Lori and I want to wish you all a very Happy Holiday Season and a Happy Thanksgiving too.

We know that many sellers have experienced pretty substantial set backs in 2008. If there is a silver lining to the challenges many have faced when they sold their homes, it is that if they sold their home between January and August of this year, they got in front of the market's economic free fall. This year, the Phoenix Valley has set the record and leads the nation in property value decline, eclipsing 30% net property value loss in the last 12 months. Example after example can be found. We have a client in Anthem Arizona who owns a home that was valued at 1.2 million dollars in the early part of 2006, however that 4,500 sqft, 5 bedroom, pool home, in the Golf Course Country Club of Anthem Arizona was appraised for only $427,000 in August of this year. Another client who sold their 1,800 sqft home for $200,000 in August 2008 in Palm Valley, a community in Goodyear Arizona, got out before the property plummeted to a current value of around $168,000. That iss over $30,000 less than we sold their home for just 120 days ago. We are so glad they decided to pull the trigger at that time.

The Real Estate Industry is working diligently to try to get the ear of Congress to help the housing industry. As members of the National Association of REALTORS® we joined our membership, nearly 2 million strong, to send a stern warning to Congress, urging them to include several items in the upcoming economic stimulus package. These were the points NAR made to Congress:

*Make the $7500 first-time homebuyer tax credit available to all buyers and eliminate repayment requirements. The credit's limited availability and repayment requirement severely limit the credit's use and effectiveness.

*Make the 2008 FHA, Fannie Mae and Freddie Mac loan limits permanent. New rules for 2009 will reduce them. Now is not the time to limit mortgage affordability.

*Get the Treasury relief program back on track and target more funds to mortgage relief. Create a federal mortgage interest buy-down program to make below-market rates available and stabilize home prices.

*Permanently bar banks from engaging in real estate brokerage and management. The banks have proven they have enough to do to simply manage the loan process. Banks should not manage home sales and purchases.

*Support HR 6694 - FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008. Downpayment assistance programs are not and have never been at the center of any mortgage crisis.

Over 80% of AmeriDream participants are buyers who are protected by the Fair Housing Act, or first-time homebuyers

DPA composes over 40% of FHA business and uses NO tax-payer dollars to fund their programs

FHA is financially sound and is projected to make billions of dollars through 2014 even with a high concentration of gift assisted loans and will have a capital ratio at three times the congressionally required amount

DPA programs helped to add over $24 billion to the economy from 2000 through 2005

It is irresponsible for Congress to turn its back on the FHA buyer at any time and most importantly, in these economic troubling times.

We can only hope that they grow a brain and understand that to continue to give billions of tax payer dollars to the banking industry and now the auto industry is only a prescription for continuation in this (economic perfect storm).

Lori & G-II are licensed REALTORS® with Coldwell Banker Residential Brokerage. They can be reached by cell phone at either 602.574.5674 for Lori or 602.796.5674 for G-II or via eMail at Lori.and.G-II@GoAirForceHomes.info. If you would like to CHAT with us LIVE, simply click the

Sellers today have a particular challenging decision to make, "Do I sell or do I sit out the market and wait for a more opportune time?" Today's Arizona Republic ( http://tinyurl.com/6l7hxq ) noted that property prices/values in the Valley have retreated from the gains realized during the boom days of 2003, 2004 and 2005 backward to a pre-boom era. Some Valley communities are seeing property values/prices retreat to those of 2002/2003. These sobering realities heap a very interesting set of scenarios on today's Sellers and Buyers.

As a Seller, consider the following:

The challenges Sellers face today is that most of the inventory Sellers compete against is foreclosed and/or Short Sale inventory, which in turn pulls the property values down in their neighborhood.

Being both a Buyer and Seller produces a double edge sword. On the one side, if a Seller is going to get in and stay in the game, the Seller will sell for far less than they had expected. The reality is... when the market finally corrects itself, property values will begin their slow and steady climb upward. But… keep this point in mind, once that upward swing begins… and it will begin… sometime in the future… perhaps as early as the second ¼ of 2010… if Maricopa County re-establishes her statistical bellweather appreciation curve of 3.5% to 4% per year, a property that would be valued at $265,000 in 2010 could be worth about $310,000 in 2015. The question that must be answered by today’s Seller is, “Am I willing to wait 5 to 7 years to capitalize on the equity I will build in my home over that period of time, or do I cut my losses… in my current home… today… and target a purchase for… perhaps less capital investment and then deal with the same upward appreciation curve described above?”

As a Buyer, consider the following:

On the other side of the sword blade, a Buyer or Seller (turned Buyer) can capitalize on the pain of the Seller they purchase from, ultimately making a purchase of their next home for much less than that Seller thought they would sell for and in all likelihood for a price that could never have been attained only a few years ago. Perhaps equally important is the very real probability that the home purchased today, may indeed, devalue a bit more before the market corrects itself. Some market analysts project that the real estate market will "over correct" to the bottom and beyond, before making a swing back upward. One thing is certain, no one knows where the bottom is!

Unfortunately, there is no clear cut answer to these and other questions. Each Buyer/Seller must weigh their own investment portfolio and then decide for themselves, which direction to go. "Do ya hold-em or do ya fold-em?"

Before I close I ran a few numbers through the G2-O'Meter and here's what I pondered.

Mr. Buyer today wants to buy his first house. He has his eye on a charming little bungalow priced at today's market value of $150,000. Mr. Buyer earns $50,000 per year. He is unlike the majority of first time Buyers today and has saved $20,000.

He can secure a loan for 6.5% bringing his PI to $855.00. His TI will be $150 and his MI will be about $80 bringing his total PITIMI to $1,155.00. His DTI ebt to Income) ratio is 28%, well within Fannie/Freddie/Sally/Ginny lending guidelines. Mr. Buyer has a modest car payment, one for each of his modest automobiles, only $300 per month for each auto. He has minimum credit card debt, only $200.00 per month. Therefore his total committed cash out each month is $1,955, not including his cost for fuel, food, insurance and disposable income. Therefore his total cost of living, month to month, including his new house payment will be right at $3,000.

Now... let's put Mr. Buyer in his new home. He has exhausted his savings account because he had to put a minimum of 10% down ($15,000) and he had to pay his own closing costs, about $5,000. Mr. Buyer has NO cash reserves any longer. His total monthly cash outlay is 73% of his monthly income. What if he gets sick? What if his wife gets sick? What if his little ones get sick? What if his health insurance deductable, if he has health insurance, is so great that his cash outlay exceeds his income? Can he continue to be the frugal saver he was before he purchased his home?

I postulated this scenario to demonstrate where our real estate market may be heading. Do you think that it could come to pass that our nation re-visits the philosophy of our grand parents, wherein major purchases were made, ONLY if you had the cash to make such a purchase? Do you think if our national mindset takes this road, that Buyer's of real estate, could put off their purchase until they have enough of a cash reserve to sustain an unexpected "perfect storm of life"?

I don't know the answer and I'm not sure anyone out there does, but what I am certain of is... we're in for a very different upcoming decade or two. A few decades of frugal living and thrift spending. Do you think the Real Estate Industry might see our ranks shrink as those agents who got in the business of late run for more stable income producing platforms? If we do see a shrinking of our REALTOR ranks, do you think there will be enough business out there to grow our business? To the last questions, I am convinced the answer is Absolutely YES!

For those of you reading this BLOG post, who are not real estate agents, lenders, appraisers or home inspectors, you may find some component of my post that will lend itself to your own profession.

I believe that the questions raised are good ones. I believe we must all take a good hard look at where we have come, what we are going through and then set our sights on how NEVER to have to endure this kind of damage again. The first time this happened, "The GREAT Depression" our country was still young. She had never seen an economic down turn like that. The shame of where we find ourselves, as a nation and as individuals... today... is that we lost sight of what our grandparents learned and what they taught our parents and what our parents tried to teach us. We must learn this lesson this time so that our off spring and our off spring's off spring never have to walk in this pit of fire again!

Lori & G-II are licensed REALTORS® with Coldwell Banker Residential Brokerage. They can be reached by cell phone at either 602.574.5674 for Lori or 602.796.5674 for G-II or via eMail at Lori.and.G-II@RealEstateInPhoenix.net.

By now, everyone, or almost everyone, is aware that the Housing and Economic Recovery Act of 2008 was signed into law by President Bush on July 30th, 2008. The bill was strongly supported by the NATIONAL ASSOCIATION OF REALTORS® (NAR). What many don't know is that NAR did not oppose SEC. 2113. CASH INVESTMENT REQUIREMENT AND PROHIBITION OF SELLER-FUNDED DOWN PAYMENT, a component of this bill that ripped away Down Payment Assistance Programs and increased the minimum down payment requirement of FHA buyers. I have searched everywhere to try and find an answer to why NAR would not take a stand on this very important issue but with little or no success. Now... here's a trivia for you. It has been suggested that it was President Bush 1 who made DPA available to FHA buyers in 1999. And while it is true that it was his son, President Bush 2 who embezzled DPA from the FHA buyers on July 30th 2008, in an attempt to place blame for the current mortgage crisis on DPA type loans, DPA actually got it's birth in 1996 when... reportedly... Nehemiah's founder, Don Harris, who is also a real estate lawyer, found a mechanism within the statutes, that let charitable organizations make such gifts.

Section 2113 was inserted into H.R. 3221 at the eleventh hour, by the "Good O'l Boy's network on Capital Hill" just days before the President was to sign the bill into law; a typical underhanded trick perpetrated by many Washington "me first... you last" politicians.

To their credit, a group of honorable representatives, in the House of Representatives, launched an attack on Section 2113 of H.R. 3221. Less than 24 hours after President Bush signed H.R. 3221 into law and barely allowing the ink to dry, Al Green, U.S. Congressman for the 9th District of Texas along with Gary G. Miller, U.S. Congressman for the 42nd District of California, Maxine Waters, U.S. Congresswoman for the 35th District of California and Christopher Shays, U.S. Congressman for the 4th District of Connecticut sponsored H.R. 6694. H.R. 6694 is a bill intended to revise the requirements for seller-financed down payment assistance for mortgages for single-family housing insured by the Secretary of Housing and Urban Development. The bill does not address the increased down payment requirement but the bill does take an enormous step toward overturning the Down Payment Assistance regulation set forth in H.R. 3221.

H.R. 6694, FHA borrowers would need to meet a set of criteria that would help lay to rest the concerns expressed by the HUD over loans being granted to borrowers who have not demonstrated the necessary credit skills to maintain a mortgage payment. For example, the borrower would have to have a FICO credit score of not less than 680. However there are provisions where the buyer/borrower could have a FICO score as low as 620. You can read more about H.R. 6694 by CLICKING HERE.

There has been a lot of dispute leveled at the DPA programs, alleging that FHA DPA loans have a higher rate of foreclosure than those FHA loans that did not contain a DPA component. These allegations are simply not true. In fact a GAO (U.S. Government Accounting Office) study found that 91% DPA homebuyers were successful homeowners and were not in default on their mortgage! Contrast the DPA statistic with the current Fannie/Freddie crisis. Since late 2006 over 282 major lenders have gone bankrupt due to failed conventional Freddie/Fannie hybrid loans using either 80/20, 80/15/5, 80/10/10 and/or 100% LTV mortgages. Now... you tell me... which program has a better track record-the goofy NINJA (No Income, No Job, No Asset) loans of yesteryear or the FHA DPA loans? It really isn't rocket science!

When Brian D. Montgomery, the F.H.A. commissioner made the claim that FHA had to withdraw $4.6 Billion from it's $21 Billion capital reserve fund in May to cover the costs of losses, claiming that those losses were primarily due to the agency’s seller-financed down payment assistance mortgage program, he would not and could not assign any figures to sustain his claim. One can only conclude that Mr. Montgomery was simply pandering to the fears of Congress and to the National Press Club he spoke to in June 2008.

There have been allegations that DPA loan programs placed an unrealistic and over-burdensome strain on our economy. In fact, this is far from the truth. DPA programs helped to add over $24 billion to the economy from 2000 through 2005. Additionally, DPA composes over 40% of FHA business and uses NO tax-payer dollars to fund their programs. In reality, tax revenues generated to State and local governments by new home construction bought with DPA: 150,000 x $82,269 (amount in tax revenue generated from an average single family unit) was in excess of $12.3 Billion (that's BILLION with a "B") between 2000 and 2005. Now... contrast that track record with the multi-trillion dollar bailout of Freddie Mac and Fannie Mae, that will use your/our tax dollars. Where is the logic to strike at the very heart of the buyer pool who has demonstrated the most stable and responsible component of our mortgage economy? Over 1 million home owners have been created through the use of DPA FHA loans since its inception.

Between January 1st 2008 and August 31st 2008, the real estate industry saw record sales, depleting the swollen reservoirs of unsold inventory. According to ARMLS (Arizona Regional Multiple Listing System) over 80% of the closed transactions, in this time period, occurred in the price range under $346,250. Lenders who processed FHA loans reported that over 80% of their pipe line was DPA type FHA loans. If this is any kind of bell weather for the rest of the nation then the end of DPA can only spell a resurgence of unsold inventory and a depletion of the buyer pool. It has been projected, by AmeriDream, that the real estate market could lose 25,000 buyers per month from the national real estate landscape.

In 2008, two different federal courts took the rare step of striking down the HUD regulation which would have banned seller-funded down payment assistance PA). The courts’ decisions were NOT made on technical grounds, but for fundamental substantive reasons—the courts ruled that the HUD regulation violated the most basic principles of the Administrative Procedures Act (APA), that is, that an agency which issues a regulation must present at least some “reasoned decision-making” in support of its position.

The APA sets a very low threshold for an agency to meet for a regulation to be valid if it is challenged in court. An agency does not need to convince a court that a regulation is correct. An agency merely needs to present a plausible rationale and minimal evidence supporting the regulation. Yet the courts held that HUD failed to articulate any plausible policy rationale or provide verifiable data in support of its position.

The courts ruled in the Civil Action No. 07-1282 (PLF), AMERIDREAM, INC., Plaintiff, v. ALPHONSO JACKSON, Secretary, United States Department of Housing and Urban Development, Defendant. that;

“HUD’s reliance on such flimsy anecdotal evidence ‘is not sufficient to enable [the Court] to conclude that the [Final Rule] was the product of reasoned decision-making.’ Motor Vehicle Mfrs. Association v. State Farm Mut. Auto. Ins. Co.,

After HUD had it's head handed to them by the courts, HUD again proposed a rule to ban charitable DPA, but this time sought legislation which would impose a ban without HUD having to present any rationale or data supporting that policy.

The choice is clear. We all must rally to the aid of the DPA programs. The data, presented by HUD and all pundents who are proponents of stealing DPA from FHA buyers, is flawed... and twisted to strike fear in the hearts of the American tax payers and congress.

Please help put DPA back on-line for worthy and qualified FHA home buyers. CLICK HERE to locate your state representative and tell him or her that you want them to support and vote for H.R. 6694 before September 26th 2008... before Congress adjourns for the rest of the year.

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Lori & G-II are REALTORS® with Coldwell Banker Residential Brokerage in Phoenix, Arizona.

Lori & G-II can be reached for comment at Lori.and.G-II@RealEstateInPhoenix.net or send a text message to their cell phone by CLICKING HERE or by cell phone at (602) 796-5674.