President Bush just signed into law the Housing and Economic Recovery Act of 2008.  Below is a summary (from the National Association of Realtors) of the key points of the legislation and how they will benefit consumers, and the housing market. 

H.R. 3221, the “Housing and Economic Recovery Act of 2008,” passed the House on July 23, 2008, by a vote of 272-152. On Saturday, July 26, 2008, the Senate passed the bill by a vote of 72-13. The President signed the bill on July 30, 2008. The bill includes the following provisions:

• GSE Reform – including a strong independent regulator, and permanent conforming loan limits up to the greater of $417,000 or 115% local area median home price, capped at $625,500. The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

• FHA Reform – including permanent FHA loan limits at the greater of $271,050 or 115% of local area median home price, capped at $625,500; streamlined processing for FHA condos; reforms to the HECM program, and reforms to the FHA manufactured housing program. The downpayment requirement on FHA loans will go up to 3.5% (from 3%). The effective date for reforms is immediate upon enactment, but the loan limits will not go into effect until the expiration of the Economic Stimulus limits (December 31, 2008).

• Homebuyer Tax Credit - a $7500 tax credit that would be would be available for any qualified purchase between April 8, 2008 and June 30, 2009. The credit is repayable over 15 years (making it, in effect, an interest free loan).

• FHA foreclosure rescue – development of a refinance program for homebuyers with problematic subprime loans. Lenders would write down qualified mortgages to 85% of the current appraised value and qualified borrowers would get a new FHA 30-year fixed mortgage at 90% of appraised value. Borrowers would have to share 50% of all future appreciation with FHA. The loan limit for this program is $550,440 nationwide. Program is effective on October 1, 2008.

• Seller-funded downpayment assistance programs – codifies existing FHA proposal to prohibit the use of downpayment assistance programs funded by those who have a financial interest in the sale; does not prohibit other assistance programs provided by nonprofits funded by other sources, churches, employers, or family members. This prohibition does not go into effect until October 1, 2008.

• VA loan limits – temporarily increases the VA home loan guarantee loan limits to the same level as the Economic Stimulus limits through December 31, 2008.

• Risk-based pricing – puts a moratorium on FHA using risk-based pricing for one year. This provision is effective from October 1, 2008 through September 30, 2009.

• GSE Stabilization – includes language proposed by the Treasury Department to authorize Treasury to make loans to and buy stock from the GSEs to make sure that Freddie Mac and Fannie Mae could not fail.

• Mortgage Revenue Bond Authority – authorizes $10 billion in mortgage revenue bonds for refinancing subprime mortgages.

• National Affordable Housing Trust Fund – Develops a Trust Fund funded by a percentage of profits from the GSEs. In its first years, the Trust Fund would cover costs of any defaulted loans in FHA foreclosure program. In out years, the Trust Fund would be used for the development of affordable housing.

• CDBG Funding – Provides $4 billion in neighborhood revitalization funds for communities to purchase foreclosed homes.

• LIHTC – Modernizes the Low Income Housing Tax Credit program to make it more efficient.

• Loan Originator Requirements – Strengthens the existing state-run nationwide mortgage originator licensing and registration system (and requires a parallel HUD system for states that fail to participate). Federal bank regulators will establish a parallel registration system for FDIC-insured banks. The purpose is to prevent fraud and require minimum licensing and education requirements. The bill exempts those who only perform real estate brokerage activities and are licensed or registered by a state, unless they are compensated by a lender, mortgage broker, or other loan originator.

For more information, visit http://www.realtor.org/governmentaffairs.

I read a good book on the plane. And to be fair, I’ll say upfront that I read it because I was I asked to review it for Cabin Life magazine. I might not have picked it up on my own and I would have been missing out.

The full title is The Northwest Green Home Primer: Hundreds of ideas for building, remodeling and buying green. Although the focus is on the Washington and surrounding states, the basic tenants are applicable universally.

What I liked is it covers the big, major projects you’d expect like hydronic radiant systems, wind turbines and solar heating. But there were literally hundreds of smaller, more manageable improvements including rainwater harvesting, passive solar and how to buy “green” items like carpet.

What makes it all seem do-able are helpful worksheets and illustrations that walks one through everything from site analysis to budgets. Also dotted throughout the text are real-life case studies, warts and all, supported with photos.

I think everyone wants to go green and do better by this earth, but the task can seem so enormous at times it’s easy to do nothing at all. Green Primer can help dislodge us from our trance and help us take steps in the right direction - even if they’re just baby ones.

This is not the actual cabin that was for sale, but you get the idea…

I flew to Maine this weekend to attend my 20th class reunion. After putting everything I own into a big truck, having my whole family live in an interior-room (read no windows) of a nice hotel for 2 weeks and then unpack all the items from said truck, my very clever husband said, “You should go to your reunion by yourself and drink heavily.” Like I said, clever man.

While I was there I was privy to a real estate drama. An acquaintance of mine put his lake cottage on the market because of failing health. The Realtor is the only game in town so he signed with her. She created a listing and put it on her website.

A few weeks later, his health improved to the point that wanted to keep his cottage - so he took it off the market. (It makes me think of the Monty Python movie when the plague victim says “I’m not quite dead yet. I’m feeling bet-ta, I think I’ll go for a walk…) The listing agent is said to have demanded her commission - the ENTIRE amount of $21k!

It’s this behavior that gives Realtors a bad name. Of course this professional needed to be compensated - no one claims otherwise, but to demand a sum of money just shy of what starting teachers make their first year was not a karma improving move.

Lawyers were retained and at the end, the agent settled for a $1,000 or thereabouts.

When I look at this situation through my blogger’s glasses, I know this would have never occurred with the greed-prevention, flat-fee model of www.webdigs.com.

It makes me feel like I’m working with the guys with the white hats.

So when this guy goes to list his cabin again, do you think he’ll use her?

In the most recent post from The Skinny it appears that for the first time in a year, the number homes per buyer has gone down.  Have we hit the proverbial bottom yet?  Too soon to tell.  I would say this is a positive sign, however, it is still a buyers market.  One month doesn’t make a trend, so it will be interesting to see how this continues.

This is also a fairly nebulous statistic.  I would be more interested in housing values…what are they doing?  How are the projected to move in the coming months?  With mortgage interest rates climbing and the CPI (Consumer Price Index) hitting a 17 year high in the month of June, housing prices have nowhere to go but down.  CPI, to put it simply, refers the cost of living.  It is going up while the average income is stagnant.  This means that households fall behind…and when households fall behind, and there is a large inventory of homes for sale, well…you get the picture.

So, if you are on the fence about selling now, or riding it out…make sure that you can ride it out for several years.  I don’t have a crystal ball and I am not an economic expert, but I can look at the facts and apply some common sense.  Housing prices appear to be poised for continued decline. 

So, if you were thinking of selling in a year or two, it may be a wiser choice to list now…try the market now.  See if you can get the price you want (assuming it is reasonable and in line with current market prices).  Otherwise, it may not be there in a year or two.

The phrase “Consumer Price Index” can be intimidating and unclear to Americans. It’s an economic term, after all, and not a part of everyday American language.

It even has its own abbreviation to add to the confusion — CPI.

So, when a layperson hears that “CPI is rising”, it’s not always clear what it means. The tendency, therefore, is to ignore the news.

This is one reason CPI is commonly substituted with the more down-home expression of “Cost of Living”.

In contrast to the term “CPI”, the phrase “Cost of Living” is a lot more clear. When people hear that the Cost of Living is rising, instinctively, they get it. And now they can see how it works in numbers, courtesy of the Bureau of Labor Statistics.

The Inflation Calculator at the government Web site helps a person compare household income to the changing Cost of Living between any two years since 1913. For example, a U.S. household earning $48,201 in 2007 would have to increase that income to $50,868 just to keep up with “life”.

CPI touched a 17-year high in June, jumping 5.000 percent year-over-year. Without a 5.000 percent increase an income, a household falls behind.

Of course, none of you missed this above the fold story a few days back in the Star Tribune. It’s the piece about the Realtor arrested for faking a showing at a house to steal meds. This does nothing to help with the trust issues people have around the industry.

So since this happened, I’ll confess that I was a giant wienie when my house was on the market. I took the lockbox off my door every second when there wasn’t an appointment scheduled.

That Realtors are bonded did little to comfort me. And having my key just hanging around my doorknob while I was sleeping, or taking a bath, or staring into space just freaked me out. Even if an agent is honest as the day is long, what if he/she just leaves my lockbox code where clients - or anyone - can find it?

I also took great comfort that my Webdig’s agent, Tom, told me he’d handle it if someone just came by and wanted to see my house. This girlfriend doesn’t want to end up in a “ripped from the headlines” Law & Order episode.

One could point out that I do have a Rotwieller, but honestly he’s an old guy and - don’t tell him - probably not the sharpest knife in the drawer. In fact, he was staying at my husband’s bachelor pad for a few days and managed to get his entire 70-lb body completely stuck in the kitchen’s Lazy Suzan cabinet for an undetermined amount of time. No, really.

After Jason spun him around, freeing him, he had a wild look as if to say, “Stand Back! That thing is dangerous!”

This is not the dog I’m going to entrust my personal safety to. And even if he was Rin Tin Tin, it’s still a good idea to pop the box off when you don’t need it.

Let’s be careful out there.

Seller’s Diary:  Just to let you know - we’re finally in our new house. Unpacking is so much harder than I remembered it. Actually the whole damn moving deal is freakishly exhausting. We’re about 90% there with being settled and for the first time since January I feel like there’s some earth underfoot.

Of course, I’m still waiting for a telephone and Internet and learning where the stores are - but in the big picture, it’s all good.  I had coffee from my own machine this morning and really, what’s better than that?

There’s a lot of public information “out there,” but often times the Internet Super Highway is just a tangled web. When a simple Google search returns a half million hits, where do you start?

Well the fine folks at the Minneapolis Star Tribune just made being a Nosy Rosy that much easier. They have a new web portal at www.startribune.com/infocenter that offers direct links to lots of public data such as salaries, entertainment, roadwork - and most importantly to us - real estate transactions.

Of course, this info has been previously available on County websites, the Star Tribune ramp is a much easier drive. Here’s a direct link to the real estate page which prompts viewers for an address and then spills the goods.

Having access to info is part of the Webdig’s creed. Webdig’s can offer an attractive flat rate BECAUSE people are so savvy now and able to do so much of the research. It’s great to find Realtor’s that aren’t afraid to see their clients empowered with knowledge.

Enjoy the new access - and remember use your power for good, not evil.

Even though I’m not going to be buying a house for at least a year, I still find myself checking out what’s out there. I use traditional MLS sites like webdigs.com, troll Craigslist and FSBO portals, too. Some of the non-traditional sites offer A LOT of pictures - sometimes 20 or more.

I love real estate photos, I really do, but when is it too much of a good thing?

According to Point2Agent, the more photos the better. Their research shows more hits as the numbers of images increases.

But I believe in the burlesque dancer approach - you want to show just enough to entice, titillate even - but not SO much that your potential buyer peeks a blemish and moves on. The idea of posting images is to motivate armchair buyers into their car and seeing your house in person where they can fall in love with it. Somehow you want your home to be the Dita Von Teese of Real Estate - sexy, alluring, but never giving away anything before its time.

I found that when confronted with 30plus pictures, I’d eventually come to one that would throw me out of real estate ecstasy - and I’d more often than not scratch it off my list. So it becomes a fine balance of using the “come hither” photos and excluding ones that may cast doubt.

A while back I read a Star Tribune article on how to take better photos for selling your home. One of the best tips I got was to take an outdoor photo in the evening with the lights glowing in the house. When I took mine I really lucked out because it had just rained which made my patio particularly inviting.

That’s a staging tip by the way. My stager, Jean McCue, suggested that we hose off the patio before showings to make it look it’s best. We did it when we could, but honestly by the 40th or so showing the novelty of doing to was wearing thin. But I always did it for second showings.

When my house was on the market with Webdigs, I think it had 9 photos and that seemed like a nice number. We never lacked for showings and we were able to hit the high points of the property.

P.S.: I am finding excerpts of “Selling isn’t for Sissies” all over Real Estate Blogs throughout the country. The one that made me laugh though was being included on a site called f*ckedseller.com. How funny is that?

When you’re looking to buy a house, you want to really know your potential new neighborhood. Of course, by law, Realtors can’t opine about an area’s credibility –but they sure can direct you to websites that can help you get the data you need.

Here is a very cool site: www.crimemapping.com - it creates a map based on an address and puts virtual push pins where various crimes occurred. It doesn’t work for every community, as the police must agree to supply data, but for where it does work it’s pretty cool.

The pins are even color-coded so you can easily distinguish a noisy area from a a street where there has been violent crime. The website can also spit a report of exactly when and where the incident occurred.

While I would always recommend walking the streets different times of the day before buying a home, this web site is a great way to get some hard facts on a neighborhood

Happy weekend everyone - and to make you feel better about yourselves Duluth ’s waterfront is 50 degrees colder than the Cities today. No, really.

It’s a terrific time to buy a home, but not because homes happen to be affordable. 

It’s a terrific time to buy because the variety of mortgage products available to home buyers looks poised to shrink.

Monday, Alt-A mortgage lender IndyMac Bank stopped accepting mortgage applications and it’s likely that other Alt-A lenders will likely follow suit.   

Alt-A loans are ones in which borrowers can’t (or won’t) verify one of two major underwriting criteria:

• Evidence of income
• Evidence of assets

Since the Credit Crunch began last July, Alt-A mortgages have been a steady source of funds for ”in-between” borrowers — those that are not quite prime, and not quite sub-prime.  IndyMac was among the largest lenders of its type and had outlasted many of its peers. 

Its position as a market leader and subsequent exit from lending means that the remaining Alt-A lenders will likely make one of two choices in the coming weeks:

1. Raise rates and fees because of greater Alt-A mortgage risk, or
2. Follow IndyMac’s lead and exit mortgage lending altogether

Both outcomes would be harsh for home buyers of all types because when any large bank takes mortgage-related losses like IndyMac just did, it tends to create major risk aversion in the market.

Risk aversion impacts everyone – even the “good” borrowers. 

Banks have been nervous about lending for several months and so they’d rather pass on an “average” mortgage application rather than risk getting stuck with a potentially “bad” one.  IndyMac’s exit may cause fewer mortgages to get approved.

In other words, buyers eligible for financing today may be ineligible tomorrow. 

Therefore, if you’re a home buyer and you know your credit profile is less-than-ideal, consider writing a purchase contract sooner rather than later.  Your mortgage options may be thinning, and the ones you have may be getting more expensive.