Archive for the ‘government loans’ Category

Should the Government Intervene in the Real Estate Market?

Monday, July 25th, 2011

The government has played an integral role in the real estate market for a very long time. But lately there have been two diametrically opposed views – and many in between – as to whether it should continue to do so. I posed this question to agents and the responses were very interesting.

The pro-government view is that the government has contributed to making the market a better place, mostly for consumers. Programs to help people avoid foreclosure, get better rates on loans and be able to buy homes with little money down (buyers who otherwise would not be able to purchase), keeping buyers, sellers and homeowners safe from scams (like mortgage fraud – although the past has not proven this is 100% possible), and enforcing local and federal laws (zoning, anti-discrimination in housing) to help people and our neighborhoods.

Just as vocal are those who feel that the government has intervened too much (anti-government intervention views), causing the market to be in such a horrible state. They site programs that have failed to do much but cost taxpayers lots of money, bank scams due to lack of regulation, problems within the foreclosure market, as well as the looming possibility of a loan limit reduction, which many believe will decimate the market even further.

One respondent pointed out that the government has to be involved to some extent, as many laws designed to protect us are entwined with the real estate market – zoning laws, building codes and federal anti-discrimination in housing laws come to mind. I agree. The government needs to jump in here to enforce rules that will keep our neighborhoods strong and ownership protected. So maybe the question should be “how much should the government intervene?”

Mark Zandi, the Chief Economist for Moody’s Analytics, recently stated in a post that it may be time for the government to get more involved in housing. He sites three areas that would benefit: “(1) facilitating more refinancing, (2) delaying the impending reduction in conforming loan limits, and (3) supporting principal-reducing loan modifications more aggressively.” He believes the government should require Fannie Mae and Freddie Mac to provide more refinancings through the Home Affordable Refinancing Program (HARP).

The flip side of the coin is that the government, instead of enforcing oversight on government agencies like Fannie and Freddie, needs to back off and let the chips fall as they may. They say that if Fannie and Freddie fail, it could open the doors to privatization – new types of funding where corporations and private parties become lenders in the primary market. These folks believe housing will not recover until such a time. Of course, there are many viewpoints in between as well.

No matter where you stand on government intervention in real estate, there are valid arguments on both sides. The key is getting people in the know to get together and have dialogues, sharing ideas that could reasonably be implemented to make a difference in the market. I love posting heated questions like this to Realtors, because the ideas that spark from them are often good ones, smart ones, and show that a group of people really can come together and find ways to solve problems for the common good – maybe a lesson the federal government can take to heart. What do you think?

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Government May Help Pay for Your Home Improvements

Thursday, November 18th, 2010

The Department of Housing and Urban Development (HUD) recently announced that it has initiated a program that could help you pay for home energy improvements. This program will grant loans, called FHA PowerSaver Loans, to credit-worthy borrowers up to $25,000 to make energy efficient improvements of their choice.

PowerSaver loans will be backed by the FHA, and up to 90% of the loan amount will be insured by FHA mortgage insurance. Lenders will be chosen to participate in the program based on commitment and ability to provide energy saving loans. Interest rates will be low and borrowers must have at least some equity in their homes, but it is not yet clear exactly how much and whether it will be a case-by-case basis.

Examples of energy efficient improvements include duct sealing, new doors and windows, water heaters, HVAC systems, solar panels, insulation and georthermal systems. It is not clear whether energy efficient appliances–such as washers and dishwashers–are included but most states have programs that provide rebates for these appliances.

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