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The Homeowner Rescue Bill Rescues Fannie and Freddie Investors.

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The Homeowner Rescue Bill Rescues Fannie and Freddie Investors. I don’t see any other groups being rescued.

Normally I don’t find it difficult to disagree with President George W. Bush about pretty much everything (save the curvature of the earth and that humans should breathe oxygen). This time it is different. Bush had to have been ashamed to have signed it. Just look at how it is buried on this page. Arizona Senator John Kyl was one of the 13 dissenting votes. Kyl even called a close Realtor friend of mine here in Arizona to explain why he could not vote for it – that it was simply an awful piece of legislation. It is supposed to help save 400,000 people from going into foreclosure. If that was really the purpose, considering how much it will cost (800 billion dollars), It would have been a lot cheaper to have a lottery and simply select the 400,000 supposed lucky ones and just buy their home for them.

But that really isn’t the purpose at all. It is the Fannie Mae – Freddie Mac Bail Out Bill. That is why Bush signed it. He accepted all that other crap so he could do what he had to do to keep Fannie & Freddie afloat. What I don’t understand is why (in the final form it passed in) the NAR backed it. Unless we are to assume that anything that gives any Realtor anything is “good” – no matter the cost, this one just makes no sense.

My office already has had sellers who need to do a short sale either take their home off the market or fail to let agents and buyers show their house. No need. The government is here to help them. If foreclosures are estimated to be in the range of 5.5 million between now and the end of 2010 how does “fixing it” for 400,000 solve anything? And don’t be surprised if there aren’t 400k people (not counting FNMA and FRE stockholders) who get helped at all. I predict less than half of the estimated 400,000 will have anything other than foreclosure or a short sale occur.

The change that will hurt the Phoenix market the most is the complete elimination of the AmeriDream and Nehemiah programs. Effective, October 1st – they are gone. Currently, those seller-funded down payment assistance home sales account for about half of all the homes being sold here. If it had to go away, now of all times? Homeowner Rescue Bill, my ass.

Loads of other stuff. Thanks for nothing, Barney.

Russell has been an Associate Broker with John Hall & Associates since 1978 and ranks in the top 1% of all agents in the U.S. Most recently The Wall Street Journal recognized the Top 200 Agents in America, awarding Russell # 25 for number of units sold. Russell has been featured in many books such as, "The Billion Dollar Agent" by Steve Kantor and "The Millionaire Real Estate Agent" by Gary Keller and has often been a featured speaker for national conventions and routinely speaks at various state and local association conventions. Visit him also at nohasslelisting.com and number1homeagent.com.

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21 Comments

21 Comments

  1. Jennifer in Louisville

    August 12, 2008 at 4:43 am

    Whats not to like…….as an investor: buy a stock, the government (aka American tax payer) covers the downside, and if the stock goes up – you make all the profit. You mean you see a problem with that???!??

    But seriously, I absolutely agree. I personally believe that the this latest piece of legislation rewards those that took big risks – and the persons that went the more conservative route (i.e. putting in an actual down payment and not doing 100% financing, going with fixed rate loans, etc) – are the ones footing the bill for the people that took the risks.

  2. Charleston real estate blog

    August 12, 2008 at 6:45 am

    Russell, it’s election year politics at its worst. And I’ve said for a while that with all the money being thrown around by Washington, the better solution is simply to pay off *everyone’s* mortgage. At least most taxpayers would see a tangible benefit.

  3. Linsey

    August 12, 2008 at 8:32 am

    The thing that really sends me is NAR’s support. Are they asleep at the wheel?

  4. Bob

    August 12, 2008 at 9:14 am

    I just got an email from someone upset because she called Countrywide to apply “for the program” and they didn’t have a clue.

    As much as this bill stinks, the spin of false hope these weasels put on it is worse.

  5. Eric Blackwell

    August 12, 2008 at 10:37 am

    Along Bob’s line of thought…we are getting inquiries about the program, yet when they take a closer look at it, they don’t like it. It is the ultimate political “Chinese Food”…you “feel” full…for about 20 minutes…but then what…

    Eric

  6. Dan Connolly

    August 12, 2008 at 10:52 am

    The bill is wrong on so many levels, from the so called first time home buyer “credit” to the reduction of the capital gains exclusions for owners who lived in their home for two out of the last five years…. and yet I have seen virtually nothing about those aspects anywhere in mainstream media.

    Bob, Countrywide has it head so far up it’s own a** that it’s not even funny. I had an all cash purchaser who made an offer on one of their listings (almost full price). It took three weeks to get it accepted (verbally), then 3 weeks of emails, phone calls, begging and finally threatening to get a signed contract back and a closing attorney assigned. When the contract finally arrived we had 7 days left on a 30 day closing. The first email we got was from the asset manager telling us we had 7 days left on our contract to close. We closed in escrow and then it took 5 business days to get approval on the settlement statement. 2 weeks after closing we get an email from the manager telling us that they have assigned the file to the attorney (who already closed it) and we had 7 days to close or they would cancel the contract.

  7. Paula Henry

    August 12, 2008 at 11:36 am

    Russell – you so eloquently speak the truth about the BS of this Homeowner Resue Bill. 🙂 I doubt I will have many, if any sellers actually assisted by this bill.

    NAR backing may seem a logical solution if only for the appearance of backing a plan to help homeowners, but when the details are revealed and many homeowners do not get the help they think they will, will the NAR then face the wrath of homeowners who look at our profession and our Association as the ones who could not make it work. You know someone will have to accept the blame when the chips fall. It won’t be the next president.

    DPA’s are the one program we needed to keep. Yes, they can often be a pain – but they are good programs. Without looking at all the details, the first-time homebuyer “loan” may be a benefit, but will not replace the DPA’s. We have a similar program here, Indiana Housing, which is a loan to first time homebuyers for downpayment. It has qualification guidelines and stricter than normal Inspection and repair guidelines which can quickly cause a transaction to fall apart when all parties are not aware of the repurcussions of the program. I wonder if we will see such guidelines with the first-time homebuyer program.

  8. Bob

    August 12, 2008 at 12:25 pm

    Bush had no choice. This isn’t about homeowners or even specifically Fannie and Freddie.

    This was a quid pro quo cram down to bailout certain Asian investors who are financing our debt. The payoff for us are sovereign wealth fundslike this one with $29 billion earmarked to take a ton of residential property off the books for maybe 50 cents on the dollar with the goal of getting to the bottom of this mess sooner.

  9. Carolyn Gjerde-Tu

    August 12, 2008 at 3:47 pm

    The “hope” portion of the bill is also puzzling. Not sure why an existing lender would agree to accept less than what they are owed and not be allowed to stay on as mortgage holder. It is my understanding that the new loan will be for 90% of the appraised current value and has to be a different lender than the current one.

  10. Vicki Moore

    August 12, 2008 at 5:02 pm

    I’m going to click my heels: There’s no place like home. There’s no place like home. That’ll be just as productive;

  11. Mack in Atlanta

    August 13, 2008 at 3:52 am

    The estimates that I have seen are that 300,000 buyers will not be able to purchase homes in the next year due to the elimination of seller funded dpa.

  12. Holly White

    August 13, 2008 at 11:50 am

    Some rescue. Ameridream eliminated and the downpayment requirement was boosted from 3% to 3.5%. Now this is something we can really work with. What a joke.

  13. Paul Francis, CRS

    August 16, 2008 at 3:38 am

    Personally.. I call it the Lenders Relief Bill myself.. Just like you we also have strapped homeowners here in Las Vegas with a false sense of hope (IMO) that are doing the same thing as yours and counting on the Foreclosure Rescue part of the bill. Which, from what I understand.. there is no requirement for the original lenders to participate in this to begin with…

    The only true relief there can be for Las Vegas real estate is to specifically address short sales and come up with a better solution in just letting everybody move on…

    Smoke and Mirrors?

  14. Matthew Rathbun

    August 16, 2008 at 9:31 am

    I would like to have seen this money used to regulate the lender’s reactions to the market. We should be putting requirements on the lenders to respond in more reasonable time frames, to actually workout loan options for those who could be helped (fixed interest rates as opposed to just letting ARM continue to escalate)

    Take these funds and hire federal employees to go into the lenders offices and look into why it takes 4 months to get an answer for an offer to purchase for an offer that only requires $10,000 forgiveness from Lender, while they are answering $50,000 less than payoff in two weeks.

    Again, use the money not in the form of the a “bail-out” but in the form of temporary oversight of the lenders until this mess clears up!

  15. Joe Manausa - Tallahassee Real Estate

    August 28, 2008 at 3:15 pm

    Well written and well said Russell. Specifically, the loss of the two down-payment assistance programs is going to hurt all of our real estate markets. These were great programs for people getting into their first home that will now have to wait. The market needs an enema and this bill is only prolonging a blood-letting and perhaps creating a blood-bath.

  16. Steve Simon

    September 8, 2008 at 5:36 am

    Fannie and Freddie, have been bailed out, its official, but its not enough…
    September 8th, 2008
    Over the weekend the two largest secondary market (where loans are bought and sold) players in history FNMA (Federal National Mortgage Association) and FHLMC (Federal Home Loan Mortgage Corp.) were officially bailed out and had their leadership axed for new Generals!

    great if you’re talking about a quick fix, but not an answer that will work for the long term.

    You can read a few hundred more additional words of mine at my blog (you can find it if you really want to 🙂 ), but this really is a band-aid, and election year bandage designed to keep blood off the floor, for now…

  17. Adam

    September 19, 2008 at 11:11 pm

    As a distress homeowner, I’d like to know how to apply for this bill?
    I did call my lender and they said they don’t know yet and you have to wait till October 1st.
    I bought my house in June of 2006 for $345k with 10% down, now, the same house just sold for $194k. Whereas, my loan balance is $305k and my mortgage payment eats 48% of my net income.
    Does any one has a good advice what can I do?
    So far, the only option I see is to walk out, even though, I paid till now $100k between down payment and interest.
    Thanks

  18. Bob

    September 20, 2008 at 8:52 am

    Adam, what state are you in?

  19. Adam

    September 20, 2008 at 8:54 am

    I live in Orlando, Florida

  20. Bob

    September 20, 2008 at 12:32 pm

    Talk to an attorney who understands what your options are and can explain the potential consequences of each option. If you need a referral, let me know.

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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