FHA Mortgage Expert - Tri-State Area - New Jersey/PA/Delaware

Jeff, it sure does seem like we're living in an era of bailouts.  Sooner or later, we'll be paying for these.

 

Just a FYI ...I would still help my clients use the Tax Credit, even later if it was extended, but it’s been going on for almost 2 years now. If the buyer didn’t get off the fence now, why later?  Besides, we all need to understand the economics of this hand out and what it can do to our future.  I just wanted to point out some things.

 

Hi Jeff.  I am with you.

The buzz about the credit is coming from Realtors, mainly here on AR.

The public is not buzzing.

The reason to buy a home is because you need a home...

Thanks for writing,

Ken

Since the 8k is really my money anyway why not give it back? Now I am not getting any of it directly , but I may in the form of commission from a fisrt time buyer. In lieu of massive taxc cuts it seems to me that this program helps us as Realtors as well as a lot of other people beside the home owner. Should this expire? I think we need to cut spending and while every one agree with this , they also say not my programs. So the be logically consistant if we are to cut spending and cutting is a good thing then this credit as part of cuts while unpleasant is necessary and I would support not extending the credit as part of a package of cuts aimed at getting spending under control.

I was against it in the begining and still am.  Why should I help you purchase your home?  I to will and have helped people secure a home while using it but I do not like the idea and now to extend it?  My vote is NO!!!

 

I wanted to add this... "Don't go around saying the world owes you a living. The world owes you nothing. It was here first."  - By Mark Twain

 

GABE... I agree... there can be many arguments defending the tax credit, which I will agree with some of them. But when are we going to look at the overall picture, and not the short term, which has gotten us in the mess that we are now?

KEN.... . yes, I have noticed that... and not to throw many under the bus, but many of these realtors seem to be new or in the last 3 years, and they need this just as much as some home buyers. Some realtors actually needing it more than the home buyer. So it really makes you think, what thinking cap are we as professionals and business people, actually wearing???  I just don't think too many realize what this can and porbably will do to us in the near future.  Read Brian Brady's send blog and watch the video.  thanks

CHARLIE.... . it's our money, my nieces and nephews money, everyone's money.  And you just made part of my case, this tax credit helps you as a realtor also, now. But believe it or not, people would still have bought without the tax credit. This is just my opinion, but I would bet many of those that said, I bought because of the tax creidt, would have bought anyhow. Our minds sometimes tell us things differently.  As I mentioned, home buying is an emotional thing. People don't always think correctly or say the right things when their emotions are happy ro sad. Yes, we need to cut spending in many areas and now, not later.  Thanks for your input.

EDWARD... .  So was I..  it didn't mean that I didn't help my clients with it, or advertised it. But I did see the writing on the wall from day one. And when is it going to be enough, or in this case, not enough?  To not only extend it, but to $15,000?  Then what, to $20,000?  thanks

 

I just left this comment on Brian Brady's article.......

Certainly applies to this one too.

 

The longer we cannibalize future sales with the $8000 bait..... The more it will hurt when it is over.

Ask the auto industry how that 'Employee Pricing' worked out for them after the promotion. They couldn't give away a car for a long time.

I am not seeing that many people who NEED the money to close... I am seeing mostly people urgent to close before the deadline..... TOMORROW's BUYERS!!!!!!  And if they DO need the $8000 to close, why? They don't have savings? No reserves and they want to buy a home...... Not a good recipe for a loan that will actually perform....

I think that this is a good program....But I do not have many that have taken advantage of this program. 

I hope that it will  be extended.

 

My take is a bit apart from status quo arguments, Jeff.  I want to see the Government leave our industry en masse, including FHA, VA, and USDA financing.  We can't develop a healthy private mortgage market because unsubsidized banks can't compete with "the Government option".  Subsidized mortgages keep mortgage rates artificially low and provide a false "loss-stop" measure which dissuades competition.

It sounds radical because we've never experienced a housing or mortgage market that wasn't subsidized by the Federal government.  Imagine the creative solutions we could create if we didn't have to compete against the "government option".

Free markets work...if we let them

 
TOM.... . thanks for sharing these points. Yes, we will find some that needed this money... but in many cases, the rush is on, because they want that money. But they have to buy a home to get it... are we pushing some people off the fence that aren't ready?  I think so... and what will happen in a year or so? Overall, you make an excellent point at the end.  thanks for sharing.

GINGER.... . how come many haven't taken advantage of it in your area then?  Why do you think this is a good program? And why do you want to see this extended?  Not trying to point you out, but I am trying to gather feedback from those that make these statements, yet give no true reason.  Maybe because it just seems good?   thanks

 

BRIAN aka America's # 1 mortgage broker... .   I agree with you 110%, which is why I loved your 2nd blog on this and the free market. I had a great chat with Tom Burris about this same subject this morning... and I had several things that I wanted to talk about in this blog, but it was long enough. In your video, Greenspan says that there was a flaw in his belief, that markets would regulate themselves.  Rut row... really?  Okay, we learn this now, yet we are turning our backs on free markets? So I agree, free markets do work, if we let them. I just fear for our lives in the near future... again, you make some excellent points.

Here is what I think is a great example of all of this, that I didn't mention in my blog...

Didn't the gov't force Fannie Mae and Freddie Mac to extend their financing criteria 7 years ago?  Fannie & Freddie both then started with 100% financing with much higher ratios, because the gov't said, try and help get everyone a house. It's the American way... so much happened after that, hence it is a large problem to where we are now.  And now what, who owns Fannie & Freddie?  Just food for thought...

 

I think if all real estate professionals could be guaranteed the same income they are used to now, that all would say do away with it. Most are too fearful, even if they can't trace a lick of business from the tax credit. The fear of the unknown. Personally I think it has brought more buyers out - but is it worth it in the end. Who will ever know. I do think it should stop, or be phased out.

Jeff: Thank you! This is the best post you've ever done in my opinion. I have appreciated the others but this one is different and true. I agree with you about the band aids. Eventually the government will decide it can no longer afford to prop up our economy. We live, right or wrong, with capitalism and that means the free market must reign. Yet we've seen very little of this the last 2 years. Everything has been government mandated. The only free market decision was to let Lehman Brothers fail.  Everything else was brokered by our government. Personally I think it's time to let us make it or fail on our own. If there's no $8000 tax credit, it doesn't mean that people will stop buying. It's all about psychology and the American psyche is improving slowly-it shows in the stock market gains, improved builder starts, etc. I invite you to read my blog that I'll be posting shortly about the ten things that could slow up a recovery. Thanks again for the post. Truthfully, this one was different, thought-provoking and welcome! Take care.

I have to say I was all for the tax credit but I am rethinking it based on some thoughtful blogs lately regarding this issue. It has made me stop and think about things. Only 1/2 my buyers got it. 1/2 of those 1/2 would have bought anyway. So... I am thinking it is not as useful as I thought and costing us soooo much money to support it. Of course I will use it for everyone who wants to but now.... after reading some great opinions and arguments, I am am starting to sit on the other side of the fence. It is a great time to buy with or without this credit. One of the great assets of activerain is that there are some great thoughts out there and it allows everyone to express those thoughts and maybe makes us all a little bit wiser!

You have made some great points!  I am certainly looking at this in a different light now.  Thanks for the links to these other posts on the subject.

 

STEVE... .  bingo, the fear of the unknown. I hate speaking for many realtors, but you make a great point, hence why I talked about our commissions in this blog. It's like robbing Peter to pay Paul. We allow the tax credit, so we can still collect commission checks. I will admit, it has helped some of my clients and it got me a few extra clients.  But will it kill us later on in life...??  Yes, the unknown.. but if you review the numbers and the writing on the wall, this is a band aide that will cost us more later on... yes, my opinion.  thanks

PAUL.... . my best ever?  I Like a few others, but thank you very much for that polite compliment. Hit you hit one of the nails on the head, stating that this first time buyers credit is in the mind of many buyers... and many don't think ahead or plan ahead. And as Brian Brady stated, it's about allowing free market, as what you mentioned. Thanks again for the kind words and I will take a look at your blog later.  thanks

DIANNE... . that is exactly what I am looking for, especially those realtors that swear that it has made them busier than ever before. I attribute that to many things, and not just to the tax credit. One realtor that swears by this, is semi new in real estate... has gotten more business from  blogging, and client referrals.  Just because the home buyer says, gee, I am buying now because of the tax credit, doesn't mean that is the only reason. Not unless you ask them the correct questions, know their goals, etc, etc.  I am a firm believer than many were going to buy anyhow.  Some might just have bought 6 months earlier. And speaking of that, is that even a good thing, if they weren't truly ready, but that they are getting $8,000 now.  Time will tell... will we see a rise in foreclosures then?  Then what?  Then what 'well' will we need to drain then? then.??  Thanks for your honest feedback and input.

 

We need Jobs. 

I would love to see Made in the USA again....

Linda Metallo, Re/max Impact, Lockport, IL.

Jeff - As you mentioned above "it’s been going on for almost 2 years now. If the buyer didn’t get off the fence now, why later?"  I'm currently working with a few first time buyer's and this tax credit isn't a factor for all of them, which I find refreshing because I never want a buyer to feel like they HAVE TO buy a house.

 

ANN.... . my pleasure... that was the main reason to why I wanted to write about this, even though I had read 3 very well written blogs that talked about this tax credit. I just felt that I needed to shed some different light that was not brought up or ignored by others.  thanks

LINDA...  . So would I and for some reason, this seems to be over-looked so often. Gee, I wonder how many politicians have their hands in overseas income, jobs, supporting this and or that??? 

MICHELLE.... .  that is a good problem to have. I knew that this would become an issue and a debate in the last 2 months. Makes you wonder why so many waited... I wonder if it was because of blogs like this..  You out smarted the crowd because you skipped the first time homebuyers tax credit. - people have actually said to wait, because prices will come down.  Okay, so they come down, but by 20K should make you wait?  You are better off paying the 20 k and getting the 8 k in hand, at least in my opinion. thanks for the feedback.

 

I feel housing always leads the nation out of a recession. Keep the $8,000 credit until3/31/2010

I've only had 1 buyer take advantage of it and they would have bought anyway....  All of these incentives in so many areas are going to cost much more because the of the administrative costs and because the US is spending money that we do not have... we would not advise our best friend or our enemy to be using credit cards the way that the US is currently using credit.

Hi Jeff,  I think that the credit helped in a small way for the buyers it was aimed at.  I hope the credit expires rather than being extended.

It could be argued that the mortgage industry let us all down and brought us to this mess.  Giving away money to people who can't afford to buy a house without it, seems to be one of those instances where we don't learn from our previous mistakes.  I vote to not extend it and not increase it.

Jeff-

I am with you about the welfare mentality.  I have only been in the business 10 weeks and have yet to use the tax credits, but a continual hand out will only add to the problem.  Its the same mentality as "give a man a fish or teach him to fish".  Our government does not know what is best for us, but they want the masses to think so.  Great post

Great blog.  I read Brian's also, and will read some of the others when I get a chance.  This is going to cost us billions in the long run that I don't believe we are able to afford. So no, don't extend. I have had ONE client that was interested in the tax credit.

As the old saying goes, "cant squeeze blood from a turnip". These days, the government is looking more and more like that same purpleish garden item we call, the turnip.  Great post!

 

JOE.... .  it always does?  And how is that?  Yes, the housing market is part of our economy, but it's not all of it. And right now, the housing market of the last 3 years, with mortgages included, has led us into the deep black hole that we are in. Sure, it will help some, but don't you think some of this will back fire and haunt us down the road?  thanks

JUDY... .  good point, that this tax credit could just be one huge national credit card... and that is one scary thought. In regards to how many would have bought even if there wasn't a tax credit?  My problem with that is that I don't think we will ever truly know those numbers.  I have heard from some realtors that they know for a fact that they have gotten much busier just because of the tax credit, and if it wasn't for it, these people wouldn't have bought. I kind of disagree with that thinking...  even if the client tells you this, I still think it's an assumption built on emotions and some other issues. I just hate assuming....  this is just my opinion on a small, dark, secluded island..   ;o)   thanks

BILL.... . I do believe this also, that it did help some... but if you read many of the comments on those other blogs, several realtors came out and said that many of these buyers would have bought anyhow...  prices have been lower than in recent years and mortgage rates are the lowest in a very long time.  The 8k was just an added incentive for many. People should be buying a home, not an incentive. thanks

GARY.... . I will partially agree with your comment. I can't totally blame the mortgage industry.  Actually, this is who I have blamed. Help, I can't make my mortgage payment...  Overall, I will blame the gov't on many issues.  Here is a biggie, that congress pushed Fannie Mae & Freddie Mac to extend financing to many more than they should have.  100% financing with higher than average debt to income ratios was a huge mistake...

TIM.... .  wow, only 10 weeks... god bless you and good luck. I did read your profile very quickly, and it seems like you have technology on your side, in regards to web 2.0.  That's a great start... with that and knowledge.  Good luck. But overall, you hit the nail on the head. Our gov't wants us to think so...  with the help of the media. Yes, the continual hand outs will create more problems down the road.  PS... I am assuming from your picture that you just got married?  I hope your wife has a great job with a strong salary and benefits. ;o)  Congrats and thanks for the compliment.

AMY.... . I think Brian and Lenn hit some great points.... so did Alan. Yes, this will cost us. I just received a semi disturbing comment on my fan page on facebook. This person said that they see no difference between the tax credit and the seller-funded down payment loans. ouch... rut row. Huh?  The seller-funded DPA's don't cost the tax payers a dime.  I am miffed and scared of comments like that, unless I am missing something.  And thanks for the compliment.

 

Hi Jeff -- I totally agree.  I would have advocated to let all these too big to fail investment banks fail, even if it affected me and I lost my house.  If I lost my house and I'm in good financial shape, most people would have as well and perhaps for once, we would have true REFORM. 

I think there is too much hype. I have a buyer right now that's so overwhelmed with the tax credit. I told them to concentrate on getting a property and then worry about the credit.

Lots of food for thought in the suggested blogs.  I have read a few of them and you are begining to change my view.  I do agree the smart thing to do is let capitalism work.  I think if we would have seen some of these big banks fail, we, in the long run we, and they would all be stronger.  WE should have never bailed them or the auto makers out.

Congratulations on your Featured Post JEFF!  The tax credit is not the cure- nor it is a consumer bail out- several people hav e made some very good points here.  The overall mentality has to "change"

Good Question, Jeff:-

If the buyer didn't get off the fence now, why later? 

Again, I could expand knowing some of my clients' situations... and I can totally understand where you are coming from also.

Some of my clients know they are not ready to purchase now. Not a matter of credit score, but because I've "trained" them, brain washed if you want to call it, that on top of coming up with the down payment,  you ought to have enough $$$ in your savings before you purchase a house. Remember, you no longer can call your landlord when things break down.

They feel that in a year, they are in a better position to purchase a home. They know that the purchase is in their horizon, just not a perfect timing. But we also know that if it gets extended or expanded, it would be good news for them. But they would rather choose right than to be blind sighted with the luring tax credit.

Alot of times, this plea is on behalf of my clients, but again, it doesnt mean that I dont understand the stand you're on.

Jeff, thanks for this and previous articles. I am a first-time buyer, and have been tempted by the carrot in front of me. However, my wife and I do not want to get into a mortgage until March for several reasons. We have decided to wait until then, and if the credit gets extended it will be a bonus. However, if that does not occur, we will not be overly disappointed. We don't agree with the politics involved in the different bailouts, and consequently have had discussion on the ethics of us accepting the credit. However, that is a personal issue.

My main concern is that this credit, if allowed to continue or even extended, could potentially create another exploding bubble as people get into houses that they have no right to. I am interested, from all you professionals, whether many of those using the credit could/should be a home-owner if the credit did not exist? Not everyone has the resources, fiscally or otherwise to be a home-owner. But will they ever if the govt keeps stepping in to nanny them along? I am originally from the UK, a so called "nanny state" and I am sad to see the US moving this way. People need to become more responsible, an idea that this credit does not encourage. 

 

Thansk,

 

Andrew, Huntsville, AL

Interesting opinions.  Why is that when the Bush Administration passed a 1.7 Trillion Dollar tax credit aimed almost entirely at the top 10% of this nations wealthy there was nary a peep of outcry, but let a few progressives try to pass a tax credit of just a couple of Billion that is directed at the lower end of the economic landscape and all HELL breaks loose?

I say extend the credit and get the housing market healthy again and this nasty economy will rebound quicker.   But, that is just my "middle class, on the front lines of this mess" opinion.  After all the mortgage and real estate industry had no part of creating this crisis, so screw the Jerks that got screwed! 

jeff, I see your the FHA Expert.  Isn't that a Federal program?  How is feeding on the govt tit working for you?

Hi Jeff.

 

I am not sure if some others have been on welfare but I have so know that SOMETIMES so-called "hand-outs" can help. It is much easier to criticize though... than it is to actually help. The first time home buyers that I have been working with are buying because it is an incentive though trivial to some it is significant to them. Like with welfare. I know of others who have been on welfare and after being helped they are no longer on welfare.

 

On that line a few people have already mentioned what about other government subsidies with FHA, VA, etc. Seems like some people are selective when it comes to government intervention. I could go on but I won't :-)

 

 

 

GREG.... .  lol.. so very true. And I guess time will tell to see who was more right about stuff such as the tax credits. thanks

CHRIS..... . this was one topic that many disagreed with me, when I said the same thing. There will be investors out there to buy loans. It just comes down to how pretty and profitable they look. A great example is how MBS's are being sold and bought. But getting back to your point, we should have let some fail. We aren't learning lessons from our mistakes... just too many bailouts. And now what, do we do anything, not caring, looking for a bailout?  thanks

NEAL... . excellent advice...  I have said the same. But sometimes they are like, but I really want it. It has created a lot of hype and some have gotten greedy, both the consumer and the loan officer/realtor. thanks

TERRY.... . just as Chris stated in his comment a few above yours. And I just love writing about stuff like this, because of someone as yourself, that you see another side of things... and this has slightly changed your opinion. I just call this, educating people on both sides of the fence, so they can make an educated decision, and not based on a one-sided opinion that sounds great.  thanks for the feedback.

 

 

ALLISON.... . agreed, that it's not the cure to all problems... and yes, people need to change their mentality. Also, thanks for the polite compliment.

LOREENA.... . you make a very good point, and that is that you challenge your clients, giving them thoughtful pieces of education. Explaining to them that they need to be responsible when it comes to buying a home, no matter what carrot is being dangled in front of them. And we need to add to it, letting them know, if it's not there, don't let it kill your dreams. An excellent job on that part.  thanks for sharing.

 

ANDREW.... . first off, I don't hold it against anyone who takes advantage of this tax credit. I would if I was buying, why wouldn't I.  I want to bring up issues that could take place in the near future, because of our bad spending habits.  In this case, this would be the gov'ts spending habits.

I think you have looked at this very responsible, not jumping in to buy now, just for the reward. But to wait because you just feel like you aren't ready just yet. Very comendable.

In regards to my opinion about those using the tax credit, are there some that don't deserve to buy?  Well, that is a whole other discussion by itself. The short of it...  there will always be some buyers that shouldn't buy.  Not that they don't deserve to buy, because if you qualify legally, you qualify. But someone making 100k, buying a 200k house, still might not be mentally ready to buy.  In my opinion, it primarily comes down to their spending habits. This is just my opinion.

Overall, this has been one of the better comments from a consumer that I could ever think of. I really appreciate your insight and feedback. Especially that of what has taken place in the UK and what you have seen and lived through.  One thing we as American's haven't done much, is learn from other countries mistakes.

On another note, I am not licensed in AL as of yet, but we are working on it. I can help buyers from CT. down to FL. and I have plenty endorsements from buyers and realtors in each state. I would love to keep in touch with you and possibly help you in the near future. If not, I network with many loan officers on a national level. Please don't hesitate to get in touch with me.  thanks again...

 

MAJOR.... . in regards to your first statement,... probably because not as many people blogged back then, that the internet is growing, to be able to pick up on such issues as the one that we are talking about.

On another note, there is a part of me that didn't want to answer your comment. Yes, I sense an attitude that has some hatred in it. Why do I say this?  because of this statement that you made... "After all the mortgage and real estate industry had no part of creating this crisis, so screw the Jerks that got screwed! "

Well, I don't think I made any statement in what I wrote or in my replies that would give you any idea that I don't think we are to blame. I wrote about it here... Help, I can't make my mortgage payment.. I blame everyone one way or another...

 

MAJOR.... . curious.. am I picking up a vibe that you just want to pick a fight with me?  ;o)  About reading up on FHA first, before we have this conversation. - FHA -  FHA makes the rules and insures these loans.  They don't fund them or supply them... investors on Wall Street do.  I feed on all tits that are supplied to me... conventional, FHA, VA, USDA....  I help my client by advising them on the best financial programs available. I stated FHA Expert, because I am more knowledgeable on FHA loans than many in my industry. thanks for your input.

LANA... . you make an excellent point.  Just don't read into my title...  titles are set up for several reasons. I do believe that the tax credit is a handout. But here is the problem with some handouts... some are abused and misused. That is all that I will say on that.   thanks for sharing and for being honest...

 

LOL.... jeff, i think you hit a nerve with someone. i hope major isn't a realtor.... their clients would not be well served by major's ignorance. oh... by the way, 'major'..... if that is your real name......... 90% PLUS of all loans are government backed. do you know who fannie/freddie are? jeff, maybe it is time o show the ugly side of this business to the people. that stuff we talk about but dont write about?!?!?!!?

Let me preface - I am a libertarian so I don't like welfare.

I have seen the tax credit HELP our local economy by people (at least my buyers) to fix up homes.  New landscaping (money in local landscaper's pocket,) new flooring (money in local flooring installer's pocket,)  new paint and hardware - (money in large corporate remodeling store's coffer) ETC.  I do believe that the money will come back in the form of taxes paid and by revitalization.

I do still believe it is welfare.

Now seller assisted DPA - not welfare because it is a seller/buyer negotiation choice.

Jeff,   A number of times I have propsoed that instead of a Payment to borrowers, that HUD authorize a ZERO Down or $100.00 Down program similar to what is available on HUD owned property sales here in Ohio.  I do not support bring back DPA programs by the many non profits because I believe the only reason they were involved was for the fees they collected.  This option would allow more people to actually purchase homes because under the current incentive we are not really bringing new buyers to the market.   Because they can come up with the funds to close they could purchase regardless of the incentive.  So we are only rewarding those that could have bought anyway. 

The Zero Down option could also assist current home owners that might be underwater or breaking even if they were to sell their current home, because it would allow them to sell that home even if they used cash that they would otherwise use as a down payment on their new purchse   The reasons could be Downsizing, moving closer to work, or adjusting their lifestyle to their current income.

If you follow this logic, sellers with no cash left and buyers with no cash would actually increase the pool of buyers.  Hopefully their skin in the game would be their responsibility to make their payments. 

I would say as long as at the time of closing any buyers using this program did not own any other property they could get zero down. 

Any thoughts, Jeff or anyone else?

 

I read Loreena's post and liked it very much.

I can tell you our buyer traffic has increased BUT I cannot directly say it's because of the tax credit. In fact, most people don't know about it or understand it until we explain it.

I hope they extend it to encourage buyers. But they are NOT necessarily moving OFF the fence if they don't find the right house first! And if they have poor credit, no matter how much they want the credit they ain't gettin it.

I got a kick out of the "robbing Peter to pay Paul" comment.  Remember, those who rob Peter to pay Paul can always count on the support of Paul.  In this case, the NAR is acting like Paul. 

Ending the credit will probably have a negative impact on MY business.  But I think it needs to stop.  I could have more money in my pocket if I did things that I didn't think were ethical... but the price of my ethics is higher than what I could get to sacrifice those ethics.

Let it expire! Lets get back to basics and think about getting jobs and job creation front and center.  The more government you get the more issues you will have. I live in a high poverty area of the United States. The Feds have robbed many of the poor to become addicted to the hundreds of programs that they offer. Most of you never see these communities. 

New Orleans is one where the welfare industry is big. Health Care has always been free here. Section 8 and public housing dominate the landscape. 40,000 vacant homes. Less and less chance to succeed.

Hi Jeff. "Handout" is a relative term. The same can be said about VAs and FHAs. Not to worry... the deadline is approaching and when it expires there won't be much to gripe about LOL Good thought-provoking post as usual.

 

TOM.... . hitting a nerve or not, I have no problem with this.  The tone was a little harsh and I know my tone with others is never the best.  But a tone plus thinking that you know what you are talking about?  Then I don't have a problem acting back. You bring up a great point. Fannie & Freddie was once a non-gov't business, but now it is owned by the gov't, which I want to explain in detail. But in all honesty, why should I when he doesn't even know what FHA is and how it operates.  Because FHA stands for Federal Housing Authority, doesn't mean it's all run by the gov't per se. Sure, they take care of the guidelines and rules, but the servicing is done on the private sector.

 

RENEE,,,, , I am not going to dispute that at all... I always advertised the fact that you could take half of that money and truly fix up the main parts of your home. It's those buying homes to get that 8k so they can free spend, do what ever with it... not fix up the house or save... but party, take trips, live like a rock star, and but frivolous stuff. I can only assume that this happens, but I bet there are some out there. I actually have heard some people say that they were buying just because of the tax credit. That is not smart and is part of the reason why we are in this trouble. It goes back to robbing Peter to Pay Paul....they will get a gift to buy, pay some back, and spend the rest....

In regards to welfare... it's not to upset anyone that gets welfare, because they deserve it...  but I think on many occasions, this is worse than welfare. ANd yes, I had some lady on my FHA Expert fan page on facebook tell me that the seller-funded DPA is nothing different than the tax credit.  HUH?  What? How is that?  See, that kind of thinking really, really scares me. And that is how I think much of our gov't thinks... just my opinion though.  PS... hey, love the new picture...

 

 

TIM... . the funny thing, the 100% won't happen, because congress shot it down the after the House passed it. This was like 5 years ago? Secondly, HUD got greedy and whispered in congress's ear about killing the seller-funded DPA, because HUD wanted their cake and to eat it also.  Well, all of that high school crap back fired... and who lost?  Buyers and tax payers. In my opinion, the seller-funded DPA was a good thing and is not funded by tax payers money. Many talk about how prices were inflated because of those DPA's, yet can't the same be said for the tax credit?  Because of multiple offers, it has driven up costs....

In regards to not supporting the DPA's because of the fees?  Sorry, but that is crazy. You are talking about $400 to $500 per client, which can be paid by the seller, the buyer, or the lender.  The tax credit?  That is a much bigger bill that we will be burdened with for years to come.SO I can;t see how you think a non-profit fee of so little is such a big deal. Someone has to take care of the paper work and such. I find it a small price to pay for, when the tax payers don't have to pay for anything.

You then made this statement... "This option would allow more people to actually purchase homes because under the current incentive we are not really bringing new buyers to the market.   Because they can come up with the funds to close they could purchase regardless of the incentive.  So we are only rewarding those that could have bought anyway."

You lost me me with this one... I am not 100% sure if you were talking about the DPA or the tax credit... or both at the same time. But I will say this, in many cases, unless you were in a state that had a state program that allowed the tax credit to be used for the down payment, you would still need 3.5% of your own money. With the DPA... it's not your own money, but you still would need to have a down payment.  SO overall, you still have a tad equity, some skin...  with 100% financing, you don't.  And if they did this, I would believe that you would need to tighten up the debt ratios and a few of the other qualifications per se. Remember when Fannie and Freddie got into 100% financing, but didn't tighten the requirements?  Well, all hell broke lose, and foreclosures started to happen. In my opinion, if we give in one area, we need to tighten in another.

In regards to the zero down options, helping those sellers under water and such...  how about allowing for assumptions then, even if it's not a FHA mortgage?  Or some program such as this?  But what would that do for someone like you or I? The problem here, and you asking what could be done, is that you have a few agency's that aren't the same and are owned by different entities.  Meaning, you can't do what you can do with HUD homes, with that $100 down program, and do the same with a Fannie Mae home. Something would have to be re-written for this to happen. Again, just my opinion. But this starts with congress then. But do we really want the gov't getting involved again?  thanks

 

 

ERICA.... . okay, so you liked her blog.  But you made this statement... "I can tell you our buyer traffic has increased BUT I cannot directly say it's because of the tax credit. In fact, most people don't know about it or understand it until we explain it."

Okay, so you like Loreena's blog, it sounds good, but you really can't put your finger on the traffic for those using the tax credit. Let alone, your next comment states that you actually know many people that you talk to or deal with, actually don't know much about. Which if I had to assume as a prosecutor, this means to me that you aren't selling the tax credit. That if they end it, it won't hurt your business.

So, let me ask you this now...  why do you like Loreena's blog?  What are the reasons?  You state this... "I hope they extend it to encourage buyers. But they are NOT necessarily moving OFF the fence if they don't find the right house first! And if they have poor credit, no matter how much they want the credit they ain't gettin it."

For what reason then?  Why do you want to see the tax credit extended, after you told me what you stated???  Especially if you don't think buyers are moving off the fence?  thanks and thanks for your input.

 

LANE.... . yes, the comment might sound funny, yet it is so true in reality.... and it's gov't at its best. And yes, Paul could be the NAR... which is very scary. It makes you wonder what NAR's intentions truly are... doesn't it?  And I agree 110%, that stopping the tax credit will affect a lot of our business, yours and mine. That scares me a little... but as you stated after this, that we do need to stop this then. That is how I have to look at this, hence why I wanted to write this post.  To try and give more subjective opinions and perspectives.  thanks for your feedback.

ERIC.... . I agree with you Eric, let's get back to the basics.  And you should know, because of where you lived, especially after what happened after Katerina. Your area is a prime example of gov't getting involved, yet it all goes downhill.... and we don't hear these stories that you mentioned of, thanks to the media and their agendas.  thanks for your feedback on this.

LANA.... . I don't think you can put VA loans in the same sentence that includes the word handout. Could explain why you would say VA loans are handouts?  We should back our own, those that gave service and or their lives to this country. Just my opinion on this.  But yes, we soon might not have to worry about this, unless they extend this tax credit. And if they extend it to 15K???  Then what?  What does this say.  On another note, thanks for that compliment.

 

Love the post and all of the responses to.

I am so glad to see someone write a great post about this.  I hope it is not extended!  First time home buyers are actually in pretty good shape right now.  Prices are down - rates are low.  We cannot afford any more entitlement programs.  Enough is enough.  People will still buy.  I did loans in the 80's when rates were at 18%.  I've done loans when values dropped.  Markets will correct and life will go on.

I could not agree more!  Thanks for saying what I feel about this "tax credit".  Interference with the normal real estate and home loan market contributed greatly to the situation we find ourselves in now and this program is creating a false underpinning to our recovery attempts.  I heard yesterday on a national radio program that in some areas of the country as much as 40% of sales are due to this giveaway program.  If we're not careful we will find ourselves in yet another industry that is government owned! 

Donna Dastic, Realtor, GRI, ABR, CSP (Adams, Cameron & Co., Realtors) Deland, FL

 

   

 

JAMES.... .  thanks.. I love thought provoking blogs and the comments...

JANE.... . thank you... I am not sure a lot of first time homebuyers are in shape...  I still see many that come to me, that have a limited savings... even when living rent free.    But yes, we keep supplying money that costs us money. And yes, people will still buy, but now they all want a handout. If the tax credit is not extended, will that hurt the market some, because people might just wait for 6 months, hoping for another Tax Credit?  I think so... they need to just buy if they are ready, period. And lastly, yes, markets will correct itself... we do need to give a push or shove at times, but for how long and at what cost.  thanks for your feedback.

 

DONNA.. . I have read some comments from other realtors saying after they have read this and a few other of the blogs mentioned above, that they are slowly changing their mind about this.  Hey, I will be the first to admit, it's nice, because if it brings more buyers, it can bring us more money. But we have to be fiscally responsible.

You made this statement... "I heard yesterday on a national radio program that in some areas of the country as much as 40% of sales are due to this giveaway program."

I find that hard to believe and I would love to know their source... is this opinion, fact?  Gee, it's a radio show, which many are there to start up controversy, to stimulate conversation, etc, etc. And don't forget this, even if it was a fact, by whom and how valid is that fact. I just have a huge problem when polls are done, stats, figures, and facts are shared...   why?  Many can be manipulated ....  just food for thought.  thanks

 

What a great, thought-provoking post!  Just b/c NAR is pushing to extend the credit, doesn't mean we all need to jump on the bandwagon without educating ourselves first!

Tina in Virginia

I notice that you're promoting yourself as an "FHA loan expert." Based on your comments it appears that you, like Brian, believe that the government should never be involved in any kind of social engineering including housing. I suggest you read my comments on Brian's thread. I won't repeat them here as they're redundent. As for your opinions, perhaps we should begin unraveling the government's involvement in housing by eliminating the FHA. Thoughts?

Carl Schumacher

 

I'm all for helping those who help themselves.  I don't expect a handout, nor do I think they should be randomly given. I think the tax credit CAN be a win-win proposition and do believe it has it's place.  How about going back to basics!  Extend the tax credit, HOWEVER...have rules...REAL rules.  Have them pay it back. People we're still buying when it was 7500 and taken back every year.  Make them qualify for it. 

  In most any situation there is a middle ground.  I agree with a LOT of what you are saying.  I've watch all the bail outs, the cash for clunkers, the RE tax credit and now heard they're having one for appliances coming...similar to the cash for clunkers. (Didn't verify that yet.)  Sure, credits seem great up front, when you're the one getting them, but someone has to pay the bill in the end! 

Jeff,

As a fellow Loan Officer, I have to disagree with some of your thoughts.  Firstly, to self proclaim yourself as an FHA EXPERT, you should ensure that you are educated on what FHA is.  What I can tell you is that history is against your views at every turn. 

FHA is a Depression Era policy in which has been the great equalizer since it's inception.  I for one have done studies on this and from time to time conduct jaw dropping presentations to REALTORS about the history of FHA.  If you had the opportunity to see what I teach, you will clearly see figures that demonstrate every down turn in our economy since the Depression has greatly benefited from FHA.  What I have done is provide you with a graph since 1980.  What you want to pay attention to are the downward peaks of the conventional loan (which points out down turns in our Great Economy) and then the "POW" peaks at every downturn of our economy.  What is interesting is that once you see FHA going up, conventional gradually follows it up which means our economy is getting better.

If I were you, I would give graces to the Liberal Boogey Man you are trying to criticize for this program. The other thing I point out to many of my blind-sided conservative peers, is that I ask the question "What does this say about us as an industry in general?"  We often hear (as somewhere in this post) "LET THE MARKET WORK ITSELF OUT"..  The market has never worked itself out. In fact, there has always been government intervention and yes good old fashioned American ingenuity.  In fact, the "REAGAN ERA" was marked by record government spending. He ran a deficit which is now toughted as "Trickle Down Economics or what some like to call Reaganomics". 

Thank me later for the graph.  (By the way, this graph is drawn from historically correct data).  

Prosecutor Belonger -- Your reply really made me think. This credit was announced months ago, yet it's only recently we've seen increased traffic. WHy? Is it the threat of it going away? Are buyer suddenly GETTING IT? Or are they seeing their friends get $ and wanting some of the "bailout" too?

Look at how cash for clunkers took off. That didn't take months to take off, did it? Simple program, the public liked it and decided to cash in. This program is a harder sell (harder to understand for the average person, I think).

We have all these agents running banners on their ads, and on their office signs, "8000 tax credit--hurry and buy now!" Is that spurring our uptick in activity? I don't know. Or is it that prices finally have hit a level where people WILL buy. I cannot put my finger on it.

I do know that the buyers I am working with, and people in my office, are NOT buying because of the credit. They're buying because they want/need a house.

The fence sitters are still there because (1) some just cannot find what they're looking for (2) their credit sucks  and they're working on getting their scores up and (3) they think the prices will fall more as we go into winter.

Great discussion.

We all take advantage and use a number of Tax Credits, Write Offs, etc. . . .  At least this one is aimed at middle class people who seem to be the ones getting it worst in this crises.  The big guys get bailed out and the failures get hand outs.

I am all for eliminating it when we eliminate corporate welfare, bailouts, etc . .  When we eliminate the income tax and replace it with a consumption tax, you get the idea.  This would include eliminating Realtors beloved Mortgage Interest Deduction. 

The other nice thing about the credit is we don't have a department or bureaucracy to manage it and I do not think it has a Czar.  Sounds like a good way to put cash in the hands of people that actually work.

Boy do I agree with you! Turning America into a welfare society is not my idea of progress.

This mess started with people being enticed to buy homes they couldn't afford with loans that were pre-set to fail. Some in government (for instance, George Bush) asked for restraints on Fannie and Freddie and the "easy loan" mentality that prevailed - and they were waved aside like they were talking nonsense.

The government needs to back off and stop trying to put band-aids on things. They're making it worse, not better!

Now, I hope I'm wrong, but I think we'll see something similar happening in the car market within the next year or two. Folks who were happily driving paid-for clunkers now have car loans to pay. And they are not saving enough on gasoline to make up for that monthly payment.

My bet is that many of them just squeaked by with qualifying for those loans - and that we'll see a flood of repossessed cars on the market before long.

 

TINA,... . I agree, I see so many jumping the band wagon per se, without putting facts side by side. That is another reason why we are in this mess. And it shouldn't come down to someone saying, I am the President and I have talked to our top economists and we need to do this NOW...  I am sorry, I guess the ones that disagree with you aren't our top economists, but they could actually be more right than what you have. It's just the fact that they don't agree with you. That is another issue.  thanks

 

CIDM.... . Carl, you made this statement.. "Based on your comments it appears that you, like Brian, believe that the government should never be involved in any kind of social engineering including housing."

That is an assumption just based on what you read. I personally feel that you can assume, but that you are slightly off, unless you followed my blogs for the last 3 years. Besides, I am not going to bite on a true political debate, because there is just way too much out there to talk about in such a short space of a comment. And the word "NEVER", very harsh and one-sided.  I have never said that the gov't should be involved.  But they do need to learn what things they should jump into. You want to hear a huge problem that I have with gov't.  Let's take this example for instance..  When Obama told us Americans that we needed to inact the Stimulus Package of 2009 NOW, right now, today... that we can't wait another day.  They drafted it and gave it out, telling everyone to vote on it the next morning... thousands of pages.  LOL  Seriously, what do you think of that.  Honest opinion.

In regards to your comment on Brian's Blog, I didn't get to it yet. Since you couldn't paste and copy them over here also, to continue discussion, I will get to it this weekend.

But you did make this last comment.. "As for your opinions, perhaps we should begin unraveling the government's involvement in housing by eliminating the FHA. Thoughts?"

No, not at all.  That is no to eliminating FHA.  The gov't has made the rules and guidelines, but they don't fully control this type of financing. Yes, FHA was formed under the gov't, but what's your point and or question?  We need financing options...  It seems that a few people want to debate this with me, including Ted below. Hey, everyone can have an opinion. Prove it wrong otherwise by fact...  hhhhmmm..  facts, do we even know what they are anymore?  Just curious... that was not at you, just in general.

I will say this... what has gotten us in trouble is assuming.  Something that was done here, based on one blog and some of my comments in another blog. I am on both sides of the fence many times. All I did here was try to show one side that was not talked about as much as it should have been... besides the phrase, just do it, because it will help our economy. Such blind statements...  does anyone know 110%?  No, not at all... but statements like that, make me feel like they just know.  If they did, would we be in this mess? 

Before I leave you, let me ask this question.  Did the gov't not demand Freddie and Fannie to extend credit about 5 years ago?  And what happened with that?

 

 

BARBARA.... . now, I can live with those rules. I was still a tad against it originally, but to go from paying it back to not paying back?  What a huge mistake... no accountability.  Then Mr. President, please just give me $100,000 and we will call it even, for all my pain and suffering of the gov'ts bad decisions...  let me say this, when will the free spending stop?  Yes, to you haters in regards to my comment about the gov't staying out of certain things, some spending does help... but doing it so blindly, without waiting some, analyzing more?   rut row..

 

 

TED... . lol.. sorry... but there are two sides to what you just stated.  This is what you said.   "Firstly, to self proclaim yourself as an FHA EXPERT, you should ensure that you are educated on what FHA is.  What I can tell you is that history is against your views at every turn."

I know the basics about FHA and how and why it was started. It was basically to make housing more affordable. Do I need to be a Harvard graduate and define this with every client, the history of FHA, to self-proclaim myself as the FHA expert?  In all honesty, I find that silly and here is why.  As an FHA Expert, I bring knowledge and expertise about FHA loans, how to utilize them, knowing many of the guidelines, knowing how to qualify people, how to get them to close, period. Should I also know when FDR had his first press conference about FHA... or HUD increased the loan limits in 1970, or when HUD allowed non-occupant co-borrowers?  I don't think so...  I really don't.  I kind of see where you are going with this.  But let me point something out Mr. History... 

You stated this in a most recent blog of yours..."FHA allows credit scores as low as 580, however most lenders (almost all) have moved away from that and require 620+."

You said that as a fellow loan officer, you talk about the history of FHA... and you tell me that I should know about what FHA is... as I explained, I know the basics. I told you want FHA Expert means to me, above.  But let's question you as a loan officer then. In your blog, about collection accounts and such, which I thought was explained well...you say that FHA allows credit scores as low as 580.  I would say that is very misleading.... FHA only has one real credit score.  499 or 500, which ever you would like. FHA says that you must put down 10% or more if you have a credit score below 500. FHA doesn't talk about credit scores of 580 or 620.  The investors on Wall Street do. Let me take this a step further, for fun debating... maybe you can be the Professor or the educator, teacher of the History of FHA and I will be the loan officer, the FHA Expert, understanding the guidelines.  Hey, just food for thought. Whay ya say?

 

You then go on to make these statements... "If I were you, I would give graces to the Liberal Boogey Man you are trying to criticize for this program. The other thing I point out to many of my blind-sided conservative peers, is that I ask the question "What does this say about us as an industry in general?""

Okay, maybe the boogey man knows how to pick...  wait, Boogey Man?  Not the choice of words I would have used. I don't claim to be an expert on that, what a liberal boogey man should know. Some people might think that I am taking this to an extreme, getting to carried away.  But doesn't it start with your comments, what you are assuming, and actually accusing me of... because you just read one blog?  The Pope is more in likely an expert on Catholic history and what it means to be Catholic. I didn't know that we had to define FHA Expert and when people search for me, that they need and want the breakdown of the history starting in 1934. 

Overall, I do appreciate your comments, but just wondering to what degree were your actions?  Food for thought.. Oh wait, am I assuming?  Yes... well, maybe. I think it's a fair assumption just by what you stated in your one blog about collection accounts and what FHA says about credit scores. I just didn't get that memo that FHA goes to 580. .. or that I learned that from my FHA history professor.

One more thing... maybe it was just the way your comment sound cocky to me. And I am not afraid to talk about this in public, even for the public to read this. I do claim to be an FHA Expert on FHA loans and helping my borrowers achieve that dream. I think giving them a history lesson would be boring and scare many away.  Anyhoo... happy Friday.  ;o)

 

 

ERICA.... .  Prosecutor Belonger? Not sure if I should take that ask a semi compliment... but I'll run with it...  lol  Or that you were just being fun and cute...  We haven't met yet, so I don't know your personality. Which reminds me... keep an eye out this weekend for a blog on the next Philly Active Rain gathering.

But hey, I do try to come back an analyze each comment made and if the comment is not complete or unfinished, and leaves me not knowing or that I don't understand, I need to dig deeper and get dirty... lol  And sometimes my replies have sounded harsh... but I am glad I made you think some. Personally, I was just getting tired of the basic answers..."keep it, extend it" or "get rid of it"... but with no explanation. I want to know why...

First off, you made this statement... "This credit was announced months ago, yet it's only recently we've seen increased traffic"

Announced months ago?  Not to be a stickler for details, which I try to be, try since Jan/March of 2007. If my calculations are correct, we are talking about 18 + months.  Wow...  

Now, I will partially agree that many people still don't know about this or understand it... and yes, I am tired of the ads stating the basics, making it sound like easy/free money.  But that is why people like you and I need to take the time with each client, to explain.. to write blogs... etc, etc.

Now, you stated this.."I do know that the buyers I am working with, and people in my office, are NOT buying because of the credit. They're buying because they want/need a house.."

These are great buyers...  and can be rewarded with the incentive. People that buy because they want/need a house.   How about those that are strictly buying, just to get the tax credit?  Do we think this could lead to more problems and issues?  More foreclosures...?  I think it could..   But let's really look at this... how about jobs, income, the US dollar?  Shouldn't we focus on this before we dangle that large carrot?  Just food for thought.  and thanks for coming back...

 

I liked one suggestion... let's go back to the $7,5000 tax credit that had to be repaid.  Why not?  Come on people...  stuff that is free still costs money. In my opinion, simple logic and common sense.

 

That last comment gave me a headache (trying to read it).  I lost you at "<w:LsdException Locked="false" Priority="31" SemiHidden"

Agree 100% BTW.  We have a local State rep trying to introduce a state version of this program - I'm not excited.

 

I am for the tax credit and I know it has made a difference and helped people. I don't know the price of housing where some of you guys are but here in Michigan first time buyers can buy a home in a nice area for well under $100,000. We have sold homes to single moms that never thought they could live a a safe area and have their kids in a good school. They can replace their "safety net" in the bank and have the money for the home.

You guys need to remember these "welfare receipients"  you call them HAVE JOBS, GOOD CREDIT AND MONEY IN THE BANK!!! Do I sense a feeling that people that aren't in the UPPER income levels are beneath you? Remember there are lots of worker bees in this country that are really good people, contributing to this country and making less than $30,000 per year. I suggest you get out of your ivory tower and talk to the people that fix your car, clean your house and serve your food!!!!!!!

Remember those of you that are talking this down have your name out there for all to read. I would rather see everyday people get a break and not see the millions of dollars in bonus going to the people that brought this country to their knees. The people taking advantage of this program had no part it that. 

Years ago Ronald Reagan said something about what we don't want to hear.  If I remember correctly, "I'm from the government and I'm here to help."  

Don't believe that government assistance is any help.  The bigger the government, the more they waste of our tax dollars, and the deeper we all go into debt for it.  What government help does is piss away whatever money they take from us, then go into debt so they can take away the money of our children and grandchildren.

The money they give away comes from somewhere.  Lets face it.  Each of us could do a better job helping others... IF we weren't paying so much in taxes.  But, then our government officals wouldn't have the power they love to wield over us all.  Just remember that Sugardaddys like Uncle Sam ask a price.  Government money always has a string attached, and it's tied around the taxpayer's neck.

Jeff,

Your missed the point of the graph.  You can debate with me about this but the numbers are there.  Historically, FHA has been there to help us get out of every bad turn in our economy's history. That is fact that has been recorded and it is not of my own making or opinion.  Without it, I will go as far as guaranteeing you that our economy (through and through) would have not expanded in the necessary fashion without FHA.  Again, to suggest that "LET THE MARKET WORK ITSELF OUT" mantra is Peter Pan behavior.  "I BELIEVE, I BELIEVE!!".  That thought process led to policies that de-regulated everything to a point of ruin.

By the way, I can come across as a wise ass time to time but I didn't mean it that way at all.  I feel that there are a lot of facets to consider which people are not aware of such as the data I presented. 

As for the your "test" of my knowledge. First, keep in mind that post was a while ago and we actually did indeed at the time originate loans at 580. However, what I will say is that per guidelines (since that is what you are asking), there are no such thing as FICO requirements in the FHA 4155.1.  In fact, the FICO score requirement has had restrictions/ limitations due to "LENDER" requirements.  As to the reason why I out 580 at that time, was specifically due to the fact that no one at the time, was originating any loans with a score of less than 620.  We were one of the very dew lenders nationally.  

However, I did learn something from this reply, "I need to ensure my blogs are constantly updated". You are correct, less than 620 does not exist in this market due to the lenders.  

As for the expert title, I consider that to be one is not only to be able to know the program (although very important and knowing how to structure the deal since FHA is all about the details and not the application itself) but rather have a grasp on why it does "help", how it helps, and importantly how it can benefit the market as well.  This allows me to bring that much more value to my clients and my REALTORS.  This is historically important because then, we understand where we have been and where we are going. Without FHA, you nor I and the REALTORS in this post would likely be working corporate (I shudder at that idea).

Thank you for the provocative post and God Bless!

Wow what a conversation!!!! Who can write loans when they have to talk this much?? Ted, I write less than 620 all day long. But that is for another day. You can read my blogs about it.

I can tell you who!  Me!  I don't take loan applications.  I work on marketing.  I have a team of 6 loan officers that do it thus the concept of "The Canto Team".  That is fabulous that you still can. Good for you for doing those.  Personally,  I haven't lost much sleep over that nor business but I understand that some LO's markets are still accepting them.  We made a good call to not do them anymore.

I could save my clients this, and sometimes more.  NOT all the time, due to negotiation . . . but on average I save my clients $5,000.  What I'm now seeing, now that buyers are out (maybe before the fall / winter sets in) is that listing agents are using the $8000 credit to negotiate sellers' terms and conditions (hence my wonderful "featured" blog).  And out the window goes the money I would normally save my clients . . . anyway.  The $8,000 credit is an interesting bone / carrot to dangle.  A savvy buyer will understand how a GOOD AGENT will save them money  with / or without the credit . . . and it WILL go away. 

Jeff,  You stated

", the 100% won't happen, because congress shot it down the after the House passed it. This was like 5 years ago? Secondly, HUD got greedy and whispered in congress's ear about killing the seller-funded DPA, because HUD wanted their cake and to eat it also"

 I thought HUD had tried for years to eliminate Seller Funded DPA and because of Law Suits and PR campaigns HUD was unable to stop a them. 

"Many talk about how prices were inflated because of those DPA's, yet can't the same be said for the tax credit?  Because of multiple offers, it has driven up costs...."

I do agree that more buyers having the ability to buy homes would buy homes would increase Sales Prices.   That is Supply and Demand economics.   I agree, With Seller Funded DPA demand was increased, Sellers also dealt with a Net Price they desired and sales prices were adjusted upwards which did inflate sales prices.  This I believe created a spiral upward in prices.  Yes, the Tax Credits did get some people off the fence and that would cause sales prices to increase possibly.  Again Supply and Demand economics would determine that.   The question then becomes, should government actions, incentives or policies be used to change the Supply or Demand. 

"In regards to not supporting the DPA's because of the fees?"

My statement was meant to say that the DPA organizations were doing it for that reason, simply.   If you grasp my statement that sellers look at a desired Net Proceeds and when DPA programs were used the prices were increased (aka inflated) to cover the seller Funded assistance and the Fees.   I would have no problem if Simple Supply and Demand were the controlling factors.  Bringing more buyers to the market increase sales prices and inflating prices market prices thru the use of DPA Progams doubled the effect.  Bringing DPA programs back would then takes us back to this unhealthy mix.  Possibly not, because of the new rules used by appraisers, however once started, the spiraling could start again.     

Back to my suggestion.  Do you believe anything should be done to assist the current real estate market?   If you say NO, then end of subject.  If you believe something should be done then the question is what.  Your options are:

1)   Bring back DPA programs that would bring more buyers to the market place but at the same time Inflate sales prices. 

2)  Allow 100% or the $100.00 Down on a temporary basis using whatever rules permit HUD to use it on HUD Owned properties.  If not authorized under current guidelines, then instead of extending or changing the current incentive.  Either might require congressional action.  I do not support giving money to buyers on a nationwide basis.  I would support State, City or Regional incentives based upon individual market conditions to use these giveaways; however with a Zero down option these might not even be necessary.

Tim, I believe that your solution it the only solution that would actually be feasible to kick start this economy.  In our area USDA loans are our top loan now simply due to the 0 down payment and the no PMI. 

There is no use in arguing with the people who think that the tax credit needs to be expanded.  These are the same people who want socialized medicine, that want to tax the rich and give to the poor.  The more socialized our nation has become over the last 50 years the further we have slid down the slipper slope of self destruction.

Great points Jeff and to all the comments that are anti keep the credit going.  Keep the government out of it.  I assume you people are also wanting to eliminate the home mortgage interest deduction.  That would raise a lot of revenue and help reduce the debt and deficet in the future.

P.S.  I'm a real estate and mortgage broker.  I think the credit should be extended.

Very true Jeff. After all is said and done...there will be a price to pay. The price will be paid in more debt and taxes.

Couldn't agree more with all you said in your post. The welfare mentality is getting entirely out of hand. Thanks for the time you obviously put into this, and the reference links.

Damon,   Thanks for pointing out the 100% Financing option with USDA.  I believe the objection that most people have to 100% financing came past experience.   I also believe that a number of other factors playing into the problem.   Those being Stated Income Loans, very liberal credit underwriting and questionable appraisals.   All of these contributed to where we are today.  I believe tightening in each of those areas have occurred therefore we are in a different place today.   I look at these items as a deadly mix.

I also believe the $8,000 did offer some stability to the market, however as the incentive was a hand out to those that really did not need it and is something every tax payer will be paying for years to come.  If it had been written like the original $7,500 that called for repayment I might have supported it because then it was just a loan. 

For those that stand by "Skin in the Game", with the decline in property values overall, even some people that put 10% or 20% now find they are underwater.  I believe the two most important factors with any loan are "Ability to Pay" and "willingness to pay".  Ability will be controlled by our economy in general and jobs.  Willingness is a mentality and the more free money that is given to people the weaker this gets. 

Will close saying, I believe something needs to be done when the $8,000 expires.  The question is what and I do not believe the Seller Funded DPA programs are not the solution for the reasons I have expressed. 

Jeff,

Let the markets run their course is my belief. If a small business can't take in more than it spends, it closes and a government that is broke should not give away $11.2 billion dollars as an incentive to purchase a home. Prices, rates, tax deductions, home appreciation (in theory) and the pride in being an owner should drive the market, IMO.

Patrick

Hi Jeff, You do write great contorversial posts!  I love reading them, so keep it up.  Yes, I agree,  in the long run it will produce more debt and taxes.  Great feedback here. congrats on feature post!

Great post and comments! I think the 1st time homebuyer tax credit should be allowed to expire. It has created a false market that cannot be sustained and extending this credit will only prolong the housing recovery. Put the "Free" back in market and let the markets work it out.

Patrick and Kathie.. You didn't read other previous posts. The Real Estate market has NEVER WORKED itself out alone. It is not that simple as you are led to believe. There is data to prove this. That statement is so cliche and packs no backbone. What aggravates me most is the short attention span and ingratuitous attitude we have as an industry in general. 2 years ago I read hundreds of posts of agents in dire straits and still I speak to some that are still struggling. I am sure not one of us would like to be put in the same place as 2 yrs ago again. I will likely have some people reply with.. ' I didn't hany problems'! LIES! I will put myself on the line to say 70 percent were in a bad place. I am really tired of the idea that we are all above this mess as an industry. There is no 'Let the market work itself' since we all collectively worked together to its demise. I remember clearly and blatantly Agents running prices up with bidding wars, purchases with site unseen, etc and lenders, title companies, appraisers and the whole lot doing insane stuff. The market sure did work on itself then. How in the heck you expect that same market to dig itself out now?

Ted, chill out and write your own post with your own views.  Thanks for staying civil I guess.

Jeff:  I still have not had a buyer tell me that they are buying because of the tax credit so what's the hub-bub?  It doesn't seem to be making a difference to them.  I did a post recently and I believe that the buyers that are now 'hurrying up' to take advantage of the 'Sham-wow' offer are the same people that XMas shop on December 23rd.

 

I just love it when posters talk about "government expenditures" when they refer to tax saving activities. They seem to feel that letting me keep my own money is actually a government expense. Taken to the extreme, this means that all money belongs to the government, and therefore that any money I have is a gift (Handout) by the govenment.  Phooey!

And talk about the federal deficit has always been a non starter with voters. They just can not get excited about reducing the deficit if it means cutting back on a favorite program.  And anyway, who do we owe the money to?  It's either to ourselves (think government bonds and bills bought by us citizens to fund our retirement) or to overseas investors (and who cares if we default on debts to them!  -- not really, but you get the idea).

I believe the $8000 tax credit has been a big help even if there have not been all that many who have taken advantage of it. It has provided a big psychological boost. I vote for extending it.

"This is a great time to buy a house"

Akron, Ohio

 

What was this post #77 about?  Yikes!

Ted: You (post #75 and earlier) have done some excellent thinking here.  Stay with it.

Akron, Ohio

 

Agree with notes above.  Whether we like it or now - FHA will lead us to recovery and is a necessity for a real estate recovery in 2010 and moving forward.