Preserve, Protect and Defend Mortgage Insurance Deduction (MID)

You can shape legislation by being heard early and with strong conviction. 

This is one of those times. Congress needs to hear from you. Warning signs have appeared on Capitol Hill about mortgage interest deductibility. Homeowners have taken big hits the past few years. We cannot have Congress adding to the injury.

Watch NAR President Ron Phipp's video Call for Action explaining why our action is so urgent. 

Then send your letter asking your Representative to cosponsor H.Res25, a bipartisan House resolution that affirms the value and importance of the Mortgage Interest Deduction.

Homeowners need to direct Congress to Preserve, Protect and Defend the MID. No economic recovery is possible without a vibrant housing market. Please Take Action today.

What's at Stake:

House and Senate committees are already holding hearings to gather the perspective they need to craft a new tax system for the 21st century. These hearings will take most of this year.

Congressional leaders from both parties, as well as the Administration, continue to insist that “Everything is on the table,” including MID.

Changes to the MID in any form would have an adverse effect on the entire housing market, potentially lowering home values and slowing sales. Each change to the mortgage interest deduction opens the door for full elimination later on, and could have an even broader effect on local economies and jobs, such as in markets reliant on second homes.

SAMPLE LETTER:

 

Message Subject: Subject: Co-Sponsor H.Res 25. Preserve, Protect, & Defend the Mortgage Interest Deduction. 

Dear [Decision Maker],

As both your constituent and as one of more than one million members of the National Association of REALTORS, I remain steadfast in my belief that economic recovery depends in large measure on recovery in the housing market. That recovery is by no means complete and, in fact, the market is still quite weak.

I understand that throughout the spring and summer, Congress is likely to take many votes on huge bills that will affect economic, fiscal and tax policy. I urge you in the strongest possible terms to assure that each one of them will contribute to stabilizing housing markets and, just as important, do no harm. The simplest way for Congress to provide certainty to the housing market is to preserve the MID and oppose any legislation that would undermine it.

Please show your support of stable housing policy by cosponsoring H.Res.25, a bipartisan resolution offered by Rep. Gary Miller. Realtors believe that wide cosponsorship of this resolution will send a strong signal that Congress remains committed to a housing recovery.
H. Res.25 expresses the sense of Congress that the current law governing the MID must be retained. To restrict current law in any way would undermine progress in the still-fragile housing recovery. 

Please join Mr. Miller and your colleagues in sending a strong signal that you support a stable housing market and that you support the current MID rules. Please co-sponsor H.Res. 25.

Sincerely,
Your Name
Address City State

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The Truth Behind Meat, Fish and Poultry Consumption from Farm to Fridge

Farm to Fridge - The Truth Behind Meat Production from Mercy For Animals on Vimeo.

Prepare for Spring’s Housing Thaw

In the famous quote by Joseph P. Kennedy “When the going gets tough, the tough get going,” and to reiterate and expound in first voice as a Realtor® from excerpts in real estate opinion, reports and notes by Ron L. Phipps, NAR president; as a Realtor®, the going has been tough—and all Realtors® in the industry have been going, going and going! It definitely has been a long, cold and bitter economic winter in real estate which is affecting our own state of Utah and across the nation. The nation as a whole has seen some of the most challenging economic times that are facing each of us personally as Realtors® and as citizens of the world. 

With the rivers running swiftly looking like they might overflow their banks, there is definitely a hint of spring in the air with the melt of winter’s snow. I know all of us are ready to welcome the promise of warmer days ahead and have it stay that way for awhile. So it is with the projection of Real Estate for 2011.

Here is an overview of what is happening in the market.

Pending home sales: In late January, we reported the fifth monthly gain in six months.

February: In February home sales dropped by 10%. 

Home sales for 2011: 5.3 million sales are anticipated

Consumer confidence index. The Conference Board’s measure of consumer confidence dipped in December, but was up again in January to levels not seen since spring 2010.

These are all positive indicators of what is anticipated in home sales for the year of 2011. Beyond that, we have much to be thankful for. Home Ownership Matters!

References:

http://www.realtor.org/rmonews_and_commentary/Opinion/1101_notes_president
http://www.realtor.org/rmonews_and_commentary/opinion/1102_notes_president?presentationtemplate=rmo-design/pt_articlepage_v1_print&presentationtemplateid=1b18c0004a12c9a4b7e1ffbdd1ec736f
http://rismedia.com/2011-03-24/anticipating-a-spring-thaw/

Home Sales Drop After Seeing Substantion Increase in January

Report by Lawrence Yung - NAR Chief Economist

Scaling back housing finance: fallout fear

Flaws in Obama's mortgage reform plan

The document the administration recently sent to Congress outlining its game plan for housing finance has both scale-down and ramp-up thrusts. The scale-down thrust, comprising most of the report, involves shrinking the federal government's involvement in the market.

The ramp-up thrust would create a new federal program designed to support the private market. This article is about the scale-down.

Backdrop

The point of departure for this proposal is a post-crisis housing finance system in which only about 10 percent of all new home loans are strictly private. The remaining 90 percent are either acquired by Fannie Mae or Freddie Mac, or insured by the Federal Housing Administration (FHA).

Further, qualification requirements set by the strictly private market are far more restrictive than they were before the crisis, which is the reason their market share is now so low. Before the crisis, risk-based pricing was widely practiced, making loans available over a wide range of risks.

Today, only a sliver of risk-based pricing remains. For the most part, risk-based pricing has been replaced by risk cutoffs. At many lenders, borrowers with a credit score of 800 have to put 20 percent down, and borrowers who put 40 percent down still need a 700 score to qualify. Some lenders will go to 10 percent at 680, but limit the loan size.

Fannie Mae and Freddie Mac have tightened their requirements, but by much less than the strictly private sector. The agencies today will accept a credit score of 620 at 20 percent down, and 680 at 5 percent down. However, risk-based pricing is extensive and many borrowers with mediocre credit, small down payments or both, choose to opt out.

The average down payment on new loans is about 35 percent, and the average FICO is about 765. The agencies have also tightened their documentation and appraisal requirements significantly.

FHA has the most liberal requirements, which are little changed from what they were before the crisis. FHA accepts 3 percent down with a credit score of 580, though many lenders require higher scores so that they won't be tarred with originating too many loans that default. FHA has also increased its insurance premiums.

What scale-down means

The crux of the Obama administration's scale-down plan is a gradual phaseout of Fannie Mae and Freddie Mac, combined with a reduction in the scope of FHA operations. The ultimate goal seems to be a system in which the strictly private market would account for about 85 percent of the traffic, and FHA would have about 15 percent. 

The report suggests a number of ways of accomplishing this, including reductions in the maximum qualifying loan size at all three agencies, and increases in insurance charges. The first reduces the number of borrowers who qualify, while the second forces price increases by the agencies that would make the strictly private market more price-competitive.

Implications and consequences

The volume of risky loans, already down sharply from the post-crisis tightening of qualification requirements, will shrink further as the scale-down proceeds. Because a large proportion of risky mortgages are generated by disadvantaged groups, this approach constitutes a reversal of what had been public policy for at least four decades, which was to encourage homeownership among such groups. 

Sometime this year, the regulatory agencies will promulgate new rules implementing provisions of the Dodd-Frank bill that require them to define "qualified residential mortgage" (QRM).

These are low-risk loans that exempt originators from having to assume 5 percent of the risk of loss. The split in the market following implementation of this rule will further disadvantage weaker borrowers, since non-QRM loans will carry a higher price if they are available at all.

Softening the blow

The report recognizes the need to go slow and cautiously, but offers no concrete ideas on how to soften the blow. Here are two. 

1. The administration ought to set up a task force to determine whether the existing regulatory structure, including the bank examination process, is unduly constraining the strictly private market. If government wants lenders to expand into the space vacated by Fannie, Freddie and FHA, government ought to make sure that it has not itself constructed roadblocks to such expansion.

2. FHA should extend its tentative steps toward risk-based pricing to a comprehensive system in which the insurance premium on every loan reflects the risk of loss to FHA of that loan. This will help keep FHA financially sound, reduce concerns if FHA is pressed to expand into some of the space vacated by Fannie and Freddie, and neutralize political pressures to liberalize terms unduly.

Thanks to Guy Cecala of Inside Mortgage Finance.

Flaws in Obama's mortgage reform plan
By Jack Guttentag
Inman News™
March 07, 2011
Editor's note: This is Part 1 of a multipart series.

Next week: The ramp-up proposal.
The writer is professor of finance emeritus at the Wharton School of the University of Pennsylvania. Comments and questions can be left at www.mtgprofessor.com.

5400 South Flex Lanes Project Website

5400 SOUTH REDWOOD ROAD CFI

Part of the Redwood Road Intersection Improvement Project

Construction Update 3.7.11

5400 South Redwood Road CFI

Upcoming Scheduled Activities:

On 5400 South and Redwood Road:

Construction of the North-South Continuous Flow Intersection (CFI) at 5400 South and Redwood Road resumed on March 1. Crews will continue clearing and grubbing in preparation for utility re-location and installation on the NW corner of 5400 South and Redwood Road.

Sidewalk closures: Sidewalks will be closed on the northwest side of 5400 South, west of Redwood Road through mid-April. Pedestrians are reminded to stay out of the construction zone and use the sidewalks on the south side of 5400 South. 

Traffic Impacts:

Motorists and pedestrians should use care and watch for large trucks and heavy equipment entering and exiting the area. Intermittent lane closures may be required to accommodate construction vehicles.

Please slow down and pay attention when driving through the work zone.

Other Information:

When complete, these two projects at the intersections of 4700 South and 5400 South on Redwood Road will reduce traffic congestion and improve west/east traffic flow. Both intersections will be widened and improved with new curb, gutter, and sidewalk, as well as adjusted traffic signal timing.

* The intersection of 5400 South and Redwood Road will be converted into a new North-South CFI. (See illustration below)

* Dual left and single right-turn lanes will be added to all sides of the intersection of 4700 South and Redwood Road.

Construction at both projects is anticipated to be complete by early fall.

5400 South & Redwood Road Continuous Flow Intersection (CFI)

Useful links

Redwood Road, 4700 South widening and 5400 South CFI Project Website

5400 South Flex Lanes Project Website

Contact the Public Information Team

Toll free hotline: 1-888-556-0232

Email: 47-54redwood@utah.gov

Visit the Redwood Road Intersections project at www.udot.utah.gov/go/47-54redwood or click on "Useful links" for additional information.

Activities are subject to change due to weather, supply, or equipment problems

January 2011 - Home Sales Decline

Pending Home Sales Decline in January

Washington, DC, February 28, 2011

Pending home sales eased moderately in January for the second straight month, but remain 20.6 percent above the cyclical low last June, according to the National Association of Realtors®.

The Pending Home Sales Index,* a forward-looking indicator, declined 2.8 percent to 88.9 based on contracts signed in January from a downwardly revised 91.5 in December. The index is 1.5 percent below the 90.3 level in January 2010 when a tax credit stimulus was in place. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, points to the broader trend. “The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market,” he said.

“While home buyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes that need to go through the system,” Yun said. “We should not expect the recovery to be in a straight upward path – it will zig-zag at times.”

The pace of January existing-home sales, 5.36 million, is slightly higher than NAR’s annual forecast for 2011. If contract activity stays on its present course, there should be an 8 percent increase in total existing-home sales this year.

“The broad fundamentals for a housing recovery are developing,” Yun said. “Job growth, high housing affordability and rising apartment rent are conducive to bringing more buyers into the market. Some buyers may be looking to real estate as a hedge against potential future inflation.”

The PHSI in the Northeast declined 2.4 percent to 73.5 in January and is 3.0 percent below January 2010. In the Midwest the index fell 7.3 percent in January to 78.0 and is 3.2 percent below a year ago. Pending home sales in the South rose 1.4 percent to an index of 97.7 but are 0.4 percent below January 2010. In the West the index fell 5.2 percent to 98.7 and is 0.9 percent below a year ago.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1.1 million members involved in all aspects of the residential and commercial real estate industries.

# # #

*The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.
The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.
An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.
Each February, NAR Research conducts a normal review of PHSI seasonal adjustment factors and fine-tunes monthly data for the past three years; revisions are posted in the Research area of Realtor.org.
NOTE: Existing-home sales for February will be reported March 21 and the next Pending Home Sales Index will be released March 28. The 2010 Vacation and Investment home report will be published March 30; release times are 10:00 a.m. EDT.
REALTOR® is a registered collective membership mark which may be used only by real estate professionals who are members of the NATIONAL ASSOCIATION OF REALTORS® and subscribe to its strict Code of Ethics. Not all real estate agents are REALTORS®. All REALTORS® are members of NAR.
Information about NAR is available at www.realtor.org. This and other news releases are posted in the News Media section. Statistical data, tables and surveys also may be found by clicking on Research.