We would like to update you on the following.

The Bush Administration and House of Representatives have apparently agreed on the following provisions.

1. GSE limit will increase to $625,000 across the board throughout the country. It will be effective until December 31, 2008.

2. The FHA limit will increase permanently along the lines presented in our earlier email.

The Administration-House stimulus bill will include a provision raising the FHA limits to a 125% of median sales price with a maximum loan amount of about $729,000. This provision appears to be the House version of the FHA bill. We understand that the House FHA bill (H.R. 1852) as drafted will also be included in the stimulus program announced this afternoon by the Administration-House. In this regard, the House version, of course, raises the “floor” to 65% of the GSE limit. We will have to see how the GSE language is written to determine whether the FHA floor would increase to 65% of the temporary limit (i.e. $625,000)

Impact on Current FHA Limits

For FHA, this change raises the current cap of 95% of median sales price to 125% and also raises the maximum from $362,790 to $725,000. For example, if 95% of the median sales price ($368,421) resulted in an FHA limit of $350,000 today, the new limit, if this provision is enacted, would be increased to approximately $460,500. Of course, in a market w/ a median sales price of $500,000 (1.25 times $500,000), the limit would increase to $625,000 and so on.

What is Next?

The legislation will likely be passed by the House very quickly (in the next week). It will then go to the Senate for consideration. As we have discussed in the last month, the House and Senate still have to work out the existing differences in the FHA bill including the mortgage limit issue. Of course, the Administration support of the FHA mortgage limit increase adds a positive dynamic to that negotiation process. In addition Barney Frank has removed the housing trust fund from the FHA bill eliminating a point of controversy. Outstanding issues in the FHA bills are the mortgage limits, mortgage broker approval requirements, risk-based pricing and seller funded downpayment assistance programs.

As the development of the stimulus bill in less than a week indicates, we expect this bill to be “fast-tracked” and we are hopeful for passage by February 15th. However, we have also witnessed the impact of Senate rules on the FHA bill before the Holidays.

We will keep you apprised.

Brian Chappelle

Partner

Potomac Partners

2127 S. Street N.W.

Washington D.C. 20008

The article below indicates that the reason for increased foreclosure is loss of jobs, not sub-prime lending.

I think this article is particularly insightful given all the sub-prime hub-bubb.

If you’re moving here from another areas– you’ll be pleased to know that you’re not moving to a distressed, foreclosure prone real estate market. The RTP area boasts one of the most robust job markets listed as the 3rd highest employment area in the country and therefore you would expect a lower foreclosure rate and rising real estate values…Hope this is informative.

Jobs, Not Subprime, Continue to Drive Foreclosure Rates
Investor’s Business Daily (04/10/07) P. A1; Stoddard, Scott
California is ground zero for many of the country’s biggest subprime lenders, including Countrywide Financial and Wells Fargo; and with 22 percent of its total mortgages considered “risky,” it leads the nation in terms of lending to borrowers with flawed credit. Even so, California’s foreclosure rate for the fourth quarter of 2006 came in at just 0.43; while Midwestern states like Indiana, Michigan and Ohio all crossed the 1-percent threshold. Economists attribute the Golden State’s resilience to a robust economy that continues to create jobs–which in turn allows residents to remain in their homes, supports housing prices and lets homeowners use equity to refinance out of adjustable loan terms and into fixed loans. Michigan, Illinois, Indiana, Ohio and other Midwestern states, meanwhile, have been battered by the one-two punch of declining residential values and the loss of tens of thousands of manufacturing jobs following cutbacks at auto companies. “High foreclosures are historically linked to employment issues and regional and state economic conditions,” confirms Mortgage Bankers Association Vice President of Public Relations Laura Armstrong.

Have you ever wondered which documents to retain and which files to purge? Here are some ideas to help get your records organized. By organizing your records today, you can avoid potential problems later.

Tax Returns: Keep all federal tax returns and supporting documents for as least six years. The Internal Revenue Service generally has 3 years after your return is filed to assess tax. This three-year statute of limitations is extended to six years if amounts in excess of 25% of your reported gross income have been omitted from your return. If you filed a fraudulent tax return, the IRS can audit you at any time.

While it is generally safe to discard tax-supporting documents after six years, it is a good idea to keep your tax returns indefinitely. Copies of past returns can help remind you of carry-over items – such as capital losses and depreciation – for your current return.

Real Estate: All closing statements plus receipts for improvements should be kept for at least four years after the property is sold. Refinance papers should also be retained. Create a file for bills and canceled checks that contain invoices from any improvements you made to your home. When you sell, you can reduce the tax due on your profit by adding the cost of the permanent improvements to your home.

For any rental real estate or depreciable business property you own, keep records of the property’s cost, date acquired and the schedule of depreciation claimed in previous years. This record should be kept for four years after the disposition of the property.

Investment Documents: Generally, investment documents should be kept for at least four years after the asset is sold. This would include record of stock dividends, splits and reinvested dividends. Don’t forget to keep records of your non-deductible IRA deposits, employer-plan stock purchases, rollovers and conversions to Roth IRAS and Keogh plan deposits. These should be kept until four years after the plan assets have been withdrawn.

It is important to retain trade confirmation notices you receive from your stock broker or mutual funds when you buy or sell securities. You will need the information to calculate your gains and losses. When you sell an investment, it is a good idea to attach the buy and sell confirmation to your tax return copy for that year to document the capital gain or loss you reported.

Keep your monthly brokerage or mutual fund statements at least until you receive your annual statement. If that statement summarizes all transactions and related data, for the year, shred your monthly statements.

We’d love to hear from you. Please Contact us today to find out more about purchasing a home in the Raleigh, Durham or Chapel Hill area! If you are thinking of selling your Chapel Hill, Cary, Durham or Raleigh area home, contact us for a free home valuation and valuable information on area trends. If you’re looking to purchase a triangle area home we can assist you in finding your perfect home. We have a number of incredible tools that we’d be happy to demonstrate. Just call Angela Bordbar or Colin Moody for details. (Colin)

“Popcorn” or “Cottage Cheese” ceilings can date your home, reduce it’s value to prospective buyers, and depending on when it was applied be hazardous to your health. Here’s what you need to know about ridding yourself of this potential menace.

More than an eyesore
If you want to remove an acoustic ceiling, you’ll first need to determine whether it contains asbestos. Asbestos was used as a binder in many construction materials before it was banned in 1978 for posing health risks such as cancer and respiratory disease. You’re not required by law to test for asbestos, but the Environmental Protection Agency strongly recommends it.
If your home was built prior to 1979, the chances are very good that your popcorn ceiling contains asbestos. In fact, it’s not uncommon to find asbestos in acoustic ceilings installed in the 1980s because existing inventories were exempt from the 1978 ban.
You can test for asbestos by submitting samples to a laboratory. The cost is minimal and labs are generally listed in the Yellow Pages under “Asbestos — Consulting and Testing.”
Obtaining a ceiling sample is not difficult:
Using a spray bottle, thoroughly wet three or four small ceiling areas with water mixed with a few drops of liquid detergent.
With a putty knife, carefully scrape about one square inch of “popcorn” from each area into a sealable plastic bag.
If the lab results are negative, meaning less than 1% asbestos was found in the sample, the EPA recommends taking two additional samples to confirm the analysis.
If you have asbestos …
If your sample comes back positive for asbestos, there are only two ways to deal with it safely and legally:
You can encapsulate the asbestos with a new layer of non-asbestos acoustic sprayed over the top of the existing ceiling. This is the most economical solution to the asbestos problem, but still leaves your home with that dated look.
The pricier solution is to have a certified asbestos-abatement company remove the finish and then have the wallboard retextured and painted. Cost for having professionals remove asbestos vary, but for say, a 15-by-20 foot room you can expect to pay $3,000 to $5,000.
It is illegal to paint an asbestos-containing acoustic ceiling because rolling or spraying can release the harmful fibers into the air, where they can then be inhaled. Paint is not an efficient way to encapsulate asbestos fibers, according to the EPA.
While it is not illegal to remove your asbestos-positive ceiling yourself, there are no known safe levels of asbestos exposure and the EPA recommends strongly against doing so. If you decide to remove it on your own anyway, you’ll need to use special HEPA filter respirators, disposable protective clothing, rubber boots and eye protection. And you must use special containment bags for all debris and dispose of them only at sites licensed for asbestos. (Full guidelines are available from most state health departments or air-quality agencies.)
No asbestos? Fresh paint can help … some
If there is no asbestos present, there are other ways to deal with popcorn ceilings that fall short of removal. One option is to freshen them up with a new coat of paint.
Think twice about using a roller because acoustic ceilings are very porous and will absorb a great deal of paint. Also, using a regular roller makes it nearly impossible to achieve even coverage. Often, the entire layer of the cottage cheese texture will come right off, leaving a bare strip of drywall. New on the market are thick rollers with slits that are less likely to scrape the acoustic off, but they still require a lot of paint and can be drippy.
The most efficient way to put new paint on a textured ceiling is to spray-paint it with flat latex. Spraying is a difficult job, and unless you already have most of the supplies, it may be cheaper to hire a professional. Professional painters can usually respray the acoustic ceilings in an average-sized home in less than a day for about the same price as materials alone. After all this is done, however, you’re still left with that same outmoded look.
Taking it down yourself
Removing an acoustic ceiling is not beyond the average homeowner. But it’s hard work, and not particularly pleasant. Be prepared for the long haul. It’s a dirty, nasty, long job, as you scrape, it’s going to fall in your face, your hair — but it’s doable.”
The basic steps:
Clear the room of all contents, including any hanging fixtures. Place wire nuts on any exposed wires and turn off these fixtures at the breaker to avoid electrical shock.
Guard walls and floors with a lightweight plastic drop cloth, covered with a layer of six-millimeter plastic sheeting.
Soften the acoustic material with a light water spray; a pump garden sprayer works well.
Scrape the popcorn off with a wide-blade taping knife.
Let the drywall dry overnight. The next day, repair any imperfections with drywall joint compound, then sand with a sanding pole using 100-grit sandpaper.
Apply texture to match the wall finish.
The final steps are to seal the ceiling with drywall primer and paint.
Use a good primer. Think of primer as the glue that makes the paint stick, finish with a flat latex paint.
If this sounds too complicated, there are plenty of professionals who will do the job for you — painters, dry-wallers, handymen — but removing an acoustic ceiling is more labor than skill, and labor is expensive. You can expect to pay $400 to $800 for a 15-by-20-foot room.

We hope this article and others in our blog has been interesting and possibly helpful. Please Contact us today to find out more about purchasing a home in the Raleigh, Durham or Chapel Hill area! If you are thinking of selling your Chapel Hill, Cary, Durham or Raleigh area home, contact us for a free home valuation and valuable information on area trends. If you’re looking to purchase a triangle area home we can assist you in finding your perfect home. We have a number of incredible tools that we’d be happy to demonstrate. Just call Angela Bordbar or Colin Moody for details. (Colin)

Adapted from an article written by Ann Harper.

This year, for the first time, PMI (Private Mortgage Insurance) is tax deductible. …. The new deduction is valid on purchases and refinancings that close in calendar year 2007. There is no deduction if your adjusted gross income exceeds $110,000 for the year, or $55,000, if you are married, filing separately. And this deduction has been approved by Congress for one year only, so it might go away, unless lawmakers approve an extension.”

We’ll keep you posted on this and any other pending legislation that may affect your ability to purchase a home. In the meantime Contact us today to find out more about purchasing a home in the Raleigh, Durham or Chapel Hill area! If you are thinking of selling your Chapel Hill, Cary, Durham or Raleigh area home, contact us for a free home valuation and valuable information on area trends. If you’re looking to purchase a triangle area home we can assist you in finding your perfect home. We have a number of incredible tools that we’d be happy to demonstrate. Just call Angela Bordbar or Colin Moody for details. (Colin)

Low Rates and extraordinary inventory have created perfect conditions for home buyers.

Take a moment to consider these facts: