Why Government Programs Failed

The Obama administration’s initial foreclosure-prevention programs, launched in early 2009, were intended to help 7 million to 9 million people. So far, they’ve aided about 2 million, and not all of those are out of foreclosure danger.


Programs begun later have also faltered. One intended to help at least 500,000 has helped just a few hundred a year after its launch. Another initiative to extend $1 billion to help the jobless or underemployed avoid foreclosure ended in September, obligating less than half of its funds. The unused money went back to the U.S. Treasury.

As of Nov. 30, the government had spent just $2.8 billion of the $46 billion it had declared in 2009 that it would spend to help resolve the housing crisis, the Treasury Department says. More has been committed, but ultimately a only fraction will be spent, according to the non-partisan Congressional Budget Office.

Since 2009 approximately 2.5 million homes have been lost to foreclosure. An additional 4 million are in the foreclosure process or seriously delinquent, while housing and unemployment issues continue.

Every program that was proposed to help troubled homeowners has fallen short or failed outright. Not even one has been successful. I've yet to see any efforts to help the unemployed find employment. The administration has somehow created a way in which large corporations realize that they can be more profitable with fewer blue collar employees.

The administration’s programs were destined for failure by design flaws, their reliance on a mortgage industry overwhelmed by a historic collapse in home prices, and a brutal extended housing downturn. Nor could they overcome the interests of mortgage investors unwilling to surrender profits and mortgage servicers with greater financial incentives to foreclose on loans than to modify them..

"There was nowhere near the effort to help Main Street as there was to help the banks,” says former senator Ted Kaufman, D-Del., who chaired a congressional oversight panel that oversaw $475 billion in Troubled Asset Relief Program (TARP) funds. Most of that went to banks and the auto industry.

Shaun Donovan, secretary of Housing and Urban Development, said in a recent interview that some administration programs “haven’t reached as many people as we originally targeted.”

Those shortfalls are glaringly evident.

Streamlining the Short Sale Process

Hoping to positively influence the nations housing market by shortening and simplifying the short-sale process, the Treasury Department released new guidelines for borrowers, lenders and loan servicers. Adding another acronym to its list of government-sponsored programs, (this one is called HAFA) Home Affordability Foreclosure Alternatives.

The new guidelines offer incentives to borrowers and loan servicers for utilizing a short sale in order to avoid foreclosure. Some of the key features of HAFA include:
- Seller / Borrower can recieve up to $1500. for relocation expenses
- Borrowers are fully released from any future liability for the debt.
- Treasury Dept. will share the cost of clearing junior liens from 2nd mortgage holders in order to help release any claim that may interfere with the short sale process.


According to the Treasury Department publication,
"The program will publish streamlined and standardized documentation, including a Short Sale Agreement and an Offer Acceptance Letter. Creating one standard set of documents that the industry can use is expected to minimize the complexity of these transactions and significantly increase use of the short sale option."

The property must be listed with a licensed real estate broker and no foreclosure action can take place during the marketing period as long as the seller/borrower is acting in good faith. There is a maximum marketing period of 1 year to ensure that everyone is moving as quickly as possible in order to accomplish the short sale. Currently expiration of the program is scheduled for Dec. 31 2012.

For a complete text of the Treasury Departments guidelines please call me directly at 561-306-6736 or email rebuygeorge@yahoo.com. You can also go to my website at http://www.ges-realty.com/

Lessons In Defining the Next American Dream

Housing prices peaked 40 months ago in May 2006. What have we learned from the great housing bubble and crash ?

Obviously, we have learned that housing prices can be extraordinarily volatile. No one can ever again say foolish things like housing prices never fall. People who bought with a standard mortgage in the years close to the boom have lost all of the equity in their houses. Buyers and lenders should never again think that an area’s recent price increases are the sign of a strong market where prices have nowhere to go but up. In the long run, price increases are followed by price drops, and caution needs to be taken in booming markets.

The second lesson of the housing debacle is that there is extraordinary pain in both housing busts and booms. When housing prices soared, ordinary Americans found it increasingly hard to afford a house. During the boom, many hoped that housing prices would stop rising and even decline, not understanding the terrible impact that declining housing prices would have. Large swings in housing prices, can be extremely painful.

The third lesson is that the response to the American housing crisis has been incredibly foolish. We've used public resources to encourage ordinary Americans to bet all they could on the housing markets. We have allowed billions of tax payer dollars to bail out of firms that had lost on those mortgage gambles. We continue to provide billions of tax payer dollars to the same institutions that were instrumental in creating the bubble that burst what once was the American Dream.

All of these "lessons " leave me wondering what the next American Dream will be.

Perhaps a much less volatile, more comforting lifestyle with a reassurance that we live in a country that cares for it's citizens emotional, financial and physical well being. That the people we've put in charge are truly capable of handling those responsibilities. That we the people and our families are the beneficiaries and not the victims of big business and big government.

For more on today's housing market call 561-306-6736 or email rebuygeorge@yahoo.com

Appraisals: Crippling the Housing Recovery

Lower appraisals are one of the biggest problems sellers, buyers and Realtors are faced with today. Because mortgage amounts are based on an appraiser's estimates of value, appraisals are a crucial cog in the machinery of the housing market. That cog may have ground to a halt recently.

Newly enacted federal government guidelines compounded by lenders putting pressure on appraisers to be very cautious of plummeting home values have crippled the already slow housing recovery. When a home is placed on the market, normally the fair market value is considered to be comparable to other homes sold at "arms length transaction" prices. In today's market these transactions are few and appraisers will use distressed, foreclosed or short sale prices as com parables.

An inappropriate approach by an appraiser using sales of distressed properties drives down prices on everything. A person not under water but needing to sell may be subject to the perceived value of an unjust appraisal because of the foreclosure down the street. I and many other Realtors have listed homes that would have closed at list price only to be appraised lower due to a foreclosed or short sale closing occurring during our marketing activity or while we were in contract waiting to close.

I may tweak a few appraisers with this post but I have to say it. Much of the housing bubble run up was directly related to over valued appraisals. Appraisers today are being more cautious. The bubble or run up in values and the low ball appraisal are results of pressure on appraisers from lenders. At some point the dog needs to wag it's own tail and begin to take control of itself.

For more on selling your home, home values, mortgage rates and available properties call me directly at 561-306-6736, email me directly , visit me on Twitter , or go to ges-realty.com

Is Housing Nearing Bottom?

May 2, 2009 - As the housing market slowly moves closer to bottoming, rates on 30 year fixed rate mortgages tied a record low this past week.
Average rates on the 30 year fixed rate mortgages fell to 4.78%. A year ago average rates were 6.06%. A considerable difference for any borrower. A new 30 year fixed rate mortgage taken today could mean a savings of $165 monthly or close to $2000 a year.

Inventories are dropping as homes have become more affordable. Recently inventories of single family homes month to month in certain areas of South Florida that I like to watch closely have declined by 30% or more.As availability declines and prices begin to stabilize, lower more affordable mortgages are attracting more buyers.

Some REO or bank foreclosure inventories still not showing on the market could stall the momentum as lenders again begin to process and place foreclosed inventories on the market. It's my belief that once a bottom is recognized these lenders will indeed flood the market with inventories, creating another round of competition between sellers, albeit on a more even playing field, where pricing is key.

If rates remain low and prices bottom, affordability would than be more related to individual incomes, credit and employment stability. Housing may very well be near bottom. The underlying question may now be - will other economic conditions recover or lag behind housing?

The Ups and Downs of Florida's Housing Numbers

Are we beginning to see some light at the end of the Florida Housing Tunnel? According to the Florida Association of Realtors recent MSA (Metropolitan Statistical Areas) reports some areas although still showing declining values are reporting increases in sales. Most notably in South Florida the Ft. Pierce - Pt. St. Lucie MSA which includes St. Lucie and Martin Counties show a monthly increase in sales of existing single family homes through second quarters of 2008 of 34% as compared to sales volume in the same period of 2007. Another MSA that may be on the mend is the Ft. Myers- Cape Coral area reporting an increase is sales of existing single family homes in the second quarter of 2008 of 38% over the same period a year ago. The West Palm - Boca Raton MSAs sales of existing homes is off by only -3% compared to the same period a year ago and may be beginning stabilize into the next half of 2008.

These same areas show similar trends in sales activity for condos with Ft. Pierce - Pt.St. Lucie unchanged, Ft-Myer - Cape Coral an increase of 15% and West Palm - Boca Raton up 6% over a year earlier. Although inventory remains high and prices are still declining some buyers may sense that prices in these areas are now at an affordable level. The MSA numbers include sales of foreclosed homes and of course any short sales that may have been closed as well. Foreclosure sales may account for a good portion of the increases and that may be a positive sign in itself.

Eliminating any of the inventory regardless of how modest the upward trend in sales may be or how it affects prices may be the light that helps lead Florida into a more stable housing market.
Contact me directly for more on the most recent Southeast Florida homes and condo prices, sales and foreclosure activity.

George Sinacori 561-306-6736 or rebuygeorge@yahoo.com

Baby Boomers May Want To Buy Now

With prices in Southeast Florida at a low, Baby Boomers should consider buying a retirement home now, even if they’re still years away from actually moving. Allowing renters to pay the bills for now can assure a great buy and a stable position without incurring any unwanted expense until retirement.

Here are some great points to consider:

• Buy a home that can be rented for a rate that, after tax considerations, covers the mortgage, real estate taxes and insurance and hopefully gives you a return on your down payment.

• Study housing trends. Look for demographic and economic data. The information can reveal facts that will influence whether or not to buy. For example, big companies going out of business or large chain store closings may be bad news.

• Don’t forget maintenance. Property managers usually charge a percentage of the monthly rent. Family members may do the job for free but could be ill equipped to make repairs.

• Consider financing. Boomers with sufficient equity in their current home can tap it to either buy their retirement home outright or secure a much lower mortgage.

Prices may be bottoming here in Southeast Florida so buying now for the long term may prove to be a smart choice for Baby Boomers considering downsizing the homestead and related expenses.

Search for homes and the MLS here at GES-Realty

George E. Sinacori

GES Real Estate, LLC

Licensed Real Estate and Mortgage Broker

rebuygeorge@yahoo.com

First Time Homebuyer Tax Credit

One of the provisions of the new Housing and Economic Recovery Act of 2008, signed into law by President Bush on July 30, 2008 provides a First Time Home Buyer Tax Credit. The tax credit is available to qualified first time homebuyers. A first time homebuyer is anyone who has not owned any property in the past 3 years.

- As defined in H.R.3221 Section 36: " FIRST-TIME HOMEBUYER

- The term `first-time homebuyer' means any individual if such individual (and if married, such individual's spouse) had no present ownership interest in a principal residence during the 3-year period ending on the date of the purchase of the principal residence to which this section applies.""In the case of an individual who is a first-time homebuyer of a principal residence in the United States during a taxable year, there shall be allowed as a credit against the tax imposed by this subtitle for such taxable year an amount equal to 10 percent of the purchase price of the residence."
Note: the property may not quailfy for the credit if it is purchased from a relative.

The first time homebuyer tax credit is available to buyers of a primary residence purchased from April 09, 2008 through July 01, 2009. The allowable credit amount is 10% of the purchase price up to a maximum $7,500. Single tax payers with modified adjusted gross incomes up to $75,000. are eligible for the credit and married couples with combined modified adjusted gross incomes up to $150,000 are eligible. The credit is temporary and the amounts taken are recaptured (repaid) in future tax years, up to 15 years of ownership, or when the home is sold.

The new measure is part of the Housing and Economic Recovery Act of 2008. It should stimulate prospective homebuyers who may already recognize the bottom of the market but need another incentive to buy a home in the near future. The First Time Homebuyer Tax Credit is available through June 30, 2009 to qualified buyers. In all probability it will not be available beyond that date. It is a temporary economic stimulus.

Consumers are demonstrating interest in the measure according to the activity reported by the National Association of Home Builders Federal Housing Tax Credit website.

Other provisions of the H.R.3221 include FHA Modernization which increases FHA insured loan amount to 115% of an areas median home price up to a maximum of $625,500 which may in effect allow more working families to take advantage of FHA insured loans. The provision will also allow FHA to guarantee $300 billion to refinance mortgages where homeowners may be facing foreclosure.

Anyone needing more information on the tax credit or on the new loan limits and down payment requirements for FHA insured mortgages or on refinancing into a new loan can contact me directly at 561-306-6736 or email me or visit my website www.ges-realty.com