How much would yet expect the home buyer program would cost the government? If you had to put a number on it, do you think you could?

Well, some estimates are making their way around the internet now. One estimate from the Government Accountability Office pegs it at $22 billion.

Now, the way the original tax credit worked, back in 2008, allowed homeowners a tax break of $7,500. This needs to be paid back over 15 years beginning in 2011. So far $7.3 billion has been claimed.

The 2009 Recovery and Reinvestment Act expanded it to $8,000 which didn’t need to be repaid (assuming they stay in the home for 3 years). So far, that’s cost $12.1 billion.

Then over the summer the filing extension gave people another window the claim the credit. That added another $4.1 billion.

And nationwide it was California that claimed the most out of any state. But Nevada has the most claimed per resident, though both states have been pretty hard hit.

So this is the information Washington is going to have to consider when deciding whether to bring back the tax credit. It’ll be interesting to see which way they swing.

The Federal Reserve has been trying for over a month to put in place new rules to protect borrowers from deceptive mortgage practices. One of the most crucial is limitations on the compensation mortgage brokers and loan officers can receive.

Among the restrictions is a prohibition on double-charging for origination fees, and keeping them from higher compensation for poorer mortgage products.

A lot of the regulations remove the incentive for mortgage brokers to propose higher interest rates since that has typically meant a higher commission for them.

Moody’s claims that these new rules should be a much better protection for consumers and home owners than they’ve had until now. Also, it will increase competitiveness which will further drive down prices and promote fair practices.

It remains to be seen how things will actually play out. And most of these rules don’t go into effect until next year. But some of the implications of these moves should be felt sooner.

Washington has decided to get moving helping those homeowners who owe more on their mortgages than their homes are worth. The FHA will issue them a new loan with new terms and the existing lien holder will drop 10 percent of the unpaid principal.

This is projected to help half a million to one and a half million homeowners. But they don’t expect that many people to actually enroll in the program. No surprise there, right? I’d expect most people wouldn’t jump at the chance to put their faith in the government.

Nationwide there are about 11 million people with negative equity. That’s about 23% of residential property.

We’ll keep our eyes on this and watch not just how it works out for those who sign up, but also for those who don’t.

People often tell me that when they were in college they assumed owning a home was something they would only do much later in life. The goal of being a home-owner was something to dream about one day being, but not something to actually consider achievable.

Well I’m here to tell you that it is 100% completely achievable and can be easier than you think. I just read a great article by an actual college student (of really modest means) who did it and is much better of because of it.

She didn’t come in with money or experience. She didn’t have some magic beans fall into her lap. She just paid attention to her situation and took a chance. That’s a lesson a lot of us need to learn. Making the most of your situation doesn’t take luck or fate. It just means opening your eyes and seeing what’s already there.

So in this young woman’s case, she realized that housing prices in her area were dirt cheap. She figured out that she could get a killer house for less than half of what it had been selling for just a few years earlier.

So what did she do? She decided she would become a homeowner and rent out a condo to tenants. And which tenants? Her roommates, of course!

Essentially, this enterprising young lady had saved enough for her 20% down payment on a nice 3 bedroom near the beach. She got her parents to take out a mortgage on the rest and worked out a repayment schedule she could meet.

Then she and her existing roommates moved into the apartment and they started paying rent to her! Seems like an incredible situation. But just think about how simple it was. All it took was for this woman to see an opportunity and go for it. (Having cooperative parents also helps, right?)

So that’s what I want you to walk away from today’s post with. Don’t be afraid to read a situation and move on it. You can find great deals if you just take a chance and look around you.

How bad is it for you when you live in a ghost town? Drives down property value, doesn’t it?

Well, Washington thinks America’s cities are turning barren, with empty homes standing on every block.

And maybe they’re right!

Between bank-owned homes and unoccupied foreclosures (and the depression and crime that come with them) some neighborhoods across the country are watching property values tumble. And lawmakers aren’t even sure what to do about it!

The number of potential buyers out there just can’t keep up with the ridiculously high availability, and banks can’t sell to just anyone since that’s what got us into this mess in the first place.

HUD, the Federal Reserve, and top mortgage lenders all met in Washington this week to try and confront the problem head on. (Kind of refreshing isn’t it?)

The first possible solution is to not open these abandoned properties up for private buyers right away. Instead, they want to give governments and non-profit organizations first crack. This, they’re hoping, will give responsible owners time to renovate or possible even demolish neglected properties and ultimately contribute to improved home values.

I’m not sure that the picture they paint is as rosy as it seems. It’s entirely possible that this will just cause the government to throw more money down the drain of the housing recovery. And who knows where the corruption is going to come in, but someone’s going to find it.

So what do you think? Leave a comment and tell me if you think Washington and the banks are finally headed in the right direction.

Whoops! Experts in the real estate field really slipped up on this one. Since the expiration of the homebuyer tax credit, pending home sales have been in a steady decline.

But the latest numbers from July show that the NAR’s Pending Home Sales Index increased 5.2% from the previous month. The news really caught them off guard.

So where do these numbers leave us?

On the one hand, the recovery promises to be a long and slow process. Lots of homes are on the market, but buying has been slow (though Obama is considering restarting the tax credit).

Yet these numbers indicate that buying can pick up even without incentives. It could be the home affordability news (which I told you about earlier this week) which is prompting buying to increase. But it’s not clear yet how long these numbers can be sustained.

And no one is really getting too worked up over the numbers. Economists across the board are trying to put the current increase in perspective.

- Home sales are still down double digits from previous years.

- Economic conditions haven’t improved enough to really impact the recovery.

- Processing delays mean the impact of any sales won’t be felt for several months.

So while no one should be predicting doom and gloom anymore, since you never know what’s going to happen, a healthy balance in between is probably best.

Home appraisals are often the most stressful part of any home sale. You never know if your home is worth what you’re hoping to get for it. You never know if the appraiser is incompetent or even corrupt.

Fannie Mae is trying to make a change. From now on, lenders that sell loans to the GSE won’t be allowed to make changes to the appraisers’ valuations. This practice is known as “appraisal cutting” and is now banned.

The problem was, essentially, that banks were afraid of risk for several reasons and so tried to devalue the properties. Now, if a lender wants to change an appraisal, they have to go back and get the original appraiser to do it.

The lender can no longer revalue the property on a whim. The process will be much more rigid than it has been until now. Lenders can’t simply decide that they won’t take the risk on such a large loan. If the house is worth the money in the appraiser’s opinion, then that’s the end of the story.

So suddenly Fannie Mae is the public protector. They’ve taken on the Superman role, looking out for borrowers and keeping the “evil” banks out of our hair.

Seems like a sharp turn-around for Fannie Mae don’t you think? I’m not sure they don’t have a hidden agenda somewhere, but for now we’ll watch how this law plays out with banks.

Let me know what experiences you come across when doing appraisals. Together we should be able to find any holes in the plan, if they’re there.

Duck! Your bank is falling!

A few years ago, that would have sounded as absurd as “The sky is falling!”

But that was a few years ago and we live in different times now. You’ve actually got to suspect that your bank might be falling. And suspect it early enough to get out while you can and save yourself lots of hassle.

Now I don’t know if your bank made the list, but 829 banks are currently on the “Problem list” (kind of like the naughty-or-nice list, but scarier). You might ask yourself why. You might want to know what your little, local, leisurely bank could have done to warrant being put on the “Problem list.”

And yet some of you might count yourselves lucky. In just the second quarter of this year, 45 banks actually failed. That makes 118 for the year. And the FDIC won’t release the names of the shaky banks because the news might be self-fulfilling.

The FDIC itself is worried because the failed banks have severely drained their funds. Just 4 months ago, 3 large banks in Puerto Rico failed, pulling resources away from the FDIC.

So you see it’s extremely important for them to know which banks are in trouble. They’ve got to budget for these things the same way everyone else does. And they have some hope that even these troubled banks can pull themselves up. The banking industry as a whole pulled in a $21.6 billion profit last quarter. And 2/3 of all banks actually look better now than they did 6 months ago.

But what the future holds for your local bank, the big multi-national banks, and the state of the economy, can’t be predicted all that well. We’ll need to keep our eyes and ears open to get a sense of what’s to come. So keep reading my blog for everything you need to know.

How long do you think it’ll be until demand for homes outstrips supply? Half a year? 1 year? If your friends have been telling you the recession is over, tell them this.

The balance won’t be restored until 2012!

That means prices won’t be going up any time soon either. With all of the foreclosures flooding the market (due to lots of failed loan mods, ahem!) there are way more properties to choose from than there are buyers for them.

There are 1.8 million more homes for sale right now than is usual for this time of year. So where are all these properties going to go? And why isn’t the demand there? I mean, if prices are so low, why aren’t buyers flocking?

It probably a combination of pretty obvious factors such as:

- a weak job market
- tighter underwriting standards
- stricter lending restrictions

This means it’s often not worth the risk and hassle trying to go after the perfect deal.

Luckily (except for the builders union) the pace of housing starts has slowed, so that shouldn’t contribute significantly to the housing excess.

But don’t give up hope! The right house might come along, and if you work hard, you can make everything line up in your favor. Find someone who knows the lay of the land to hunt down the right deal for you. And it’s gotta be someone who knows how to navigate the banks. Can you think of anyone?

The evidence so far clearly shows that the surge in home sales in the first 2 quarters was completely due to the tax credit. So the slow down over the summer shouldn’t have come as a surprise to anyone.

Well, except the government. Apparently this took them completely by surprise.

The Obama administration is thinking of bringing it back. Before we discuss whether this is wise or not, let’s just review the numbers briefly.

The NAR reported that sales of previously owned homes went down 27% in July. New home sales are down 13%.

Now remember that the numbers in June were up because of the tax credit. So of course we’d expect to see a dip in July. No surprises there.

So did the tax credit do what it was supposed to? Was anyone hoping it would stimulate long term growth?

I certainly didn’t. So why should Obama be scrambling to get it reinstated?

HUD has claimed the July numbers are worse than they expected. I’m not sure why. It seems if everyone runs to cash in early, the first month out will be a steep decline.

I say we give it a few more months, get a steadier picture, and then make some tough choices.

What do you think?