"You've Caught the NET!"

This one seems to have snuck up on us!

It was prompted by coverage in the Wall Street Journal, in their "Developments" blog yesterday - "Home Prices Are Low, But Getting A Mortgage is Tough!"

Chicago - the entire metro area - is now on AIG United Guaranty's Declining Markets List.  This has occurred, despite the fact that our Real Estate Market here is vibrant, even growing, in many Chicago Neighborhoods and suburbs!

AIG's answer to this - they cannot more precisely identify "declining market areas."  Would you agree with this?  Didn't think so!

We all know the mortgage market has been battered by default over the past year.  High-leverage conventional financing is just about gone.  Stated income loans are just about gone.  And Mortgage Insurance Companies are feeling the heat as well - many of the loans they insured are now in foreclosure, and the equity they counted on to make themselves whole has disappeared.

Mortgage Insurer Triad Guaranty, Inc. is leaving the Mortgage Insurance business.  MGIC is raising its MI Premiums nearly 12%.  And the beat goes on!

But what does this mean, in practical terms?

Even those with a previously-comfortable 10% down payment may have to pay a 5% "declining market fee" in order to close.  Often times, the buyers are told this very close to closing - and they just don't have the reserve funds to cover, especially on short notice!  They often have to walk away from their purchase.

As recently as a year ago, many were singing the death knell of PMI.  With the liberal lending standards of a couple of years ago, many home buyers were able to avoid paying for PMI by taking out two separate loans against their new homes - a main loan for 80% of the purchase price, plus a second, higher-rate loan to cover between 10 and 15% of the outstanding balance.  Thus, PMI was not required.

Today, however, such "piggyback loans" have virtually disappeared, and more of those with a low down payment are forced to purchase mortgage insurance.  The percentage of new home buyers using PMI increased from 8.5% in early 2006, to 20% during the Fourth Quarter of last year.  Since then, into 2008, the percentage of buyers seeking PMI has come down to roughly 13% - many low-down-payment buyers have simply left the market!

An increasing number of borrowers are turning to FHA Loan Programs as PMI requirements become tighter.  FHA is more liberal in its credit and down payment requirements - as little as 3% down can get a borrower an FHA Loan - although FHA recently began charging those with riskier credit histories a premium on the loan.  Importantly, FHA loans are not subject to "declining market" lists!

It is estimated that FHA loans now make up between 10 and 12 percent of new home loans, up from 3% two years ago, when conventional loans were easier to obtain.

In reality, many would think the falling prices in today's Chicago Real Estate Market would have the buyers marching in.  Many do - but many have been disappointed when they can't find financing!

See our post from yesterday evening at BlogChicagoHomes.com for more information, as well as a link to Amy Merrick's article in yesterday's Wall Street Journal.  Amy's article contains a current map of Mortgage Insurer AIG Guaranty's Declining Market List.

Here's the PDF file delineating the affected market areas and zips.

DEAN & DEAN'S TEAM CHICAGO

Good Morning, Active Rainers!

Are you holding up ok?  Financially, I mean?

It seems, sometimes, the daily drumbeat of discouraging economic news turns into a din.  High inventories.  Long market times.  Declining prices, in some areas, dramatically.

Listing Clients putting off their decision to sell while waiting for better times.  Those pressed to sell due to economic stress facing long approval delays from their lender - or lenderS - only to be turned down to sell short.  Unrealistically priced sellers finding other, non-integrous real estate practitioners, or, sadly, lenders to tell them what they want to hear.

Buyers waiting for prices to fall further.  And, when they do decide to buy - will they get financed?  We've found here in Chicago that Mortgage Insurance Companies have now tagged us "declining market," despite renewed market vibrancy in many areas and suburbs here.  Those with 10% down, with strong credit, used to be a slam dunk to close.  Those with 5% down - more headache, but usually a successful close.  Not anymore!

FHA transactions - viewed as the mortgage safety net for those with low down payments and tarnished credit credentials - often impose repair requirements the sellers are hesitant to agree to.

Inspection issues - what will buyers raise?  As a practitioner, can you manage their expectations?  Will the sellers agree to the usually-higher levels of repair requests, since buyers feel "they can get them all now?"

So, again, how are you holding up?

Often times, it seems as if we're working hard to stay afloat financially.  Does it seems, at times, you have to rob Peter to pay Paul - this month?  (You'll pay Peter back next month, you know!)  Tapping reserve lines you've set in place, perhaps too often?

Have you hoped for stronger times - next quarter - but just don't know if they'll come - next quarter?

Will those deals in process be delayed?  Will they close at all?  Often times, their success or failure depends on third parties - lenders, appraisers, attorneys, and the overall economy.

As successful Real Estate and Mortgage Professionals, we are taught to have a broad, optimistic view.  Have faith!  Markets will strengthen again, as they always have.  Things will balance.

But responsibility is in the present!  Family Obligations.  Personal Obligations.  Business Obligations.  And the constant need to "keep a positive face" in difficult times.

Are you doing OK?  How are you holding up, money wise, I mean?

It's good to share!  Please do!

DEAN & DEAN'S TEAM CHICAGO

The U.S. Secretary of the Treasury, the Federal Reserve Board, and The President consider Fannie Mae and Freddie Mac key to turning around the real estate market downturn nationwide.  Should these two government-sponsored Mortgage Investors and Guarantors fail, the result might be tragic for the U.S. Economy, and the housing market's chances for recovery soon.

Under the Fed and Treasury Department proposals, either Mortgage Guarantor will now have access to a line of credit or an investment in equity by the U.S. Treasury.  The credit advance would be temporary in nature, but could last for up to 1 1/2 years.  Currently, each company's line is capped at $2.25 Billion - but this will most likely go far higher under the new proposals.

The Fed's moves to extend credit to Fannie Mae and Freddie Mac, coupled with the U.S. Treasury's proposal to buy equity in either company if necessary, calmed investors feared, fueled a successful Freddie Mac Auction of $3 Billion of Short-Term Debt on Monday morning, and somewhat moderated investors' concerns on the stock of each company (though both were down slightly at the end of the trading day on Monday).

Fannie Mae and Freddie Mac currently back over half of all residential mortgages funded in the U.S.  Smooth operation, and adequate capital, is critical to fund new mortgages.  Adequate reserve funding also assures Fannie and Freddie Stockholders, whose investments build the capital reserves each company requires.

Last week, on the heels of the failure of IndyMac Bank in California - a large mortgage provider of "stated income, no-doc" loans, dogged by escalating mortgage default, Fannie and Freddie lost over 40% of its share value.  Investment experts worried the lowered stock value of each company could scare away investors, dilute stock value, and necessitate a bailout by the U.S. Government.

Playing out the worst possible option here, investors in Fannie and Freddie would flee to other investments, capitalization of these two mortgage giants would decrease, as would their ability to buy and guarantee as much mortgage volume.  The pool of available mortgage money would decrease, and mortgage rates would increase - further exasperating the current sluggishness in the U.S. Housing Market.

See our post Tuesday @ BlogChicagoHomes.com for more information, as well as a link to Deborah Solomon and Sudeep Reddy's article in yesterday's Wall Street Journal.

DEAN & DEAN'S TEAM CHICAGO

Hey, gang!

Our entire Team just returned from our Annual Summertime Visit to see Floyd Wickman and his trainers at his annual Forum in Michigan. Here are a few gems we came home with from the journey -

1.  It's incredible coming together with a relatively-small group of like-minded real estate professionals (roughly, 80), from all over the U.S. and Canada, sharing the same market experiences as our Team has.  The opportunity to bond, and to share stories, tips, and techniques, is just incredible - every time!

2.  Analyze your PEOPLE, as well as YOURSELF, using a PEOPLE ANALYZER.  How is your ATTITUDE?  Your EFFORT?  PRODUCTION?  And, TOOLS & SYSTEMS?  Rate each one using a "+" or a "-".  Identify where you are lacking, and work to improve it.  (Hint:  If you can't master ATTITUDE, you won't tackle the others!)

3.  Having a tough 2008?  WIPE THE SLATE CLEAN - and endeavor to have a record year, ONE YEAR FROM NOW.  Sometimes, past issues, problems, and crises can weigh you down, if you let them mark success or failure for you.

4.  ANALYZE "Why Your Goal IS Your Goal," seven layers down.  This in-depth analysis will often give you deeper answers than you expect, and a possible solution, if you need one.

5.  Track your results VISUALLY.  Floyd, in his SMART program, proposes the use of a REVERSE THERMOMETER.  Don't dwell on how far you have come (or haven't come) - think, "How Much Farther Must We Go?"

6.  Analyze what the MONETARY VALUE of specific INCOME PRODUCING and EXPENSE GENERATING activities in your business.  Work to make the Income Producing Activities more Income Producing - and cut, as much as you can, underlying expenses.  This is ESPECIALLY TRUE today - yes?

7.  Directly from Floyd (and amazing when you hear him in a very small-group setting, rather than in a large room) - COME TOGETHER, with your colleagues, for advice, mentorship, and support, and with others in the industry to grow - together!

8.  Again, from Floyd - GET MAD by how our industry, our market conditions, and our professionals, are being characterized in the media - and then do whatever you can to change that perception, even if only in your own community and sphere of influence.

9.  GET POSITIVE!  Every day - do positive affirmations, and get that often-negative feeling you get when you first awaken out of your head.  Check out Floyd's MyPositiveClub.com for positive affirmations and thoughts, on a weekly basis.

10.  Remember the words of Floyd Wickman's Long-Time Mentor, and Acclaimed Speaker, Zig Ziglar - "You Can Get Anything in Life YOU Want, if You Help Enough OTHER PEOPLE Get What They Want!"

We took an AMTRAK Train both ways, to and from Ann Arbor, to reach the Forum, and return home.  Traveling by train is an incredible experience - it's relaxing, and allows you to discuss and strategize with your Team or colleagues, while still arriving refreshed and not hurried.  Try the train next time, if you can!

Those of you that also joined us for Floyd's Forum this year - please share your "gets."  Didn't go?  We'd still love your thoughts, tips and suggestions.

Please share with us!

DEAN & DEAN'S TEAM CHICAGO

Will new loan rules passed unanimously today by the Federal Reserve Board better protect home borrowers?  Or, will they even further dampen borrowing power of prospective homeowners, and have a negative effect on the already-depressed housing market?

That matter is up for debate.  But as mortgage defaults and foreclosures continue to escalate month to month, here in Chicago and across the U.S., many blame easy, high-risk loans offered by many lenders as the main culprit. 

The Fed action will take many of the riskier mortgage loan options off the table - including the controversial "stated income" loan. 

It will also stop lenders from using only the expected equity of the buyer's home to determine approval. Other sources of buyer's income need also be checked, to assure chances for repayment even if the home declines in value.

All first-lien mortgages must have escrow accounts for homeowners insurance and real estate taxes.  Presently, these escrows can be waived under certain circumstances. 

Most pre-payment penalties will be banned.  Loans whose payments could change during the first four years of the loan cannot be charged a pre-payment charge if they payoff the loan during this period.  Other loans cannot have pre-payment penalties during the first two years of the loan.

New, more specific loan disclosures would have to be provided, and deceptive or misleading advertising would be stopped.

All conventional loans would have to comply with the new Fed rules, whether or not the loans are offered by a Federal Reserve member bank.  (For example, mortgages offered by Credit Unions need also comply.)

The Fed is suggesting the changes go into effect in October, 2009, with the exception of regulations involving the escrow requirements, which would begin in April, 2010.

According to Fed Chairman Ben Bernanke, "The proposed final rules are intended to protect consumers from unfair or deceptive acts and practices in mortgage lending, while keeping credit available to qualified borrowers and sustainable home ownership."

See our post @ BlogChicagoHomes.com for more information, with a link to Jeanine Aversa's story in yesterday's Chicago Tribune. 

Check out as well today's article in the Wall Street Journal, by reporters Meena Thiruvengadam and Maya Jackson-Randall.

DEAN & DEAN'S TEAM CHICAGO

I'm trying to get a head start on the day with this earlier-than-usual post! 

Here's the latest Stat Summary on the Chicago Real Estate Market, based on data pulled yesterday evening, July 13, 2008 -

Active Listing Inventory remained stable this week, but Pending Sales increased, countering last week's Fourth of July-week drop-off.   Closed Listings and Listings Expiring countered last week's increases - predictably, since we are now mid-month.  Total Sales Volume gave up last week's gain.  Average Market Time fell this week - but there is no established trend here toward moderation.

Absorption Rate, or average inventory turnover, gave back much of last week's 3.1% improvement - increasing by 2.6%, to 28.19 months of active inventory, on average, in the North and Northwest Side Neighborhoods we serve in the City of Chicago!   Percentage of Sale Within Six Month (180 Days) showed a decent 2.4% gain this past week, however.

Communities and clients we serve reside, or plan to reside, in the Chicago Neighborhoods of The Chicago Loop, The Gold Coast, River North, Lincoln Park, Lakeview, Uptown, Edgewater, North Center, Lincoln Square, Albany Park, Ravenswood, Wicker Park, and Bucktown. 

Also, these Great Chicago Neighborhoods: Logan Square, Rogers Park , West Ridge, Portage Park, Jefferson Park, Norwood Park, Sauganash, Edgebrook, and Edison Park.   Plus All Chicago Suburbs. 

SINGLE FAMILY, CONDOS, AND SMALL MULTI-UNIT PROPERTIES - NORTH SIDE OF CHICAGO, NORTH OF ADDISON STREET, WEST OF ASHLAND AVENUE

                             ACTV LISTINGS        JUST SOLD         CLOSED        EXPIRED

w/e July 14th                5,237                  56                        80                    64

w/e July 7th                  5,161                  43                       112                  161

% CHANGE                    +1.5%              +30.2%             -28.6%             -60.2%

CLOSED PROPERTIES DATA

                              AVG SALE PRICE     AVG DAYS ON MKT     TOTAL VOLUME   

w/e July 14th                $335,139               120 DAYS                      $26,811,150

w/e July 7th                  $367,809               141 DAYS                      $41,194,707

% CHANGE                     -8.9%                       -14.9%                             -34.9%

THEORETICAL TIME TO CLEAR EXISTING INVENTORY (ABSORPTION RATE) -

w/e July 14th - LAST 12 MOS - 19.16   LAST 6 MOS - 20.01     LAST 3 MOS - 28.19

w/e July 7th - LAST 12 MOS - 18.79     LAST 6 MOS - 20.37    LAST 3 MOS - 27.47

PERCENT OF HOMES SELLING IN 180 DAYS - 

w/e July 14th- 25.02% (UNSOLD - 74.98%) 

w/e July 7th - 24.44% (UNSOLD - 75.56%)

 SOURCE: MIDWEST REAL ESTATE DATA LLC, AREA MARKET SURVEY DATA

Please visit and review our Chicago IL Real Estate Stats Pack Archive via our Team Blog Center - BlogChicagoHomes.com. 

Call us anytime for current trends in any Chicago Neighborhood or Chicago Suburb! 

DEAN & DEAN'S TEAM CHICAGO

In many parts of the country, I would assume, tax and public incentives for restoring worn, yet historic homes and commercial buildings are readily available.  In order to get the money, however, those renovating have to comply with certain detailed guidelines for repair and reconstruction.,

One such individual, renovating a home he purchased in the late 1990's on the South Side of Chicago, in the historic Kenwood Neighborhood, restored his home to pretty much it's original state - with more than a few modern amenities, of course!

Homeowner Daniel Aucunas completely refinished and repaired original hardwood floors, stripped paint from vintage wood trim, replaced five art glass windows, refurbished and replaced original ornamental ironwork, and pressure washed exterior masonry.

To provide a bit of financial incentive along his $570,000 rehab projects, Aucunas took advantage of an eight-year freeze on the assessed value of the property, through the Tax Assessment Freeze Program administered by the State of Illinois.   (After the eight-year period expires, the assessed value gradually increases to current market levels). 

"If you look at it 10 years later, your tax bill is pretty reasonable," said Aucunas, who may be applying for additional financial assistance money in the near future.

Other government-sponsored incentives require compliance with strict guidelines regarding materials to be used, construction methods, and non-variance of the original floor plan add cost, and may scare away owners who wish to update the house's original layout to one more contemporary. 

At least 25 percent of the market value of the property must be invested in repairs and renovation, and it must meet U.S. Department of the Interior Standards for rehabilitation of historic homes and buildings.  Architect's plans and photos must be submitted to state or local agencies for approval before work can begin, and historic certification must be applied for within two years after completion of the work.

The City of Chicago has a number of programs to incentive those who renovate potentially-historic buildings.  In some cases, fees for building permits can be waived.  Chicago also  has it's quite popular Historic Chicago Bungalow Initiative, as well as a separate program to restore the facades on historic commercial structures. 

Cook County - the county in which the City of Chicago is located - offers a "Class L" incentive to those renovating landmark commercial, non-profit, and multi-family buildings.  For more information, check out this Fact Sheet via the Cook County Assessor's Office website.

Certain buildings in national or local historic districts can also qualify for a 20 percent Historic Preservation Tax Credit if they plan to spend more than the building's adjusted basis-the value of the building not including land value.  The Illinois Historic Preservation Agency oversees this program. 

See our post today at BlogChicagoHomes.com, including a link to Janice Neumann's article from The Chicago Tribune on July 6th.

DEAN & DEAN'S TEAM CHICAGO

Late Saturday night, folks, and Sue and I are back in our room after an incredible day at Floyd Wickman's Annual Forum in Ann Arbor MI.

What a POWERFUL EVENT, as a small group of just under 80 top, motivated agents from across North America - a bit stressed from the rigors of today's Real Estate Market, but still alive and kicking - shared their thoughts and ideas with each other today.  Success, not merely survival, was on everyone's mind!

I will post on a few GREAT IDEAS we shared and fishboned with others on this very productive Saturday in a subsequent post.  Here, however, I propose to discuss what, for me, has been an incredible way of establishing accountability for success -

THE "R" GROUP CONCEPT!

I have been in this "RESPONSIBILITY GROUP" with fellow Realtors Bob Daniel, of Prudential Residenz Realty in Cincinnati OH, and Norman O'Grady, of Prime Realty Group in Boston MA, for over three years now - and it works.

The concept is simple, takes little time, and is real close to FREE. Here's the basic drill, as discussed and taught in Floyd Wickman's highly-successful Program, formerly called The SMART Program -

Bi-weekly, on a Tuesday morning, at 7:30 Central Time (8:30 in the East), the three of us call a bridge line, FREE (plus Long Distance Charges, if applicable) from InstantConference.com. 

During our 45 minute to one hour conference call, with only the three of us on the line, we discuss the positive things that have happened to us since our last call, review our production stats and compare them to the bi-weekly goals we set, and share the "Secrets of Our Success," or some great ideas on how we did what we did.

We then take a few minutes, rounding the table, and soliciting help to solve a problem that we encountered since our last call, and graciously and gratefully sharing our suggestions.

Finally, we commit to objectives for the next call, say our goodbyes, and be on our way,

It's a powerful tool!  Although preparation is required, travel is not.  After a while, your R Group Partners really get to know you, and often help solve your problems before you completely describe them!

Here is a simple five-step outline that Bob, Norm, and I use for our R Group Calls -

1.  "Good News" - What Good Things happened to each R Group member since the last time we spoke?

2.  "SMART Numbers" - Starting with your ANNUAL PRODUCTION GOAL, the percentage of the goal achieved to this point, and specifically what you have done since the last call to achieve your goal.  Haven't achieved a goal you've committed to?  This is the time to discuss that too - and have the other R Members help you get back on track!

3.  "Parade of Techniques" - We each share some of the specific things we did since the last call to achieve our successes, and solicit critique on these techniques.

4.  "Ask the Experts" - This involves each member stating their Number One Goal.  Then, their Number One Problem that stands in the way of achieving that goal.  Finally, the sharing of ONE PIECE OF ADVICE, from each R Group Member, on which steps they feel will help you solve your goal.

Getting stuck here?  Try an AHA - "Adversity Handling Analysis!"  Each member takes a look at their recent challenges to success, and then analyzes -

          a.  What HAPPENED Here?

          b.  Was the outcome MAJOR, or MINOR?

          c.  What PERCENTAGE of the adversity was YOUR responsibility?

          d.  What  LESSONS have been learned from this adversity?

          e.  What will you do to PREVENT this stumbling block from occurring again?

5.  "Commitment" - on what will be accomplished by each R Group member prior to the next telecall.

How to best succeed using the R Group Mini-Mastermind format?  First, group members should have similar production levels.  The meeting should be set at a FIXED TIME and DAY, exactly every two weeks.  And each member keeps the other members ACCOUNTABLE for their actions.

One person should "chair" and keep order of and records for the R Group - otherwise, strong personalities, common with us Real Estate Folk, could lead to chaos, and lack of real direction, very quickly.  We'll be testing a ROTATING CHAIRMAN'S ROLE within our group.

Confused?  Write me back, and perhaps we can help you begin.  We've had quite a bit of success with ours!

Just let us know, or visit Floyd Wickman's Website!

DEAN & DEAN'S TEAM CHICAGO

THE CHICAGO IL REAL ESTATE MARKET, AND OTHER THINGS CHICAGO, FROM THE POINT OF THE VIEW OF A LITTLE WHITE DOG!

This photo, taken by my humans, Dean & Sue, while we all visited our close friends and mentors in St. Paul MN last week.  It conclusively proves, beyond a shadow of a doubt, what we dogs have long known - we dogs can be dead asleep, but at the same time be completely awake.

You know, it takes work for a dog, especially a cute lil' white one, like me, to develop keen, instinctive driving skills.   It took me months to develop a way to reach both the gas, the break, and the steering wheel at the same time - while adjusting the stereo!

But months of practice fined-honed my driving skills, and I know qualify for the lowest rates State Farm offers for its best canine drivers!

There is a problem in Driver's Education as it would apply to teen drivers trained in the Chicago Public schools, however.  The largest school district in Illinois is trying to join the ranks of many Suburban Chicago School Districts by seeking an exemption to a new state law requiring public schools statewide to provide at least six hours of actual on-the-road driving in their Driver's Education Programs.

To this point, CPS has exploited a legal loophole to offer as few as one hour, forty minutes of on the road training in preparation for a new Driver's License. 

Last August, when IL Governor Rod Blagojevich signed the Driver Reform Bill into law, most applauded the new rules.  They were aimed at reducing vehicle crashes, especially among new teenaged drivers, low on driving experience. 

The Bill tripled the time a teenaged driver must have a Learner's Permit before they can get their actual Driver's License.  It also imposed night driving restrictions on teens, and maximized the number of teen occupants in a vehicle being driven by a teenager.

Many public school districts in IL, however, have been budget-challenged recently.  They contend the new six-hour rule is not really necessary, and is too expensive to apply across the board.   Last year, the state proposed a funding plan to subsidize the cost of a statewide six-hour minimum, but that funding never materialized. 

This led to nineteen school districts statewide - including the suburbs of Aurora and Crystal Lake, in the Chicago suburbs, plus several others in Downstate Illinois, to seek an exemption to the rule.  Most of these communities were successful in obtaining a five-year waiver.

The majority of the Driver Reform Bill became law last January 1st.  The six-hour rule, however, went into effect last week, on July 1st.  On June 25th, the Chicago Board of Education submitted their request for an exemption to the rule.

"We're looking for a change in the training hours, not solely because of financial reasons," said Chicago Public Schools Spokesperson Mike Vaughn.  "We think, in a lot of cases, that it's a bad idea to place new drivers directly out in traffic without training on simulators or driving ranges."

The school system is asking to train the estimated 19,000 public and private-school driver's education students with four hours of teacher-supervised, behind-the-wheel street driving, one hour of simulators and one hour of range driving, in addition to the 30 hours of classroom work, Vaughn said.

The State Board of Education will submit the request to the legislature by October 1st, Spokesman Matt Vanover said. The legislature must act on the request in 60 days from the time it convenes after receiving the waiver request.

If lawmakers fail to act in that time, the exemption is automatically granted.

Illinois Secretary of State Jesse White, whose office administers driver's rules and regulations, and issues Driver's Licenses, feels not requiring six-hours on the road for teen drivers will seriously weaken the spirit of the legislation, and make IL roads more dangerous.

On Wednesday, Secretary of State Spokesperson Beth Kaufman said White was "disappointed" that Chicago Public Schools is seeking a waiver. She added that he will try to overturn the waivers given to the 19 schools-and any that may be granted to Chicago schools-in the fall legislative session.

"The vast majority of schools" in Illinois have accepted the six-hour rule, Kaufman said. If legislators authorize the city exemption request, it would take effect in the fall of 2009, Vaughn said.

You dogs - what's your opinion?  My two cents - every driver, whether they have four paws, or only two, can't have enough experience and training.  FOLLOW THE SIX-HOUR ON-THE-ROAD RULE!

YOUR ACE REPORTER ON FOUR PAWS,

BUDDY HOLLY MOSS & DEAN'S TEAM CHICAGO

Hello, All!

The long-awaiting Housing Reform Legislation seems likely to pass the U.S. Senate next week.   The effect on markets faced with high housing inventory and slack demand, along with tight loan underwriting standards - including parts of Chicago and the suburbs - could be significant!

It's proposals are ambitious - relaxed loan guidelines for FHA, Fannie Mae, and Freddie Mac that could allow perhaps as much of $300 Billion of new, fixed-rate loans that could help homeowners facing sizable rate resets in the coming couple of years.

Also, an increased Conforming Loan Limit of $625,000 - perhaps higher - is a key component of the bill, as well as a proposed first-time home buyer tax credit of up to $8,000, plus incentives to those that purchase and rehab foreclosed properties.

According to Senator Christopher J. Dodd (D - Connecticut), "Unless we act and do so promptly, we're going to look at a situation that only gets worse."

However, the bill faces considerable opposition before it is passed!

The U.S. House, and the Bush Administration, are divided over several key elements of the bill - including acceptable loan limits, foreclosure incentives, and time for implementation - quickly, or over time.

President Bush and those in his administration feel the foreclosed properties incentives comprise a "bailout" of lenders - many of whom, the Bush Administration feels, contributed to today's credit and mortgage problems.

Seller-funded Down Payment Assistance Programs continue to draw the ire of the administration, while the Congressional Black Caucus supports these programs that they feel will stave off blight in many stressed communities.  Many African-American home buyers, say caucus members, rely on these assistance programs in order to buy a home.

Indeed, the Housing Reform Legislation is a step in the right direction, in today's real estate market - but it's got a bit of a rocky road ahead before it becomes law, it seems.

See our post today at BlogChicagoHomes.com for more info, as well as a link to today's Associated Press article in The Wall Street Journal.

DEAN & DEAN'S TEAM CHICAGO