Program would seek to bring mortgage payments down to 31% of income
By Ronald D. Orol, MarketWatch
Last update: 2:38 p.m. EST Feb. 18, 2009
WASHINGTON (MarketWatch) -- The White House unveiled a plan Wednesday to help 9 million "at risk" homeowners modify their mortgages, committing $75 billion of taxpayer money to back the initiative.
The plan contains two separate programs. One program is aimed at 4 million to 5 million homeowners struggling with loans owned or guaranteed by Fannie Mae or Freddie Mac to help them refinance their mortgages through the two institutions.
A separate program would potentially help 3 million to 4 million additional homeowners by allowing them to modify their mortgages to lower monthly interest rates through any participating lender. Under this plan, the lender would voluntarily lower the interest rate, and the government would provide subsidies to the lender.
"The plan I'm announcing focuses on rescuing families who have played by the rules and acted responsibly: by refinancing loans for millions of families in traditional mortgages who are underwater or close to it; by modifying loans for families stuck in subprime mortgages they can't afford as a result of skyrocketing interest rates or personal misfortune; and by taking broader steps to keep mortgage rates low so that families can secure loans with affordable monthly payments," President Barack Obama said.
Homeowners that have Fannie Mae or Freddie Mac loans, who are having a difficult time refinancing and owe more than 80% of the value of their homes, would be eligible to refinance with this program. Even if homeowners with Fannie or Freddie loans have negative equity on their mortgages, they can qualify for this refinancing program. The program would only help homeowners occupying the property, not individuals who own property as investors.
To help fund the program, the Treasury Department is hiking an existing funding commitment to Fannie Mae and Freddie Mac. It will buy $200 billion of Fannie and Freddie preferred stock, up from its previously preferred stock purchase agreement of $100 billion. It also will buy more mortgage securities backed by Fannie Mae and Freddie Mac, raising the total to $900 billion, up from $850 billion previously.
Fannie and Freddie own or guarantee more than 30 million mortgages, or almost 60% of all single-family loans, according to recent estimates.
Under the $75 billion modification program involving government subsidies to lenders, the lenders will be responsible for bringing down interest rates so that a borrower's monthly mortgage payment is no more than 38% of pretax income. After that, the government program would match the amount reduced by the lender to bring a homeowner's payments down to 31% of pretax income.
Should a lender have a difficult time getting a homeowner's payment down to 31% of pretax income by lowering its interest rates, it can also lower the principal owed on the mortgage and take advantage of government assistance.
As part of the $75 billion initiative, servicers will receive $1,000 for each successful modification, as well as additional government funding for each month the borrower stays current on its loan. Homeowners can also receive $1,000 a year for five years as part of the program, as long as they stay current on their loan payments.
The program also provides additional incentives to lenders who modify at-risk loans before the borrower falls behind. The program takes effect March 4.
Loan servicers owned by financial institutions that receive government assistance from the remaining funds in the bank bailout bill would be required to implement "loan modification plans" based on Treasury guidance.
Henry Sommer, director at the National Association of Consumer Bankruptcy Attorneys, said he believes the incentives should encourage servicers to participate in the program. However, he added that even with the program, mortgage servicers may not have the staffing and resources to adjust a critical mass of troubled mortgages.
"It puts servicers in a better position to participate, but I still worry about staffing," Sommer
commented.
Obama traveled to a hard-hit Arizona community Wednesday to announce details of the program. He and Housing and Urban Development Secretary Shaun Donovan discussed their plan in Mesa, Ariz., a suburb of Phoenix that has been reeling from the housing-industry meltdown and economic slowdown.
Mesa -- Arizona's third-largest city -- saw its median home price fall 35% over the past 12 months to $140,000 in January. More than 300 families lost their homes to foreclosure there in January.
Funding
For the $75 billion program, $50 billion will come from the remaining $350 billion in Troubled Asset Relief Program funds, and $25 billion will come from Fannie Mae and Freddie Mac, according to a Treasury official.
Obama plans to package this approach within a larger housing bill that lets bankruptcy judges alter mortgages and lower interest rates for troubled homeowners. Such a provision was approved by the House Judiciary Committee last month. House Speaker Nancy Pelosi, D-Calif., said "Congress stands ready" to act on the committee's legislation.
Sommer said bankruptcy-judge authority would be the only way to provide serious help to troubled homeowners that have second loans. "These second lien loans were very prevalent in many problematic markets."
Citigroup Inc. has endorsed this approach, though other banks have yet to do so.
The new lower interest rate must be kept in place for five years. Leif Thomsen, chief executive of Boston-based mortgage lender Mortgage Master, said he believes that the government should make those lower interest rates permanent, but five years is better than a shorter period.
"A five-year modification is better than a six-month modification," he commented.
Sommer also said he believed the Treasury's time frame was set because government officials are hoping the financial system will stabilize by then.
The program also requires quarterly meetings to monitor the program among the Federal Deposit Insurance Corp., Housing and Urban Development Department and the Federal Reserve.
In another smaller, separate program to be announced Wednesday, funding of $1.5 billion would be provided to help renters displaced by foreclosure to relocate and $2 billion to stabilize neighborhoods that are experiencing high levels of foreclosure.
The Obama mortgage plan
Below is a list of key elements of the plan outlined Wednesday by President Obama that aims to aid as many as 9 million households in fending off foreclosures:
*Allows 4 million–5 million homeowners to refinance via government-sponsored mortgage giants Fannie Mae and Freddie Mac.
*Establishes $75 billion fund to reduce homeowners' monthly payments.
*Develops uniform rules for loan modifications across the mortgage industry.
*Bolsters Fannie and Freddie by buying more of their shares.
*Allows Fannie and Freddie to hold $900 billion in mortgage-backed securities — a $50 billion increase.
Ronald D. Orol is a MarketWatch reporter, based in Washington.
Wednesday, February 18, 2009
Friday, February 13, 2009
WHY TO BUY A HOME NOW
Why to Buy a Home Now
by Phoebe Chongchua
If you're renting and wondering if you should buy a home, consider what bestselling author, David Bach, says, "The average homeowner is worth 35 times more than the average renter."
He advises renters to take action immediately and start saving part of their paycheck every month to help accumulate a down payment. He also encourages renters to borrow 10-20 percent less than what the bank is willing to lend; that way they're only buying as much home as they can afford.
The longer you rent, the longer it may take you to eventually get into homeownership. If the market conditions have scared you, perhaps you're not looking at the other side of the coin. Owning a home becomes part of your investment portfolio, provides tax benefits, allows you to build equity (it still exists), and, if you buy now, you may get an excellent deal.
According to a MarketWatch news article, buying a home now can provide some real negotiating power to request improvements, price reductions, help with closing costs, and more. "People can get a lot of what they need and almost all of what they want today," said Jay Papasan, one of the authors of "Your First Home".
While poor market conditions have created a troubling situation for some homeowners, the downturn has made the buying market ripe for others. The affordability of homes is better than ever. The National Association of Realtors' housing affordability index concluded that homes in December of 2008 were more affordable than at any other point since 1970 (the start of the index). And with numerous foreclosures on the market and prices dropping in many areas, now is a good time to buy. But in order to make your purchase profitable, here are some things you should consider.
How long will you be in the home? Some experts advise that if you are planning to move within a year, buying may not be the best option because of the expenses associated with moving. However, if you're searching for a place to live for, at least, several years, buying now could be a good choice for you.
How much you can afford. Don't let tighter lending regulations scare you off from making a purchase. Instead, understand what you truly can afford. Don't get caught up in buying too much home. In fact, these days, the trend is moving toward smaller homes -- simpler living.
Mortgage rates drop to historical low. How much home you can afford is affected by mortgage interest rates that, right now, are highly appealing. Good credit, documenting your income, and a substantial down payment will make you a better candidate for the better mortgage rates.
Freedom to choose. Now, unlike several years ago, the market has a large inventory in many areas. The market time to sell a home has increased which creates a large inventory of homes, everything including new, existing, and foreclosures. Buyers can peruse the market and have the freedom to select the home they really want. If you're interest is in a new home, know that many developers are getting more competitive with their pricing because they also have taken a hit by the ailing economy.
Quality of life. Buying a home can create a higher quality of life, giving you pride of homeownership, and something to enjoy improving and developing over the years.
Tax credit benefit. Last summer, the federal government started providing up to a $7,500 tax credit to buyers who have not owned a home in at least three years; the tax credit must be repaid within 15 years. But that figure may increase. The National Home Builders Association and National Association of Realtors are pushing for more significant help for all home buyers -- not just those who are buying for the first time. The Senate, as part of a stimulus package, this month approved a temporary new tax credit to be applied to homebuyers' tax bills. The credit would give buyers 10 percent of the purchase price of any home, up to $15,000. Alan Zibel of the Associated Press writes, "Anyone who buys a home within a year of the bill's signature would qualify. To deter speculators, buyers must occupy the house as their main residence for at least two years." At the time of this writing, the stimulus package had not yet gone to the White House.
by Phoebe Chongchua
If you're renting and wondering if you should buy a home, consider what bestselling author, David Bach, says, "The average homeowner is worth 35 times more than the average renter."
He advises renters to take action immediately and start saving part of their paycheck every month to help accumulate a down payment. He also encourages renters to borrow 10-20 percent less than what the bank is willing to lend; that way they're only buying as much home as they can afford.
The longer you rent, the longer it may take you to eventually get into homeownership. If the market conditions have scared you, perhaps you're not looking at the other side of the coin. Owning a home becomes part of your investment portfolio, provides tax benefits, allows you to build equity (it still exists), and, if you buy now, you may get an excellent deal.
According to a MarketWatch news article, buying a home now can provide some real negotiating power to request improvements, price reductions, help with closing costs, and more. "People can get a lot of what they need and almost all of what they want today," said Jay Papasan, one of the authors of "Your First Home".
While poor market conditions have created a troubling situation for some homeowners, the downturn has made the buying market ripe for others. The affordability of homes is better than ever. The National Association of Realtors' housing affordability index concluded that homes in December of 2008 were more affordable than at any other point since 1970 (the start of the index). And with numerous foreclosures on the market and prices dropping in many areas, now is a good time to buy. But in order to make your purchase profitable, here are some things you should consider.
How long will you be in the home? Some experts advise that if you are planning to move within a year, buying may not be the best option because of the expenses associated with moving. However, if you're searching for a place to live for, at least, several years, buying now could be a good choice for you.
How much you can afford. Don't let tighter lending regulations scare you off from making a purchase. Instead, understand what you truly can afford. Don't get caught up in buying too much home. In fact, these days, the trend is moving toward smaller homes -- simpler living.
Mortgage rates drop to historical low. How much home you can afford is affected by mortgage interest rates that, right now, are highly appealing. Good credit, documenting your income, and a substantial down payment will make you a better candidate for the better mortgage rates.
Freedom to choose. Now, unlike several years ago, the market has a large inventory in many areas. The market time to sell a home has increased which creates a large inventory of homes, everything including new, existing, and foreclosures. Buyers can peruse the market and have the freedom to select the home they really want. If you're interest is in a new home, know that many developers are getting more competitive with their pricing because they also have taken a hit by the ailing economy.
Quality of life. Buying a home can create a higher quality of life, giving you pride of homeownership, and something to enjoy improving and developing over the years.
Tax credit benefit. Last summer, the federal government started providing up to a $7,500 tax credit to buyers who have not owned a home in at least three years; the tax credit must be repaid within 15 years. But that figure may increase. The National Home Builders Association and National Association of Realtors are pushing for more significant help for all home buyers -- not just those who are buying for the first time. The Senate, as part of a stimulus package, this month approved a temporary new tax credit to be applied to homebuyers' tax bills. The credit would give buyers 10 percent of the purchase price of any home, up to $15,000. Alan Zibel of the Associated Press writes, "Anyone who buys a home within a year of the bill's signature would qualify. To deter speculators, buyers must occupy the house as their main residence for at least two years." At the time of this writing, the stimulus package had not yet gone to the White House.
Wednesday, February 11, 2009
Anyone Ready For The Stimulus Bill???
Key lawmakers reach deal on $789B stimulus bill.
By DAVID ESPO, AP Special Correspondent David Espo, Ap Special Correspondent
WASHINGTON – Moving with lightning speed, key lawmakers announced agreement Wednesday on a $789 billion economic stimulus measure designed to create millions of jobs in a nation reeling from recession. President Barack Obama could sign the bill within days..
"The middle ground we've reached creates more jobs than the original Senate bill and costs less than the original House bill," said Senate Majority Leader Harry Reid, one of the participants in an exhausting and frenzied round of bargaining.
The bill includes help for victims of the recession in the form of unemployment benefits, food stamps, health coverage and more, as well as billions for states that face the prospect of making deep cuts in their own programs.
It also preserves Obama's signature tax cut — a break for millions of lower and middle income taxpayers, including those who don't earn enough to pay income taxes.
Officials had said previously that one of the final issues to be settled was money for school modernization, a priority of Pelosi as well as Obama and one on which they differed with Collins and other moderates whose votes will be essential for final Senate approval.
It was not immediately clear when final votes in the two houses would occur. A House vote was possible as early as Thursday, with the Senate to follow before lawmakers begin a scheduled weeklong vacation.
There was no immediate reaction from the White House, but the president's chief of staff and other aides were intimately involved in the negotiations that led to the agreement.
Stocks moved higher in the moments after Reid stepped to the microphone just outside the Senate chamber.
Sen. Joseph Lieberman, an independent from Connecticut, predicted the bill "will be the beginning of the turnaround for the American economy."
Reid said the legislation would create 3.5 million jobs.
Obama has been campaigning energetically for the legislation in recent days, saying it was essential to avoid having the worst economic crisis in a generation turn into a catastrophe.
As if to underscore the urgency, he said a few hours before the agreement was announced that machinery giant Caterpillar Inc. plans to rescind some of the 22,000 layoffs the firm recently announced — once the stimulus is signed into law.
The real decisions were made in Capitol office suites where Pelosi, Reid and other key lawmakers, often joined by White House officials and their own aides, worked late Tuesday night and picked up again in the morning.
Sen. Max Baucus, D-Mont., one of the negotiators, earlier announced agreement to hold the bill to $789 billion, tens of billions below the cost of both the House and Senate bills that had cleared in recent days, and that 35 percent of the total would be in the form of tax cuts.
The reductions in the bill's size caused grumbles among liberal Democrats, who described them as a concession to the moderates, particularly Sen. Arlen Specter, R-Pa., who are under pressure from conservative Republicans to hold down spending.
The principal components of the emerging measure included money to help victims of the recession, as much as $44 billion in aid for states, which face cuts of their own as a result of lower tax receipts, and the president's proposed tax cut for lower and middle-income wage earners.
Negotiators tentatively agreed to include a one-time payment to recipients of Social Security, Supplemental Security Income and veterans' pensions and disability. While the size of the checks remained unsettled, officials said it would be less than the $300 originally proposed by the Senate.
Officials said there was agreement to accept the White House's call to provide the tax break to workers who pay Social Security taxes but do not earn enough to owe income taxes, although it was possible the amount would be scaled back somewhat. The president sought $500 for individuals and $1,000 for couples.
Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said. The agreement would allow taxpayers to deduct the sales tax paid on new car purchases, but not the interest on loans for the same vehicles.
It also appeared a compromise was in the works on the administration's demand for school construction funds.
Sen. Tom Harkin, D-Iowa, told reporters that $6 billion would be set aside, and officials said it could be spent only on repair and modernization work, a limitation designed to appease the moderates.
But officials said House Democrats were holding out for as much as $9 billion.
With numerous demands for the funds in the bill, lawmakers worked to satisfy competing demands.
A Senate-passed provision to give $10 billion to the National Institutes of Health for research — a favorite of both Harkin and Specter, appeared likely to survive.
The officials who described the negotiations did so on condition of anonymity, saying they were not authorized to disclose the details of the closed-door negotiations.
Obama has spoken out repeatedly in recent days to urge Congress to act quickly in the face of the worst economic crisis since the Great Depression.
"We're at the doorstep of getting this plan through Congress, but the work is not over," he said in Springfield, Va., where he visited a construction site.
Even after the measure becomes law, he said, the challenge will be to effectively make use of the funds in an "endeavor of enormous scope and scale."
Republicans, too, took note of the size of the bill, and they said it included billions that would be wasted.
The original House bill, with a price tag of $820 billion, passed without a single Republican vote.
The $838 billion Senate bill that cleared on Tuesday had the backing of only three of 41 Republicans — but that was enough to give it the 60 votes it needed.
Collins told reporters she hoped fellow GOP lawmakers would reconsider when the final compromise comes to a vote "rather than just reflexively oppose this."
She said the negotiators had "tightened and scrubbed it" to eliminate wasteful spending.
___
Associated Press Writers Andrew Taylor and Ben Feller contributed to this story.
By DAVID ESPO, AP Special Correspondent David Espo, Ap Special Correspondent
WASHINGTON – Moving with lightning speed, key lawmakers announced agreement Wednesday on a $789 billion economic stimulus measure designed to create millions of jobs in a nation reeling from recession. President Barack Obama could sign the bill within days..
"The middle ground we've reached creates more jobs than the original Senate bill and costs less than the original House bill," said Senate Majority Leader Harry Reid, one of the participants in an exhausting and frenzied round of bargaining.
The bill includes help for victims of the recession in the form of unemployment benefits, food stamps, health coverage and more, as well as billions for states that face the prospect of making deep cuts in their own programs.
It also preserves Obama's signature tax cut — a break for millions of lower and middle income taxpayers, including those who don't earn enough to pay income taxes.
Officials had said previously that one of the final issues to be settled was money for school modernization, a priority of Pelosi as well as Obama and one on which they differed with Collins and other moderates whose votes will be essential for final Senate approval.
It was not immediately clear when final votes in the two houses would occur. A House vote was possible as early as Thursday, with the Senate to follow before lawmakers begin a scheduled weeklong vacation.
There was no immediate reaction from the White House, but the president's chief of staff and other aides were intimately involved in the negotiations that led to the agreement.
Stocks moved higher in the moments after Reid stepped to the microphone just outside the Senate chamber.
Sen. Joseph Lieberman, an independent from Connecticut, predicted the bill "will be the beginning of the turnaround for the American economy."
Reid said the legislation would create 3.5 million jobs.
Obama has been campaigning energetically for the legislation in recent days, saying it was essential to avoid having the worst economic crisis in a generation turn into a catastrophe.
As if to underscore the urgency, he said a few hours before the agreement was announced that machinery giant Caterpillar Inc. plans to rescind some of the 22,000 layoffs the firm recently announced — once the stimulus is signed into law.
The real decisions were made in Capitol office suites where Pelosi, Reid and other key lawmakers, often joined by White House officials and their own aides, worked late Tuesday night and picked up again in the morning.
Sen. Max Baucus, D-Mont., one of the negotiators, earlier announced agreement to hold the bill to $789 billion, tens of billions below the cost of both the House and Senate bills that had cleared in recent days, and that 35 percent of the total would be in the form of tax cuts.
The reductions in the bill's size caused grumbles among liberal Democrats, who described them as a concession to the moderates, particularly Sen. Arlen Specter, R-Pa., who are under pressure from conservative Republicans to hold down spending.
The principal components of the emerging measure included money to help victims of the recession, as much as $44 billion in aid for states, which face cuts of their own as a result of lower tax receipts, and the president's proposed tax cut for lower and middle-income wage earners.
Negotiators tentatively agreed to include a one-time payment to recipients of Social Security, Supplemental Security Income and veterans' pensions and disability. While the size of the checks remained unsettled, officials said it would be less than the $300 originally proposed by the Senate.
Officials said there was agreement to accept the White House's call to provide the tax break to workers who pay Social Security taxes but do not earn enough to owe income taxes, although it was possible the amount would be scaled back somewhat. The president sought $500 for individuals and $1,000 for couples.
Working to accommodate the new, lower overall limit of the bill, negotiators effectively wiped out a Senate-passed provision for a new $15,000 tax credit to defray the cost of buying a home, these officials said. The agreement would allow taxpayers to deduct the sales tax paid on new car purchases, but not the interest on loans for the same vehicles.
It also appeared a compromise was in the works on the administration's demand for school construction funds.
Sen. Tom Harkin, D-Iowa, told reporters that $6 billion would be set aside, and officials said it could be spent only on repair and modernization work, a limitation designed to appease the moderates.
But officials said House Democrats were holding out for as much as $9 billion.
With numerous demands for the funds in the bill, lawmakers worked to satisfy competing demands.
A Senate-passed provision to give $10 billion to the National Institutes of Health for research — a favorite of both Harkin and Specter, appeared likely to survive.
The officials who described the negotiations did so on condition of anonymity, saying they were not authorized to disclose the details of the closed-door negotiations.
Obama has spoken out repeatedly in recent days to urge Congress to act quickly in the face of the worst economic crisis since the Great Depression.
"We're at the doorstep of getting this plan through Congress, but the work is not over," he said in Springfield, Va., where he visited a construction site.
Even after the measure becomes law, he said, the challenge will be to effectively make use of the funds in an "endeavor of enormous scope and scale."
Republicans, too, took note of the size of the bill, and they said it included billions that would be wasted.
The original House bill, with a price tag of $820 billion, passed without a single Republican vote.
The $838 billion Senate bill that cleared on Tuesday had the backing of only three of 41 Republicans — but that was enough to give it the 60 votes it needed.
Collins told reporters she hoped fellow GOP lawmakers would reconsider when the final compromise comes to a vote "rather than just reflexively oppose this."
She said the negotiators had "tightened and scrubbed it" to eliminate wasteful spending.
___
Associated Press Writers Andrew Taylor and Ben Feller contributed to this story.
Friday, January 30, 2009
Utah Governor to Help Homeowners
Utah Governor to Help Homeowners, Posted by Dick
I’m visiting the Utah REALTORS® this week, and several members of the Utah State leadership and I had a chance to meet with Gov. John Huntsman and Lt. Gov. Gary Herbert on Tuesday.
Joining me in the photo below are (left to right) Taylor Oldroyd, CEO of the Utah County Association; Kenny Parcell, President of the Utah County Association; Lt. Gov. Gary Herbert; Matt Barton, President-Elect of the Utah County Association, Chris Kyler, CEO of the Utah Association; and Lerron Little, 2009 President-Elect of the Utah Association.
As some of you know, Gary Herbert is a REALTOR® and a past chair of NAR’s Issues Mobilization Committee. Both he and Gov. Huntsman are strong advocates for real estate. Utah’s economic strength is a credit to their good work and leadership. We are fortunate to have them both in office, and I am hopeful that Gary will follow Gov. Huntsman, who has said that he will not run for another term.
Although Utah has fared better than some other states in the current housing cycle, it has not been immune to the problems in the credit markets and the rise in foreclosures. I was very excited to hear that Gov. Huntsman is planning to set aside $30 million to help people who are have trouble with their mortgages avoid foreclosure. A portion would also help renters.
While the federal government is taking steps to address broad issues in the financial and housing markets, they can’t (and shouldn’t) be the only answer. I personally thank Gov. Huntsman and Lt. Gov. Herbert for their leadership in Utah, and I encourage other state and local leaders to do the same.
REALTORS® stand ready to work with public officials at all levels of government to help strengthen our communities and keep homeownership alive and well.
On Wednesday morning, I met with members who give significantly to RPAC through the Utah County Association. I talked to them about how we make decisions on which candidates to support, and I emphasized that 70 percent of the money they contribute stays right here in Utah. It was a good meeting, and I thank all of the Utah members who participate in our advocacy through RPAC and Grassroots.
Later that morning, I had the opportunity to speak to nearly 500 members at the Utah general membership meeting. They have three of these meetings per year, and to have that many people attend is remarkable. I spoke to them about how much we have accomplished this year, particularly on the public policy front. And I assured them that we will keep working to help REALTORS® and their clients in this challenging time.
The entire visit was inspiring, but the highlight for me was hearing Kenny Parcell address the members. Not only is he an incredible leader, but the experiences he shared, and the way he was able to reach out to REALTORS® in Utah, were just incredible.
Thanks to all of the wonderful folks in Utah for inviting me to visit – I am so proud to be your NAR President. Keep up the great work. You continue to prove that there is nothing we can’t accomplish when we work “All Together.” – Dick Gaylord, 2008 NAR President
I’m visiting the Utah REALTORS® this week, and several members of the Utah State leadership and I had a chance to meet with Gov. John Huntsman and Lt. Gov. Gary Herbert on Tuesday.
Joining me in the photo below are (left to right) Taylor Oldroyd, CEO of the Utah County Association; Kenny Parcell, President of the Utah County Association; Lt. Gov. Gary Herbert; Matt Barton, President-Elect of the Utah County Association, Chris Kyler, CEO of the Utah Association; and Lerron Little, 2009 President-Elect of the Utah Association.
As some of you know, Gary Herbert is a REALTOR® and a past chair of NAR’s Issues Mobilization Committee. Both he and Gov. Huntsman are strong advocates for real estate. Utah’s economic strength is a credit to their good work and leadership. We are fortunate to have them both in office, and I am hopeful that Gary will follow Gov. Huntsman, who has said that he will not run for another term.
Although Utah has fared better than some other states in the current housing cycle, it has not been immune to the problems in the credit markets and the rise in foreclosures. I was very excited to hear that Gov. Huntsman is planning to set aside $30 million to help people who are have trouble with their mortgages avoid foreclosure. A portion would also help renters.
While the federal government is taking steps to address broad issues in the financial and housing markets, they can’t (and shouldn’t) be the only answer. I personally thank Gov. Huntsman and Lt. Gov. Herbert for their leadership in Utah, and I encourage other state and local leaders to do the same.
REALTORS® stand ready to work with public officials at all levels of government to help strengthen our communities and keep homeownership alive and well.
On Wednesday morning, I met with members who give significantly to RPAC through the Utah County Association. I talked to them about how we make decisions on which candidates to support, and I emphasized that 70 percent of the money they contribute stays right here in Utah. It was a good meeting, and I thank all of the Utah members who participate in our advocacy through RPAC and Grassroots.
Later that morning, I had the opportunity to speak to nearly 500 members at the Utah general membership meeting. They have three of these meetings per year, and to have that many people attend is remarkable. I spoke to them about how much we have accomplished this year, particularly on the public policy front. And I assured them that we will keep working to help REALTORS® and their clients in this challenging time.
The entire visit was inspiring, but the highlight for me was hearing Kenny Parcell address the members. Not only is he an incredible leader, but the experiences he shared, and the way he was able to reach out to REALTORS® in Utah, were just incredible.
Thanks to all of the wonderful folks in Utah for inviting me to visit – I am so proud to be your NAR President. Keep up the great work. You continue to prove that there is nothing we can’t accomplish when we work “All Together.” – Dick Gaylord, 2008 NAR President
Tuesday, December 16, 2008
Why Utah’s economy is soaring above its neighbours
The Mormon work ethic:
NOBODY knows quite how the contagion that broke out in Wall Street will affect the rest of America, nor how deep or how long the likely recession will be. What is certain is that some places will suffer more than others. So far Utah, a state best-known for Mormonism and pretty rocks, is looking unusually healthy. “We’ve got a lot to be proud of,” says Jon Huntsman, the governor. “Certainly more than many of our neighbours.”
Indeed, Utah has more to be proud of than any other state in the West. In September its unemployment rate was just 3.5%—less than half of California’s and the second-lowest rate in the region after oil- and gas-rich Wyoming. Last month the Milken Institute declared Provo, a sprawling settlement south of Salt Lake City, America’s best-performing city for technology output and job and wage growth. Salt Lake City itself came third.
Hardly a month goes by without Utah announcing a corporate relocation or a new factory. The state has experienced a minor semiconductor boom in part because of its cheap, coal-fired power. Ogden, until recently a decaying railway town north of Salt Lake City, has quietly become the world centre of winter sports equipment. Mike Dowse, who oversees brands such as Atomic and Salomon for Amer Sports, gives three reasons: “the mountains, the mayor and the money”.
The mountains are the Rockies, which lure young workers who like to go skiing. The mayor is Matthew Godfrey, a business-minded man who has aggressively recruited several companies to Ogden (Mr Huntsman, a former chemicals executive, likes to work the phones, too). The money, which comes partly from the city and partly from the state, is a mixture of relocation grants and tax breaks tied to the creation of well-paying jobs.
Utah’s housing market is relatively healthy, largely because it did not heat up too much in the middle of this decade. In August its foreclosure rate was lower than the national average. Nevada, Utah’s neighbour to the west, had America’s highest rate of foreclosure filings, according to Realtytrac. California had the second-highest rate and Arizona the third. Colorado’s front range, which includes Denver, is also littered with abandoned houses. Such areas have suffered from sharply falling property prices, reduced consumer spending and job losses among construction workers.
Another, hidden, source of strength is Utah’s strange demography. Mormons tend to start families young: the average Utah woman marries at just 22. That means the “echo boom”—the peak of childbearing by baby boomers—took place not around 1990, as in the rest of America, but ten years earlier. One reason unemployment is rising across the West is that a wave of teenagers is crashing onto the job market. Utah, by contrast, has few teenagers and lots of productive people in their late twenties and early thirties. “The timing is pretty good for a recession,” says Pam Perlich of the University of Utah.
The “cultural thing”, as businessmen from out of state delicately refer to Mormonism, helps in other ways. Utah’s almost universal conservatism makes for stable, consensual politics. It took the state legislature just two days last month to plug a $272m hole in the budget. By contrast, California’s budget was 85 days late. Nevada’s politicians are preparing for a nasty fiscal fight next year.
Mormons do not come to work nursing hangovers, and they are inclined to stay put in the promised land rather than pursue better-paying jobs elsewhere. Matthew Donthnier, who is hiring for a new Procter & Gamble plant, has only one complaint about the local workforce: it can be a little difficult to persuade people to toil on Sundays.
Oct 23rd 2008 SALT LAKE CITY
From The Economist print edition
NOBODY knows quite how the contagion that broke out in Wall Street will affect the rest of America, nor how deep or how long the likely recession will be. What is certain is that some places will suffer more than others. So far Utah, a state best-known for Mormonism and pretty rocks, is looking unusually healthy. “We’ve got a lot to be proud of,” says Jon Huntsman, the governor. “Certainly more than many of our neighbours.”
Indeed, Utah has more to be proud of than any other state in the West. In September its unemployment rate was just 3.5%—less than half of California’s and the second-lowest rate in the region after oil- and gas-rich Wyoming. Last month the Milken Institute declared Provo, a sprawling settlement south of Salt Lake City, America’s best-performing city for technology output and job and wage growth. Salt Lake City itself came third.
Hardly a month goes by without Utah announcing a corporate relocation or a new factory. The state has experienced a minor semiconductor boom in part because of its cheap, coal-fired power. Ogden, until recently a decaying railway town north of Salt Lake City, has quietly become the world centre of winter sports equipment. Mike Dowse, who oversees brands such as Atomic and Salomon for Amer Sports, gives three reasons: “the mountains, the mayor and the money”.
The mountains are the Rockies, which lure young workers who like to go skiing. The mayor is Matthew Godfrey, a business-minded man who has aggressively recruited several companies to Ogden (Mr Huntsman, a former chemicals executive, likes to work the phones, too). The money, which comes partly from the city and partly from the state, is a mixture of relocation grants and tax breaks tied to the creation of well-paying jobs.
Utah’s housing market is relatively healthy, largely because it did not heat up too much in the middle of this decade. In August its foreclosure rate was lower than the national average. Nevada, Utah’s neighbour to the west, had America’s highest rate of foreclosure filings, according to Realtytrac. California had the second-highest rate and Arizona the third. Colorado’s front range, which includes Denver, is also littered with abandoned houses. Such areas have suffered from sharply falling property prices, reduced consumer spending and job losses among construction workers.
Another, hidden, source of strength is Utah’s strange demography. Mormons tend to start families young: the average Utah woman marries at just 22. That means the “echo boom”—the peak of childbearing by baby boomers—took place not around 1990, as in the rest of America, but ten years earlier. One reason unemployment is rising across the West is that a wave of teenagers is crashing onto the job market. Utah, by contrast, has few teenagers and lots of productive people in their late twenties and early thirties. “The timing is pretty good for a recession,” says Pam Perlich of the University of Utah.
The “cultural thing”, as businessmen from out of state delicately refer to Mormonism, helps in other ways. Utah’s almost universal conservatism makes for stable, consensual politics. It took the state legislature just two days last month to plug a $272m hole in the budget. By contrast, California’s budget was 85 days late. Nevada’s politicians are preparing for a nasty fiscal fight next year.
Mormons do not come to work nursing hangovers, and they are inclined to stay put in the promised land rather than pursue better-paying jobs elsewhere. Matthew Donthnier, who is hiring for a new Procter & Gamble plant, has only one complaint about the local workforce: it can be a little difficult to persuade people to toil on Sundays.
Oct 23rd 2008 SALT LAKE CITY
From The Economist print edition
If I Sell My Home, Will I Have to Pay Capital Gains Tax?
The IRS permits a maximum exclusion on capital gain of $250,000 for individuals and $500,000 for married couples filing a joint return who sell their home, but of course some conditions apply.
For the five-year timeframe prior to the date of the sale of your primary residence, you must meet the Ownership and Use Tests the IRS provides in Publication 523, Selling Your Home. These rules ensure you have owned the home for at least two years, and lived in the home for at least 24 months out of the last five years. Additionally, you may not have excluded a gain on your taxes from the sale of a different home within the last two years. Note that if you sell your property for less than your original purchase price, you cannot claim a capital loss.
A 'reduced maximum exclusion' can apply to those who must sell their home due to a change in their place of employment, health issues, or unforeseen circumstances that affect qualified individuals. In all cases, it is best to consult your tax professional or IRS guidelines if you have any questions about the taxes you may be responsible for if you sell your home.
For the five-year timeframe prior to the date of the sale of your primary residence, you must meet the Ownership and Use Tests the IRS provides in Publication 523, Selling Your Home. These rules ensure you have owned the home for at least two years, and lived in the home for at least 24 months out of the last five years. Additionally, you may not have excluded a gain on your taxes from the sale of a different home within the last two years. Note that if you sell your property for less than your original purchase price, you cannot claim a capital loss.
A 'reduced maximum exclusion' can apply to those who must sell their home due to a change in their place of employment, health issues, or unforeseen circumstances that affect qualified individuals. In all cases, it is best to consult your tax professional or IRS guidelines if you have any questions about the taxes you may be responsible for if you sell your home.
Wednesday, November 26, 2008
Happy Thanksgiving
Happy Thanksgiving to everyone. This is the time to take a moment before the craziness of the Holidays set in. Enjoy your family and friends, make new acquaintances and nurture old ones. And if real estate is in your cards this Holiday season, I'll be here for you.
From me to you, Happy Thanksgiving!
From me to you, Happy Thanksgiving!
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