Another interview with Brian Short (Tennessee Association of Mortgage Brokers Executive Director) by News 2 WKRN TV regarding President Obama’s announcement about the $8,000 tax credit being offered to first-time home buyers for those who buy a house before December 1, 2009.
In an effort to rebuild the real estate industry, first time home buyers or buyers who haven’t owned a home in three years are eligible for a tax credit under President Barack Obama’s newly unveiled housing plan.
“It’s a great incentive to get somebody either back into the market or to enter into market for first time,” Brian Short, Executive Director for the Tennessee Association of Mortgage Brokers, told News 2.
The tax credit is worth 10% of the value of the home up to $8,000 from now until December 1.
“Those who have been waiting to buy a home, this is an ideal time to buy a home,” Short said. “You’ve got motivated sellers out there right now and realtors and mortgage professionals have time to help you.”
The tax credit combined with lower home prices, lower interest rates and more houses to choose from makes it a great time to buy.
“It allows people to buy a good quality home at a price they may not have been able to afford in years past,” said Andy Voyles, Director of Operations for Elite Mortgage Services.
Individuals do not qualify for the credit if they make more than $75,000 a year and homebuyers would have to repay the credit if they sold their homes within three years.
Current homeowners can also get a tax credit of up to $1,500 by making their homes more energy efficient this or next year.
East Nashville woman faces foreclosure while battling cancer
Posted: Feb 18, 2009 10:19 PM CST
President Obama Wednesday unveiled a $75 billion plan to shore-up the housing market.
The plan aims to help nine million families keep their homes.
People who owe more than their homes are worth will be able to refinance.
While the plan should lower mortgage payments, the president warns it will not save every home.
Molly Secours lives in east Nashville and is self-employed. She’s caught in the middle of the housing melt-down.
When Secours bought her house, she secured a subprime mortgage loan with a carefully laid out plan to earn stellar credit and refinance with a different bank.
Things didn’t go according to that plan.
Secours was diagnosed for uterine cancer and out of work for 11 months for chemotherapy and radiation.
Now, with a mortgage rate of 9.8%, she is on the verge of losing her home.
“I go into foreclosure on March 2 unless I take this deal, which is almost higher than what I have,” Secours said. “It’s devastating, it’s demoralizing. People aren’t going to put themselves in this situation on purpose.”
President Obama’s plan to help the housing market may help those facing foreclosure stay in their homes.
Some question the “fairness” of his plan.
“Is it fair that I pay my bills and my neighbor who doesn’t, we’re equal and they get the same opportunity to refinance as I do?” asked Andy Voyles, with Elite Mortgage Services. “I don’t think its fair, but the goal is to keep people in their homes.”
“I don’t understand why people, who are in a good position aren’t supportive of helping those who aren’t. When you support your community, you help everyone,” said Secours.
Brian Short is the executive director of the Tennessee Association of Mortgage Brokers.
He said neighbors should be supportive of keeping their neighbors in their homes.
“That’s good for you as a neighbor,” Short told News 2. “You don’t want to see the value of your home go down.”
Secours doesn’t know if she’ll be helped by Obama’s plan but said she’s not losing her home without a fight.
“There’s embarrassment and shame surrounding this, and there shouldn’t be. What’s shameful is taking advantage of people in hard times. That’s shameful,” she said.
The Tennessee Association of Mortgage Brokers said they’re still waiting on the details of Obama’s housing plan.
That plan will dictate how they can help their clients who are upside down in their homes.
It was announced at the end of last week that the National Association of Realtors was asking the Department of Housing and Urban Development (HUD) to re-open the FHA 203(K) loan program to investors as a part of the formula for helping reverse the continued downward spiral of the US housing market.
The FHA 203(K) loan is a government insured rehabilitation loan I have used to help home owners, either buy and rehab a home they plan to live in or to rehab the home they current live in. Either way, it works much like a construction loan with up to 5 draws for major projects to improve the condition of a distressed or out-dated property.
The borrower would be required to qualify for the final loan amount including the costs of the improvements and the money is only released after the work is completed and inspected to meet whatever codes or requirements necessary. The borrower is required to front the money for the repairs or use a contractor who will agree to be paid in stages as work progresses.
Improvements can be made from a long list of “qualified improvements” including updating kitchens, bathrooms, HVAC, electrical or plumbing systems, roof, windows, flooring, siding and even adding square footage by adding a master bedroom or bathroom.
One of the beauties of this loan is that the current mortgage must be rolled into the final loan so the borrower is left with only one final “all-inclusive” mortgage at a great FHA fixed rate.
However, in the late 90’s there were investors who were involved with some fraudulent deals with builders, appraisers and title companies who abused this program and HUD cut off all non-owner-occupants from using the FHA 203(K) loan. This decision shut down a lot of investor rehab activity until the sub-prime market began to pick it back up about 5-6 years ago. Two years ago, most of the non-owner-occupant rehab activity came to a crashing halt, once again, as the sub-prime programs evaporated and now, some neighborhoods are riddled with empty homes which have been vacant for several months and are in need of repair or normal improvements to ever get them sold.
Over the past 2 years appraisal standards have increased, property values have decreased and vacancy rates have increased. All of this leads to the need of investors to be enticed back into the market with favorable loan programs to reward their willingness to take on part of the risk of getting the housing market back out of the ditch.
NAR has called for a three year window for investors to be allowed back into the FHA 203(K) loan programs. I would echo their call but not put a 2 or 3 year limit in place at this point. Let’s take this one year at a time and call for Congress to immediately allow the non-owner occupant to qualify for the FHA 203(K) loan without further penalty and renew this provision again for another year at the end of 2009, 2010 and 2011 if necessary until we see normal numbers come back for the housing market. This plan is much better than a government bail-out plan and rewards those who are willing to take on risk with the rewards of profit to be made on investor houses they have repaired and updated to get off the market.
There still seems to be much discussion about what should be done to or for the “Big Three” US Auto Makers (affectionately referred to in some circles as “The 3 Little Pigs”) who arrived in Washington, DC earlier this month stepping off their private corporate jets with a tin cup in their hands. My private conversations with friends and family members have reflected some of the uncertainty and complexity of the thoughts and comments being circulated in the media and among our elected politicians who are admittedly “over their heads” on this one! (I told one friend a few weeks ago, “Suit me up and put me in. At least I understand the mortgage industry!” Not a bad place to start for those who are trying to figure out this current mess!)
Many of the comments I have been hearing vacilate between one or two of the following positions:
“They’re too big to let fail! Nearly 25% of all jobs in the US are in some way related to the US auto industry!”
“Let them go under! The unionized US auto worker is costing almost twice as much at those who work for Japanese, German or Korean auto companies. This is the only way to bring the UAW back to the negotiating table to restructure and reorganize.”
“The US government made this mess by over-regulating our auto industry when the foreign companies could continue to use their standard practices and make better cars, cheaper.” They are blaming the increased government regulation for the collapse of the US auto industry as many of us have suggested when looking at the current condition of the US mortgage industry. (This seems like a reoccurring theme.)
The comment I overheard recently which really caught my attention was one where she said, “But what about those retired UAW workers who were PROMISED their retirement? If we let the US auto companies fail all of those retired folks will lose their retirement!”
They were “PROMISED” retirement pay? Someone guaranteed them a certain level of pay during the rest of their days on this earth, just because they put in their “30 years”? This guarantee was made with no respect as to the condition or continued viability of a company which has not yet successfully made it into the 21st Century in terms of what the consumers are demanding and what current levels of domestic fuel types can propel?
Who made these promises? What gave them the right to do so? They are still cranking out under preforming, overpriced, inefficient machines causing us to remain attached at the breasts of foreign governments lactating their crude oil and holding us hostage to their tyrant policies directed at crippling our government, the balance of trade and our standard of living.
They “PROMISED” them retirement? What was guaranteed? What is it that my buddy with Edward Jones always says?…..” Past Performance does not guarantee future results.” Whose retirement is guaranteed? My parents have surely seen their retirement account balance dwindle over the past several months – The Dow-Jones has fallen16% since the Presidential election! They will likely never see their accounts recover fully to what they were prior to this most recent downturn. My retirement is not guaranteed – assuming I EVER retire!
Retirement benefits can never be ethically “guaranteed” to anyone! Just as your financial planner is required to say – your money will only last as long as the companies or governments in which you have bought an interest by securing stocks or bonds – or funds made up of those stocks or bonds – successfully operate. If they fail, your interest (stock, bond or fund) will also fail. That’s life in the REAL WORLD!
Why should the American taxpayer be assumed to be on the hook for unethical promises or guarantees made by those doling out the UAW retirement funds when they, most likely, contributed to the failure of the US auto companies and their employee’s retirement funds? Who is going to bail me out if my retirement fund fails? Or my parents if their retirement fund fails? Do they deserve “full retirement” even though their companies where they they had an interest performed poorly or possibly failed? Of course not!
Retirement is NOT GUARANTEED! Neither is equity in ones home. We’ve certainly seen that lie ruin a few million people this year! Our founding fathers wrote that we were guaranteed “life, liberty and the pursuit of happiness” because those “inalienable rights were endowed by our Creator.” Some have argued that this list of “inalienable rights” should be expanded to “include freedom of speech and expression, freedom of religion and conscience, freedom of assembly, and the right to equal protection before the law.”
Those who have been persuaded to expand this list even farther to include: minimum mage, government health care, guaranteed retirement, home ownership, never-decreasing home equity, a job you love, a spouse who always loves you, kids who never disobey, and a boss who always puts the care of his employees ahead his own bottom-line will surely bring this country and our free-market economy to its knees.
Life is full of risk. Some lose and some win – even on a level playing field. What we’ve been rightly promised is the opportunity to get back up, dust off our knees and start running AGAIN! Being pushed down once, twice or hundreds of times doesn’t mean that we’ve lost. We lose only if we remain on our butts and never get back up.
You mean we can keep running? Now, that’s a pretty sweet guarantee!
There seems to be a rush to bail out, yet, another industry. Banks, Insurance companies, Fannie and Freddie and now, the “Big Three” auto makers. How can this be “good” for our country and economy?
The mortgage industry applauded the bailout of the GSE’s (government sponsored enterprises) Fannie Mae and Freddie Mac. They were already quasi-government agencies with directors and CEOs appointed by Congress (for better or worse!). Unlike the insurance industry, no other company – government run or private – does what they do. Unlike the auto industry, no other company – domestic or foreign – keeps our banks fluid and the housing market flowing. Without Fannie and Freddie the wholesale banks, which buy the mortgages originated by mortgage brokers, would have no more money to fund the new loans. Fannie and Freddie were put in place by the federal government to keep the market fluid.
The Federal Government determined, over fifty years ago, that fluidity in the housing market was the key to keeping Americans buying their homes. This strategy has worked for our country for the past several decades and has given this generation unprecedented opportunity to own a house (or two) when our grandparents seldom owned property and certainly did not buy without a 25%-30% down-payment.
Fannie and Freddie (whether there should still be two of them is a topic for another day!) have played a key role in the “ownership society” announced by President Bush nearly 8 years ago prior to this recent unprecedented growth in home ownership among all Americans – including minorities, women and young people. No one else has done or could do for our economy what Fannie and Freddie have done in giving Americans ownership, equity, property and a vested interested in a community.
So, many are now saying, “let’s take all hurting industries to the Feds and let them bail them out, too!” Insurance companies (AIG is back for a SECOND round?!?), Wall Street Banks, the Auto Industry…. Why stop there? Circuit City just announced the closing of 155 stores and that they will ask for Chapter 11 protection from their creditors as they reorganize and attempt to restructure their debt. We’re losing our Circuit City (only 4 months old!) in the city where I live.
Other retail chains are hurting, as well. Starbucks was in the news earlier this week for posting a worse than expected earnings report. Starbucks recently forced the closing of a Saxby’s coffee shop in our humble city when they built theirs one block away from the newly finished Saxby’s. Is the over-priced coffee industry hurting and should the Feds step in a bail out the Grande’s, Latte’s and Espresso’s of the world because many teen-aged multi-pierced, messy-haired servers and “Espresso-Masters” will be displaced? I tend to believe that, as John McCain took a beating for saying, the fundamentals of the US economy will work themselves out – in the insurance industry, the banking industry, the auto industry and, need I say, the gourmet coffee industry. We must let the free market do its work and not let the Feds try to convince us that they know how to run a business and to micro manage these selected industries and our economy.
Is the mortgage industry really that different? YES. When it comes to competition and product availability, the secondary market of the mortgage industry is very different. Fannie and Freddie play a role that no other private or foreign company or agency play and that is why it is not inconsistent to support the limited propping up of Fannie and Freddie (already quasi-government agencies) and be opposed to the Federal government picking and choosing which private company or industry to bail out. Unions have made the US auto industry what they are today – unresponsive to market changes, overpriced, less efficient, dependent on foreign fuel, and not environmentally friendly. The US auto industry must change at their core or they deserve to fade into the history books along with their union-thug bed-fellows.
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