; and‘(C) use the proceeds from HOPE Bonds only to pay for the net costs to the Federal Government of the HOPE for Homeowners Program, including administrative costs.
(2) REIMBURSEMENTS TO TREASURY- Funds received pursuant to section 1338(b) of the Federal Housing Enterprises Regulatory Reform Act of 1992 shall be used to reimburse the Secretary of the Treasury for amounts borrowed under paragraph (1).
(3) USE OF RESERVE FUND- If the net cost to the Federal Government for the HOPE for Homeowners Program exceeds the amount of funds received under paragraph (2), remaining debts of the HOPE for Homeowners Program shall be paid from amounts deposited into the fund established by the Secretary under section 1337(e) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992, remaining amounts in such fund to be used to reduce the National debt.
(4) REDUCTION OF NATIONAL DEBT- Amounts collected under the HOPE for Homeowners Program in accordance with subsections (i) and (k) in excess of the net cost to the Federal Government for such Program shall be used to reduce the National debt.

Are We Experiencing Continued Irresponsible Home Lending in Southern California?

Here in Southern California we continue have some apparent irresponsible home lending practices going on.

The Orange County Register, reported on July 27, 2008, in a Marketplace article that one year ago, July 27, 2007, the house at 920 W. Camile St. in Santa Ana was bank-owned and deserted and that "the subprime lending bonanza had blighted a city block".

In October of 2007, this same house sold at auction for $304,500 (a bit more than half what the prior a buyer using 100 percent subprime financing paid in 2006).

This same house at 920 W. Camile was renovated and repainted and was resold in January, 2008, for $625,000, with a $125,000 down payment and a $500,000 mortgage from Wells Fargo Bank. (according to The OC property tax records).

Why would the price of a distressed property on a this same street in Santa Ana double between October of 2007 and January 2008?

Why did Wells Fargo Bank extend good credit to the buyers on this street where comparable homes are selling for $300,000?

In November, 2007, Wells Fargo Bank issued a $289,275 mortgage for this same home at 920 W. Camile to an investor who had purchased the home at a foreclosure auction.
In January, 2008, Wells Fargo Bank issued a $500,000 mortgage to the new owners of this same home.

Does this make good sense? Is this good for Southern California and our economy? Will this help make our communities better places to live?

This kind of lending practice isn't a good thing and will not be supported by Realtors.

Posted by Harrison K. Long, Explore Properties Group
Source: Orange County Register, Marketplace, July 27, 2008



Tags: Mortgage Financing; Home Ownership Economics; Explore Real Estate; Southern California; South OC

Slow Your Driving Down, Save At the Pump, and Keep Our Streets and Neighborhoods Safe

When visiting in Woodbridge, a nice neighborhood here in Irvine, CA, showing a property with a client two days ago on Saturday, I saw a car zoom by at about 45 MPH in a 25 MPH residential zone.

Wow! I was surprised, because Irvine is known for its safe and peaceful streets.

Then I thought that this young driver must not care about saftey for the kids of the neighborhood ... or about the price of gasoline at the pump.

What's the hurry? Isn't it enough that we have $5 a gallon at the fuel pump? Does this young driver care about the cost of fuel? Or is it necessary that a young child get smacked on the street by a driver who doesn't care? What will it take for this young driver to slow it down?

Let's live life in the slower lane. You get better gas mileage in your car when operating at lower speeds. And we will all get safer streets ... fewer deaths and injuries from auto wrecks.

The State of California has banned the use of cell phones by drivers of motors vehicles. Isn't the same public interest served if we slow down when driving a motor vehicle? Especially in residential neighborhoods?

Let's slow our driving down ... save money at the pump ... and keep out streets and neighborhoods safe.

Posted by Harrison K. Long, Explore Properties Group, July 28, 2008

U.S. HOUSING AND ECONOMIC RECOVERY ACT of 2008 Passes House and Senate

It's good news for our economy, business and real estate, that the U.S House and Senate have passed the Housing and Economic Recovery Act of 2008 and that President Bush has indicated he will sign it into law.

The idea is to stimulate the economy and inspire people to get back into the market for real estate.

Especially interesting is the homebuyer tax credit. This special $7500 tax credit that would be available for any qualified purchase between April 8, 2008 and June 30, 2009. This credit is repayable over 15 years and is effectively an interest free loan.

Posted by Harrison K. Long, Explore Properties Group.

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HR 3221, the Housing and Economic Recovery Act of 2008
National Association of REALTORS® Summary
(as of 7/24/08)

H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23rd by a vote of 272-152. The Senate must now approve the language adopted by the House. The Senate is expected to approve the bill on Friday, July 25th or Saturday, July 26th. The President has said he will sign the bill. It includes:

· GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

· FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

· Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).

· FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.

· Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.

· VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.

· Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision does will be effective from October 1, 2008 through September 30, 2009.

· GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.

· Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.

· National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.

· CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.

· LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.

· Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.

Needed U.S. Law to Help With Our Energy Challenges

We need U.S. law (from the Congress and Senate) to support energy exploration and the development of known energy resources in the Arctic National Wildlife Refuge (ANWR).

The development of our own domestic oil resources is vital for the economy and U.S. national security.

Let's also support new technology and move away from our dependence on oil in the long-term.

Our U.S. Energy Independence and Security Act (H.R. 6) was signed into law on December 19, 2007, which had provisions designed to increase energy efficiency and the availability of renewable energy.

We need law to provide business incentives (tax breaks) to continue clean energy production and improve energy efficiency.

We need law that would extend critical tax incentives (tax breaks) such as, the production tax credit for electricity produced from renewable sources, wind, biomass, hydropower, and geothermal.

We need law that would extend the 30 percent investment credit (tax breaks) for businesses that install solar or fuel cell equipment.

We need law that would extend effective energy efficiency programs that give homeowners tax credits (tas breaks) for installing energy efficient furnaces, windows, and insulation to make homes more energy efficient.

We need law that would give builders a tax deduction (tax breaks) for building more energy efficient new homes.

We need law (tax breaks) that would help businesses make energy efficient improvements to commercial buildings (more tax breaks).

Posted by Harrison K. Long, Explore Properties Group, July 21, 2008
Source: Ken Calvert, U.S. Congressman, California

Will Shy Bargain Hunters Make Their Deals About California and U.S. Housing During 2008?

We have a big sale going on in the OC & California housing these days.

The OC house seller continues to cut the price. We have experienced a $150,000 drop in median selling price for Orange County residences from the June 2007 peak. We went from a record high price of $645,000 a year ago to $495,000 in June 2008. During 2008 so far, the OC home sale prices fell 23 percent.

What's the cause?

Cheap money during 2004 to 2006, and aggressive lending and stupid thinking borrowers and blind regulators and greed and overinflated home prices.

The OC, California, homes could now be relatively inexpensive. It is possible that the OC home is 5.2 percent undervalued.

What usually happens when the shopkeepers at the mall can’t move enough inventory at a certain price?

The OC Housing market now offers good buyer opportunities.

Will the bargain hunters make their deals during the remainder of 2008? Or will they wait and make their deals in 2009?

Posted by Harison K. Long, Explore Properties Group, July 20, 2008
Source: Orange County Register, DataQuick Information Systems

Is Today's U.S. Housing Bust Unique in Economy History?

This U.S. HOUSING BUST began in good economic times. Certain developments have contributed to the current BUST.

After the 2000 stock-market problems and the September 11, 2001, terrorist attacks, and amid fears of deflation, the Federal Reserve drove short-term interest rates to historic lows.

The nation's financial system was flooded with money, and cheap money inspired a surge in home-buying.

Home prices in many US areas began to hit the top in 2004. At the same time the Fed began to raise rates.

Home affordability started to decline in some markets.

On Wall Street the securitization of mortgages had become a huge profit center. The demand for new mortgage product continued. Mortgage brokers and loan originators were getting rich.

By 2005 the mortgage industry started with new affordable products that featured low TEASER RATES in the first years of a mortgage to keep monthly payments low.

Old fashioned down payment and debt-to-income requirements were not used much by lenders during this time.

Some new borrowers lied at STATED INCOME about their annual income and net worth. Mortgage brokers helped some of these people who got LIAR LOANS.

Greed was first, and then came some fraud. Some borrowers and lenders believed that ever-rising home prices would save them.

Borrowers began defaulting on loans. The value of some homes slumped below the amount of debt. Then the home and property owners were in SHORT PAY situations.

Delinquencies, defaults and foreclosures hit the housing market hard. This is unmatched in US economy history. Past due loans and foreclosure rates have been pushed to all time highs.

What's the future?
Some believe that pressure on home prices from foreclosures may decrease in the latter part of 2008? What do you think?

Posted by Harrison K. Long, Explore Properties Group, July 18, 2008
Source: Barron's Newsletter