"As a result of the bill, Congress will raise the national debt ceiling to $10.6 trillion from $9.8 trillion".
The WSJ has a lengthy column on the bill today:
"Key points of the housing bill, and their cost over 10 years (to be fully offset by tax code changes and fees):
• Fund to provide more low-income housing: $5.3 billion
• Tax credits for first-time home buyers: $4.6 billion
• Grants for state and local governments to buy foreclosed homes: $3.9 billion
• FHA insurance for up to $300 billion of home loans: $729 million
• Counseling for homeowners facing foreclosure: $210 million
• Loosens restrictions on how states issue tax-exempt housing bonds
• Keeps lenders from foreclosing or increasing mortgage interest on returning troops for a year. Creates financial-counseling program, increases home-loan limit for military veterans: $112 million
• Raises loan limit for lenders to 115% of the local area median home price, up to $625,000
• Raises limit on seniors' reverse-mortgage program to $625,000
• Raises limit on federal debt to $10.6 trillion, from $9.8 trillion
• New regulator for Fannie and Freddie, financed by the two lenders
The bill also authorizes the Treasury secretary to expand credit and buy equity shares in Fannie or Freddie if necessary. The Congressional Budget Office estimates this would cost an extra $25 billion if it happened".
36 comments:
I'm particularly amused by the declaration that the costs will be fully covered by tax code changes and fees...yet they need to raise the debt ceiling by a trillion bucks.
yes, and Fannie and Freddy are going to open a lemonade stand to cover this:
"New regulator for Fannie and Freddie, financed by the two lenders"
Well, this isn't a very useful way of reporting this. I want to read more of the details of the plan-- not how much they've authorized for costs (which is not, in any case, the same as how much it will cost: Note that this is all voluntary for the lenders, as far as I can tell, which means that if they think it's going to cost less to foreclose, they'll do it.)
Gosh darn it, I know it's "too long to read", but why don't any of the articles link to the actual bill number to make it easier to look up the actual text???
From the winning bill:
HR h3221eah.txt
details for all us fence-sitters. As far as I can tell it's just any purchase after April 2008. I don't see an end date.
Cheers!
SEC. 612. FIRST-TIME HOMEBUYER CREDIT.
(a) In General.--Subpart C of part IV of subchapter A of chapter 1
is amended by redesignating section 36 as section 37 and by inserting
after section 35 the following new section:
``SEC. 36. FIRST-TIME HOMEBUYER CREDIT.
``(a) Allowance of Credit.--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.
``(b) Limitations.--
``(1) Dollar limitation.--
``(A) In general.--Except as otherwise provided in
this paragraph, the credit allowed under subsection (a)
shall not exceed $7,500.
``(B) Married individuals filing separately.--In
the case of a married individual filing a separate
return, subparagraph (A) shall be applied by
substituting `$3,750' for `$7,500'.
``(C) Other individuals.--If two or more
individuals who are not married purchase a principal
residence, the amount of the credit allowed under
subsection (a) shall be allocated among such
individuals in such manner as the Secretary may
prescribe, except that the total amount of the credits
allowed to all such individuals shall not exceed
$7,500.
``(2) Limitation based on modified adjusted gross income.--
``(A) In general.--The amount allowable as a credit
under subsection (a) (determined without regard to this
paragraph) for the taxable year shall be reduced (but
not below zero) by the amount which bears the same
ratio to the amount which is so allowable as--
``(i) the excess (if any) of--
``(I) the taxpayer's modified
adjusted gross income for such taxable
year, over
``(II) $70,000 ($140,000 in the
case of a joint return), bears to
``(ii) $20,000.
``(B) Modified adjusted gross income.--For purposes
of subparagraph (A), the term `modified adjusted gross
income' means the adjusted gross income of the taxpayer
for the taxable year increased by any amount excluded
from gross income under section 911, 931, or 933.
``(c) Definitions.--For purposes of this section--
``(1) 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.
``(2) Principal residence.--The term `principal residence'
has the same meaning as when used in section 121.
``(3) Purchase.--
``(A) In general.--The term `purchase' means any
acquisition, but only if--
``(i) the property is not acquired from a
person related to the person acquiring it, and
``(ii) the basis of the property in the
hands of the person acquiring it is not
determined--
``(I) in whole or in part by
reference to the adjusted basis of such
property in the hands of the person
from whom acquired, or
``(II) under section 1014(a)
(relating to property acquired from a
decedent).
``(B) Construction.--A residence which is
constructed by the taxpayer shall be treated as
purchased by the taxpayer on the date the taxpayer
first occupies such residence.
``(4) Purchase price.--The term `purchase price' means the
adjusted basis of the principal residence on the date such
residence is purchased.
``(5) Related persons.--A person shall be treated as
related to another person if the relationship between such
persons would result in the disallowance of losses under
section 267 or 707(b) (but, in applying section 267(b) and (c)
for purposes of this section, paragraph (4) of section 267(c)
shall be treated as providing that the family of an individual
shall include only his spouse, ancestors, and lineal
descendants).
``(d) Exceptions.--No credit under subsection (a) shall be allowed
to any taxpayer for any taxable year with respect to the purchase of a
residence if--
``(1) a credit under section 1400C (relating to first-time
homebuyer in the District of Columbia) is allowable to the
taxpayer (or the taxpayer's spouse) for such taxable year or
any prior taxable year,
``(2) the residence is financed by the proceeds of a
qualified mortgage issue the interest on which is exempt from
tax under section 103,
``(3) the taxpayer is a nonresident alien, or
``(4) the taxpayer disposes of such residence (or such
residence ceases to be the principal residence of the taxpayer
(and, if married, the taxpayer's spouse)) before the close of
such taxable year.
``(e) Reporting.--If the Secretary requires information reporting
under section 6045 by a person described in subsection (e)(2) thereof
to verify the eligibility of taxpayers for the credit allowable by this
section, the exception provided by section 6045(e) shall not apply.
``(f) Recapture of Credit.--
``(1) In general.--Except as otherwise provided in this
subsection, if a credit under subsection (a) is allowed to a
taxpayer, the tax imposed by this chapter shall be increased by
6\2/3\ percent of the amount of such credit for each taxable
year in the recapture period.
``(2) Acceleration of recapture.--If a taxpayer disposes of
the principal residence with respect to which a credit was
allowed under subsection (a) (or such residence ceases to be
the principal residence of the taxpayer (and, if married, the
taxpayer's spouse)) before the end of the recapture period--
``(A) the tax imposed by this chapter for the
taxable year of such disposition or cessation, shall be
increased by the excess of the amount of the credit
allowed over the amounts of tax imposed by paragraph
(1) for preceding taxable years, and
``(B) paragraph (1) shall not apply with respect to
such credit for such taxable year or any subsequent
taxable year.
``(3) Limitation based on gain.--In the case of the sale of
the principal residence to a person who is not related to the
taxpayer, the increase in tax determined under paragraph (2)
shall not exceed the amount of gain (if any) on such sale.
Solely for purposes of the preceding sentence, the adjusted
basis of such residence shall be reduced by the amount of the
credit allowed under subsection (a) to the extent not
previously recaptured under paragraph (1).
``(4) Exceptions.--
``(A) Death of taxpayer.--Paragraphs (1) and (2)
shall not apply to any taxable year ending after the
date of the taxpayer's death.
``(B) Involuntary conversion.--Paragraph (2) shall
not apply in the case of a residence which is
compulsorily or involuntarily converted (within the
meaning of section 1033(a)) if the taxpayer acquires a
new principal residence during the 2-year period
beginning on the date of the disposition or cessation
referred to in paragraph (2). Paragraph (2) shall apply
to such new principal residence during the recapture
period in the same manner as if such new principal
residence were the converted residence.
``(C) Transfers between spouses or incident to
divorce.--In the case of a transfer of a residence to
which section 1041(a) applies--
``(i) paragraph (2) shall not apply to such
transfer, and
``(ii) in the case of taxable years ending
after such transfer, paragraphs (1) and (2)
shall apply to the transferee in the same
manner as if such transferee were the
transferor (and shall not apply to the
transferor).
``(5) Joint returns.--In the case of a credit allowed under
subsection (a) with respect to a joint return, half of such
credit shall be treated as having been allowed to each
individual filing such return for purposes of this subsection.
``(6) Recapture period.--For purposes of this subsection,
the term `recapture period' means the 15 taxable years
beginning with the second taxable year following the taxable
year in which the purchase of the principal residence for which
a credit is allowed under subsection (a) was made.
``(g) Application of Section.--This section shall only apply to a
principal residence purchased by the taxpayer on or after April 9,
2008, and before April 1, 2009.''.
(b) Conforming Amendments.--
(1) Section 26(b)(2) is amended by striking ``and'' at the
end of subparagraph (U), by striking the period and inserting
``, and'' and the end of subparagraph (V), and by inserting
after subparagraph (V) the following new subparagraph:
``(W) section 36(f) (relating to recapture of
homebuyer credit).''.
(2) Section 6211(b)(4)(A) is amended by striking ``34,''
and all that follows through ``6428'' and inserting ``34, 35,
36, 53(e), and 6428''.
(3) Section 1324(b)(2) of title 31, United States Code, is
amended by inserting ``, 36,'' after ``section 35''.
(4) The table of sections for subpart C of part IV of
subchapter A of chapter 1 is amended by redesignating the item
relating to section 36 as an item relating to section 37 and by
inserting before such item the following new item:
``Sec. 36. First-time homebuyer credit.''.
(c) Effective Date.--The amendments made by this section shall
apply to residences purchased on or after April 9, 2008, in taxable
years ending on or after such date.
SEC. 613. ADDITIONAL STANDARD DEDUCTION FOR REAL PROPERTY TAXES FOR
NONITEMIZERS.
(a) In General.--Section 63(c)(1) (defining standard deduction) is
amended by striking ``and'' at the end of subparagraph (A), by striking
the period at the end of subparagraph (B) and inserting ``, and'', and
by adding at the end the following new subparagraph:
``(C) in the case of any taxable year beginning in
2008, the real property tax deduction.''.
(b) Definition.--Section 63(c) is amended by adding at the end the
following new paragraph:
``(7) Real property tax deduction.--For purposes of
paragraph (1), the real property tax deduction is the lesser
of--
``(A) the amount allowable as a deduction under
this chapter for State and local taxes described in
section 164(a)(1), or
``(B) $350 ($700 in the case of a joint return).
Any taxes taken into account under section 62(a) shall not be
taken into account under this paragraph.''.
(c) Effective Date.--The amendments made by this section shall
apply to taxable years beginning after December 31, 2007.
Cara, I hope you can use any benefits of this bill to buy that well-priced modern house that's out there waiting for you!
We had that discussion here before. If a $7500 tax credit is willing to make the buyer buy a house, wouldn't a $7500 price reduction do exactly the same thing (from the buyer's perspective).
The person actually getting the money out of that tax rebate is the seller, and they're getting it in cash up front.
xpovos
Not if that 7500 can be part of your downpayment or emergency cash.
In fact the way it's written it's like they're replacing DAP with this tax credit which is essentially a 15 year 0% interest loan to yourself from the gvnmt. So, for instance if next summer, we come up 7500 short on our savings plan, we could still go ahead and buy, by adjusting our withholdings to get the 7500 out sooner than the following April.
The 7500 price drop is only the same thing on no-downpayment loans or if the buyer already has as much saved for a down as they want to have. In fact the 7500 corresponds really well to that 3% down required by FHA on a $250k house. Cute, huh. No more seller paybacks, get them straight from the tax-payer, that will fix the moral hazard.
cara,
Except the tax credit isn't same as cash to the buyer. They get it 'back' at year end when they calculate taxes, and if I read it correctly, it's pro-rated over a number of years.
Still looks more like a sell-side subsidy to me.
DC has a $5,000 tax credit and it was non-issue in my home purchase. It was not part of my calculations, nor my agents or lender. That was a deliberate decision: it's a very short-term benefit that could easily be offset by other tax issues.
Nonethless, it is a definite "nice to have" at tax time.
That said, I think the $7,500 is a nice incentive. Frankly, I would have set it much higher.
From the WSJ article:
The biggest boost for homeowners is a program that would allow the FHA to back the refinancing of as much as $300 billion in home loans for distressed borrowers. Under this plan, the lender or investor holding the mortgage would have to accept at least a 15% write-down in the value of the previous loan. The new mortgage would then receive federal backing
I wonder how this 15% write down is going to show up in the “comps”.
If a borrower purchased a $400K home and refinanced for a principal of $340K, how are potential buyers in the same neighborhood to know? Will this 15% reduction be shown in the tax records? Will it be reported my MRIS? After all, the “value” of the home is not the $400K as purchased, if so, the bank could foreclose and forego the 15% write down.
Robert-- It won't show up in the comps, but then, it wouldn't in any case as long as the owner didn't sell. Of course this will allow some people who would otherwise have to either sell or be foreclosed on to stay in their homes: that's the whole point of the bill. But it's not likely to put much of a brake on price declines. For one thing, a lot of people are not going to qualify. They're going to verifying income and determining ability to pay.
The two main factors in prices are buyer psychology and the lender's willingness to lend. Both of those factors are highly negative and are likely to stay that way for some time.
xpovos,
As I said, one can adjust your withholdings to get it out in the remaining months of the year before April. Granted, most people are unwilling to do the math before April needed to accomplish this, but as someone who had to file estimated taxes for 10 years, and whose almost equal dual income married filing jointly means that I have to put in an arbitrary additional withholding in order to get it right now, this would be no big deal for me.
It's a one time tax credit, limited by being no more than your final tax burden, and being less than 10% of the purchase price, that then you pay the Fed back a little over 6% of the tax credit each year thereafter for 15 years. (i.e. the 0 percent loan).
Of course sensible people won't be calculating this into their purchasing decision. But this isn't intended to motivate sensible people, it's intended to bring out the fence-sitters and turn them into knife catchers, in sufficient numbers to create the dead-cat bounce and clear some of the inventory. And for much of the country that's experiencing the slow-down due to the mortgage tightening and generalized fear but didn't actually have a bubble that exceeded affordability, it's a great idea to get houses moving again and prevent an over-correction. For us, it's hopefully mostly moot. I'd love some free money, but since everyone would be getting it, it will just sustain our purchase price artificially, and I'm not happy about that.
cara,
At least we agree about the generics, then. This is a bad idea.
xpovos
Yep. Pretty much. It's just a bad bad thing all around for the actual bubble markets.
For Detroit, Cleveland and the like it may prove very useful in finally letting inventory move so people can regain mobility to follow the jobs. Any psychological help they can get would be a good thing. But seriously, I don't think that portion of this national policy is aimed at NoVa.
"• Tax credits for first-time home buyers: $4.6 billion"
$7500 off your taxes in year one, but it has to be repaid over 15 years... in my book that's just an interest-free loan.
million
I think they're hoping people who can't understand that an interest free loan in a potentially extremely inflationary period is an amazing deal won't read the fine print that it has to be paid back.
Arbitrage baby!!
Sarah said...
Robert-- It won't show up in the comps, but then, it wouldn't in any case as long as the owner didn't sell. Of course this will allow some people who would otherwise have to either sell or be foreclosed on to stay in their homes: that's the whole point of the bill. But it's not likely to put much of a brake on price declines. For one thing, a lot of people are not going to qualify. They're going to verifying income and determining ability to pay.
Sarah. Let me rephrase the question:
As a potential buyer, how am I to know that the “comps” in the neighborhood do not have an automatic 15% cut off the top due to the government bail out? Of course it’s not going to show up in MRIS. Of course it’s not going to show up in the tax records.
Will this bail out put a break on price declines? I don’t think so either. But that’s not my point. This goes back to a few days ago where I opined about the lack of data in the industry. At some point (as a potential buyer) I may have to negotiate with a sellers agent. In that negotiation, if the sellers agent presents “comps” and one of those has essentially a 15% government subsidy and I am not informed of this, in any other industry, I would think that would be called cooking the books, a scheme, a racket, or simply fraud.
Robert-- Sorry, I don't understand what you are saying. What the 'comps' will show is just the price paid for the most recent sales. The only houses that are going to have '15% cut off the top' are ones that aren't for sale-- and thus can't be used as 'comps'. The only way these 'cram downs' are going to affect the sales process is that some people who you might expect to be desperate, based on the previous sales price, won't be quite so desperate.
But that's something you deal with all the time anyway. You can't tell what a seller's actual position is-- they might look like a desperate seller, but have substantial other assets and be quite willing to take their house off the market if they don't get what they want. Or the opposite-- you might check previous sales and discover they paid $100,000 8 years ago and mistakenly assume they are not desperate-- because their $300,000 worth of HELOCs don't show on the original sales report.
I just don't see this program affecting sales at all, except very indirectly, by letting a few more people stay in their homes than would otherwise be able to do so.
OK, maybe I'm blind, or maybe it's Friday afternoon and I'm just lazy, but the only place I've read anything about credit card transactions being reported to the IRS is in the Ron Paul article. I don't doubt that it's true, but I didn't see it......
Sarah said...
What the 'comps' will show is just the price paid for the most recent sales. The only houses that are going to have '15% cut off the top' are ones that aren't for sale-- and thus can't be used as 'comps'.
No one should use homes that are listed “for sale” as comps. Sellers can ask for any amount they want, not what the market will bear. You look at previous sales as comps. Usually you look no further than 6 months back, and that’s pushing it. Given the lack of sales, I have no problem extrapolating . If in 2006 the going price in a particular neighbor hood was $400K and the area as seen 6% price drops for each of the following years, we can ballpark it.
If however, one of these comps was purchased in 2006 for $400K, then in 2008 had the principal cut by 15% via loan restructuring, was the purchase price in 2006 really $400K? I say no. The market could not bear the $400K purchase price in 2006 as proven by the loan restructure and we would extrapolate from $340K, not the $400K.
I would even agree to a simpler route. If the purchase price in 2006 was $400K and in 2008 the current owner had the principal reduced to $340K, indicate this in the tax records, or in MRIS, somewhere, anywhere to indicate that the $400K sale price was/is unfounded.
But that's something you deal with all the time anyway. You can't tell what a seller's actual position is-- they might look like a desperate seller, but have substantial other assets and be quite willing to take their house off the market if they don't get what they want. Or the opposite-- you might check previous sales and discover they paid $100,000 8 years ago and mistakenly assume they are not desperate-- because their $300,000 worth of HELOCs don't show on the original sales report.
I agree. If grandma left little Johnny half-a-mil, I wouldn’t know it. However, using mdlandrec.net, I can see how much the seller put down, if he got an ARM, the terms of that ARM, second mortgagees, refi and I do believe, any HELOCs. I can then search the Maryland courts. I can see if the seller has any foreclosure processes pending, nasty divorce, leans, or any other financial proceedings relating to the courts. So no, I don’t have the full picture, but I can get a pretty good idea.
Robert,
I'm reading section 112 of the link I posted, and I'm not seeing this 15% minimum cut that you are quoting. The point I do see is the 87% of market value max LTV (after including fees/ insurance).
How are you getting that number? Is that calculated from the required DTI reduction?
I also really can't find this end date for new buyers that the press is quoting. I seriously think NAR made that up and its propogating.
Point being, if the debt reduction is done by maximizing current LTV, then the owners are using exactly the same comps that you'd be using to buy and hence reflect but do not change the current market price.
But again, maybe I found the wrong draft of the bill. I just don't trust the summaries in the MSM to do my research for me.
Cara said...
“I'm reading section 112 of the link I posted, and I'm not seeing this 15% minimum cut that you are quoting. The point I do see is the 87% of market value max LTV (after including fees/ insurance).
How are you getting that number? Is that calculated from the required DTI reduction?
Point being, if the debt reduction is done by maximizing current LTV, then the owners are using exactly the same comps that you'd be using to buy and hence reflect but do not change the current market price.”
Also from section 112:
(i) provide for the refinancing of such existing mortgage or mortgages in an amount not greater than 90 percent of the current appraised value of the property involved
I was getting the 15% from the WSJ article. No I haven’t studied the bill thoroughly, but I think it may take some time and further reading to decipher.
However, my point being is that principal is being reduced. Say you’re about to make an offer on a home in a neighborhood of 20 homes. Using previous sold data the average price in that neighborhood is $400K. However, 6 homes in that neighborhood have had principal reductions. Is it still fair to say that the average price in that neighborhood is $400K? If not, how do you find out how many homes have had loan reductions and to what extent?
Say you’re about to make an offer on a home in a neighborhood of 20 homes. Using previous sold data the average price in that neighborhood is $400K. However, 6 homes in that neighborhood have had principal reductions. Is it still fair to say that the average price in that neighborhood is $400K? If not, how do you find out how many homes have had loan reductions and to what extent?
Robert, the houses with principal reductions will not figure in to the average sold price at all, because they are not being sold. They simply aren't part of the statistical pool. If and when the ones with principal reductions do begin to be sold, the principal reduction will only affect the sales price very tangentially, allowing some of the houses to be sold at less than the previous sales price without either being a short sale or going into foreclosure.
I don't think the median sales price of houses sold in recent months is terribly useful in any case in deciding how much to offer on a particular house, although it does at least give you an idea of how fast prices are falling. In a market like this I'd just be on the lookout for long-term owners who really want to sell, and maybe look into which banks are the most serious about moving inventory off their books.
Sarah said...
Robert, the houses with principal reductions will not figure in to the average sold price at all, because they are not being sold.
I do not, and do not recommend, using homes that are “being sold”, i.e. using asking price, to determine market value. One must use previous sales to determine market value.
Essentially, homes with principal reductions are having their previous sale price changed, reduced.
I don't think the median sales price of houses sold in recent months is terribly useful in any case in deciding how much to offer on a particular house, although it does at least give you an idea of how fast prices are falling.
Is that not why we follow MRIS data? We use previously sold homes to mark the mean/median prices and the rate of price increases/decreases? If so, some of these previously sold homes are having their previous sales prices reduced.
Robert,
The eligibility for the bailout provision is only up to a certain date which is now well more than 6 months in the past. Hence those sales would not be in the comps anyway at either their original sold price or their principle reduction price. They simply are not comps. And as I said before, the reductions are such that they match the current comps.
90% LTV is normal. Even in the bubble days. I can't recall where in CR it had the scatter plot of LTV's but they are and were heavily concentrated at 90 and 80 LTV. Therefore, these new reductions do nothing to change the current price climate. (other than their effect on the owners future selling positions)
Cara said...
90% LTV is normal. Even in the bubble days. I can't recall where in CR it had the scatter plot of LTV's but they are and were heavily concentrated at 90 and 80 LTV. Therefore, these new reductions do nothing to change the current price climate. (other than their effect on the owners future selling positions)
Is this the “normal” buyer puts down 10% and refi’s the 90% LTV. Or, is it a simple reduction in principal to 90% LTV? (I’m still looking for dates/timeframes in the bill)
Robert,
I'm not sure whether this was your question, but what I meant by "normal" was that a typical buyer puts down at least 10%. In answer to the refi aspect, I do believe that a buyer who put down for instance only 3% could, under this bill, get in a new 90% LTV loan, effectively creating an equity share for themselves from thin air (or the taxpayer or the bank...)
I did figure out where WSJ got the 15% reduction number. That is indeed what one gets if you take one 30 year amortizing loan and turn it into a new 30 year amortizing loan at the same interest rate in order to go from a payment that is at minumum 35% DTI to one that's under 30% DTI. So, the 15% is a derived number based on those assumptions. Given that many people will be trying to go from a teaser low interest rate into a safe haven 30 year loan, the principle reduction will have to be even greater to meet the DTI eligibility requirements of the program. This in essence limits who can get this deal, and will effect the willingness of the banks to do these transformations because most of them will have to be more than 15% reductions to qualify.
Robert, we seem to be talking past each other. I'm not talking about using asking prices, I'm referring to median prices of sold houses. I gather you're objecting to the fact that there is no easy way to tell if there has been a principal reduction by looking at the previous sale price. That's true. What I'm saying is it's academic, since these houses aren't likely to be coming onto the market anytime soon anyway.
There has never been any easy way to see if a mortgage has been subject to a cram down (which is essentially what this program is), as far as I know, so this program doesn't change anything on that front. It does, however, remove another significant source of distortion of pricing information by outlawing the 'downpayment assistance programs' which allowed homeowners to sell at prices that appeared considerably higher than they actually were. So a) the program isn't introducing any new price distortion that didn't already exist and b) it's removing another source of price distortion.
Sarah said...
Robert, we seem to be talking past each other. I'm not talking about using asking prices, I'm referring to median prices of sold houses. I gather you're objecting to the fact that there is no easy way to tell if there has been a principal reduction by looking at the previous sale price. That's true. What I'm saying is it's academic, since these houses aren't likely to be coming onto the market anytime soon anyway.
I agree, we are talking past each other. I agree that these homes are not likely to be coming on the market any time soon. What I want is what I have stated earlier, more data. Those in the REI will continue with their “realestateislocal, it’sagoodtimetobuy”, anything to prop up the market. Each data point can be used to 1) Make an informed decision. 2) Discredit those in the REI who proclaim the worst is over (if indeed it is not). So far I’m not convinced of the reach of the housing bill and the time frame in which it applies. I think it’s too early to know how many it will help, and how many will qualify. It may be a very small percentage. Good enough. If however it becomes more widespread, I see the possibility that it could become another indicator of the market and at some point, something potential buyers will have to look out for. Sure, if the only people who qualify are those that bought 1+ years ago, not much of a factor for comps/market indication. But, if we have people that are quailing that bought just a few months ago, it’s defiantly something to look out for. Have we found all the loop holes? Have we found all the qualifying dates/time frames?
As a matter of fact, forget what I just said and any other points I attempted to make. Can we just agree to watch this new bill like a hawk? Let’s keep on this bill like we keep on DOM and median prices. I was listening to the MSM today and the government regulators said it would take at least a year to get this bill into action (offices/departments/regulators/regulations set up and running)
Can we just agree to watch this new bill like a hawk? Robert, well, I'll try, but it is something like 700 pages... Some of the commentors over at Calculated Risk were taking CR to task today for not posting a link to the entire bill. His comment was, "I've read entire bills before - and then I wanted that part of my life back."
As far as the time frame to which the bill applies-- here's the quote from Money: Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007.
One part I like: Each loan will have to be underwritten by an FHA lender on a case-by-case basis. That means the banks will do a new appraisal to determine the home's current value, as well as examine and verify income statements, bank accounts, job histories and credit scores.
It looks like Holden Lewis at Bankrate.com has done a pretty reasonable job of summing up 'the good, the bad and the ugly' on the bill. Here's the link.
http://thomas.loc.gov/home/c110query.html
If you want the full text, wait until they post the one that's sent to the president (should be in the next day or so). Use the Thomas query link above, bill text search "homeownership" and restrict to only "enrolled bills". Reading the early versions is pretty much a waste.
The time frame you're looking for was actually listed within the table of contents portion in all the previous versions that I've looked at, so just skimming the top part should give it to you, and yes, it will only be for mortgages before 2008. With an odd gap between January and April 2008 where you're just shit out of luck, because you neither qualify for the first timer tax credit (0% interest loan) nor the refinance.
Robert,
Ah, looking for fodder to counter the arguments of the Real Estate Industrial complex! Always a good idea!
I would say that the ammunition this bill gives you is the following. If any realtor , broker etc tries to say that the previous bubble high watermark prices are any indicator of future potential appreciation, you can use this bill to counter that those prices were at minimum 15% higher than any sustainable level, and in fact that those who bought then may very well not be paying on those amounts anyway. If they counter that the program really wasn't that widespread, and only helped a handful of misguided owners, point out that actually more people were so far under that they got foreclosed on well before this bill than are expected to be helped by it.
However, unless its the sellers agent (in which case you can just ignore them) I suspect that any real estate agent lucky enough to have a client in the near future will simply be agreeing with anything you say about the market and putting you in the price range and security range you feel comfortable in, with essential no outside opinions that might interfere with a sale, any sale. That's the attitude I've gotten from the few I've crossed paths with lately.
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