Hat tip to Rick for passing this along:
http://www.politico.com/news/stories/0909/27448.html
An excerpt:
By the end of this month, Senate Environment and Public Works Committee Chairwoman Barbara Boxer (D-Calif.) is expected to unveil new legislation along the lines of the Waxman-Markey bill, which passed the House on June 26.
That bill contains 397 new regulations. One of them would affect almost everyone who buys or sells a home. If Waxman-Markey becomes law, homes for sale that qualify as “federally related transactions” — which is almost all of them — would be required to undergo an environmental inspection.
Many politicians are upset about depressed housing prices. And true, environmental inspections are one way to raise them. But this is not the way to do it. Sen. Boxer should see to it that the Senate version of cap and trade leaves the environmental inspection provision out.
Inspections are not free. Nor is fixing the inevitable violations. Compliance with new energy-efficiency standards would make homes, especially older ones, more expensive. Selling one’s home would become even harder than it already is in this down market if Waxman-Markey-style cap and trade becomes law.
And that is just one of the unintended consequences.
Suppose you have a window that isn’t quite airtight or your appliances are a little too old. Maybe they’re not Energy Star certified. You’d have to replace them before you would be allowed to sell your home.
The result could be the end of fixer-upper homes; surely, this is not what Congress has in mind. Some families prefer to buy a home in less-than-stellar condition on the cheap and make repairs and upgrades themselves.
For people who don’t have a lot of money, or who enjoy working with their hands, or who want to customize their home, this can be a very fulfilling path to homeownership. Waxman-Markey would take that away.
If the sellers are required to make all these improvements pre-sale, buyers lose the opportunity to, say, choose what kind of appliances they can have, what kind of insulation to put in the attic or what kind of doors or windows they would like.
To sum up: Inspecting homes for sale for their environmental friendliness would raise home prices. Buying or selling a home would become an even more onerous process than it already is. And there’s an easy way to dodge the bullet: Rent instead of own. If enough people did that, the inspection requirement would fail to achieve its goal of making homes more energy efficient.
They should just add a page to disclosures that says which appliances do/don’t meet environmental standards. The same as with the existing water regulations. If it’s not water efficient, just say so and let the buyers know. The water efficiency standards are only enforced for new additions – existing facilities are grandfathered.
While new builds should have “green” requirements, the older homes should not be subject to these inspections. OTOH, if an owner of an older building wants to improve it, the govt can certainly continue with financial incentives for energy/water-efficient devices and appliances, which they are already doing, AFAIK.
This sounds idotic to me.More stupid rules by the govt.Looks like they need to find some real work to do.
Looks like more standards for inspectors. Is that a bad thing? They’ll probably do something like sdbri suggests.
Considering that the SDUT has a front page story on its website about the GOP going hard after Boxer’s seat you may want to take the above opinion piece with a grain of salt.
But I thought that culling the pool of potential buyers and sellers would be a good thing? Fewer people owning, more people renting and all that? That would seem to eliminate objection #2 of the above argument.
With regards to argument number #1, yes, it’s true it does raise prices and make thing more complicated but I think a lack of complications in buying homes led to many of our current problems (whether this proposal addresses those concerns of not is another issue entirely). It does provide opportunities for new service providers and does insure that more homes will be more energy efficient.
I’m not sure how this negatively affects most people unless you owned a bunch of run-down, errr, “older” homes and had plans to sell them.
And definitely not to get political here, because I think boxer is an airhead (at best), see who the republicans are running against her? carly fiorina. Does anyone really think fiorina is going to fail upwards that hard?
Our government in incompetent. They’ve proven it over and over and over.
How do these morons keep getting re-elected?
You guys need to take off the tin foil hats. An inspection is not a requirement to mitigate. Its information. The law requires an inspection, which is fine. As long sa the inspection can be waived, or the seller can state that the environmental issues are as is/where is, then who cares?
Wow, miss a couple days of bubbleinfo–miss a lot! Ten entries! So I obviously missed Thursday morning’s discussion re: NAR video on FHA. I include my comments here as they would be buried if I commented on last Thursday’s.
Here’s my situation. I talked to a mortgage guy last week–just to see about pre-approval. I have 20% DP, stellar 20-year credit history, stellar FICO, and NO debt (no car payment, no loans, no credit cards balances that I don’t pay off every month) with no late payments, including mortgage history.
I was looking for pre-approval of a 30-year fixed as I like to be able to sleep at night knowing my monthly mortgage obligation.
I’ve been looking on and off to buy a home for 3 1/2 years. I rent (7 years) with a month-to-month lease, and have no home to sell. (My late husband had cancer, so we decided to rent instead of buy when we moved back to CA.) Hindsight is always 20/20–wish we had bought for $350K.
Easy for me to get a loan? Nope! I thought last summer was crazy, but IMO, the credit situation is even more stringent now. (And for good reason.) But I fear I will “fall through the cracks”. I’m retired, have very high assets, but my last year’s tax return was downright ugly ‘cuz of the stock market crash. I will have “capital losses” for years to come.
I’m shocked to hear I can’t get a 30-year fixed even with the above qualifications (see paragraph #2). I thought I did everything right. *Sarcasm* I guess being responsible just isn’t in vogue these days! Captain Obvious here, I’ve obviously done everything wrong!
If needed, I even have a co-signer (due to the fact I’m retired), but since it’s a “non-occupant co-signer” conventional 30-year fixed won’t fly. At all. Not a chance. As in zip, nada, nope! Because with a conventional 30-year fixed, EVEN with a co-signer, I have to qualify on my own.
We always have had 30-year fixed mortgages with 20% down. I mistakenly thought FHA was for low-income, first-time home buyers. Apparently not!
The mortgage guy said: “Why don’t you just pay cash? You could do that!” “Why?”,I replied. “I want to keep more of MY money in MY pocket. After all, you never know what will happen in the future.”
20% DP isn’t enough? After all, you can’t take your door knobs down to the grocery store for payment if you don’t have enough cash reserves. Who knows what the future will bring? Alas, 2004 taught me how quickly everything can change. You can quickly go from a perfect life to your worst nightmare (in one phone call) that you never wake up from…
Here’s what really surprises me. Even if I do a FHA loan with 20% down, I’m STILL required to pay PMI. Why would I want to do that? I’m thinking of 10-15% down payment now– but certainly NOT 3.5%. PMI has never been part of my life, and now it might be IF I’m approved.
And yeah, Jim, sorry for the length. You can delete, edit…whatever! It’s your blog, after all, and you certainly have the final say as bubbleinfo is part of your business.
Anyone have any more comments re: FHA–including JtR–now that I’ve shared my personal situation? *Chuckle* Jim, maybe you should change my name from “Susie” to “Responsible Idiot” (for this one post)…
I think you can get FHA’s MI removed after 3 or 5 years, and I know you can get non-occupying co-borrowers to co-sign to qualify, so at least you have an option.
If we have to live with full-doc loans due to abuse, and good folks like you get penalized a few bucks, it will be preferred, compared to opening the EZ-doc door again.
The market is already back to being a madhouse, even with full-doc.
Jim,
Not to butt in here, but FHA has 2 different kinds of “mortgage insurance”, neither of which is called that.
1. The Upfront MI. This is always 1.5% (I’ve heard some quote 1.75%) of the lent amount. This is tacked on to the balance and cannot be avoided, regardless of how much you borrow or put down.
2. The Monthly MI. This is avoided with 20%+ down on a 30 yr. I’ve understood this can also be avoided on a 15yr with 10%+ down. This is supposed to be an additional .5% after the rate.
As you can see, FHA is not a panacea. Susie is probably better off with a low-doc or documented assets loan. It will carry a higher interest rate, but let’s be honest here. In America, Cash is Trash, at least as long as the Federal Reserve is still in business.
Chuck Ponzi
Susie, nobody should be giving you a prime loan without proof of stable income. This is what FHA and sub-prime were made for. If you take 100 people with your stats, at least 5 of them will default and wipe out the entire margin of a prime loan just in the overhead.
Loans are not made out based on responsibility alone. Otherwise they’d hand me a blank check. A cosigner does not give you more income and wouldn’t apply here.
The bottom line is people are happy to loan you money. Just not at the exact same rate they’d lend someone who has proof of stable income. Why in the world would they? That omission was the first thing I noticed after reading paragraph one.
I believe the original house version of the “Cap and Tax” bill put the burden of these inspections on appraisers. I wonder how many freebie energy efficient installations are in Boxer’s luxury second home in Rancho Mirage. These politicians are completely out of touch with the real world and the state of our economy. Time for Boxer to hit the road in 2010.
Chuck P, are “guarantors” permitted on a conventional loans by some lenders??? This little unknown “benefit” works well in the case of a mistress, whose married sugar daddy bankrolls the downpayment, but wants to keep his name off title.
Susie-sdbri is right. Due to your investment losses last year, it probably looks like you flip burgers for a living, in terms of your income. You don’t have stable income (if you did, those losses would be immaterial), therefore you don’t qualify for a prime 30 year fixed loan.
As for the blog post, can anybody confirm that this is merely an inspection, or an actual requirement that any house sold meet energy efficiency standards? If it’s just an inspection, big whoop-it won’t do what the article says it will do-it doesn’t ban fixer uppers. Now, if it actually requires houses have all their appliances and insulation and whatever meet modern standards, expect a lot of torn down houses, as many older houses won’t be worth fixing up to modern standards before sale.
I agree with Desert Realtor it’s time for Barbara Boxer to hit the road.
To sum up: Inspecting homes for sale for their environmental friendliness would raise home prices.
An “energy audit” is something I’d want when considering a purchase, but that’s my preference and shouldn’t be law.
On another note… Higher costs don’t directly translate to higher prices; that Politico writer should know better.