“What The Heck” Is Going On?

“What The Heck” Is Going On? Who Is In Control Of The U.S. Government And It’s Economy?

Loan Limits Drop October 1, 2011
For the first time in three years, the upper limits on single-family home mortgages in high-cost areas, (Baltimore-Washington Metropolitan Area), qualifying for Fannie Mae and Freddie Mac’s government guarantee declined October 1, 2011. The FHA loan limits, enacted on temporary basis effective July 2007, dropped from $729,750 to $625,500 in Fauquier County and from $729,750 to $287,500 in Culpeper County. Reverting to lower loan limits impact 669 counties in 42 states and the District of Columbia limiting home sales. These lower loan limits will have a direct affect on local home sales decreasing the number of buyers who qualify for loans in our area, thereby lowering the number of total home sales in the future.

November 18, 2011 Congress Restore FHA Loan Limits To National Association of REALTORS® Backed Levels
The U.S. House and Senate yesterday restored FHA loan limits to the level they were at before they were allowed to expire at the end of September. As a result, the limits will rise to 125 percent of the area median home price from 115 percent, up to a maximum $727,750. The National Association of REALTORS® estimates that several hundred counties where FHA loan limits fell at the end of September will now rise back up to the previous level. “The reinstated loan limits will help provide much needed liquidity and stability to communities nationwide as tight credit restrictions continue to prevent some qualified buyers from becoming home owners and the housing market recovery remains fragile,” states NAR President Moe Veissi in a statement released last night. President Obama is expected to sign the legislation shortly. The restored loan limits are in a broad-based bill that includes funding for a variety of federal operations and programs.

Let us see, lawmakers have taken leave, vacation, or a long snooze during the real estate crisis, and the effects of 48 days, 13% of the year, on 669 counties. Utilizing an average of 30 homes in each county that failed to sell, 20,070 homes, or 40,140 families were affected (using one buyer and one seller per home.) The 20,700 seller’s were planning to receive proceeds from their sale, or if they were involved in a short sale, they were planning on receiving their $3,000 relocation stipend from the lender. $3000 x 20,700 families equal $62,000,000 that Americans lost while Congress fiddled.

Oh, but that is only a partial affect; banks now have to worry about when 20,700 homes will sell and when the lender can get the loan off of their books. Attorneys, title companies, surveyors, loan officers, moving companies, laborers, and REALTORS® have lost income, an income that would be re-invested in groceries, gasoline, home payments, rent payments, heating bills, clothing, insurance bills, county real estate and personal property taxes, and every other place that we spend our money.

Let us bring it down to one home in Culpeper County, Virginia and analyze the effects. This particular home was scheduled to be sold on October 7, 2011, but the FHA loan limits nixed the sale. This home was a short sale that the lender approved and was going to loose $60,000, yet rid themselves of this loan. This particular owner had kept the home in great shape, cleaned, and heated, thusly qualifying for the $3,000 relocation compensation offered by the lender and backed by the Congress. The loan negotiator, employed by the seller without payment, had spent sixty hours helping all agree to a realistic contract sales price and terms. Then attorney’s searched the title, the water was tested for bacteria and lead, the septic field was checked and the septic tank was pumped, the wood boring, termite inspection, was completed and two families, one buyer and one seller were prepared to sell, purchase, and move; and two real estate agents and their families anticipated being paid.

November 24, 2011 Update: The lender will now loose a minimum of $90,000 on their loan due to the extended timeframe of sale and the new “contract price for the home.” The seller, anticipating the October 7th sale, moved out of the home because they did not feel that is was fair to live in a home that they were not paying on and up to date, and that the home was scheduled for settlement as the first purchaser’s loan was “approved and ready to settle.” Due to moving out of the home, the seller is not now eligible for the relocation compensation even though they kept the home heated, cleaned, and proper for the new owner.

The loan negotiator, without payment, has now spent ninety hours helping all agree to a realistic contract sales price and terms. Then, new attorney searches the title. A new water sample is taken for the water to be tested for bacteria and lead. A new inspector drives to the property to inspect septic field and check that the septic tank was pumped. A new wood boring, termite inspection, is completed and two families, one buyer, and one seller prepare to sell, purchase, and move; and two real estate agents and their families anticipated being paid. Oh, I forgot the anguish of so many families.

Forty-eight days in government: (one day Congress $224,452 plus $1,725 President and Vice-President) times 48 = $10,712,496.
Annual Salaries:
President: $400,000, $1,095 daily; Vice-President - $230,700, $632.05 daily
Senate Leadership: Majority Party Leader - $193,400, $529.86 daily; Minority Party Leader - $193,400
Speaker of the House: $223,500, Majority Leader - $193,400, Minority Leader - $193,400, $529.86 daily
Member of the Senate and the House of Representatives: $174,000, $467.71 daily

Therefore, the $10,712,496 paid to the government elect above, and not counting the costs of their support staffs, came from the relocation compensation that they had authorized for those loosing their homes. Now I understand, how about you? Contact me at info@realestatephd.com with your comments.