The Media can be misleading.

Yeah I know, no surprise there!

But let's talk about HR 3221, H.R. 3221 or if you want to call it by it's really long name, the Housing and Economic Recovery Act of 2008

It was signed into law Monday July 28th, 2008. It was reported all over the world. it's the talk of the town. I've been interviewed on radio shows, quoted in articles and blogs. Ok, now what?

Just about nothing. We're waiting.
There's quite a few facets included in the bill that still need to be hashed out. Here's a quick peek at just some of the facts.

The $7,500 Tax Credit

It's a tax credit (not a rebate). It's for purchases made between April 9, 2008 and July 1, 2009. It's essentially an interest free loan for 5 years that has to be paid back.

Down Payment Assistance Programs

HR 3221 wipes out the ability for down payment assistance on an FHA loan starting October 1, 2008. Think you have till then? Think again. The Lenders are already not allowing DPA on the loans they are accepting.

Skin in the game

FHA used to finance up to 97%. That meant that the buyer had to pony up the other 3%. As of October 1st, under the new rules, the borrower will have to 3.5%.

Reserve Requirements for Second Homes

Thinking about buying a second home? Vacation home? How about Rental Property. It's a great time to find bargains. How much liquid reserves do you have in the bank? There wasn't a minimum reserve requirement before. Now there is.

Have less than 30 % equity in the second home? You'll need to prove you also have 6 months worth of PITI reserves for both properties in the bank (liquid). Yeah I said SIX months! Have more than 30%? You'll just need to prove you have two months reserves.

Capital Gains Exclusion

Are you good at percentages? Remember when you were entitled to $250,000/$500,000 of tax-free gains from the sale of a home if filing separately/jointly provided you lived in the residence for at least 2 of the preceding 5 calendar years? Not any more.

Now that exclusion is calculated by taking the capital gains on the sale of the home and multiplying it by a ratio (percentage) of how long you lived in the home and how long you owned the home.

Loan Limits Increased!

Nope. Matter of fact, depending on where you live, FHA, Fannie and Freddie Conforming Jumbo loans will decrease.

The Mandatory Refinance at 90% of Present Value

I saved the best for last. First of all it's not mandatory. It's actually voluntary on the lenders part. Should a lender decide this is in their best interest, they'll still hold the note. They'll reduce the size of that note to 90% of the present value and that's what FHA will be on the hook for. Then again, nothing here is in concrete. The details still have to be hammered out by HUD. Until that happens, nothing really has changed.

So there you go. You know know more about HR 3221 than the next guy at the water cooler.

What should you do if you think any of these changes will involve you in the future? Contact your trusted mortgage professional today.

Example: New Home Sales, which is the number of contracts signed in a prior month for a house that often times hasn't even been built yet.  40% or more of those contracts fall out (don't go to fruition).

Another issue I have is with old data.  Reports that rely on information from months ago.  Or broad based statements based on states and regions when we all know real estate is local, really local.  Zip code local.  That bothers people like Mike Simonsen as well.  Altos Research compiles data in real time, as it happens, and serves it up locally.

Watch This Video

When Business Week wanted to do a story on the best and worst performing zip codes, they naturally turned to Altos Research.

Here's a sampling of the various Real Time Charts they produce for Walnut Creek, CA.  I think you can see why the best in the industry turn to Altos Research for their data.

Real Estate Price Trends
The median single family home price as of August 03 2008 for WALNUT CREEK is $917,989
Explain this
WALNUT CREEK condo reports and zip-code level detail available for all subscribers. Subscribe today!

Housing Market Conditions
With a Market Action Index as of August 03 2008 at 19.40, WALNUT CREEK is currently a buyer's market.
Explain this

Home Sales and Demand Trends
The average property in WALNUT CREEK as of August 03 2008 has been on the market for about 84 days.
Explain this

Price Per Square Foot
The median price per square foot for homes in WALNUT CREEK as of August 03 2008 is about $429
Explain this

Homes for Sale
There are about 194 properties on the market in WALNUT CREEK as of August 03 2008.
Explain this

We were invited after the daily festivities at Inman Real Estate Connect to hop on the "Trulia Trolley" and party at the House of Trulia.

The food was great. The music rocked. We all hooted and cheered at the Wii Contest.

The drinks and conversations flowed. Hugs, kisses, and fist bumps.

I was able to talk to some wonderful Trulia employees, including one of the founders!

Hey, I even bumped into Jonathan Miller!

While we were all having a great time we also learned what a great company Trulia is, and the truly (is it a pun?) forward thinking thought process they have.

(just wait till you see the iPhone Application they have!)

Everyone had a really great time. Thank you Rudy, and thank you Trulia!

I had a chance to sit down with Bill at one of his open houses.

Bill is a real estate agent working out of Security Pacific Real Estate Services in Walnut Creek.

Here's our interview:

Contact Bill:

• (925) 974-7679
• bclemente@securitypacific.com
• http://www.actorbillrealestate.com/

Yesterday Indymac Bank (IMB) ceased accepting new loan files in both Retail and Wholesale.
They cited the usual rhetoric of the difficult financial marketplace and turbulent times. This is on the heels of the Schumer story.

They also cited, (and this is the really important part)

Lack of Liquidity

"Yet in this environment, where either there are no bids for most of IMB's mortgage loans and securities or the bid/ask spreads are abnormally wide, fire-selling assets would actually deplete capital further. "

Every large bank needs to be able "securitize" and "monetize" their mortgage assets. Indymac ran out of that ability.

Think of it this way, Indymac has a vault. That vault has piles of money in it. When Indymac gives Mr. Johnson a loan to buy a house, they take the money out of their vault and pay the previous homeowner.

As you can imaging, mortgages are big ticket items, and it doesn't take long to empty that vault. If the vault is empty, the bank can't possibly make new loans. That's why they sell the loans they have already done. While Mr. Johnson may continue to pay for his new loan, Indymac needs to sell the ownership of that loan. The proceeds of selling that note put money back into the vault.

Now, when Mrs. Jones comes in for a loan, Indymac has money to loan. It's a little more complicated than that - but that's gist of the story.

The Financial Sector and the Housing Sector are both in a heap of trouble and that's going to have a direct impact on you.

Liquidity

The house across the street from me is for sale.

As more and more banks run out of liquidity the ability for them to fund loans also diminishes.

Can you guess what loans they'll choose to fund if any? Yup, the highly qualified and the ultra highly qualified (forget about the plain old qualified buyers)

Watch the Video

The house across the street might be worth $500,000 in a regular open market. But that assumes that the buyer can get a loan for that home (or has cash). As the lack of liquidity rises, the number of approved buyers drops, and the price that the home sells for also drops. (simple supply and demand).

You see, finally in desperation the seller accepted a low ball offer for $250,000 cash. When they did that can you guess what just happened to the value of my home?

So while we tend to think these big banks are evil money machines that don't deserve our pity, we also forget the very real impact their demise has on us. That lack of their liquidity will hurt you!

We spent the morning of the 4th watching and participating in the Pleasant Hill Parade.

Being a Marching Band Dad, I've seen quite a few parades this year. We've traveled to Victoria, BC and saw a parade with 450 entrants. We've marched through the streets of San Francisco with the Blue Angels roaring overhead.

But nothing says "Hometown" like a good old fashioned small town parade!

Here's a few snippets from this years parade.

Watch the Video

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