Talks on mortgage giants continue

WASHINGTON - July 18, 2008 - Treasury officials and senior lawmakers huddled behind closed doors yesterday, searching for a way the Treasury Department might safely invest in mortgage finance giants Fannie Mae and Freddie Mac without exposing taxpayers to massive losses.

People close to the talks said Treasury Secretary Henry M. Paulson Jr., House Financial Services Committee Chairman Barney Frank (D-Mass.), and leaders of the Senate Banking Committee are considering a plan that would allow the government to buy senior preferred shares in Fannie Mae and Freddie Mac if the firms' financial condition were to deteriorate dramatically. That would mean taxpayers would get any payouts before other shareholders when the firms returned to financial health, the sources said.

After a late-afternoon meeting with Frank, Paulson reported making good progress, saying he expects "a very acceptable result" by next week, when the House is expected to vote on the Bush administration's plan to prop up the ailing mortgage finance giants as part of a broader housing package.

Paulson insists that he does not expect to have to use the authority to help the companies because they remain financially sound. He has said he is asking for the authority to renew confidence in the companies following a steep slide in their stock prices last week.

Another taxpayer-protection option proposed by Frank hit a snag. Frank suggested that if the Treasury were to invest in the firms, the companies should postpone dividend payments to shareholders. But that proposal will have to be dropped - or at least softened - because several major institutional investors in Fannie Mae and Freddie Mac are permitted to invest only in stocks that pay dividends and would have to divest if that idea were implemented.

Meanwhile, lawmakers have rejected Paulson's proposal to exempt aid to Fannie Mae and Freddie Mac from the nation's debt limit, which is currently set by law at $9.8 trillion. The House voted this year to raise the debt limit to $10.6 trillion, a move that has yet to be ratified by the Senate. Rather than setting a new, higher cap specifically for Fannie Mae and Freddie Mac, lawmakers are considering including the $10.6 trillion figure in the housing bill, Democratic aides said, giving the Treasury an immediate $800 billion cushion without setting a specific price tag that would be open to attack by opponents.

After meeting with Paulson, Frank said he, too, is "very optimistic" about the negotiations.

"I do not see any differences ... that will prevent the House from passing the bill on Wednesday, and soon thereafter passing the Senate and soon thereafter being signed by the president," he said.

Talks on mortgage giants continue

WASHINGTON - July 18, 2008 - Treasury officials and senior lawmakers huddled behind closed doors yesterday, searching for a way the Treasury Department might safely invest in mortgage finance giants Fannie Mae and Freddie Mac without exposing taxpayers to massive losses.

People close to the talks said Treasury Secretary Henry M. Paulson Jr., House Financial Services Committee Chairman Barney Frank (D-Mass.), and leaders of the Senate Banking Committee are considering a plan that would allow the government to buy senior preferred shares in Fannie Mae and Freddie Mac if the firms' financial condition were to deteriorate dramatically. That would mean taxpayers would get any payouts before other shareholders when the firms returned to financial health, the sources said.

After a late-afternoon meeting with Frank, Paulson reported making good progress, saying he expects "a very acceptable result" by next week, when the House is expected to vote on the Bush administration's plan to prop up the ailing mortgage finance giants as part of a broader housing package.

Paulson insists that he does not expect to have to use the authority to help the companies because they remain financially sound. He has said he is asking for the authority to renew confidence in the companies following a steep slide in their stock prices last week.

Another taxpayer-protection option proposed by Frank hit a snag. Frank suggested that if the Treasury were to invest in the firms, the companies should postpone dividend payments to shareholders. But that proposal will have to be dropped - or at least softened - because several major institutional investors in Fannie Mae and Freddie Mac are permitted to invest only in stocks that pay dividends and would have to divest if that idea were implemented.

Meanwhile, lawmakers have rejected Paulson's proposal to exempt aid to Fannie Mae and Freddie Mac from the nation's debt limit, which is currently set by law at $9.8 trillion. The House voted this year to raise the debt limit to $10.6 trillion, a move that has yet to be ratified by the Senate. Rather than setting a new, higher cap specifically for Fannie Mae and Freddie Mac, lawmakers are considering including the $10.6 trillion figure in the housing bill, Democratic aides said, giving the Treasury an immediate $800 billion cushion without setting a specific price tag that would be open to attack by opponents.

After meeting with Paulson, Frank said he, too, is "very optimistic" about the negotiations.

"I do not see any differences ... that will prevent the House from passing the bill on Wednesday, and soon thereafter passing the Senate and soon thereafter being signed by the president," he said.

Talks on mortgage giants continue

WASHINGTON - July 18, 2008 - Treasury officials and senior lawmakers huddled behind closed doors yesterday, searching for a way the Treasury Department might safely invest in mortgage finance giants Fannie Mae and Freddie Mac without exposing taxpayers to massive losses.

People close to the talks said Treasury Secretary Henry M. Paulson Jr., House Financial Services Committee Chairman Barney Frank (D-Mass.), and leaders of the Senate Banking Committee are considering a plan that would allow the government to buy senior preferred shares in Fannie Mae and Freddie Mac if the firms' financial condition were to deteriorate dramatically. That would mean taxpayers would get any payouts before other shareholders when the firms returned to financial health, the sources said.

After a late-afternoon meeting with Frank, Paulson reported making good progress, saying he expects "a very acceptable result" by next week, when the House is expected to vote on the Bush administration's plan to prop up the ailing mortgage finance giants as part of a broader housing package.

Paulson insists that he does not expect to have to use the authority to help the companies because they remain financially sound. He has said he is asking for the authority to renew confidence in the companies following a steep slide in their stock prices last week.

Another taxpayer-protection option proposed by Frank hit a snag. Frank suggested that if the Treasury were to invest in the firms, the companies should postpone dividend payments to shareholders. But that proposal will have to be dropped - or at least softened - because several major institutional investors in Fannie Mae and Freddie Mac are permitted to invest only in stocks that pay dividends and would have to divest if that idea were implemented.

Meanwhile, lawmakers have rejected Paulson's proposal to exempt aid to Fannie Mae and Freddie Mac from the nation's debt limit, which is currently set by law at $9.8 trillion. The House voted this year to raise the debt limit to $10.6 trillion, a move that has yet to be ratified by the Senate. Rather than setting a new, higher cap specifically for Fannie Mae and Freddie Mac, lawmakers are considering including the $10.6 trillion figure in the housing bill, Democratic aides said, giving the Treasury an immediate $800 billion cushion without setting a specific price tag that would be open to attack by opponents.

After meeting with Paulson, Frank said he, too, is "very optimistic" about the negotiations.

"I do not see any differences ... that will prevent the House from passing the bill on Wednesday, and soon thereafter passing the Senate and soon thereafter being signed by the president," he said.

Realtor Scoop

FAR's Disaster Relief Fund (DRF) Is There For You

The names Andrew, Charley, Dennis, Frances, Ivan, Jeanne and Wilma will be forever etched in the minds of Floridians. But as devastating as those hurricanes were, they also generated a tremendous outpouring of goodwill-as members of the Realtor® community from across the state stepped forward and donated millions of dollars to assist their fellow real estate professionals who were victims of those storms.

The Florida Association of Realtors®' Disaster Relief Fund (DRF)was originally created as a trust in the aftermath of Hurricane Andrew in 1992, with the primary purpose of assisting members of the Realtor® family who are victims of officially declared natural disasters such as hurricanes, tornadoes and more. In 2004, when an unprecedented four hurricanes touched down in Florida within six weeks, the DRF received more than $2 million in donations.

"The assistance and the outreach we received from the Realtor community made us realize anew that the profession is [one] in which people reach out to help their fellow man," says Nan Harper, co-owner of Harper-Pinzino Island Realty in Pensacola Beach, who received DRF assistance when her home and business was destroyed by Hurricanes Ivan and Dennis.

Joan Cornett, sales associate with Bill Mancinik, Realtor, in DeLand, awoke on Feb. 2, 2007, to find her dreams "evaporate in one brief moment." Three tornadoes-now known as the Groundhog Day Tornadoes-blazed a path of destruction across Lady Lake, The Villages, DeLand and New Smyrna Beach. "A house is a hard thing to lose," says Cornett, who saw the home in which she raised her son reduced to a pile of debris. "I submitted photos of the damage with forms [to the DRF] and was able to get some assistance based on the enormity of the damage.

"We are all vulnerable to anything when it comes to Mother Nature," Cornett adds.

"The fund is for natural disaster assistance-whether here in Florida or in other states," says Todd Dantzler, 2008 DRF chairman. "We hope and pray that we're not needed, but if so, we are there to respond and we take our responsibilities very seriously."

"I would like to see contributions reach the $10 million level," says past DRF chairman and 2004 FAR President Russell Grooms. "We could make it a self-perpetuating [entity] and always have funds available for emergencies."

BEFORE:

·    No idea how to jump-start a full-time real estate career.

AFTER:

·    Goals, objectives, strategies, plans and actions for taking it to the next level.

Hudson's GOSPA
Goal: Hudson must set at least one goal and fine-tune it annually.

Objectives: Steps that Hudson must take to support her goal. For example, to make a smooth transition to real estate sales, Hudson must list and sell enough properties to generate a livable income and save for retirement).

Strategies: Hudson's strategy (i.e., a plan of action for achieving specific objectives and the goal that those objectives support) will include deciding which areas to farm in order to sell enough properties to reach her goal.

Plans: The "map" that Hudson will follow to carry out her strategy. For example, her strategy for becoming a top lister in a specific farm area could include isolating neighborhoods/niches and becoming a specialist in them.

Actions: Activities that Hudson must carry out in support of her plan (e.g., talking with a specific number of prospects each month).

Source: Jay Barber.

Got GOSPA?

Our expert shows this part-time sales associate how to set Goals, Objectives, Strategies, Plans and Actions for full-time success.

When you ask most people what they're going to do when they retire, they smile broadly as they envision countless rounds of golf or days spent lounging with a good book. For Eleith Hudson, selling real estate is what she's planning to do in her retirement. She's had her license for 20 years and has always wanted to be in the practice full time but hasn't been able to break away from her job as a nurse.  "I work labor and delivery ... need I say more?" jokes Hudson, a sales associate whose license is listed with Evergreen Brokers Inc. in Cooper City. But her retirement from nursing is in the not-too-distant future. "Time is drawing near," she says, "and it's time for me to start taking care of me now." She's so determined to make a go of real estate that she recently spent a week's vacation in the classroom-studying for her broker's license. "I'm so close and have painstakingly obtained all the pieces to begin my new profession, but I need guidance to organize everything appropriately," she adds.
 
Bring in the Expert
Hoping to get that guidance, Hudson consulted with real estate trainer Jay Barber. Here's what he had to say.

1. Follow a Formula
Barber prescribes a no-nonsense formula based on the training he received as an IBM salesman back in the 1970s. He calls it "GOSPA" (an acronym for Goals, Objectives, Strategies, Plans and Actions), and while he can't guarantee it will help Hudson to finally create the career of her dreams, he feels it has the potential to improve her odds. "In this market, it's critical that you follow a formula like GOSPA so you know what you're doing and, more importantly, why you should or shouldn't be doing it."

2. Own Your Goals
Since the "G" in GOSPA is for goals, Barber wants Hudson to clear her mind and write down one or two statements describing what she wants to achieve in her career. "If you don't write it down, Eleith, you don't believe it," he says. "Think of your goal as the top of a pyramid. Everything you do will support this goal and have a cascading effect. For example, maybe your first goal is monetary and you want to equal the income you currently make in nursing. Or maybe you want to list X number of properties each month. Or, as a long-term goal, you might want to be recognized as Realtor® of the Year. Make sure your goals are specific and attainable. And, above all, believe in them." Barber notes that goals rarely change, so Hudson should revisit them annually to see if they still apply and update them if they don't.

3. Find Your Objectives
Objectives are the steps that Hudson must take to satisfy her goals. And, according to Barber, it may take several objectives to reach just one goal. If her goal is to live to 85, for example, he says her objectives would include all the things she can do to improve her chances of reaching that age  (e.g., getting enough exercise, eating right and renouncing unhealthy habits). If her goal is to generate a six-figure income, her objectives will include calculating how many houses she needs to sell within a specific price range to meet that goal. Hudson's objectives generally won't change, Barber says, unless circumstances alter her goals. He encourages her to re-evaluate her objectives about every six months to make sure they still support her goal.
"My recommendation is that you print out your goals and objectives on a piece of paper, frame it and hang it over your desk so you look at it every day," says Barber.

4. Devise Strategies
As her third step in the GOSPA formula, Hudson must figure out which strategies to put into practice. Barber explains that strategies form the piece of the puzzle that will allow Hudson to implement the objectives she needs to follow in order to reach a particular goal. Take, for example, Hudson's hypothetical goal of generating a six-figure income. She will need to have a strategy to meet each objective in support of that goal (in her case, to sell X number of houses at X sales price). Her strategy could also include how she's going to meet the objectives needed to generate listings.

It's easy to confuse strategies with objectives, says Barber, who points out that strategies are the "how-to" component of objectives. For
example, if Hudson has a lot of listings but buyers are scarce, her strategy, or how-to, might include coming up with ways to better market those listings to buyers.

5. Plan It
The fourth element of Barber's GOSPA formula is the plan that Hudson will need to devise to accomplish a specific strategy. For example, if her strategy involves learning how to better market herself, she'll need to come up with a plan that outlines the specific things that will help her implement that strategy. "You should ask yourself, ‘OK, what am I going to do to support my strategy?'" Barber explains. "It could be to work closely with your broker [in a mentor/student situation] or ... to team up with a top-producing sales associate," he says.

"Plans are of a much shorter duration than the rest of the GOSPA," Barber continues. "They are three-month or four-month steps. You're going to try some things and they're not going to work, so you'll have to revisit your plans and in some cases your strategies every 30 to 60 days."

6. Act on It
Finally, Barber explains that actions are the specific activities that Hudson will implement to put her plans into action. "Plans are ‘OK, how do I identify actions that will get me from point A to point B?'" he explains. "And actions are ‘How do we get there?'"

Again, if her goal is to generate a six-figure income, her objective would be to sell X amount of real estate, followed by a strategy to work in a specific price range. Her plan would likely include deciding which neighborhoods to farm, and her actions might include marketing herself to homeowners within 30 to 60 days.

"Remember, Eleith, everything you do must tie in to your GOSPA," says Barber. "It takes discipline and constant revision. Maybe one of your objectives wasn't realistic. Or maybe it's the strategy and the way you were going about it. About every three months, look at your plans and actions, and ask, ‘Where am I?' With the limited amount of free time that you have, it seems GOSPA will be even more important for you because you need to know what you're doing and why. Follow it and take little steps leading up to the ultimate goal of where you want to be."  


This column provides advice from industry experts concerning marketing, technology and business issues. It won the Silver Award in the 2007 Best Column category from the Florida Magazine Association

What to Say to FSBOs

The angst that accompanies cold calling FSBOs is rooted in confusion about what to say. Here's a primer on scripting from our experts:

Don't focus on your services, but the seller's needs. Send a letter to sellers detailing some useful information that can help them sell the home. You can give them advice about planting flowers or where to advertise. It gets your name out as a professional.

Don't offer your listing service right away. Don't go in for the kill immediately. Not many FSBOs will work with you until you first build a relationship.

Be available in any way that the consumer wants you to be. Future contact, whether it's by phone, e-mail, text message or in person, should be determined by the customers, not you. They must know that you'll talk to them in a way that meets their comfort level.

Practice, practice, practice. Use a friendly audience-your work colleagues or family members-to practice your script at least 15 minutes per day. As with any skill or hobby, you can't become razor sharp at your cold calling skills unless you practice.

Ready, Willing and Able Buyer? The Courts Decide.

A court determines that a gratuitous promise of financing from a friend is not sufficient to support a buyer's specific performance claim.

Friends often loan friends money. But is a friend's promise to finance a buyer's real estate purchase sufficient to support the buyer's assertion that he or she is ready, willing and financially able to buy the property on the agreed-upon closing date and thus is entitled to specific performance?

That's a question the 5th District Court of Appeal (DCA) was asked to decide in the case Lusignan v. Lusignan (5th DCA, 2008).
Here's what happened.

Shortly after the seller's house was damaged by hurricanes in 2004, she entered into a contract to sell it to her stepdaughter for $100,000. The contract included a Nov. 1, 2004, closing date and was contingent on the buyer obtaining financing.
The buyer claimed that a wealthy friend's husband had agreed to loan her $100,000.

Seller Leaves State
Several days before the closing, the seller left Florida. As a result, the closing didn't take place on Nov. 1 (the buyer alleged that she was unable to contact the seller and thus unable to close). The seller eventually returned to Florida and made substantial repairs to the home. Soon afterward, the buyer contacted the seller to schedule a closing. But the seller said she wasn't required to close (since the contract's Nov. 1 closing date had passed) and claimed that she hadn't left the state to avoid the closing and could've easily been contacted by telephone. The seller filed a lawsuit, seeking a determination by the court that the buyer had no claim to the property. The buyer filed a counterclaim, asking that the court require the seller to convey the property to the buyer pursuant to their contract, as well as breach of contract.

Ruling Favoring Buyer Reversed
Following a nonjury trial, the court of appeal ruled in favor of the buyer and ordered specific performance of the contract. It concluded that the buyer was ready, willing and able to perform the contract but was unable to contact the seller once she left the state-making the Nov. 1 closing an "impossibility." The seller appealed the decision to the 5th DCA.

On appeal, the 5th DCA reversed the trial court's decision and explained that pursuant to Florida law a buyer seeking specific performance of a contract must allege and prove that the buyer either (1) paid the balance due under the contract; (2) tendered the balance or had been ready, willing and able to pay such balance; or (3) was excused from performance. In this case, the 5th DCA determined that the trial court "misunderstood" the meaning of "ready, willing and able," and agreed with a series of decisions by the 4th DCA, wherein that court of appeal had outlined a three-pronged test for determining whether a buyer is financially ready and able to buy, specifically: "where the purchaser relies primarily, not upon his own personal assets, but upon the proceeds of a contemplated loan or loans to be made to him by a third party, he is financially able to buy only if he has a definite and binding commitment from such third-party loaner. Even though the third party is financially able, his promise is of no avail unless made for an adequate consideration."

The 5th DCA indicated that the trial court had relied on the testimonies of the buyer and of the friend's husband, who, although acknowledging that he wasn't a mortgage lender, said he was "simply going to write [the buyer] a check."

This evidence, according to the 5th DCA, was insufficient to establish that the buyer was financially ready, willing and able on the closing date and thus entitled to specific performance. The 5th DCA noted that although the buyer's friend's husband agreed (as a friend) to provide the loan, and had claimed financial ability to do so and had even provided written confirmation of the financial ability to do so, no evidence had been presented by the buyer of his financial standing, of her having a binding commitment from him or that the promise was anything more than gratuitous. Therefore, the 5th DCA determined that the trial court had wrongly ordered specific performance of the contract.

Finally, the court rejected the buyer's claim that she was alternatively entitled to damages (the difference between the contract price and the current fair market value of the property) under a breach of contract claim. The 5th DCA concluded that since the buyer couldn't be considered ready, willing and able financially under the specific performance claim that she couldn't be considered ready, willing and able under the breach of contract claim eith

Your Market is Changing. Are You?

Real estate is always changing. The way you sold yesterday might not work today. Here's how to prosper when everything around you is swirling.

"How many of you are working in a changing market?" That was the question I asked an audience of 1,100 Realtors® in January 2008 at the Certified Residential Specialist (CRS) conference. About 60 percent of the hands went up. The other 40 percent of attendees were in a changing market too; they just didn't realize it.

They also didn't realize that they might be changing careers soon, because long-term success in real estate depends on three things- acknowledging that the market will change, anticipating market movement and adapting to it.

Acknowledge Change
Too many sales associates are missing opportunities today because they're mentally stuck in yesterday's market. If that living in the past mindset could be manifested in their appearance, they might look like the cast from the movie "Grease."

You may not have to look farther than your office to find sales associates (or the empty desks they used to occupy) who are mentally still living the 2004 market. Most likely these associates entered real estate sometime after 2000, so they'd experienced the market that seasoned sales associates know comes around only about as often as Haley's Comet.

Veteran sales associates also understand that the real estate market is like a Lava Lamp. Globs heat up and rise; then the globs cool off and fall. To survive these ups and down, it's important to realize that markets, as fashions, change. So, focus on today's reality, unless you dig wearing poodle skirts or tee shirts with a pack of Lucky Strikes rolled up in the sleeve.

Anticipate Market Movement
There are very few things constant in real estate-other than change. This isn't a difficult concept, because we can find ourselves in one of only three markets. There's a buyer's market, a seller's market and a market that is in relative equilibrium. Most sales associates know the market they're in, but few try to anticipate the market's movement, which is important if your goal is to give your customers the best advice possible.

Most of the country, including Florida, is now considered to be a buyer's market, characterized by heavy inventory and falling prices. But, real estate is very local. So, what is your specific market like? Is your market getting worse? If it is, then you should advise your sellers to get more aggressive and lower their asking price. If the market is improving, the price reductions may not have to be as deep.

There's only one way to know if your market is improving, and it's not by watching CNN or reading The Wall Street Journal. It's by tracking the overall inventory in your market and the submarket in which you specialize. If inventory is growing, the market is continuing to move further from a seller's market and deeper into buyer's market territory. If inventory is shrinking, the reverse is true.

Inventory, or the change in it, is the market's compass. A change in inventory indicates a change in market direction. At a bare minimum, you should track the number of listings every month, and in so doing, you'll be among the first to spot the market's change in direction.

When you do this, you can confidently advise your customers because you can base your recommendations on information you know to be reliable, rather than on the opinions of the many real estate experts. In addition, you'll have elevated yourself above much of your competition because of your knowledge.

Adapt to Market Changes
When the market shifted from a seller's market to a buyer's market, as it did in Florida about three years ago, you saw your seemingly endless supply of buyers dry up. The red hot market we experienced had conditioned sales associates to expect buyers to flock to their open houses with escrow checks taped to their foreheads. Those days are gone and so are many of the sales associates who couldn't adapt to a changing market.

I teach sales associates a simple concept called "Fish for the fish that are plentiful." During the seller's market, every time we would throw our net into the buyer's pond, we would bring up more buyers then we could handle. Why? Simple-buyers needed us. Homes were selling so fast that buyers would be at an extreme disadvantage if they were not using a sales associate.

That's not as much the case during today's buyer's market. If you're still throwing your net into the buyer's pond, forget it. The buyers are there, but they've gone so deep that you couldn't bring them to the surface with dynamite. They'll show themselves when they're ready.

Instead, start throwing your net into the seller's pond. Sellers are the ones who need our help now. Your net will overflow, and you'll be amazed at how easy it is to get listings. Don't be fooled: a listing taken and not sold pays the same as the amount you receive when you spend two weeks showing buyers every home in town only to find out they have horrible credit. Qualify sellers the same way you used to qualify buyers. Determine if they're willing or able to afford to sell at today's market value.

There's an axiom in real estate that says when listings are easy to get, they're hard to sell and when buyers are plentiful, properties are not.  That's the way it is and will be. Don't fight it; just learn to adapt to the market conditions, and you'll enjoy a long and fruitful career. 

FHA Loan Limits Open Doors

FHA loans are becoming more attractive. Here's how to market to the people who can be helped with these new loan limits.

"This is great news for buyers," says Cathy Alley, a sales associate at ERA American Realty in Niceville. She's referring to the March announcement by the Department of Housing and Urban Development (HUD) that it increased the size of loans that the Federal Housing Administration (FHA) can insure for the remainder of 2008.

"I think the raising of FHA limits is going to help not only buyers in our area, but it will also generate activity across the nation," says Alley. "When the market was hot, first-time buyers really couldn't buy property because they were being outbid by investors. This will bring the average American back to the homebuying market."

What the New Rules Mean
"FHA loans," as they're called, are issued by traditional lenders but insured by the FHA. Because they allow down payments of as little as 3 percent, they've been valuable in helping lower-income buyers enter the housing market. But as home prices rapidly increased, FHA loan limits remained stagnant. That left lower-income buyers with fewer homes they could purchase through the FHA program.

The new FHA rules are a result of the economic stimulus package Congress passed in February of this year. Through the package, Congress asked HUD to reconsider its median home prices in counties throughout the nation, which it uses to determine which loans it can insure. In most counties, including those in Florida, the FHA is permitted to insure only loans that don't exceed 125 percent of the county's median home price. In designated high-cost areas, the FHA can insure only loans that don't exceed 175 percent of the median home price. By revising the median home prices upward, HUD is opening up the FHA program to more buyers.

For instance, in Miami-Dade County, the new median price is $339,000, which has raised the FHA loan limit from $362,790 to $423,750. In Lee County, the median price has been reset to $285,000, which has raised the FHA loan limit from $270,750 to $356,250. In Manatee County, the median price has been adjusted to $354,000, increasing the FHA loan limit from $336,100 to $442,500. Check the limit in your county by visiting HUD's Web site: https://entp.hud.gov/idapp/html/hicostlook.cfm.
On the same day HUD increased FHA loan limits, the Office of Federal Housing Enterprise Oversight increased limits for loans guaranteed by Freddie Mac and Fannie Mae from $417,000 to $729,750. That means that buyers who needed financing greater than $417,000 in the past-and were required to pay higher interest rates for those jumbo loans-can now get loans up to $729,750 without paying the jumbo loan premium.

Spread the Word
As soon as the new FHA limits were announced, sales associates throughout Florida sprang into action. "I take any opportunity to reconnect with buyers," says Toni Campbell, a sales associate at Keller Williams Advantage II Realty in Orlando. "Buyers need to hear something positive, so I started going through my contact list and letting them know that the FHA loan limits had been raised and that the change would help them get more of a home than they could afford before."

Once Campbell gets buyers on the phone, her dialogue is simple. "I explain the difference with the new loan limit," she says. "I say, ‘If you could normally afford a $350,000 home, this might allow you to get a home up to $375,000.'" Her pitch has worked. "I had two people who were looking at renting, and once I explained the FHA program, it piqued their interest in buying today rather than waiting two years."

Alley has sent a postcard to buyers in her market explaining the new limits. On the front, she asks, "Could a FHA home loan be right for you?" On the back, Alley explains the benefits of the FHA program, including the low down payment requirement, the provision that allows sellers to contribute to buyers' closing costs and the provision that allows gift funds to be used.

"I'm hopeful this will open doors to buyers who haven't been able to buy," says Alley. "And maybe the people I sent it to aren't in the market themselves, but they may have a son or daughter who can afford to buy but who doesn't have the cash for the down payment, and the parents can help out."

The worst-case scenario for Alley is that even if the postcard doesn't bring buyers in the door to take advantage of FHA financing, she's still showing consumers that she's smart and diligent. "Anything going out to my database that helps people understand that I'm still in the marketplace and shows I'm working hard for them-that helps."

Glenn Stein, broker/owner of Realty Executives Ocala in Ocala, turned to the Internet to get the new FHA information out to his target audience. He posted news of the FHA changes on his Web site. Though he hasn't had much response to his Web post, he's also discussed the new FHA rules with buyers when he thinks the program might fit their needs. "Sometimes we can overcomplicate the jargon. Buyers are simply interested in, ‘Can I buy this house?'" he says. "So it's a simple conversation with the sales associate and buyers in the car between showings. Most people think the FHA program is only for $100,000 houses, and when we're showing houses right at the top of the FHA limits, we say, ‘Do you realize you have the option of 3 percent-not 5 or 10 percent-down on this house?'"

John C. Davison, broker/owner of The Davison Real Estate Group in Longwood, recommends that you also broaden the discussion to include other housing assistance programs. "I've begun to target first-time buyers more frequently to take advantage of the possibility of putting clients into a house with very little money down," he says. "I even take it a step further and tell them about no-money-down options through government down payment assistance programs. With some programs, like [the Nehemiah Program], the Dream Homeownership Program and Family Home Providers, sellers can contribute up to 3 percent of the purchase price."

Will the New Limits Work?
Sales associates are cautiously optimistic that the new FHA loan limits will bring buyers back onto the homebuying playing field. Davison believes they're an asset, but not for all buyers. "There are definitely people in our area that the new FHA limits will help," he says. "But lenders still have standards that need to be met, and we all know how tight those standards have become. Also, the increased loan limits do nothing for people who are saddled with selling a house to be able to move into another house. It's like the corner candy store in a small town. It may double its size, but how much candy can people in that area buy?"

For Terry Dona, the new limits are already helping buyers beat tough down payment requirements. The sales manager at Metro Mortgage and Gulf Coast Associates in Bonita Springs, who's also a mortgage underwriter and HUD lender, says that since the new FHA limits were introduced, she's seen double the number of buyers using FHA loans to purchase homes. "Probably the biggest issue, especially for younger buyers, is the ability to get a down payment together," she says. "With not-for-profit down payment assistance programs, buyers with a decent job and good credit can get into a house for as little as $500. That makes a huge difference, and it makes it possible for quite a few people to buy."