Photo Courtesy of www.trendir.com
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.