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

Get Over the 'NIMBY" Attitude When It Comes to Our Need For More Fuel and Energy

A primary challenge for us in business here in California and the US is high gas and fuel prices.

HERE IS AN IDEA TO IMPROVE THINGS FOR BUSINESS AND REAL ESTATE.

Jonathan Lanser at the Orange County Register says that people need to temper their "NIMBY" (not in my back yard) attitudes. We agree.

Our need for plentiful and cheaper fuel and energy is clear. However, many folks object to it being produced in their home towns and back yards.

Industry here in the U.S. can build clean, efficient plants that produce and transport fuel and energy. It's OK to have them near your town or home neighborhood.

It's good that some people want to protect the environment while adding energy infrastructure.

Compromises must be made. We need power plants, more nuclear power, oil refineries, oil wells, transmission and transportation hubs.

Let's help make things better for business, our economy and real estate, and improve quality of life for people along the way. We agree with Jonathan Lansner.

Posted by Harrison K. Long, Explore Properties Group
Source: Orange County Register, June 22, 2008

It's Good that FHA Suspended its 90-day Rule Against Flipping

Foreclosed and abandoned homes harm neighborhoods and delay a community’s recovery.

In order to help facilities sale of bank-owned properties, the Federal Housing Administration (FHA) has temporarily suspended its 90-day rule against flipping of properties.

Under that anti-flipping rule, the FHA does not insure a mortgage loan if the sales contract is executed within 90 days of the seller’s acquisition of the property. Effective June 9, 2008, the anti-flipping rule has been waived for one year for properties acquired by lenders, their subsidiaries, and their outside vendors.
The FHA still requires homes to be “safe, secure, and sound," which may not be the condition of certain foreclosed-upon properties.

Check out Federal Housing Administration. Also check out article about California REO Transactions at California Association of Realtors.

Posted by Harrison K. Long, Explore Properties Group

U.S. Presidential Candidates Different Positions on Housing and the Economy

U.S. Presidential Candidates Different Positions on Housing and the Economy

The two U.S. Presidential candidates for election 2008 have different approaches to housing and economic issues.
Senator John McCain:
1. Proposes to spend up to $10 billion to allow some home owners to trade high-interest, adjustable-rate mortgages for fixed-rate loans.

That sounds good.

2. Proposes a suspension of the 18.4-cent federal gas tax and 24.4-cent diesel tax during the summer.

That sounds good too.

3. Supports a middle-class tax cut by doubling the personal tax exemption for dependents to $7,000.

This also will be good.

4. Calls for a simpler tax system with two tax rates and a generous standard deduction.

We agree.

5. Supports making permanent the 2001 and 2003 income tax cuts and proposes cutting the corporate tax rate to 25 percent from 35 percent and allowing businesses to immediately write off capital expenses.

We agree again.

6. Maintains that government assistance to the banking system should focus on preventing systemic risk that would endanger the financial system and the economy.

Senator Barak Obama:

1. Calls for greater government regulation of the U.S. financial system and proposes a new $30 billion economic stimulus plan to help home owners, including a $10 billion foreclosure prevention fund to help people keep their homes and $10 billion in relief for state and local governments hit hardest by the housing crisis.

Would that be socialism? Is he suggesting that we socialize the U.S. financial system?

2. Outlines six "core principles for reform" that would give the Federal Reserve supervisory authority over any financial institution to which it might make credit available and calls for reform and streamlining of financial regulatory agencies.

What?

3. Wants to repeal a provision in the bankruptcy law so ordinary families can modify terms of home mortgages.

What are "ordinary families"? What does he mean by "modify terms"?

4. Proposes a 10 percent mortgage tax credit for middle-class Americans.

What are "middle class Americans"?



Posted by Harrison K. Long, Explore Properties Group, Coldwell Banker Previews, June 10, 2008.
Source: Reuters News Service

US Congress and Senate Should Pass Permanent Federal Housing Administration Reform Legislation

US Congress and Senate Should Pass Permanent Federal Housing Administration Reform Legislation.

The time is now for the US Congress and Senate to pass permanent Federal Housing Administration reform legislation if we are to give American homebuyers and homeowners the peace of mind they need.

While new loan limits were recently enacted as part of the Economic Stimulus package, they will expire at the end of 2008 even though they have brought relief to more than 325,000 families so far this year.

Reducing these limits, or letting them expire by doing nothing, could cause further turmoil in our fragile housing market.

Realistic loan limits in high cost areas of the country are needed to bring stability to the marketplace.

So are lowered FHA downpayment requirements and options for buyers to obtain qualified mortgages for the purchase of condominiums as well as single family homes.

It is important for FHA reform legislation to be enacted during 2008 in order to create safe and affordable mortgage options for homebuyers and those wanting and needing to refinance home mortgages.

Posted by Harrison K. Long, Explore Properties Group, May 27, 2008

Are We Starting to Experience Some Home Sales Stability in OC, California?

Are we starting to experience some home sales stability?

DataQuick Information Systems released its report on May 19, 2008, and said sales units in OC, California, totaled 2,166 in April, 2008, the first time they were above 2,000 homes a month since the market crisis started.

During April, 2008, buying activity was 19 percent below April, 2007, and 46 percent below the average April since 1988, and was the slowest April in DataQuick’s 21-year sales history.

However, unit of sales improvement in April, 2008, was driven partly by bargain hunters looking at the low end of the price.

The number of houses that sold for $500,000 or less increased 55 percent, and the number selling below $400,000 doubled.

Almost thirty percent of homes sold in Orange County during April, 2008, had been in foreclosure during the prior year (DataQuick).

That's amazing. Perhaps it's the start of the home sale market clearing out the foreclosures. That would be a good thing.

Posted by Harrison K. Long, Explore Properties Group, May 22, 2008
Source: Orange County Register, May 20, 2008

Proposed FHA Expansion of Loan Guarantee Program Got Help Today

Proposed Expansion of FHA Loan Guarantee Program Got Help Today
It's good that proposed expansion of FHA loan guarantee programs got help when U.S. Senate Republicans agreed to include the idea in a compromise bill. Some Democrats agreed on April2, 2008, to drop their controversial proposal to allow bankruptcy courts to "cram down" the mortgage debt of troubled borrowers. We could now have congressional debate over the planned FHA expansion. The Bush administration has made FHA loan guarantee programs part of its foreclosure prevention concept. Democrats apparently are dropping their idea about changing of the U.S. bankruptcy code. That idea was bad anyway.
Posted by Harrison K. Long, Explore Group, April 2, 2008.

Battle Over Rent Control and Eminent Domain, California Election June 2008

Rent control is a major election issue in June, 2008, over two California ballot measures. The primary focus of the two initiatives — Prop. 98 and Prop. 99 — is to remedy the state’s eminent domain law to prevent government from taking private property for private uses. Proposition 98, spearheaded by the conservative Howard Jarvis Taxpayers Association and the mobile home park industry, adds another provision that would phase out rent control in California apartments and mobile homes as they are vacated. Rent control proponents, led by a coalition of renters, seniors, mobile home associations and environmental groups, countered with Prop. 99, which they say would provide eminent domain protection without stripping renters of their rights. We like proposition 98.
What do you think?
Posted by Harrison K. Long, Explore Group, April 1, 2008 [Source: OC Register.com]

NCAA Men's Basketball Final Four Time & Look at Memphis, Tennessee, Homes & real estate

It's NCAA men's basketball final four time of year. We have UCLA v. Memphis State and also Kansas v. North Carolina. What powerhouses of college sports! It's great. What real estate spin get we get from these scheduled confrontations? Let's look at the Memphis, Tennessee, real estate market information provided by Yahoo:
Memphis, TN Real Estate Market Snapshot
updated Monday, March 31, 2008
Listing Type Number Median Price Price Change from Feb
Homes for Sale (MLS) 4,669 $125,000 +0.1%
New Homes 57 $264,900 0.0%
Real Estate Classifieds 1,063 $124,900 0.0%
Foreclosures 3,576 $71,500 0.0%
That appears to be real values for buyers at Memphis. We hope everyone hires a Realtor there and gets the homes sold. A question would be how many of the 4,669 homes will actually sell. We wish the folks of Memphis well, especially for their exciting basketball team.
Posted by Harrison K. Long, Explore Group, Coldwell Banker Previews, March 31, 2008
[Source: Yahoo Real Estate]

In Short Sales, Lenders and Loan Servicing Agents Should Make It Easier for Buyers

In Short Sale situations, lenders and loan-servicing institutions should make it easier for buyers and Realtors. Lenders should help the market and provide sellers and agents with location of online department and person responsible for processing the short sale applications. Lenders should use a single industrywide short sale application and list of supporting documents that all lenders and servicers would agree to accept. The Uniform Loan Application is an industry standard. Lenders should agree to use a Uniform Short Sale Application. Lenders and servicers should update the listing agent and seller information on the status of the short sale application throughout the process. Lenders should deliver a clear answer, in writing, yes or no, within a reasonable time, to buyers, perhaps 30 days from receipt of the complete application.
Posted by Harrison K. Long, Explore Group.
[source: David Silver-Westrick]

What Should You Consider When Thinking About Foreclosure Buyer Opportunities?

What Should You Know and Consider About Foreclosure Buyer Opportunities:
Buyers must be pre-approved for a loan by a lender.
Source of Down Payment Must be confirmed.
The bank could require that you finance your purchase with them.
Expect competition for your offer.
Some buyers bid on multiple properties.
Banks won’t accept offers that are contingent on selling your home.
The best deals generally are those properties with the longest time on the market.
Bank-owned homes typically sell at less than their listing price.
Get your own buyer inspection of the property.
Consider the cost of repairs or damaged or missing appliances when bidding.
The bank will make a counter-offer to your first offer.
Some banks will not accept an offer unless it is submitted by a REALTOR®.
The bank will require the use of its own forms for the offer and purchase contract.
Banks generally are looking to sell and close escrow quickly, within two weeks to 45 days.
Posted by Harrison K. Long, Explore Group, March 28, 2008

Issues Affecting 2008 Outlook for OC and California Housing Market

Issues that will affect the OC and California housing market during the remainder of 2008: (a) Buyers’ access to higher limits on non-conforming loans, (b) general strength of the economy in the US and California, (c) how aggressive the banks are to unload their inventory of foreclosed homes, and (d) aggressive or passive policies of lenders in agreeing on terms of the thousand of proposed short sales.
Posted by Harrison K. Long, Explore Properties Group, March 5, 2008.
[Source: Orange County Register, Marketplace, March 5, 2008]