Thursday, February 26, 2009

Eglin AFB Airmen Need Immediate Correction to American Recovery and Reinvestment Act


I am privileged to represent Major Jason M. Trew, a pilot with the United States Air Force, as a real estate client. Major Trew is stationed at Eglin Air Force Base. I have Major Trew's home listed for sale in Freeport Florida, because he is being required to relocate by the Air Force to a new base. Like many others in the military, his property value has declined to an amount lower than his mortgage balance. Major Trew is not a property flipper nor a speculator. He earnestly relocated to the Emerald Coast of Florida for the military, as directed by the United States government, and invested in a home for his family in March 2007. I am printing his letter to Congress, with his permission, of grave concern regarding the new American Recovery and Reinvestment Act of 2009, and its affect on our military by establishing an arbitrary cut-off date for aid to military members who purchased homes with values now below mortgage balances:

The Honorable Dave Obey
Chairman, Committee on Appropriations
Room H-218, The Capitol
Washington, D.C. 20515

Dear Mr. Chairman,

Section 1001 of the ‘‘American Recovery and Reinvestment Act of 2009'' includes a provision extending temporary homeowner assistance for members of the armed forces permanently reassigned during this mortgage crisis. However, I strongly disagree with the stipulation that the property must have been purchased before July 1, 2006.

When the Military Officers Association of America asked the Appropriations Committee staff for the rationale for that cutoff date, the committee indicated the sense that the home market decline was underway at that point, and the intent was to protect people who purchased homes before they had any warning to expect a decline.

Contrary to this assumption, the fact that home prices had decreased was an incentive to purchase a home. In fact, the National Association of Realtors launched a $40 million campaign in fall 2006 to encourage home purchases. Within the Florida real estate market, a survey released just after the July 1, 2006 cutoff date found that:

-Only 16% of homeowners listed a "fear of a price bubble"
-Only 5% said they were concerned about falling home values overall
-58% were optimistic that home values in their own community would continue to increase

In January 2007, a Florida Association of Realtors (FAR) report that indicated "the market correction has plateaued and the local real estate industry is likely on the rebound." That same month, the FAR president stated that, "now is the time to take advantage of homeownership opportunities."

After reading articles like these, we purchased a home in March 2007 because we assessed that the market's decline was near the end and we did not expect a further decrease. Obviously, we purchased at a bad time in the real estate market, just as those who purchased before July 1, 2006.

Starting last summer, we attempted to sell our home for a loss that we could personally absorb. In seven months, no one inquired about the house and a recent comparative market analysis estimated the value at $70,000 less than our mortgage balance and $120,000 less than the appraised value at the time of purchase. We are now pursuing a short sale and deed-in-lieu-of-foreclosure. Either option will significantly impact our credit for many years.
As an active duty member of the U.S. Armed Forces, the current wording of the ARRA provides us no relief as we prepare to move to our new assignment. Many other military families are in the same situation.

The 1 July 2006 date was a faulty decision that sacrificed effectiveness for the sake of simplicity and I request that you to introduce legislation that corrects this costly mistake.

Respectfully,
Jason M. Trew

4 Attachments:
1. New York Times article, "Realtors Say the Stars Are Aligned for Housing" (6 November 2006)
2. Orlando Sentinel article, "Poll: Homeowners fear storms, not lower values" (8 July 2006)
3. Bradenton Herald article, "Realtors predicting home sale uptick" (26 January 2007)
4. PR Newswire article, "Florida's Existing Housing Market: Median Price Up, Sales Down in 2006" (25 January 2007)

cc:
Senator Bill Nelson (D- FL)
Senator Mel Martinez (R- FL)
Representative Jeff Miller (R - 01)
__________________________________________________________________________________________________
Contact Wendy Rulnick, Broker
Destin Florida real estate and the Emerald Coast
Rulnick Realty, Inc.
itswendy@rulnickrealty.com
877-487-9639
850-650-7883




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