Housing Stimulus (Or lack there of...)
Housing was hoping to get a big boost from the latest addition to the mammoth stimulus bill working its way through Congress. Senate legislators unanimously approved a proposal earlier this month that would allow a tax credit for home buyers of 10 percent of the value of new or existing residences, up to a $15,000 limit. However, it did not make it in to the recent "stimulus package". Current law provides for a $7,500 tax break but only for first-time homebuyers. "It is time to fix housing first," said Sen. Johnny Isakson, R-G. Isakson's office said the proposal would cost the government an estimated $19 billion. In all, the stimulus reached a total of just under $800 billion. Proposals to move rates on real estate loans down to 4.0% did not carry in the Senate. (Thanks guys, I'd rather have pork anyhow!) Source: The Associated Press.
The U.S. House will vote on a bill to overhaul the Hope for Homeowners program, which by many accounts, has been a flop so far. Congress approved the program in July with the hope that it would aid 400,000 home owners. So far the program has attracted only 451 applicants and just 25 loans have closed. (That's 25! Out of how many millions of homeowners!!!) "HOPE for Homeowners, was designed to help families refinance into safer, more affordable loans, in many cases helping those families avoid a devastating foreclosure," says NAR President Charles McMillan. "Despite being well-intentioned, the HOPE for Homeowners program has had limited success. Lenders have found the program difficult to participate in because of many of the program's constraints." The proposed revision to the program will lower participation standards, cut costs for consumers and reduce the cost of implementation for lenders. The proposed reform will also provide a safe harbor for loan servicers that modify loans and make permanent the increase in deposit insurance to 250,000. Source: Reuters News
So what can we conclude? Politicians like to grand stand and reporters like a good scoop (whether its the truth or not)! It is generally agreed upon that the housing market is exceedingly important to our economy and consumer sentiment, however, the powers that be have (to date) essentially ignored it. The proposals so far, when projected out in to the future, would appear to do more damage than good...
My $.2: Increase the tax credit to $15,000, do not require it to be paid back over 15 years as is currently is required, pressure Fannie and Freddy to slightly loosen underwriting guidelines for well qualified buyers and investors, and to get rid of their Loan Level Price Adjustments (which increase rates significantly when greater than 70% of a home's value is borrowed and the credit score is under 740), and most importantly find a way to keep rates around 5% or lower for as long as is needed!!!
PS: FHA is still doing a great job approving folks with verifiable income and credit over 620. USDA still allows for 100% purchase financing in the less populated areas and for low to moderate income families. For us RhodeIslanders, most of the western part of the state meets that guideline. For more info please visit www.myRImortgage.com
Have a great day!
PS: While my business is good and growing steadily, it is important for you to know that I am NEVER too busy to help those you refer to me: your family, friends, neighbors, and coworkers.
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