Special offer

Congress wants to put the American Dream out of Reach for most people!Take Action!

By
Real Estate Agent with Berkshire Hathaway HomeServices California Properties 01238708

Congress wants to put the American Dream out of Reach for most people!Take Action!

First I would like to give you my position with a little background: I am all for responsible lending, buying and keeping deadbeats and cheats out of home ownership. When my parents bought their home they had to put down 20 per cent and we had to pool our resources to make it happen. The house was $42,500.00 and my mother sold some of her jewelry, as my father sold his coin collection and I took a job during the summer and gave my first semester College money to make it work.

The Facts:  Congress wants my clients, your clients to put down 20% as the down payment. The average two bedroom condominium in Marina Del Rey is $509,000.00 I took out the luxury and high end condominium for this calculation. This is strictly based on the last month's sold numbers. I did not include ocean view condominiums, rather your basic bread and butter two bedroom condominium one would buy without having extravagant taste.

Let's Do the Numbers: $509,000.00 sales price with 20% down payment is $101.800.00 plus 3% closing costs is $15,270.00. Now that is a total of $117,070.00, which a buyer would need to purchase this Condominium. How many average Middle Class families have this type of Cash in their Savings Accounts? I sure do not, do you?

The National Association of Realtors (NAR) did some research on this very question. 60% of recent home buyers made less than the 20% down payment to buy a median-priced home. They also discovered that it would take about 14 years for a typical person to save up a 20% down payment.

Now with that said if the new regulation governing Qualified Residential Mortgages (QRM) takes effect this year, then basically 60% less people will be buying homes. What will that do to the fragile economy?

Not only Realtors, but the entire country will be affected by this bad Regulation. Please contact your Congress Person today if you are a buyer, seller or future buyer or seller of Real Estate. Tell a Friend, Take action. This will affect everyone in some form or another.

If you are a consumer  who is considering buying  or selling  a home, investment real estate, vacation homes, or beach properties in Southern California, Los Angeles, Century City, Westwood, West Hollywood, Beverly Hills, Culver City, Marina Del Rey, Venice or Malibu. Feel Free to give me a call at 310.486.1002 (USA) or email me at homes@endrebarath.com  or visit one of my websites at http://www.endrebarath.com  Your Pet Friendly Realtor. I contribute a portion of my commission to Local Animal Rescue Organizations.  

 

Comments (15)

Linda Papallo
Century 21 Access America Licensed in CT - Wethersfield, CT
860 221-8600, Your Wethersfield CT Realtor SFR, CDPE

Endre,

 

Excellent blog post. I sent our Congressman  an email to take action against this bill. Very few individuals have huge sums of cash for a 20% down payment.  The real estate sector will take a huge hit in the event QRM is passed.

Thank you for your post.

May 23, 2011 12:42 PM
Ken Barker Realtor® GRI, E-Pro Certified
Dilbeck Real Estate - Burbank, CA

Endre - Excellent portrayal of the numbers. It is scary. Yes there are some percentage that can but I even have quite a few that need help on 5% down with closing costs paid by the seller. It will be very slim.
I am never ever one to write my congressman but it is happening today, O.K. tomorrow.

May 23, 2011 01:26 PM
Paul S. Henderson, REALTOR®, CRS
Fathom Realty Washington LLC - Tacoma, WA
South Puget Sound Washington Agent/Broker!

I just heard the government is going to start showing the advantages of renting.

May 23, 2011 01:39 PM
Phyllis Lerner call 914.438.7556
Corcoran Legends Realty - Tarrytown, NY
Corcoran Legends Realty

Why do our elected officials have no common sense? The following organizations, along with NAR, recently prepared an in-depth analysis of the impact of the proposed "Qualified Residential Mortgage (QRM) Regulation":

  • Center for Responsible Lending,
  • Community Mortgage Banking Project,
  • Mortgage Bankers Association,
  • Mortgage Insurance Companies of America, and
  • National Association of Home Builders.

These oranizations developed this joint white paper in advance of the House Subcommittee on Capital Markets and Government Sponsored Enterprises hearing on the Qualified Residential Mortgage, which took place on April 14, 2011.

The executive summary of the white paper, entitled, "Proposed QRM Harms Creditworthy Borrowers and Housing Recovery," is provided below, or the entire white paper is available for download as a PDF. The executive summary was also issued as a joint statement.

Executive Summary (and statement)

The government is throwing a devastating, unnecessary and very expensive wrench into a very fragile housing recovery. First time home buyers will have to choose between higher rates today or a 9-14 year delay to purchasing a home while they save up the necessary down payment. And well over 25 million home owners would be locked out of refinancing at lower rates because they currently do not have the required 25 percent equity in their homes.

High down payment and equity requirements will not have any meaningful impact on default rates. But they will require millions of consumers, who are at low risk of default, to either put off buying a home or pay unnecessarily high rates. The government is penalizing responsible consumers, making homeownership more expensive or simply out of reach for millions.

We must urge regulators to develop a final rule that encourages good lending and borrowing without punishing credit-worthy consumers! Prevent our government from going from one extreme to the other!

Download "Proposed QRM Harms Creditworthy Borrowers and Housing Recovery" white paper

 

May 23, 2011 02:00 PM
Donne Knudsen
Los Angeles & Ventura Counties in CA - Simi Valley, CA
CalState Realty Services

Endre - I too am not one who is promoting the QRM policy.  Between hubby and I, we have many homes and only the last two were ones where we put 20% or more down.  With so many homeowners in a position where they can not afford to sell, it may be years before they will be able to breakeven let alone walk away with 20% to put down on another home.  Don't even get me started on first time buyers.  After 8.5yrs in the mortgage industry, I have personally seen only a very small percentage of first timers with 20% or more to put down on a home. 

This policy is nonsense.  Guess I better write my congressman again (sent him numerous letter during the recent Reg Z issues this year).  As much as I dislike the guy (have never voted for him), I did read something about him recently that would indicate that this kind of policy would not be something he would probably support.

May 23, 2011 04:29 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Linda, than you fro the nice words, it is great that you are reaching out to your congressman, hope you spread the word as my post's intention was to get the word out to as many people as possible. Good to know that Connecticut is in.

Ken, the more people reach out to their politicians the better it is so thank you for spreading the word.

Paul, I love your sarcasm:))Please reach out to your politicians

May 23, 2011 05:47 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Phyllis thank you for adding to the conversation and the link to the white paper. On a side note do not forget to reach out to your politicians as well.

May 23, 2011 05:49 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Donne, I would love for you to let us know what per cent of your 8.5 years paid with 20 per cent down. As well as the converse what per cent did not. Hence that is what per cent would be missing out and dropping out of the purchasing of homes. My whole point of my post. I hope more people will see it and spread the word. Thank you for your input.

May 23, 2011 05:52 PM
Brian Doubleday
Brian Doubleday - IML RealEstate - Orange County, CA Broker - Ladera Ranch, CA
Ladera Ranch, Foothill Ranch, Lake Forest, Mission Viejo

Just fell out of my chair, this is very scary, that would definitely kill the economy, thanks for the heads up

May 23, 2011 06:05 PM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Brian time to wear seat belts in your chair at home & in the office....

May 23, 2011 06:08 PM
Brian Doubleday
Brian Doubleday - IML RealEstate - Orange County, CA Broker - Ladera Ranch, CA
Ladera Ranch, Foothill Ranch, Lake Forest, Mission Viejo
LOL!!!
May 23, 2011 06:19 PM
Rene Fabre
ARFCO Media - Renton, WA
Practicing Philosophical Eclectic of the Arts

This is just like grade school when the whole class got punished for something one idiot did... Our we headed back to feudalism? It wasn't the American homebuyer that got us into trouble. It was the friggin' greedy banks and their idiot loan practices.

May 24, 2011 02:46 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Rene, what is unfortunate here is that by forcing Lenders to do only 20% loans Congress will basically put the Economic Recovery on hold for a good 5-10 years. The economy is so fragile anyway we do not need this to happen. Quite frankly I am surprised that not more people are aware of this as well as the ramifications. Thank you for commenting and spread the word.

May 24, 2011 06:35 AM
Rene Fabre
ARFCO Media - Renton, WA
Practicing Philosophical Eclectic of the Arts

That's a good point (that hadn't really sunk in for me yet)... I will spread the word! Thanks...

May 24, 2011 11:53 AM
Endre Barath, Jr.
Berkshire Hathaway HomeServices California Properties - Beverly Hills, CA
Realtor - Los Angeles Home Sales 310.486.1002

Rene, hope you are spreading the word as we speak:))

Aug 26, 2011 02:14 PM