It Starts With the FIRST TIME BUYER
We have title issues stemming from the Robo-signing that could affect a large percentage of people who bought foreclosure properties. How to handle this is yet to be addressed by any government entity except the courts.
We have programs to help underwater homeowners – the success of these is dubious at best.
We are very good at looking at a small percentage of the issue and crafting a solution for it; but have not looked at how to actually revive the purchase and sale of housing. Housing purchases are driven by FIRST TIME BUYER – they are the ones that fuel the market.
We have made it extremely difficult, if not impossible, for that first time buyer to get a mortgage. In places where entry housing would be a condo – the restriction on FHA loans due to investor ratio prevents loans from being given. Many condo owners have been forced to rent their property due to the fall in home values. So even if the owner could bring money to the table to sell or arrange a short sale – they either need a buyer with a considerable down payment or all cash – because you can’t secure FHA financing for the property. I admit that this example is a small percentage of home sales. In Urban Areas it’s significant though. And I’m not talking about the luxury million dollar condo.
Let’s use another example: I can’t say this is scientific - but I went to realtor.com and grabbed a listing from where my Mom lives (Latrobe,PA – the home of Mr. Rogers and Arnie Palmer and Rolling Rock!). 3 bedroom and 2 baths listed at $19,800 – pretty much anyone breathing with even a full-time minimum wage job could buy it. Let’s try another one: (again from Latrobe) 4 bedrooms and 1 bath listed at $119,000 - might this be someone’s second purchase? But they can’t get a buyer until someone buys their potential buyers first home. DOMINO EFFECT!!!
How do we get the first time buyer back in the market?
(1) Ease FHA requirements – Investor ratios are important for urban areas – and the ability to procure a low-down payment loan for any First Time Buyer is critical.
(2) Give a property tax break for 2-5 years to a first-time buyer buying in that jurisdiction – compensate the local jurisdiction with a requirement of volunteer hours. You get your property tax bill: (a) if you’ve done your 50 or however many hours of verified service you pay X if not then you pay Y. Criminals are given community service as a punishment – use community service for a good purpose: to put people in homes.
(3) There is insurance to pay credit cards if you become unemployed – come up with a program for the first-time buyer (could be a low-interest loan repayable once employed again). Paying 1 or 2 percent extra on six months of payments is better than losing your home. This will go far to ease the buyer’s mind about economic .
(4) Expand the eligibility of the Good Neighbor Next Door Program. Good neighbors are not limited to Law enforcement officers, pre-Kindergarten grade teachers and firefighters/emergency medical technicians. A good neighbor is someone who provides service to the community – and could be the paralegal that volunteers with Legal Aid to help low-income residents or seniors. Let’s expand our thinking here as to what makes for a good community.
I think we have all realized that housing plays a big part in the economy: Appliances are manufactured along with carpet, paint, etc… and a vibrant housing market starts with the first time home buyer.
