The Repercussions of New Legislation
Well, in Congress’s rush to act out and try to do something helpful, they have ended up getting in the way and further throwing in more regulations, which will do nothing but hinder positive economic improvements in the housing market.  Not only in the Buffalo Niagara Region, but nationwide. The more they regulate, the longer it will take for the housing market to rebound.
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What to do I mean, their latest housing legislation that redistributes wealth (the tax credit for first time home buyer, that is a no interest loan covered by the tax payers of this country) also implements more regulations.
In this legislation, which is over 600 pages long, any homeowner after October 1st who purchases a home with a FHA mortgage, will have to come up with more money! I still am not sure how this will stimulate the housing market. What do I mean? Before this piece of legislation an FHA buyer needed a down payment of only 2.25%. They also had to contribute an additional .75% towards closing costs, for a total of 3%. In the new legislation, the borrowers now must contribute 3.5%, with all of the funds going towards the down payment. On a $200,000 home that is additional $2500!
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As we move through these unsettling times we must resist the temptation for our legislators to meddle the market.  Our economy has dealt with many issues, some requiring restraint and others requiring minor adjustments. We cannot over react, because with every action there is a reaction. And in a free market, any action by our legislatures to solve a market problem typically has had a long-term tendency to stifle economic growth.
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