Mortgage Fees Would Rise Under Payroll Tax Cut Deal

SMOKE AND MIRRORS AGAIN ON CAPITOL HILL.  Read more HERE.

If you're a real estate agent, a real estate broker, a loan officer, a home buyer or a home owner,

YOU HAVE A TARGET ON YOUR BACK.

Congress has done it again.  The government has targeted one group of Americans to benefit another.  This is what Congress calls "paid for" when they design legislation to benefit one group of voters and sticks their hands in the pockets of another group to "pay for it".  In most cases of course, the group to benefit are expected to vote for the politician(s) who sponsor the legislation.  In this case it's an extension of the so called "payroll tax cut".  This is not a "payroll tax cut".  Never was and never will be.  It is a clear reduction in the withholding for FICA contribution to fund Social Security benefit recipients.  Of course, as usual, the benefit is immediate and the "pay" for it will be a charge to American home owners and buyer for the next ten years.  Have we ever seen Congress buy any votes by cutting one single $Dollar of spending???  Help me out.  I can't think of one.  What they propose today will be paid for by new fees on some group of Americans long into the future.  Even when Congress "reduces" an expenditure, it's only a reduction in the "rate of growth", not a cut as they cleverly claim. 

In this case, the reduction in FICA withholding is "paid for" by gouging home owners and home buyers and it will last FOR THE LIFE OF THE LOAN.

THE REAL ESTATE INDUSTRY HAS A TARGET ON IT'S BACK!  That's for sure.

"In exchange for a two-month tax cut, the Senate on Saturday approved a permanent increase in fees attached to mortgages backed by Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA)."

The fee amounts to about $360 per household per year for an average $200,000 mortgage.  How much money will this hit on home owners and home buyers raise??  About $37,000,000,000.  Of course, that will extrapolate to $720 per household with a $400,000 mortgage.  That's a lot of $Billions and that's a lot of households.  $37,000,000,000 represents $Thirty Seven Thousand Million.  It represents a fee to every single home buyer who finances their new home purchase with a loan purchased or insured by Fannie Mae, Freddie Mac or the Federal Housing Administration, or about 90% of ALL newly originated or refinanced loans.

$37,000,000,000 is a lot of money and the saddest thing about the entire matter is that it funds the reduction in the FICA withholding for only TWO MONTHS. 

If Congress succeeds in passing legislation to reduce the FICA withholding for a year, which is the goal of many today, where will they get the money to PAY FOR that????

I GIVE UP!!  What I do know is that anyone involved in the housing industry, every home owner who may wish to refinance their home loan and every future home buyer for years HAS A TARGET ON THEIR BACKS!!

Courtesy, Lenn Harley, Broker, Homefinders.com, 800-711-7988.

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BTW, the "tag" for this post is "mortgage mess", now up to 245 posts with this one.  Why do I have a compendium of posts with the tag of mortgage mess??  Because, IMO, the "mortgage mess" was caused by, created by and exacerbated by actions of the U.S. Congress. 

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Had my One on One with my BIC.......... Time to set some goals.

I had my one on one with my BIC last week and it made me go back and re-evaluate some of my plans for the upcoming year.

I want to spend more on marketing......no, not that kind of marketing, newspapers, RE books is not where I'll be spending my money. I want to learn and I want to streamline my online presence, I have a great website with Dakno, I have my ActiveRain Blog, I have two Outside blogs, I have a Blog for Portofino. I have a Twitter, Facebook, Linked in, and on and on. I firmly believe you have to spend some money to advance in this business, the top agents do it, or they are the knowledge to do it themselves.

Of course there are places to go to get free advise......Here on ActiveRain is one of the best places to learn and connect with people who know what they are talking about. In fact it's through AR that I found a class I intend to take with Katherina Gassett. One of the best ideas I think to come from AR recently is the 30 day challenge, right now there is a December challenge going on, powerful stuff, I did one in September and it is hard, let me tell you.

So I will spend more on my website, I want it to generate quality leads,Dakno designs some really cool Real Estate Websites  I will blog blog blog but I want to learn to optimize my time and so I will invest in knowledge for that. I have a smart phone, an iPad2 a laptop, I'll be spending money on apps, lenses, software I think this Internet stuff is going to be around for a bit!

I'll also be doing some non Internet based marketing for example, mailing to my neighborhood, I used to do it and it generated a lot of listings, I stopped and so did the listings, there are six homes listed now, and I only have one, I think if I can get into the homes listed, when they expire I might get them. I read Barbara Todaro's blog, as should you and she does a staggering amount of mailing and it works for her and works well.

When you have to explain how a plan is going to work out loud and to another person, it is a powerful way to find out if the plan is sound or needs tweaking. Can you guess I had a tweaker in there! I have a large data base but   it is just names of people until I separate them into groups and assign a plan for each group, I probably won't be  calling up my Mother in Law and asking for referrals but I will be calling my past clients, who I have neglected, and I have clients that need a nudge.

2011 was not a great year and I'll be glad to see the back of it, I did spend a lot of time working on projects and homes that will come to fruition in 2012.

Bring It!!

Have you ever noticed how snow will melt around the foundation on older houses?  This will happen at any house with unheated foundation walls, and it's a great visual indication of how the house is losing heat.   When there's no melted snow up against the house, we can rely on thermal imaging to figure out where the heat loss is occurring.  In the image below it's right at the rim space; that's the part that shows up as the brightest orange / yellow.

While houses usually act like chimneys, sucking air in at the bottom and exhausting air through leaks at the top, the photo below is a perfect example showing how it doesn't always work that way.  The frost that has accumulated against the siding is all coming from air that's leaking out of the un-insulated, un-sealed rim space.   It was about -15 degrees outside when I took the photo below.

To cut down on basement heat loss, an obvious place to start at is the rim space.  I mentioned this a couple weeks ago when I wrote my post about how I had my entire basement re-insulated, but today I'm going to focus on the rim space alone and discuss the different options for insulating and air sealing this space.

The old way of insulating rim joists was to use fiberglass batts.  As I've mentioned many times in previous blogs, fiberglass batts are a poor choice of insulation for any project... but they should never be used at the rim space because it's nearly  impossible to install a proper vapor barrier here, and fiberglass batts will allow for a lot of air leakage.   Without a vapor barrier at the rim space, you'll have relatively warm, moist air passing through the fiberglass insulation and then condensing at the rim joist.  This can create mold or rotting.

There are only two ways that I ever recommend to insulate the rim space: rigid foam or spray foam.

Using spray foam at the rim space is just about the only thing that is ever done on new construction houses in Minnesota today; while it's expensive, it's worth it because it can be applied quickly and does a perfect job of both insulating and air sealing the rim space.  Wires, faucets, pipes... they're no match for spray foam.  All of the penetrations get sealed.

While spray foam is supposed to be covered by an approved material to prevent the possible spread of a fire, the rim space is one exception to this rule; this exception can be found in the Minnesota Amendments to the IRC, sectionR314.5.11.  Here in Minnesota, up to 5 1/2" of foam insulation can be sprayed at the rim space and left exposed.  The only downside to using foam insulation is that it's relatively expensive.  You can buy do-it-yourself insulation kits for fairly small jobs, such as a rim space, but I would personally just hire a professional to do this.  It wouldn't cost much more than a spray foam insulation kit.

The alternative to having spray foam applied at the rim space is to install rigid foam insulation.  Installing foam insulation at the rim space takes a long time, but it's not a very difficult project.  Basically, pieces of rigid foam boards get cut to size, placed at the rim space, and caulked or foamed in place to help prevent air leakage.

While writing this post, I came across a great blog written by a handy homeowner, showing how he insulated his own rim space with rigid foam.  You can view it here - rigid foam at rim space.

The one thing to remember when making a house tighter is that you'll have less air leaking in to and out of your house, which can create other problems, such as a backdrafting water heater or excessive moisture in the home.  The Minnesota Department of Commerce Energy Information Center has a great handout that specifically addresses this topic, which you can download here - Combustion & Makeup Air.

If you don't have any insulation at your rim space, add this project to your list of 'to-do' projects.  It's not as critical as attic insulation and it takes more time, but it's a good thing to do.  Just don't use fiberglass.

Reuben Saltzman, Structure Tech Home Inspections - Email - Minneapolis Home Inspector