Is there actually hope for the future of the real estate industry, REALTORS(R), mortgage professionals, and specifically appraisers, with H.R. Bill 3044?  Implemented early this year (2009), HVCC (Home Valuation Code of Conduct) has already proven to have thrown a screw into the "mix", and, in the opinion of numerous real estate specialists, still cannot totally prevent wrongdoers from continuing to cheat, when and where they can, and will CERTAINLY not [positively] serve home buyers and sellers who rely on the most accurate valuation of [local] real estate properties.

If you are a real estate professional, mortgage broker, investor, or consumer, it is important to educate yourself about the changes made to home valuation (appraisal) methods and procedures, pertaining to HVCC. Although codes of conduct, reliability, and responsible professionalism are always important components in the home buying/selling process, even as we have learned of certain wrongdoings and illegal acts that existed in the past, HVCC has created unnecessary "middle man" interferences. 

The "middle man", a.k.a. asset management companies (AMCs) are currently seen by some regulators to be necessary and mandatory components in the residential appraisal process. Many more see it as inevitable increased costs for consumers, decreased income for qualified appraisers, and inadequate and incorrect residential home appraisals (valuations), which ultimately affect all of us...mainly consumers.

Anytime additional entities are added to a mix, we will see increased costs for everyone involved, creating even more economic burden on businesses and consumers alike. HVCC is creating significantly increased costs for home buyers and sellers, has equally and negatively affected the income base of thousands of appraisers (business entities) across our nation, and, at the same time, is "padding the pockets" of AMCs. We are all aware of what happens when businesses show deflated profits...consumers make up for it! 

In addition, while many of us have heard that "real estate is local", certain restrictions regarding HVCC and "middle man" interference can cause [bogus] inflated values of home prices in certain areas (markets), and could possibly be devaluing prices of homes in your own neighborhood...even YOUR own home! This can definitely happen when AMCs hire (commission) appraisers located in one region of the country to offer valuations (opinions) of properties that are located in totally unfamiliar markets. Doesn't it make sense, that it's usually best to hire real estate professionals who are legitimately and directly familiar with current market conditions in, or around, your area?

Could it be possible that those responsible for recent changes in the appraisal environment are trying to level out home values across the nation, in order to do away with differing market bases? Hmmm! As real estate professionals, we may be called upon to voice our opinions relating to the subject of the moratorium that H.R. 3044 proposes, as well as the future of the home valuation process. Please be ready to offer your support when, where and how you can! The future of homeownership depends on us!

Enjoy your day!

FED LOWERS INTEREST RATES (FEB '08)...WHAT NEXT, BEN?

Okay. So Mr. Bernanke lowered interest rates, again, in an attempt to prevent a U.S. recession. Now what?

Many banks are still in trouble, homeowners are still foreclosing, a great deal of rental properties sit empty, and many people I know can't afford hardly anything, or so it seems in Ohio, as well as other states.

Restaurant biz is being touted as "booming" in some larger cities, such as Cincinnati, as reported at http://news.enquirer.com/apps/pbcs.dll/article?AID=/20080203/CINCI/302030004 (Feb. 17, 2008), although the Cincinnati Enquirer (online) reports condo sales and development on the riverfront is hurting. http://DaytonDailyNews.com reports, almost daily, that more and more restaurants are closing their doors. Celina~Grand Lake St. Marys has seen two new ones open recently, and one is about to open shortly. Two of those are Mexican restaurants. Go figure. To be fair...one is a "fast food, walk-up, sit-down" restaurant, that has a bar, but no liquor license, to date. It is owned by a local, of German descent, I believe.

I don't mean to sound unappreciative, but President Bush's attempt to put a Band-Aid on the wounds of some 111 million households with his generous $300-$600 (higher, if dependents are in the home) just doesn't sound to me like we'll be seeing much of a boost in the overall economy...and I'm talking about lower and middle-class spending. The majority of folks are bailing out of so much credit debt, 300 bucks will likely only prove to be one trip to Wal-mart for most.

Expect more reductions in rates over the next several months, although you should also expect this slump...regardless of what candidate actually ends up in the Big House next January...is going to hang around for some time to come. (See previous post below-"FED LOWERS BANK LOAN RATE"-that I wrote several months ago.) It is being predicted by some economic experts that the real estate market should begin to recover within 3-5 years.

Oh! I don't want to forget...in President Bush's stimulus package, it was proposed that loan value amounts be raised by a little more than $312K, from $417K to $729,750, in order to help the largest metropolitan area homeowners with larger mortgages and refinancing in areas of high-price markets. That oughta' help us out a bunch, or maybe not. Could it be that we could see more of the same issues we got ourselves into in recent years with 100% mortgages, when those homeowners become victims of foreclosure...just delayed a bit longer?

So...back to my original question..."What next?", Mr. Bernanke.


FINALLY!!!!! Fed Lowers Key Rate (Follow-up)

FED LOWERS KEY BANK RATE In an attempt to prevent (?) a housing slump (eh-hem...) and recession, the Fed has lowered the key bank rate 1/2 percent! Hurrah! It has been more than 4 years since we saw the last reduction, which has remained at 5.25, and is now (thankfully) back down to 4.75. Perhaps more of you will now be able to afford a home mortgage loan. Beware, though. Make certain your bank has adjusted their rates in the right direction. Banks do not always lower their rate, just because the Fed has changed the key interest rate. In recent months, consumers have found how difficult it can be to get accepted for a loan. Not surpisingly, due to the foul-ups of the sub-prime lenders past, there have been many banking institutions that have gone bust, because they couldn't afford the losses from all the foreclosures. They now hold company with many of the homeowners who experienced the rath of foreclosure on their homes. If you find your bank is not lowering their interest rates, shop around! Don't keep paying those higher rates. Your own neighborhood bank or savings and loan company is the place I'd advise that you check first. They normally have lower rates for locals, and many retain the loans in-house, instead of selling them to secondary mortgage/service companies.  Whatever you decide, be careful. Be sensible. If you feel the time is right to purchase a new home, car, or whatever...make certain you don't take on too much debt. We should want to rebuild the economy with our purchases, but we don't need more of what we've seen in recent years.

FED LOWERS BANK LOAN RATE

Real estate professionals, surviving mortgage banks, investors, far too many foreclosure victims, not to mention the general buying public, have been dealing with so many negative economic conditions, of late. Many of which were created primarily by higher interest rates and sub-prime home loan lenders, whose lax practices and procedures created havoc on so many levels (i.e., a major squeeze on the current housing market). Brace yourselves…it will continue to affect us all for some time to come.

There have been significant adjustments and restructuring of the mortgage loan market, specifically the manner in which loans are processed. Fannie Mae and Freddie Mac, under the guises of the government, have been reestablishing means and methods for making home loans available to creditworthy consumers. Yet, those with poorer credit histories, who less than a year ago, could have received funds so easily, are virtually frozen in their tracks. Well, the Fed has finally noticed that the housing market is struggling to a significant degree, and volatility in other financial markets.

It took the almighty stock market falling steadily over the last couple of weeks, with the Dow dropping from an all-time volume high of 14,000 to back below 13,000, to prompt the Fed, with fears of inflation, to get off the pot and do something. The key discount rate is lower by 1/2 percent, to 5.75 percent from 6.75.

Although this is a [slight] move in the right direction towards economic recovery, one must note that the key discount rate only affects what the Fed charges banks for their loans. It provides more liquidity for struggling banks. It does not affect mortgage loan rates and other credit rates consumers . Consumers and businesses feel their pinch from a higher federal funds rate, which determines what banks charge each other, and the one the Fed has yet to moderate. The federal funds rate has remained at 5.25 percent for over a year. It is what creates consumer confidence and spending. When Greenspan was in, and recognized weakened economic conditions, the rate was set at historic lows, and consumer confidence increased, as we experienced 2-3 years ago.

Okay. Let us say you are the head honcho of the Federal Reserve, and the following has been happening around you for months…actually, for more than a year. What, when, how, and to what extent do you do something to correct the situation?

A major part of the overall scenario is, even though the stock market hit an all-time high, last month-meaning there are some seriously wealthy individuals somewhere on Earth-far too many average consumers are struggling with increasing adjustable rate mortgages and doubled credit card payments, increased property taxes, higher gasoline and utility bills, and so many other financial burdens.

Scores of people, with dreams of homeownership, cannot get mortgage loan funding (federal funds rate based). The fact that mortgage loans have become more difficult for people to obtain, means that many will have to throw money away as rent payments, or hit the skids. There will be less chance to build equity from home ownership.

We must also consider whether countless individuals will lose jobs, if they have not already, due to increased burdens on personal finances. High unemployment rates systematically strain the economy.

Consider also, with the loose lending practices of the past few years causing floods of foreclosures and increases in bankruptcies, we are likely going to experience an increase in homeless within our communities. Of course, the government (i.e., our taxes-emergency funds, Social Security, grant monies, etc.) will be required, to some degree, to provide food, clothing, shelter, medical care, education, etc., to many of those individuals and/or families.

Has anybody, except me, noticed the timeline in which our economy took such a downward turn? Negative changes have developed just over the last year and a half.

How long did they say this new guy [Bernanke] would be head honcho?

Alan Greenspan, where are you?

Feel free to post your comments about this subject.