Real Estate Information Archive


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Posted by Tim Burrell - President Bush just signed the Housing and Economic Recovery Act of 2008.  The first thing I noticed is that some first time homebuyers may need to hurry.

If you are a buyer that does not have 3.5% downpayment and you want to buy some Raleigh real estate,  you have to buy before October 1, 2008.  The program where sellers can arrange for downpayment assistance ends on that date.  If you are a first time home buyer, you can get an amazing benefit of a tax credit of 10% of the purchase price of the home you bought, up to a maximum of $7,500.   This is not just a deduction to reduce the amount of income you have.  It is a tax credit, i.e. it is directly lowers your taxes.   For example, if you buy a home that is worth $100,000, you get the maximum tax credit of $7,500.  If you were going to pay $17,500 in income taxes, you reduce the amount of tax you pay to $10,000.  So, you can buy a home with no money down and get up to $7,500 off your taxes. 

There is a catch.  You have to pay back the tax credit over 15 years, with no interest, or if you sell the house for a profit.   That is not so bad.  Where else do you get an interest free 15 year loan. 

The bill provides $300 billion in financing to allow people who got bad loans to refinance with FHA loans.   If you want to refinance the mortgage on your principal residence, the payments on your current loan have to be more than 31% of you income, the legislation's line of being unafordable.  I have paid over 31% of my income in housing payments for all the decades I lived in California.  The loan had to be taken out before 2008, so it is not meant for newly acquired loans.  The maximum loan is $550,400.  The loan cannot exceed 90% of the appraised value of the house, so the existing lender may have to take a short payoff to make the deal work, if the value of the home went down.  Since the values of Raleigh real estate are holding strong or going up, this provision should not be of major importance to our area. 

Again, this relief comes with a catch.  If you accept this refinancing, you have to share some of the profit with the FHA when the house sells or is refinanced.  FHA gets 100% of the profit if it sells, or refinances,  in the first year, and the amount for the FHA goes down by 10% per year until it reaches 50% for the FHA. 

The legislation also props up Fannie Mae and Freddie Mac.  The sudden decrease in the value of their stocks shows that the investment community has lost confidence in these institutions that are extremely important to financing in the US.  Since these two have an interest in nearly half the loans in the US, their stability greatly affects housing.  The legislation increases the lines of credit for these two and authorizes the government to buy their stock if necessary to give them additional support.  The loan limits for Fannie and Freddie were also raised to 115% of the areas median home price, not to exceed $625,500.  The last part does not have a dramatic effect on Raleigh real estate, as it will be a long time before the median price in Wake County will get anywhere near that limit.

There is one other provision that foreign investors like.  Under existing law, they had to fill out a form with their social security number and give it to the seller.  Now, they give the form to the closing agent and do not have to reveal their social security number to the seller.  Since the dollar is so low compared to foreign currency, there may be an increase in foreigh investors who purchase Raleigh real estate, so this provision may have some affect in our area. 

New Loan Limits are Coming


Posted by Tim Burrell - As a part of the new stimulus package recently signed by President Bush, the loan limits for Fannie Mae, Freddie Mac and FHA loans were increased to 125% of the median price of a home in the area, up to an amount of $729,750.    The Department of Housing and Urban Development has released the increased limits for the state of California yesterday, and the limits for other states are expected to follow in short order.   The new loan limits are set county by county for the entire state.

What does this mean for North Carolina, particularly Triangle real estate?  The initial projections were that it would probably mean very little.  Most of the counties in North Carolina have homes where 125% of the median price is still under the old limit of $417,000.  All of the four counties in the Triangle fit into this category. 

However, it just came out today that the loan limits for Wake County went up from $224,000 to $295,000 and the loan limts for Durham County was raised to $331,000.  So, there are more homes that can use FHA, Fannie Mae and Freddie Mac loans (called GSE loans).  This will help Triangle real estate, particularly Wake County real estate and Durham county real estate, as homes that are priced near $300,000 to $350,000 will have better financing available to encourage their sale.



Help Raleigh Real Estate: Contact Your Senator!


Posted by Tim Burrell - The Senate Finance Committee has approved an economic stimulus package that does not include an increase in the limits for loans by Fannie Mae and Freddie Mac (commonly called GSE's), and does not include an increase in the limits of the guarantees allowed by the FHA.   The stimulus package passed by the House of Representatives in HR 5140, the Recovery Rebates and Economic Stimulus for the American People Act of 2008,  includes increases in the amount of Fannie Mae and Freddie Mac loans to 125% of the median price for homes in high cost areas, with a cap of $729,750.  The House bill would also allow FHA to guarantee loans up to 125% of the median price in high cost areas, with the same cap.  This increase would be temporary, as it would expire at the end of they year.

Now is the time to contact your Senator and explain the obvious: THE PROBLEM IS REAL ESTATE LOANS, STUPID

The main source of the economic problems, and possible recession, is the lack of availability of real estate financing.  The exotic loans that used to allow a segment of the market to buy homes do not exist any more.  The standards for qualifying for nearly all loans have been raised, a second shrinking of mortgage funding.  With the increase in housing prices in many areas, conventional loans that are limited to $417,000 or less do not allow "regular folks" to buy a home in those areas.

The House bill would allow the limits on the conforming loans that "regular folks" need to go up.  This would allow more people to buy houses in the areas hardest hit by foreclosures.  The National Association of Realtors projects that this increase would prevent about 200,000 foreclosures nationwide.  Decreasing foreclosures would help consumer confidence, not only in the housing market but in the economy in general.

It is hard to imagine any reason for the action by the Senate.  The problem is a sudden decrease in the availability of real estate financing.  Why not deal with that problem by providing a short term increase in that financing?

The House bill would increase the availability of loans, and cost the consumer nothing.  The Sentate is concentrating on giving money from the US Treasury to taxpayers, and proposing amendments to give money to recipients of Social Security, both of which will eventualy cost taxpayers.  The money given to consumers will be used to buy consumer goods at WalMart and Best Buy.  We need something that will allow consumers to buy houses.  Also, the increase in loan limits is temporary, so that it is not a long term authorization which means any potential problems are limited in duration.

This difference between the House of Representatives and the Senate gives you a better appreciation for our form of government.  The Founding Fathers wanted to have a body in the legislature that was more in touch with the people, and they created the House of Representatives.  The Senate has only two members from each state, and focuses on larger pictures, but is less in touch with what is happening with "regular folks".

The National Association of Realtors is making an effort to have Realtors contact Senators to point out this mistake.   It would be even more important for consumers who are not Realtors to contact their Senators, so that the national importance of this mistake is felt, and the Senators cannot dismiss this as a self serving effort by Realtors.

This increase in the conforming loan limits is not as important to Raleigh real estate, and all of the real estate in the Triangle.  A loan of $417,000 will buy more than the average home in this area.  But increasing these limits will allow more people to buy the more expensive Raleigh real estate and Cary homes, and move into a Chapel Hill house.  More importantly, this increase will help the areas in the United States that have large amounts of foreclosures.  Decreasing foreclosures will be good for the entire economy, which will help our area.

Please contact your Senator and ask the Senate to face the problem head on.  Since the problem is a decrease in real estate financing, provide a temporary increase in that financing.

Posted by Tim Burrell - One of the reasons for the decrease in the number of home sales in California, Florida and other high priced areas is the decrease in available financing.  The Triangle homes and houses in of the rest of the country are selling using loans that are associated with Fannie Mae and Freddie Mac, as they are able to stay within the limits allowed for those loans, so called Conforming loans.  The loan limit is $417,000.   Other loans are guaranteed by the FHA, with a lower limit of $362,000.  These programs do not do much for buying a home in California and Florida, unless you have a huge down payment.   But, those are the areas with an abundance of foreclosures.

Last week, an agreement was reached between the leaders of the House of Representatives and the White House to raise the Conforming Loan limit.   Some of the people involved in the agreement must not have taken good notes, as House Republican Leader John Boehner said they were raising the limit to $625,000 while House Speaker Nancy Pelosi said the limit would go up to $729,750, so the conforming loan limit for GSE's (Government Sponsored Entities)could be one or the other or someplace in between.  They were on the same page when they said that the FHA loan guarantee program would be expanded to a new limit of $725,000.  The increase in the conforming limit was supposed to be for one year, while the increase in the FHA guarantee would be permanent.

However, they forgot this thing called two house legislature, an idea that Thomas Jefferson, Ben Franklin and James Madison thought was important.  What about the Senate, the other part of the legislature?   Senator Richard Shelby of Alabama, a prominent member of the Senate Banking Committee, wants to tie the increase to the passage of legislation to increase the oversight of the GSE's.  That may work out, as the House of Representatives has already passed HR 1427, a bill that would provide for that increase in oversight.  Senator Chris Dodd of Connecticut, the chairman of the Senate Banking Committee, has stated he will support passage of legislation that would reform the oversight of GSE's and expects it to pass later this year.  So, if the Senate passes legislation similar to HR 1427, the oversight may come into effect, and maybe all parties will follow through with the increase in the loan limits. 

But, Senator Dodd wants to go farther by creating the Federal Homeownership Preservation Corporation, and fund it with $20 billion to purchase loans from lenders, allow homeowners to refinance into fixed rate government backed mortgages.  This proposal is designed to prevent foreclosures and allow more homeowners to keep their homes.   However, the White House does not want this added to the Stimulus Package, which is what Senator Dodd would like to do.

What will the White House do?  In the State of the Union Message tonight, President Bush urged the Congress to pass the legislation that would reform Fannie Mae and Freddie Mack, and modernize FHA.  He did not include anything about increasing the Conforming Loan limit.  He also urged the Congress not to add additional costs to the Stimulus Package, indicating he would oppose Senator Dodd's efforts to ceate the Federal Homeownership Preservation Corporation.  So, will the loan limit increase go into effect, or will it get bogged down in confrontation over the items in the Stimulus Package and reform of the GSE's and FHA?

If the Senate will get the oversight it wants and the White House gets the Stimulus Package it wants, then maybe  the House will get the increase in the limits it wants.  What will the nation get?

The National Association of Realtors estimates that if the limit of conforming loans is raised to $625,000, it will prevent between 140,000 and 210,000 foreclosures, as well as have a positive effect of 2 to 3 percent on home prices.   Those who oppose this legislation say it will  weaken the ability of the GSE's to help low and moderate income families.  Others warn that if this legislation passes and the conforming loan limits were increased, then it would increase the risk to the taxpayers just to benefit the wealthy.

Most Raleigh real estate can be purchased with the current conforming loans, and those Raleigh homes do not need the increase in the loan limit.  However, there part of the Raleigh real estate market that is slow is the part that is priced over $400,000.  So, increasing the conforming loan limits will make more financing available for that price range, which will help to decrease our inventory of higher priced homes.

The other benefit to increasing the loan limits will be to aid the markets in the areas with the largest amount of foreclosures.  If this decreases the number of foreclosures in those area, there will be less doom and gloom about the real estate market, and that will help all of us.

If the biggest problem with the economy is the lack of financing for real estate, you would hope that the politician would pass some legislation that would provide for more real estate financing, particularly for states like California and Florida, where most of the foreclosures are occuring.  It is only logical that if what we need is more financing for these areas that the politicians would provide that.   But, logic and government frequently do not coincide.  Lets hope they do this time. 

I enjoy your opinions, so feel free to comment. 

Foreclosure Relief for Raleigh Real Estate

Posted by Anthony Williams - It’s no secret that foreclosures are on the rise countrywide. A period of cheap and easy financing resulted in rapid appreciation of many markets whose bubble was sure to burst. And burst it did. Many homeowners today find their investment upside down — they owe more on their property than its current value. A large number of foreclosures stem from risky subprime loans. But many result from variable rate loans which drive payments out of reach of borrowers. Enter the Fed.

This summer, President Bush announced the FHASecure plan designed to bring stability to the real estate market by helping break today’s cycle of foreclosures and price depreciation by creating greater liquidity in the mortgage market. A key component of this strategy is to allow families with otherwise strong credit histories to qualify for refinancing based on a risk-based pricing structure.

FHASecure is a Federal Housing Administration (FHA) product, thus will operate under the same safe guidelines as the existing mortgage insurance program. Eligible homeowners will be required to meet strict underwriting guidelines and pay a mortgage insurance premium to help offset risk at no cost to the taxpayer. To qualify for FHASecure, an eligible homeowner must meet the following five criteria:

1. A history of timely mortgage payments.

2. A teaser interest rate that has or will reset between June 2005 and December 2009.

3. A minimum of three percent equity in the home.

4. A sustained history of employment.

5. Sufficient income to make the mortgage payment.

So if your mortgage has reset and you’re struggling to make ends meet, maybe this program will enable you get back on your feet. For more information about FHASecure and other FHA products, call 1-800-CALL-FHA or visit or

Anthony Williams

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Photo of Team For Your Dreams, Inc. Real Estate
Team For Your Dreams, Inc.
REMAX United
7721 Six Forks Road, Suite 110, Raleigh, NC 27615
Raleigh NC 27615
Fax: 310-347-4041