The NAR Four-Point Plan

[Roger J]

I don't know how many on here have seen or heard of the above, NAR's attempt to sway Congress on a "stimulus" plan, but I thought it would be worth posting.  NOTE: I may be unNARed after this, so if you have a job opening, let me know 

Taken from last to first:
Permanently bar banks and banking conglomerates from engaging in real estate brokerageand management.  The banks have proven they have enough to do to simply properly manage their current lines of business.  Do we really want them to manage the home buying process?  Imagine what could have been the situation now if they already had the added ability to engage in real estate sales.

This has been a long running NAR compaign.  Apparently, some banks are trying to get into real estate brokering WITHOUT going through NAR.  This will be on ALL NAR requests/suggestions until something gives.

Get the Emergency Treasury bank relief program back on track by targeting more funds to mortgage relief efforts and increasing efforts to mitigate foreclosures.  Don't just give the banks unrestricted cash. Make the program work to improve mortgage and housing markets as it was originally intended.

Good idea, yet nothing from NAR on exactly HOW to do that.  Leaving it up to Gov't to do it worked so well last time.

Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent.  New rules for 2009 would significantly reduce the FHA, Fannie Mae and Freddie Mac loan limit from their 2008 levels. Now is not the time to limit the availability of affordable mortgages.

Actually, a good idea, in my opinion.

Make the $7500 tax credit available to all purchasers and eliminate the repayment requirement.  The credit’s limited availability and required repayment terms have severely limited the credit’s appeal to potential homebuyers.  As a result, the credit has not been widely used or proven effective at stimulating sales.

Eliminating the repayment for 1st time homebuyers..good idea.  Figuring out a way to get that tax credit to actually use it for the downpayment (vs. at taxtime)...major good idea.  The idea as presented, One of the absolute worst ideas I've ever heard.

Let's forget about for a minute on HOW the Gov't would pay for this thing in the first place.  What would happen if EVERY buyer got a $7500 tax credit for purchasing a home?  Would it create a strong seller's market in a hurry?  I'd say it would!  Sure, credit would possibly slow the surge (ability to get a loan), but in a short span, you'd likely create another bubble-rise in house values, which is what created this whole mess in the first place.

And would you get $7500 for EVERY house you bought?  Investors that buy 10-20 houses a year, that's one heck of a tax break and bonus!

Raj

[johnnyMB]

i dont think anyone knows really what to do.

NAR especially doesn't know what to do.

I'm not really sure what they really do for real estate agents?

except start up their propoganda machine every once and a while and tell us all how now is the best time ever to buy a home

[fdjake]

First, let me start by saying NONE of this is directed at you Roger.  It's just my take on ALL these stimulus plans regardless of where they originate.

If you don't have a JOB..........It doesn't matter what interest rates are or how much of a tax credit you get for buying a home.  the other point here is....WHERE ARE ALL THE CUSTOMERS  for these low interest loans???  In my opinion our country is now divided into 2 groups.  1) People who purchased homes before the BOOM and DID NOT over pay or RE-FI themselves to death.....and 2) Those that DID.   The folks that have low balances on OLD mortgages may take advantage of a few interest rate points but it won't turn this economy....The OTHERS now have credit ratings so bad,  they can't even get CAR LOANS never mind MORTGAGES!!!!

Our economy is lossing over 500,000 JOBS a MONTH!!!!!!   That number is INCREASING at a escalating rate.

Here's a tid bit that very few people are aware of, or they aren't talking about it....

During the boom the majority of people in this country DID NOT buy homes......What they DID DO was take out TRILLIONS of dollars in equity in homes that they originally paid very low prices for.  Last month I did 49 title searches on Properties that were entering foreclosure.  One of the requirements I use to limit these searches is the listed DATE of the foreclosed mortgage.  In other words, I look for homes originally purchased PRIOR to 2002.   By limiting my searches to these homes, the odds of them having SOME equity SHOULD increase.
Last month out of the 49 homes I did title searches on......

NOT ONE.......NOT  ONE......Had a SINGLE DIME of equity left in them.  These homes were purchased for an average ORIGINAL price of UNDER $100,000.........The owners then systematically RE-FI'D those homes so many times during the boom that the average balance on the remaining mortgages was now.........

$300,000

As these folks lose their jobs it creates a SNOW BALL effect.  Dropping their interest rates WILL NOT work.  You can't get a $300,000 re-fi on a home that is now worth $150,000!!! Add to this the recent report that 50% of all re-worked mortgages enter FORECLOSURE AGAIN within a year!!

All the talk is about people who purchased homes with TEASER rates, sub-prime, or just purchased at the PEAK of the market.  These people have caused the finacial collapse we all are dealing with now.  The next shoe to drop is JOB LOSSES!!!!

JOBS

JOBS 

JOBS

You CAN NOT Stimulate a person into SPENDING that does not have WORK!!!

[Roger J]

You make some valid points, Jake.

Yes, if you don't have a job, buying a house is NOT on your primary list of things to do.

Yes, if you are, or think you are, on the verge of losing your job or getting a cut in pay, buying a house is NOT on your primary list of things to do.

That said,

There are customers out there buying homes.  This month has been one of the busiest months for our office since summer.  This in what is historically, a slow time in the RE market.  Jan is looking to be a blownout month in sales.  If the market prediction is true of 3.5-4.5% interest rates, then the first of the year will probably be pretty busy.  Also, there are alot of new home buyers that are trying to get into a home BEFORE they file taxes so that they can get that $7500 tax credit on upcoming taxes.

Maybe all the customers are here, Jake, but they are out there.

Also, you CAN refi a $300K mortgage down to $150K.  All that is needed is a bank officer with a little common sense about them.  Yes, that is a rare thing, BUT several banks are already adjusting loans in this manner (not as drastic a cut, I'm sure, but doing it none the less).  If the property is REALLY only worth $150K now, then it's going to be worth LESS than that if they take it back in foreclosure.  Not to mention the costs of going through foreclosure.

Just my thoughts.

Raj

[fdjake]

Interesting points Roger.....

How are you doing when it comes to getting potential buyer financed??

I'm seeing deals getting kicked back for petty things. I'm also seeing banks being VERY cautious on their appraisals.  This really hurts when the buyer is maxxed out as far as their down payment goes.  Banks have done a complete 180.... 3 years ago they'd FIND a way to get a buyer INTO a loan....Now they FIND a reason to deny the loan.

[Roger J]

Seriously, in most cases, financing is NOT the problem.  Most loans are going either FHA or USRDA right now and as far as credit scores go, I've seen as low as 580.  USRDA is 100% loan, too (actually up to 102% of APPRAISED VALUE if repairs needed).

The real problem has been CONVINCING the potential buyer that they CAN get financing because they've seen on the news that the "credit markets" are frozen.

Yes, banks aren't loaning to just anybody anymore.  Buyers do have to have good, full docs and no "issues" (580 score, for example, must have GOOD income).

You also have to keep in mind, Jake, the market that you're in.  We've had this discussion before, but I'm sure that a lender is going to look much differently at a loan if the property is in a market that has suffered a 30% drop in value or if its in a market that has suffered less than 1% drop in value.

You know that's why I have a real problem with this whole "National Housing Market" bull.  They base that report on 330 housing markets.  There are literally thousands of local markets, yet the "National Housing Market" uses only 330 to base their research.  Add to that that of those 330, some 80% of them were markets that during the boom, were posting double-digit annual appreciations and are now the ones posting major depreciations, you'd have a badly painted picture.

Raj

[fdjake]

The problem for most of us is MY market is much more comparable to the national market than YOUR'S is.

It's not 'BULL" when you have major Wall Street Banks VANISHING from the face of the EARTH due to a real estate bust..... and that "Bull" bust .....has also gone GLOBAL.

[Roger J]

It should be VERY clear to everyone now that the crisis we are currently facing is NOT bull.  I didn't say that and not even hinting at it.

I just disagree the term National Housing Market, because simply put, there is no such thing.

Raj

[fdjake]

I agree.