Richard's Real Estate Thoughts: June 2010

UPDATE 6/30 Senator Reid released a statement the the tax credit extension passed, but the Senate vote roll does not show there was a vote. More details I guess in the morning.

The House has been busy trying to recover the Home Buyer Tax credit closing deadline extension. This time as a stand alone bill. It passed the House this afternoon, rather quickly after it failed to go through with larger Tax Extenders Bill.

Here is a summary of HR 5623, Homebuyers Assistance and Improvement Act of 2010.

I hate to say this, but I think passage is likely in the Senate, and maybe tomorrow. The Senate a couple weeks ago passed the extension amendment to the Tax Extenders Bill.

Maybe we can expect something fast tomorrow. The tax credit deadline is set to end tomorrow.

Reports are that 180,000 home buyers would miss out on the credit who would otherwise be qualified.

Of course this would not impact new home sales. The purchases that would benefit if the tax credit closing deadline is extended have already been contracted.

A similar effort was given to extend unemployment benefits. That effort did not pass.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

Chattanooga has a fairly active Sierra Club locally. It is active in community education outreach with monthly speakers. Last night the topic was alternative energy sources, focusing on bio fuels and ethanol.

The basic idea is to reduce dependence on oil sources from the Middle East. More drilling in the US will not change the fact that the vast majority of oil reserves are in the OPEC nations.

Energy alternatives such as wind, nuclear, tidal have little impact on oil dependence because the electric grid does not rely primarily on oil.

Transportation energy has to be the focus for impacting dependence on OPEC oil. Our choices are conservation, less driving, increasing efficiency, and oil alternatives.

The speaker was Doug Mizell. He is an entrepreneural advocate for waste reclamation and bio-fuels. His take is to use local agricultural and industrial waste to produce ethanol. He also wants to use our number 1 crop in the south - kudzu - as a feedstock for biofuel production.

Very interesting talk, very informative. The next presentation will be on Do It Yourself Solar. Meetings are held the last Monday of each month, at the Greenspaces office, 63 Main Street.

For more information visit the Chattanooga Sierra Club website.

 Today the White House and the Senate has begun discussions for a new energy bill. They have opened the discussion to a live chat, starting at 4pm. Here is the link to the live chat.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

Quicksprout is recognized as a top business blog. A recent post lists 15 warning signs that your business sucks.

Gotta love the author, Neil Patel's, subtlety. All of the points are excellent, as usual. I wanted to talk about a couple of the points that hit home with me.

1. Money decisions

This is actually a combination of two of the 15 points: a) being scrupulous with each penny and saving every dime, and b) knowing when to spend money.

It is tough to know when to invest and when to guard the wallet. I think basically it comes to a plan. Does the expense fit in the plan? Does the expense move the plan forward, increase the chances of the plan to succeed?

Is the plan actually working?

Do you even know if the plan is working? Can you monitor and track its success or failure?

2. Keep making the same mistakes

For goodness sake, have some imagination and creativity, at least make new mistakes.

3. You have not talked to a potential customer and customers are not talking about you

Again this is really two of the 15 points.

If you plan is not putting you in front of customers, then it is a bad plan. If your money spent is not putting you in front of customers, then it is bad money. If your time is not putting you in front of customers, then it is bad time.

The plan and the execution should have as its goal, for your customers to talk about you. This plan can include social marketing, but it should also include email, letters, phone, and face to face contact. Always we hear of systems to improve efficiency with customer retention.

If you are not infront of customers and they are not talking about you ... your plan is not good.

Good points all, but the three (or 5) I mentioned hit home for me. These points can give us all fair warning, not just those who own their business.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

Charlie Daniels Band highlighted the music for the final night of Riverbend 2010. The crowd loved every minute of the performance.

Charlie Daniels showed his talent on the guitar as well as the fiddle. I have listened to Charlie Daniels' songs on the radio for over 30 years. But I never realized and just how good a musician and how good a singer he truly is.

After that live performance, I am a Charlie Daniels fan.

Some video from Charlie Daniels.

The final night of Riverbend is about fireworks as much as it is about the final main stage performer. And the fireworks for Riverbend 2010 was fantastic.

Because the Chattanooga Riverbend Festival fireworks are better than Disney's and take a full 20 minutes, there are two videos. Both are worth the watch. Oh, and click the full screen view button.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

Forbes found that Chattanooga tops the list of places in which a home is a great investment, now, in today's market. A town "where people make enough money to buy good houses, where taxes are low and where prices were expected to rise."

Chattanooga was in third nationally, and first in the Southern Region. 

The ranking in each category for Chattanooga:

Population: 512,327
Home Price Affordability Rank: 34
Home Price Forecast Rank: 9
Homeowner Cost Affordability Rank: 3

Each city in the survey was ranked by the average of all three criteria.

Congratulations also to Julia Odom of Select Realty Professionals for having one of her home photos chosen for the article. Julia has an active and informative blog on real estate in Chattanooga, and also a very good photo blog on Chattanooga, Chattanooga Exposed.

For those keeping score, here is a summary of some of the recent honors and recognition for the Scenic City. Please let me know if I have missed any.

Best bang for the buck
Top Arts Destinations
Next 50 Great Towns
Top 10 Outdoors Cities
Third best city to live in 2008
Top Natural Wonders
Top Retirement Choice

Congratulations to everyone who helps make Chattanooga a great town, and no longer a secret!

The big financial reform bill is near passage as the House and Senate reconciliation conference announced agreement. The bigger issued that were worked out were on derivatives, bank regulations, and consumer protection.

UPDATE 6/29 - the provision to tax big banks was cited as a problem for passage. A new agreement was reached to remove the bank tax which was expected to bring in $19 billion in revenue. A partial replacement tax might be an increase in FDIC premiums. This would rais $3 billions, and share the cost with the smaller banks.

The consumer protection provisions contain most the mortgage related legislation, including some changes to HVCC and appraiser independence, risk retention, predatory lending.

Here is a Reuter's article with a cursory summary of major provisions.

Here is a summary of the Common Sense Mortgage Lending Reform and Consumer Protection summary from Speaker Pelosi.

There is a lot to review in this bill. A lot that addresses the consumer and the mortgage and housing market.

I will be eagerly looking at news and commentary over the weekend and next week.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

Today's cloture vote to end the filibuster on the Tax Extenders Bill has failed to pass. The Tax Extenders Bill includes provisions to extend the Home Buyer Tax Credit time to close eligible purchase contracts from June 30 to September 30 and to extend unemployment benefits.

Most reports indicate that this means the end of the efforts to extend the home buyer tax credit.

The flood insurance program extension had also been part of the Tax Extenders Bill. Earlier this week the House separated flood insurance so that flood insurance can be moved forward without the burden of the other provisions in the Tax Extenders bill. Click here see note for June 23 update.

Unemployment insurance, less directly related to housing, is a big part of this bill that will not be passed. With unemployment rising each week, and more devastatingly, long term unemployment a high levels - almost 7 million. The economy needs these families to be able to survive. Indications are that unemployment may be considered with upcoming legislation for small businesses, but it is possible that efforts to extend unemployment insurance coverage will not be continued.

(Update - Lane Bailey in a comment below provided this link to studies about the impact of extended unemployment on job searches.)

Rural Development Guarantee Program is suffering from inaction, as far as I can tell. Local Rural Develoment departments are issuing conditional guarantees, with a higher funding fee. This is in anticipation that Congress will soon refund the Guarantee program, but with higher funding fees.

Some lenders are accepting loans applications for Rural Development loans. We are still, at this time, offering USDA Rural Development home financing under the conditional guarantee. 

Congressional inaction on funding Rural Housing and on the Flood Insurance program is unforgiveable. Failure to pass the provision to extend the Home Buyer Tax credit closing date and unemployment insurance period is hurtful for millions.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

I saw this sign at a local restaurant in downtown Chattanooga. If anyone knows which restaurant, please post in comments. You will win!

I'm not sure exactly what point to make from the sign, and would love to hear comments about how you take it.

The restaurant is a gourmet hamburger place - very good hamburgers by the way.

But it is not fast. Hence the sign. One of the other signs was NFF - not fast food.

Of course the other signs in the picture point to the quality of the food, and actually the service is very good too.

• Is it picture perfect?
• Would you come back for what you are about to serve?

I really like the last question.

Would I come back to me, or refer someone to me, for what I am serving?

Does your loan officer serve what you expect? that would justify using them again?

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

The Get Motivated Seminar has announced it will be in Chattanooga on July 20, 2010. The speaker list is impressive, and I am excited to attend.

It happens all in one day - 8 AM to 5 PM - at the Chattanooga Convention Center Halls A-D.

Speakers for the Chattanooga "Get Motivated" Seminar

Knoxville will have the same seminar on July 21.

More information on the Chattanooga seminar here.

UPDATE on speakers and additional seating prices.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com

Udate 6/24/10 - It does not look good for passage of the tax credit as Republicans and Democrats fight over the bigger cost items in the Tax Extender Bill - vote expected today or Friday. Senator Reid indicates that the 60 votes required to call for the vote are notpresent. 

Update 6/23/10 - the House passed the flood insurance extension. Small miracle. It still must pass the Senate. They finally considered the flood extension separate from the Tax Extenders bill. Maybe they will do the same for unemployment and for the home buyer tax credit.

Here is a very good summary of the status of the proposed changes to the now famous Tax Extenders Bill - pulled from the Senate Finance Committee website. This summary lists the changes and the costs.

The most significant change is with the carried interest provision.

"Investment fund managers from paying taxes entirely at capital gains rates on investment management services income received as carried interest in an investment fund."

The Democrats' position was to retain this tax benefit. The change on the table would partially close the loophole and reduce the overall cost of the total bill by $13 billion.

A similar amount is saved with changes to the Medicare payments to doctors.

The Homebuyer Tax Credit extension is one of the listed provisions - back on page 3. At issue is how to pay for the entire package - estimated cost $140 billion, now with the reductions listed in the linked summary, reduced to $120 billion.

A reduction of $20 billion. Is this enough improvement to pass the bill? (Which then would return to the House for a reconciliation vote.)

Of that, the Homebuyer Tax Credit Extension is ....... $140 million.

The summary is tedious reading. And it is annoying to think that these arguments are holding up consideration of extending flood insurance, extending unemployment insurance, and extending the homebuyer tax credit.

The end result of these ongoing negotiations?

It is possible that a new vote will take place tomorrow.

UPDATE 6/17 - Senate vote today on HR4213 - Cloture not passed. Thune Amendment to waive budgetary discipline not passed. It looks unlikely that this bill in its present form will not go through. Maybe some of the pressing issues can be split off and passed separately - unemployment, flood, and home buyer tax credit extension come to my mind.

And the world waits expectantly.

Will these changes be enough to end the filibuster?

See my previous post  here.

FHA, VA, Rural Development, Conventional, Jumbo,
Reverse Mortgages, FHA 203k Renovation

Home financing in Tennessee and Georgia.

www.RichardSmithHomeLoans.com