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Clergy from all faiths were called upon this week to give last rites to Down Payment Assistance Programs, Nehemiah and Ameridream. Builders through out the United States were on their knees praying for a miracle and promising they would never inflate prices again and would play nice with everyone from this day forward.

HR 3221 signed into law the elimination of the Down Payment Assistance Programs primarily used for FHA loans. It has been the staple of builder business since 2003. DPA’s were used less frequently in the re-sale markets until this year. What will we do? For one, we all need to be slapped around and come back to our senses. In the previous years when the DPA’s were not available or when the sellers would not accept them, Loan Officers counseled their clients on methods of accumulating the required money for down payment: a gift from mummy and daddy (or any family member), selling a vehicle, motorcycle, quad, or any item worth a few bucks (this needs to be documented and paper trialed), borrowing from a 401K, and the so out of style, saving. DPA’s are easy money and required no thought towards the investment. It is just like rent, except there are a few more papers to sign. So if we do not get a reprieve, we may have to work a little harder with our clients.

Visitor’s at Joe Arpaio’s tent city will no longer be able to get released one day and become a loan officer the next. HR3221 establishes a nationwide registry that will set minimum standards for loan originator licensing. All loan originators - lenders, banks, credit unions and mortgage brokers - all must register with the Nationwide Mortgage Licensing System and Registry and go through a criminal background check. Dogs need a license, if you go fishing you need a license, to sell real estate you need a license, but the individuals that help families with the largest purchase they will ever make have not been required to be educated in loans or loan programs. How many people were put into subprime loans when they could have qualified for a program, more suited to their financial needs, because of lack of knowledge of loan programs?

FYI: This is truly a historic market. Yesterday history was made in our office when an appraiser called and said there was a sticker on the front door of an REO property stating that due to the health hazard of the pool, algae and mosquito eating minnows had been added to the pool water. We asked him if the minnows would add value to the property or would they convey at no cost? And speaking of licenses, do we need a license to remove the critters to insure no harm would come to them?

BY DIANE GERDES

Bye, Bye, American.....Economic Update

A piece of the American pie is fading fast with one of the last of the zero down programs, eliminated by HR3221, Housing and Economic Recovery Act of 2008 , kicking Down Payment Assistance programs Ameridream and Nehemiah to the curb October 1^st. Most banks are requiring close of escrow before the October 1^st deadline. Some will go up to two weeks past, but boy, that would be just a little too exciting. Will the DPAs bounce back? Maybe. There are court appeals, new legislation introduced, grass roots movements; but the reality is that a new law would have to be signed off by the House of Representatives, the Senate and the President. It will be months, if indeed any legislation is passed, and it will be highly regulated with many stipulations. The original Down Payment Assistance Programs, Mom and Dad, are still in effect.

The Down Payment Assistance Programs are going away, but how about that new tax credit? Pretty dang cool! Buyers who have not owned homes in the past three years are eligible and it applies to homes closed after April 9, 2008 and before July 1, 2009. The tax credit is a straight dollar-for-dollar deduction of your tax bill. So a married couple who would ordinarily pay $8,000 in taxes would pay just $500. But no, your buyer is not going to get a check in the mail from the government for $7500 after closing on their home. They will have to fill out a to-be-determined form with their tax return in January or February, and the tax credit will be calculated from the taxes paid in. As always, with anything regarding the IRS; check with an accounting professional to get exact information.

FYI: Boys and Girls, read the contracts that you receive from the banks, asset managers and trustees! Escrow was opened yesterday with a contract from a bank trustee, signed by the borrowers, stating that the trustee had up to 60 days to get bank approval for deed re-conveyance. The borrowers are utilizing Ameridream, so you do the math. On Tuesday, we were waiting to close on another bank owned property, when the bank refused to give back our borrower his earnest money. He had signed a bank addendum that he would not receive ANY funds at closing. The REO interpreted it to include his earnest money. If you think the banks on these REO properties are going to do what is best for your client, think again.

Diane Gerdes

Ahh, Beijing, sponsor of the 2008 Olympics, home of the Forbidden City, Tiananmen Square, and the Great Wall of China. Just do not inhale. With the pollution over 5 times the World Health Organization’s recommended levels, the murky air quality makes site-seeing a chore. Watching the Olympics on T.V. makes you want to grab a face mask.

American Markets are exhaling, at least a little, with some good news. Oil Prices continued to drop this week, down 21% from their high and the dollar had a strong showing against the currencies of the world. (When oil prices come down, our dollar’s value goes up) Low labor costs kept the production numbers steady for last month and Home Depot posted stronger than expected gains. (Ex-home builders are now contractors repairing the REO properties to make them lender acceptable)

Speaking of lenders, Fannie Mae knocked the breath out of all of us this past Thursday morning by levying an increase to the conventional interest rates to the tune of about .250. There was no warning and it is permanent. Rumor has it; that the conventional rates are no longer following the markets and will continue to increase.

FYI: Arizona is having its own Olympic contest between two super corporations. Fresh and Easy, a subsidiary of Great Britain’s Tesco supermarkets, has become increasing popular since opening this year. Wal-Mart is going lettuce head to lettuce head with Fresh and Easy by opening a similar concept store called Marketside. Smaller stores, offering the new buzz words for food, organic and natural, with convenient neighborhood locations. After a short walk, I can fry my peanut butter and banana sandwiches in organic grape seed oil. Life is good.

By Diane Gerdes