Covington Living Today

Roll Me Over In The Clover...  words to an old ditty I was reminded of when I read the latest FHA rules waiver.

On January 15, the Federal Housing Commissioner signed a waiver of Section 203-37a(b)(2) of FHA regulations which essentially state that you cannot get an FHA loan for a property which has been purchased by the seller within the past 90 days.  The waiver takes effect on February 1, and will be in effect for one year from that date.

What does this mean? 

The FHA decided that waiving the 90-day sale rule will offer a multitude of advantages to both the agency and the US housing market:

• It will help address the foreclosure crisis;
• Give FHA a "greater opportunity to dispose of its single family REO properties in a way that maximizes return to the FHA;
• Permit buyers to use FHA loans to purchase other bank-owned property;
• Create market conditions allowing homes to resell as quickly as possible;
• Help stabilize resale prices; and
  
• Help stabilize neighborhoods and communities where foreclosures have been high.

So, let the "flipping" begin!

There's Always A Catch...

Naturally, there are a few restrictions to applying the waiver.  But they're not so bad for transactions on the up-and-up.

• All transactions must be "arms-length" between the buyer and seller;
• Seller must hold title to the property;
• No pattern of previous flipping associated with the property;
• Property must be marketed "openly and fairly" via MLS, FSBO, auction, etc.

And in cases where the sales price of the property is 20 percent or more over the seller's purchase cost, the lender must justify and document the reason for the increase in value with the seller or through an appraiser, and must have an inspection done and provide a copy to the purchaser.

Will It Help?...

In part of the waiver order, the  FHA says, "As a result of the currently tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers.  FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to the stabilization or neighborhoods and communities."

This could actually be as good or better an effort as the homebuyer tax credits which expire this April.  We'll have to wait ans see.  But, let's hope so!

Roll me over...
In the clover...
Roll me over in the clover,
And do it again!

In today’s Covington real estate market, I’ve ceased being amazed at the attitude of the FDIC, some of our large banks, and alleged premiere mortgage companies.  They are continuing to do more to hamper a rapid recovery of our housing industry than they are to facilitate it.  And, they don’t really seem to care.

There are exceptions, naturally.  But, they are few. 

Several of our “local” banks, strapped with significant numbers of foreclosures, are making genuine efforts to reduce their inventory and bring things back to a more normalized market.  They have assigned special management teams to work on getting the foreclosed homes off their books.  They’re advertising, offering special agent incentives, good interest rates and special financing packages to qualified buyers.  Most importantly, they always are available to talk with agents.  But, the “big guys” are another story…

In the past couple of weeks, my associates and I have been involved in two situations which have become all too typical.  One involves the FDIC, and the other a large bank/mortgage provider, who shall go unnamed.  I won’t even disclose the names of the horses which pull their stagecoach.

In the first situation, a local bank foreclosed on a number of new homes in an upscale Covington neighborhood and was making every effort to sell the homes.  In fact, they had several under contract when the FDIC stepped in and assumed control of the others.  My associate had a qualified, pre-approved buyer who had found one of the remaining homes to be their “dream.”  But when the agent called the local bank to present her offer, she was told that the FDIC had assumed control of the remaining homes, there was no one she could talk to at the FDIC to make an offer, and even if she called and left messages, no one would call her back.  “The FDIC has its own procedures for dealing with its inventory,” she was told, “and don’t seem to be in a hurry.”  The homes may be re-listed with an agent in four to six months, but until that time, there’s nothing you can do.”  The result… a confused, frustrated, inconvenienced buyer, a frustrated Realtor®, and another new home remaining in inventory, deteriorating, blighting the neighborhood and ready to be vandalized.

In the second situation, my associate made an offer on a foreclosed home listed for $256,000.  Her buyer's offer of $205,000 was the highest of three which came in at essentially the same time.  However, several days later, the listing agent called to tell her that the asset manager for the mortgage company which owned the home had decided they would get more for it by selling it at auction.  Last weekend, my associate bought the home for her client at absolute auction for $140,000.  My associate had a very happy, satisfied client, but she got paid much less than her effort was worth.  And, I hope the asset manager got thrown from the stagecoach.  He probably didn't...

But, I’ve ceased to be amazed!

Or do you just feel like you’ve been raped… again?

Our U.S. House of Representatives and Senate reached a “closed door” agreement last night on a tentative $789 billion “stimulus” bill meant to send signals to the American consumer that our economic woes will soon improve and instill confidence in a brighter future.  So, what’s so stimulating in the agreement?

• $90 billion in increased federal matching funds to states to help pay for Medicaid, along with an additional $54 billion that could be used to build and repair schools and colleges.
• $11.5 billion supporting the IDEA program for special education, along with an additional $10 billion to help low-income students.
• Funds to modernize the electrical grid, make federal buildings more energy efficient and to help low-income families weatherize their homes.
• Health insurance subsidies for people laid off from their jobs, and money to support hospitals in modernizing health information technology
• Infrastructure funds for building and repairing highways and bridges, expanding transit systems, upgrading railroads and airports, repair federal buildings, and bring broadband Internet service to under-served areas.
• $70 billion as a one-year fix for the alternative minimum tax, saving some 20 million middle and upper-income taxpayers about $2,000 in taxes in 2009.
• And, finally, an exciting, stimulating, tax credit for 95% of American workers which will add a whopping $13.00 to take-home pay beginning in June.  But wait… that $13 buck will drop to about $8.00 next January!

But where's the stimulus for the economy?

The singular item which could have put the economy on the road to recovery – fixing the housing market crisis via a $15,000 tax credit for all homebuyers – was totally deleted from the package. 

The world-wide economic crisis – banks going under, credit unavailability, home foreclosures and insolvent builders resulting in higher unemployment rates -  began with the implosion of sub-prime lenders and the mortgage market. So there’s no reason to believe that if housing led us into this situation, it can’t lead us out.

In fact, that’s exactly what it did in 1974.  In that year, our housing market was in much worse shape than today.  But President Gerald Ford and Congress passed a one-year tax credit for anyone buying and occupying a standing home, and within one year two-thirds of existing inventory was sold, housing prices stopped declining, and the economy was stabilized.  Is that so hard to understand, Congressmen and Senators?  Do you not learn from the past?

Are you stimulated yet, or do you feel more like a Sabine woman than an American citizen?

Maybe this will “stimulate” you.  Take a look at some of things inside the compromise stimulus package:

• $650 million for digital TV coupons
• $600 million to buy new cars for the Feds
• $650 million for wildlife management
• $570 million for climate initiatives
• $150 million to improve Smithsonian buildings
• $75 million for “stop smoking” programs
• $30 million to restore the wetlands habitat for the salt marsh harvest mouse (a Nancy Pelosi pet project)
• $30 billion to improve Federal buildings
• $1.5 billion to prevent homelessness, and, Oh Yeah…
• $2 billion as a “gift” to someone’s friends at ACORN.

Are you “stimulated” yet?  If not, I suggest you use your $13.00 windfall to buy Viagra.  Then, maybe next election, we can stick it to the 535 politicos running this country rather than allowing them to continue screwing us.