Fannie Mae Announces Keys to Recovery Initiatives

According to NAR's Washington Report dated May 6, 2008, Fannie Mae President and CEO Dan Mudd announced Fannie's new Keys to Recovery Initiative to promote liquidity, stability, and affordability in the housing and mortgage markets.

Here are the highlights:

First, Fannie is working to reduce the cost to consumers of jumbo conforming loans (loans above $417,000 up to $729,750) and make it easier to qualify for these loans. NAR expects these steps to significantly lower mortgage costs and give more choices for many families living in high cost areas.

Second, Fannie is allowing up-to-date borrowers to refinance Fannie Mae-owned mortgages even where current value of the home is significantly less than the existing mortgage. This innovation should help keep thousands of families in their homes and prevent foreclosures that are a disaster not only for families but whole communities.

Finally, Fannie has entered into an agreement with the state housing finance agencies to provide $10 billion in financing for first-time homebuyers and entered into a new partnership with the Self-Help Credit Union to minimize the harm caused by foreclosures and help families become homeowners in rehabilitated foreclosed properties.

The 5 Biggest Mistakes Experienced Real Estate Agents Make

This Article is from the NYSAR Communications Center and was used by permission from Realty Times (05/06/08)- Aurthor Denise Lones

1. Experienced real estate agents often neglect to follow up with their contacts, believing that being out in the field with as many buyers and sellers as possible constitutes a busy day. However, experts say agents with automated follow-up systems accomplish more when they complete these tasks on a daily basis.

2. Experts also note that agents without goals tend to get into a routine, which prevents them from moving up a notch to generate more income. To avoid complacency, agents should set goals and stop doing tasks that do not boost business.

3. Additionally, experts say they should hire assistants and outsource various processes instead of trying to do everything by themselves.

4. Agents should seek out educational opportunities to enhance their careers, rather than take courses only when they need to renew their licenses.

5. Finally, experts underscore the importance of spending money on marketing upfront, using creative advertisements to differentiate themselves from the competition

This is What Happens to Over Priced Listings

Quote of the Week

This week's quote is about service and serving.

"The true leader serves. Serves people. Serves their best interests, and in doing so will not always be popular, may not always impress. But because true leaders are motivated by loving concern than a desire for personal glory, they are willing to pay the price."

— Eugene B. Habeckerin -The Other Side of Leadership

The Greatest Threat to the Current Economic & Housing Market Recovery

As I mentioned at the end of my blog article titled “Why What Happened on Wall Street This Week Was Important and What’s The Concern About Inflation”, dated Saturday 3/22/08, the situation to watch with regard to housing market recovery would be tightening credit which threatens to halt any recovery. Well, that is exactly where we are at right now!

Here’s exactly what I said in that article: “We now have a situation in which lenders do not want to lend. The danger here is that the Fed is wanting to stimulate the economy while the banks are digging in their heels. This is the situation to watch at this point. It will be interesting to see how this works its way out.”

We are now navigating this difficult and potentially perilous course in the river of economic recovery. Here’s what’s going on:

Over the last three months, according to the Federal Reserve, consumers and businesses have found it more difficult to borrow money. In other words, we are experiencing a credit crunch.

According to a survey done by the Fed (Senior Loan Officer survey) in April, more than half the banks surveyed said they have tightened up on commercial an residential loans, real estate loans, and home-equity lines of credit. Back in January only about one-third of those banks surveyed had tightened credit.

The credit crunch has effected more than the sub-prime segment of the market. In fact, it affects almost every borrower. What this translates into is less borrowing, less (and slower) economic growth, and less consumer spending – not the stuff that supports an economic recovery.

Why have the banks tightened credit? Because they need to minimize their risks and turn a profit on their loans in order to stay solvent. As a result, banks demand increasing interest-rate spreads on loans (the difference between a lender’s cost of funds and the rate they charge to their customers for those funds), more documentation, more collateral, etc.

25% of the banks surveyed are less willing to make consumer loans. Requirements being place on home-equity loans and even credit cards are becoming much tougher. Few banks are willing to make student loans for the next academic year.

Nearly 80% of the banks surveyed have increased standards for commercial real estate loans. Concerning commercial and industrial loans, 55% of banks have tightened their standards as well.

The tightening of credit, to one degree or another, is necessary at a time like this. Not long ago, people who had dubious credit did not have much of any problem obtaining loans. People were beginning to feel that obtaining money by credit was a right, not a privilege regardless of their credit-worthiness. These questionable loans, in many cases, have now become loans in default thus causing lending institutions to suffer with some of them even going into default. So, now we are back to reality and realize that credit truly does depend upon a person’s credit-worthiness.

However, at a time when the Federal Reserve is loosening credit and seeking to make money cheap to borrow, the banks are doing just the opposite. This does not bode well for an economic recovery. As a matter of fact, while it commonplace for lenders to tighten up credit during an economic downturn, lenders are tightening up even more than they have in past downturns.

When credit standards are changed (either loosened or tightened) there is usually a lag of about 9 months between when this happens and the impact it has on the economy. As credit tightens, it will blunt, or perhaps even stall, the effects of an economic recovery and expansion in the months and next few years ahead.

As I mentioned in a blog article posted earlier today 5/10/08, titled “Investors Begin Buying Up Mortgages – A Very Good Sign For Economic Recovery”, investors are starting to buy up billions of dollars in mortgages that have been stuck on the books of banks. While this has not yet freed up money for new mortgages, it is a critical precursor for banks to begin lending again at levels that will both secure good risks for them but also loosen credit sufficiently and have the intended effect of supporting and hastening, not halting, a economic and housing market recovery.

The action of the banks by tightening credit at this time is perhaps the most critical matter and potential stumbling block concerning the recovery of the economy and housing market. It is certainly worth watching and seeing what the Fed, Administration, and GSEs (government sponsored enterprises such as Fannie Mae and Freddie Mac) will do.

Another major concern for the housing market is that of record losses sustained by mega-lenders such as Countrywide Financial Corp. and GMAC. However, that is the subject of another article at another time.

-Written by Ross Gill

That Indespensable Quality

By: Brian Tracy

Dare to Go Forward
Winston Churchill once said, "Courage is rightly considered the foremost of the virtues because upon it, all others depend." Courage is the chief distinguishing characteristic of the true leader. It is almost always visible in the leader's words and actions. It is absolutely indispensable to success, happiness and the ability to motivate other people to be the best they can be.

Follow Through On Your Vision
In a way, it is easy to develop a big vision for yourself and for the person you want to be. It is easy to commit yourself to living with complete integrity. But it requires incredible courage to follow through on your vision and on your commitments. You see, as soon as you set a high goal or standard for yourself, you will run into all kinds of difficulties and setbacks.

Refuse to Compromise
You will be surrounded by temptations to compromise your values and your vision. You will feel an almost irresistible urge to "get along by going along." Your desire to earn the respect and cooperation of others can easily lead to the abandonment of your principles, and here is where courage comes in.

Stick to Your Principles
Courage combined with integrity is the foundation of character. The first form of courage is your ability to stick to your principles, to stand for what you believe in and to refuse to budge unless you feel right about the alternative. Courage is also the ability to step out in faith, to launch out into the unknown and then to face the inevitable doubt and uncertainty that accompany every new venture.

Avoid Your Comfort Zone
Most people are seduced by the lure of the comfort zone. This can be likened to going out of a warm house on a cold, windy morning. The average person, when he feels the storm swirling outside his comfort zone, rushes back inside where it's nice and warm. But not the true leader. The true leader has the courage to step away from the familiar and comfortable and to face the unknown with no guarantees of success. It is this ability to "boldly go where no man has gone before" that distinguishes you as a leader from the average person. This is the example that you must set if you are to rise above the average. It is this example that inspires and motivates other people to rise above their previous levels of accomplishment as well.

The Attack of Alexander the Great
Alexander the Great, the king of Macedonia, was one of the most superb leaders of all time. He became king at the age of 19, when his father, Philip II, was assassinated. In the next 11 years, he conquered much of the known world, leading his armies against numerically superior forces.

Lead the Action
Yet, when he was at the height of his power, the master of the known world, the greatest ruler in history to that date, he would still draw his sword at the beginning of a battle and lead his men forward into the conflict. He insisted on leading by example. Alexander felt that he could not ask his men to risk their lives unless he was willing to demonstrate by his actions that he had complete confidence in the outcome. The sight of Alexander charging forward so excited and motivated his soldiers that no force on earth could stand before them.

Action Exercises
Here are two things you can do immediately to put these ideas into action:First, set big goals for yourself and force yourself out of the comfort zone by acting boldly - even when there is no guarantee of success. Go boldly where no one has ever gone before.Second, resolve to act quickly and decisively when you are confronted with a difficult or dangerous situation. Dare to go forward. Practice audacity in all things. Acting with courage builds your courage and confidence higher and higher.

Seasonal Adjustment Will Account For A Rise in Home Sales

A flat pattern in home sales activity should continue for the next couple of months before improving over the summer, according to the latest forecast by the NATIONAL ASSOCIATION OF REALTORS®.

Lawrence Yun, NAR chief economist, said the extent of an expected recovery hinges on better access to affordable loans. “Things are beginning to improve, but the availability of affordable mortgages is uneven around the country and sometimes within metropolitan areas,” he says.

“As anticipated, we continue to look for a soft first half of the year, for both housing and the economy, before notable improvements in the second half. Some time is needed for FHA and new conforming jumbo loans to become widely available.”

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in March, edged down 1.0 percent to 83.0 from a downwardly revised level of 83.8 in February, and was 20.1 percent lower than the March 2007 index of 103.9.

NAR President Richard F. Gaylord says additional costs in many markets are hindering a recovery. “Our members are telling us that more buyers are looking at homes but are slow in signing contracts, and that’s contributing to the weakness in pending home sales,” he says. “In many cases buyers are waiting for greater access to affordable credit, especially in higher cost areas, but some are disappointed with what appears to be unnecessarily restrictive lending requirements. The good news this week is there is some discussion toward relaxing some of the burdensome lending practices.”

The PHSI in the Northeast jumped 12.5 percent in March to 80.8 but remains 15.4 percent below a year ago. In the South, the index slipped 0.1 percent to 84.9 and is 26.7 percent lower than March 2007. The index in the West declined 1.4 percent in March to 91.2 and is 9.5 percent below a year ago. In the Midwest, the index fell 10.4 percent in March to 74.1 and is 22.3 percent below March 2007.

Existing-home sales are projected to rise from an annual pace of 4.95 million in the first quarter to 5.82 million in the fourth quarter. For all of 2008, existing-home sales are likely to total 5.39 million, and then rise 6.1 percent to 5.72 million next year. “Although more than half of local markets are expected to see price growth this year, the aggregate existing-home price will decline 2.4 percent in 2008, driven by a relatively few markets that are very oversupplied,” Yun says. The median price is forecast at $213,700 this year before rising 4.1 percent to $222,600 in 2009.

Some areas already are seeing sales increases, underscoring that all real estate is local. In March, unpublished snapshot data shows sales in Bakersfield, Calif., and Jackson, Miss., were higher than a year ago. At the same time, price gains were noted in markets such as Buffalo-Niagara Falls, and Cedar Rapids, Iowa.

On May 13, NAR will report first-quarter data on metropolitan area home prices, covering about 150 metro areas, and state home sales. “Although some market adjustments are necessary, a downward overshooting of the housing market would cause unnecessary loss in economic output, income, and jobs,” Yun says. “It is critical to stimulate housing demand by inducing fence sitters back into the market. A home buyer tax credit on any home purchase would accomplish that.”

Here are some highlights from NAR's report:

New-homes. Sales of new homes are expected to fall 30.9 percent to 536,000 this year before rising 10.1 percent to 590,000 in 2009. Housing starts, including multifamily units, will probably drop 29.5 percent to 955,000 in 2008, and then rise 1.3 percent to 967,000 next year. The median new-home price is estimated to fall 3.7 percent to $238,000 this year, and then rise 5.4 percent in 2009 to $250,900.

Rates. The 30-year fixed-rate mortgage is likely to rise gradually to 6.2 percent by the end of the year, and then average 6.3 percent in 2009.
Affordability. NAR’s housing affordability index is expected to rise 10 percentage points to 127.0 for all of 2008.

GDP. Growth in the U.S. gross domestic product (GDP) should be 1.5 percent this year and 2.3 percent in 2009. The unemployment rate is projected to average 5.3 percent in 2008 and 5.5 percent next year.

Inflation. Inflation, as measured by the Consumer Price Index, is seen at 3.4 percent this year and 2.2 percent in 2009. Inflation-adjusted disposable personal income is forecast to grow 1.2 percent in 2008 and 3.0 percent next year

Treasury's Paulson Says Credit Crisis in Ending!

REALTOR® Magazine Daily Real Estate News May 9, 2008

Treasury Secretary Henry Paulson said Wednesday that the worst of the nation’s credit crisis has probably passed.

"There's progress," he said. "I think we're closer to the end of this" than to the beginning.

But Paulson doesn’t see much immediate change in the housing market. He said depressed home sales and prices remained "the biggest risk to the economy,” and he expects further pressure on housing in the months ahead."

Even the optimists here believe that you're going to continue to see in the next several months" newspaper headlines that will say prices have declined even further and foreclosures have increased, he said. "That's what happens during a correction."

Source: The Associated Press, Jeannine Aversa and Martin Crutsinger (05/07/08)

Investors Begin Buying Up Mortgages - A Very Good Sign for Economic Recovery!

REALTOR® Magazine Daily Real Estate News May 9, 2008

Banks Revisit Mortgage-Backed Securities

Investors are starting to buy up billions of dollars in mortgages that have been stuck on the books of banks, but that hasn’t yet freed up money for new mortgages.

In the past four weeks, banks have gone to market with four issues of commercial mortgage backed securities with a total balance of $4.9 billion, according to data provider Commercial Real Estate Direct. That’s a big improvement from weeks earlier this year when there were no deals, but down from the same period last year, when the issuance totaled $78.7 billion.

Banks are offering the securities at discounts ranging from 5 percent to 20 percent, but those discounts are modest compared to what vulture investors got in the wake of the last major real-estate collapse in the early 1990s.That’s because default rates on commercial real estate remain low by historical standards. And there’s a lot of cash available. Banks don’t have to take the low-ball offers.

Source: The Wall Street Journal, Lingling Wei and Jennifer S. Forsyth (05/09/2008)

U.S. House of Representatives Passes Plan to Help Borrowers

REALTOR® Magazine Daily Real Estate News May 9, 2008

The U.S. House passed a housing aid plan Thursday that would provide $300 billion to refinance mortgages for homeowners facing foreclosure.

Under the program, lenders will get an FHA guarantee on the loan if they write down the principal amount by 15 percent from the home’s current appraised value. The bill excludes investors and those who lied about their income on a loan application.A companion measure would give first-time home buyers a $7,500 tax credit and provide $15 billion to allow communities to buy and fix abandoned homes. The vote on the FHA plan was 266 to 155, drawing support from 39 Republicans. The homebuyer tax credit was approved by a margin of 322 to 94.

The bill now goes to the Senate, which must debate and vote on it. President Bush has said he would veto the measure if it passes.

Source: Reuters News, Patrick Rucker (05/08/2008)

Many Metro Markets Are Doing Well Despite What Is Frequently Reported By The Press!

REALTOR® Magazine Daily Real Estate News May 2, 2008

Markets That Are Doing Just Fine, Thanks!

Some cities aren’t feeling the pain of falling home prices or rising unemployment. Despite the national slowdown, they're doing just fine.

To identify the economically healthiest cities, Forbes magazine examined key measures in the country’s 50 largest metros. The magazine studied unemployment and job-growth data from the Bureau of Labor Statistics, home price data from the NATIONAL ASSOCIATION REALTORS®, and information on gross metropolitan product growth provided by the U.S. Conference of Mayors.

Here are the 10 cities that Forbes sees as practically recession-proof, along with the percentage of growth for median-priced homes in the past year.

Oklahoma City, Okla. Median home price: +8.2 percent

San Antonio, Texas +7.9 percent

Austin, Texas +6.4 percent

San Jose, Calif. +11.2 percent

Raleigh, N.C. +4 percent

Salt Lake City +2.5 percent

Houston +1.1 percent

Seattle +1.2 percent

Charlotte, N.C. +3.3 percent

Dallas-Fort Worth +.5 percent

Source: Forbes, Matt Woolsey (04/29/2008)

FHA Mortgage Refinance Bill Moves Ahead

REALTOR® Magazine Online Edition -Daily Real Estate News May 2, 2008

The U.S. House Financial Services Committee on Thursday passed a bill that paves the way for the Federal Housing Administration to refinance $300 billion in troubled mortgages.Lenders would have to erase a portion of the original loan in order to secure a government guarantee on future payments.The plan would "put liquidity back in the market and not interfere with the market, I think, but help restore (it)," Committee Chairman Barney Frank says.Democrats, who hold the majority in the House, are expected to pass the measure once it is presented for a vote next week. A Senate panel is to begin drafting a companion measure on Tuesday.

The bill will probably have a harder time in the Republican-dominated Senate.

Source: Reuters News, Patrick Rucker (05/02/2008)

How To Avoid Anxiety Overload!

This is an excellent article from REALTOR® Magazine. I highly recommend reading it. -Ross

Stop stressing Market Anxiety Overload? Is uncertainty in your market stressing you out?
Experts discuss top anxiety triggers for real estate pros, including the common fears of not making enough money or losing clients, and provide action plans for relief.

ARTICLE BY ELYSE UMLAUF-GARNEAU

Sellers aren't the only ones stressing out. As home sales slide and financial markets roil, it’s easy for you to let anxiety get the upper hand.

“Real estate practitioners are faced with threats to their income and livelihood,” says psychologist Alan Keck of Altamonte Springs, Fla. “They’ve also seen increased competition because more people have entered the business in recent years. Moreover, many are financially overextended.”

But rather than being paralyzed by worry or fear, you can ease anxiety by taking concrete actions tailored to today’s market realities.

Anxiety trigger 1: Fewer clients and transactions.

Market to a new niche. Emily Link, ABR®, CRS®, a practitioner with Keller Williams Realty, Thousand Oaks, Calif., has weathered three major downturns in her 28 years in the business. To keep sales moving during the current sales slump, Link refocused her marketing on first-time buyers. In March, she launched a series of first-time buyer seminars, and she’s tapping more online outlets to increase her name recognition and get greater exposure for listings. She promotes properties on Craigslist in Ventura and Los Angeles and uses the real estate Internet marketing company Z57 to get her listings syndicated on more than 15 real estate search engines. Another option some practitioners may want to explore is working REOs. (For more, see “Mastering Foreclosures" - a separate article located at http://www.realtor.org/).

Up your contact rate. Even though sales are slower, NAR is projecting some 4.9 million in existing-home sales for the first half of the year before an improvement to 5.8 million in the second half. Get a bigger piece of the pie by increasing the number of contacts you make each week. Determine how many appointments you need on average to secure a listing. Next, develop a schedule to make that many contacts each month.

Cindy Wilson, a salesperson with Koenig & Strey GMAC Real Estate, Chicago has ramped up her client contact. New prospects receive hand-written notes; Chicago Cubs magnets and schedules are in the mail to her sphere of influence; and she stays in regular contact with lukewarm prospects. “It takes persistence to turn a lead into a client,” she says. “I wrote notes and made calls at least monthly to check in and keep in touch, not push.” That was the strategy that finally landed Wilson a listing with someone she met nearly six months ago. (For more prospecting tips and ideas, see “Prospect for Profits” which can be found at www.realtor.org).

Resist putting on the pressure. Even if you’re desperate to close a deal, ratchet down any pressure you’re tempted to exert on reluctant clients, says Jana Martin, a psychologist in Long Beach, Calif. “People can sniff out desperation pretty quickly,” she says. “You want to put aside aggressive tactics.”

Re-educate yourself. Ann DeFries, CRS®, sales manager of Balistreri Realty, Boca Raton, Fla., and 2008 president of the Women’s Council of REALTORS®, urges practitioners to improve their businesses by gaining broader skills, especially if they first entered real estate during the go-go years. “In our office, we’re stepping up education on basics such as business planning, negotiating, market analysis, building rapport, and writing contracts,” she says. (For more, see REALTOR® magazine’s Work Smart series and Prospecting Resource Guide which can be found at www.realtor.org)

Anxiety trigger 2: Shrinking income. Spend smarter.

Analyze all your marketing and business costs, and then eliminate those that don’t produce business benefits. For example, Link opted for a cheaper — and turns out more feature-rich — contact management program and cut marketing costs by temporarily shelving a glossy promotional magazine. Though beautiful, the magazine wasn’t giving her the best results for her money. Just those two cuts save her $110 monthly. (For more on projecting and controlling expenses, see “Budget for Success" whcih can be found at www.realtor.org)

Cut your personal expenses. Take some of the pressure off yourself by reducing your personal expenses wherever possible. Put off buying a new car for one more year; eliminate travel costs and explore a vacation spot closer to home; eat out less often. For more ideas, see “Save Money Now” or tap into additional saving tips from AmericaSaves.org.

“We’re not a generation used to delaying gratification, but people are going to have to make some changes,” says Nancy Molitor, a Wilmette, Ill.-based psychologist. Her suggestion: keep the fun, cut the costs. “The challenge is to still have diversions, but find ones that are less intense and exuberant than people have gotten used to,” says Molitor.

Anxiety trigger 3: Buyers won't buy because they think home prices will keep falling.

Curb the fear of overpaying. Use your expertise and local market facts to counter buyers’ anxieties about paying too much for a home. Wilson shows buyers a neighborhood’s pricing history to illustrate by just how much prices have become more favorable to them. Others, such as DeFries, remind buyers that housing is a long-term investment and not a get-rich-quick scheme. “You’re buying a dwelling, not a retirement program,” says Robyn DeLong, a practitioner with Lyon Real Estate, Citrus Heights, Calif. It’s also helpful to remind buyers that according to NAR’s Research Department, the value of the average home nearly doubles every 10 years.

Dispel the hope of timing the market. DeFries warns fence-sitting buyers about the dangers of waiting too long for more attractive prices and missing today’s low mortgage rates. NAR’s Research Division is projecting that mortgage interest rates will increase throughout 2008 and the first half of 2009. For more on overcoming buyer and seller objections, get some scripts to help you respond with “Say the Right Thing.”

Fend off buyer pessimism. NAR’s new advertising and promotional campaign, “Surround Sound,” focuses on educating consumers about the favorable conditions that exist for buyers.

Anxiety trigger 4: Sellers’ don’t want to lower prices.

Provide a true picture of today’s market. Some sellers are still clinging to the belief that they can sell a home for what a neighbor netted 18 months ago. In most markets, that’s just not going to happen. Wilson begins by acknowledging sellers’ disappointment, saying, “Though you’re not going to make as much as you anticipated, you have enjoyed this property as your home — a value that can’t be quantified.” In addition, she points out that the property they’re trading up to will likely provide similar joy and they’ll be getting it for a good price. She then addresses the new market reality by showing a detailed pricing history of condo units in the building and how selling prices have declined neighborhood-wide in the last year.

Show a little tough love. Sellers are understandably unhappy that their home may sell for less than it might have a year ago, but facing reality is what being an adult is all about. “If I can’t convince sellers with market data, I take a tough-love stance,” Wilson says. “I say, ‘you never actually had that money.’ That usually stops the argument.”

Provide a life preserver to underwater sellers. Owners whose mortgage debt now exceeds their home’s current market value present a special situation. Do your part to make a sale feasible by setting up a reference team of accountants, mortgage experts, CPAs, and lawyers who can analyze sellers’ financial picture and outline options. For more on short sales, read “How to Succeed at Short Sales.”

Anxiety trigger 5: You (and your clients) are faced with chronic negative press about real estate.

Counter a negative with a positive. Sure, negative stories on home prices are shaking some consumers, but instead of getting mad, take action. Use some of the same market statistics you’ve developed for your buyer prospects, and send them to your local media outlets. Offer to meet with reporters and explain what your local market is really experiencing. Also check sources at REALTOR.org for information on the importance of home ownership in building long-term wealth. Finally, read “Winning the Publicity Game” for tips on working with the media.

Reduce media consumption. There’s a cumulative negative effect in hearing the same reports over and over. Your intellect hears one thing and your emotions respond to another. “The more your read, the more you think the sky is falling,” notes Molitor. Though you need to understand the world economy, you also need a realistic assessment of your personal economic situation. If your finances are OK, then a tidal wave of negative media should be less alarming to you.

Anxiety trigger 6: Feelings of helplessness and depression.

Focus on what you can control. “Real estate cycles are part of the business,” says DeLong. “I try to manage any internal anxiety I feel because if I don’t, it shows on the outside. Instead of saying ‘oh dear, oh dear,’ I’m focused on what I want and what I need to do to move forward and not spiral down.” She concentrates on the fact that the market is still strong for qualified buyers and investors and shares that message with prospects, past clients, and others asking about market conditions. “People make money in every market and there are opportunities if you look for them,” she adds. DeLong has also upped her networking at Rotary Club meetings and Chamber of Commerce events and holds more open houses to meet new buyers.

Resist false feel-goods. People often try to counter stresses by treating themselves to new clothes, vacations, or expensive meals when they’re down, says Martin. Instead these short-term solutions “just compound the problem,” she says. Similarly, avoid overindulgence in food, drinking, or smoking to quell anxiety. For more coping strategies, spend some time with the exercises in the “Reducing Stress” toolkit at REALTOR®.

While there’s no silver bullet that will turn a slow market into a hot one, using a few of our strategies will reduce your anxieties now and ensure that you’re ready to make the most of the next market upswing.

Legislative Efforts & Agenda At the State Capitol

This is an update of new and pending legislation in Albany.


New York Subprime Predatory Lending Prevention Act (A.10679/S.6394)

Assemblyman Brennan (D-Brooklyn) introduced comprehensive legislation known as the New York Subprime Predatory Lending Prevention Act. The bill imposes numerous consumer protections relating to the issuance of subprime home loans. Some specific provisions include: prohibiting the granting of subprime loans without regard to the borrowers’ repayment ability; holding lenders responsible for policing their associated appraisers; prohibiting originators from influencing the appraisal process; and requiring the legend on subprime lending documents to explicitly state "This loan is a subprime home loan and is subject to the New York Subprime Predatory Prevention Act." The legislation is also sponsored by Senator Klein (D-Bronx).


First Time Homebuyer Property Tax Exemption (S.7634)

Senator Hannon (R-Nassau) introduced legislation to provide a property tax exemption to certain first time homebuyers. The bill would apply to first time homebuyers between the ages of 18-40 with a household income up to $150,000 and would phase out on a sliding scale over a ten year period from the date of purchase. NYSAR will be issuing a memo in support of this legislation in the coming weeks. See link to view bill text: http://www.assembly.state.ny.us/leg/?bn=S07634&sh=t


Freshwater Wetland Authority (A.7133)

The Assembly passed NYSAR-opposed legislation sponsored by Assemblyman Sweeney (D-Lindenhurst) to expand the state Department of Environmental Conservation’s ability to regulate wetlands. The current threshold is at least 12.4 acres unless the wetland is determined to be of unusual importance. This measure would reduce that size to one acre or more. NYSAR believes this reduction could seriously hinder the creation of affordable housing and economic development throughout the state. The legislation is carried by Senator Marcellino (R-Syosset) where it has remained stalled in the Environmental Conservation committee. See link to view bill text: http://www.assembly.state.ny.us/leg/?bn=A07133&sh=t

The following are news items that discuss recent developments at the Capitol
Lawmakers Infuse $$ Into State’s Affordable Housing Programs

The latest state budget invests over $300 million in affordable housing programs, reflecting a $200 million increase over traditional levels. The additional funds are intended to bolster existing state programs designed to build and preserve affordable housing throughout the Empire state. Commissioner VanAmerongen of the Division of Housing and Community Renewal (DHCR), said: "Thanks to the leadership of Governor Paterson and the members of the Legislature, we are making an unprecedented investment in affordable and supportive housing that will pay dividends for all the residents of New York State." See link to view complete details of the specific housing programs: http://www.dhcr.state.ny.us/general/public/press080410.htm


NYS Division of Housing and Community Renewal Announce $500,000 in Grants

The NYS Community Development Block Grant program has awarded 21 communities across Upstate with grants to help provide affordable housing and jump start local economies. The grants may be used for a number of planning activities to help municipalities identify and prioritize community development needs, goals and create sustainable strategies to achieve them. The City of Cortland, for example will apply their grant toward developing a plan to revitalize its East End neighborhood and Albany County will develop a workforce housing plan. See link to view the complete list of grant recipients: http://www.dhcr.state.ny.us/


Clock Ticking on NY’s Property Tax Relief Commission

The State Commission on Property Tax Relief has conducted eight meetings to explore various options to help alleviate the state’s crushing property tax burden. The dilemma of getting teachers unions, school boards, business groups and the general public to find consensus has become a major stumbling block. Suggestions such as imposing a cap on property taxes and a tax circuit breaker, meaning taxpayers wouldn’t pay more than a certain percentage of their income in property taxes have been discussed with very little agreement on a final resolution. The commission faces the daunting task of submitting a report to the governor by May 22 detailing a plan to cut property taxes which meets the simultaneous needs of the public and various interest groups.

Are We In a Recession? If So, What Does It Mean?

Realtor® Magazine Online - Interactive Article - Daily Real Estate News April 29, 2008

Two-thirds of the 52 economists surveyed last week by USA Today say the U.S. is in recession. Another 13 percent believe that the economy is headed that way sometime this year.The good news is that nearly all believe the recession will be short and shallow and inflation will decline.

Unemployment, one of the hallmarks of a recession, will probably rise to about 6 percent, says David Berson, chief economist for the PMI Group. "That's pretty low for a recession," he saysBut Berson continues to worry about real estate. "Given the drop in home prices, there's a big risk that foreclosures will go up more than expected," Berson says.

Some economists, however, are more optimistic and do not think the economy has, or will necessarily, fall into a recession. "A recession, by definition, is a broad-based decline in GDP that lasts more than a few months," says Ken Mayland of ClearView Economics. So even if there were a decline in the first quarter, Mayland says, that doesn't mean there will necessarily be a decline in the second quarter.

Source: USA Today, John Waggoner and Barbara Hansen (4/29/08)

Fannie & Freddie Go on a Buying Spree

Back on Saturday 3/22/08, I wrote and posted an article on this blog titled "Fannie & Freddie Get a Little Help From Their Uncle Sam" which mentioned that Fannie Mae and Freddie Mac agreed to expand their puchases of U.S. mortgages and related securities after President Bush reduced the amount of capital these companies are required to hold as a cushion against lossses (monies held in reserve).

To bring you up to date on this, contracts to buy mortages by these two major government-backed lenders were up sharply in March. Freddie Mac has reported that portfolio mortgage purchase and sales agreements hit $43.5 billion, up from $14.8 billion in February this year. Fannie Mae reported that mortgage commitments increased to $31 billion in March, up from $25 billion in February.

The Office of Federal Housing Enterprise Oversight (OFHEO) said that both Fannie Mae and Freddie Mac, which either own or guarantee at least 40% of the oustanding U.S. residential mortgage debt, should be able to purchase or guarantee $2 trillion in mortgages in 2008. In February, the OFHEO lifted the $1.5 trillion cap on loans and mortgage-backed securities that Fannie Mae and Freddie Mac were allowed to buy and hold.

The reason this is important is obvious. The more mortgages Fannie and Freddie can purchase, the more stability there will be in the mortgage-backed securities market and the real estate market. It will also give lenders a sense of ease. This is all part of getting the housing market back on its feet and moving forward again.

Residents Question Rising Property Taxes

REALTOR® Magazine Online Edition - Daily Real Estate News for April 28, 2008

Home owners across the country are facing higher property taxes at a time when rising food and gas prices, declining home prices, and increased job losses already are taking a toll.

Municipalities are hiking property taxes to balance their budgets, and some local governments are delaying tax cuts that were planned years ago.

The Bureau of Economic Analysis reports a 6.1 percent boost in state and local government spending costs between the 2006 fourth quarter and 2007 fourth quarter, versus a 2.6 percent jump for the national economy.

Property taxes have been raised 9.7 percent in Spring Valley, N.Y., and 4 percent in Arlington County, Va., for instance, and could surge 17 percent in Memphis.

Observers note that municipalities often turn to property taxes when they need more money, with a Census Bureau report indicating that property taxes make up 40 percent of general revenue for local governments on average; but some home owners think officials should cut services instead.

Although home price drops ultimately will lower a home's assessed value and reduce property tax bills, it takes time for market conditions to affect appraisals. In response, many home owners are requesting reassessments.

Source: The Wall Street Journal, Conor Dougherty (04/25/08)

Has the Economy Turned the Corner?

Last week may have been a pivotal one for the economy. When the Federal Reserve cut its key interest rate, the fed funds rate, on April 30th just a quarter percentage point down to 2% it signaled that a larger rate cut was not needed due to improving conditions in the financial markets. Many in the financial markets had thought just a week before, due to poor economic data, that the Fed might cut rates up to half a percent. Also, on April 30th, the Fed made it clear that it may not need to cut rates again in the future.

So, what’s going on? With the bailout of Bear Stearns (see my blog article titled “Bear Stearns – What’s Going On & Why Is This Important To Know About?, posted Saturday March 15th), as well as the aggressive moves by the Fed in reducing rates seven times since September 2007, providing $400 billion in liquidity (cash and loans) to the markets, etc., etc., the financial markets are responding to these measures and are improving as a result.

Many economists as well as Wall Street watchers are saying that the worst is now behind us. However, what are they basing this optimism upon? First, despite the rash of bad news and reports over the last several weeks (i.e. – reports on the economic calendar such as the existing home sales for the month, durable goods orders, new home sales, jobless claims, consumer sentiment, etc.), the stock market has managed to climb almost 11% in the last few weeks. How can this be? Because, as I mentioned above, Wall Street now believes the worst is behind us. Many now see a broad sustained recovery in both the financial markets and economy for the second half of the year. This is what NAR’s Chief Economist, Lawrence Yun, has been saying all along – please read his articles posted on this blog.

Lately, the stock market has surged because of all the measures taken by the Fed, Treasury, Administration, and Congress that are now beginning to have a positive impact on the financial markets and economy. This is also having an effect upon the dollar, which is beginning to strengthen and, in turn, is causing oil prices to fall. In addition, key volatility indices such as the Market’s North American CDX, as well other indices, show that corporate credit risk has fallen sharply since mid-March. What does this mean? Despite the massive debt write-downs just a month or two ago by corporate giants like Citigroup Inc. and Merrill Lynch & Co., which caused great volatility in the markets, the underlying strength of the financial markets is now firmer than it has been in recent history.

The change in attitude on Wall Street is remarkable to watch compared to the doom and gloom of just a month or two ago. At that time, you may remember that Bear Stearns was tanking due to billions of mortgage-security losses. As I mentioned above, there was a string of negative economic data, which strongly suggested we were nose-diving into a potentially serious recession. In addition, there seemed to be no hope in sight concerning the implosion of the housing market.

However, Wall Street now sees that there are more profitable times ahead even though consumers are currently financially strapped because of inflation, a poor job market, and tightened credit. Wall Street and the Fed also realize that the national housing market is still very fragile and may have a few more bumps in the road before it stabilizes.

Yet, here in New York, NYSAR's March data for sales of existing single family homes is up 10.1% from the month prior, with a foreclosure rate of only 1.9% statewide. Please read the blog article posted herein titled "New York Housing Figures for March Show What’s Really Going On!", posted April 28th, for more information about how well the housing market is doing here in New York.

It remains to be seen in the weeks ahead if Wall Street can sustain the recent gains it has only recently made or if the market will slip once again. Nonetheless, the effects of lower interest rates and the stimulus package will have a broad and sustained positive impact on the economy. As you may recall, the 2008 fiscal stimulus package contains over $100 billion in tax rebates. The rebate checks, as of last week, are beginning to be received in people’s mailboxes (though I haven't received mine yet).

According to Chief Economist Lawrence Yun, the current tax rebate is more than twice as high as a similar rebate passed in 2001. He believes that the marginal propensity to spend from a tax rebate is about 40 cents to 50 cents on the dollar. Based on this, that should translate into additional consumer spending of $60 to $80 billion in the second half of the year. That’s a great shot in the arm for the economy.

How much things will improve remains to be seen. It was just reported last week that the national economy grew at a snail’s pace of just 0.6% in the first three months of this year. It is the second consecutive quarter of feeble growth. Yet, 0.6% is still a positive number at a time when many experts were predicting a negative number.

While many economists have believed that the country has been headed for a recession and the new media, for the most part, has been talking about recession (some have even speculated about a possible or probable depression), it hasn’t happened yet. Actually, it looks like we may be turning the corner.

Quotes of the Week

"Money is one of the most important subjects of your entire life. Some of life's greatest enjoyments and most of life's greatest disappointments stem from your decisions about money. Whether you experience great peace of mind or constant anxiety will depend on getting your finances under control."

—Robert G. Allen: Financial adviser, author


"If you want to live a happy life, tie it to a goal, not to people or things."

—Albert Einstein


"The entrepreneur is essentially a visualizer and actualizer... He can visualize something, and when he visualizes it he sees exactly how to make it happen."

— Robert L. Schwartz


"If you don't design your own life plan, chances are you'll fall into someone else's plan. And guess what they have planned for you? Not much."

—Jim Rohn: Author and motivational speaker

Fed Cuts Rates for 7th Time Since September '07

Yesterday, April 30th, the Federal Reserve cut its key interest rate by a quarter percentage point, however the central bank also hinted that this latest rate cut may be the last one for a while.

The cut reduced the fed funds rate, which is the key overnight rate at which the banks loan money to each other, down to 2%. It was 5.25% in September 2007, when the Fed began its rate reductions in response to the downturn in the economy.

The fed funds rate is the benchmark for home equity loans, credit cards and other consumer loans as well as for prime rate loans used for short-term business lines of credit.

In the statement issued by the fed, the phrase "uncertianty about the inflation outlook remains high" led many to believe that should the latest reduction, combined with previous cuts have its intended effect, the new emphasis at the fed would be to fight inflation. If the economy does recover, inflation in a low interest rate environment is a very likely scenario and at that point we could interest rate increases. A number of economists are predicting that this may be exactly the case in 2009. Some blame the fed, in part, for the inflationary situation we currently have with commodity prices - food, oil, etc. These critics say that this has directly contributed to the rapid rise in prices consumers and businesses are having to absorb.

While there could be more rate cuts, the fed believes that, given where the economy is currently at, they have done enough rate reductions to assist the economy to rebound. The fed is scheduled to meet again the third week of June and will consider any changes in monetary policy at that time.