Santa Cruz Real Estate Blog

Free money for sale...

Mon, 06 Jul 2009 04:09:54 +0000

Many of you are aware that first time home buyers can receive $8,000 in free money for buying a home.� If the home is new construction, the buyer can receive $10,000 in additional free money.� I don�t know about you, but $18,000 in free money from the government is a rare and wonderful thing.� Now comes word of an additional� improvement in this program.� Rather than receiving this money as a tax credit, the buyer would now be able to apply this money towards their down payment!

Improvement Coming to Buyer Tax Credit?
Shaun Donovan, secretary of the U.S. Department of Housing and Urban Development, said that the Federal Housing Administration is working on a plan that will permit its lenders to allow home buyers to use the $8,000 tax credit as a down payment.

Previously, most buyers wouldn't receive the funds until after they filed their tax return, and that deterred some people from using the credit.

�We all want to enable FHA consumers to access the home buyer tax credit funds when they close on their home loans so that the cash can be used as a down payment,� Donovan says.

He says FHA�s approved lenders would be permitted to �monetize� the tax credit through short-term bridge loans. This will allow eligible home buyers to access the funds immediately at the closing table. The plan isn't final; more details are expected in coming weeks.

Other Solutions for Today's Market
During his address, Donovan went on to say that the Obama administration plans to further stabilize the housing market. �I do think we have some early signs that the market overall is stabilizing,� Donovan says. �Since January we�ve seen both home sales moving up and down around a relatively stable number and we are seeing the first signs that the rapid decline in home prices is starting to abate.�

He and other speakers examined cutting-edge solutions necessary to promote and preserve homeownership and real estate development, stimulate the economy, and protect the nation�s taxpayers. They also shared their ideas on what the role and responsibility of the federal government is in the revitalization effort.

�Right now the Federal Reserve is the market,� said panelist Jay Brinkman, chief economist for the Mortgage Bankers Association. �What will be the effect when the Fed stops buying?� Brinkman explained that an exit strategy must be planned for the long-term; the federal government cannot continue to support the mortgage markets indefinitely.

�We are thrilled that so many high-caliber individuals were able to join us today at this important meeting to promote stability in the housing market and the U.S. economy,� said NAR President Charles McMillan. �We look forward to an ongoing dialogue and action toward this goal, during our midyear meetings this week and beyond.�

Source: NAR

July 2009 Santa Cruz Real Estate Update

Fri, 03 Jul 2009 15:51:43 +0000

Summer is here and we hope you�re enjoying the lovely weather here in Santa Cruz!�� This month we have Lavender in full bloom in our yard with bees-a-buzzzzz!

The Real Estate News...

FREE MONEY UPDATE!!!
The �California State Tax Credit for new construction� requires an application process and has nearly filled their application quota.� When the funds are depleted, the credit will no longer be available, so if you�re on the fence or in the process, don�t delay!� Go to this website for daily updates on the number of applications received:

http://www.ftb.ca.gov/individuals/New_home_Credit.shtml

The first-time home buyer tax credit of up to $8,000 has helped many new home buyers into their first home.� It�s set to expire for home closings on November 31, 2009.� At this time, both legislators and the business community are hoping to build on the incentive's success by expanding it.

Here are the proposed changes introduced in the House and the Senate:

Setting a new cap of $15,000.
Extending the tax break into mid-2010.
Making the benefit available to all home buyers, not just first-timers.
Offering a separate tax credit to $3,000 for borrowers who refinance.

The existing $8,000 is still available, and if you know anyone who may qualify for this, please pass along this information to them or give us a call and we�ll help them to capture this credit.

We are ready to help you through the process of buying or selling your home.� Call us anytime with any questions about our market or about the real estate process.� We look forward to working with you.

Dan and Lyn
July 2009

For the latest in real estate news, trends, and advice, see our monthly client newsletter.

See, I told you so. Real estate is a fine investment in this changing economy...

Fri, 03 Jul 2009 04:08:22 +0000

Smart investors are looking at our depressed home values and seeing opportunity, as evidenced by the multiple offers on lower priced homes we�re seeing.� Now is the time to get off that fence and buy, buy, buy. . .

Homes May Be Undervalued Today
After dropping for two years, home prices appear to be bottoming out, and any further declines would be an overcorrection, NAR Chief Economist Lawrence Yun told thousands of practitioners at the REALTORS� Midyear Legislative Meetings in Washington, D.C., on Thursday.

The median national home price today is about $169,000, down almost 14 percent from a year ago and an estimated 30 percent from its peak. Today�s prices are justified by the fundamentals of the economy and may even represent an undervaluation, Yun said.

Lender Policies Hinder Recovery
Distressed sales, which today comprise about 50 percent of transactions nationwide, are creating market distortions in otherwise stable neighborhoods. �We�re only capturing transaction prices,� he said, and those prices might be 20 percent to 25 percent below actual values. For that reason, it�s possible that widely cited projections that a third or more of homeowners are underwater might be off the mark, he said.

The consequences of these missed projections could be huge. Lenders, shying away from refinancing mortgages of troubled owners, exacerbate the downward spiral of homeowners� financial position and that, by extension, hurts the broader economy.

Contributing to the problem is the lack of reasonably priced financing for higher-cost homes at a time when declining prices, low rates, and the home buyer tax credit are helping the entry-level market.

Indeed, while housing overall is at a 9.5 month supply, down from double digits not that long ago, homes above $729,750�the threshold for jumbo loans�face a 40-month supply.

Key Test
By summer, all of the incentives that have been put into place by the government will have had several months to work, Yun said. If sales start picking up significantly, then prices should stabilize and trigger a broader economic recovery.

If sales don�t show a significant response, then the federal government might have to look at another big injection of funds into the economy, something no one has an appetite for.

Yun�s forecast reflects the brighter scenario: �My projection is home sales will be 10 to 20 percent higher the second half of this year than last year and we will come out of this recession in 2010,� he said.

–Robert Freedman, REALTOR® Magazine

Another wave of foreclosures is coming and our home prices are going to suffer

Mon, 29 Jun 2009 04:04:58 +0000

Everyone is asking about the �second wave� of home foreclosures and whether we�ll see this in our Monterey Bay area.� Unfortunately, I do think there is another wave coming.� Here is an article that describes what is happening in southern CA.� The same thing applies here. . .

New foreclosure wave predicted in Inland area
By LESLIE BERKMAN, The Press-Enterprise

A near record number of homes entered the first stage of the foreclosure process last month in Riverside and San Bernardino counties after mortgage industry foreclosure moratoriums were lifted.

The supply of bank-owned houses has shrunk from a year ago, sparking intense competition from investors and first-time buyers, who often find they must make offers on multiple houses to get one accepted.

But economists expect the number of bank repossessions to burgeon in coming months as a new influx of defaulted mortgages proceeds to foreclosure.

Christopher Thornberg, an economist with Beacon Economics in Los Angeles, said the slowdown in foreclosures while mortgage delinquencies increased "was a mirage. It wasn't real. At some point you have to foreclose."

New federally sponsored programs for refinancing and modifying troubled mortgages and the lending industry's redoubled efforts to stave off foreclosures will be undermined by job losses, predicted Chapman University economist Esmael Adibi.

"The weakening economy trumps all the goodwill coming form the banking system and the Obama Administration," Adibi said.

According to a report released late Tuesday by RealtyTrac, an Irvine-based foreclosure monitoring company, notices of default, the first step in the foreclosure process, were issued for 6,019 homes in Riverside County last month. That was fewer than the 6,642 record in March but more than the 4,706 default notices recorded in April, 2008.

San Bernardino County recorded 4,661 notices of default last month, down from 5,336 a month earlier but sharply up from 3,759 a year earlier.

Meanwhile real estate agents complain about a shortage of foreclosed houses for sale because banks have stopped taking over homes and seem to be slow putting the ones they have on the market.

Riverside County last month had 1,519 bank repossessions, the final stage of foreclosure, down from 1,934 in March, and down from 2,598 homes repossessed in April 2008. There were 1,580 homes repossessed in San Bernardino County last month, up from 1,179 in March but fewer than the 1,845 homes repossessed the same month a year earlier.

"There is now a dip in (bank repossessed houses) similar to the dip in the notices of default in the third and fourth quarters of 2008. We expect a corresponding spike (in bank repossessions) probably in the third or fourth quarter of this year," said Daren Blomquist, a spokesman for RealtyTrac.

Blomquist said the foreclosure process was interrupted by industry moratoriums that were imposed before the winter holidays, then lifted in March. Also, he said lenders waited to see how many troubled mortgages might be remedied by the Obama proposals.

Pete Nyiri, owner of Corona-based Top Producers Realty, a high-volume broker of bank-owned Inland houses, said late last week he started getting more repossessed houses to sell. He said lenders and loan servicers "are telling us it is going to be back to where it was as far as numbers are concerned."

Martina Aloi, 62, said she and her 87-year-old husband submitted offers on four houses before they were able to buy their first house for $165,000 in San Jacinto. "I was very, very surprised. I didn't think it was going to be as competitive as it was with prices coming down and the economy," Aloi said.

Cash for Keys, Jingle Mail, what the heck are they talking about?

Mon, 22 Jun 2009 04:02:01 +0000

O.K.� You�ve lost your job or you�re going through a divorce, you just can�t keep up with your mortgage payments and the lender won�t negotiate a loan modification with you.� What is the next step?

Treasury Dept. is giving 'cash-for-keys'
Adding to its mortgage rescue program, the government will now offer additional incentives to get troubled borrowers out of homes.

By Les Christie, CNNMoney.com staff writer, May 15, 2009: 8:02 AM ET

NEW YORK (CNNMoney.com) -- When all else fails, the Treasury Department is now willing to cough up cash to get homeowners to move on and to get loan servicers to forgive mortgage debt.

The new initiatives are part of the government's Making Home Affordable program.

Under the original program, unveiled earlier this year, homeowners could be eligible for loan adjustments or refinancings if they meet several criteria: the home must be their primary residence, for example, and the mortgage balance must be no more than $729,750.

Even then, however, mortgage help is not assured. The homeowners may still not be able to afford reduced monthly mortgage payments of 31% of income. And to protect the investors who own the mortgage, the value of a modified loan still has to be greater than the value of what would be recovered in foreclosure.
In these cases, lenders first consider a short sale, a deal in which the home is sold for less than the mortgage balance, and loan servicers may forgive the difference.

If that is unsuccessful, the final step is a "deed in lieu of foreclosure," when borrowers voluntarily forfeit the deed and the debt may be erased.

Under the new initiatives, for short sales and deeds in lieu, borrowers will get up to $1,500 to assist with relocation expenses. Treasury will also pay the servicers $1,000 to complete a short sale or deed in lieu.

A deed in lieu can be the least painful way of ending a mortgage default nightmare, according to Pamela Simmons, a real estate attorney in California.

"Borrowers often prefer to end it quickly and cleanly," she said. "They just want to get it over with." And it's better than just walking away from a mortgage, a situation where the debt still looms.

A deed in lieu might also be better for the banks. Banks acquire the properties back from delinquent borrowers faster and more easily, saving them legal, financial and other costs associated with going through the entire foreclosure process.

Not every deed in lieu involves "cash for keys," but motivated lenders will often pay borrowers something, typically about $1,000, to vacate by a fixed date and to not vandalize the homes or strip it of fixtures.

Who is this good for?
The borrowers who may benefit most from this program are the ones who would still not be able to repay their mortgages under any reasonable workouts.

These would include delinquent borrowers who are way underwater, owing much more on their mortgages than their homes are worth, people who have lost their jobs with little hope of finding another and ones who have gone through a divorce or another life-changing event.

In those cases, they may be better off cutting their housing expenses by switching to a rental and the cash-for-keys is one more good reason to do so.

Complications
But deed in lieu may not be simple, according to Lawrence Jacobson, a Los Angeles-based real estate attorney.

The least complicated scenario is a borrower with no other debt on the home. In that case, it's just a matter of the lender taking its lumps and writing off the difference between what it's owed and what the repossessed home realizes when resold.

If there's a second mortgage, however, the lender will not allow a deed in lieu unless they get the full cooperation of the holder of the second mortgage.

"[Giving the deed back to the bank] is a transfer of title," said Jacobson, "and it's subject to all encumbrances. Lenders will only consider deed in lieu if they're the only [mortgage holder] or if the second lien-holder is willing to give up its interests. Everyone has to be a party to the transaction."

To help solve that issue, Treasury will also make incentive payments to second mortgage holders, up to $1,000, if they give up all claims.

Someone else�s bad credit problems are on my credit report

Fri, 19 Jun 2009 03:57:59 +0000

One of the biggest issues that borrowers have to confront in this brave new world of mortgage lending is errors on a credit report.� If someone else�s bad credit is reported on your credit report, and your FICO score is suffering as a result, here are some steps you can take to fix the problem.

Right Steps to take before disputing a credit report error
By Jessica Anderson, Kiplinger's Personal Finance, Sunday, May 17, 2009

If you believe an error has been made on your credit report, you can dispute it.

At first glance, the rules for fixing an error seem simple enough. But because lenders don't necessarily report to all three credit bureaus, a mistake might appear on one, two or all three of your reports, and you must dispute each one separately.

You can get a free copy of your credit reports at the three major credit bureaus -- Equifax, Experian and TransUnion -- once a year at AnnualCreditReport.com. You can also get a free report if you've been denied credit based on information in your report.

As long as the credit bureaus comply with the Fair Credit Reporting Act and verify that they're correctly reporting the information they received from a lender, they consider their job to be done. So your first call should be to the lender. When you have enough information from the lender to correct the mistake, start your challenge.

Each credit report has a phone number as well as an address to start a dispute, or you can do so online at http://www.transunion.com, http://www.equifax.com or http://www.experian.com. However, if the report is more than 60 days old, you likely will have to get a new one to begin a protest -- and the phone number on the report may no longer work. Also, if you got your report from a third-party site rather than directly from the credit bureau, you may have to get a report from the bureau to begin your challenge (but it's supposed to be free).

Bureaus typically have 30 to 45 days to "resolve" your dispute. If it's a simple factual error that is acknowledged by the lender, it could take as little as two weeks. You will be notified of the bureau's decision via regular mail or e-mail.

Another reason to buy real estate

Mon, 15 Jun 2009 03:55:45 +0000

There are all kinds of reasons to own your home.� Here is a new spin. . .

Fight Inflation: Buy a Home
Some economic analysts say that the possibility that the economy will go into overdrive and inflation will skyrocket is a much more frightening possibility than the current recession.

One inflation hedge nearly all of them point to is real estate. Owning it outright is the best scenario, but if that�s not possible, a low-rate, 30-year fixed mortgage is the next best thing. As inflation drives up salaries, mortgage payments will stay the same, analysts point out.

Source: USA Today, John Waggoner (04/24/2009)

Repent! The end is near...

Fri, 12 Jun 2009 03:53:55 +0000

Not that end.� The end of this miserable housing slide is near, according to some experts. . .

Housing Analysts Predict the Bottom Is Near
The bottom of the housing decline is near, predicted analysts and home builders attending the National Association of Home Builders� semiannual Construction Forecast Conference last week.

Mark Zandi, chief economist of Moody�s Economy.com, facetiously picked a date when home prices would stop falling: Dec. 15, 2009. Other observers weren�t so precise, but they did generally agree that the federal government�s efforts to shore up the market would take effect by the end of 2009 or early in 2010.

Analysts also predicted that consumers will spend less on remodeling. Eric Belsky, executive director at Harvard University�s Joint Center for Housing Studies, predicted that spending on remodeling would fall 12.3 percent by the end of this year compared to last.

Analysts project that the credit crisis will loosen, although people with blemished credit records may continue to have trouble getting mortgage loans.

Source: The Wall Street Journal, June Fletcher (04/24/2009)