FHA: The Other Shoe Drops

Although the initial press releases from FHA about 2010 changes made no mention of limits to seller contribution, yesterday’s release made that part clear.  In a nutshell, here are the changes:

  • Downpayment requirements increase for borrowers with 580 FICO scores or less from 3.5% to 10%
  • Up front Mortgage Insurance premiums will increase .5% to 2.25%.  FHA will continue to allow the up front fee to be financed.
  • Seller contributions will be decreased from 6% to 3%.  In the past, sellers were able to pay up to 6% of a buyer’s loan and closing costs.  In the new world, they are limited to 3%.

The changes are in response to pressure from Congress to bolster the soundness the FHA reserve fund and to reduce risk by ensuring that borrowers have ‘more skin in the game’.

I’ve heard from, well . . .  nearly everybody how numbing these changes will be to the housing recovery that is taking place today.  The economy has created a great market for first time buyers to own their own homes . . . and suddenly we’re making it very difficult for them to take advantage of the opportunity.

Think about it.  Today, a young family with less than perfect credit can get into a $150,000 home on an FHA loan with something like $6,000 in cash.  That would be enough to cover the downpayment, and some miscellaneous costs.  Much of their closing expense can be paid by the seller — up to 6% of the mortgage amount.  With the changes, the same family would probably face a 10% downpayment plus have to pick up half of what the seller used to be able to pay for them.  That same $150,000 home would probably take $20,000 in cash to acquire.  You can imagine how many homebuyers will be taken out of the market when these changes take effect.

We’ve wrestled and wrestled with how to fix the economy and we’ve created new programs to get America moving again, some with positive results, others . . . no so much.  I can’t help but wonder what would have happened if we’d have taken a nice chunk of the Stimulus money and put it into housing.  What if we’d have made it possible for homeowners to have more — to reduce their debt or their payments — or for buyers to find it easier to get into the market, instead of helping some of the biggest corporations in the world weather the storm.

I know these things tend to work themselves out over time and if there’s good news in the FHA changes it is that their implementation is months away.  Here is a timeline:

Is there an action step for us here?  Probably.  Write your Congressmen and Women.  Contribute to RPAC, the REALTOR Political Action Committee (they fight not just for the industry, but also for homeowners).  Work with your best lenders to find ways to help these newly disenfranchised borrowers get back into the market.

Thanks to Lana Erwin, Help-U-Sell Edmond/OKC, for helping me track down this information.

Tuesday Morning Quarterback

Peter King with Sports Illustrated does a column on their website called ‘Monday Morning Quarterback,’ where he reacts to the NFL Football games of the previous weekend.  I’m taking a page from his lesson book here  to comment on a few Help-U-Sell specific things, but feel impelled to talk football first in Peter’s honor.

First off, The Chargers (my home team) reminded me so much of the traditional real estate world in their lacklustre AFC Playoff game.  They were overconfident, relied on the same old same old, did nothing new or out of the box, did not respond to the challenge of the moment, and. . . they lost.  It’s taken me a week and two days to even be able to talk about it.  The Jets, however, are a rag-tag upstart bunch that clearly has a different approach. They reminded me of Help-U-Sell, intercepting passes, forcing fumbles, running poor Phillip Rivers ragged.    It took Peyton Manning and a well prepared Colts team to handle them.

Yes, we’re all glad to see the Saints in the Super Bowl, but is Brett Favre a class act, or what?  To see him come back after spraining his ankle and scramble around like a 25 year old made me proud to be a grey haired geezer.  Could there be an AARP Magazine cover in his future?

Speaking of the future, the upcoming Tech Summit is shaping up.  The development team from South Africa arrives in a couple of weeks to ensure that the rollout of the new broker sites goes without a hitch.  They will attend the meeting as well, as we all learn how to do the simple things that will make our websites really Hummmmmm.  If lead generation is your goal and if you’re short on the time, money and effort it would take to do a consistent direct mail campaign (i.e.  ETMs), then learning how to use the Internet to accomplish the same objective is key;  and that’s what we’ll be doing at the Tech Summit.   It will also be a time to come together and bond as a new, rejuvenated Help-U-Sell family.  You get the added benefit of hearing a bunch of guys talk like Matt Damon and Morgan Freeman in ‘Invictus.’

Most frequently asked question:  What does it cost?  Simple answer:  nothing.  All you pay is your transportation, lodging and most meals.  Lunch on day two will be provided.

A surprising number of folks are planning on coming to Sarasota for the meeting, which will be held at Help-U-Sell Headquarters.  The host hotel is the HERE and it is very nice at $119 a night.  It includes breakfast, dinner and a shuttle service to and from the meeting.  March 1 and 2 are in the heart of the ‘Season’ in Sarasota, so rates everywhere are pretty high.

The Vegas hotel is The Palace Station.  It’s across the freeway from the strip and is a very nice property.  They have about 10 restaurants and offer free shuttle service from airport and to the strip.  It’s also a bargain at $29 and $39 a night (plus about $10 in fees).  The more expensive rooms are worth the extra.

You’ll need to come to the meeting with your wireless network enabled laptop so that you can participate, learn and get maximum benefit.  If you don’t have one, now’s a great time to invest or upgrade.  The little Net-Books do just about everything you’d need, weigh nothing and cost less than $500.

The new edition of Help-U-Sell Connect is out except for the video update, which Tami, Robbie and I will be recording that this week.  I didn’t mention John because he won’t be there:  he’s roaming around Northern California, working with Maurine on University and calling on a few brokers.

Maurine started the first ever online Help-U-Sell University last week with an overview of Marketing.  It was excellent and took the 30 or so attendees back to basics.  We all know that marketing has changed, but in order to cope with the changes and make good decisions it is important to remember what the intent of marketing was from the beginning.  That’s what last Thursday’s hour long session was all about.  University continues this Thursday and I’d urge you to get involved.

Finally, Lori Warnelo has been calling offices in her new role as Team Services Liason.  Our goal is to be in touch with every office about once a month.  Lori will be reminding brokers of upcoming events and initiatives, taking the marketplace pulse and looking for ways to improve the overall performance of the Help-U-Sell team.  You Go, Lori!

And finally, FINALLY:

DON”T FORGET!

National Help-U-Sell Get A Listing Day

Next Tuesday, February 2, 2010!

Make it your goal in life that day to get a new lisitng and to report your war story in a comment here in the SetFeeBlog for a chance to win a one-on-one website consultation with Robert Stevens.  Details HERE.

New! Improved! National Help-U-Sell Get a Listing Day!

Ok; So everyone who took a listing last Wednesday was too shy to post a war story.  Besides:  What was in it for them, right?  So . . . Now, announcing the New,Improved National Help-U-Sell Get a Listing Day, Tuesday, February 2, 2010 (that’s 02-02-2010).  The idea is simply this:  if your life depended on it, you’d be able to get up in the morning, go out into the world and come back by sundown with a new listing.  That’s what we’re all going to do on Feb. 2.

And this time there’s a pretty cool prize.  Robert Stevens will give the winner — drawn at random from all war stories posted on this blog — a free comprehensive website consultation.  The winner will work with Robert one-on-one to customize, localize and optimize their Help-U-Sell website for maximum attractiveness to search engines, which translates into more leads.  It’s a great prize!

For inspiration, I have two things.  First, read the original National Help-U-Sell Get a Listing Day posted  HERE.  Then, take a look at a video Michelle Morgan’ (Help-U-Sell Real Estate Specialists, Lake Havasu, AZ) posted on her website, HERE.  It rocks!

FHA: Not As Bad As Anticipated

The FHA changes that were rumored late last year have begun to trickle out and the initial announcement is not quite as bad as we heard it might be.  Downpayment requirements for borrowers with a FICO score less than 580 will increase to 10%.  Those with scores above 580 will continue to qualify for the 3.5% downpayment currently available to all.  In addition, the upfront Mortgage Premium will increase from 1.75% to 2.25%.

National Help-U-Sell Get A Listing Day!

Floyd Wickman used to say, ‘You can’t DO a sale . . . but you can DO a listing.’  What he meant is that it’s difficult to get up in the morning, decide you’re going to make a sale and then DO it before the sun goes down.  There are just too many factors that are beyond your control.  However, you can get up in the morning and DO a listing.  You really can.  What?  You doubt?  If someone told you they’d give you $1 million if you were able to get a new listing by the end of the day, you’d be able to do it, right?  Sure you could.  You’d start calling all your past clients, looking for leads.  You’d call FSBOs and Expireds. You’d probably start making some cold calls. 

Truth is:  any one of us could get a new listing by close of business if we approached the task as a priority.

So . . . Tomorrow, January 20, 2010 (what a great number!  1-20-10) let us all resolve to get at least one new listing by  close of business.  Really:  think about it tonight before you turn out the light.  How will you attack this challenge?  What will your strategy be?  And then, tomorrow, when your feet hit the floor, you’ll be in gear. 

Some ideas to get your REALTOR juices flowing:

Call FSBOS and ask, ‘If I could show you a way to triple your marketing exposure at a fraction of the cost of an ordinary REALTOR, would you give me 15 minutes of your time? ‘

Call Expireds and say, ‘I know you must be frustrated trying to sell in this market.  I have a completley different approach that gets results and costs a whole lot less.  Can I drop by in an hour to show it to you?’

Call your past clients and CIs and ask for their help:  ‘I have all of these buyers and, truth is, I’m having trouble finding houses for them!  Really, the inventory is way down.  Do you know anybody who’s thinking of selling?’ 

Make up a flyer and go door to door in a good first time buyer neighborhood:  ‘I’m in the neighborhood today alerting homeowners to the tremendous tax benefits available right now for people buying and selling real estate.  Who do you know that’s thinking of selling?’ 

Tomorrow night, when you get home, take a minute to hit the ‘Comment’ button at the bottom of this post and share your war story.  We all want to hear how it went! 

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