here were two huge announcements made Thursday that are going to have a tremendous impact on the real estate market. Fannie Mae announced a new program to slow down home foreclosures. Owners facing foreclosure will be able to turn their deed over to Fannie Mae, and then rent back the home for a year. After the year is up, owners will be able to rent on a month to month basis. The program was created to help owners that do not qualify for other loan workout programs. This “Deed for Lease” program is meant to help ease the transition for homeowners, giving them time to seek other housing. It also lessens the impact on neighborhoods.
There are a lot of questions still to be answered with the new Fannie Mae plan. For starters, will residents have the opportunity to buy the property back once they are back on their feet? It would make sense if they could, as it would keep the resident committed to the care of the property, but nothing really specifies that right now. Also, if the water heater breaks, or there is some other maintenance needed, who is responsible? Fannie Mae would own the property, which should put them in charge of repairs, but, again, there aren’t enough details provided about the new program.
The second big announcement is that, pending President Obama’s signature, the First Time Buyer Tax Credit is going to be extended through April 30, 2010. By that time, buyers need to have a signed sales agreement in hand for their home purchase. The home doesn’t actually have to be closed on until June 30th. Military personnel who have been deployed for at least 90 days in 2008 or 2009 will have until April 30, 2011.
The maximum income levels for qualifying for the tax credit have also been changed. The limit is now $125,000 for single buyers and $220,000 for couples, up from $75,000 and $150,000, respectively. It is hoped that this expansion will put an end to the latest dip in home sales, which fell again in September and October, with the end of the tax credit looming.
With these two programs in place, there is a better chance of the real estate market getting back on its feet without another major decline. With less foreclosures on the market, there will be a smaller backlog of inventory (homes) waiting to be sold. The buyer credit will encourage more people to become home owners for the first time, making a (hopefully) major dent in the current inventory. And, if Fannie Mae will allow Deed for Lease participants to buy back their homes, that will prevent thousands of homes from ever entering the market, which will help to keep the number of homes for sale at a lower amount and help to turn everything back around.
Fashion icon Tommy Hilfiger has taken a bath on his nine-bath Greenwich, Conn., mansion – selling it for $20 million, a 40% discount from its original price. The palatial Round Hill Road estate was sold to an unidentified buyer, who couldn’t view the house until after Hilfiger’s wife, Dee, gave birth to the couple’s first child in September. Hilfiger, 58, who has moved to Manhattan, first listed the home for $27.9 million in February 2008. The price was cut to $21.9 million earlier this year.
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