Bufford Warren Homes

The Stimulus Bill and Home Financing

 

The Stimulus Bill and Home Financing
In the pending legislation there is and $8,000 tax credit for home buyers. This credit is for people that purchase a home between January 1, 2009 to December 1, 2009. And if the home is resold within 3 years the credit must be recaptured on the sale of the property, but if it is held for more than 3 years it is nonrefundable.
Fannie May and Freddie Mac have adopted the same loan limits for 2009 as those for 2008. For Arizona the Maximum limit on a FHA mortgage is $417,000. There is also money appropriated for cities and counties to use for neighborhood stabilization and redevelopment.
This will not be enough to address the root cause of our economic problems that were created by the mortgage finance and housing industries.

What Stimulus Bill is Our Representative Voting On ???

Have all of the Democrats turned stupid? How can anyone vote for a piece of legislation when they have not had the time to read it and study it? This 800 Billion dollar bill (stimulus package) was not even printed until the evening of February 13, 2009 and I will defy anyone to read it and comprehend its meaning without having a few days to study. Yet the House of Representatives has rushed a vote on this early morning on February 13, 2009 and the Senate has scheduled a vote for February 14, 2009.

This kind of political activity is very self serving and is not in the best interest of the country.

Help For Main Street That Will Help Wall Street

Our government has invested a great deal of money in Freddie Mac and Fannie May and I believe that this investment should give us the ability to shape policy. We, the government, are essentially guarantying all the loans under these two entities. By putting pressure on the Federal Reserve to lower the interest rates on FHA mortgages. I suggest that the interest rate on a home purchased with a Thirty Year Fixed rate FHA mortgage that is owner occupied to be lowered to 4%. This will translate into a payment on a $200,000 mortgage to be $955 monthly, an affordable amount for most. I also suggest that second home buyers and investors be offered the same rate but have to put down a minimum of 10%. This will bring buyers back into the market, stabilize prices and absorb the inventory. There should be a sunset clause on this type agenda, possibly eighteen to twenty four months.

In addition you might consider allowing people that are upside down in their homes to refinance 125% of the present market value at the same rate. This should only be made available to those that the lenders agree to cooperate by rewriting the mortgage to the lower amount. I believe that this would be very attractive and be doable for many of the people in this situation. The lenders involved would need to have some future obligation for the 25% in excess of market value in case of a future foreclosure on the same property. This would also accomplish two things. It would allow many people to stay in their homes and the mortgage holders would lose less money than they would by going through the foreclosure process.

In addition to the above I suggest that these loans be assumable after the lender qualifies the prospective buyer for credit worthiness and only after the mortgage has been active for a minimum of one year. I believe that this and the low interest rate will eliminate most foreclosures.

 

 

 

An Idea To Jump Start Our Economy

We in America are experiencing a very depressed economy as a result of mismanagement of our credit markets. This has started a domino effect that has spread throughout the business world. I have stated in the past that in order to get markets and business back on track we need to address the issue of the excess inventory in housing and this I still believe.

Banks have now got to the point where they are refusing to loan money. I and many others have been under the impression that the reason banks were not lending money was that they did not have the money to loan. I no longer believe this to be the case. The Feds have lowered the discount rate to levels that have not been available for decades and the treasury has made a lot of capital available. We need an answer to this problem before business can again start providing goods and services. I do not believe in big government but there are times that their power should be used for the good of all. If the banks do not want to do the job that the business world needs to survive we may need to put them into a situation where they either perform or be nationalized.

Our government has invested a great deal of money in Freddie Mac and Fannie May and I believe that this investment should give us the ability to shape policy. We are essentially guarantying all the loans under these two entities. I suggest that this position be used to dictate that the interest rate on a Thirty Year Fixed rate FHA mortgage at 4%. This would calculate a monthly payment on a $200,000 mortgage to be $955; an affordable payment for most households. I also suggest that second home buyers and investors be offered the same rate but have to put down a minimum of 10%. This will bring buyers back into the market and absorb the inventory of homes in most parts of the country.

 

 

Does Obamas Plan Change Our Government For The Better ???

The social engineering that Mr. Obama has planned for this country's future scares the heck out of me. When you study his plan, his past actions and listen to what he says, it tells me that he wishes our government to emulate many of the countries in Europe.

I am a Senior Citizen that has worked all my life and I am still working full time because my retirement income will not stretch far enough to provide for those to whom I am responsible. I see some tough days ahead for me and my family but I do not want this country to become another Sweden.

The Social Democratic Party that controls the Swedish government has instilled a cradle to grave existence but at a very big price to its citizens. The Health Care industry is the country leaves much to be desired. A relative of my wife needed an operation on her feet. She was on a waiting list for 18 months, (Socialize Medicine). An uncle needed a gall bladder operation and elected to go out of country for the surgery. He worked in the USA for many years and could afford the flight for better medical care.

Taxes on income in Sweden range from 28% to 59.5%. But what most people outside the country do not know is they also have a Value Added Tax (VAT). The value added tax (mervärdesskatt or moms) rate in Sweden is 25%, with exceptions for food and services like hotel room rental fees (12%), and for sales of publications, admission tickets to cultural events and travel within Sweden (6%)^[1]. This tax in addition to the price of the product has made many products unaffordable. The result of VAT is a very thriving black market industry for many products.

Legacy of the Time Democrats Controlled All Three Branches of Government

In 1977 President Jimmy Carter signed into law the Community Reinvestment Act which pushed Fannie and Freddie to aggressively seek loan for minorities. In 1993 President Clinton rewrote the rules for Fannie and Freddie. When these rules were re-written Fannie and Freddie went from quasi-private firms into semi-nationalized ones that monopolized the mortgage industry. The Democratic controlled congress made loans to large Democratic voting blocs that handed out the money for favors and jobs.

In 1995 President Clinton had the Treasury Department to rewrite the rules for the Community Reinvestment Act and banks were given strict new numerical quotas and measures for the level of diversity in their loan portfolios. Banks then sought after a good CRA rating which made them more attractive for a takeover or a merger.

Between 1997 and 2001 Andrew Cuomo, Clinton's Secretary of Housing, made a series of decisions that allowed Fannie and Freddie to leverage capital to just 2.5% versus 10% for banks. They were also allowed to get into the subprime market. Under the new guidelines Fannie and Freddie exploded and with their incentives banks made billions of dollars of loans in less fortunate areas which boosted minority home ownership but lead to many of these loans going bad.

We are now at the same crossroads where our financial mess started 30 years ago. That was the last time that we had all three branches of our government controlled by the Democrats. The legacy of the very left Carter administration was the loss of our staunchest ally in the Middle East (Iran) which was replaced with a devout enemy and a financial crises not experienced since the Great Depression and is directly related to decisions they made for Freddie and Fannie and then were further promoted by the Clinton Administration.

An Idea For Addressing The Housing and Mortgage Problem

Most people have now accepted the fact that mismanagement in the housing and home mortgage markets created the economic situation that we are in today and for an economic recovery to occur these market problems must be addressed.

I am a conservative and believe that government should not be involved in private industry. That being said there are times when government interference and influence is needed.

Fannie and Freddie are now controlled by our government and the government now has the power to influence policy. I propose that through Freddie and Fannie the FHS interest rate on a 30 year fixed rate mortgage for an owner occupied home be reduced to 4.5 %. I further suggest that second home buyers and investors be allowed to purchase under the same plan but their down payment would be 10% for a 30 year fixed.

If this plan were to be adopted I believe that we would bring the buyers back into the market, home values would stabilize and the excess inventory absorbed.

Comments to The AZ Congressional Members

Sent to the AZ Congressional Members 10/02/08

 

After reading the Senate Rescue Bill that is to be voted on by the house I have a few questions. As a Small business person that depends on the real estate market in the state of Arizona I was wondering, how do I get my name on the list to receive one of these absolutely necessary grants? I am sure that the AZ. housing market needs more investigating and I know I could be of great service. I feel that I have been contributing to this kind of pork for many years and I would just like to know, how I can get my piece of the action.

Bufford Warren—Broker

Metro West Realty

Phoenix, AZ

Will this bail out help our economy or further delay its recovery?

Much is being written and said about the $700 Billion dollar bail out of our financial institutions. It is said that to let them fail will possibly cause a global economic meltdown. I am not so sure of this. Sure a few will fail but others will replace them and the industry will be stronger. After thinking about this for a few days I find myself wondering why we are going to the rescue of the very entities that helped create the mess we are in. The loose guidelines that the mortgage industry used created the investor driven housing boom. When property values started to fall, due to the overbuild, most of the investors had already made their money and pulled out of the market. This left the mortgage lenders that created this, by their loose lending practices, and the homeowner holding the bag. This scenario is no different than that of any other business or individuals that make bad decisions and has to pay the price. I do not believe a bailout is the answer. Let these people suffer the results of their bad decisions.

After this bail out will you be able to purchase a home or car and have a reasonable interest rate on a loan? Will your job be saved? Our economy is stagnant; will it encourage business to invest and create jobs? Just what is that $700 Billion Dollars going to do for us, the everyday working Jane & Joe? Is it going to create new jobs? I don't see how. Will my bank close, possibly? Will gas for my car cost less, probably not? The dollar will take a beating against other currencies and oil will go up on the global market.

If our government is going to spend this kind of money I want it to create something. Would it not make more sense to take that $700 Billion and finance industries to make this country more energy independent? This would create badly needed jobs and kick start our economy and would go a long way toward healing our sick financial industry.

 

You and I Own an Insurance Company

Tuesday night I went to bed, after my usual no money involved poker game, and when I woke up on Wednesday morning I found that I along with my fellow Americans owned an insurance company. Now I really like the idea of being a business owner but what puzzles me is when do I get my dividend payment? In other words what do I get for my money?

AIG is the largest insurance company in the world; it does business in 134 countries. Under its umbrella are different kinds of insurance companies, investment companies, retirement fund accounts etc. It has invested in real estate and is one of the larger insurers of PMI insurance for homes. The basic cause of its problem is the loss of value in the real estate market. This company is huge and if it was allowed to go bankrupt the loss in jobs, retirement accounts and investor's accounts could very well devastate the global economy.

So what do I get for my money? By investing in this company we have allowed ourselves to possibly escape a complete melt down of the global economy and difficult times that have not been seen since the great depression of the 1930s. We in this country enjoy a life style and standard of living that is the envy of the world. To keep our financial resources and freedom of choice that we enjoy so much, we occasionally have to do those things that we find repugnant.