Can’t pay the mortgage? You still might be able to stay in your home. Government-controlled mortgage company Fannie Mae is going to give borrowers on the verge of foreclosure the option of renting their homes for a year.
The change announced Thursday could give a temporary break to thousands of homeowners, but critics question whether it will only add to the mushrooming losses at the company, which has received billions in taxpayer money.
The new “Deed for Lease” program will allow homeowners to transfer title to Fannie Mae and sign a one-year lease, with potential month-to-month extensions after that. It also helps save money because the lender does not need to complete the often lengthy and time-consuming foreclosure process.
The program helps “eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities,” Jay Ryan, a Fannie Mae vice president, said in a statement.
It also does less harm to the borrower’s credit record.
“It shows that you put your best effort to work out a solution,” said Gabe Del Rio, director of homeownership at Community HousingWorks of San Diego.
However, Mike Himes, director of homeownership services at NeighborWorks Sacramento, said the industry should push harder to modify loans at lower monthly payments. “The preferred option is allowing people to retain ownership,” he said.
Fannie Mae executives said the rental program is designed to help delinquent homeowners who don’t qualify for a loan modification, but still want to stay in their homes.
To qualify, homeowners have to live in the home as the primary residence and prove that they can afford the market rent, which will be established by the management company running the program. Rents are based on current market rates.
The plan is expected to be particularly attractive in places like Phoenix or Orange County, Calif., where homeowners are stuck paying large mortgage bills on properties that are now worth far less than they originally paid. At the same time, rents have been falling in those areas and homeowners may find they are paying far less to live in their home.
In Orange County, Read more
Category: Real Estate (page 65 of 266)
I actually feel kind of bad for the should-have-known-better folks who voted for Obama. It was obvious to me last fall that he was a false-flag candidate, a stone liberal masquerading as a centrist. And I understand that, for true stone liberals, he’s actually been somewhat of a disappointment. But for people who can do math, their misplaced faith in Obama has to sting twice, once for having been so dreadfully wrong, and once again because snarky assholes like me just won’t let it slide.
But here’s the good news, from my point of view: Last night’s results may have the immediate impact of putting the brakes on all this tax-and-spend stupidity. The larger stupidities will endure, of course, but we just might have gotten ourselves shut of the home-buyer’s tax-credit last night. Surely this is an event worth celebrating.
This is Instanpundit.com’s Glenn Reynolds in today’s New York Post:
But [Obama] was right the first time about not being ready for the Oval Office. As president, he seems confused and a bit distant on the issues, leaving the details to congressional Democrats and an ever-growing number of “czars” while he golfs and launches attacks at Rush Limbaugh and Fox News.
With the economy tanking (unemployment is much worse after Obama’s deficit-swelling stimulus than Obama’s advisers predicted it would be with no stimulus at all), with the promised post-partisanship dissolving into witch-hunts against hostile media and the promised post-racial America devolving into the awkwardly staged “beer summit,” with the “necessary war” in Afghanistan the subject of endless dithering and the promised “smart diplomacy” materializing as a series of awkward missteps by Hillary Clinton, the froth has become a lot less frothy.
Republicans, who were prepared to give Obama the benefit of the doubt a year ago, now can’t stand him. Independents who voted for him are deserting in droves. And Democrats don’t seem that happy either.
The good news for Obama is that he doesn’t have to run for re-election for three more years, so he still has a chance to get his feet under him. But for Congress members facing elections in a year — including Read more
This from my Arizona Republic real estate column:
As I write this, the entire real estate industry is on tenterhooks, waiting to see if the $8,000 first-time home-buyers tax credit is going to be extended.
It’s not really a tax credit, it’s a taxpayer-funded subsidy, a “gift” extracted by force from everyone who does not buy a house under the program. The money taken from taxpayers — either now or later by deficit spending — is money that cannot be spent or invested elsewhere.
And it’s not as though this were a zero-sum game. The actual marginal sales — the home sales that would not have happened without the subsidy — may have cost taxpayers from $40,000 to $75,000 each. And as huge as those numbers are, they ignore the interest cost of the borrowed money, the opportunity costs of mal-investment and the compound interest value of those opportunity costs.
Government action cannot create wealth. At best, it moves wealth around. At worst, government destroys wealth by taking it away from the very people who have new ideas and new technologies to invest in.
But as bad as this tax credit is, it’s only temporary. Someday it will end. The mortgage interest tax deduction — which almost no home-owners actually get — is forever. The government dominance of the secondary mortgage market — FannieMae, FreddieMac, GinnieMae, etc. — is forever.
And here’s the real kick in the head, given all we’ve been through in the real estate market over the last eight years: The National Association of Realtors reports that 59% of all new home loans this year were underwritten by the Federal Housing Authority, the Veterans Administration or the U.S. Department of Agriculture.
What this means is that a huge number of homes will have been sold this year with down-payments ranging from 3.5% to -5%. Six out of ten new mortgages are essentially nothing-down loans.
The U.S. government wants to buy your vote by making home-ownership easy. But the net effect of government intrusions in the real estate market is to create a standing wave of foreclosures amid steadily-declining home values.
Steal this book: I’ve written over 200 Read more
…today is probably the day to make contact with your state’s U.S. Senators.
(Incidentally, if you want for your political communications to have maximum force, you have to do more than write a check. You’ll get double the impact is you make a photocopy of your check — and then mail the photocopy to your candidate’s opponent. This should be very effective over the next two years in “purple” districts.)
Time to take a look at the second installment in the 7 things series. If you recall, last time, we looked at the fact that, in a rapidly changing market like we are, 6 months ago is ancient history. What someone paid 6 months ago…… Well, just read about that at 7 Things – Part 1.
So what’s Part 2 about? Here’s what I wrote last time:
2. Don’t worry so much about what you paid for your house. Instead, look at the difference between what you can expect to sell your house for and what it’s going to cost you to buy the new one that you want. I expect you’ll find that those are much more important numbers (unless you end up without any equity, in which case you don’t sell).
There are a couple of things that I think still hold true and one big thing that I think doesn’t hold true any more. First the things that hold true:
- If you are selling one home to buy another, the most important number is not what you paid for the existing home, the most important number is the difference between the two homes. If the value of your home has fallen by $40,000 but you’re in a situation where you can buy a newer home with less maintenance and 1000 square foot bigger for a “net” difference of $20,000, then it might very well be a good deal.
- If your family situation has changed (i.e. – We got married and are expecting our second set of twins in the last 2 years! – Yikes!) then what you paid for your house doesn’t matter. I’ve got a client who is negotiating on a house where the seller has to sell within the next three weeks but they are “hung up” on what they paid for the house. If you need to do something, don’t worry about what you paid for your house, just focus on what the financial and logistical aspects and make the move. I’m working with Read more
I do not get around to as many blogs as I would like in the real estate space. (Seriously – I am busy with EricOnSearch and the brokerage), but it did not escape my notice that my friend and fellow dog, Galen Ward and Estately are running in the black.
EricOnSearch (my little teeny tiny enterprise) runs in the black. We celebrate others who do as well. Just like when I toasted Glenn Kelman and RedFin turning a profit, my hat is off to Estately. Good job guys!
In each of these cases, profitability has come from hard work, tough decisions and focused effort. That is how you stay out of a dot com bust or any other kind of bust for that matter.
Cheers!
From Politics Daily, the you-just-can’t-make-this-shit-up section:
Four-year-olds are adorable, trustworthy, and, having never owned a home before, fully eligible for the first-time homebuyer tax credit that Congress passed in 2008.
As a result of that loophole and numerous faulty reporting mechanisms, a House panel learned Thursday of tens of thousands of cases of fraud in the tax credit program, including more than 500 instances of people using their children — including a four-year-old — to apply for the credit to get around income caps and a requirement that the purchaser has never owned a home.
Together, fake or faulty claims for the $8,000 refundable tax credit may have cost the government up to half a billion dollars so far, investigators told the Ways and Means subcommittee.
Russell George, an inspector general with the Treasury Department, told the subcommittee about the most brazen instances of bogus claims that he had come across since the IRS created a filtering system last May to weed out suspicious applications.
George said he had found nearly 20,000 returns for people who may not have actually purchased homes; thousands for people who already owned homes; 3,200 taxpayers who could not prove they were in the country legally; and an unspecified number of IRS employees wrongly applying for the credit.
It is completely implausible to me that anyone could expect anything other than disaster from government-run anything. I like to say that governments are only good at one thing — killing people — but even that isn’t true of the U.S. government: The Army expends 20,000 rounds of ammunition for every confirmed kill. No worries, though:
This week Sens. Chris Dodd (D-Conn.) and Johnny Isakson (R-Ga.) began a push to expand the credit to all homebuyers and extend the deadline, now set for Nov. 30th, to July 2010.
Good plan…
I had coffee yesterday with a long time friend of mine who works for a local title company. We were talking about a variety of things, including some of the new stuff I’m working on on the web.
The topic came around to the $8,000 First Time Home Buyer Tax Credit. He said to me that he’s had 3 different Realtors tell him that on December 1, the value of all of their listings is going to drop by $8,000 each.
Let me say that again, on December 1, each of the houses that they have listed is going to drop in value by $8,000. Why’s that? Because the first time buyer credit is going away.
Now let’s look at a couple of things (according to this story):
- It’s called a FIRST TIME HOME BUYER tax credit.
- According to these Realtors, it has inflated (or kept up) the prices of homes by $8,000. So does the buyer benefit or does the seller?
- Somewhere less than 50% (according to the last stats I’ve heard) of the buyers qualify for the tax credit.
- But 100% of the buyers are paying paying $8,000 more.
- And the government is paying $43,000 for every additional sale we’re getting.
Now, do you really think that it’s such a good idea any more?
Oh, and in reality, the prices of the homes aren’t going to wait until December 1 to drop. Realistically, if you haven’t signed a purchase agreement by Halloween, it’s going to be very difficult (but not impossible) to get the deal closed by the end of November.
All is not as simple as it seems.
Tom Vanderwell
Technorati Tags: $8, 000, First Time Home Buyer Tax Credit
For those Twitterites out there, yesterday was a very good day. Twitter announced two (count ’em) deals, one with Microsoft to have Tweets appear on Bing’s results. The second one was roughly similar with Google.
What does it all mean?
To me it means the following…
If you think tweetspam was bad before, watch out now…it’s gonna get worse. Think tweeting listings was bad before? grin
The big winner is Twitter. Seriously. It is like if the iPhone cut deals simultaneously with AT&T and Verizon instead of just At&T.
From here I am interested in your thoughts. What do you think it means. Please comment and discuss.
For the real estate agents among us, well you guys are used to selling things. I think the act of selling is undervalued in our culture. When you sell something, you are convincing another person that, whether it’s your service or a house, that you have something of value, and that they should part with some of their hard earned cash to pay for it.
There’s something very honorable about the exchange. No one puts a gun to anyone’s head. No one takes by force. One human being is convinced or persuaded that, yes, that home, or that real estate agent’s services are worth the price asked. And a deal happens.
For all of my life, I’ve been a salaried employee. A guy who worked in an office and was paid for his work. And that’s fine too.
But let me tell you, that when I made my first “sale” this week – meaning, a human being hired me as a lawyer to represent him on a matter – there was something particularly exhilarating about it. Of course, it’s going to take a few more clients like this to hire me, but, with my private practice barely three weeks old, and a bunch of leads in the pipeline, it’s pretty nice to make a sale.
So let me say, to all you real estate agents who have been selling homes to live in for all these years, why didn’t you tell me earlier how fun it could be to sell something to someone, and to add value to their lives.
Wow. What are you waiting for…?
From newgeography.com:
Among the media, academia and within planning circles, there’s a generally standing answer to the question of what cities are the best, the most progressive and best role models for small and mid-sized cities. The standard list includes Portland, Seattle, Austin, Minneapolis, and Denver. In particular, Portland is held up as a paradigm, with its urban growth boundary, extensive transit system, excellent cycling culture, and a pro-density policy. These cities are frequently contrasted with those of the Rust Belt and South, which are found wanting, often even by locals, as “cool” urban places.
But look closely at these exemplars and a curious fact emerges. If you take away the dominant Tier One cities like New York, Chicago and Los Angeles you will find that the “progressive” cities aren’t red or blue, but another color entirely: white.
In fact, not one of these “progressive” cities even reaches the national average for African American percentage population in its core county. Perhaps not progressiveness but whiteness is the defining characteristic of the group.
More:
This raises troubling questions about these cities. Why is it that progressivism in smaller metros is so often associated with low numbers of African Americans? Can you have a progressive city properly so-called with only a disproportionate handful of African Americans in it? In addition, why has no one called these cities on it?
As the college educated flock to these progressive El Dorados, many factors are cited as reasons: transit systems, density, bike lanes, walkable communities, robust art and cultural scenes. But another way to look at it is simply as White Flight writ large. Why move to the suburbs of your stodgy Midwest city to escape African Americans and get criticized for it when you can move to Portland and actually be praised as progressive, urban and hip? Many of the policies of Portland are not that dissimilar from those of upscale suburbs in their effects. Urban growth boundaries and other mechanisms raise land prices and render housing less affordable exactly the same as large lot zoning and building codes that mandate brick and other expensive materials do. They both contribute to Read more
Saturday I took a mini vacation and visited my daughter Rian, who was taking a longer vacation in the Hocking Hills. If you are from the Mid-West, you may know about the Hocking Hills. It’s beautiful land- old forests, rolling hills. It was a treat to take a day away from normal life and I love driving through Ohio with its farmland and small towns. I’m a Realtor. Under all is the land.
Ohio is still, and always has been, an agricultural state. Our biggest business is agriculture- that’s large expanses of productive real estate- income producing dirt. I am, even in my inner ring suburb, surrounded by cornfields and soybean fields and small roadside farm stands and pick-your-own strawberries. And when I was a kid I hated it! Hated it. I was once much more cosmopolitan than the hayseed you see before you. I was once a citified mohawk wearing rabble-rouser. I was once on the fast track out of the Mid-West and onto somethinganything more exciting. And then I grew up.
I spent time with people who came from the same gene pool. I was accepted by the most gentle and loving people I’d ever met. Their quiet wit, their infinite love, their simple lives woke me up and let me understand that I could take the girl out of the country, but I never really wanted to take the country out of the girl. My mohawk grew out, my attitude softened- just a bit- and I learned to love the sight of a pristine barn rising out of tidy rows of cornfields. I know with the tiniest whiff on the breeze, whether I’m smelling cow, pig, or horse shit, and my husband Jamie, who has farming in his blood and spent his youth as an assistant to a large animal veterinarian, says that the dumber the animal, the better the smell. Hint: Pigs stink almost as much as humans.
We have beautiful land in Ohio, and no time is it more beautiful than now, in the fall, when the trees become a spectacular raging colorfest, and the farm fields are golden, Read more
REALTORS are great at sharing ideas.
I really do like the idea of team spirit and sharing. I think that one can make a strong case for it in business among friends who trust and respect each other. It is what a scenius is all about. It is what we do at our brokerage with what we call our Roundtable. It is a good thing.
But that is TOTALLY different from intellectual property theft. One of the things that I watch REALTORS do time after time is to “help themselves” to other peoples’ intellectual property (or have their hired folks do it) and then fight arrogantly when they are informed about it. Most times it starts as an innocent thing where the REALTOR is unaware of it and ends with the REALTOR losing significant time and money.
Two examples:
Take the latest controversy about a REALTOR named David Bigham. I was not aware of it until my buddy Jon posted on it on our real estate newspaper site. This, sadly enough, has happened literally hundreds of times while I have watched. It is TOTALLY avoidable.
David Bigham is (apparently) a REALTOR somewhere in Minnesota. I neither know him or care. I simply want to help folks avoid his plight for THEIR business.
Here is how it typically starts.
1) REALTOR buys a domain.
2) REALTOR is a visual person, so they find a competitors site that LOOKS cool.
3) They contact the firm that built it and ask “How much?”
4) They faint. Lotsa bucks.
5) They start contacting EVERY web developer from their cousin Fred to the local web development students to every serious firm looking for a person to “make it look EXACTLY like that.” (Famous Last Words…)
6) So Fred or Betty or whoever (insert web developer here) literally copies and pastes the code which is EASILY done and makes a few simple modifications and posts the site as “theirs”, lock stock and barrel.
Then the trouble starts. See, the guys who designed that site…they ummmm…. OWN that design. Yes it may be fashionable for REALTORS to “steal” (or “pinch” “boost” “hi-grade” “lift” etc-grin),,, advertising and Read more
In July of 2008, I wrote a piece as a guest post on Paul Kedrosky’s site, Infectious Greed. I called that piece The Top 7 Things Every Home Buyer Should Know. The piece got a lot of “press” and actually got me interviewed by the New York Times. I was talking with the reporter who I’ve gotten to know at the New York Times about a month ago and we realized that it was almost exactly a year since he had ran the piece, “Considering the 7 Year Plan.” He made a comment at that point, “It would be interesting to see what, if anything, has changed over the last year in your opinion of what a home buyer needs to think about.” I agreed and decided at that point to do that.
So this is the introduction to what will be a 7 part series over the course of the next week or so. I’m going to take each item, one by one, and look at what my view was in July of last year and then factoring in what I think has or has not changed over the last 15 months.
Here’s a hint for you – out of the 7 parts, I think that we’re going to find that at least 3 or 4 of them have changed substantially.
I’ll have the first one up in a day or two.
Thanks for listening in/reading what my thoughts are…..
Tom Vanderwell
Technorati Tags: 7 Things Home Buyers Should Know
