Wheaton, IL

This is an outline of the major provisions in the recently past housing bill that is designed as a homeowner relief program that becomes effective October 1st, 2008:

I hope this document which I received from a Title Company that we use, helps better explain these major provisions in a well organized practical summary.

-Mark Kempe

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The Housing and Economic Recovery Act of 2008

A Practical Summary

On July 30, 2008, the Housing and Economic Recovery Act of 2008 was signed into law by President Bush. The 700-page housing bill is designed to help struggling homeowners avoid foreclosure and boost confidence in the housing market; however, the sheer amount of information contained in the bill is overwhelming.

To make it easier to discuss the Act with customers and to help you understand how the Act will impact your customer base , LandAmerica has created both a practical summary of some of the Act's major provisions and a summary of the products and services LandAmerica offers that may impact borrowers in the housing bill program. While the Act can be complex, some major provisions include:

Federal Housing Administration Modernization

What the legislation does: The legislation gives the Federal Housing Administration (FHA) greater flexibility to respond to the needs of borrowers, enables more working families to become home owners, provides a viable alternative to the volatile subprime market and allows the FHA to play an important role in stabilizing the mortgage markets. How?

• The maximum FHA-insured loan will be increased to 115 percent of an area's median home price, up to a maximum of $625,500, with a minimum down payment of 3.5 percent (up from 3.0 percent currently).

Foreclosure Relief (Hope for Homeowners Act of 2008)

What the legislation does: The legislation is estimated to help as many as 400,000 homeowners stay in their homes. How?

The legislation allows the FHA to guarantee up to $300 billion in refinance mortgages where current mortgage holders agree to accept partial payment so the outstanding principal on the new loan is more affordable for borrowers.

• Existing lenders would have to agree to take a substantial write-down to make the new loan affordable, and the new FHA lender would pay off the discounted existing mortgage.
• Only owner-occupied principal residences would be eligible. In exchange for new mortgages, homeowners will share future appreciation of their property with the FHA.
• Borrowers must also meet a payment burden test to determine if they can afford a new mortgage.
• Banks must agree to relinquish their existing claims in exchange for a payment equal to 85% of the current value of the home.
• The government would be liable if the borrower defaults and the amount recovered in foreclosure is less than the outstanding principal.
• The homeowner relief program begins October 1, 2008, and ends on September 30, 2011.

Mortgage Revenue Bonds

What the legislation does: Expanding this program helps strapped borrowers seeking to refinance their home loans. How?

• States will be provided new authority to issue an additional $11 billion in bonds to be used to refinance subprime loans, mortgages for first-time home buyers and multi-family rental housing.

Government Sponsored Enterprises (GSEs)

What the legislation does: The law creates a new, independent regulator called the Federal Housing Finance Agency (FHFA) to govern and reform government-sponsored enterprises (GSEs) Fannie Mae, Freddie Mac and the Federal Home Loan Banks. How?

• The Treasury Department has been granted temporary authority to purchase debt and equity of Fannie Mae and Freddie Mac through 2009. This is meant to provide financial stability for the mortgage giants. The regulator will have enhanced authority to raise capital standards and take corrective actions if the GSEs are undercapitalized. Since this agency will be funded through fees assessed upon the GSEs, these fees will likely be passed along to lenders.
• The legislation also permanently increases the maximum loan limit to $625,500 for Fannie Mae and Freddie Mac. This will help buyers seeking homes in high-priced markets such as California and the Northeast.
• The bill also creates a new affordable housing fund to be financed by the GSEs. The fund will be used to finance the construction, maintenance and preservation of affordable rental housing projects nationwide.

Tax Credits

What the legislation does:

Provides each new first-time homebuyer a tax credit equivalent to an interest-free loan of 10 percent of the purchase price of the home (up to $7,500) to be repaid over 15 years. How?

• It will be available through July 2009 for taxpayers who meet adjusted gross income levels. Rules relating to the Low Income Housing Tax Credit will be simplified, and states will see increased housing tax credit in 2008 and 2009 depending upon the size of the state.
• The legislation also allows for a new standard deduction for homeowners who do not itemize on their tax returns. For tax year 2008, taxpayers who do not itemize their deductions but pay property taxes will receive a $500 additional standard deduction ($1,000 for married couples).

Who is eligible to claim the $7,500 tax credit?

First-time home buyers purchasing any kind of home-new or resale-are eligible for the tax credit. To qualify for the tax credit, a home purchase must occur on or after April 9, 2008, and before July 1, 2009. For the purposes of the tax credit, the purchase date is the date when closing occurs.

What types of homes will qualify for the tax credit?

Any home purchased by an eligible first-time home buyer will qualify for the credit, provided that the home will be used as a principal residence and the buyer has not owned a home in the previous three years. This includes single-family detached homes and attached homes like townhouses and condominiums, as well as new homes constructed on lots already owned by the homebuyer.

Other Provisions in the Bill

Veterans: The bill lengthens the time a lender must wait before starting foreclosure after a soldier returns from service from three to nine months and also provides returning soldiers with one year of relief from increases in mortgage interest rates.

Disclosure Requirements: Enhances mortgage disclosure requirements to require lenders to inform borrowers of the maximum monthly payments possible under their loans.

Legal Services: Provides additional funding for housing counseling and legal services to distressed borrowers.

Community Development: $3.9 billion will be provided for emergency Community Development Block Grant money to purchase and clean up abandoned homes in areas blighted by foreclosures.

*Sources:

The United States Senate, The Library of Congress National Home Builders Association www.govtrack.com www.federalhousingtaxcredit.com www.hud.gov

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Community Bank - Wheaton/Glen Ellyn

Mark Kempe

Senior Mortgage Loan Consultant, Residential Mortgage Division

100 North Wheaton Avenue

Wheaton, IL 60187

Mobile: 630-668-9000

Direct: 630-784-4512/ Fax: 630-933-8674

E-Mail: mkempe@commbank-wge.com

In the table below lists all of the single family detached and single family attached homes currently on the market in Wheaton, IL The data lists available homes by price range with average time on market in each range.

Should you have an interest in homes in a selected price range, send me your physical characteristics requirements. I will send complete details on those homes that meet your criteria.

If you are contemplating a change in lifestyle, ie. a more luxurious home or the luxury of the amenities in a senior citizen development, I may be able to save you some money via discounts available to me.

Active Listings

List Price Range # Listings Avg. Days on Mkt Less than $149,999 18 159 $150,000 - $199,999 58 117 $200,000 - $249,999 35 179 $250,000 - $299,999 62 160 $300,000 - $349,999 52 173 $350,000 - $399,999 55 197 $400,000 - $449,999 42 131 $450,000 - $499,999 38 193 $500,000 - $549,999 26 188 $550,000 - $599,999 29 258 $600,000 - $699,999 26 232 $700,000 - $799,999 12 337 $800,000 - $899,999 14 287 $900,000 - $999,999 15 329 $1,000,000 - $1,999,999 48 259 $2,000,000 - $2,999,999 1 179

Active Listings Summary

# Units Avg. MT Median List Price Avg. List Price Max. List Price Min. List Price Total Volume 531 193 $397,900 $495,356 $2,349,000 $99,900 $263,034,147

Here is another example of how you can live in a place for years and not know everything about it. I am even more ashamed because this relates directly to my business. I was driving down Main Street, Wheaton today and a small sign caught my eye – DuPage Homeownership Center. So, I turned my car around and went inside to see what I was missing.

A nice man welcomed me inside and give me all sorts of information about their first time homebuyer’s program and educational classes. The mission of this nonprofit, charitable organization is “to increase accessibility to and preserve homeownership, with an emphasis on serving first-time homebuyers and low- and moderate- income persons.”

They offer two first time homeowner classes each month. The next one is on July 26, 2008 from 9am – 1pm at St. Raphael Catholic Church in Naperville. Reservations are required, so call 630-260-2500 to reserve your spot.

The DuPage Homeownership Center created the Homestead Program in 1992. This financial program allows buyers to pay less in interest charges so they can afford more house for their money. There are restrictions to enter this program, such as the home can not cost more than $275,000, you must be able to put 3% down and be up to date on all local, state and federal taxes.

The Center also offers help to people facing foreclosure. In the last five years, The DuPage Homeownership Center has help 75% of their clients avoid foreclosure. It’s good to know that there are organizations out there helping people achieve the American Dream of homeownership. And in our current economic climate, groups like this are needed now, more than ever.

The table below lists all of the single family detached and single family attached homes currently on the market in Wheaton, IL. The data lists available homes by price range with average time on market in each range.

Should you have an interest in homes in a selected price range, send me your physical characteristics requirements. I will send complete details on those homes that meet your criteria.

If you are contemplating a change in lifestyle, ie. a more luxurious home or the luxury of the amenities in a senior citizen development, I may be able to save you some money via discounts available to me.

Active Listings

List Price Range # Listings Avg. Days on Mkt Less than $149,999 11 156 $150,000 - $199,999 50 128 $200,000 - $249,999 39 132 $250,000 - $299,999 67 166 $300,000 - $349,999 56 186 $350,000 - $399,999 43 209 $400,000 - $449,999 40 168 $450,000 - $499,999 40 194 $500,000 - $549,999 30 215 $550,000 - $599,999 29 262 $600,000 - $699,999 29 188 $700,000 - $799,999 19 244 $800,000 - $899,999 13 375 $900,000 - $999,999 15 304 $1,000,000 - $1,999,999 53 268 $2,000,000 - $2,999,999 1 123

Active Listings Summary

# Units Avg. MT Median List Price Avg. List Price Max. List Price Min. List Price Total Volume 535 198 $407,317 $510,849 $2,349,000 $124,900 $273,304,063

I’m around people in social situations all the time – I have been to my fair share of baseball games, football equipment pickup, coffee houses and graduation parties lately. Inevitably, the subject of work crops up and the first thing people ask after I tell them I’m in real estate is, “How’s the market doing?”

Here are my general answers this month.

I have seen a great increase in buyers looking at my 10 listings. Some homes have had as many as 5 showings in one day!

When I call for agent feedback the answer is either the home I represent is in their top three favorites or they have picked another home to bid on. Either way, I like that answer much better than the one I heard 2 months ago (we’re still looking). This means people are making decisions and buying something. I wish it was one of my listings (and so do my sellers) but at least people are buying. That is a very good sign. We need to burn through the current inventory.

Speaking of current inventory, there is a lot of it out there right now. There are 490 single family homes on the market in Wheaton and 403 in Glen Ellyn. Glen Ellyn has more active condos/townhomes at 191 and Wheaton has 166 available. That is an amazing amount for buyers to look at. There can be as many as 50 homes in a single $50,000 price range!

Buyers these days know they are in high demand. They know which sellers have been on the market a long time, which home is headed toward foreclosure and how the other homes compare to it.

This leads me to my next point and it’s not a pretty one for sellers. I have been seeing agents and buyers come in with really low offers (some as low as 89% of asking price). They put out the offer and see how low they can get the house for. If they don’t feel the number is low enough, they move on to the next home hoping the seller is read to give them a bargain.

So, the good news is people are buying homes; the bad news is that they want a deal – now more than ever.