Hello I no sooner finish writing a letter to my local Congressman and I got your flipping update, thank you . I wonder if you could put this on your webpage and just see if it will start some brain storming from people like us in the industry. I have talked with thsi Congressman’s staff after a prior letter or two and they thanked me and agreed , but you know how that goes . Here is my letter from today to him:
Hello Joseph

I have written before and spoke with one of your staff in regards to the present economy in relation to my career and my knowledge lending and what is happening in the real estate market . I would like to stress again that the real estate market is what is going to have to change to get us out of this terrible recession. It is my opinion after lending for over 20 years via conventional and government programs that we need to stop the value of homes from decreasing . It will not become popular to buy a home again until prices have bottomed out , and when that would be is unknown with the present course of action we are using . We got lucky this round of ARM adjustments due to the LIBOR rate , but we still we see more and more foreclosures coming into the marketplace in the future and the prior foreclosures sit unsold. How can we address the inventory and supply issue ? I have a very simple way to attack it that has been over looked .
1. Offer the tax credit only if a home is purchased that was in foreclosure and increase it to $10,000.
2. Do not limit it to first time buyers , that is like trying to increase sales in a store and limiting a coupon to customers over 6 feet .It defeats the purpose of the credit , that is to get us back on track and dispose of too much inventory.Somehow the present system is to reward first time buyers ? Who did the marketing on that ? We need to encourage all to buy homes including developers and builders.
3. Would you have a problem if someone buys a home with cash and fixes it up for profit ? Well Joe our system does they call it flipping . That flipping policy came into place over a paranoid guideline that basically happened because a few bad lenders and appraisers worked up and scammed the system. The HUD based the whole system on a few ill minded criminals as if everyone buying a home that was in need of work , and making the community a better place by fixing it up a criminal . Lets face it with the new HVCC law it would be much tougher for a criminal to do that. We should encourage investors to buy foreclosures and fix them up , instead they sit and bring down the economy and are in need of work . We are looking at the problem it is right in front of us yet we do nothing. We act like time is the cure , sometimes that is but not when the cancer of too much inventory is in our future with more to come. When this happens change must be made or time will only work against us.
4. Allow the funds ( tax credit) to be available for that purchase via being wired into the closing or attorney’s office holding the closing prior to closing. If for what ever reason the closing does not take place it is simply shipped back to the IRS. This also removes the man power needed to issue the credit at a later date. We could even design it by the size of the transaction not just a flat 8,000 or 10 % of the price , this could save tax payers money in the long run.
5. We still need to do a government subsidized rate as I mentioned in previous emails so that the rate for all FHA and Conventional mortgages is at 4 % or below . We have only used about 457 million of the 1.27 trillion available to buy MBS bonds , lets use that money to subsidize the rate instead, it could go much further that way and have less ramifications on the federal budget and inflation in the long run. We could attach recapture of the funds if the home is sold and it increases in value , and after a certain amount of years. If that home owners are over age 65 when the sale takes place the recapture is waived or if income or health issues are present then of course the recapture would be forgiven. I can promise you that when I speak with Realtors the majority are very slow , the tax credit was set up backwards. HUD did come out with a mortgagee letter 2009-15 for FHA trying to address the credit before the closing but that was withdrawn and it was set up so that it was not fair to all lenders to participate . The mortgagee letter said you had to go to a non profit well not all lenders partisipate with non profits ( LHOP charges a fee of around 4,500 a year ro be a partisipant) . the way to address is as I said in my first statment , wire it to closing via the IRS direct. I truly wish congress would speak to hard working dedicated loan officers and come up with a solution , we are the few that know what is happening in the real estate market and home buyers mind and have some solutions . I again would like to offer any help you would want and if you have any questions please do not hesitate.

Thank you