Fannie Mae and Freddie Mac loans were exempt from the HAFA short sale program that was put into effect by the Treasury on April 5, 2010.  Fannie Mae has just created its own version of HAFA with regulations that you can find at http://shortsalesr.us/FannieMaeHAFA.pdf.  Similarly, Freddie Mac has created its version of HAFA with regulations you can read at http://shortsalesr.us/FreddieMacHAFA.pdf.

Does this addition to HAFA make you happy?  In general, the terms are similar to the Treasury's short sale program that is supposed to expedite the review and approval of short sales by pre-approving the seler for the short sale and establishing the amount the lender will accept at the time the Short Sale Agreement (SSA) is entered into.  In other words, you qualify the seller and get the amount needed from the sale at the time you list the property.  However, there is a difference with Fannie and Freddie.  With the Treasury's program, the lender considering the short payoff may tell the Realtor how much they will settle for.  For those of you who do a lot of short sales, they will specify the amount they want to be paid at closing as shown on line 504 of the HUD.

In the Fannie and Freddie program, the servicer is prohibited from telling the seller, buyer and Realtor what this amount is.  Instead, the servicer will establish an asking price based on the condition of the market in the area.  Who is better at setting an asking price: (1) the Realtor who works there every day or (2) a Loss Mitigation negotiator with files from all over America?  When the contract is submitted, you hope that this asking price results in the Minimum Acceptable Net Proceeds (MANP).  If you do HAFA short sales, you have to love the acronyms :-) .  

Having the Broker Price Opinion or appraisal already done at the time the offer is presented is a benefit, and the servicer does not tell the Realtor what the acceptable net proceeds are in most of the non-HAFA short sales (except for FHA short sales where you know to the penny).  So, in this manner the program gives a benefit of the BPO already being done and the same result as the old fashioned short sale where you play "guess again" on the amount the lender wants.  But, it could have been better if Fannie and Freddie followed the Treasury's lead.

The other bad news is that the servicer tells the Realtor how to market the property, and supervises the marketing plan.  Again, who knows better what will work (1) the Realtor who has developed an effective program or (2) the loss mitigation negotiator who just took the HAFA training course.   The guidelines mandate that the marketing program includes " a "For Sale" sign, Multiple Listing Service(s), flyers, print ads, open houses as well as appropriate usage of the internet;"  Few will argue with a for sale sign and putting it in the MLS, but open houses work less than 2% of the time according to NAR statistics.  Print ads have dramatically fallen because they are not that effective.  However, if you want to comply with the Short Sale Agreement you will do these things, because the agreement can be cancelled if you violate it.

Another problem is that a seller cannot be considered for a Fannie or Freddie HAFA short sale if a foreclosure is pending that could sell the property in 60 days, or if the state laws would allow a foreclosure in the next 60 days.  States like Texas can go from a dead start to a full foreclosure in less than 60 days, so does that mean you cannot do a Fannnie or Freddie HAFA short sale in those states?

There are some great benefits.  The servicer must respond to an offer within 10 business days.  That beats the months of waiting we do now.  The servicer must allow at least 45 days to close the sale after approval, with a maximum of 60 days.  Also the foreclosure must be postponed during the sale period, wich is at least 120 days. 

The financial incentives are similar. The seller gets $3,000 in moviing assistance.  The servicer gets more under Fannie and Freddie than the Treasury by receiving $2,200 for an approved short sale, as opposed to $1,500 for the Treasury. 

So, like everything else in short sales, there is some good news and some bad news.  But, at least there is a program that provides some tools that a savy Realtor can use to help a borrower in trouble.

If you need an encyclopedial of information on short sales, go to www.ShortSalesR.us and for the complete  Fannie Mae guidelines go to http://shortsalesr.us/FannieMaeHAFA.pdf and for the Freddie Mac guidelines go to http://shortsalesr.us/FreddieMacHAFA.pdf

   Learn Negotiating Skills So You Don't Negotiate Like This!

It took me 17 years of doing short sales to realize that I needed to change how I taught short sales to Realtors and their assistants.  I teach a class approved by the North Carolina Real Estate Commission for continuing education credit, and I have written a book endorsed by the Council of Residential Specialists (CRS) of the National Association of Realtors called Create A Short Sale, Your Guide Through the Short Sale Maze.  I believe that Realtors are going to rescue America by doing more short sales, thereby decreasing foreclosures with the result that the sellers, buyers and the neighborhoods are all better off.  Short sales are better for everyone in Real Estate, but they are very hard on Realtors. 

Many of the courses that teach Realtors how to do short sales are good and a lot of the members of ActiveRain participate in making short sales better.  Thank you for your good work.  However, I realized that there is a critical part of short sale education that is not getting enough attention. I also wrote Create A Great Deal, the Art of Real Estate Negotiating, which CRS also endorses, so my emphasis is teaching negotiating skills.

Many of the courses teach you how to get short sale listings,  get contracts signed and submit short sale packages, which is good.  However, it does not matter how many contracts you get signed, it matters how many sales you close. I have been able to close all but one of my short sales in 17 years. So, I realized that the part of short sales that needs more instruction is negotiating with the banks and having the right people for that job.

Most Realtors are great at dealing with people and putting deals together, with appropriate personality types.  Most of them are not good at detail work, persistent follow through and repetitively calling banks.  In other words, they do not have the attrributes to succeed at an essential part of the short sale process: negotiating with banks and closing the sale.   I have been trying to teach Realtors how to do the entire process of a short sale, which is like teaching a donkey to fly.  You can get them off the ground with a lot of energy but they are not constituted to stay with it to complete the course, and the landing is not pretty.

So, my new course teaches negotiating techniques that work gracefully with the bank, emphasizing collaborative negotiating where you work together with the loss mitigation negotiatior to come to a Win-win result.  Also, I teach team members and virtual assistants to do the detail work that they do much better than most Realtors.  So, my version of short sale success is a team sport.

If you would like to learn more about this different portion of short sale education, go to http://www.ShortSaleNegotiatingSpecialist.com .  This niche of short sale education can change your success rate for short sales dramatically, so you can close them all.

After all, it takes at least as much time to work a short sale that does not get the bank's approval as it does to work on one that closes --- and the ones that close pay much better.

I wrote the book, Create A Great Deal, the Art of Real Estate Negotiating, which just being published.  It has been very well received.  Here is a review from Inman News by Bernice Ross, their most published columnist.  I wanted to share it with my friends.  If you want to buy the book, or for more information, go to www.CreateAGreatDeal.com.  

Secrets of a master negotiator

Top tips from real estate broker Tim Burrell

By Bernice Ross, Monday, June 1, 2009.

Inman News

Negotiation is the No. 1 skill that you need in real estate to succeed. Are you ready to master the secrets of becoming a master negotiator?

Whether you are a newbie or a 30-year real estate veteran, growing your negotiation skills is one of the best ways to improve your conversion ratio and to close more business. In his book, "Create a Great Deal," Tim Burrell provides the strategies you need to maneuver through virtually any tough real estate negotiation. Here are some of Burrell's top tips.

1. Trust is paramount
How do you establish trust in a negotiation situation? There are three key steps: Listen, ask questions, and let the clients be in control of the process. Outline their options (including not accepting the offer) and allow them to decide which option is best for them.

2. Get something in return
Some negotiators constantly grind the other party to obtain concessions. To break this pattern, when you make a concession ask, "If we do that for you, what are you willing to do for us?" If you allow the other party to come up with a concession, it may be better than what you would have proposed.

3. Reciprocity
This is the opposite of "getting something in return." In reciprocity, you offer to give something first in order to get something back. For example, if negotiations are at an impasse, you can restart the negotiation by making a new concession. For example, you could say, "We could move up the closing date. Is there something you could give us in exchange?"

4. Flinch and vise
When a buyer wants to make a ridiculously low offer, grimace (that's called the "flinch"). After you grimace, respond by saying, "You'll have to do better than that" (that's the "vise.") This approach often causes the buyer to raise the offer. If not, you have uncovered that this may be the best the buyer can do.

5. Let silence do the heavy lifting
Make your proposal and wait for the other party to respond. Most Americans are uncomfortable with silence and feel compelled to say something. In contrast, people from other cultures often use silence to get what they want. Burrell recommends that silence is particularly effective when the other side has made you angry. Rather than lashing back at them, silence actually accomplishes more.

6. The decoy
It's always smart to include at least one item in your negotiation that your clients are willing to concede. For example, if the sellers want to close after school is out, the buyers could ask to close quickly. When the sellers make a counteroffer pushing the closing date back to the end of the school year, they will feel as if they have gained a major concession. You can then ask for a concession in exchange for the later closing date.

7. Give your clients alone time
When your clients appear to like a property, find a way to excuse yourself so they can talk in private. This is especially important for people who do not speak English as their first language. The only buying sign you may see will be when they excuse themselves to have a private conversation in their native language.

8. Don't accept the first "no"
According to Burrell, for determined negotiators, "no" is merely an opening bargaining position. This is particularly true for bureaucracies including the government, banks, major builders and insurance companies. If you accept the first "no," they don't have to do any additional work. Burrell said the same thing is true for home warranty insurance. If they can tell you that, "No, it's not covered" and you go away, their problem is over. Be persistent.

9. Accept a really good offer slowly
If you receive an offer that is way too good, don't jump up and down with glee. The other party will believe that they made a mistake. Instead, question some of the terms. Suggest that you might have to stretch to accept their proposal. Alternatively, ask them to throw in a little something to get you to accept. That way, the other party will feel that they did all right rather than feeling that they gave too much away.

10. Translate issues into numbers
Assume that your buyers are making an offer on a house that is listed for $150,000. The buyers and the sellers are $3,000 apart. The buyers are resisting coming up with the additional $3,000. Each $1,000 of their loan amount results in an additional $6 per $1,000 in payments. In this case, the additional payment would be an additional $18 per month. Explain to the buyers that if they are able to skip one inexpensive restaurant meal per month, they will be able to get the right home with the right schools for their children.

If you are serious about upgrading your negotiation skills, "Create a Great Deal" is a great way to do it.

Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, trainer and author of "Real Estate Dough: Your Recipe for Real Estate Success" and other books. You can reach her at Bernice@RealEstateCoach.com.

Copyright 2009 RealEstateCoach.com

Reproduced with permission from Bernice Ross

I am amazed that the Today Show put Rick Santelli on as the first thing to start America's Day.  He has a complaint about the government's efforts to help the housing crisis.  That would be alright if he had any facts as the basis of his opinion and any educational background that would qualify him to talk about the economy.  I understand that he was an English Major at Buffalo.   THE MAN IS A LIAR, AND THEY GAVE HIM AIRTIME!

He said that he is upset because the new programs to stop foreclosure let people reduce the amount of their principal of their loans, i.e.  not pay back what they borrowed.  That is not true, they are adjusting the interest rates and the time over which the payments are made to help borrowers make the payments, but they are not talking about modifications to eliminate the obligation to pay the money back.

He said this effort will help speculators and "flippers" who bought homes to resell.  That is not true, the plan only applies to owner occupied homes.  So, it does not help people who were just speculators, it helps families stay in their homes.  His pathetic statement wondering how you separate out speculators from deserving people shows that he should not be a commentator allowed on the air.  The plan separates them out specifically by refusing to help homes that are not owner occupied.  In spite of many attempts by Brian Williams to ask what Rick Santelli would propose, he had nothing, absolutely nothing to suggest, other than to say there should be much debate on these issues.  He could not even say what he wants the 92% of America that is paying their mortgage to do.

So, he gets America riled up at a time when we need to work together, and the Today Show gave him the podium to do his damage.  His lies need to be corrected.

You can look at my information and see I am a Realtor in Raleigh, North Carolina, then dismiss what I have to say because of my profession.  However, I a big part of my business is listing and selling homes that have been foreclosed.  So, the more the Today Show put a liar like Rick Santelli on the air to make housing worse, the more money I make. This is not about my self interest, this is about saving America.  While liars like Santelli make me more money, I am an American first.

This new effort by the government will allow people like my daughter, a school teacher, to get an adjustment to her mortgage.  She bought a home for her family with four children while we were selling her home in California. The idea was to refinance the new home once the house in California sold.  Before the government's efforts, she could not refinance, because the new rules established by the banks say she has to be in her new job for two years.  She has excellent credit, she is improving her skills to make more money but the inappropriate restrictions on credit are making her efforts to support her family much more difficult.

Instead of focusing on how this plan will benefit America, and give me less foreclosed homes to sell, the media puts a liar on the air to spread mis-information to undercut this effort.  This mistake needs to be corrected.  I sent a similar message to the Today Show.  Let's hope they do something, as this kind of journalism would even make Fox News blush. 

Wachovia Bank is in merger talks with several financial institutions, apparently because there is concern about their portfolio of sub prime loans.  Their stock price has fallen dramatically, and they are talking with potential suitors.  I do not see anything wrong with Wachovia's financial situation, but I have seen where unfounded concerns have caused big problems for our financial institutions.  With a little help from their friends, Wachovia will stay independent.

It is better for North Carolina if Wachovia remains independent.  The firm is a large employer in North Carolina, and it is one of the highlights of the Charlotte economy.  I do not work for Wachovia, and I live in Raleigh, so neither of these affrect me directly.  I want the financial crisis to stabilize, and for our employment to increase, not decrease.  If Wachovia merges, you know Charlotte will be hurt and many North Carolina jobs will be lost or transfered elsewhere.

The people of North Carolina always help their neighbors stay out of trouble.  It looks like Wachovia is not in fact in trouble, as the financial information reveals that the bank is stong.  But, perception is critical in these times of bad financial news.  I do not want the media coverage of the merger talks, with the tag line that implies that there is a problem with their portfolio of sub prime loans, to give Wachovia the same problem that happened to Washington Mutual.  If the depositors support Wachovia, there should be no reason to merge, particularly with the imminent signing of the bail out plan that will solve some of the issues with sub prime loans.  I want us to learn from the experience of Washington Mutual.

Washington Mutual was in fact well funded, until the public got worried about them.  It is true that Washington Mutual had a "Memorandum of Understanding" with the Office of Thrift Supervision, a part of the Treasury Department, so there was something for the depositors to talk about.  There is nothing like that with Wachovia.  When the Washington Mutual depositors paniced and took billions out of the bank, it could not survive.  Remember the scene from the movie, Its a Wonderful Life, where George Bailey barely keeps the bank open by using all but two dollars of his honeymoon money during a run on the bank.  The run on the bank is what happened to Washington Mutual, only they did not have George Bailey.

Washington Mutual was taken over last Thursday by the FDIC, and sold at a fire sale price to JP Morgan Chase.  The sale price for the assets was $1.9 Billion, which is a lot of money, but it is nothing for one of the largest financial institutions in the United States. 

What did the WAMU failure do?  The people who left their money on deposit did not notice any change, as the bank opened the next day and all their money was there.  So, everyone who took their money out of Washington Mutual and participated in killing the institution, did not have any advantage from withdrawing their money.  My personal hope is that they misplaced some of their cash, so they lost something, while all of the people who left their money in Washington Mutual still have every cent.  There should be some "bad karma" from being the cause of further problems in our economy.

What eles did the death of Washington Mutual do?  All the stockholders lost everything.  The WAMU employees who had lots of WAMU stock in their retirement plans were wiped out.  So, the working people just lost a major part of what they worked for.  In the meantime, JP Morgan Chase is going to have a huge profit.  So, the rich get rich, and the working people get wiped out.   Also, the rest of us get less competition in the financial market, so there is less competition when we want to get a loan.

What do I want you to do?  Do not take any money out of Wachovia.  Those of us in North Carolina want to stand by our major institutions, and Wachovia, and the banks that are now part of Wachovia, have been a part of this state for a long time.  In fact, I want you to put money in Wachovia so North Carolina can show our neighbors that we want them to be an independent part of our community.  Most of my money is in Bank of America, and they have been gobbling up Countrywide and Merrill Lynch, so they will be fine without me.  I have some small Wachovia accounts.  Monday morning, the money comes out of Bank of America and goes into Wachovia.  I want to be like the friends in the movie Its a Wonderful Life who contribute to the success of my neighbors and the bank we need in North Carolina.  I do not want to say it is unpatriotic if you particupate in a run on the bank, but you sure are not helping your country or your neighbors if you do. 

If you know someone at Wachovia, please let them know we want them to remain independent.  If you have any money in Wachovia, it is safe so long as it is within the limits of the FDIC insurance.  So, leave it there.  Even better, take whatever you have in your mattress and put it in Wachovia.  If North Carolina shows them that we care, I hope they will show us they have the strength to remain independent. 

If you are wondering why I am doing this, financial stability is partially in my best interest.  I am a Realtor, so if banks remain strong, then my clients can get loans and buy real estate in Raleigh.  However, I sell foreclosed properties, the ones that banks have taken back, we call them REOs.  So, if there are more financial problems, I make more money because I sell more REOs.  I am not doing this for the money, I am doing this because it is good for North Carolina and the people who buy homes here.  If you want to find out more about me, visit my main blog at http://www.TeamForYOUrDreams.com/blog.

I will see you at Wachovia on Monday morning, putting money in the bank.

posted by Tim Burrell -  Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart  held a press conference Sunday to announce that the government had placed Fannie Mae and Freddie Mac under conservatorship.  After meetings with the Board of Directors of both organizations,  the Federal Housing Finance Agency  took control of these institutions that are vital to financing of home purchases. 

Fannie Mae and Freddie Mac are government sponsored enterprises (GSEs) that are involved in more than half of all the real estate financing in the U.S.  They do that by buying loans from banks and packaging those loans as Mortgage Backed Securities, and selling the securities.  By selling the loans to Fannie and Freddie, the banks get fresh capital to make new loans.  The sale of mortgage backed securities by Fannie and Freddie has been hurt by concerns overt sub-prime loans and the higher than normal default rates on mortgages.  In other words, the buyers of these securities are scared by the reports concerning the sub-prime loans and the increase in foreclosures.  So, you have the combination of a huge increase in the number of loans that need to be purchased by Fannie and Freddie with the decline in the ability to sell mortgage backed securities resulting in a financial mess for Fannie and Freddie.

Fannie and Freddie are involved in 5.4 trillion dollars worth of mortgage debt.   To give you an idea of how huge that is, it is more than the amount of the privately held national debt of the entire United States.  In the past four months, Fannie Mae and Freddie Mac have been involved in 80% of the financing of home purchases.  In short, if you want to get financing to buy a home, there is an 8 out of 10 chance that you will need Fannie Mae and Freddie Mac. 

What did the government do?  They replaced the leadership of these two organizations as Herb Allison, a former vice chairman of Merrill Lynch, was selected to head Fannie Mae, and David Moffett, a former vice chairman of US Bancorp, was picked to head Freddie Mac.  The hope is that the rest of the staff will remain in place, and Fannie's Daniel Mudd and and Freddie's Richard Syron, the  former leaders of each organization, have agreed to stay on during the transition. 

The government is going to buy $5 billion in mortgage backed securities held by Fannie and Freddie.  This will provide a quick infusion of capital for each organization.  The Treasury Department said it will immediately be issued $1 billion in senior preferred stock from each company, but eventually the Treasury could be required to put up as much as $100 billion for each company if the funds are needed to keep the companies afloat. This continuing support  guarantees that each organization will remain solvent, assuring that financing for real estate purchases will not be thrown into chaos.  The government also will receive warrants representing ownership stakes of 79.9 percent in each firm.   The existing stockholders will be subordinate to this obligation to pay the federal government, so the 36 billion in outstanding stock for these companies just moved down a notch to be in second position to the federal government.  This puts those shares in the position of junk bonds according to Standard and Poor's ratings.  

In the short run, Fannie and Freddie will be allowed to increase their holdings and buy more loans.  In the long run, the government wants to shrink the size of Fannie and Freddie, with their portfolios shrinking by 10% per year starting in 2010.  All lobbying will cease, all dividends will stop and other cost cutting measures will be instituted to make these institutions more efficient. 

What will that do to Raleigh Real Estate?  In the past few months, some mortgage rates were dropping, but the rates on loans associated with governmentmal agencies were not, as Fannie and Freddie could not pass along the better prices to consumers.  The conservatorship will probably lower the cost of these loans associated with governmental organizations, so buyers may get better rates.   It will also guarantee that these loans will continue to be available.  When I watched GMAC financing close their doors to new loans in the Triangle, I was concerned about the availability of new loans.  Now, I am not, as government will infuse up to $100 billion into each of Fannie and Freddie to see them through.   In other words, investors are much more confident knowing that up to $200 billion will be available to guarantee the long term viability of these organizations.

One of the biggest problems in the real estate industry is the availability of financing.  The raleigh real estate market is in excellent condition, but you cannot close a deal if you cannot get financing.  This move makes financing more certain, and lets Realtors stop worrying about whether they can get loans for their customers.  Just the certainty that loans are available is valuable, and the prospect of getting better interest rates is appealing.  For example, on Monday, interest rates on these types of loans dropped one half of one percent, which has a wonderful effect on lowering monthly payments and allowing buyers to qualify to purchase more house. 

The loss to the taxpayers is debatable, as we taxpayers just got preferred shares in companies that will do well in the long run.  My hope is that the projections of a $25 billion loss to the taxpayers is highly inflated, and the taxpayers may even make a profit from the preferred shares that pay 10% interest.  If Fannie and Freddie make a profit, the government is one of the first to be repaid.  

In general, this is good news for the real estate industry and benefits the stability of Raleigh real estate.  For a local perspective on this event, visit my blog at http://www.TeamForYOUrDreams.com/blog .  Inman News was kind enough to publish an article I wrote on this subject at http://tinyurl.com/67lvze .

posted by Tim Burrell - The Housing and Economic Recovery Act of 2008 has some amazing benefits for first time homebuyers.  When is the last time someone gave you a $7,500 loan, that has no interest, no payments for two years, and if you do not make enough when you sell, you do not have to pay back the loan?  That is what first time homebuyers get.  Call everyone you know who wants to buy their first home, this is too good to miss.

If you have not owned a home in three years, you are a first time home buyer.  If you buy a home after April 9, 2008 and before July 1, 2009, you qualify for a credit.  Call your friends who just bought a home and tell them they may take $7,500 off their tax bill.  It has to be your principal residence, so rentals do not count.

The tax credit is 10% of the cost of the home, up to a maximum of $7,500.  So, if the home costs $65,000, your tax credit is $6,500.  If the home cost $100,000, you would get a credit of $7,500.  This is not an additional deduction that lowers the amount of income to be taxed, it is a tax credit.  In other words, you take $7,500 off your tax bill.  What if your tax bill is only $5,000?  The IRS will send you the additional $2,500 as a refund.  When was the last time the IRS sent you a refund because you bought something?

The loan has no interest, and will be paid back over 15 years.  You get the credit on your 2008 taxes, but you start paying it back on your 2010 taxes that are due in 2011, so you get at least two years without a payment.  You pay back 6.67% of the credit each year, so for a $7,500 credit the payment is $502.50 per year.  If you stay put for 15 years, you pay it off with no interest.

What happens if you sell the house?  You pay the balance back at the closing.  So, you get $7,500 now, and pay the rest of it back if you make money on the sale of your house.

What happens if you do not make enough money when you sell your house?  They forgive the rest of the debt.  In other words, get $7,500 now and pay back nothing if your house only breaks even at closing.  When was the last time you got a loan on a speculative venture where the person who gave you the loan forgave the rest of the loan if you did not make enough profit on the sale? 

The risk of loss in buying now is on the government.  In other parts of the country where real estate is going down in value, you can lose 10% of the value of the home (up to $7,500) and the loss is covered by the fact that you do not pay back the tax credit.  The Raleigh real estate that first time buyers can aford is going up in value, so we are not as worried about the risk of loss.  Even a bad buy that does not go up in value is covered by the tax benefit because you get $7,500 no matter what happens.

 Similarly, if you die before repaying the debt, it is forgiven.  There are special rules for sales as a result of divorce or if the government takes your property by condemnation.

There are restrictions on the amount of income that you can make and still get the credit.  But the restriction is $75,000 per year for a single person and $150,000 for a couple filing jointly, so the vast majority of people qualify.   If you make more than that, you can still get some of the tax credit, but there are complicated rules about phasing out the credit as the income goes up.  If you make that much money, you can afford to hire someone to figure out the formula.  The restriction on the location of the property is minimal, it has to be in the United States.  Not too tough, huh?

There are minimal restrictions on the financing.  If you use a loan that is supported by mortgage revenue bonds, you do not get the tax credit.  These loans are normally made by North Carolina housing agencies, but there are not many of them available, and the qualifications limit their use.  In other words, nearly every loan allows you to get the tax credit. 

What is the catch?  You have to buy your first house in three years before July 1,2009, not be super high income, not use bond financing and buy anywhere in the US,   Not too difficult, right?

If you know someone who wants to buy their first home in three years, call them.  Don't miss it.  This information is the best available as of July 30, 2008, so you want to consult a tax specialist to see if anything has changed while you are looking at houses.

The government gives tax credits to huge companies, here is one for the little guy.   Don't miss it.

Posted by Tim Burrell - President Bush just signed the Housing and Economic Recovery Act of 2008.  The first thing I noticed is that some first time homebuyers may need to hurry.

If you are a buyer that does not have 3.5% downpayment and you want to buy some Raleigh real estate,  you have to buy before October 1, 2008.  The program where sellers can arrange for downpayment assistance ends on that date.  If you are a first time home buyer, you can get an amazing benefit of a tax credit of 10% of the purchase price of the home you bought, up to a maximum of $7,500.   This is not just a deduction to reduce the amount of income you have.  It is a tax credit, i.e. it directly lowers your taxes.   For example, if you buy a home that is worth $100,000, you get the maximum tax credit of $7,500.  If you were going to pay $17,500 in income taxes, you reduce the amount of tax you pay to $10,000.  So, you can buy a home with no money down and get up to $7,500 off your taxes. 

There is a catch.  You have to pay back the tax credit over 15 years, with no interest, or if you sell the house for a profit.   That is not so bad.  Where else do you get an interest free 15 year loan. 

The bill provides $300 billion in financing to allow people who got bad loans to refinance with FHA loans.   If you want to refinance the mortgage on your principal residence, the payments on your current loan have to be more than 31% of you income, the legislation's line of being unafordable.  I have paid over 31% of my income in housing payments for all the decades I lived in California.  The loan had to be taken out before 2008, so it is not meant for newly acquired loans.  The maximum loan is $550,400.  The loan cannot exceed 90% of the appraised value of the house, so the existing lender may have to take a short payoff to make the deal work, if the value of the home went down.  Since the values of Raleigh real estate are holding strong or going up, this provision should not be of major importance to our area. 

Again, this relief comes with a catch.  If you accept this refinancing, you have to share some of the profit with the FHA when the house sells or is refinanced.  FHA gets 100% of the profit if it sells, or refinances,  in the first year, and the amount for the FHA goes down by 10% per year until it reaches 50% for the FHA. 

The legislation also props up Fannie Mae and Freddie Mac.  The sudden decrease in the value of their stocks shows that the investment community has lost confidence in these institutions that are extremely important to financing in the US.  Since these two have an interest in nearly half the loans in the US, their stability greatly affects housing.  The legislation increases the lines of credit for these two and authorizes the government to buy their stock if necessary to give them additional support.  The loan limits for Fannie and Freddie were also raised to 115% of the areas median home price, not to exceed $625,500.  The last part does not have a dramatic effect on Raleigh real estate, as it will be a long time before the median price in Wake County will get anywhere near that limit.

There is one other provision that foreign investors like.  Under existing law, they had to fill out a form with their social security number and give it to the seller.  Now, they give the form to the closing agent and do not have to reveal their social security number to the seller.  Since the dollar is so low compared to foreign currency, and the Triangle is one of the best places to invest in the US, there may be an increase in foreigh investors who purchase Raleigh real estate, so this provision may have some affect in our area. 

It is true that housing has problems, banking has problems and there are more foreclosures.  But, did you know that most of the prices of homes in the United States are going up? Did you know that these prices have been going up consistently since February?  Do you think that information would help prevent a recession?

Here are the facts.  According to National Association of Realtor statistics, the median home price has fallen from a high of $230,200 in July 2006 to a low in February 2008 at $195,600, a drop of 15%. That is the bad news, and that is what you hear in the media.  Since February, however, the median home price has risen steadily every month. By May the index had risen to $208,600, up $13,000 and a full 6.6%. It will be interesting to see what the next index shows when it comes out the end of July.  Another indicator, the mean home price (most of us would call it the average home price),  has risen from a low of $242,000 in February of this year to $253,100, a rise of $11,100 or 4.5%. It, too, has risen every month since February of this year.  That is the good news.   Have you heard any good news about real estate in the media?

In the Triangle area of North Carolina, we did not have the orginal bad news, our market has always been better than the national average.   Instead of going down by 15% in the last year like the rest of the nation, our average sales price went up, from $270,065 in June of 2007 to $278,506 in June of 2008.  If you like median numbers, they went up over the last year also, from 218,000 to $221,900.  Our supply of homes for sale has increased, and it is taking longer to sell the average house, but our average days on the market is a respectable 82.  The Triangle market is not as good as it has been as we have a nine months supply of homes for sale, but I cannot find anything that supports the media "doom and gloom".

We really appreciate our clients who listen to us instead of the media, because they are making a killing in the market.  The media is making everyone think it is a buyers market when, in fact, the prices are increasing.  So, our smart clients are picking up great deals.  We are having a wonderful time negotiating with people who listen to the media instead of knowing the true facts.

So, our Team wants to have a little contest.  We are stumped by the media. Why would they give the image that prices are going down when they are going up?  Why would they want to create problems for all of us who own homes, when I cannot find support for the image of disaster that I hear on the evening news?   Whoever has the best explanation, or possibly the most humorous explanation, will win a $25 American Express Gift Card.  Just send your answer to tim@TimBurrell.com and watch our blog at www.TeamForYOUrDreams.com/blog for the winner.