DC on DC
A Regular Update on the Washington Real Estate Market
 “Breaking Down the Bailout ”

 


Dear Friends and Page,

Since ElBoghdady featured me on the front page of the Business section of theWashington Post in her piece on housing and the economy last Thursday, my phone has been ringing off the hook with questions about Real Estate in the eye of this financial hurricane. Donald Trump said this morning that this Bailout is more complicated than sending a rocket into space. Hopefully, this summary will break it down for any of you who are interested.

Leaders in the Congress have agreed to the underpinnings of a deal that will allow the Treasury Department to buy up to $700 billion in troubled securities to soothe global credit markets.

Congressional negotiators amended the Treasury Department's original proposal to add new oversight powers and conditions that would protect taxpayers.

The full House of Representatives and Senate must both approve the legislation, with a vote expected in the House on Monday. Key elements of the plan follow:

·       The $700 billion in buying power would be doled out by Congress in stages. After the first $250 billion is authorized, the President could request another $100 billion. The final $350 billion could be cleared by a further act of Congress.

·       Eligible assets include residential or commercial mortgages and related instruments which were originated or issued on or before March 14, 2008. Other financial instruments can be included in consultation with the Federal Reserve if Congress is notified.

·       Treasury secretary given broad discretion to determine the methods for buying assets.

·       Foreign central banks, or institutions owned by a foreign government, cannot take part.

·       The government will take a stake in companies that tap federal aid so that taxpayers can share in the profits if those companies get back on their feet. An exception applies to financial firms that offload less than $100 million of soured investments.

·       If a company receives aid but fails, the government will be one of the last investors to see a loss.

·       A new congressional panel would have oversight power and the Treasury secretary would report regularly to lawmakers in two elements of a multi-level oversight apparatus.

·       If the Treasury takes a stake in a company, the top five executives would be subject to limits on their compensation.

·       Executives hired after a financial company offloads more than $300 million in assets via auction to the government will not be eligible for "golden parachutes."

·       Would permit the Federal Reserve to begin paying interest on bank reserves from October 1, giving it another tool for easing credit strains.

·       Mandates a study on the impact of mark-to-market accounting standards, which critics blame for a downward spiral in the valuation of assets on corporate balance sheets.

·       The federal government may stall foreclosure proceedings on home loans purchased under the plan.
- Alongside the plan to buy securities outright, the Treasury Department will conceive an alternative insurance program that would underwrite troubled loans and would be paid for by participating companies.

·       If the government has taken losses five years into the program, the Treasury Department will draft a plan to tax the companies that took part to recoup taxpayer losses.
Complicated, but it’s not NASA. Bottom line is you can’t live in a portfolio, but owning real estate is the most important investment one could have. Rates started at 5.75% this morning and finished at 6% at the end of the day. That’s still cheap money. If you have liquid reserves, buy now. For the serious to the looky-loos, I’ve attached 9 exciting listings with virtual tours that stand out in this Fall inventory.

Click the following URL to see the listings:
http://matrix.mris.com/Matrix/Public/Email.aspx?ID=27193003834

Please call me if you’d like to check any of them out in person, or if have other questions about your own homes in this market. Best wishes to you all. Shana Tova Umetukah.

David
DAVID CROSSLAND
Realtor DC & MD
Long & Foster Real Estate
Chevy Chase Uptown Office
4400 Jenifer Street, NW
Washington, DC 20015

Office: 202.364.1300 x 6222
Cell: 202.320.5046
Fax: 202.237.9889
david.crossland@longandfoster.com
www.DConDC.com