Your Trusted Real Estate Advisor

The National Association of Realtors® is working to help the housing market. One project now in place is for Realtors® to contact their senators and representatives asking for the “4-Point Plan” shown below to be implemented. I have sent a letter to Congressman Tancredo and Senators Salazar and Allard as a part of this project.

What's the plan?

• Make the $7500 first-time homebuyer tax credit available to all buyers and eliminate repayment requirements. The credit's limited availability and repayment requirement severely limit the credit's use and effectiveness.
• Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 will reduce them. Now is not the time to limit mortgage affordability.
• Get the Treasury relief program back on track and target more funds to mortgage relief. Create a federal mortgage interest buy-down program to make below-market rates available and stabilize home prices.
• Permanently bar banks from engaging in real estate brokerage and management. The banks have proved they have enough to do to simply manage the loan process. Banks should not manage home sales and purchases.

Doing all we can ...

At Reason’s 40^th anniversary event, held in Hollywood on November 14 and 15, the American Enterprise Institute's Peter Wallison analyzed the roots of the current market meltdown and explained how government policies directly caused or massively exacerbated the housing bubble and the subsequent bust at the center of things.

This 25 minute video (Peter Wallison: The Roots of the Financial Crisis) is a little hard to follow because at first you don’t realize Wallison is reading from a projected Power Point slide and his delivery is not crisp. However, it is helpful to hear a fairly concise summary of the two major causes of the mortgage meltdown, both creations of the Federal government.

Follow the politicization of housing via the “Community Reinvestment Act” (CRA) and the creation, and later manipulation of two “Government Sponsored Enterprises” (GSE’s)--Fannie Mae (Federal National Mortgage Association or FNMA) and Freddie Mac (Federal Home Loan Mortgage Corporation, or FHLMC). 

You will then see how difficult it will be for that same government to get us out of the problem. Without citizen involvement and oversight, they will continue to make insane laws and then try to obscure their own responsibility for the crisis.

It all reminds me of a cartoon I once saw of an office door in a building in Washington, D.C. that had the title, "Department of Obfuscation".  Today it would be called, "CYA Department" (Cover Your "Assets").

No. Keep the account open. That’s the information a lender sent me. I thought it might help some of you.

If you close the account, it will make your credit score go down for two reasons. 1) You have stopped the amount of time the account has been opened -- the longer an account is open, the higher the score. 2) You have lowered the amount of credit available to you. That raises the ratio of used credit to available credit.

In addition to your score going down, you could also run the risk of having too few accounts to get a loan. Underwriters look for at least three open accounts. With fewer than three open accounts, you might have your loan denied.

Credit scoring is complicated. If you are thinking about getting a loan and have questions about your credit score, ask a lender who keeps up with current rules and underwriting guidelines.