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.

DISNEYLAND Fireworks Every Night

Disneyland Fireworks can be heard nightly here in Southern California. That's a good thing and helps us be taken away in our thoughts of fun and interesting times with family and friends.

My wife Christi and I live at our home in the Turtle Rock area of Irvine, South Orange County, California, about 15 miles south of Anaheim and Disneyland.

It's a beautiful time of year here. We experience some of the best weather in the world with warm sunshine during summer days and ocean breezes at night.

While writing a note here at my desk at home, I feel a bit of the pacific ocean sea breeze washing through our neighborhood. Disneyland fireworks are going off in the distance. Hearing them each night at about 9:35 PM is fun.

We are blessed to have a home and live in such a place. The comfort of our weather and variety of coastal lands some reasons why so many folks want to move and live here in South OC.

Disneyland fireworks seem to be part of that too.

Posted by Harrison K. Long, Explore Properties Group, Coldwell Banker Previews. June 27, 2008.

Sellers Should Require Serious Earnest Money Deposits On The Sale of a Home

Sellers sometimes make the mistake of contracting with a buyer for a home sale and asking earnest money deposits of less than three percent of the price. That's painful when the buyer backs out of the deal.
One way to assure that a buyer is serious is to require 3 percent or more of earnest money deposit. If the buyer doesn't and later backs out, he would only lose the small deposit and cause financial hardship for the seller. The seller would also lose the benefit of finding a buyer during the time the home was taken off the market.
Smart sellers ask buyer deposit of at least 3 percent, so that the buyer will think twice about walking away.
In some states and according to contract, if the buyer defaults prior to sale closing, the earnest money goes to the seller. In some states, the seller can also sue the buyer for damages, if the house subsequently sells for less than the original contract price, plus costs sellers incurred to carry the house until it sells. In some situations, seller can sue the buyer for specific performance, which is asking the court to force the buyer to close the deal.

Be careful and consult a local attorney for guidance on this. Keep in mind that litigation is time-consuming, expensive and uncertain.

Posted by Harrison K. Long, Explore Group, April 28, 2008

Why Buy a Home or Property Now?

Interest rates on long-term, fixed, and adjustable mortgages are at historically low levels. The Fed started cutting interest rates to bolster the economy in September, and recently has turned more aggressive. During eight days in January, the Fed slashed rates by 1.25 percentage points, the biggest single-month reduction in a 25 years. Since September, the Fed has cut its federal funds rate - what banks charge each other on overnight loans - by 2.25 percentage points to 3 percent. It also cut its discount rate on direct loans it makes to banks by 1.75 points to 3.5 percent. Rates are expected to move lower at the Fed's next meeting on March 18. Despite this, mortgage rates are starting to creep up. Consumers should lock in low rates now, before they go higher. With more homes on the market for longer periods of time, buyers have more choices when it comes to selection. The foreclosure crisis has motivated the government to create more consumer protections against predatory lenders than previously existed. A temporary increase in the conforming loan limit means consumers should soon be able to borrow at lower interest rates for higher-priced homes. Prior to the increase, the conforming loan limit was $417,000. The spread on interest rates between jumbo, or non-conforming mortgage loans and conforming is about 1.2 percentage points.
Posted by Harrison K. Long, Explore Properties Group, Feb. 29, 2008
[source: California Association of Realtors]