If you were planning to apply for the seller funded downpayment assistance program through Ameridream, please be advised that this program will soon be coming to an end on October 1, 2008. There is speculation that this program is being eliminated by Congress because the foreclosure rate by those who participated in this program was higher than other groups.

Per the Ameridream website here is some background information on its Down Payment Assistance Program. Charitable down payment assistance funded in part with seller participation has allowed homeownership to grow without using taxpayer dollars. To date, more than one million families and individuals have utilized this down payment assistance, generating nearly $10 billion in home equity for those families. These working families qualify for FHA insured loans in every respect, but are unable to save the needed down payment. Please visit http://www.supporthomeownership.com to let your voice be heard to Congress to save this program.

The city of Cincinnati’s downpayment assistance programs are not affected by this change, so the Cincinnati real estate market may not be too adversely impacted.

Cincinnati real estate Investors who own multi-family properties or apartment buildings are consistently trying to ensure that their rental rates are consistent with the market. Where as an investor can you go to find the market rates for your area. You can look in the local newspaper such as the Cincinnati Enquirer or community newspaper such as Suburban Life Press for the real estate classified ads.

The Federal Hosing Bill that is working through the Senate and House right now are expected to have sizable impacts on local economies and real estate markets like Cincinnati. The Housing Bill provides financial incentives like mortgage negotiation perks, $7,500 interest free short term loans, and Jumbo loan borrowers.

For those currently in debt and in trouble with their mortgage here are the incentives the government has set out for you to renegotiate with lenders:
1. Your loan must be at least 31 percent of your monthly household income.
2. Lenders, however, are not required to give you a better deal under the new law.
3. If you manage to get a new loan, you cannot take out a home equity loan for at least five years. 4. 4. You will also have to pay a 1.5 percent fee each year on the remaining balance.
5. Finally, you have to hand over no less than 50 percent of any appreciation on the home to the government once you sell. Sell the house in less than five years, and you will have to turn over as much as all of the gain.

Now about those $7,500 interest free loans being handed out. Well they are for first time home buyers and come in the form of a tax credit. How ever if your income is over $75,000 ($150,000 married) the credit begins to phase out. You will pay the loan back in 15 equal payments over the next 15 years to the Internal Revenue Service. The tax credit is retroactive to home purchases on April 9, 2008, and expires on July 1, 2009. Ask your accountant about this benefit in your 2008 return.

The Bill will also allow Fannie Mae and Freddie Mac to purchase and securitize loans up to $625,000 where in previous years the cap was $400,000. This increase comes in line with the increase of home prices over the decades.

In a recent edition of Time magazine there is a featured article about some services that help home owners negotiate new rates with their banks, or even walk away from their homes.  Some of these services package information for local Cincinnati homeowners in distress and in some cases help advocate for the home owner.  Other services simply repackage and sell publicly available information.

Companies like the Walk Away Plan provide home owners who are in distress some counseling as well as assistance in negotiating with their bank for a new loan at a current interest rate, or renegotiating the loan all together. Other services, like Short Refi Me,  try to work with your bank to refinance your home based on current value.

CNN Money reports about the US subcommittee efforts to bring together a relief package, or legislation reform to help the ailing housing market in Ohio and other states. The article sites some numbers from Realtytrac and some are good for Ohio, and some are not so good.

Across the country foreclosures surged 48% in the month of May which is not encouraging. However Ohio saw a 7% drop in foreclosures compared to the same month in 2007. Hopefully this is the beginning of the reversal of a trend that sees Ohio’s foreclosure rate growing every year since 2000.

At some point all of the adjustable rate mortgages will have reset and the home owner will either refinance a fixed rate they can afford, negotiate with the bank, sell their home, or foreclose. The question we in the real estate and mortgage profession is when will we hit bottom, when will we have moved past a point when all of the crisis mortgages have been flushed from the system and we can slowly begin to rebuild the housing industry based on sound lending principals and appropriate risk / reward tolerances. The end goal is to attract investors to buy up relatively bland, and previously dependable residential mortgage backed securities. Only then will we know the depth of the damage to the reputation of the housing industry as an investment vehicle.

For years we have been moving to the suburban areas for lower prices, and in return we get longer commutes. With gas prices what they are what is the actual cost of our suburban home? WorldChanging.org features an application developed by The Center for Neighborhood Technology. Their interactive map helps people visualize the real cost of an area. The CNT defines affordable as housing + transportation costs are less than (<) 45% of the median income of the area.

Those of us familiar with Cincinnati real estate know that some areas covered in the map have much higher home prices, and people who can afford them. Using median income for the region may not be the best metric.

If the numbers were based on median income by zip code I would feel more comfortable with the application. However, this certainly brings up a good point, with gas at $3.35 a gallon location, location, location takes on a whole new meaning.