Mortgage Rates Continue Falling to Record Lows

For the fourth consecutive week, mortgage rates have fallen to all-time lows. The 30-year mortgage rates averaged 5.01 percent this week, which is a drop from last week's 5.1 percent. Last year at this time, rates averaged 5.87 percent.

"Interest rates for 30-year fixed-rate mortgages fell for the 10th week ... due in part to the Federal Reserve's recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae," says Freddie Mac Chief Economist Frank Nothaft.

Other rates also dropped for the week:

15-year fixed rates: dropped to 4.62 percent from 4.83 percent last week. Last year at this time
15-year mortgage rates averaged 5.43 percent.

5-year hybrid adjustable-rate mortgages averaged 5.49 percent, a drop from 5.57 percent last week. The only slight increase in rates this week was in 1-year ARMs, which were 4.95 percent, up from 4.85 percent last week. Overall, 1-year ARMs were still down for the year from last year's 5.37 percent.

Freddie Mac began tracking rates in 1971.

Source: The Wall Street Journal, Amy Hoak (1/09/09)

Home Buyer Tax Credit: How It Works

First-time homebuyers in 2008 can take an income-tax credit on their purchase, thanks to passage in Congress earlier this year of the first-time home buyer tax credit.

The definition of first-time homebuyer is generous. To get the credit, the homebuyer cannot have owned a home in the previous three years. The home must be a principal residence and purchased between April 9, 2008 and July 1, 2009.

The credit is equal to 10 percent of the purchase price, up to $7,500. Single taxpayers with modified adjusted gross income up to $75,000 and couples with MAGI up to $150,000 will qualify for full credit. Singles with MAGI up to $95,000 and couples with MAGI up to $170,000 will get a reduced amount. Those with higher incomes don’t qualify.

If the amount of tax a homebuyer owes is less than the amount of the credit, they get to keep the difference in the form of an IRS refund.

The homebuyer must begin to repay the credit in two years in increments of about $500 a year over a 15-year period for those who received the full credit.

Homebuyers who sell their home before the credit is repaid must pay off the loan with any profits. If they sell the home at a loss, the loan is forgiven.

[Editor's Note: The credit is set to expire in mid-2009, although industry groups, including the NATIONAL ASSOCIATION OF REALTORS®, are encouraging Congress to extend it. NAR is also encouraging Congress to make the credit available to all buyers and to eliminate the repayment requirement. More detail on how the credit works is available from NAR on REALTOR.org.]

Source: Chicago Tribune, Mary Umberger (12/28/2008)

NAR: Poor Economy Takes Toll on Home Sales

Existing-home sales weakened against a backdrop of an eroding economy, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – fell 8.6 percent to a seasonally adjusted annual rate of 4.49 million units in November from a downwardly revised level of 4.91 million in October, and are 10.6 percent below the 5.02 million-unit pace in November 2007.

“The quickly deteriorating conditions in the job market, stock market, and consumer confidence in October and November have knocked down home sales to another level," says Lawrence Yun, NAR's chief economist. "We hope the home sales impact from the stock market crash turns out to be short-lived, as was the case in 1987 and 2001.”

What Needs to Be Done

Yun says it's imperative to provide incentives for homebuyers to rebound the market. "It also depends on how effectively Congress and the new administration can help facilitate the short sales process and unclog the mortgage pipeline – impediments remain for some buyers with good credit,” Yun says.

NAR President Charles McMillan says it’s crucial to enact sufficient housing stimulus to spark an economic recovery.

"We need more than low interest rates to encourage enough buyers to enter the market and meaningfully draw down inventory, which would stabilize home prices – that, in turn, would help the economy to recover,” he says. "We should extend the first-time buyer tax credit to all homebuyers and eliminate the repayment feature, and make permanent the higher loan limits that are vital in high-cost markets – the faster we do this, the faster housing and the economy can recover."

Yun cautions that there will be negative consequences if housing stimulus is delayed. “Falling home prices would lead to faster contraction in consumer spending and further deterioration in bank balance sheets," he says. "More importantly, falling home values would lead to higher loan defaults, including those recently modified distressed mortgages."

McMillan says NAR is grateful that the Treasury, the Federal Housing Finance Agency and the Federal Reserve have been working to bring interest rates down on most mortgages to historic lows.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.09 percent in November from 6.20 percent in October. The rate was 6.21 percent in November 2007. Last week, Freddie Mac reported the 30-year rate fell to 5.19 percent — the lowest on record since the series began in 1971.

A Closer Look at the Numbers

*Inventory: Total housing inventory at the end of November rose 0.1 percent to 4.2 million existing homes available for sale, which represents an 11.2-month supply at the current sales pace, up from a 10.3-month supply in October.

*Prices: The national median existing-home price for all housing types was $181,300 in November, down 13.2 percent from November 2007 when the median was $208,800. There remains a significant downward distortion in the current price from a large number of distress sales at discounted prices; the median is where half of the homes sold for more and half sold for less.

*Single-family home sales: fell 8.0 percent to a seasonally adjusted annual rate of 4.02 million in November from a level of 4.37 million in October, and are 8.8 percent below a 4.41 million-unit pace a year ago. The median existing single-family home price was $180,800 in November, down 12.8 percent from November 2007.

*Existing condominium and co-op sales: dropped 13 percent to a seasonally adjusted annual rate of 470,000 units in November from 540,000 in October, and are 23.1 percent below the 611,000-unit pace in November 2007. The median existing condo price was $185,400 in November, down 15.5 percent from a year ago.

Despite an overall softening in sales, there has been a solid trend of rising activity in California, Nevada, Arizona and Florida markets. “Sales are rising only in areas with large numbers of distressed properties as bargain hunters take advantage of discounted home prices,” Yun says.

By Region

*Northeast: existing-home sales dropped 12 percent to an annual pace of 730,000 in November, and are 18 percent lower than a year ago. Median price: $257,700, down 0.1 percent from November 2007.

*Midwest: existing-home sales fell 7.4 percent in November to a pace of 1 million and are 16 percent below November 2007. Median price: $142,400, down 11.2 percent from a year ago.

*South: existing-home sales dropped 10.9 percent to an annual pace of 1.64 million in November, and are 17.6 percent below a year ago. Median price: $154,500, which is 10.6 percent lower than November 2007.

*West: sales declined 4.3 percent to an annual rate of 1.12 million in November but are 17.9 percent higher than November 2007. Median price: $242,500, down 25.5 percent from a year ago.

Source: NAR

Existing Home Sales Fall by 8.6 Percent

WASHINGTON - Sales of existing homes plunged far more than expected last month as buyers recoiled from October's financial wreckage on Wall Street. The median sales price fell by the largest amount on record.

The National Association of Realtors said Tuesday existing home sales fell 8.6 percent to an annual rate of 4.49 million in November, from a downwardly revised pace of 4.91 million in October.Sales had been expected to fall to a pace of 4.9 million units. according to Thomson Reuters.

The median sales price plunged 13.2 percent in November to $181,300, from $208,000 a year ago. That was the lowest price since February 2004, the biggest year-over-year drop on records going back to 1968 and most likely the biggest drop since the Great Depression.
Lawrence Yun, the normally upbeat chief economist of the Realtors group, found few positive spots in the month's dismal data. But he did note that after prior stock market crashes home sales usually rebounded within a few months.

"We hope that, similarly, the current slowdown in home sales activity is a short-term phenomenon," Yun said, noting that people in the real estate industry are "crossing our fingers" that the market will recover. Sales fell around the country, with the largest drop - of 12 percent - in the Northeast.

Nationally, the Realtors group estimates that sales of distressed properties made up 45 percent of all property sales in November.

There were 4.2 million unsold homes on the market in last month. At the current sales pace, it would take 11.2 months to sell all the properties, matching a record set last spring.
The glut is being driven by a massive wave of mortgage foreclosures. And until the inventory of homes falls to more normal levels, analysts say, the housing slump is likely to persist.

Source: AZCentral.com

Low Prices, Low Rates Mean Opportunity

Housing prices have fallen dramatically all over the country and rates on 30-year fixed-rate mortgages are already close to 5.5 percent. Experts say it's possible, with government encouragement, that rates will fall as low as 4.5 percent.

Now is the time for first-time buyers to step up. Here are some things to consider:

Prices have always softened in the winter. As temperatures fall, bargain hunters will have bigger then usual opportunities.

New homes are likely to become scarce. Ian Shepherdson, chief United States economist for the research firm High Frequency Economics, said he believes that a steep drop-off in inventory of new homes is coming soon, due to a rapid decrease in home builder activity.

Location, location, location. Buying the best-priced house in a really good neighborhood is still smart.

Will values go up? You may have to live in a house for 10 years, but over time, buyers will almost certainly make money.

Source: The New York Times, Ron Lieber (12/05/08)

NAR: Pending Home Sales Holding Steady

Pending home sales eased against a deteriorating economic backdrop but remain in a stable range, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, slipped 0.7 percent to 88.9 from an upwardly revised reading of 89.5 in September. It is 1 percent below October 2007 when it was 89.8.

“Despite the turmoil in the economy, the overall level of pending home sales has been remarkably stable over the past year, holding in a generally narrow range,” says Lawrence Yun, NAR chief economist. “We did see a spike in August when mortgage conditions temporarily improved, which underscores two things – there is a pent-up demand, and access to safe, affordable mortgages will bring more buyers into the market.”

Conditions remain uneven around the country, but some areas that are showing healthy gains in pending home sales from a year ago include many Florida and California markets; Providence, R.I.; Lansing, Mich.; Oklahoma City; and Las Vegas.

By the Region

Here's what the PHSI showed across the country:

* South: jumped 7.8 percent to 95.9 in October but remains 2.9 percent below a year ago.
* Northeast: rose 0.6 percent to 68.1 but is 14.1 percent below October 2007.
* Midwest: declined 4.3 percent to 79.7 in October and is 6.8 percent below a year ago.
* West: fell 8.7 percent to 103.7 but is 17.4 percent higher than October 2007.


The Economic Forecast

New-home sales: for 2008 should total 486,000 this year, decline to 393,000 in 2009 and then grow to 446,000 in 2010. Housing starts, including multifamily units, are projected at 934,000 units in 2008 and 731,000 next year before rising to 772,000 in 2010.

Existing-home sales: looking at middle-ground assumptions, existing-home sales are forecast to total 4.96 million this year, and then increase to 5.19 million in 2009 and 5.55 million in 2010.

Home prices: “Price projections are challenging in an environment with so many variables and divergent local conditions,” Yun says. “The home price correction to date has brought prices in line with fundamentals, but buyer pessimism could cause prices to overshoot downward, resulting in further economic deterioration.” NAR’s housing affordability index is likely to remain quite favorable, averaging 138 in 2009.

Unemployment rate: is estimated at 7.2 percent in the first quarter, rising to 8.3 percent by the end of 2009.

Inflation: as measured by the Consumer Price Index, is seen at 0.7 percent in 2009. Inflation-adjusted disposable personal income is expected to grow 1.5 percent in 2009.

GDP: Yun expects growth in the U.S. gross domestic product (GDP) to contract through the first half of 2009, then stabilize and expand in latter part of the year – lifted by a home sales recovery.

“Given the critical role of housing in an economic recovery, we’re confident sufficient stimulus will be offered to bring more buyers to the market,” he says.

Could a Drop in Interest Rates Help?

The 30-year fixed-rate mortgage will probably decline to 5.6 percent in the first quarter, rise slowly to 6 percent by the end of 2009, and average 6.2 percent in 2010.

NAR President Charles McMillan says he’s hopeful about considerations by the U.S. Treasury to help the housing market.

“Efforts to bring down mortgage interest rates demonstrate a clear understanding of the role housing plays in stabilizing the economy,” McMillan says. “We’re very encouraged by all of the proposals getting serious consideration in Washington to help home buyers. More sales will stabilize home prices by bringing down inventory, and would lessen foreclosure pressure.”

Source: NAR

Economists Ponder Future of Home Prices

When will home prices go back up again?

Economists surveyed by The Wall Street Journal say that home prices won’t hit bottom until the second half of 2009 at the earliest and some say the downward trend will continue until 2011 or 2012. After that they may rise again, but not nearly as fast as they have in the last decade. Instead they will rise just a little faster than inflation and stay in line with increases in household income.

William Wheaton, a professor of economics and real estate at the Massachusetts Institute of Technology, says he expects house prices to increase at a rate roughly 1-percentage point higher than inflation over the long term.

Celia Chen, director of housing economics at Moody’s Economy.com is more optimistic, expecting home values to rise an average of 4 percent per year over the next couple of decades.

Demographer William Frey predicts that growth will continue in coastal and Southern cities while populations in rustbelt areas like Michigan, Ohio, Western Pennsylvania and Upstate New York will continue to decline.

The great unknown is the impact aging baby boomers will have. While retirees in the past have often headed for warmer and suburban areas, boomers have tended to confound expectations. They could well show a propensity for staying put or moving to urban areas for the cultural life or to be near friends and family, shunning sun-dappled retirements communities.

Source: The Wall Street Journal, James R. Hagerty (12/02/08)

NAR-Backed Rate Buydown Gains Traction

An effort by the NATIONAL ASSOCIATION OF REALTORS® to spur home sales through a mortgage-interest rate buydown appears to be gaining traction.

Reports in major news media like the Washington Post and Wall Street Journal today quote sources familiar with a meeting between U.S. Treasury officials and NAR in November in which the buydown proposal was discussed.

"Treasury officials told the REALTORS® that the [buydown] plan could be a more effective way to help home owners than focusing solely on borrowers who are struggling to meet their monthly payments," the Washington Post story says.

Under the Treasury plan, lenders would sell newly issued mortgage-backed securities to the government provided the interest-rate on the loans collateralizing the securities was no higher than 4.5 percent. Although NAR supports a buydown, it does not take a position on how low interest rates should go.

To pay for the plan, Treasury would issue bonds at 3 percent, creating a 1.5-percent spread that it could use for buying the securities. Those securities would then be purchased by secondary mortgage market companies Fannie Mae and Freddie Mac, which are under federal conservatorship.

NAR has been calling for a buydown and other measures to help stimulate housing sales as part of a four-point plan it showcased at its annual meeting in Orlando last month.

To date, tens of thousands of REALTORS® have sent letters to their members of Congress asking for quick action to help housing, which is widely considered a crucial first step to a broader economic recovery.

Other parts of the four-point plan include making 2008 high-cost conforming loan limits, which are now $729,750, permanent, and improving the home buyer tax credit by expanding it to all buyers, not just first-timers, and eliminating the repayment requirement.

Some analysts have calculated that an interest-rate buydown could help as many as 2.5 million households.

"We strongly encourage the Treasury to move quickly with its plan to lower interest rates to encourage current buyers to act rather than continue to wait," said NAR President Charles McMillan in a public statement on the Treasury's most recent action with the plan. "We are pleased to see that the leadership of the Treasury Department is seriously considering the actions we discussed to lower interest rates. The result of such action will help the nation’s economic recovery and bring stability to the housing market."

Source: REALTOR® Magazine Online

Mortgage Rates Take a Big Dip

For the week ended Dec. 3, Freddie Mac reported the lowest interest on 30-year fixed home loans since late January.

The rate came in at an average of 5.53 percent, down from 5.97 percent the previous week and 5.96 percent a year ago; while 15-year fixed mortgages settled at 5.33 percent compared to 5.74 percent last week and 5.65 percent in the year-earlier period.

Borrowing costs for short-term loans also were lower, with one-year adjustable-rate mortgages dipping to 5.02 percent from 5.18 percent a week ago and 5.46 percent a year ago.

Five-year hybrid ARMs, meanwhile, fell to 5.77 percent from 5.86 percent last week and 5.75 percent during the same period of last year.

Source: Realty Times (12/05/08)

Reverse Mortgages Get Boost from Uncle Sam

Starting on Nov. 1, the limit on FHA-backed reverse mortgages, dubbed Home Equity Conversion Mortgages (HECMs), will rise to $417,000 nationwide.

The new rules also will institute a 2-percent cap on origination fees for the first $200,000 of the loan amount or a 1-percent ceiling for higher amounts, with a $6,000 inflation-adjustable limit.

Additionally, seniors will be allowed to use such loans to purchase a new property and extract equity from co-operative properties, and lenders will no longer be allowed to sell annuities and other financial products along with the mortgage.

Presently, 99 percent of new reverse mortgages are HECMs.

Source: Christian Science Monitor, Margaret Price (10/27/08)

Mortgage Market Still Open for Business

Lenders emphasize that loans continue to be available for a range of potential home buyers, not just those who are putting down 20 percent and have a credit score higher than 720.

Although credit underwriting is tougher and loan terms stricter, borrowers can still put down 3 percent (3.5 percent after Jan. 1) on an FHA-insured mortgage and 5 percent on some Fannie Mae and Freddie Mac loan programs with private mortgage insurance.

FHA standards are designed to help people with problem credit and those with scores in the upper 600s can still qualify for loans with reasonable rates offered by Fannie Mae and Freddie Mac.

Maximum loans in high-cost markets are capped at $729,750 through December. In June, they are expected to fall to approximately $625,000.

"I don't think consumers really know how free-flowing capital is right now in the residential mortgage market. There are no shortages, no breakdowns. People ought to be aware of that," says Jeff Lipes, president of Family Choice Mortgage.

Source: Washington Post Writer’s Group, Kenneth R. Harney (10/18/08)

NAR: Home Sales Rise as Affordability Improves

Existing-home sales increased last month as buyers responded to improved housing affordability conditions, according to the National Association of Realtors®.

Existing-home sales – including single-family, townhomes, condominiums and co-ops – rose 5.5 percent to a seasonally adjusted annual rate of 5.18 million units in September from a level of 4.91 million in August. Home sales are 1.4 percent higher than the 5.11 million-unit pace in September 2007.

Lawrence Yun, NAR chief economist, said more markets are seeing year-over-year gains.

“The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri, and Rhode Island,” he says. “The South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike.”

NAR President Richard F. Gaylord says low home prices and low interest rates have helped attract buyers.

“This is the first time since November 2005 that home sales have been above year-ago levels,” Gaylord says. “Credit tightened at the end of September, but the improvement demonstrates that buyers who’ve been on the sidelines want to get into the market to make a long-term investment in their future.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage fell to 6.04 percent in September from 6.48 percent in August; the rate was 6.38 percent in September 2007.

Yun says there may still be market disruptions.

“The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac," Yun says. "Inventory remains high, and price declines are pressuring owners."

Yun says that an additional housing stimulus would stabilize prices more quickly and help bring faster stability to Wall Street.

"Removing the repayment feature on the [$7,500] first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory,” Yun says.

A Closer Look at the Numbers

* Total housing inventory: at the end of September fell 1.6 percent to 4.27 million existing homes available for sale, which represents a 9.9-month supply at the current sales pace, down from a 10.6-month supply in August. This marks two consecutive monthly declines since inventories peaked in July.

* National median existing-home price: $191,600 in September, for all housing types. That's down 9 percent from a year ago when the median was $210,500.

“Compared to a fairly small share of foreclosures or short sales a year ago, distressed sales are currently 35 to 40 percent of transactions," Yun says. "These are pulling the median price down because many are being sold at discounted prices. The current market is not being dominated by speculative investors. Rather, 80 percent of current buyers are purchasing a primary residence, which is a bit higher than historic norms.”

* Single-family home sales: increased 6.2 percent to a seasonally adjusted annual rate of 4.62 million in September from a pace of 4.35 million in August, and are 3.8 percent above the 4.45 million-unit level a year ago. The median existing single-family home price was $190,600 in September, which is 8.6 percent below September 2007.

* Existing condominium and co-op sales: were unchanged at a seasonally adjusted annual rate of 560,000 units in September, but are 15.7 percent below the 664,000-unit pace in September 2007. The median existing condo price was $199,400 in September, down 10.2 percent from a year ago.

By Region

Here's a breakdown across the country of existing-home in September:

* West: sting-home sales in the West jumped 16.8 percent to an annual rate of 1.25 million in September, and are 34.4 percent higher than September 2007. Median price: $253,600, down 18.5 percent from a year ago.

* Midwest: sales increased 4.4 percent to an annual pace of 1.19 million in September, but are 2.5 percent below a year ago. Median price: $152,500, which is 7.9 percent lower than September 2007.

* South: sales rose 2.2 percent in September to a pace of 1.9 million but remain 7.8 percent below September 2007. Median price:$167,200, down 4.1 percent from a year ago.

* Northeast: sales slipped 1.2 percent to an annual pace of 840,000 in September, and are 7.7 percent lower than a year ago. Median price: $246,800, down 5.4 percent from September 2007.

Source: NAR

10 Ways to Cut Energy Bills This Fall

Staying warm doesn't have to cost a fortune. Here are some ideas from the U.S. Department of Energy for conserving heat and saving money.

When the leaves start falling, you know that the heating bills are about to start rising. But keeping your home warm and cozy on chilly autumn nights doesn't have to break the bank.

The U.S. Department of Energy offers these simple tips and relatively inexpensive home improvements that will help ensure cold gusts stay out and your furnace doesn't have to work harder than it should.

The goal: Conserve energy and keep more of your hard-earned dollars in your pocket.

Share these ideas with customers and use them for your own house. After all, who doesn't need to save a little money these days?

1. Plug air leaks with caulking, sealing, or weather stripping. Save 10 percent ($190 per year) or more on energy bills. Focus on windows, doors, outlets or switch plates on exterior walls.

2. Properly maintain the heating system. Heating accounts for half the average family's energy bill (approximately $950 per year). Make sure the furnace or heat pump receives professional maintenance each year. The small cost (about $75-100 for most service calls) will pay back in better performance all year long.

3. Install a programmable thermostat. Programming the thermostat from 72ºF to 65ºF for eight hours a day while no one is home, or everyone is tucked in bed, will cut the heating bill up to 10 percent ($90 per year), paying for a basic unit in less than a year.

4. Seal and insulate heating ducts. A system can lose up to 60 percent of its warmed air before it reaches the register (wasting $570 in warmed air per year) if ducts are not properly insulated in unheated areas such as attics and crawlspaces.

5. Insulate, insulate, insulate. Adequate insulation in the attic, ceilings, exterior and basement walls, floors, and crawlspaces can save up to 30 percent on home energy bills ($630 per year). Focus on the attic. (Heat rises.) Most homes should have between R-30 and R-49 insulation in the attic. Learn more at www.eere.energy.gov/consumer.

6. Close fireplace dampers when not in use. When in use, reduce heat loss by opening dampers in the bottom of the firebox (if provided) or open the nearest window about an inch, close doors to the room, and lower thermostat setting to 50-55ºF.

7. Let the sun shine in. Open curtains on south facing windows during the day to allow sunlight to naturally heat the home, and close them at night to reduce the chill from cold windows.

8. Stay out of hot water. Water heating accounts for 15 percent of household energy use. Reduce water heating costs by lowering the water heater’s thermostat setting. Each 10ºF reduction can save between 3-5 percent in energy costs. Also insulate the hot water heater and hot water pipes.

9. Install storm windows over single-pane windows or replace them with Energy Star qualified windows. Storm windows reduce heat loss by 25 to 50 percent, and storm windows with low-e coating that reflect heat back into the room during the winter months save even more energy. Look for the Energy Star label to maximize savings. Energy Star qualified windows reduce heating and cooling bills by an average of $345, but could be higher in cold and hot climates, compared with uncoated, single-pane windows. Can’t afford new windows just now? Tape clear plastic sheeting to the inside of window frames if drafts, water condensation, or frost are present.

10. Net big savings with a little label. When replacing appliances, light bulbs, electronics, or heating and cooling systems, cut energy bills by up to 30 percent ($600 per year) with Energy Star labeled products. Use compact fluorescent light bulbs (CFLs) in place of comparable incandescent bulbs. Find retailers at www.energystar.gov.

These and other improvements that impact the energy efficiency of a home can save home owners money in the short term and serve as a selling point to potential buyers later. Be sure to save receipts, documentation, and manufacturer’s information.

Not sure where to begin? Try the Department of Energy's online energy audit tool at www.hes.lbl.gov. In the long run, a whole-house energy audit is a fool proof way to make a plan to address wasted energy and make a home operate efficiently for years to come. Visit www.natresnet.org to find a qualified auditor in your neck of the woods.

(Source: REALTOR® magazine, Kelly Quigley)

New Stimulis Package Under Discussion

Capitol Hill legislators are busy hammering out another economic stimulus plan to help ordinary Americans. But their chances of gaining support from the president and lawmakers on both sides of the aisle is not certain.

The problem is that Democrats and Republicans have very different views of how a stimulus package should be structured, and the White House has signaled its opposition to some of the key ideas now being circulated.

Senate Majority Leader Harry Reid (D-Nev.) took the wraps off a $150 billion package similar to a stimulus proposal made by Democratic presidential nominee Sen. Barack Obama (D-Ill.) earlier in the week.

That proposal includes spending on infrastructure projects, providing energy assistance to low-income families, and a mandate for the federal government to be more aggressive in using its authority to push lenders to reduce foreclosures by renegotiating mortgage loans.

Republicans, by comparison, favor suspending the capital gains levy, lowering the corporate tax rate, and providing federal guarantees on interbank lending.

[Editor's note: The National Association of REALTORS® has called on Congress to pass a new stimulus bill during the lame-duck session of Congress later this year and to include four consumer-oriented housing provisions in the bill that would:

1. Make the temporary high-cost conforming loan limit of $729,750 permanent.
2. Eliminate the repayment requirement in the $7,500 homeownership tax credit and also expand eligibility for that tax credit to all buyers, not just first-timers.
3. Ensure the $700 billion in federal assistance to Wall Street gets filtered to lenders for new loan originations and refinancings, and not just be used to shore up investment banks' bottom lines.
4. Permanently keep banks out of real estate brokerage and management to ensure long-term protection of consumers.]

Source: Los Angeles Times, Jim Puzzanghera and Richard Simon (10/16/08)

Certified Negotiation Expert (CNE)

Shielamarie Suttle Receives New Certified Negotiation Expert Designation

Real estate negotiation skills a must for all home buyers/sellers, especially in current market

I have been awarded the Certified Negotiation Expert (CNE) designation, achieved by real estate professionals who have successfully completed formal training in the art of negotiation. Agents who receive this certification are in the top 1% of all agents nationally.

With professional negotiation skills, agents will typically obtain better results for their clients. CNE agents have a powerful competitive edge because of their ability to uncover information effectively, get more and give less during sales/purchase negotiations, and retain control over desired outcomes. Bottom line, CNE agents know how to influence and persuade others more effectively than agents without professional negotiation training.

The certification training is provided by Negotiation Expertise, LLC, a national negotiation training and coaching company based in Peoria, AZ. Tom Hayman, the President and owner, is a professional negotiator with 35+ year’s experience, including 25 years with Procter and Gamble, a Fortune 50 company. Hayman asserts “Any Buyer or Seller who hires a CNE agent can feel confident that they have the best trained agent in the business. They will get superior results and have better resolution of any issues when hiring a CNE agent.”

If you are looking to Sell or Buy real estate, please visit my website at www.ShielaSuttle.com. I invite you to contact me at any time! And remember, I'm never too busy for your referrals.

Why This Autumn is a Great Time to Buy

This fall could be a particularly great time for first-time or buyers long out of the market to jump in, say a variety of real estate professionals.

Here are the reasons why:

• Prices are probably as low as they are going to go as the market stabilizes, thanks to the government takeover of Freddie Mac and Fannie Mae.
  
• Interest rates are likely to decline as Freddie and Fannie get government help.
  
• The Federal Housing Administration recently boosted its loan limits to $729,750 in expensive areas. It's going to take some of that back come Jan. 1, when the loan limit will shrink to $625,500.

The FHA allows down payments of as little as 3 percent, but that will rise to 3.5 percent as of Oct. 1. People scraping dollars together for a down payment should try to set their closing for the end of this month.

• The tax credit will shave $7,500 off a first-time buyer’s federal tax bill due April 15. Buyers who don't owe tax, will get the money as a refund.

The government's definition of a first-time buyer is anyone who hasn’t owned a home in the last three years.

Source: The Washington Post, Elizabeth Razzi (09/07/08)

Government Takeover of Fannie & Freddie

What is happening to Fannie and Freddie?

Major Points

• Fannie and Freddie have been placed in conservatorship. (Federal government has taken 79.9 percent of common stock and all dividends in return for buying $1 billion of preferred shares.)
• Treasury Department says both are open for business with no major changes in operations.
• Top Fannie/Freddie executives have been replaced.
• Fannie/Freddie can grow their guaranteed mortgage book with no limits and grow their retained portfolios with limits. Ultimately, the government plans to shrink their portfolios (10% per year starting in 2010).
• The federal government will provide capital to keep Fannie/Freddie’s net worth positive (up to $100 billion). In return, the Treasury will receive new senior preferred stock and warrants on the GSEs’ common stock.
• The federal government will begin buying Fannie/Freddie mortgage-backed securities (MBS) on the open market.
• Treasury Department will create a Secured Lending Credit Facility, a liquidity backstop for GSEs.
  

Initial Reactions

• Rates drop half a point!
• World markets respond positively to news: stocks up on Monday, September 8, 2008.
• Federal Reserve Chairman Ben Bernanke: “These necessary steps will help to strengthen the U.S. housing market and promote stability in our financial markets.”
• Investor Warren Buffett: “Secretary Paulson has made exactly the right decision for the country. He is minimizing the problem of moral hazard and maximizing the benefits for the housing market and for the smooth functioning of financial markets.”
  

Anticipated Results

• Increased confidence in financial markets.
• Rates to possibly stabilize, due to reassurance given by government intervention.
• Loan term changes possible (FICO, LTV).
• More loan workouts possible due to increased government pressure on lenders to create solutions that prevent foreclosures.

Where Are Lenders Getting Credit Scores?

Consumers often mistakenly believe that mortgage lenders use only credit scores from Equifax, Experian, TransUnion, and Fair Isaac's myfico.com to gauge creditworthiness.

However, Consumer Reports recently found that lenders also use NextGen FICO scores, FICO Expansion Scores, and Industry Option FICO scores — which take car loans into consideration — as well as custom formulas.

Given that these credit scores or scoring models are not available to consumers, experts say that consumers should not rely solely on available credit scores to determine their likelihood of getting a loan. They would be wise to make timely bill payments, make more than the minimum payment, hold down credit card balances, and retain old accounts.

Additionally, experts say it might be worth keeping tabls on other credit scores, such as Experian's PLUS scores, which are not yet sold to lenders but could be in the future.

Source: Allentown Morning Call (PA) (09/02/08)

Is the Worst Over? Analysts Have Mixed Views

Some analysts reacting to the news that home sales rose a healthy 3.1 percent in July compared to June say the increase predicts further improvement. Others are more pessimistic.

"We are not yet ready to call the current levels a bottom but clearly most of the declines are behind us," says Adam York, a Wachovia Corp. economist.

"The good news is the trough is behind us," says Harm Bandholz, a New York-based economist with UniCredit, but Bandholz warns that tighter lending standards and rising foreclosures will continue to put pressure on housing prices.

Real estate consultant John Burns, who advises large builders and investment firms, says he thinks supply and demand will remain out of whack until there is a 46 percent decline in the inventory of homes on the resale market.

Burns, who is president of John Burns Real Estate Consulting, estimates that by 2010 the most stable markets will reach equilibrium and by 2011, the national market will move into better balance. Overall, he believes that it will take until 2014 for it to be business as usual.

Sources: The Wall Street Journal, Kelly Evans (08/26/2008) and Business Week, Amy Feldman (08/18/2008)

How the New First-Time Buyer Tax Credit Works

Under the new housing bill, home buyers who have not owned a home in the last three years will be eligible for a tax credit equal to 10 percent of the property up to a maximum of $7,500.

Here’s how it works:

* The credit is $3,750 for married couples filing separately. Unmarried people who jointly purchase a home will be able to divide the $7,500 credit.

* This program is actually a loan, which home buyers must repay over 15 years at zero percent interest beginning in the second year after they purchase the home. A home buyer who qualified for the whole credit would pay $500 for 15 years or about $41.67 per month.

* The credit applies only to homes purchased on or after April 9, 2008, and before July 1, 2009.

* High-income home buyers don’t qualify: Eligibility begins phasing out for single filers with adjusted income of more than $75,000 and $150,000 for joint filers. It completely phases out at $95,000 for singles and $170,000 for married couples filing jointly.

Source: The Washington Post, Michelle Singletary (07/03/08)