Details Unveiled for Obama’s Foreclosure Avoidance Plan

Governmental Affairs, News No Comments »

On February 18, President Obama unveiled the Homeowner Affordability and Stability Plan, the administration’s $75 billion effort to help up to 7 to 9 million families avoid foreclosure by refinancing or modifying their mortgages. Today we heard the asministration’s details on how the “Making Home Affordable” program will work.

While you can read the summary or the entire set of guidelines, the three key elements are:

  1. The Home Affordable Refinance Program. Under this program, eligible borrowers may refinance loans that Fannie Mae or Freddie Mac (the government sponsored enterprises, or GSEs) own or guarantee.  The program can help homeowner-occupants who are current in making loan payments and have loan-to-value ratios (LTVs) above 80 percent but not more than 105 percent.  Cash out refinancings are not permitted.  The program ends in June 2010.
  2. The Home Affordable Modification Program. This is a $75 billion program with lender, servicer, investor, and borrower incentives to make it work.  The program is limited to homeowner-occupants who are at risk of default or already in default and who have loans at or below the maximum GSE conforming loan limit of $729,750 (or higher for 2-, 3-, and 4-unit properties).  Loan modifications under the program may be made until December 31, 2012.
  3. More Support for the GSEs. President Obama also announced more support for the GSEs, including doubling of potential Treasury investment from $100 billion to $200 billion for each GSE, to maintain their positive net worth. The plan also raises the cap on mortgages that the GSEs may hold in their portfolios by $50 billion to $900 billion.

The government has established the site to help consumers navigate the different options and determine eligibility for any of them. You can also review the following resources that offer more specific details on each program.

Posted by Scott Sherrin at 3:58 pm

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Mortgage Interest Deduction Targeted for Cut in Obama’s Proposed Budget

Governmental Affairs No Comments »

Among the many details of the nearly $3.7 trillion 2010 budget President Obama unveiled yesterday is a proposal to modify the mortgage interest deduction (MID), a part of the tax code since 1913. Not long after the budget was unveiled, NAR responded voicing its strong opposition to any proposal that messes with the sacred MID.

In short, the budget proposes to reduce the amount of mortgage deductability for joint tax filers earning more than $250,000 annually ($200,000 for single filers). In opposing the proposal, NAR believes that the change could result in:

  • a further erosion of home prices and home values;
  • greater distress on the balance sheets of banks as the collateral value of mortgage-backed securities declines; and
  • a second credit crisis emerging before the first one is resolved.

NAR has already sent a letter to President Obama and pledges to “use its formidable array of resources” against the enactment of the MID change as proposed; you should be hearing much more about this in the coming weeks.

Posted by Scott Sherrin at 11:37 am

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Obama Announces Plan to Help Struggling Homeowners

Governmental Affairs, Mortgage Lending, News 1 Comment »

Yesterday, President Obama unveiled the Homeowner Affordability and Stability Plan, the administration’s $75 billion effort to help up to 7 to 9 million families avoid foreclosure by refinancing their mortgages.

The key components of the plan are:

  • Government Sponsored Enterprises (GSEs) Refinancing for Up to 4 to 5 Million Responsible Homeowners with GSE loans to Make Their Mortgages More Affordable
  • A $75 Billion Homeowner Stability Initiative to Reach Up to 3 to 4 Million At-Risk Homeowners
  • Supporting Low Mortgage Rates By Strengthening Confidence in Fannie Mae and Freddie Mac

NAR has developed a good summary of the plan to help REALTORS® understand how it is structured.

Posted by Scott Sherrin at 12:15 pm

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Foreclosures: Part of the Problem or the Solution?

Governmental Affairs, Mortgage Lending, News 3 Comments »

In this past weekend’s edition of The Wall Street Journal, opinion writer Ramsey Su argues that the government should not step in to prevent foreclosures, which he believes are the free market’s way of dealing with the current real estate crisis. By not allowing the market to deal with its own problems, Su argues that the government would be creating “a generation of mortgage slaves.”

What is the market telling us? Dataquick recently released December sales data for Southern California, once the hotbed of speculative excesses supported by nontraditional financing. Foreclosures now dominate sales. Prices are down. Sales volume is up. New home construction is down. These are beautiful textbook illustrations of supply and demand driving price and market equilibrium.

It seems Su is not alone in this opinion. In an interview with Memphis native Sarah Lacy on the Yahoo! Finance Tech Ticker yesterday, investor Paul Kedrosky agreed with Su and cited California as an example of free-market forces at work:

Kedrosky cites California as an example: Real estate prices fell so hard, so fast here that a lot of the foreclosure protection programs didn’t get a chance to work. And, as a result, prices have bottomed out and property is starting to move again.

So should the government work to prevent foreclosures, or will that just prolong the pain?

Posted by Scott Sherrin at 3:16 pm


New Housing Law Offers Relief, Benefits to Home Buyers

Community, Governmental Affairs, Market Statistics/Performance, Mortgage Lending, News 3 Comments »

This morning, President Bush signed into law the Housing and Economic Recovery Act of 2008, legislation aimed at shoring up the housing market in the United States and offering current homeowners with troubled mortgages and potential homeowners with significant assistance.

Of most interest to people who do not own a home but have been thinking about it is a $7,500 tax credit to qualified first-time home buyers who purchase a home between April 9, 2008, and June 30, 2009. That’s a tax credit, meaning those who qualify will receive a dollar-for-dollar reduction in what they owe the year the credit is taken against their income taxes. The credit does have to be repaid, but it is done over 15 years and payments don’t start until tax returns files two years after the credit is taken.

In the Memphis-area market first-time buyers make up a larger share of all buyers than the national average, which means a larger number of people locally stand to benefit from the credit. Add to that the affordability of Memphis-area real estate and it adds up to an outstanding opportunity for first-time buyers.

Here’s the fine print:

  • The credit amount can be 10 percent of the cost of the home purchased, not to exceed $7,500.
  • Any single-family property (including condos) that will be used as a primary residence is eligible.
  • The full amount of the credit is available for individuals with adjusted gross income of no more than $75,000 ($150,000 for joint filers). The amount of credit available gradually phases out as adjusted gross income reaches $95,000 for a single filer and $170,000 for joint filers.
  • The credit is repayable over 15 years (without interest) in equal installments of 6.67% of the credit or when the owners sell the home, assuming there is sufficient capital gain from the sale. Repayment does not begin until two years after the credit is claimed.

More detailed information on the tax credit, including FAQs and answers, is available at this site created by the National Association of Home Builders.

Read the rest of this entry »

Posted by Scott Sherrin at 12:49 pm

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Keeping the ‘Crisis’ in Perspective

Ethics/Professionalism, Governmental Affairs, Market Statistics/Performance, News No Comments »

A little over a week ago, Dennis Kneale commented on CNBC about whether the housing “crisis” is really a crisis at all, or just a smaller problem blown out of proportion. From Kneale’s perspective it all comes down to the numbers, which reveal homeowners most affected by the supposed “crisis” is a much smaller percentage than what you might believe.

Direct link to the video is:

Posted by Scott Sherrin at 8:13 am

2008 NAR REALTORS® Day on the Hill

Governmental Affairs No Comments »

Last week, thousands of REALTORS® converged upon Washington, DC for the NAR Mid-Year Meetings.  One of the main purposes of the Mid-Year Meetings is to address legislative and political issues facing the real estate industry.  In order to advance our legislative agenda, REALTORS® from every state in the country visit with their Senators and Congressmen on Capitol Hill.  If you have never been on the Hill with the REALTORS® before, it is truly a sight to see!  REALTOR® professionals are everywhere you look - sharing their expertise with their elected officials to help Congress make informed decisions as it passes legislation that greatly affects our industry. 

 This year we carried three main messages to Congress:

  1. Enact Housing Stimulus Legislation
  2. Improve Access to Affordable Insurance
  3. Enact Small Business Health Care Legislation

I think we can all agree that the real estate industry is a little different than it was two years ago.  In order to breathe new vitality into our market, we asked Congress to pass FHA and GSE reform.  We need legislation that will make FHA more flexible, preserve the missions of Fannie Mae and Freddie Mac, and make the temporary higher loan limits permanent.  Additionally, if Congress is going to pass a housing tax credit - they need to do it soon and make it available for any property that is purchased as a principal residence.

While we were in DC, the Senate passed the House’s Flood Insurance Reform and Modernization Act.  This bill should now be on its way to the President for signature.  We also asked Congress to enact legislation that will enhance the availability and affordability of homeowner’s insurance, especially in disaster-prone areas.

Finally, we again requested action on legislation concerning health insurance coverage for small business owners and REALTORS®.  This is new legislation that has been reworked to remove the objections that several Congressmen have had in the past. 

There is a reason that we say “If real estate is your business, then politics is your profession!” I hope you will join us in future years as we converge on Capitol Hill to carry the collective REALTOR® voice and have a say in the legislation and regulation that so affects our industry and livelihoods.

Posted by Aubrie Kobernus at 12:57 pm

REALTORS® Converge on Washington, DC

Governmental Affairs, News No Comments »

I am in Washington, DC at the National Association of REALTORS® Midyear meeting. The electricity of politics is in the air, and although this is one of my favorite tourist towns, instead of spending half a day tomorrow in the Air and Space Museum, I will join my fellow REALTORS® on Capitol hill lobbying our Senators and Representatives. Major talking points:

  1. FHA Reform
  2. GSE (Government Sponsored Enterprises) Reform - You have heard of our quasi-governmental cousins Fannie Mae and Freddie Mac, of course
  3. Homebuyer Tax Credits
  4. National Flood Insurance Program
  5. Affordable Property and Casualty Insurance
  6. Small Business Health Insurance

More details, and tourist pictures later… I have to go deep into the ground to catch a quiet, fast train.

Posted by Joe Spake at 6:31 am


MAAR Brings Housing Market Concerns to Rep. Blackburn

Community, Governmental Affairs, Market Statistics/Performance 1 Comment »

On April 24th, U.S. Congresswoman Marsha Blackburn asked to meet with several members of MAAR to discuss the current housing market in Tennessee and how she could help in Congress.  MAAR President John Snyder, Governmental Affairs Director Aubrie Kobernus, several members of MAAR’s Governmental Affairs committee, and I were able to spend an hour talking frankly with the Congresswoman. We told her what we felt were the most important issues that needed to be addressed to help get our market improving at a faster rate.

We shared with her the importance of pending legislation to allow for lower down payments for FHA loans and risk-based pricing. Another discussion involved the type of information related to real estate markets that’s given to the media out of Washington. The concern we expressed is that they’re using information that basically covers ONLY those markets that are experiencing drastic price reductions. We asked that the representatives of the states that are not seeing the same type of problems be very loud and clear that this information doesn’t cover every market. As we all know quite well, real estate is a local issue that differs no matter where you are.

Other topics of discussion included:

  • Tax credits for the purchase of a home
  • The merits of a government bailout of the lenders that have bought these bad loans
  • Possible legal action against lenders who fraudulently made these loans

It was a great discussion in an hour’s time and we’re hopeful Ms. Blackburn will take some of our ideas back to Washington. We’ll have a chance to reiterate these points in our visits with other Tennessee representatives during the NAR Midyear Legislative Meetings in Washington May 12-17.

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