Well, representation may finally be here, provided the leadership in Washington doesn’t fail again. Some highlights from the latest proposal are:

• To offer all responsible homeowners the option to refinance at 4% (Republican).
• To offer the $7500 (possibly $15k) buyers tax credit to all home buyers, not just first-time buyers (Democrat).
• To reset the payment for those in foreclosure so that it is no more than 31% of gross income (Democrat).

While I am not a fan of bailing out those who bought a home worth more than they could afford (re: the last proposal), I understand that most people do not plan on losing their jobs. This means that while the last proposal bails out gamblers, it also protects those who may have had a recent job loss and are trying to make ends meet. People with families and children who should probably know enough to save but haven’t learned why.

Eugenians know Peter DeFazio is the man to talk to about this. Send your message to Peter through this form if you agree that the bailout should support not only gambling bankers and irresponsible borrowers, but also those who provide stability and financial temperance during this crisis of confidence.

This blog would like to offer a couple of additional proposals:

• The banking executives that led the country down this dark, over-leveraged tunnel should fail. Bonuses should never exist in this environment. Our government cannot afford the perception that it is corrupted by a revolving door that protects those who need no financial protection.
• The banks that deceived shareholders and homeowners regarding the extent of their “off balance sheet” assets should fail. No bailout for the gamblers and liars. The government should replace that liquidity with STRONGER loans to their competitors w/strict rules to protect the borrower. When Lehman brothers failed, it hurt, but what hurt more was not purging the rest when that could have been done within a matter of months.

However, these cities may have narrowly missed the negative equity tide that washed away markets in a number of California cities, especially Vallejo.

In fact, the charts below suggest that the NW is pulling out of a relatively mild real estate slump.

First, Eugene..

Then Portland..

And Seattle..

Thanks again to Zillow for the amazing “open source” statistics!

“SENATE PASSES BILL TO PROTECT HOMEBUYERS
Home Loan Fairness Act will target predatory lending practices, head off mortgage crisis”

What’s unclear is how the State defines “predatory” within the language of the bill.

Several people who own small mortgage brokerages have posted to this blog, noting that what this bill really does is limit working families and formerly at risk renters from ever getting their own home. A secondary effect is to weigh supply and demand in the marketplace of loans so that demand favors large banks and other institutions with far more financial resources at their disposal. These institutions are able to absorb the cost of issuing fewer loans to the public. This could result in less competition between lenders, leading to higher fees and rates for traditional borrowers.

This bill is now in the House. The Legislative Session ends June 29th. If you feel that this bill needs to be ratified carefully before being passed, to determine financial impact to both borrowers (subprime and traditional) and lenders, contact your State representative here.

There have been many comments from lenders. I would like to hear from borrowers who are looking to get into low FICO, no down payment, or stated income only loans. The default rate for these loans is currently anywhere from 12-20%. This means that 80% or more of the people who previously qualified for a loan under these criteria will not have access to a home loan.