Sep. 30, 2008 - Bank Rescue Plan Defeated: What's Next?

Lawmakers are expected to continue negotiations after the U.S. House of Representatives' surprise defeat yesterday of a $700 billion rescue plan, which sent shockwaves through Wall Street.

"What happened today was not a failure of a bill, it was a failure of will," said Banking Committee Chairman Chris Dodd, D-Conn. "Our hope is that cooler heads will prevail, people will think about what they did today and recognize that this is not just scare tactics, it's reality."

Here’s what could happen next:

• The bailout plan could get revived when Senate leaders reconvene on Wednesday. Senate leaders who backed the plan could debate it, which would then give a nudge to the House when it returns to Washington on Thursday.

• The proposed rescue plan by Treasury Secretary Henry Paulson and Federal Reserve Chairman Ben Bernanke could be abandoned altogether and a bill that has more Republican support could be proposed instead—although this is viewed as unlikely.

• The existing plan may be tweaked and include more lawmakers from one of the parties to garner greater bipartisan support. For example, proponents will aim to sway moderate Republicans who would be likely to flip after winning some concessions on the legislation. Also, Republicans in California and the Southwest could feel pressure to back the government's rescue plan since their residents are particularly facing a slumping housing market.

Source: Reuters, Patrick Rucker (09/29/08)
 

Sep. 17, 2008 - Credit-Worthy Buyers See Tighter Lending

Interest rates are lower and existing-home prices have fallen dramatically in many areas. Now what the market needs are willing buyers who can find financing.

About 75 percent of U.S. banks tightened standards on mortgage lending to the most credit-worthy borrowers in the three months ended in July, according to the Federal Reserve's quarterly Senior Loan Officer Survey.

"Tighter standards assure the loans are less likely to fail, but also have had the unfortunate effect of limiting the ability of some first-time home buyers to enter the market,'' says Sara Tinsley Demarest, spokeswoman for the Washington-based Mortgage Bankers Association.

"Nobody really wants to take risk anymore. Deals are getting really hard to do now,” says Suzanne Bach, senior vice president of New York-based Guardhill Financial Corp., and an 18-year home lending veteran.

Source: Bloomberg, Sharon L. Lynch (09/16.2008)
 

Sep. 10, 2008 - Buyers Crave Green More Than Extra Space

Buyers of custom homes are increasingly interested in money-saving features like extra insulation and energy-efficient furnaces, rather than game rooms and space for in-laws, according to a Home Design Trend Survey by the American Institute of Architects.

Sixty-eight percent of the survey's respondents said customers were requesting extra insulation in the attic compared with 56 percent a year ago.

Two-thirds of respondents said green products such as tankless water heaters, double or triple-glazed windows, and sustainable flooring products such as bamboo or cork were gaining in popularity.

Only 8 percent of the survey’s respondents said game rooms were increasingly popular among their customers, down from 23 percent last year. Home offices also declined in popularity even though they remain the most requested specialty room. Last year, 61 percent of custom home buyers wanted them; this year only 41 percent made the request.
 

Sep. 2, 2008 - End in Sight for Seller-Funded Down Payments

Prospective homeowners have until Oct. 1, 2008, to use down payment assistance from a seller to purchase a house.

The Housing and Economic Recovery Act of 2008 signed into law in July bars such seller-funded aid on Federal Housing Administration-backed mortgages.

Lawmakers added the provision to the housing relief package because about 40 percent of FHA borrowers who went into foreclosure in the past year received down payment assistance from a seller.

However, some industry professionals are worried that the rule change will keep some buyers out of the market.

Scott Syphax, president of The Nehemiah Corp., which runs a privately funded down payment assistance program, cites a report by housing research firm Zelman & Associates.

The report found that 10 to 25 percent of potential home buyers will have no way of securing home ownership without seller-funded down payment assistance, and stated that the rule change will have far-reaching implications for the real estate industry at large.

Source: Augusta Chronicle (GA), Tim Rausch (09/02/08)