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Lalucas's Links
FEBRUARY 15, 2009 1:49PM

Waiting for Wednesday

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Has anyone else noticed that President Obama's announcements during his first days of office are serving much the same function as a really great Advent calendar house? Each day, we get to open the door to find a new delight in the form of overturning a policy from the previous administration, an announcement of forward looking planning, or new figures chosen for his cabinet. All these door openings have been leading toward a celebration on the day after President's  Day on which he (in conjunction with many others) will sign a bill  focused to create jobs and stabilize the economy.

Yes, it will be a very Happy (day after) President's Day this year,  when our belated President's Day gift arrives in the form of a much desired economic stimulus bill. What a valued present this will be -- my heart will soar with most of America at the generosity and good spiritedness of it all.  

Another eagerly anticipated celebration is scheduled to begin on Wednesday, however. On that day, our new President is scheduled to unveil his plan to stem home foreclosures -- exactly 30 days after taking office.  In my mind, I think of it as of Realtor's Day, but that would be a focus much too narrow. Americans may come to celebrate the signing of some massive future Save our Homes Bill as Homeowner's Day.

Yes, we may have a new holiday to add to our already busy calendars. A day dedicated to our thankfulness for the opportunity to continue to own our home will mark a return to normalcy that will be well worth celebrating for many of us. 


In spite of my inclination toward positive thinking, I have taken on board the words of White House spokesman, Robert Gibbs:

"I would wait until Wednesday to see what the President offers and be careful that we don't set an unreasonable series of expectations based on leaks from God only knows where."

In anticipation of the unveiling of the plan, big lenders have agreed to temporarily halt foreclosures. This is good news for homeowners as well as Realtors strugggling with a housing market damaged by the influx of bargain priced bank foreclosed homes and nearly non-existent mortgage lending. In the face of taxpayer dollars given to financial institutions to encourage lending, the Administration needs to enforce the new laws that are part of our Day After President's Day gift package.

There is every reason to expect the housing market to recover when mortgage lending is restored. The National Association of Realtors stated that sales of foreclosed homes has helped drag the median price of homes to the lowest level since 2003.  This is significant because 2003 marked the beginning of the historic rise in home pricing that lead to our current situation.

As a real estate professional, I have stated many times that when pricing hits 2003 levels, more than likely, we will have hit bottom. This is very likely the case unless an event of catastrophic proportions takes place, such as a new war or terrorist attack. Or, if the banks continue to reject new mortgages for highly qualified borrowers, relegating finanincg a home into the realms of The Impossible Dream.

Today, NAR sent out a mass email to their Realtor members  and affiliates with the following statements regarding their work in conjunction with Congress on the Economic Stimulus Bill. Charles McMillan, 2009 President of NAR writes:

"Here is what we have achieved:

1) The loan limits will be raised to $727,000 in high cost areas

2) The tax credit will be raised to $8,000 with NO payback [a true credit]

 3) Interest rates have come down 125-150 basis points

 4) The bill has over $50 billion in it for foreclosure mitigation. With Geitner's Treasury plan signaling that the second half of TARP and TALF will be used to mitigate foreclosures through a government guarantee, drive down interest rates by buying another $200-300 billion of mortgage paper from the GSES's thereby freeing them up to do the same with new mortgages. Fannie Mae has just agreed to lift the cap of 4 investment properties eligible for loans and raise it to 10.

In addition, we preserved what we have - which some tend to forget is always on the table when these negotiations start up again - mortgage interest deductability, real estate tax deductability, and the $250,000/$500,000 cap gains exclusion (an overall package worth more than $100 billion and for some a very attractive funding source for their pet projects). "


NAR started their email with the following paragraph:

"Here's our take on the Stimulis Bill and Treasury announcements made this week. We look at the Stimulis package AND the Treasury's package holistically, in compliment with each other - mostly because that's how the Obama team is looking at it.

Your representatives, the NAR Board of Directors, asked us in November to do 4 things (with an unspoken but clearly understood mandate to PRESERVE what we already have). Here they are: 1) get loan limits raised for high cost areas, 2) make the $7,500 tax credit NOT a loan, 3) try to find ways to push interest rates down (which are higher than they should be due to systemic risk right now) by 200 basis points, and 4) help provide solutions to the foreclosure/short sale problem."

Yes, NAR was able to accomplish their goals with regard to the above listed objectives -- these efforts have well-served struggling homeowners and their Realtor members.  I am Waiting for Wednesday to learn the timeframe under which the details of goal #4 will be available to us to use to stem the tide of foreclosures.

Current methods for handling short sales and foreclosures offer no humanistic or compassionate components as they are currently structured. The focus has been on loans unpaid rather on the permanent disruption to families and their lifestyles by an economy out of control .

Traditionally, the desire for home ownership had both a practical as well as financial component. Keeping a roof over our heads as well as saving for our retirement in doing so  is part and parcel of the American Way of life, the fulfillment of the American Dream. 

Keeping that American vision in mind, homeowners deserve to be treated humanely as financial problems are resolved and new forward looking solutions are crafted. The focus need shift toward keeping people in their homes as well as saving for their retirement through building home equity. As Americans, we need demand a return to the long held principles associated with home ownership for ourselves as well as  our neighbors. There seem to be elected officials listening -- we need to make ourselves heard.


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Lisa, a lot of new information about the housing market that I wasn't aware of and thanks for posting it. It's interesting to read that when the prices hit the 2003 level we will have hit the bottom. I guess anyone who bought after that is going to have to live with the bad timing part of their loss of home equity.
Well, John, it is 2003 prices in our area -- Central Florida. I imagine it will vary from region to regio throughout the country. People that bought in the early part of 2004 may be OK in our area as well. After that, from late 2004 through late 2006 most likely whatever was purchased was at least 10% too much, right on up to 35% or more.
Thank you for your comments, and glad that you are here. I always enjoy your work, even if I don't always get to read are the glue within the OS community -- a gem if only known behind the scenes to people like me (and the others that love you!)
The advent calendar metaphor - beautiful, my dear!
Thanks, Monsieur. I was just wondering what other faith's do with the Advent calendars and decorations that they find For Christmas in stores. Do they call them Christmas Countdown Calendars? Christmas Cubbie Houses?

One of my granddaughters is absolutely fascinated with hers -- she is being raised Catholic. Seems a concept with some stickiness, inside and out ;)

I am real estate impaired and you use a term that confused me about a house for sale on my street. What is a short sale?

And I bought after 2003 so I lost most of my down payment. I am hoping the house increases in value over time.
Hi Dorinda:
Maybe I should write a post about short selling. There is a lot of it now, although some of the need for it may disappear with the President's announcement.

In general, a short sale is a transaction in which a buyer makes a fair market offer for a home, but that offer is less than what is owed to the bank. Either a real estate professional, a lawyer, or an experienced short sale facilitator negotiate with the banks to take less than is owed on the mortgage as payment in full. This saves the seller from having a foreclosure on their credit record.

A home that is part of a "short sale" is generally heading for foreclosure, or is in some phase of being foreclosed upon. You might hear about a troubled homeowner being in pre-foreclosure circumstances. This generally means they are behind on their payments. After some period of time, a legal instrument called a lis pendens is filed against the homeowner, thereby starting the foreclosure process.

Sometimes a short sale can be accomplished if the bank is cooperative. The process is difficult and frustratingly slow for all involved. There are never any guarantees that the bank will agree to take the buyer's offer and move forward to close.

There are so many people upside down on their homes (owing more than the home is worth) that the short sale process is the only option available for some homeowners to get rid of a burdensome mortgage other than foreclosure.

Having to Short Sale a home prior to foreclosure is specifically heartbreaking in conjunction with job loss and bankruptcy. The people may still live in the home during some portion of the process. As their Realtor, it is hard for me to have to bring them disappointing news time and time, again.

These sellers are absolutely stuck with a home that may at one time have offered a wonderful lifestyle. That same home was likely believed to be a great investment. Something must be done to end the terrible pain and anguish of people losing their homes. It is an unnecessary tragedy of our economic times that must come to an end - soon!!
Lisa---a beautiful metaphor and information that most of us don't know but NEED to. The comment on short selling was also very useful.

Thanks for helping us know what we're talking about when we talk about this. . .
Thanks, Roger. Stellaa had encouraged me to write about real estate way back when. I think I should now in the face of our economic situation. Not as fun as some other topics, but more serious and timely, I guess!
Thanks for the info re: short sales. I wasn't really sure how that worked. I am in the process of paying of my bills so I can purchase my first home. I am so excited.