Let me begin by saying I like our NAR President Charles McMillan. I think he’s a good guy, he works hard for us and he truly believes in the Realtor Party. Having said that I must beg to differ with some of the recent utterings from the national office regarding Realtors ‘success’ with the recent stimulus bill.
In his most recent update, posted immediately before this one, he refers to the major gains by Realtors in the bill:
Dear Fellow REALTOR®,
For nearly four months, NAR has been working to deliver to you and to our nation a comprehensive plan to stabilize the housing market.
This week, we saw countless hours of hard work pay off “ in a MAJOR way “ when the federal government implemented NAR’s recommendations to stimulate housing with the signing of the American Recovery and Reinvestment Act of 2009
- Lower interest rates for home mortgages;
- A greater ability to get financing through FHA, Fannie Mae and Freddie Mac in high-cost areas;
- A true tax credit incentive to buy a home NOW; and
- Foreclosure mitigation and short-sale standards.
As on wag summarized in response to another post of mine on the topic – ‘well, we didn’t get what was on the table but at least we didn’t lose what wasn’t on the table’. So lets’ look at these a little closer.
1. Did we really get lower interest rates? Or have interest rates actually been edging lower since the Fed reduced the prime to .025% last year? Where in the economic stimulus package does it mandate lower interest rates? And are interest rates even the problem right now? Interest rates are, and have been, pretty darn good for awhile now. Banks not loaning money is the problem, not high interest rates. Sorry, Charles. That dog don’t hunt.
2. Greater ability to get FHA & GSE financing? Well, partly true I suppose. Actually nothing new or the result of the stimulus, but we did get the increased GSE limits extended at least through the end of this year. Of course as Paul Harvey might say, we need to see page 2. That’s the page that talks about Fannie & Freddie increasing mandatory fees and toughening credit score and down payment rules. For example, if an applicant doesn’t have 30% to put down, they pay higher fees. Got a 699 FICO but you can make a 25% down payment? You still get hit with a 1.5% ‘delivery fee’ at closing. If your FICO is between 700 – 720, you’ll still pay an extra 3/4 point. If you’re buying a condo and you don’t have 25% down payment, you’ll pay an extra 3/4 point regardless of your FICO. Does this sound like a ‘greater ability to get financing’ to you? Me neither.
3. A true tax credit? Well, this one is correct. Last year you recall the $7,500 kinda tax credit that you got one time and then paid back over three years. Not so much a credit as an interest free loan that buyers ignored in droves. This year the credit was extended to $8,000 and if you stay in your home 5 years, you don’t have to pay it back. That’s pretty good. Of course it’s still only for first time homebuyers rather than trying to stimulate the full buy-side of the equations. And it’s certainly not the $15,000 carrot that was dangled so enticingly in front of our faces to get us to call our legislators to urge them to vote for the porkulus bill. Heck, it’s not even as good as what the home builders got included in the California budget bill which is a $10,000 credit for buyers of NEW homes – but I guess this is as close to a win as we can get on this one.
4. Foreclosure mitigation and short sale standards? Oh puhleeze. Short sale standards? In what alternative universe do these exist? Have ANY of you seen anything even approaching even modest short-sale cooperation? We can’t even get standards on REO’s and that’s a walk in the park compared to short sales.
Foreclosure mitigation? Hmmmm, that must be the continuing moratoria on deed sales. I guess if you get to live in your house rent free for an extra 90 days that’s a form of mitigation. He can’t be referring to the $275 Billion program announced by Obama last week encouraging banks to modify loans. That’s the one that’s aimed at Fannie & Freddie borrowers, of which there are virtually NONE in our region. That’s the one that makes it incumbent upon banks to modify loans that fall within a loan-to-value range of 80% to 105%. Yeah, that’s gonna be a BEEEG help for people in Southwest County, or California in general, with LTV’s of -150%.
So while I am busy looking for the silver lining, while I am focusing on the positives and the greatly improved sales figures over twelve months ago, a modicum of reality does need to be interjected into the debate. Lawrence Yun has already been neutered by his continuing Pollyanna pronouncements in the face of reality. NAR runs the risk of being totally marginalized if they continue to blow smoke up our nether regions as if those of us in the field don’t actually KNOW BETTER. If the four points enumerated by Charles McMillan above constitute a ‘big win’ for Realtors, then the sad fact is we got our asses handed to us on a platter and we’re trying to decide which condiment will make the dish most palatable.
Of course, that’s just my opinion. I could be wrong.
the opinons reflected herein may not necessarily be those of the Southwest Riverside County AOR, or any local or state government or other mental institution.