As 2008 roles in, several new laws are taking effect that are significant to real estate professionals and the general public. Here is a brief summary of a number of these new laws.
Mortgage Forgiveness Debt Relief Act: This new federal act will help some taxpayers caught in the sub-prime mortgage calamity. Under this act, taxpayers may exclude up to $2 million in income of qualified principal residence indebtedness for discharges sustained during a three-year window (January 1, 2007 through January 1, 2010). This includes obligations incurred from acquisition, construction or substantial improvement of an individual’s principle residence. Refinancing is also encompassed so long as the amount refinanced does not exceed the amount of the indebtedness. California, however, does not automatically observe the provisions of this bill. Therefore, income from forgiveness of debt still must be reported as earnings for state tax purposes. Still the act does free homeowners from a staggering and depressive federal tax obligation possibility, provides a way to sell their homes for less than what is owed on them and avoids having a foreclosure placed on their records.
Cell Phone Usage: This new state law affects every driver. As of July 1, 2008, all motorists will be required to use hands-free devices when using a cell phone while driving. Violators will face a $20 fine for the first offense and a $50 fine for each subsequent breach. The only exception is when contacting a law enforcement agency or public safety entity for emergency purposes.
Anti-Discrimination: Landlords and their agents, as of January 1, may no longer legally inquire into the immigration or citizenship status of an existing or prospective tenant.
Real Estate Appraisers: A licensed appraiser’s compensation can no longer be dependent upon or affected by the value conclusion generated by an appraisal for a real property purchase, transfer, sale, financing or development. In addition, any party with an interest in a real estate transaction is barred from influencing or attempting to influence the appraisal process for a mortgage loan.
New Disclosure for Private Transfer Fees: Beginning January 1, a seller who must provide a Transfer Disclosure Statement is required to concurrently furnish a disclosure statement of private transfer fees, if applicable. Transfer fees include any payment that must be paid upon transfer of real property as imposed by a deed, CC &Rs or other documents. The statement must include a notice that payment is required, the amount of the fee and name of the entity that is to receive payment.
Recording Private Transfer Fees: As a condition of payment of the fee, any person or entity imposing a private transfer fee must record the instrument creating the fee and a separate notice of Payment of Transfer Fee Required. Both must be simultaneously recorded at the county recorder’s office for which the property is located.
Loan Regulations: As of January 1, each of the agencies governing residential loans (all under the purview of the California Secretary of Business, Transportation and Housing) will have the authority to adopt guidelines that provide more stringent provisions on residential loans on one-to-four unit family residences for interest-only, negatively amortized and adjustable mortgage loans. We expect these new guidelines will require lenders to verify that consumers can repay their loans and will demand clearer statements concerning the likelihood that future payments will be made. Criminal penalties for failing to do so are likely to be considered. This new law also brings certain private lenders under the influence of the Department of Real Estate.
Property Tax Reassessment: As of January 1, any transfer of real property made from January 1, 2001 through January 1, 2006 between registered domestic partners is retroactively exempt from property tax reassessment. The recipient of the real property transfer must submit an application by June 30, 2009 to reverse the reassessment.
Friday, February 08, 2008
Thursday, February 07, 2008
Economic Stimulus Package Goes to President for Signature
[Just in from the California Association of Realtors...]
Thanks in part to lobbying by C.A.R. and NAR members, the Senate passed their version of an economic stimulus package today, Thursday, February 07, 2008. The Senate version expands rebate checks for seniors and disabled veterans and includes the same increases to the conforming loan limits for both GSE and FHA found in the House stimulus package. The House just passed the Senate version of the bill and it will now be sent to the White House. The President is expected to sign the legislation by the end of next week, ahead of the Congressional self-appointed deadline of February 15th. The increase in the conforming loan limits will last through 2008, but C.A.R. and NAR continue to lobby for FHA and GSE reform, making these increases permanent.
The U.S. House of Representatives passed a stimulus package last week that raised the FHA and conforming loan limits to as high as $729,750 in high-cost areas. By increasing the loan limits, borrowers will see immediate relief with new liquidity in the mortgage market and the nation will see an additional 300,000 home sales. Research shows that an increase in the FHA limit would enable an additional 138,000 Americans to purchase homes, and 200,000 families to refinance their homes safely and affordably.
Increasing the FHA loan limits is critical to bolstering California’s housing market. Current law restricts FHA loans to levels well below the median home price in many areas of the country and caps loans in high cost states at $363,790. These limits are preventing many homebuyers from using FHA to purchase or refinance their loan. The proposed provision will increase FHA loan limits nationwide by raising the floor to $271,050 and the limit to 125% of local median home prices.
Additionally, raising Fannie Mae and Freddie Mac’s (GSEs) conforming loan limit will provide immediate relief to borrowers and alleviate downward pressure on current housing markets. For instance, increasing the GSE loan limit could result in more than 300,000 additional home sales and strengthen current home prices by 2-3%.
The critical role that GSEs play in providing liquidity to the mortgage market has never been more evident than it is today. The national subprime meltdown has had a dramatic impact on both the cost and availability of mortgages in many markets. Since August 2007, the interest rates for jumbo borrowers have been more than 1 percentage point higher than conforming loans, which can cost homeowners up to $400 month in higher interest payments.
Thanks in part to lobbying by C.A.R. and NAR members, the Senate passed their version of an economic stimulus package today, Thursday, February 07, 2008. The Senate version expands rebate checks for seniors and disabled veterans and includes the same increases to the conforming loan limits for both GSE and FHA found in the House stimulus package. The House just passed the Senate version of the bill and it will now be sent to the White House. The President is expected to sign the legislation by the end of next week, ahead of the Congressional self-appointed deadline of February 15th. The increase in the conforming loan limits will last through 2008, but C.A.R. and NAR continue to lobby for FHA and GSE reform, making these increases permanent.
The U.S. House of Representatives passed a stimulus package last week that raised the FHA and conforming loan limits to as high as $729,750 in high-cost areas. By increasing the loan limits, borrowers will see immediate relief with new liquidity in the mortgage market and the nation will see an additional 300,000 home sales. Research shows that an increase in the FHA limit would enable an additional 138,000 Americans to purchase homes, and 200,000 families to refinance their homes safely and affordably.
Increasing the FHA loan limits is critical to bolstering California’s housing market. Current law restricts FHA loans to levels well below the median home price in many areas of the country and caps loans in high cost states at $363,790. These limits are preventing many homebuyers from using FHA to purchase or refinance their loan. The proposed provision will increase FHA loan limits nationwide by raising the floor to $271,050 and the limit to 125% of local median home prices.
Additionally, raising Fannie Mae and Freddie Mac’s (GSEs) conforming loan limit will provide immediate relief to borrowers and alleviate downward pressure on current housing markets. For instance, increasing the GSE loan limit could result in more than 300,000 additional home sales and strengthen current home prices by 2-3%.
The critical role that GSEs play in providing liquidity to the mortgage market has never been more evident than it is today. The national subprime meltdown has had a dramatic impact on both the cost and availability of mortgages in many markets. Since August 2007, the interest rates for jumbo borrowers have been more than 1 percentage point higher than conforming loans, which can cost homeowners up to $400 month in higher interest payments.
Friday, February 01, 2008
I'm from the Government and I'm here to help you
Raise and raise again
As I predicted months ago, our elected officials in this pre-election season will be coming up with all kinds of 'solutions' to the problems in the housing market. Freezing mortgage interest rates, state bonds to bail out homeowners whose monthly payments get too high to pay, giving judges the ability to change loan terms, raising the loan limits on FHA Fannie Mae and Freddie Mac loans, pumping liquidity into the system (printing mo' money!), lowering the Fed interest rates, and sending out checks to everybody are some of the latest proposals. The only things missing are declaring California, Nevada, Arizona, and Florida Federal (housing) Disaster Areas and dropping money out of helicopters.
People in the real estate business are pumped up... so is Wall Street since the financial stocks have gotten their bail outs between the Federal Reserve and Sovereign Funds. We can all party some more while kicking the can down the road, to be dealt with at some undetermined point in the future.
If you are getting the idea that I don't think this is good policy making, you would be right. However, I don't determine macro-economic policy and neither do you. Both of us are subject to these factors that are way beyond our control, and to the extent that we can make our own way for ourselves and our families, we do our best.
Between the stimulus package and all the rest, it is lining up as a terrific buying opportunity until the election in November. With four year lows in mortgage rates for conforming loans (now with an upper limit of $417,000 but soon to be raised above $700,000), this will provide a decided boost in our local area. However, the rise in the conforming limit may only last until the end of the year, as part of the temporary stimulus package now winding its way through Congress. Concurrent with this development is a tightening of credit guidelines, which will limit the numbers of people who can get the loans. The third factor to affect our housing market will be a second look at risk factors by the folks with the money. As the risk factor for lenders goes up, so do interest rates. Flooding the market with cash also tends to raise inflation and inflation fears, which also increases interest rates.
In my opinion, nobody really has a good handle on what should be done to minimize the effects of the downturn in the housing market on the rest of the economy, but the cure may be worse than the disease.
That said, we have a narrow window for action while interest rates are low. It's a buying opportunity, and for many people, it may not be this good for years. As interest rates rise as I expect they will, many will be priced out of the market with credit restrictions. For sellers who need to sell... sell. Price the home right and it will sell. However, the last call for high prices happened a couple of years ago. Expect a lower price, but if you can make it work for you, take it.
For those who want to stay in your homes and weather this storm, know your loan terms. If you have an adjustable loan or any of the exotics, you have to know what the worst case scenario is for the adjustments. Can you keep your home if the worst case happens? If not, get yourself into a fixed rate loan while interest rates are low. If you can't do that, you should consider getting out of the house by selling it before you get into trouble.
With dropping sales prices do you now owe more than your home is worth? This upside-down condition is becoming more and more common, and you may have some options than you are aware of here too. Give us a call.
For those in way over your heads (and increasingly you know who you are), give us a call at 661-287-9164 today. Our Foreclosure Avoidance Team can help you find the right solution for your particular circumstance, and the solution is certainly not 'one size fits all'. But let's start from where we are and help get you to where you want to go.
Buyers: just call us now. There are deals out there, and we know where they are. For those who choose to work with us, you will get a screamin' deal. Just call now.
In this market turmoil there is opportunity. You can miss it, or you can profit by it. For some of you, our best strategy would be to work to minimize loss. However, our training and experience is exactly tuned to this kind of market. Do yourself a favor, and let's begin right now, from where we find ourselves.
On behalf of the SCV Home Team at Keller Williams Realty, we all look forward to working with you!
~~Ray
As I predicted months ago, our elected officials in this pre-election season will be coming up with all kinds of 'solutions' to the problems in the housing market. Freezing mortgage interest rates, state bonds to bail out homeowners whose monthly payments get too high to pay, giving judges the ability to change loan terms, raising the loan limits on FHA Fannie Mae and Freddie Mac loans, pumping liquidity into the system (printing mo' money!), lowering the Fed interest rates, and sending out checks to everybody are some of the latest proposals. The only things missing are declaring California, Nevada, Arizona, and Florida Federal (housing) Disaster Areas and dropping money out of helicopters.
People in the real estate business are pumped up... so is Wall Street since the financial stocks have gotten their bail outs between the Federal Reserve and Sovereign Funds. We can all party some more while kicking the can down the road, to be dealt with at some undetermined point in the future.
If you are getting the idea that I don't think this is good policy making, you would be right. However, I don't determine macro-economic policy and neither do you. Both of us are subject to these factors that are way beyond our control, and to the extent that we can make our own way for ourselves and our families, we do our best.
Between the stimulus package and all the rest, it is lining up as a terrific buying opportunity until the election in November. With four year lows in mortgage rates for conforming loans (now with an upper limit of $417,000 but soon to be raised above $700,000), this will provide a decided boost in our local area. However, the rise in the conforming limit may only last until the end of the year, as part of the temporary stimulus package now winding its way through Congress. Concurrent with this development is a tightening of credit guidelines, which will limit the numbers of people who can get the loans. The third factor to affect our housing market will be a second look at risk factors by the folks with the money. As the risk factor for lenders goes up, so do interest rates. Flooding the market with cash also tends to raise inflation and inflation fears, which also increases interest rates.
In my opinion, nobody really has a good handle on what should be done to minimize the effects of the downturn in the housing market on the rest of the economy, but the cure may be worse than the disease.
That said, we have a narrow window for action while interest rates are low. It's a buying opportunity, and for many people, it may not be this good for years. As interest rates rise as I expect they will, many will be priced out of the market with credit restrictions. For sellers who need to sell... sell. Price the home right and it will sell. However, the last call for high prices happened a couple of years ago. Expect a lower price, but if you can make it work for you, take it.
For those who want to stay in your homes and weather this storm, know your loan terms. If you have an adjustable loan or any of the exotics, you have to know what the worst case scenario is for the adjustments. Can you keep your home if the worst case happens? If not, get yourself into a fixed rate loan while interest rates are low. If you can't do that, you should consider getting out of the house by selling it before you get into trouble.
With dropping sales prices do you now owe more than your home is worth? This upside-down condition is becoming more and more common, and you may have some options than you are aware of here too. Give us a call.
For those in way over your heads (and increasingly you know who you are), give us a call at 661-287-9164 today. Our Foreclosure Avoidance Team can help you find the right solution for your particular circumstance, and the solution is certainly not 'one size fits all'. But let's start from where we are and help get you to where you want to go.
Buyers: just call us now. There are deals out there, and we know where they are. For those who choose to work with us, you will get a screamin' deal. Just call now.
In this market turmoil there is opportunity. You can miss it, or you can profit by it. For some of you, our best strategy would be to work to minimize loss. However, our training and experience is exactly tuned to this kind of market. Do yourself a favor, and let's begin right now, from where we find ourselves.
On behalf of the SCV Home Team at Keller Williams Realty, we all look forward to working with you!
~~Ray
Thursday, January 24, 2008
Bush-Congress Stimulus Plan Helps Housing
WASHINGTON -- Democratic and Republican congressional leaders completed a deal Thursday with the White House on an economic stimulus package that would give most tax filers refunds of $600 to $1,200. The plan also provides tax incentives for businesses and contains a measure that would help an important segment of the mortgage market.
The package temporarily raises the conforming loan limits for Fannie Mae and Freddie Mac, beyond the current $417,000, which would allow the government-sponsored companies to buy bigger loans in areas with high housing costs. The new cap, expiring Dec. 31, could be as much as about $730,000, depending on a metropolitan area's median housing price. That would help free up the market for "jumbo" mortgages, which has suffered amid a broader credit crunch.
While the stimulus package still needs to pass the Senate and be signed off by President Bush, this would dramatically assist in completing new purchase and re-fi mortgages in our area. This will help some of those in danger of foreclosure, by making more money at cheaper rates available for lending.
As we know, the devil is in the details, but since the housing sector threatens to do significant damage to the rest of the US economy and indeed, the world economy, some kind of relief was expected.
It remains to be seen whether this is a full surrender by Washington to the financial and banking sector, and whether increasingly stringent and historically sound lending practices will prevail, or if this is just a big pre-election give-away scheme by politicians which will do more long term damage to housing and the economy.
Stay tuned to The Real Blog for analysis. However, for the short term, our local real estate market will benefit and speaking as a Realtor, some freeing up of the credit market may help a lot.
The package temporarily raises the conforming loan limits for Fannie Mae and Freddie Mac, beyond the current $417,000, which would allow the government-sponsored companies to buy bigger loans in areas with high housing costs. The new cap, expiring Dec. 31, could be as much as about $730,000, depending on a metropolitan area's median housing price. That would help free up the market for "jumbo" mortgages, which has suffered amid a broader credit crunch.
While the stimulus package still needs to pass the Senate and be signed off by President Bush, this would dramatically assist in completing new purchase and re-fi mortgages in our area. This will help some of those in danger of foreclosure, by making more money at cheaper rates available for lending.
As we know, the devil is in the details, but since the housing sector threatens to do significant damage to the rest of the US economy and indeed, the world economy, some kind of relief was expected.
It remains to be seen whether this is a full surrender by Washington to the financial and banking sector, and whether increasingly stringent and historically sound lending practices will prevail, or if this is just a big pre-election give-away scheme by politicians which will do more long term damage to housing and the economy.
Stay tuned to The Real Blog for analysis. However, for the short term, our local real estate market will benefit and speaking as a Realtor, some freeing up of the credit market may help a lot.
Sunday, January 13, 2008
Reality 101: How to Create an Immigration Depression
[The following is an portion of a column by John Mauldin in Frontline Thoughts. Info on subscription is at the bottom of this page. While the political season could also be described as the silly season, there are serious issues that need to be addressed... seriously. While many Realtors absolutely will not include any political commentary (ever), I sometimes will. That's why it's called The Real Blog.]
How to Create an Immigration Depression
The call by Huckabee and others to deport 12,000,000 illegal immigrants is simply economic suicide. It would create a depression (not just a minor recession) in short order. Let's reduce productivity by 10-15%. Let's reduce consumer spending by 7-8%. Shut down hundreds of thousands of businesses who could not get workers they need. Who will pick the crops? Or do any of a hundred jobs that Americans don't want to do? It would drive up labor costs and create inflation. It would be a disaster of Biblical proportions.
Now, I am all for controlling the border. I want to know who is coming in. But we have to deal with reality, and the reality is that we need those workers who are here. The economy simply will not function without them. You can't send them home and then tell them to apply and hope they can get back in, and then expect business to function as usual. It will take years for a bureaucracy to handle the paperwork.
Go ahead. Close the borders. Find out who is here illegally and make sure they do not have a criminal record. If so, they go. The rest need to get documented, and we need to radically increase the number of immigrants we allow (after we control the borders!), especially educated workers who can help us build our knowledge economy.
And yes, this is amnesty. That is the cost of not controlling the border all these years. Nothing we can do about it, unless we want to shoot ourselves in both feet just to prove a point. Sounds rather dumb to me.
The great irony is that within ten years we are going to need even more immigrants to replace retiring boomers, as well as to pay into social security and Medicare programs. We are going to be competing with Europe for those immigrants. We need to get a head start.
And yes, it is a lot more complex than this quick analysis. But pandering to voters who for whatever reason want to stop illegal immigration by throwing out everyone who is here illegally is not the answer. Establish fines, require documents, whatever. But recognize reality and stop telling voters what they want to hear when your policies simply cannot work and will be destructive.
***************************************************************
John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore
To subscribe to John Mauldin's E-Letter please click here:
http://www.frontlinethoughts.com/subscribe.asp
How to Create an Immigration Depression
The call by Huckabee and others to deport 12,000,000 illegal immigrants is simply economic suicide. It would create a depression (not just a minor recession) in short order. Let's reduce productivity by 10-15%. Let's reduce consumer spending by 7-8%. Shut down hundreds of thousands of businesses who could not get workers they need. Who will pick the crops? Or do any of a hundred jobs that Americans don't want to do? It would drive up labor costs and create inflation. It would be a disaster of Biblical proportions.
Now, I am all for controlling the border. I want to know who is coming in. But we have to deal with reality, and the reality is that we need those workers who are here. The economy simply will not function without them. You can't send them home and then tell them to apply and hope they can get back in, and then expect business to function as usual. It will take years for a bureaucracy to handle the paperwork.
Go ahead. Close the borders. Find out who is here illegally and make sure they do not have a criminal record. If so, they go. The rest need to get documented, and we need to radically increase the number of immigrants we allow (after we control the borders!), especially educated workers who can help us build our knowledge economy.
And yes, this is amnesty. That is the cost of not controlling the border all these years. Nothing we can do about it, unless we want to shoot ourselves in both feet just to prove a point. Sounds rather dumb to me.
The great irony is that within ten years we are going to need even more immigrants to replace retiring boomers, as well as to pay into social security and Medicare programs. We are going to be competing with Europe for those immigrants. We need to get a head start.
And yes, it is a lot more complex than this quick analysis. But pandering to voters who for whatever reason want to stop illegal immigration by throwing out everyone who is here illegally is not the answer. Establish fines, require documents, whatever. But recognize reality and stop telling voters what they want to hear when your policies simply cannot work and will be destructive.
***************************************************************
John Mauldin, Best-Selling author and recognized financial expert, is also editor of the free Thoughts From the Frontline that goes to over 1 million readers each week. For more information on John or his FREE weekly economic letter go to: http://www.frontlinethoughts.com/learnmore
To subscribe to John Mauldin's E-Letter please click here:
http://www.frontlinethoughts.com/subscribe.asp
Friday, January 11, 2008
Ever Optimistic Realtors' Association Spins the Market...
Home Sales Slowdown in the Santa Clarita Valley May Be Easing
Despite ongoing national reports about slow home sales and troubles in the home loan industry, a total of 111 single-family homes and 38 condominiums sold during November throughout the Santa Clarita Valley, the Southland Regional Association of REALTORS® reported.
The single-family resale total was down 39.3 percent from a year ago, a decline that was below the 50 percent or higher drops reported in other Southern California communities, suggesting that local buyers recognize the opportunities that exist in today's market.
"I don't think you can time the housing market anymore than you can time the stock market," said Larry Gasinski, the 2007 president of the Association's Santa Clarita Valley Division. "How do you know when any market has hit bottom and is on its way back up again?
"It's a buyers' market today so why not make an offer?" he said. "If you think prices will drop 10 percent over the next year, open up with an offer that is 10 percent lower than current sales comparisons. Waiting could mean the home you love will not be there, that favorable loan interest rates will be gone, or that you'll be competing with many more prospective buyers."
The 38 condos that sold were down 56.8 percent from a year ago when the total was 88 sales. The November tally was the lowest condo sales total on record, beating the prior low of 42 sales set in October 2007.
The median price of single-family homes sold during November was $522,500, down 9.9 percent from a year ago. The median has been falling slowly since the record high of $643,000 was set in April of 2006. After nine years of increases in the annual median price, 2007 is likely to post a decline of about 5 percent.
The condominium median price reported during November of $316,000 was down 13.4 percent from November 2006, but increased 1.9 percent from the median reported in October.
The condo record high of $397,000 was set in January 2006.
"The resale market in the Santa Clarita Valley appears to be finding a new equilibrium faster than other communities," said Jim Link, the chief executive officer of the Southland Regional Association of Realtors. "Until the lending industry starts making jumbo loans higher than $417,000 the recovery will be very slow. Still, the region's economic fundamentals are good and a growing number of buyers recognize that there are opportunities today that didn't exist just a short while ago."
A total of 2, 341 properties were listed for sale throughout the Santa Clarita Valley at the end of November, an increase of 7.2 percent from a year ago, but down 4.2 percent from this October, which suggests that the pace of listings is slowing.
At the current rate of sales, the active inventory represents a 16-month supply - a clear indicator of a buyers' market and well above the desired 5- to 6-month inventory that would represent a balanced market.
While statistics do not exist to prove the point, it is believed that today's inventory is far less than the totals reported in the early 1990s when the nation and the state were going through a deep economic recession.
"The market will remain stymied until more prospective buyers realize that affordable home loans are still available and that opportunities in today's market outweigh the risks of waiting," Link said. "The elements that made Santa Clarita desirable during the boom years - a great community, excellent value for the housing dollar, and a marvelous lifestyle - ensure that the local resale market will recover faster than other communities."
[from SRAR homepage Jan 11, 2008]
Despite ongoing national reports about slow home sales and troubles in the home loan industry, a total of 111 single-family homes and 38 condominiums sold during November throughout the Santa Clarita Valley, the Southland Regional Association of REALTORS® reported.
The single-family resale total was down 39.3 percent from a year ago, a decline that was below the 50 percent or higher drops reported in other Southern California communities, suggesting that local buyers recognize the opportunities that exist in today's market.
"I don't think you can time the housing market anymore than you can time the stock market," said Larry Gasinski, the 2007 president of the Association's Santa Clarita Valley Division. "How do you know when any market has hit bottom and is on its way back up again?
"It's a buyers' market today so why not make an offer?" he said. "If you think prices will drop 10 percent over the next year, open up with an offer that is 10 percent lower than current sales comparisons. Waiting could mean the home you love will not be there, that favorable loan interest rates will be gone, or that you'll be competing with many more prospective buyers."
The 38 condos that sold were down 56.8 percent from a year ago when the total was 88 sales. The November tally was the lowest condo sales total on record, beating the prior low of 42 sales set in October 2007.
The median price of single-family homes sold during November was $522,500, down 9.9 percent from a year ago. The median has been falling slowly since the record high of $643,000 was set in April of 2006. After nine years of increases in the annual median price, 2007 is likely to post a decline of about 5 percent.
The condominium median price reported during November of $316,000 was down 13.4 percent from November 2006, but increased 1.9 percent from the median reported in October.
The condo record high of $397,000 was set in January 2006.
"The resale market in the Santa Clarita Valley appears to be finding a new equilibrium faster than other communities," said Jim Link, the chief executive officer of the Southland Regional Association of Realtors. "Until the lending industry starts making jumbo loans higher than $417,000 the recovery will be very slow. Still, the region's economic fundamentals are good and a growing number of buyers recognize that there are opportunities today that didn't exist just a short while ago."
A total of 2, 341 properties were listed for sale throughout the Santa Clarita Valley at the end of November, an increase of 7.2 percent from a year ago, but down 4.2 percent from this October, which suggests that the pace of listings is slowing.
At the current rate of sales, the active inventory represents a 16-month supply - a clear indicator of a buyers' market and well above the desired 5- to 6-month inventory that would represent a balanced market.
While statistics do not exist to prove the point, it is believed that today's inventory is far less than the totals reported in the early 1990s when the nation and the state were going through a deep economic recession.
"The market will remain stymied until more prospective buyers realize that affordable home loans are still available and that opportunities in today's market outweigh the risks of waiting," Link said. "The elements that made Santa Clarita desirable during the boom years - a great community, excellent value for the housing dollar, and a marvelous lifestyle - ensure that the local resale market will recover faster than other communities."
[from SRAR homepage Jan 11, 2008]
Wednesday, January 02, 2008
Taxes are reassessed in housing slump
Homeowners across the nation are looking to county governments to reassess the values of their homes in the face of flattening and falling prices that have befallen scores of markets. Downward assessments, done at the request of homeowners or pre-emptively by government, appear to be most pronounced in areas where the housing market was exploding just a few years ago, or where economic conditions are poorest.
While every state and local government has its own methods for assessing home values for tax purposes - some do it annually, some every five years and everything in between - many counties are hearing from residents that they would like their homes reassessed, or have taken steps to bring the taxes down of their own volition.
No one has aggregated the total number of counties reassessing home values, and many counties take at least a year to catch up to the marketplace. In some places where reassessments are rising, the numbers have yet to approach historical heights.
Cities where home values have fallen the most are the obvious first place to look for residents clamoring for reassessments, but that is not always the case. Some states, like California, Michigan and Nevada, have statutory caps in property tax increases, which mean the market value of single family homes almost always exceeds the assessed tax values, except in a major downturn. (The New York Times)
While every state and local government has its own methods for assessing home values for tax purposes - some do it annually, some every five years and everything in between - many counties are hearing from residents that they would like their homes reassessed, or have taken steps to bring the taxes down of their own volition.
No one has aggregated the total number of counties reassessing home values, and many counties take at least a year to catch up to the marketplace. In some places where reassessments are rising, the numbers have yet to approach historical heights.
Cities where home values have fallen the most are the obvious first place to look for residents clamoring for reassessments, but that is not always the case. Some states, like California, Michigan and Nevada, have statutory caps in property tax increases, which mean the market value of single family homes almost always exceeds the assessed tax values, except in a major downturn. (The New York Times)
States unveil new nationwide mortgage regulatory framework
On January 2, a new era for mortgage regulation in the United States will ring in when the states' Nationwide Mortgage Licensing System (NMLS) goes live. The Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR) announced that NMLS, an Internet-based system that will serve as the foundation of a coordinated state mortgage regulatory framework, officially became operational on the first business day of 2008.
The launch of NMLS is just one part of a multi-faceted plan being implemented by CSBS and AARMR to improve regulation and bring about greater uniformity across state lines in mortgage supervision. These efforts include coordinated supervision, improved regulatory practices and consistent standards for testing and training for mortgage originators. To accomplish this, many states have changed or are in the process of changing their laws and regulations.
The launch of NMLS is just one part of a multi-faceted plan being implemented by CSBS and AARMR to improve regulation and bring about greater uniformity across state lines in mortgage supervision. These efforts include coordinated supervision, improved regulatory practices and consistent standards for testing and training for mortgage originators. To accomplish this, many states have changed or are in the process of changing their laws and regulations.
Ten Reasons Why Now is a Great Time to Buy
1) Selection, selection, selection.
There are about 2300 resale homes on the market in the Santa Clarita Valley area. Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago the resale inventory dropped below 1,000 units. A buyer was forced to make compromises if they were going to locate the home of their dreams. There is a also a great selection of attached homes, condos, and townhouses. You can find large lots, small lots, and a lot that will accommodate your boat or RV. There are lots of options in this market.
2) No Bidding Wars.
In 2005 there was one client that made an offer on ten homes. They lost the first nine to the 'feeding frenzy' that existed. Other buyers bid the properties up substantially from the original listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. There is no competitive bidding in this buyer's market.
3) You can make an offer.
A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ration is about 96%. A seller will not be insulted if you 'make them an offer they can't refuse'.
4) Patience is tolerated.
In the hot seller's market that existed everything was rushed. Find a house before other buyers did. Hurry up and make the offer. Today a buyer can take their time. Look at several homes and think about your decision for a few hours.
5) Due diligence is welcomed.
In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order gain an advantage with multiple offers.
6) There are plenty of spec homes.
In the not too distant past buyer had to 'play games' if they wanted a new home. There were lotteries and waiting lists in order to obtain new construction. Some buyers slept in their cars in order to get to the head of the lines. R.L. Brown estimates that builders have thousands of specs ready for immediate occupancy.
7) Repair requests are welcomed.
After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold 'as is'. Many times, there were back-up buyers waiting for a primary buyer to upset the seller whose home was increasing in value almost daily.
8) Few, if any investors.
It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyer caused the market to inflate and affordability to decline. Mortgage fraud became commonplace. It's a great time to buy without having to compete with hundreds of prospective landlords.
9) Location, location, location.
Today's buyers can find homes closer to work. In the past buyers flocked to Palmdale or Riverside County in order to find affordable homes. In this market, reasonably priced homes are within biking or walking distance to schools, rapid transit lines, and relatives.
10) Real Financing is available.
The 'wink, wink' zero down, no doc, adjustable, sub-prime loans are gone. Fixed rates are back. FHA financing, first time homeowner bond programs, special loans for teachers, and police officers are back in business. It's a great time to buy real estate!
There are about 2300 resale homes on the market in the Santa Clarita Valley area. Regardless of the price range a buyer desires, there are plenty of houses from which to choose. Just a few years ago the resale inventory dropped below 1,000 units. A buyer was forced to make compromises if they were going to locate the home of their dreams. There is a also a great selection of attached homes, condos, and townhouses. You can find large lots, small lots, and a lot that will accommodate your boat or RV. There are lots of options in this market.
2) No Bidding Wars.
In 2005 there was one client that made an offer on ten homes. They lost the first nine to the 'feeding frenzy' that existed. Other buyers bid the properties up substantially from the original listing price. There were escalation clauses where buyers authorized their agents to outbid other offers by thousands of dollars. There is no competitive bidding in this buyer's market.
3) You can make an offer.
A few years ago when you made an offer, the only question was how high above the list price could the buyer reach in hopes of being the best offer on the table. Today the sell price list vs. price ration is about 96%. A seller will not be insulted if you 'make them an offer they can't refuse'.
4) Patience is tolerated.
In the hot seller's market that existed everything was rushed. Find a house before other buyers did. Hurry up and make the offer. Today a buyer can take their time. Look at several homes and think about your decision for a few hours.
5) Due diligence is welcomed.
In this market a buyer is encouraged to obtain a home inspection, termite inspection, and appraisal. In 2005 many buyers waived these contingencies in order gain an advantage with multiple offers.
6) There are plenty of spec homes.
In the not too distant past buyer had to 'play games' if they wanted a new home. There were lotteries and waiting lists in order to obtain new construction. Some buyers slept in their cars in order to get to the head of the lines. R.L. Brown estimates that builders have thousands of specs ready for immediate occupancy.
7) Repair requests are welcomed.
After a buyer completes a home inspection, they are allowed to submit a repair request to the seller. In the past a seller might insist the home was sold 'as is'. Many times, there were back-up buyers waiting for a primary buyer to upset the seller whose home was increasing in value almost daily.
8) Few, if any investors.
It is estimated that one third of all sales in 2005 were to investors. These non-owner occupied buyer caused the market to inflate and affordability to decline. Mortgage fraud became commonplace. It's a great time to buy without having to compete with hundreds of prospective landlords.
9) Location, location, location.
Today's buyers can find homes closer to work. In the past buyers flocked to Palmdale or Riverside County in order to find affordable homes. In this market, reasonably priced homes are within biking or walking distance to schools, rapid transit lines, and relatives.
10) Real Financing is available.
The 'wink, wink' zero down, no doc, adjustable, sub-prime loans are gone. Fixed rates are back. FHA financing, first time homeowner bond programs, special loans for teachers, and police officers are back in business. It's a great time to buy real estate!
Friday, December 28, 2007
Pace of Decline in Home Prices Sets a Record
By JAMES R. HAGERTY and KELLY EVANS
December 27, 2007
Wall Street Journal Page A1
A closely watched gauge of U.S. home prices shows they are falling sharply across most of the nation, as a deepening slump in the housing market threatens to damp consumer spending.
Home prices in 10 major metropolitan areas in October were down 6.7% from a year earlier, according to the S&P/Case-Shiller home-price indexes, released yesterday by credit-rating firm Standard & Poor's. That exceeded the previous record year-to-year decline of 6.3% in April 1991, when the economy was emerging from a recession. (See a PDF summary of the report.)
New statistics from the Census Bureau, meanwhile, indicate a slowdown in the number of Americans moving to states that led the housing boom, including Nevada, Florida and Arizona. (See related article.)
The silver lining behind the latest home-price data is that they signal the market is making what most economists see as a necessary adjustment, dragging home prices back into closer alignment with Americans' ability to pay. The market is working its way "back to reality," says David Seiders, chief economist of the National Association of Home Builders. He thinks house prices will bottom out by early 2009.
Some other economists say that might not happen before 2010. "The housing shock is only about halfway over, and housing prices will continue to fall well into 2009," says Lehman Brothers economist Michelle Meyer.
During the housing boom in the first half of this decade, fast-rising home prices made it easy for homeowners to take out home-equity loans or refinance their primary mortgages to extract some cash. That helped sustain consumer spending, which accounts for about 70% of U.S. economic activity.
Economists now worry that falling home prices will prompt consumers to pull back on spending enough to slow growth or even tip the economy into recession. "Eventually what's happening in the housing market is going to catch up with us," says Patrick Newport, an economist at research-firm Global Insight Inc.
Fears of a sharp drop in consumption were assuaged somewhat last week when the government reported that consumer spending in November grew at the fastest pace in 3½ years. And though holiday sales fell short of retailers' expectations, consumers, spurred by discounts, spent heavily in the final days before Christmas. Economists say that even if overall spending slows in December, the strength seen in October and November would be enough to keep the economy afloat in the near term.
"The most important determinant of [spending] is always income," says Harm Bandholz, an economist at UniCredit in New York. He said that Americans' disposable income has risen a "solid" 2.5% over last year. He and others say that as long as the job market holds up and incomes keep growing, Americans will continue to spend.
The S&P/Case-Shiller index showed that some of the fastest declines in home prices are in metropolitan areas that were among the hottest during the housing boom. Prices were down 12.4% from a year earlier in Miami, 11.1% in San Diego, 10.7% in Las Vegas and 10.6% in Phoenix.
Home prices are still up from a year ago in some cities, such as Seattle and Charlotte, N.C. And people who bought their homes several years ago still are sitting on sizable gains in most of the country.
The boom more than doubled prices in many populous areas near the coasts. The run-up was fueled in part by unusually low interest rates, which slashed the cost of monthly mortgage payments. In addition, in the wake of the technology-stock bubble, many Americans viewed real estate as a safer investment than stocks, and so poured increasing sums into second homes and rental properties. Home sales began to slow in mid-2005. Prices leveled off and then started declining in 2006. Over the past year, mortgage defaults have soared, leading to rapid growth in foreclosures.
Bette Zerba, a Realtor with Re/Max in Phoenix, says local residents trying to sell their homes can't compete with foreclosed homes selling for $50,000 to $100,000 less than theirs. "The sellers now are having to reduce their prices by 20% to 30% to compete," she says.
As the market adjusts, single-family housing starts have fallen 55% from their January 2006 peak to a seasonally adjusted annual rate of 829,000. In recent months, lenders and investors have begun owning up to billions of dollars of losses on mortgages and related securities, clearing the decks for an eventual revival in lending.
But the recovery of the housing market is likely to be a gradual process. That's partly because the boom left prices so far out of whack with incomes. As measured by the S&P/Case-Shiller national index, home prices jumped 74% in the six years through 2006. During the same period, U.S. median household income rose 15%. (Neither figure is adjusted for inflation.) That made housing unaffordable for many Americans.
For a few years, lax lending standards -- some loans required no down payments and offered low introductory interest rates -- meant borrowers could buy more expensive houses than they could really afford. But lenders have been burned by a surge in defaults that started in 2006, and such mortgages generally are no longer available. That means house prices will have to fall to a level potential buyers can afford.
Mark Zandi, chief economist of Moody's Economy.com, a research firm in West Chester, Pa., predicts that on average U.S. house prices will decline about 12% by the second quarter of 2009 from their peak in the second quarter of 2006. He expects household income to rise by about the same amount over that period.
Signs of this adjustment are apparent in the latest quarterly analysis of house prices by National City Corp., a Cleveland banking concern, and Global Insight. Economists at the two firms look at home prices in relation to household income and other factors, including population density (an indication of how much land is available) and past differences in prices caused by factors like climate and schools. In the third quarter, they found, prices in 38 of the nation's 330 metro areas were more than 33% above a level that could be explained by fundamental drivers of housing costs. That was down from 48 metro areas in this "overvalued" category in the second quarter.
"Parts of the housing market are scratching bottom right now," says Richard DeKaser, chief economist at National City. Sales of new and existing homes are down about 32% from their mid-2005 peak, he says, and probably won't fall much further before leveling off or starting to recover slowly.
Prices of new homes are likely to start recovering in the first half of 2008 because builders are aggressively chopping prices to clear inventories, says Edward Leamer, an economics professor at the University of California, Los Angeles. Recent price cuts by builders may have reduced demand in the short term because they encourage potential buyers to expect further discounts.
DAILY ECONOMICS NEWSLETTER
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• Econ Blog: In Case-Shiller Data, Few Metro Areas SparedBut prices of previously occupied homes are likely to continue falling slowly for several years, Prof. Leamer says. That's because people trying to sell their homes often don't have an urgent need to move, and try to hold out for a price they consider fair.
On average, prices of previously occupied homes, as measured by the S&P/Case-Shiller indexes, are likely to drop another 7% in 2008 before flattening out in 2009, says Thomas Lawler, a housing economist in Vienna, Va.
Inventories of unsold homes remain very high and may increase in the new year as lenders dump more foreclosed houses on the market. The number of detached single-family homes listed for sale in October was enough to last 10½ months at the current sales rate, according to the National Association of Realtors. That was more than double the level of two years ago and the highest since 1985.
Along with inventories, the nation's home ownership rate will have to adjust to today's realities as many Americans who stretched too far to buy homes in recent years go back to renting. The home ownership rate in the third quarter stood at 68.2% of households, down from a peak of 69.2% in 2004. Even a small drop in that rate has a big effect on housing demand. Economists at Goldman Sachs have warned that falling home ownership rates may force a further 40% drop in housing starts next year, to an annual rate as low as 500,000 units, before construction starts to recover.
The mortgage market also needs to adjust further. Most of the funding for home loans comes from investors who buy securities backed by bundles of mortgages. Since August, many of those investors have shunned the market amid fears of rising defaults. As a result, lenders generally are focusing on loans that can be sold to government-sponsored investors Fannie Mae or Freddie Mac, or insured by the Federal Housing Administration. So-called jumbo loans -- those above $417,000, too big to be sold to Fannie or Freddie -- have grown much more expensive, deterring buyers in high-cost areas.
The current scarcity of funds available for mortgage lending creates a chicken-and-egg situation, says Prof. Leamer. Investors who provide funding for home loans don't want to commit more money until they believe the housing market is getting better. But it's hard for the housing market to rebound as long as mortgage credit is tight. Lower prices eventually will break this impasse, by luring buyers back into the market and reassuring investors that the market is finding a bottom, he says.
Write to James R. Hagerty at bob.hagerty@wsj.com and Kelly Evans at kelly.evans@wsj.com
December 27, 2007
Wall Street Journal Page A1
A closely watched gauge of U.S. home prices shows they are falling sharply across most of the nation, as a deepening slump in the housing market threatens to damp consumer spending.
Home prices in 10 major metropolitan areas in October were down 6.7% from a year earlier, according to the S&P/Case-Shiller home-price indexes, released yesterday by credit-rating firm Standard & Poor's. That exceeded the previous record year-to-year decline of 6.3% in April 1991, when the economy was emerging from a recession. (See a PDF summary of the report.)
New statistics from the Census Bureau, meanwhile, indicate a slowdown in the number of Americans moving to states that led the housing boom, including Nevada, Florida and Arizona. (See related article.)
The silver lining behind the latest home-price data is that they signal the market is making what most economists see as a necessary adjustment, dragging home prices back into closer alignment with Americans' ability to pay. The market is working its way "back to reality," says David Seiders, chief economist of the National Association of Home Builders. He thinks house prices will bottom out by early 2009.
Some other economists say that might not happen before 2010. "The housing shock is only about halfway over, and housing prices will continue to fall well into 2009," says Lehman Brothers economist Michelle Meyer.
During the housing boom in the first half of this decade, fast-rising home prices made it easy for homeowners to take out home-equity loans or refinance their primary mortgages to extract some cash. That helped sustain consumer spending, which accounts for about 70% of U.S. economic activity.
Economists now worry that falling home prices will prompt consumers to pull back on spending enough to slow growth or even tip the economy into recession. "Eventually what's happening in the housing market is going to catch up with us," says Patrick Newport, an economist at research-firm Global Insight Inc.
Fears of a sharp drop in consumption were assuaged somewhat last week when the government reported that consumer spending in November grew at the fastest pace in 3½ years. And though holiday sales fell short of retailers' expectations, consumers, spurred by discounts, spent heavily in the final days before Christmas. Economists say that even if overall spending slows in December, the strength seen in October and November would be enough to keep the economy afloat in the near term.
"The most important determinant of [spending] is always income," says Harm Bandholz, an economist at UniCredit in New York. He said that Americans' disposable income has risen a "solid" 2.5% over last year. He and others say that as long as the job market holds up and incomes keep growing, Americans will continue to spend.
The S&P/Case-Shiller index showed that some of the fastest declines in home prices are in metropolitan areas that were among the hottest during the housing boom. Prices were down 12.4% from a year earlier in Miami, 11.1% in San Diego, 10.7% in Las Vegas and 10.6% in Phoenix.
Home prices are still up from a year ago in some cities, such as Seattle and Charlotte, N.C. And people who bought their homes several years ago still are sitting on sizable gains in most of the country.
The boom more than doubled prices in many populous areas near the coasts. The run-up was fueled in part by unusually low interest rates, which slashed the cost of monthly mortgage payments. In addition, in the wake of the technology-stock bubble, many Americans viewed real estate as a safer investment than stocks, and so poured increasing sums into second homes and rental properties. Home sales began to slow in mid-2005. Prices leveled off and then started declining in 2006. Over the past year, mortgage defaults have soared, leading to rapid growth in foreclosures.
Bette Zerba, a Realtor with Re/Max in Phoenix, says local residents trying to sell their homes can't compete with foreclosed homes selling for $50,000 to $100,000 less than theirs. "The sellers now are having to reduce their prices by 20% to 30% to compete," she says.
As the market adjusts, single-family housing starts have fallen 55% from their January 2006 peak to a seasonally adjusted annual rate of 829,000. In recent months, lenders and investors have begun owning up to billions of dollars of losses on mortgages and related securities, clearing the decks for an eventual revival in lending.
But the recovery of the housing market is likely to be a gradual process. That's partly because the boom left prices so far out of whack with incomes. As measured by the S&P/Case-Shiller national index, home prices jumped 74% in the six years through 2006. During the same period, U.S. median household income rose 15%. (Neither figure is adjusted for inflation.) That made housing unaffordable for many Americans.
For a few years, lax lending standards -- some loans required no down payments and offered low introductory interest rates -- meant borrowers could buy more expensive houses than they could really afford. But lenders have been burned by a surge in defaults that started in 2006, and such mortgages generally are no longer available. That means house prices will have to fall to a level potential buyers can afford.
Mark Zandi, chief economist of Moody's Economy.com, a research firm in West Chester, Pa., predicts that on average U.S. house prices will decline about 12% by the second quarter of 2009 from their peak in the second quarter of 2006. He expects household income to rise by about the same amount over that period.
Signs of this adjustment are apparent in the latest quarterly analysis of house prices by National City Corp., a Cleveland banking concern, and Global Insight. Economists at the two firms look at home prices in relation to household income and other factors, including population density (an indication of how much land is available) and past differences in prices caused by factors like climate and schools. In the third quarter, they found, prices in 38 of the nation's 330 metro areas were more than 33% above a level that could be explained by fundamental drivers of housing costs. That was down from 48 metro areas in this "overvalued" category in the second quarter.
"Parts of the housing market are scratching bottom right now," says Richard DeKaser, chief economist at National City. Sales of new and existing homes are down about 32% from their mid-2005 peak, he says, and probably won't fall much further before leveling off or starting to recover slowly.
Prices of new homes are likely to start recovering in the first half of 2008 because builders are aggressively chopping prices to clear inventories, says Edward Leamer, an economics professor at the University of California, Los Angeles. Recent price cuts by builders may have reduced demand in the short term because they encourage potential buyers to expect further discounts.
DAILY ECONOMICS NEWSLETTER
Sign up for our new email of the day's Real Time Economics posts, by Greg Ip, Sudeep Reddy and the Journal's economics team. The email also includes the latest economic headlines, data and columns. Choose HTML or plain text.
RELATED POSTS
• Econ Blog: In Case-Shiller Data, Few Metro Areas SparedBut prices of previously occupied homes are likely to continue falling slowly for several years, Prof. Leamer says. That's because people trying to sell their homes often don't have an urgent need to move, and try to hold out for a price they consider fair.
On average, prices of previously occupied homes, as measured by the S&P/Case-Shiller indexes, are likely to drop another 7% in 2008 before flattening out in 2009, says Thomas Lawler, a housing economist in Vienna, Va.
Inventories of unsold homes remain very high and may increase in the new year as lenders dump more foreclosed houses on the market. The number of detached single-family homes listed for sale in October was enough to last 10½ months at the current sales rate, according to the National Association of Realtors. That was more than double the level of two years ago and the highest since 1985.
Along with inventories, the nation's home ownership rate will have to adjust to today's realities as many Americans who stretched too far to buy homes in recent years go back to renting. The home ownership rate in the third quarter stood at 68.2% of households, down from a peak of 69.2% in 2004. Even a small drop in that rate has a big effect on housing demand. Economists at Goldman Sachs have warned that falling home ownership rates may force a further 40% drop in housing starts next year, to an annual rate as low as 500,000 units, before construction starts to recover.
The mortgage market also needs to adjust further. Most of the funding for home loans comes from investors who buy securities backed by bundles of mortgages. Since August, many of those investors have shunned the market amid fears of rising defaults. As a result, lenders generally are focusing on loans that can be sold to government-sponsored investors Fannie Mae or Freddie Mac, or insured by the Federal Housing Administration. So-called jumbo loans -- those above $417,000, too big to be sold to Fannie or Freddie -- have grown much more expensive, deterring buyers in high-cost areas.
The current scarcity of funds available for mortgage lending creates a chicken-and-egg situation, says Prof. Leamer. Investors who provide funding for home loans don't want to commit more money until they believe the housing market is getting better. But it's hard for the housing market to rebound as long as mortgage credit is tight. Lower prices eventually will break this impasse, by luring buyers back into the market and reassuring investors that the market is finding a bottom, he says.
Write to James R. Hagerty at bob.hagerty@wsj.com and Kelly Evans at kelly.evans@wsj.com
Thursday, December 27, 2007
Top Ten Tips When Moving With Your Pet
Buying or selling a home and moving is not only one of the most stressful events in your life, it can also be stressful on your pets.
A Pet Friendly Real Estate Agent like Ray Kutylo and the SCV Home Team can help you plan and prepare to guarantee a stress-free move. Here are a few tips to help start your preparations for a safe move for you and your pets.
1. Identification. Rule #1 in moving with your pet is properly identifying your pet with an identification tag and sturdy collar. A common mistake is to have outdated information on a pet tag. Make sure your pet’s tag includes updated information including destination location and telephone number and a mobile number, so you can be reached easily. An additional method of identification is a microchip, which is injected under the pet’s skin between the shoulder blades and is about the size of a grain of rice. The procedure is simple and similar to administering a vaccine. Microchips can be purchased directly from veterinary clinics, and the prices vary. Some shelters offer discounts for microchipping to people that have adopted shelter animals. If you have an assistance animal, ask your local shelter or Veterinarian if there any discounts for the enrollment fees.
2. Veterinary Records. Notify your Veterinarian you will be moving and ask for a current copy of your pet’s vaccinations. Your Veterinarian may also provide you with a copy of your pet’s full medical history to provide to your new Veterinarian, but in most cases medical history can be faxed to your new Veterinarian upon request. Keep your pet’s medical history in a convenient location during your move and not packed away in the moving truck. Depending on your destination, your pet may also need additional vaccinations, medications, and health certificates. Have your current veterinarian’s phone number handy in case of an emergency or if your new veterinarian needs more information about your pet.
3. Medications and Food. Keep at least one week’s worth of food and medication in case of emergency. Veterinarians cannot write a prescription without a prior doctor/patient relationship. This means that before you can get any prescription medications, your pet will need to be examined first by its new doctor. This may be inconvenient if you need medication right away. Discuss your pet’s medical needs with your Veterinarian and they can provide you with a prescription before your move if necessary. This includes special therapeutic foods - purchase an extra supply in case you can’t find the food right away in your new area.
4. Keeping your pet secure. Pets can feel vulnerable on moving day. Keep your pet in a safe, quiet, well ventilated place, such as the bathroom on moving day with a PETS INSIDE sign on the door to keep off-limits to friends and movers. There are many different types of travel crates on the market, and many are lightweight and collapsible just for traveling purposes. Make sure your pet is familiar with the crate you will be using for transportation by gradually introducing him to the crate before your trip. Be sure the crate is well ventilated and sturdy enough for stress-chewers or your pet could make an escape.
5. First Aid Kit. First aid is not a substitute for emergency veterinary care, but being prepared and knowing basic first aid could save your pet’s life. A few recommended supplies for a basic first aid kit include: Your veterinarian’s phone number, Gauze to wrap wounds or muzzle animal, Adhesive tape for bandages, Non-stick bandages, Towels, and Hydrogen peroxide (3 percent). You can use a door, board, blanket or floor mat as an emergency Stretcher and a soft cloth, rope, necktie, leash or nylon stocking for an emergency muzzle.
6. Traveling by car. It is best to travel with your dog in a crate, but if your dog enjoys car travel, you may want to accustom him to a restraining harness. For your safety as well as theirs, it is ALWAYS best to transport cats in a well ventilated carrier. Secure the crate with a seat belt and provide your pet with familiar toys. Never keep your pet in the open bed of a truck, or the storage area of a moving van. In any season, a pet left alone in a parked vehicle is vulnerable to being injured, harmed or stolen. Plan ahead by searching for pet friendly hotels to find overnight lodging during your move, and have plenty of kitty litter and plastic bags on hand for Doggy Duty. Try to keep your pet on his regular diet and eating schedule and bring along bottled water to avoid upset stomach or diarrhea. If traveling is stressful for your pet, always consult your veterinarian about ways that might lessen the stress of travel.
7. Air Travel. If traveling by air, first check with the airline about any pet requirements or restrictions to be sure you have prepared your pet to be safe and secure during the trip. Some airlines will allow pets in the cabin, depending on the size of the pet, but you will need to purchase a special airline crate that fits under the seat in front of you. Give yourself plenty of time to work out any arrangements necessary including consulting with your veterinarian, and the U.S. Department of Agriculture. If traveling is stressful for your pet, always consult your veterinarian about ways that might lessen the stress of travel.
8. Finding a Veterinary Clinic, Specialty and Emergency Hospital. Before you move, ask your veterinarian to recommend another doctor in your new area. Talk to other pet owners in your new area. Call the state veterinary medical association (VMA) for Veterinarians in your location. Once you have selected a Veterinary Hospital ask for an impromptu tour as kennels should be kept clean at all times, not just when a client is ‘expected’. You may also want to schedule an appointment to meet the doctors. Now go through the following checklist: Are the receptionists, doctors, technicians, assistants friendly, professional and knowledgeable? Are the office hours and location convenient? Does the clinic offer emergency or specialty services or boarding? If the Veterinary Hospital that you have selected does not meet these criteria, you may want to keep looking so you can be assured that your pet is receiving the best possible care.
9. Preparing your new home. Keep in mind that your pets may be frightened and confused in new surroundings. To reduce the chance of escaping due to fear, or pure excitement to explore the new territory, prepare all the familiar and necessary things your pet will need from day one including food, water, medications, bed, litter box, food and water bowls. Pack these items last, so they can be immediately unpacked and available for your pet in a secure room when you arrive at your new home. Remember to keep all external windows and doors closed when your pet is unsupervised. Be cautious of unsupervised areas in the kitchen or utility areas as nervous pets can seek refuge in narrow gaps behind or between appliances. If your new home is nearby, your pet may be confused and find a way back to your old home. Notify the new homeowners of your new address and ask them to contact you if your pet is found in the neighborhood.
10. Learn more about your new area. Once you find a new Veterinarian, ask if there are any local disease concerns such as heartworm or Lyme disease as well as vaccinations or medications your pet may require. Also, be aware of any unique laws. For example, there are restrictive breed laws in some cities. Contact the city or travel information bureau for more information as your pet may be affected by these laws. If you will be traveling internationally, always remember to have your pet examined by a Veterinarian and carry an updated rabies vaccination and health certificate. It is very important to contact the Agriculture Department or embassy of the country or state to where you are traveling to obtain specific information on special documents, quarantine, or costs to bring the animal into the country.
SOURCE: The Pet Realty Network™ Library
A Pet Friendly Real Estate Agent like Ray Kutylo and the SCV Home Team can help you plan and prepare to guarantee a stress-free move. Here are a few tips to help start your preparations for a safe move for you and your pets.
1. Identification. Rule #1 in moving with your pet is properly identifying your pet with an identification tag and sturdy collar. A common mistake is to have outdated information on a pet tag. Make sure your pet’s tag includes updated information including destination location and telephone number and a mobile number, so you can be reached easily. An additional method of identification is a microchip, which is injected under the pet’s skin between the shoulder blades and is about the size of a grain of rice. The procedure is simple and similar to administering a vaccine. Microchips can be purchased directly from veterinary clinics, and the prices vary. Some shelters offer discounts for microchipping to people that have adopted shelter animals. If you have an assistance animal, ask your local shelter or Veterinarian if there any discounts for the enrollment fees.
2. Veterinary Records. Notify your Veterinarian you will be moving and ask for a current copy of your pet’s vaccinations. Your Veterinarian may also provide you with a copy of your pet’s full medical history to provide to your new Veterinarian, but in most cases medical history can be faxed to your new Veterinarian upon request. Keep your pet’s medical history in a convenient location during your move and not packed away in the moving truck. Depending on your destination, your pet may also need additional vaccinations, medications, and health certificates. Have your current veterinarian’s phone number handy in case of an emergency or if your new veterinarian needs more information about your pet.
3. Medications and Food. Keep at least one week’s worth of food and medication in case of emergency. Veterinarians cannot write a prescription without a prior doctor/patient relationship. This means that before you can get any prescription medications, your pet will need to be examined first by its new doctor. This may be inconvenient if you need medication right away. Discuss your pet’s medical needs with your Veterinarian and they can provide you with a prescription before your move if necessary. This includes special therapeutic foods - purchase an extra supply in case you can’t find the food right away in your new area.
4. Keeping your pet secure. Pets can feel vulnerable on moving day. Keep your pet in a safe, quiet, well ventilated place, such as the bathroom on moving day with a PETS INSIDE sign on the door to keep off-limits to friends and movers. There are many different types of travel crates on the market, and many are lightweight and collapsible just for traveling purposes. Make sure your pet is familiar with the crate you will be using for transportation by gradually introducing him to the crate before your trip. Be sure the crate is well ventilated and sturdy enough for stress-chewers or your pet could make an escape.
5. First Aid Kit. First aid is not a substitute for emergency veterinary care, but being prepared and knowing basic first aid could save your pet’s life. A few recommended supplies for a basic first aid kit include: Your veterinarian’s phone number, Gauze to wrap wounds or muzzle animal, Adhesive tape for bandages, Non-stick bandages, Towels, and Hydrogen peroxide (3 percent). You can use a door, board, blanket or floor mat as an emergency Stretcher and a soft cloth, rope, necktie, leash or nylon stocking for an emergency muzzle.
6. Traveling by car. It is best to travel with your dog in a crate, but if your dog enjoys car travel, you may want to accustom him to a restraining harness. For your safety as well as theirs, it is ALWAYS best to transport cats in a well ventilated carrier. Secure the crate with a seat belt and provide your pet with familiar toys. Never keep your pet in the open bed of a truck, or the storage area of a moving van. In any season, a pet left alone in a parked vehicle is vulnerable to being injured, harmed or stolen. Plan ahead by searching for pet friendly hotels to find overnight lodging during your move, and have plenty of kitty litter and plastic bags on hand for Doggy Duty. Try to keep your pet on his regular diet and eating schedule and bring along bottled water to avoid upset stomach or diarrhea. If traveling is stressful for your pet, always consult your veterinarian about ways that might lessen the stress of travel.
7. Air Travel. If traveling by air, first check with the airline about any pet requirements or restrictions to be sure you have prepared your pet to be safe and secure during the trip. Some airlines will allow pets in the cabin, depending on the size of the pet, but you will need to purchase a special airline crate that fits under the seat in front of you. Give yourself plenty of time to work out any arrangements necessary including consulting with your veterinarian, and the U.S. Department of Agriculture. If traveling is stressful for your pet, always consult your veterinarian about ways that might lessen the stress of travel.
8. Finding a Veterinary Clinic, Specialty and Emergency Hospital. Before you move, ask your veterinarian to recommend another doctor in your new area. Talk to other pet owners in your new area. Call the state veterinary medical association (VMA) for Veterinarians in your location. Once you have selected a Veterinary Hospital ask for an impromptu tour as kennels should be kept clean at all times, not just when a client is ‘expected’. You may also want to schedule an appointment to meet the doctors. Now go through the following checklist: Are the receptionists, doctors, technicians, assistants friendly, professional and knowledgeable? Are the office hours and location convenient? Does the clinic offer emergency or specialty services or boarding? If the Veterinary Hospital that you have selected does not meet these criteria, you may want to keep looking so you can be assured that your pet is receiving the best possible care.
9. Preparing your new home. Keep in mind that your pets may be frightened and confused in new surroundings. To reduce the chance of escaping due to fear, or pure excitement to explore the new territory, prepare all the familiar and necessary things your pet will need from day one including food, water, medications, bed, litter box, food and water bowls. Pack these items last, so they can be immediately unpacked and available for your pet in a secure room when you arrive at your new home. Remember to keep all external windows and doors closed when your pet is unsupervised. Be cautious of unsupervised areas in the kitchen or utility areas as nervous pets can seek refuge in narrow gaps behind or between appliances. If your new home is nearby, your pet may be confused and find a way back to your old home. Notify the new homeowners of your new address and ask them to contact you if your pet is found in the neighborhood.
10. Learn more about your new area. Once you find a new Veterinarian, ask if there are any local disease concerns such as heartworm or Lyme disease as well as vaccinations or medications your pet may require. Also, be aware of any unique laws. For example, there are restrictive breed laws in some cities. Contact the city or travel information bureau for more information as your pet may be affected by these laws. If you will be traveling internationally, always remember to have your pet examined by a Veterinarian and carry an updated rabies vaccination and health certificate. It is very important to contact the Agriculture Department or embassy of the country or state to where you are traveling to obtain specific information on special documents, quarantine, or costs to bring the animal into the country.
SOURCE: The Pet Realty Network™ Library
The Five Miracles of 2008
When someone agrees to give me referrals and asks for a few of my business cards, five miracles have to happen for me to get the referral.
1) They don't lose my card.
2) They have my card with them when them when the topic comes up.
3) They remember to give out my card.
4) The referral doesn't lose my card.
5) The referral actually picks up the phone and calls.
Could I please collect a quarter for all the times people have told me that they referred someone to me... and I get no call! I'm not saying don't give our my cards. What I am saying is... think about the Five Miracles.
Let me teach you how to refer people to me.
When you meet someone who can benefit from my service, just as you did, simply ask their permission for me to contact them. Then call me with their information and I will follow up with them. There is obviously no cost or obligation on their part and I will never pressure them. My job is to make you look good. Ok... Great. By the way, all referrals to me are rewarded.
1) They don't lose my card.
2) They have my card with them when them when the topic comes up.
3) They remember to give out my card.
4) The referral doesn't lose my card.
5) The referral actually picks up the phone and calls.
Could I please collect a quarter for all the times people have told me that they referred someone to me... and I get no call! I'm not saying don't give our my cards. What I am saying is... think about the Five Miracles.
Let me teach you how to refer people to me.
When you meet someone who can benefit from my service, just as you did, simply ask their permission for me to contact them. Then call me with their information and I will follow up with them. There is obviously no cost or obligation on their part and I will never pressure them. My job is to make you look good. Ok... Great. By the way, all referrals to me are rewarded.
Tuesday, December 25, 2007
A Brief History of Christmas
By JOHN STEELE GORDON
December 21, 2007;
Wall Street Journal Page A19
Christmas famously "comes but once a year." In fact, however, it comes twice. The Christmas of the Nativity, the manger and Christ child, the wise men and the star of Bethlehem, "Silent Night" and "Hark the Herald Angels Sing" is one holiday. The Christmas of parties, Santa Claus, evergreens, presents, "Rudolph the Red-Nosed Reindeer" and "Jingle Bells" is quite another.
But because both celebrations fall on Dec. 25, the two are constantly confused. Religious Christians condemn taking "the Christ out of Christmas," while First Amendment absolutists see a threat to the separation of church and state in every poinsettia on public property and school dramatization of "A Christmas Carol."
A little history can clear things up.
Click for MORE
December 21, 2007;
Wall Street Journal Page A19
Christmas famously "comes but once a year." In fact, however, it comes twice. The Christmas of the Nativity, the manger and Christ child, the wise men and the star of Bethlehem, "Silent Night" and "Hark the Herald Angels Sing" is one holiday. The Christmas of parties, Santa Claus, evergreens, presents, "Rudolph the Red-Nosed Reindeer" and "Jingle Bells" is quite another.
But because both celebrations fall on Dec. 25, the two are constantly confused. Religious Christians condemn taking "the Christ out of Christmas," while First Amendment absolutists see a threat to the separation of church and state in every poinsettia on public property and school dramatization of "A Christmas Carol."
A little history can clear things up.
Click for MORE
Friday, December 21, 2007
Mortgage Insurance Premiums Now Tax Deductable
The U.S. House of Representatives voted this week making mortgage insurance premiums tax deductible for all mortgages originated for the next three years. The Senate passed this legislation last week by unanimous consent. Mortgage insurance first became tax deductible in 2007.
Eligible homeowners with adjusted gross incomes of $100,000 or less can deduct the full cost of their mortgage insurance premiums under the new legislation. Families with incomes between $100,000 and $109,000 can be eligible for a reduced deduction.
This means that a borrower in a 25% marginal tax bracket who takes out a $300,000 mortgage during the next three years, may see an additional $53 in tax savings* per month or $636 in tax savings* per year, making homeownership more affordable.
You can obtain additional information at the IRS web site, www.irs.gov.
*Tax savings example based on a premium rate of 0.85% on a 100% LTV interest only PLUSSM loan generating annual deductible premiums of $2,550 ($300,000 x 0.85%) multiplied by a 25% marginal tax rate (e.g. married couple filing jointly with taxable income of $63,700 or more) yielding a tax savings of $53 per month in 2007.
Eligible homeowners with adjusted gross incomes of $100,000 or less can deduct the full cost of their mortgage insurance premiums under the new legislation. Families with incomes between $100,000 and $109,000 can be eligible for a reduced deduction.
This means that a borrower in a 25% marginal tax bracket who takes out a $300,000 mortgage during the next three years, may see an additional $53 in tax savings* per month or $636 in tax savings* per year, making homeownership more affordable.
You can obtain additional information at the IRS web site, www.irs.gov.
*Tax savings example based on a premium rate of 0.85% on a 100% LTV interest only PLUSSM loan generating annual deductible premiums of $2,550 ($300,000 x 0.85%) multiplied by a 25% marginal tax rate (e.g. married couple filing jointly with taxable income of $63,700 or more) yielding a tax savings of $53 per month in 2007.
California & Florida Top Sales Price Drop, Foreclosure Rise Lists
Home prices fell in 21 states from October 2006 through October 207 and dropped in 21 of 31 major metro areas reported in a study released today by First American Corp.'s LoanPerformance.
The price of single-family detached homes tumbled 15.7 percent in the Riverside-San Bernardino-Ontario, Calif., market area from October 2006 to October 2007, according to the LoanPerformance Home Price Index, which analyzes data for repeat sales transactions.
And six of the eight local market areas tracked in the report that experienced double-digit price declines from October 2006 to October 2007 are in Florida or California, based on single-family detached housing sales data. Las Vegas and Phoenix also saw a double-digit drop in home prices during the study period.
California, Florida, Nevada and Arizona also appear in the top-10 list of states with the highest rate of foreclosure filings in the nation during November, released today by real estate data company RealtyTrac.
The price of single-family detached homes tumbled 15.7 percent in the Riverside-San Bernardino-Ontario, Calif., market area from October 2006 to October 2007, according to the LoanPerformance Home Price Index, which analyzes data for repeat sales transactions.
And six of the eight local market areas tracked in the report that experienced double-digit price declines from October 2006 to October 2007 are in Florida or California, based on single-family detached housing sales data. Las Vegas and Phoenix also saw a double-digit drop in home prices during the study period.
California, Florida, Nevada and Arizona also appear in the top-10 list of states with the highest rate of foreclosure filings in the nation during November, released today by real estate data company RealtyTrac.
Tuesday, December 18, 2007
Fed Proposes New Mortgage Rules
The Federal Reserve has proposed new regulation of mortgage providers which will lead to more disclosure by lenders, without restricting access to credit. Or so says this CNBC video report.
You can view it by clicking http://www.cnbc.com/id/15840232?video=610627371
You can view it by clicking http://www.cnbc.com/id/15840232?video=610627371
Sunday, December 16, 2007
Tracking the Truth on Foreclosures
RealtyTrac's data is oft-cited by the media, but some question its accuracy
by Andrew Galvin
The Orange County Register
If ever there were a public relations success story, RealtyTrac is it. The Irvine-based firm's monthly news releases, chock-full of state-by-state foreclosure counts, are devoured by a national media ravenous for data on what many consider a developing crisis. But questions are being raised about whether the firm's oft-cited numbers overstate the real dimensions of the foreclosure problem. And that could create a problem for the company's credibility.
For example, last year, RealtyTrac's data showed Colorado had the nation's highest foreclosure rate. That didn't sit well with state officials, who decided to do their own count of foreclosures and came up with a figure much smaller than RealtyTrac's. Then, in July, RealtyTrac reported 12,602 foreclosure actions in Georgia, giving the state the nation's second-highest foreclosure rate. When the Atlanta Journal-Constitution looked into the numbers, the newspaper found that RealtyTrac had counted more than 2,000 properties twice and sometimes more. RealtyTrac acknowledges it isn't perfect but says its data offers comprehensiveness and context that other providers don't.
Why the discrepancies?
The main reason is that RealtyTrac counts every step in the foreclosure process. So if a home goes into default on its mortgage, is scheduled for auction and then repossessed by a bank, RealtyTrac counts that home three times. RealtyTrac counted 54,747 "foreclosure actions" in Colorado last year. That number wasn't useful because it didn't reflect how many homeowners were actually in danger of losing their homes, said Ryan McMaken, spokesman for the Colorado Division of Housing. "We couldn't really use those numbers for having serious discussions," he said. So McMaken put an intern to work calling all of the state's 64 counties to get a count of how many homes entered the foreclosure process last year. The number he came up with: 28,435.
This summer, partly in response to criticism, RealtyTrac began sorting its numbers to compile a separate count of properties in foreclosure, in addition to total foreclosure actions. RealtyTrac's "unique property" count, published quarterly, found 19,411 properties in foreclosure in Colorado in the first half of this year. That's within a few dozen of the 19,460 counted by McMaken. "I think they're getting a lot closer now," McMaken said, adding that "we might not have to collect our own numbers" anymore.
In the Georgia situation, RealtyTrac admitted it erred. It revised its July count for the state to 8,461 foreclosure actions, down from its initial count of 12,602. "The reporting error resulted from a combination of overlapping data coverage in some areas of Georgia and an anomaly in the formatting of some of the foreclosure records in those overlapping areas," the company said.
RealtyTrac could probably mute much of the criticism of its data if it simply published its unique properties count every month in addition to its total filings count. That's something the company is considering doing next year, said Rick Sharga, RealtyTrac's vice president of marketing.
Does it matter how the data are counted? Jack Kyser, chief economist with the Los Angeles County Economic Development Corp., argues that it does. Figures that overstate problems in the housing market "become sort of a self-fulfilling prophecy in that people are afraid to go out and look for a home," Kyser said. Moreover, inflated data on foreclosures could prompt politicians to push through ill-considered mortgage reforms. "You do something that's good, but it's the law of unintended consequences," Kyser said.
Other factors that could cause RealtyTrac's counts to be higher than others: the company doesn't filter out duplicate filings if two or more loans on the same property go into default, and its monthly reports are based on the date that foreclosure actions enter its database, rather than the recording dates, Sharga said. "We're not perfect; we don't claim to be," Sharga said. "When we do find a mistake, we fix it … and try not to replicate that."
by Andrew Galvin
The Orange County Register
If ever there were a public relations success story, RealtyTrac is it. The Irvine-based firm's monthly news releases, chock-full of state-by-state foreclosure counts, are devoured by a national media ravenous for data on what many consider a developing crisis. But questions are being raised about whether the firm's oft-cited numbers overstate the real dimensions of the foreclosure problem. And that could create a problem for the company's credibility.
For example, last year, RealtyTrac's data showed Colorado had the nation's highest foreclosure rate. That didn't sit well with state officials, who decided to do their own count of foreclosures and came up with a figure much smaller than RealtyTrac's. Then, in July, RealtyTrac reported 12,602 foreclosure actions in Georgia, giving the state the nation's second-highest foreclosure rate. When the Atlanta Journal-Constitution looked into the numbers, the newspaper found that RealtyTrac had counted more than 2,000 properties twice and sometimes more. RealtyTrac acknowledges it isn't perfect but says its data offers comprehensiveness and context that other providers don't.
Why the discrepancies?
The main reason is that RealtyTrac counts every step in the foreclosure process. So if a home goes into default on its mortgage, is scheduled for auction and then repossessed by a bank, RealtyTrac counts that home three times. RealtyTrac counted 54,747 "foreclosure actions" in Colorado last year. That number wasn't useful because it didn't reflect how many homeowners were actually in danger of losing their homes, said Ryan McMaken, spokesman for the Colorado Division of Housing. "We couldn't really use those numbers for having serious discussions," he said. So McMaken put an intern to work calling all of the state's 64 counties to get a count of how many homes entered the foreclosure process last year. The number he came up with: 28,435.
This summer, partly in response to criticism, RealtyTrac began sorting its numbers to compile a separate count of properties in foreclosure, in addition to total foreclosure actions. RealtyTrac's "unique property" count, published quarterly, found 19,411 properties in foreclosure in Colorado in the first half of this year. That's within a few dozen of the 19,460 counted by McMaken. "I think they're getting a lot closer now," McMaken said, adding that "we might not have to collect our own numbers" anymore.
In the Georgia situation, RealtyTrac admitted it erred. It revised its July count for the state to 8,461 foreclosure actions, down from its initial count of 12,602. "The reporting error resulted from a combination of overlapping data coverage in some areas of Georgia and an anomaly in the formatting of some of the foreclosure records in those overlapping areas," the company said.
RealtyTrac could probably mute much of the criticism of its data if it simply published its unique properties count every month in addition to its total filings count. That's something the company is considering doing next year, said Rick Sharga, RealtyTrac's vice president of marketing.
Does it matter how the data are counted? Jack Kyser, chief economist with the Los Angeles County Economic Development Corp., argues that it does. Figures that overstate problems in the housing market "become sort of a self-fulfilling prophecy in that people are afraid to go out and look for a home," Kyser said. Moreover, inflated data on foreclosures could prompt politicians to push through ill-considered mortgage reforms. "You do something that's good, but it's the law of unintended consequences," Kyser said.
Other factors that could cause RealtyTrac's counts to be higher than others: the company doesn't filter out duplicate filings if two or more loans on the same property go into default, and its monthly reports are based on the date that foreclosure actions enter its database, rather than the recording dates, Sharga said. "We're not perfect; we don't claim to be," Sharga said. "When we do find a mistake, we fix it … and try not to replicate that."
Thursday, December 13, 2007
Navigating the Rate Freeze Plan
'Navigating the Bush Administration's Rate Freeze Program' is a terrific interactive webpage provided by the Wall Street Journal. If you think you may qualify or if you are just interested in who can be a big winner in this limited bulwark against what looks like a potential fiasco.
Just my opinion, of course.
http://online.wsj.com/public/resources/documents/info-SubPrime_Points071206.html
Just my opinion, of course.
http://online.wsj.com/public/resources/documents/info-SubPrime_Points071206.html
Saturday, December 08, 2007
Identity Theft Solution
Identity theft is becoming an increasing problem in the US, and the criminals are getting more and more sophisticated. It can be a nightmare sorting out a problem if you have one.
ID Theft Assist is a company which offers Identity Theft insurance but with a whole lot more as well. They will monitor daily your credit reports to see if someone is trying to steal your identity and alert you if there is a problem, and they have a staff which will help you do the actual work of sorting out problems if you have one. They charge a reasonable $149 a year, which like most insurance is a waste if you don't need it, but a lifesaver if you do.
You should check them out by clicking on the following link. You can click on the link to "what we do" and especially the letters from satisfied customers. I hope you never have a problem but we live in a day and age when such problems are only going to increase. http://www.idtheftassistsubscription.com
ID Theft Assist is a company which offers Identity Theft insurance but with a whole lot more as well. They will monitor daily your credit reports to see if someone is trying to steal your identity and alert you if there is a problem, and they have a staff which will help you do the actual work of sorting out problems if you have one. They charge a reasonable $149 a year, which like most insurance is a waste if you don't need it, but a lifesaver if you do.
You should check them out by clicking on the following link. You can click on the link to "what we do" and especially the letters from satisfied customers. I hope you never have a problem but we live in a day and age when such problems are only going to increase. http://www.idtheftassistsubscription.com
Friday, December 07, 2007
Foreclosure relief plan draws mixed response. What do you think?
Opinions are all over the board on what to do [if anything] for the housing market. Please take a look at this article and then post a reply with your opinion! Thanks. Ray
Some view interest rate freeze as more harmful than helpful
Thursday, December 06, 2007
By Glenn Roberts Jr.
Inman News
A plan to freeze interest rates for a segment of homeowners who face the prospect of foreclosure is either political grandstanding, a delaying tactic, a finger attempting to plug a bursting dam, or the right cure for an ailing market, depending on who you talk to in the real estate brokerage community.
Real estate agents and brokers are definitely talking about the Bush administration's effort to bring together mortgage-market players in a program to assist some distressed subprime borrowers to refinance into safer loans and avoid resetting rates that would lead to more defaults.
An estimated 1.2 million subprime borrowers with adjustable-rate mortgages would be eligible to participate in a fast-track process to refinance or apply for modified loan terms under this program, the Treasury Department announced this morning.
The Treasury Department estimated that perhaps 1.8 million owner-occupied subprime mortgage resets will occur in 2008 and 2009. Treasury Secretary Henry M. Paulson Jr. noted that the plan announced today is "a private sector effort, involving no government money."
Even before the details of the bailout plan were revealed, real estate industry professionals were already talking about the potential impact to consumers and the real estate industry.
Some real estate professionals commented in online forums that they preferred to let the market problems run their course and do not favor any efforts to intervene, and some said a rate freeze could potentially do more harm than good to the overall housing market.
"I think it's going to be a negative," said Samuel Marcus, an associate broker for Century 21 Laffey Associates in Long Island, N.Y.
"I don't think it's going to help the market -- I think it's going to hurt the market, and it's going to cost somebody a lot of money, be it taxpayers or buyers who went with a conventional mortgage."
Marcus said he feels for people who were misguided or chose home loans that got them in over their heads, and a bailout program could have short-term benefits but will not likely solve all of the market troubles.
"I would favor no federal intervention. I think we have to lick our wounds and move forward. We should work on changing the system so something like this doesn't happen again," he said.
The program seems to have been brought out through political posturing, he said.
In addition to the Bush administration's efforts to put the rate-freeze plan together for distressed homeowners, Democratic presidential candidates Hillary Rodham Clinton and John Edwards also announced proposals this week to curb foreclosures, and Clinton criticized the Bush plan as too weak.
Clinton's own proposal would have set a 90-day foreclosure moratorium and a five-year rate freeze for some troubled borrowers.
"I think it's grandstanding," said Mike Jaquish, an associate broker for Keller Williams Realty in Cary, N.C.
He said that a plan to freeze mortgage rates might harm liquidity in the mortgage market, as it could sap motivation from investors to purchase mortgage-backed securities.
If investor confidence in the mortgage market sinks further, that could make it harder for entry-level buyers, he said.
"I don't think (this) is going to make things easier for much of anyone," he said.
The principal of interfering with money markets could have a more dire impact on mortgage financing than the foreclosure problem, and he generally favors a hands-off approach to the workings of the market.
But he acknowledged that there are some very real problems with foreclosures. "I'm concerned about the overall status of the market. We've upset the apple cart big time. An adjustment is going to be made. If things get as grim as people say, the (Federal Housing Administration) is going to be the lender of choice."
Ultimately, the mortgage problems may heavily leverage the country, he said.
Realtor Krista Fuchs of Prudential Fox & Roach of Exton, Pa., said, "Something has to be done to stop the cycle of homes going into foreclosure," which can drive up inventory and drive down local home prices, potentially fueling more foreclosures.
But a rate freeze has pitfalls, too. "Freezing the rates will cause problems, possibly lawsuits," she said. "Hopefully, it won't deter future investors from buying mortgages. If that happens then the industry and economy is in much bigger trouble than we are now."
The problem is bigger than a "silver bullet fix," she said, and it appears "it's just the beginning."
Mark Anderson does see a silver lining, though, to a rate-freeze program. "If people are going to be losing homes, and they can keep them at a reduced rate or a current rate, I think it helps everybody. I think it helps Realtors, I think it helps mortgage investors," said Anderson, a Realtor for Keller Williams Classic Realty in Coon Rapids, Minn.
Buyers who were expecting a "huge fire sale" on homes may not like the idea of a rate freeze, Anderson said. "They want the market to continue sinking. But at the end of the day it's going to be helpful for everyone. It certainly beats the alternative of all those folks losing homes over the next five years."
And while there may be worries about lawsuits, Anderson said that was surely a part of the discussion in putting together a rate-freeze plan. "This could only be good for (investors)," he said, "They're not going to lose as much."
He added, "The breathing room and extra time should allow people with marginal credit to qualify and refinance themselves out of their adjusting ARMs."
The National Association of Realtors announced its support for the Bush administration's efforts to curb the rise in foreclosures by allowing loan modifications or a freeze in interest rates for some borrowers.
"The dream of homeownership should not turn into a family's worst nightmare," Richard Gaylord, NAR's 2007 president, said in a statement. "The loan modification program introduced by President Bush and U.S. Treasury Secretary Henry Paulson is a good first step in helping deserving families keep their homes."
The association also supports Fannie Mae and Freddie Mac reforms such as an increase in the conforming loan limit to aid home buyers in high-cost markets and improve mortgage liquidity, and also supports FHA modernization legislation.
Jerry Howard, president of the National Association of Home Builders, said that the plan has "the potential to get us out of this down cycle that we're in," as it could stabilize home prices and renew demand in new homes.
The home-building industry, he said, may start to see that increase in demand manifest itself in the second quarter of the year, with an increase in production by the third quarter.
He said that he didn't know how many owners of new homes might be eligible for the mortgage relief program introduced today.
Jennifer Bukaty, a broker for Bridgetown Realty Inc. in Portland, Ore., said she doesn't believe a rate-freeze plan is ultimately going to succeed because she believes there are too many legal complications.
She said that part of living in a free country is accepting responsibility for your actions.
"I think individual people made individual choices. I'm sorry about the mortgage industry, as well. I think the good ones are writing good, solid loans and doing the right thing," she said.
She acknowledges that the average consumer may not understand the intricacies of mortgage financing, adding that she directs her own clients to stay within their means and does not lead them to seek risky loans.
It might be more worthwhile to focus resources on the perpetrators of mortgage fraud, said Lenn Harley, broker for Homefinders.com, a real estate company that operates in Maryland, Virginia and Florida.
"I can't stand things that are unfair, and there's going to be a great deal of unfairness in this (plan)," she said.
She said any bailout plan will not prevent the inevitable -- properties that are already in a foreclosure process, though it may delay rather than prevent some aspects of the market downturn.
"Sooner or later the market will rule and when the market rules all of those people who didn't make mortgage payments go into foreclosure," she said.
Prices have been rising at a much faster clip than income, she said, and those prices will have to come down. "This isn't going to help," she said. "It's all political."
***
What's your opinion? Send your Letter to the Editor to Ray@SCVhometeam.com .
Some view interest rate freeze as more harmful than helpful
Thursday, December 06, 2007
By Glenn Roberts Jr.
Inman News
A plan to freeze interest rates for a segment of homeowners who face the prospect of foreclosure is either political grandstanding, a delaying tactic, a finger attempting to plug a bursting dam, or the right cure for an ailing market, depending on who you talk to in the real estate brokerage community.
Real estate agents and brokers are definitely talking about the Bush administration's effort to bring together mortgage-market players in a program to assist some distressed subprime borrowers to refinance into safer loans and avoid resetting rates that would lead to more defaults.
An estimated 1.2 million subprime borrowers with adjustable-rate mortgages would be eligible to participate in a fast-track process to refinance or apply for modified loan terms under this program, the Treasury Department announced this morning.
The Treasury Department estimated that perhaps 1.8 million owner-occupied subprime mortgage resets will occur in 2008 and 2009. Treasury Secretary Henry M. Paulson Jr. noted that the plan announced today is "a private sector effort, involving no government money."
Even before the details of the bailout plan were revealed, real estate industry professionals were already talking about the potential impact to consumers and the real estate industry.
Some real estate professionals commented in online forums that they preferred to let the market problems run their course and do not favor any efforts to intervene, and some said a rate freeze could potentially do more harm than good to the overall housing market.
"I think it's going to be a negative," said Samuel Marcus, an associate broker for Century 21 Laffey Associates in Long Island, N.Y.
"I don't think it's going to help the market -- I think it's going to hurt the market, and it's going to cost somebody a lot of money, be it taxpayers or buyers who went with a conventional mortgage."
Marcus said he feels for people who were misguided or chose home loans that got them in over their heads, and a bailout program could have short-term benefits but will not likely solve all of the market troubles.
"I would favor no federal intervention. I think we have to lick our wounds and move forward. We should work on changing the system so something like this doesn't happen again," he said.
The program seems to have been brought out through political posturing, he said.
In addition to the Bush administration's efforts to put the rate-freeze plan together for distressed homeowners, Democratic presidential candidates Hillary Rodham Clinton and John Edwards also announced proposals this week to curb foreclosures, and Clinton criticized the Bush plan as too weak.
Clinton's own proposal would have set a 90-day foreclosure moratorium and a five-year rate freeze for some troubled borrowers.
"I think it's grandstanding," said Mike Jaquish, an associate broker for Keller Williams Realty in Cary, N.C.
He said that a plan to freeze mortgage rates might harm liquidity in the mortgage market, as it could sap motivation from investors to purchase mortgage-backed securities.
If investor confidence in the mortgage market sinks further, that could make it harder for entry-level buyers, he said.
"I don't think (this) is going to make things easier for much of anyone," he said.
The principal of interfering with money markets could have a more dire impact on mortgage financing than the foreclosure problem, and he generally favors a hands-off approach to the workings of the market.
But he acknowledged that there are some very real problems with foreclosures. "I'm concerned about the overall status of the market. We've upset the apple cart big time. An adjustment is going to be made. If things get as grim as people say, the (Federal Housing Administration) is going to be the lender of choice."
Ultimately, the mortgage problems may heavily leverage the country, he said.
Realtor Krista Fuchs of Prudential Fox & Roach of Exton, Pa., said, "Something has to be done to stop the cycle of homes going into foreclosure," which can drive up inventory and drive down local home prices, potentially fueling more foreclosures.
But a rate freeze has pitfalls, too. "Freezing the rates will cause problems, possibly lawsuits," she said. "Hopefully, it won't deter future investors from buying mortgages. If that happens then the industry and economy is in much bigger trouble than we are now."
The problem is bigger than a "silver bullet fix," she said, and it appears "it's just the beginning."
Mark Anderson does see a silver lining, though, to a rate-freeze program. "If people are going to be losing homes, and they can keep them at a reduced rate or a current rate, I think it helps everybody. I think it helps Realtors, I think it helps mortgage investors," said Anderson, a Realtor for Keller Williams Classic Realty in Coon Rapids, Minn.
Buyers who were expecting a "huge fire sale" on homes may not like the idea of a rate freeze, Anderson said. "They want the market to continue sinking. But at the end of the day it's going to be helpful for everyone. It certainly beats the alternative of all those folks losing homes over the next five years."
And while there may be worries about lawsuits, Anderson said that was surely a part of the discussion in putting together a rate-freeze plan. "This could only be good for (investors)," he said, "They're not going to lose as much."
He added, "The breathing room and extra time should allow people with marginal credit to qualify and refinance themselves out of their adjusting ARMs."
The National Association of Realtors announced its support for the Bush administration's efforts to curb the rise in foreclosures by allowing loan modifications or a freeze in interest rates for some borrowers.
"The dream of homeownership should not turn into a family's worst nightmare," Richard Gaylord, NAR's 2007 president, said in a statement. "The loan modification program introduced by President Bush and U.S. Treasury Secretary Henry Paulson is a good first step in helping deserving families keep their homes."
The association also supports Fannie Mae and Freddie Mac reforms such as an increase in the conforming loan limit to aid home buyers in high-cost markets and improve mortgage liquidity, and also supports FHA modernization legislation.
Jerry Howard, president of the National Association of Home Builders, said that the plan has "the potential to get us out of this down cycle that we're in," as it could stabilize home prices and renew demand in new homes.
The home-building industry, he said, may start to see that increase in demand manifest itself in the second quarter of the year, with an increase in production by the third quarter.
He said that he didn't know how many owners of new homes might be eligible for the mortgage relief program introduced today.
Jennifer Bukaty, a broker for Bridgetown Realty Inc. in Portland, Ore., said she doesn't believe a rate-freeze plan is ultimately going to succeed because she believes there are too many legal complications.
She said that part of living in a free country is accepting responsibility for your actions.
"I think individual people made individual choices. I'm sorry about the mortgage industry, as well. I think the good ones are writing good, solid loans and doing the right thing," she said.
She acknowledges that the average consumer may not understand the intricacies of mortgage financing, adding that she directs her own clients to stay within their means and does not lead them to seek risky loans.
It might be more worthwhile to focus resources on the perpetrators of mortgage fraud, said Lenn Harley, broker for Homefinders.com, a real estate company that operates in Maryland, Virginia and Florida.
"I can't stand things that are unfair, and there's going to be a great deal of unfairness in this (plan)," she said.
She said any bailout plan will not prevent the inevitable -- properties that are already in a foreclosure process, though it may delay rather than prevent some aspects of the market downturn.
"Sooner or later the market will rule and when the market rules all of those people who didn't make mortgage payments go into foreclosure," she said.
Prices have been rising at a much faster clip than income, she said, and those prices will have to come down. "This isn't going to help," she said. "It's all political."
***
What's your opinion? Send your Letter to the Editor to Ray@SCVhometeam.com .
Friday, November 30, 2007
Bargain Smartly to Get the Best Deal
Bargaining is an art, particularly when the buyer wants to make a rock-bottom bid without insulting the seller.
In this slowing market with dropping prices, sometimes buyers get the idea that all properties on the market will go out at give-away prices, and then proceed to make offers to purchase that are 20% or lower than list price.
This is generally not a winning strategy. In fact, it often shows an immaturity in the marketplace if not an inability to deal with market realities. Most often the buyer is just shopping in a price range above what they can afford. Agents who write these types of offers show a lack of respect for the sellers, the other agents, and first and foremost, their own buyer. In order for the average seller to consider working with the offer, if only to make a counteroffer on price and/or terms, the offer has to be in some way palatable and shows you've done your homework on price comparable sales and/or seller motivation.
Sometimes an unreasonably lowball offer can make a seller so angry they won't make a counter offer or deal with a buyer. Adios is the best word that can describe the reaction, although other words are often said.
This is not to say that there aren't deals to be made. There are. Seller motivation plays a key role in price negotiation. Distress sales or time-specific needs top the list of homes that would be potentially great to make a low-ball offer on, but not all homes on the market are in these categories. Bank-owned properties are generally priced at the very lowest tier of comparable properties, and in a slowing and declining market the institutions don't want to keep them for very long. Unsold inventory costs the servicing companies money. But neither do they give these properties away. After all, they are in business also. Some people tout short sales as buyer opportunities, and sometimes they are. However, in the vast majority of cases, either the list price as a short sale is just so unreasonably low for the bank to consider and is in effect a 'teaser price' just to get people in the door, or the seller is not in a legitimate distress situation financially, in which case the lender will proceed with foreclosure and deny the short sale. This last situation is particularly prevalent in our area, where people think they can continue to game the system to their advantage.
But getting back to making offers on properties...
Here are their suggestions for coming up with a number that is competitive and compelling.
-- An offer that is more than 10 percent off the list price isn’t customary and is likely to be rejected.
-- Understand that there are other attractive homes on the market and don’t be shattered if the sellers reject their lowball offer. Move on.
-- Recognize the home’s strengths as well as its weaknesses.
-- Make a list of reasons to share with the seller for offering less than list price.
-- Instead of asking for the price to be lowered, negotiate other tangibles such as repairs, closing dates, and closing costs.
Treat others as you would want to be treated. Buyers should be respectful whenever he or she is around the sellers. Sellers, rather than getting upset about the offers that are made, should be concerned about all of the potential buyers who see their home, and then choose not to make an offer. Realistic pricing up front is the best way to negotiate a successful sale.
Some of the material for this piece was developed from an article by
Source: Star-Tribune, Lynn Underwood (11/17/07)
In this slowing market with dropping prices, sometimes buyers get the idea that all properties on the market will go out at give-away prices, and then proceed to make offers to purchase that are 20% or lower than list price.
This is generally not a winning strategy. In fact, it often shows an immaturity in the marketplace if not an inability to deal with market realities. Most often the buyer is just shopping in a price range above what they can afford. Agents who write these types of offers show a lack of respect for the sellers, the other agents, and first and foremost, their own buyer. In order for the average seller to consider working with the offer, if only to make a counteroffer on price and/or terms, the offer has to be in some way palatable and shows you've done your homework on price comparable sales and/or seller motivation.
Sometimes an unreasonably lowball offer can make a seller so angry they won't make a counter offer or deal with a buyer. Adios is the best word that can describe the reaction, although other words are often said.
This is not to say that there aren't deals to be made. There are. Seller motivation plays a key role in price negotiation. Distress sales or time-specific needs top the list of homes that would be potentially great to make a low-ball offer on, but not all homes on the market are in these categories. Bank-owned properties are generally priced at the very lowest tier of comparable properties, and in a slowing and declining market the institutions don't want to keep them for very long. Unsold inventory costs the servicing companies money. But neither do they give these properties away. After all, they are in business also. Some people tout short sales as buyer opportunities, and sometimes they are. However, in the vast majority of cases, either the list price as a short sale is just so unreasonably low for the bank to consider and is in effect a 'teaser price' just to get people in the door, or the seller is not in a legitimate distress situation financially, in which case the lender will proceed with foreclosure and deny the short sale. This last situation is particularly prevalent in our area, where people think they can continue to game the system to their advantage.
But getting back to making offers on properties...
Here are their suggestions for coming up with a number that is competitive and compelling.
-- An offer that is more than 10 percent off the list price isn’t customary and is likely to be rejected.
-- Understand that there are other attractive homes on the market and don’t be shattered if the sellers reject their lowball offer. Move on.
-- Recognize the home’s strengths as well as its weaknesses.
-- Make a list of reasons to share with the seller for offering less than list price.
-- Instead of asking for the price to be lowered, negotiate other tangibles such as repairs, closing dates, and closing costs.
Treat others as you would want to be treated. Buyers should be respectful whenever he or she is around the sellers. Sellers, rather than getting upset about the offers that are made, should be concerned about all of the potential buyers who see their home, and then choose not to make an offer. Realistic pricing up front is the best way to negotiate a successful sale.
Some of the material for this piece was developed from an article by
Source: Star-Tribune, Lynn Underwood (11/17/07)
California Tenants Displaced by Foreclosures
by Dean Preston‚ Nov. 27‚ 2007
“A foreclosure doesn’t differentiate between a homeowner and a renter residing in a defaulting property,” said U.S. Senator Chris Dodd in a recent statement supporting protections for residents of foreclosed property. This is an important recognition of the fact that both defaulting homeowners and tenants are impacted by foreclosure. It is time for California’s policymakers and media to acknowledge and address the impact of the mortgage crisis on California’s tenants.
California foreclosure rates are particularly high. Cities such as Sacramento, Bakersfield, Riverside and Stockton have been among the hardest hit in the nation. Stockton is one of the top-three cities in the nation for foreclosures, with rates increasing by over 250% from 2006 to 2007. In a press release just last week, Governor Schwarzenegger noted that California has been “impacted more than any other state by the national home foreclosure crisis.”
Homeowners are not the only people displaced by foreclosures. Banks typically evict tenants upon foreclosure because they prefer to sell the property vacant. The resulting displacement of tenants is a largely untold story of the mortgage crisis.
There is currently no definitive data as to exactly how many tenants are being displaced due to foreclosures. According to a recent survey by the Mortgage Bankers Association, one in seven foreclosures nationwide was property that was not owner-occupied.
In California, the rate of foreclosure on non-owner-occupied properties is even higher than the national rate. An estimated 22% of foreclosures in California this year involved properties that are not owner-occupied. (Plus, some of the “owner-occupied” properties also include tenants, either because the property contains more than one unit or because an owner-occupant sublets rooms to tenants.)
The media have covered the mortgage meltdown by its impact on homeowners and on the economy. Missing from the story are the tenants who are forced to leave their homes because of foreclosures.
The San Francisco Chronicle, for example, has covered the impact of foreclosures on defaulting owners in recent articles about Bay Area hotspots like Vallejo, but the paper has largely ignored the impact on tenants.
The one Chronicle piece referencing tenants in this context was a profile of a local real estate agent whose business is booming because she specializes in acquiring foreclosed properties. (“Realtor specializes in selling foreclosed homes,” September 9, 2007). The article treats tenants as if they were nothing more than an inconvenience to the agent’s lucrative business: “If it's occupied - about a third of the properties are, often by renters - she offers ‘cash for keys’ (about $500) to get the tenants to move out. Only rarely does she need to bring in the sheriff for an eviction.”
On November 18, the New York Times changed the media landscape on this issue with a front-page article entitled “As Owners Feel Mortgage Pain, So Do Renters.” John Leland’s article poignantly begins as follows: “In the foreclosure crisis of 2007, thousands of American families are losing their homes without ever missing a payment. They are renters in houses whose owners default on their mortgages — a large but little noticed class of casualties.”
Fortunately, California tenants in certain rent control jurisdictions are entitled to continue to occupy their homes despite foreclosure. Under a 1985 Court of Appeals decision (Gross v. Superior Court), the bank steps into the shoes of the former owner, and must comply with local eviction laws that limit the grounds for eviction. But this only helps tenants who live in cities where local “just cause” ordinances do not allow eviction due to foreclosure.
In most of California, banks are free to evict tenants in foreclosure cases with just 30 days notice to the tenants. Statewide legislation is necessary to provide greater protections to tenants living in these properties.
There have been recent developments at the federal level that could offer some relief. On October 22, Reps. Brad Miller (D-NC), Mel Watt (D-NC) and Barney Frank (D-MA) introduced HR 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007. Among other provisions, the bill contains limited foreclosure protections for renters. Under the bill, a successor owner would have to honor pre-existing leases, and tenants without leases would have at least 90 days before being required to vacate.
The bill passed the House on November 15th by a vote of 291-127. It is now before the U.S. Senate.
With federal legislation pending and a recent front-page New York Times article highlighting this issue, the plight of tenants in foreclosed properties may finally receive more of the media attention it deserves. Tenant advocates must actively push for coverage of this important situation. Otherwise, tenants will remain “a large but little noticed class of casualties” of the mortgage crisis.
Dean Preston is an attorney currently launching Tenants Together, a statewide tenant organization. He can be reached at dean@tenantstogether.org
“A foreclosure doesn’t differentiate between a homeowner and a renter residing in a defaulting property,” said U.S. Senator Chris Dodd in a recent statement supporting protections for residents of foreclosed property. This is an important recognition of the fact that both defaulting homeowners and tenants are impacted by foreclosure. It is time for California’s policymakers and media to acknowledge and address the impact of the mortgage crisis on California’s tenants.
California foreclosure rates are particularly high. Cities such as Sacramento, Bakersfield, Riverside and Stockton have been among the hardest hit in the nation. Stockton is one of the top-three cities in the nation for foreclosures, with rates increasing by over 250% from 2006 to 2007. In a press release just last week, Governor Schwarzenegger noted that California has been “impacted more than any other state by the national home foreclosure crisis.”
Homeowners are not the only people displaced by foreclosures. Banks typically evict tenants upon foreclosure because they prefer to sell the property vacant. The resulting displacement of tenants is a largely untold story of the mortgage crisis.
There is currently no definitive data as to exactly how many tenants are being displaced due to foreclosures. According to a recent survey by the Mortgage Bankers Association, one in seven foreclosures nationwide was property that was not owner-occupied.
In California, the rate of foreclosure on non-owner-occupied properties is even higher than the national rate. An estimated 22% of foreclosures in California this year involved properties that are not owner-occupied. (Plus, some of the “owner-occupied” properties also include tenants, either because the property contains more than one unit or because an owner-occupant sublets rooms to tenants.)
The media have covered the mortgage meltdown by its impact on homeowners and on the economy. Missing from the story are the tenants who are forced to leave their homes because of foreclosures.
The San Francisco Chronicle, for example, has covered the impact of foreclosures on defaulting owners in recent articles about Bay Area hotspots like Vallejo, but the paper has largely ignored the impact on tenants.
The one Chronicle piece referencing tenants in this context was a profile of a local real estate agent whose business is booming because she specializes in acquiring foreclosed properties. (“Realtor specializes in selling foreclosed homes,” September 9, 2007). The article treats tenants as if they were nothing more than an inconvenience to the agent’s lucrative business: “If it's occupied - about a third of the properties are, often by renters - she offers ‘cash for keys’ (about $500) to get the tenants to move out. Only rarely does she need to bring in the sheriff for an eviction.”
On November 18, the New York Times changed the media landscape on this issue with a front-page article entitled “As Owners Feel Mortgage Pain, So Do Renters.” John Leland’s article poignantly begins as follows: “In the foreclosure crisis of 2007, thousands of American families are losing their homes without ever missing a payment. They are renters in houses whose owners default on their mortgages — a large but little noticed class of casualties.”
Fortunately, California tenants in certain rent control jurisdictions are entitled to continue to occupy their homes despite foreclosure. Under a 1985 Court of Appeals decision (Gross v. Superior Court), the bank steps into the shoes of the former owner, and must comply with local eviction laws that limit the grounds for eviction. But this only helps tenants who live in cities where local “just cause” ordinances do not allow eviction due to foreclosure.
In most of California, banks are free to evict tenants in foreclosure cases with just 30 days notice to the tenants. Statewide legislation is necessary to provide greater protections to tenants living in these properties.
There have been recent developments at the federal level that could offer some relief. On October 22, Reps. Brad Miller (D-NC), Mel Watt (D-NC) and Barney Frank (D-MA) introduced HR 3915, the Mortgage Reform and Anti-Predatory Lending Act of 2007. Among other provisions, the bill contains limited foreclosure protections for renters. Under the bill, a successor owner would have to honor pre-existing leases, and tenants without leases would have at least 90 days before being required to vacate.
The bill passed the House on November 15th by a vote of 291-127. It is now before the U.S. Senate.
With federal legislation pending and a recent front-page New York Times article highlighting this issue, the plight of tenants in foreclosed properties may finally receive more of the media attention it deserves. Tenant advocates must actively push for coverage of this important situation. Otherwise, tenants will remain “a large but little noticed class of casualties” of the mortgage crisis.
Dean Preston is an attorney currently launching Tenants Together, a statewide tenant organization. He can be reached at dean@tenantstogether.org
How to Take the Sting Out of Falling Property Values
If you own a residential property that is declining in value, here are some ways to make the losses less depressing.
Trim property taxes. If a house has lost value, have it reappraised by the municipal assessor. Consider petitioning — or even suing — to get back taxes overpaid in the last few months.
Deduct a home office. Some people avoid the home office deduction because it requires deducting depreciation, but if the property has lost value, this isn’t an issue.
Sale-leaseback with a relative. If you're convinced your property is due for a big price correction and you have equity in the home, then sell now. For example, if you have a $1 million home that has been appraised at $1.8 million, you can sell it and take home $500,000 of the $800,000 gain tax free — due to an exemption on profits from the sale of personal residences. Sell the property to a trusted friend or wealthy relative and then become a tenant and pay the buyer rent at market rates — a much more attractive amount than Treasury bonds are paying now. When the housing market corrects, buy the property back.
Invest in housing futures. The Chicago Mercantile Exchange sells investment instruments that trade based on house price indexes for each of the 10 largest U.S. cities. You can sell futures, buy puts, or sell calls on this market to hedge losses in the value of your home.
Source: Forbes, Stephanie Fitch (12/10/07)
Trim property taxes. If a house has lost value, have it reappraised by the municipal assessor. Consider petitioning — or even suing — to get back taxes overpaid in the last few months.
Deduct a home office. Some people avoid the home office deduction because it requires deducting depreciation, but if the property has lost value, this isn’t an issue.
Sale-leaseback with a relative. If you're convinced your property is due for a big price correction and you have equity in the home, then sell now. For example, if you have a $1 million home that has been appraised at $1.8 million, you can sell it and take home $500,000 of the $800,000 gain tax free — due to an exemption on profits from the sale of personal residences. Sell the property to a trusted friend or wealthy relative and then become a tenant and pay the buyer rent at market rates — a much more attractive amount than Treasury bonds are paying now. When the housing market corrects, buy the property back.
Invest in housing futures. The Chicago Mercantile Exchange sells investment instruments that trade based on house price indexes for each of the 10 largest U.S. cities. You can sell futures, buy puts, or sell calls on this market to hedge losses in the value of your home.
Source: Forbes, Stephanie Fitch (12/10/07)
Monday, November 26, 2007
Holiday Shoppers on the Market
I've seen a resurgence of buyer activity in the last few weeks, with serious buyers coming out, calling on properties, making offers, making deals, and closing escrows.
For individuals and families, particular circumstances, needs, and financial fortunes are always the drivers of decisions, but after a few months of sluggish activity this resurgence is welcome.
Could it be that deep price cuts have dropped prices on enough properties to entice some of the buyers sitting on the sidelines? Could be. Maybe its a little higher level of knowledge about the price/interest rate inverse relationship... that is, in general when prices drop interest rates tend to rise. The result? A wash in affordability. Maybe its the last sweep of the sponge on less than prime mortgages, where the late comers are picking up the crumbs of liberal loan offerings, thinking that tightened lending standards in the near future will eliminate them from the buyer pool. Maybe its a growing awareness that the system will not allow the housing market to crash, and that between Fed infusions of cash, the potential for raising the limits on conforming loans, or any number of politically motivated proposals leading up to the 2008 election may bail out any buyers in trouble (this last belief is largely mistaken IMO), everything will turn out fine in the end.
Then again, maybe it's just my business, going up contrary to some larger market trends. If so, it's fine with me! Keep it coming!!
Whatever the individual motivation for taking action, give the SCV Home Team a call at 661-287-9164 and let's work out the best path for you!
For individuals and families, particular circumstances, needs, and financial fortunes are always the drivers of decisions, but after a few months of sluggish activity this resurgence is welcome.
Could it be that deep price cuts have dropped prices on enough properties to entice some of the buyers sitting on the sidelines? Could be. Maybe its a little higher level of knowledge about the price/interest rate inverse relationship... that is, in general when prices drop interest rates tend to rise. The result? A wash in affordability. Maybe its the last sweep of the sponge on less than prime mortgages, where the late comers are picking up the crumbs of liberal loan offerings, thinking that tightened lending standards in the near future will eliminate them from the buyer pool. Maybe its a growing awareness that the system will not allow the housing market to crash, and that between Fed infusions of cash, the potential for raising the limits on conforming loans, or any number of politically motivated proposals leading up to the 2008 election may bail out any buyers in trouble (this last belief is largely mistaken IMO), everything will turn out fine in the end.
Then again, maybe it's just my business, going up contrary to some larger market trends. If so, it's fine with me! Keep it coming!!
Whatever the individual motivation for taking action, give the SCV Home Team a call at 661-287-9164 and let's work out the best path for you!
Wednesday, October 31, 2007
Forgiveness of Debt and Capital Gains on Distress Sales
Forgiveness of Debt On Short Sales & Capital Gains on Trustee Sales:
This topic is so important today because of the number of homeowners receiving Notices of Default and the value of their property is less than their loans. These people need as much information as possible when they are evaluating short sale versus foreclosure, etc. Anyone who is not a tax professional should not offer tax or legal advice. I am not giving you tax or legal advice. I am giving you sources of information that can be given to friends and associates to help them.
Just Off the Press:
The IRS homepage at www.irs.gov has a new section heading, “Questions & Answers in Home Foreclosure and Debt Cancellation”. Tell everyone about this section, it will help someone, somehow, somewhere.
A Quick Summary of Foreclosure:
When a taxpayer loses a home at a Trustee Sale, the bid amount at the sale is considered their sales price and gain is calculated as in a normal sale (Sales price – Basis). If the property is a home, any capital gain can be excluded under the provisions of the $250K/$500K rules of Section 121. For more information on this calculation download page 4 from Publication 523 on the IRS website. Second thought, download all of Pub 523. It will answer many of your future questions. Short Sales & Forgiveness of Debt: Many ex-homeowners who sell their home under a lender-approved short sale are surprised when they receive a Form 1099 listing the amount forgiven as ordinary income. In my research I am amazed at the different opinions given about this situation by pundits, columnists and other experts. I strongly believe that anyone can have their own opinion but they cannot have their own set of facts. Accountants use a phrase “Safe Harbors.” My opinion is that if I see something on the IRS website it is safer to follow the IRS than some civilian’s opinion.
Is Cancellation of Debt Always Taxable:
What does IRS say? Not always. There are some exceptions. The most common situation when cancellation of debt income is not taxable involve:
•
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
•
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets. Insolvency can be fairly complex to determine and the assistance of a tax professional is recommended if you believe you qualify for this exception.
•
Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income. The rules applicable to farmers are complex and the assistance of a tax professional is recommended if you believe you qualify for this exception.
•
Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.
California Law: A debt is considered “nonrecourse” when a loan is made under either one of the following two circumstances:
---When the loan is made to purchase a one-to-four unit property and the borrower intends to occupy at least one of the units, or
---When the seller carries back financing for all or a portion of the purchase price of any real property. (Cal. Code Civ. Proc. §580b.)
Another Info Sources: On September 24th CAR published an outstanding new Q & A, "Taxation of Foreclosures, Deeds in Lieu of Foreclosure and Short Sales". Ask me about getting a copy of this publication.
Finally: According to Inman News, a bill in Congress, HR 3648, The Mortgage Forgiveness Debt Relief Act of 2007 would eliminate a provision of the tax code that allows the IRS to tax debt that's forgiven as ordinary income. To balance the loss of tax dollars IRS would tighten the rules for counting a second home, vacation or rental property as a primary resident for tax exclusion. Let's keep an eye on this bill that recently received unanimous approval from the House Committee on Ways and Means and has the support of NAR and the National Association of Homebuilders.
This topic is so important today because of the number of homeowners receiving Notices of Default and the value of their property is less than their loans. These people need as much information as possible when they are evaluating short sale versus foreclosure, etc. Anyone who is not a tax professional should not offer tax or legal advice. I am not giving you tax or legal advice. I am giving you sources of information that can be given to friends and associates to help them.
Just Off the Press:
The IRS homepage at www.irs.gov has a new section heading, “Questions & Answers in Home Foreclosure and Debt Cancellation”. Tell everyone about this section, it will help someone, somehow, somewhere.
A Quick Summary of Foreclosure:
When a taxpayer loses a home at a Trustee Sale, the bid amount at the sale is considered their sales price and gain is calculated as in a normal sale (Sales price – Basis). If the property is a home, any capital gain can be excluded under the provisions of the $250K/$500K rules of Section 121. For more information on this calculation download page 4 from Publication 523 on the IRS website. Second thought, download all of Pub 523. It will answer many of your future questions. Short Sales & Forgiveness of Debt: Many ex-homeowners who sell their home under a lender-approved short sale are surprised when they receive a Form 1099 listing the amount forgiven as ordinary income. In my research I am amazed at the different opinions given about this situation by pundits, columnists and other experts. I strongly believe that anyone can have their own opinion but they cannot have their own set of facts. Accountants use a phrase “Safe Harbors.” My opinion is that if I see something on the IRS website it is safer to follow the IRS than some civilian’s opinion.
Is Cancellation of Debt Always Taxable:
What does IRS say? Not always. There are some exceptions. The most common situation when cancellation of debt income is not taxable involve:
•
Bankruptcy: Debts discharged through bankruptcy are not considered taxable income.
•
Insolvency: If you are insolvent when the debt is cancelled, some or all of the cancelled debt may not be taxable to you. You are insolvent when your total debts are more than the fair market value of your total assets. Insolvency can be fairly complex to determine and the assistance of a tax professional is recommended if you believe you qualify for this exception.
•
Certain farm debts: If you incurred the debt directly in operation of a farm, more than half your income from the prior three years was from farming, and the loan was owed to a person or agency regularly engaged in lending, your cancelled debt is generally not considered taxable income. The rules applicable to farmers are complex and the assistance of a tax professional is recommended if you believe you qualify for this exception.
•
Non-recourse loans: A non-recourse loan is a loan for which the lender’s only remedy in case of default is to repossess the property being financed or used as collateral. That is, the lender cannot pursue you personally in case of default. Forgiveness of a non-recourse loan resulting from a foreclosure does not result in cancellation of debt income. However, it may result in other tax consequences.
California Law: A debt is considered “nonrecourse” when a loan is made under either one of the following two circumstances:
---When the loan is made to purchase a one-to-four unit property and the borrower intends to occupy at least one of the units, or
---When the seller carries back financing for all or a portion of the purchase price of any real property. (Cal. Code Civ. Proc. §580b.)
Another Info Sources: On September 24th CAR published an outstanding new Q & A, "Taxation of Foreclosures, Deeds in Lieu of Foreclosure and Short Sales". Ask me about getting a copy of this publication.
Finally: According to Inman News, a bill in Congress, HR 3648, The Mortgage Forgiveness Debt Relief Act of 2007 would eliminate a provision of the tax code that allows the IRS to tax debt that's forgiven as ordinary income. To balance the loss of tax dollars IRS would tighten the rules for counting a second home, vacation or rental property as a primary resident for tax exclusion. Let's keep an eye on this bill that recently received unanimous approval from the House Committee on Ways and Means and has the support of NAR and the National Association of Homebuilders.
Friday, October 26, 2007
Assistance for Area Fire Victims Offered
Updated Thursday, October 25th at 6:45pm
Fire Update
Current containment numbers on the Ranch (Castaic) Fire:
55,756 acres burned, 70% containment.
Residents may see smoke in the Santa Clarita area as a result of interior burning happening on the Buckweed fire. This is intentional, as the Fire Department continues to clear out the aftermath of the Buckweed fire. Please do not be alarmed.
Vasquez Bridge is closed due to fires : The County is estimating that the bridge will be re-opened by November 12th.
BE AWARE OF SCAMS- Some people are taking advantage of our residents by offering services for a large deposit to clean up debris but are not performing any services. If you are offered any home improvement services and are asked to receive the permit yourself by the contractor beware; that could mean the contractor is not licensed.
Assistance Agencies
FEMA:
A local assistance center will be established by FEMA from Oct 26th - Nov 8th (M-F) 8am- 6pm (Sat- Sun) 8am- 3pm at the City of Santa Clarita Sports Complex in the Activities Center
Please pre-register by telephone (800) 621-FEMA (3362) or TTY (800) 462-7585 or online at fema.gov
American Red Cross
The Red Cross has been working hard to assist those impacted by this disaster here in Santa Clarita. If you, or someone you know lost their home or needs Red Cross Disaster assistance, you can call their temporary family services number at 661-222-3191. Their permanent main office line is 661-259-1805. The ARC is located in the Atrium Building at 23838 Valencia Blvd, Valencia.
Other Assistance:
The SCV Disaster Coalition is now prepared to accept donations that will go to help the families who were impacted by this disaster. Here's how you can help:
They are asking for donations of either gift cards or money. There are three drop off locations here in town, or you can mail your donation. You may also donate online at scvcoalition.com.
If you would like to mail your donation, please mail it to:
(make sure to make the check out to the SCV Disaster Coalition...not KHTS. )
SCV Disaster Coalition
Care Of KHTS AM 1220 Radio
27225 Camp Plenty Rd, Suite 8
Santa Clarita, CA 91351
Or you can drop a donation off at one of these locations:
Santa Clarita Senior Center
22900 Market Street
Santa Clarita, CA 91321
(661) 259-9444
Santa Clarita City Hall
23920 Valencia Boulevard,
Santa Clarita, California 91355
KHTS AM 1220 Radio
27225 Camp Plenty Rd, Suite 8
Santa Clarita, CA 91351
Fire Update
Current containment numbers on the Ranch (Castaic) Fire:
55,756 acres burned, 70% containment.
Residents may see smoke in the Santa Clarita area as a result of interior burning happening on the Buckweed fire. This is intentional, as the Fire Department continues to clear out the aftermath of the Buckweed fire. Please do not be alarmed.
Vasquez Bridge is closed due to fires : The County is estimating that the bridge will be re-opened by November 12th.
BE AWARE OF SCAMS- Some people are taking advantage of our residents by offering services for a large deposit to clean up debris but are not performing any services. If you are offered any home improvement services and are asked to receive the permit yourself by the contractor beware; that could mean the contractor is not licensed.
Assistance Agencies
FEMA:
A local assistance center will be established by FEMA from Oct 26th - Nov 8th (M-F) 8am- 6pm (Sat- Sun) 8am- 3pm at the City of Santa Clarita Sports Complex in the Activities Center
Please pre-register by telephone (800) 621-FEMA (3362) or TTY (800) 462-7585 or online at fema.gov
American Red Cross
The Red Cross has been working hard to assist those impacted by this disaster here in Santa Clarita. If you, or someone you know lost their home or needs Red Cross Disaster assistance, you can call their temporary family services number at 661-222-3191. Their permanent main office line is 661-259-1805. The ARC is located in the Atrium Building at 23838 Valencia Blvd, Valencia.
Other Assistance:
The SCV Disaster Coalition is now prepared to accept donations that will go to help the families who were impacted by this disaster. Here's how you can help:
They are asking for donations of either gift cards or money. There are three drop off locations here in town, or you can mail your donation. You may also donate online at scvcoalition.com.
If you would like to mail your donation, please mail it to:
(make sure to make the check out to the SCV Disaster Coalition...not KHTS. )
SCV Disaster Coalition
Care Of KHTS AM 1220 Radio
27225 Camp Plenty Rd, Suite 8
Santa Clarita, CA 91351
Or you can drop a donation off at one of these locations:
Santa Clarita Senior Center
22900 Market Street
Santa Clarita, CA 91321
(661) 259-9444
Santa Clarita City Hall
23920 Valencia Boulevard,
Santa Clarita, California 91355
KHTS AM 1220 Radio
27225 Camp Plenty Rd, Suite 8
Santa Clarita, CA 91351
Thursday, October 18, 2007
Statewide California Home Sales Hit 20-Year Low In September
Statewide California Home Sales Hit 20-Year Low In September
DOW JONES NEWSWIRES
October 18, 2007 5:26 p.m.
LOS ANGELES (AP)--September home sales throughout California sank to their lowest level in two decades as mortgages became harder to get, a real estate research firm said Thursday.
A total of 24,460 new and resale houses and condos were sold statewide last month. That was down 45.2% from September of 2006 and 26.8% from August, according to DataQuick Information Systems.
DOW JONES NEWSWIRES
October 18, 2007 5:26 p.m.
LOS ANGELES (AP)--September home sales throughout California sank to their lowest level in two decades as mortgages became harder to get, a real estate research firm said Thursday.
A total of 24,460 new and resale houses and condos were sold statewide last month. That was down 45.2% from September of 2006 and 26.8% from August, according to DataQuick Information Systems.
Tuesday, October 16, 2007
How to lose your home in a few easy steps
San Diego woman chased American dream, now lives in a garage
By Helen Kaiao Chang
MSNBC contributor
Updated: 5:04 p.m. PT Oct 9, 2007
SAN DIEGO - Delia Toothman once pursued the American dream of owning her own home.
Now, she is living the American nightmare.
In just three years Toothman, 30, a former Navy officer and bioscience technician in San Diego, went from $18,000 in savings to $16,000 in credit-card debt. She once lived in a home she co-owned; now she lives in her father's garage.
Toothman is just one of thousands or even hundreds of thousands of Americans who find themselves homeless and broke in the aftermath of the housing bust. Hers is a cautionary tale of hard-working and well-intentioned young woman who got swept up in the real estate madness of Southern California, helped along by what she describes as bad advice from industry professionals.
“I feel like my life is ruined,” she said in an interview, wiping away tears. “I only wanted a house. I wanted my own property."
Toothman's story began when she left the Navy in 2004 and returned to San Diego at what turned out to be the peak of the city's real estate boom. By mid-2004 the median price of a home in the metro area had risen to $520,000, up 30 percent from a year earlier. Condo prices also were up 30 percent year-over-year to a median of $368,000.
Fearful of missing out, she and her younger sister decided to buy a home together. “We just wanted to get a piece of land, something we could own, so we weren’t paying rent; we were buying,” said Toothman.
While Toothman was only qualified to buy a $360,000 home, Toothman's agent showed her properties in the $400,000 range. Her mortgage broker urged her to finance 100 percent of the purchase price with interest-only loans that would adjust in two years.
Any talk of a housing bubble was dismissed.
“I got pressure from the real estate agent and officer,” Toothman said. “The loan officer was saying, 'Oh, prices always rise on houses.' ... The thing, is get into the house and I can always refinance you after that into another loan."
“I was like, ‘I don’t know,’ but he kept on saying, ‘If you’re renting, you’re losing this much money, but the way housing prices are going up, it’s really a good investment and you get your money back in taxes,’” recalls Toothman. “I was convinced it was a good thing.”
Toothman was hardly alone.
“It’s the American dream and they got caught up in it,” said Gary Aguilar, a vice president at Springboard Non-profit Consumer Credit Management, an advisory agency based in Riverside, Calif. “Even if it didn’t make sense, a lot of people just passed ‘Go’ and went straight to the dream home.”
Now Springboard and similar agencies are being deluged with phone calls from desperate owners trying to save their homes or stave off bankruptcy.
At Springboard, representatives handled 11,000 phone calls in August, up from about 2,000 a month last year, said Aguilar.
Toothman ended up buying a $415,000 condo in June 2004. The mortgage was entirely under her name, since her sister could not qualify. But the two agreed to split the monthly payments of $2,400.
For a year, Toothman struggled with her half of the payment. Her monthly take-home pay was $2,000. She started eating at her savings to pay the mortgage.
Toothman tried to refinance the loan to lower the monthly payment, but she was unable to qualify.
In late 2005, Toothman decided to sell. But prices were already falling, and by early 2006, the condo was worth less than the outstanding balance of the mortgage, putting her "under water." Toothman’s real estate agent found a buyer who offered $350,000 – $65,000 less than what was owed.
The only way she could sell was if the two lenders agreed to a "short sale" — taking less money than what they were owed. The principal lender, Countrywide, agreed, but Wells Fargo, which held a second loan worth $82,000 rejected the terms because the lender would have gotten only $10,000.
Then the agent found another buyer, who also offered $350,000. This time, Countrywide said yes if Toothman would come up with another $10,000 to pay Wells Fargo more. But Wells Fargo declined the offer.
“They figured I would make more money eventually, and they could take it out of me,” said Toothman, “because if they agreed to a short sale, then they had no (legal) recourse to come after me for the $82,000.”
Executives from Wells Fargo and Countrywide did not return several messages seeking comment.
Toothman’s nightmare got worse. In July 2006, the monthly payment on the two loans jumped nearly 50 percent to $3,600. For two months, Toothman maxed out her credit cards to meet the payments. The sisters planned to keep making the monthly payments until a sale went through.
But after two months, “I couldn’t pay my bills,” said Toothman. “I’m like, ‘Do I stop paying my other loans, my other credit cards, everything else?’ I just started paying my other bills instead of my mortgage, because it was impossible, it was just too much.”
In March of this year, Toothman lost the house in foreclosure, and, like many others, she now is considering bankruptcy.
Pacific Law Center, one of the biggest bankruptcy law firms in San Diego, handled almost 1,000 such cases in the first eight months of the year, up from 626 in all of 2006.
Danielle Donovan, a broker at Clarion Mortgage who has been in the industry for 27 years, said attitudes changed around 2000 when mortgage lenders began offering "subprime" loans to borrowers with less-than-stellar credit as home prices were soaring. “People stopped being interested in buying homes and more in having an investment,” she said.
Now thousands of Americans are facing the same nightmare as Toothman.
“If they don’t have the wherewithal to keep the home, it’s a matter of how are you going to support the family,” said credit counselor Aguilar.
Many are simply choosing to walk out on their mortgages. More people filing bankruptcy these days have perfect credit, zero consumer debt and no missed house payments, said Don Bokovoy, supervising attorney of Pacific Law Center. They are filing bankruptcy because they cannot afford impending higher payments on adjustable mortgages.
For many homeowners, said mortgage broker Donovan, “The question is ‘How far do I wreck myself? Do I make myself penniless and then lose the house? Or do I just walk away now and have something to start over?’”
For Toothman, the nightmare continues. She cannot qualify for a car loan. Her credit card interest rates jumped from 5 percent to 22 percent, due to missed payments while juggling mortgage bills. She wonders who will date a woman with $82,000 in debt.
“I feel burned,” she said. “I’ve always been one who paid the bills on time. I always did things the right way. If they had counseled me (correctly), I could’ve made my payments.”
Helen Kaiao Chang is a freelance business journalist. She can be reached at hchangwriter@gmail.com.
By Helen Kaiao Chang
MSNBC contributor
Updated: 5:04 p.m. PT Oct 9, 2007
SAN DIEGO - Delia Toothman once pursued the American dream of owning her own home.
Now, she is living the American nightmare.
In just three years Toothman, 30, a former Navy officer and bioscience technician in San Diego, went from $18,000 in savings to $16,000 in credit-card debt. She once lived in a home she co-owned; now she lives in her father's garage.
Toothman is just one of thousands or even hundreds of thousands of Americans who find themselves homeless and broke in the aftermath of the housing bust. Hers is a cautionary tale of hard-working and well-intentioned young woman who got swept up in the real estate madness of Southern California, helped along by what she describes as bad advice from industry professionals.
“I feel like my life is ruined,” she said in an interview, wiping away tears. “I only wanted a house. I wanted my own property."
Toothman's story began when she left the Navy in 2004 and returned to San Diego at what turned out to be the peak of the city's real estate boom. By mid-2004 the median price of a home in the metro area had risen to $520,000, up 30 percent from a year earlier. Condo prices also were up 30 percent year-over-year to a median of $368,000.
Fearful of missing out, she and her younger sister decided to buy a home together. “We just wanted to get a piece of land, something we could own, so we weren’t paying rent; we were buying,” said Toothman.
While Toothman was only qualified to buy a $360,000 home, Toothman's agent showed her properties in the $400,000 range. Her mortgage broker urged her to finance 100 percent of the purchase price with interest-only loans that would adjust in two years.
Any talk of a housing bubble was dismissed.
“I got pressure from the real estate agent and officer,” Toothman said. “The loan officer was saying, 'Oh, prices always rise on houses.' ... The thing, is get into the house and I can always refinance you after that into another loan."
“I was like, ‘I don’t know,’ but he kept on saying, ‘If you’re renting, you’re losing this much money, but the way housing prices are going up, it’s really a good investment and you get your money back in taxes,’” recalls Toothman. “I was convinced it was a good thing.”
Toothman was hardly alone.
“It’s the American dream and they got caught up in it,” said Gary Aguilar, a vice president at Springboard Non-profit Consumer Credit Management, an advisory agency based in Riverside, Calif. “Even if it didn’t make sense, a lot of people just passed ‘Go’ and went straight to the dream home.”
Now Springboard and similar agencies are being deluged with phone calls from desperate owners trying to save their homes or stave off bankruptcy.
At Springboard, representatives handled 11,000 phone calls in August, up from about 2,000 a month last year, said Aguilar.
Toothman ended up buying a $415,000 condo in June 2004. The mortgage was entirely under her name, since her sister could not qualify. But the two agreed to split the monthly payments of $2,400.
For a year, Toothman struggled with her half of the payment. Her monthly take-home pay was $2,000. She started eating at her savings to pay the mortgage.
Toothman tried to refinance the loan to lower the monthly payment, but she was unable to qualify.
In late 2005, Toothman decided to sell. But prices were already falling, and by early 2006, the condo was worth less than the outstanding balance of the mortgage, putting her "under water." Toothman’s real estate agent found a buyer who offered $350,000 – $65,000 less than what was owed.
The only way she could sell was if the two lenders agreed to a "short sale" — taking less money than what they were owed. The principal lender, Countrywide, agreed, but Wells Fargo, which held a second loan worth $82,000 rejected the terms because the lender would have gotten only $10,000.
Then the agent found another buyer, who also offered $350,000. This time, Countrywide said yes if Toothman would come up with another $10,000 to pay Wells Fargo more. But Wells Fargo declined the offer.
“They figured I would make more money eventually, and they could take it out of me,” said Toothman, “because if they agreed to a short sale, then they had no (legal) recourse to come after me for the $82,000.”
Executives from Wells Fargo and Countrywide did not return several messages seeking comment.
Toothman’s nightmare got worse. In July 2006, the monthly payment on the two loans jumped nearly 50 percent to $3,600. For two months, Toothman maxed out her credit cards to meet the payments. The sisters planned to keep making the monthly payments until a sale went through.
But after two months, “I couldn’t pay my bills,” said Toothman. “I’m like, ‘Do I stop paying my other loans, my other credit cards, everything else?’ I just started paying my other bills instead of my mortgage, because it was impossible, it was just too much.”
In March of this year, Toothman lost the house in foreclosure, and, like many others, she now is considering bankruptcy.
Pacific Law Center, one of the biggest bankruptcy law firms in San Diego, handled almost 1,000 such cases in the first eight months of the year, up from 626 in all of 2006.
Danielle Donovan, a broker at Clarion Mortgage who has been in the industry for 27 years, said attitudes changed around 2000 when mortgage lenders began offering "subprime" loans to borrowers with less-than-stellar credit as home prices were soaring. “People stopped being interested in buying homes and more in having an investment,” she said.
Now thousands of Americans are facing the same nightmare as Toothman.
“If they don’t have the wherewithal to keep the home, it’s a matter of how are you going to support the family,” said credit counselor Aguilar.
Many are simply choosing to walk out on their mortgages. More people filing bankruptcy these days have perfect credit, zero consumer debt and no missed house payments, said Don Bokovoy, supervising attorney of Pacific Law Center. They are filing bankruptcy because they cannot afford impending higher payments on adjustable mortgages.
For many homeowners, said mortgage broker Donovan, “The question is ‘How far do I wreck myself? Do I make myself penniless and then lose the house? Or do I just walk away now and have something to start over?’”
For Toothman, the nightmare continues. She cannot qualify for a car loan. Her credit card interest rates jumped from 5 percent to 22 percent, due to missed payments while juggling mortgage bills. She wonders who will date a woman with $82,000 in debt.
“I feel burned,” she said. “I’ve always been one who paid the bills on time. I always did things the right way. If they had counseled me (correctly), I could’ve made my payments.”
Helen Kaiao Chang is a freelance business journalist. She can be reached at hchangwriter@gmail.com.
Friday, October 12, 2007
Profile of Buyer Home Feature Preferences from NAR
by Paul C. Bishop, Ph.D
Harika “Anna” Barlett
Jessica Lautz
National Association of Realtors®
Purchasing a home involves countless decisions about financing, options, where to buy, and the specific features and amenities buyers value most in a home. Many of the preferences are related to the buyer’s age and income —
younger buyers just purchasing their first home or older buyers looking to trade down perhaps in anticipation of retirement. Other features in a home are embraced by most home buyers of all ages, while still other preferences depend on how long the buyer expects to remain in their home.
The desirability of some features is also reflected in the buyer’s choice of a new or previously owned home.
Once a home purchase is completed, many buyers invest in their home by upgrading kitchens and bathrooms, replacing appliances or adding landscaping. Differences in the types of improvements are evident between those buyers who purchased newer and older homes or those that expect to own their home for a number of years or only a short period of time. Home improvements not only add value to the home that can often be recaptured upon sale, but also enhance the desirability of the home for the new owner.
To more accurately assess these variations in preferences for home features and the types of home improvements buyers undertake, the National Association of Realtors® conducted a survey of home buyers who purchased a home in the period from late 2005 to early 2007. The survey gathered information about those features that buyers considered very important when searching for a home and whether or not these features were present in the home they purchased. The survey also queried recent buyers about the home improvements that they undertook during the first three months following the purchase.
The information gathered from this survey confirms many of the observations that real estate professionals make each day when working with home buyers. More importantly, however, the information gleaned from this survey provides insights into the priorities of home buyers. This information can be used by Realtors® to assist home buyers who are searching for a home, including first-time buyers or buyers transitioning to a new location. The analysis in this report will also help home sellers and real estate professionals evaluate the desirability of various features when marketing a home for sale.
CHARACTERISTICS OF HOMES PURCHASED
• The typical home purchased during the survey period was 12 years old, 1,840 square feet in size, and had three bedrooms and two bathrooms.
• First-time buyers typically purchased smaller and older homes than repeat buyers and were more likely to purchase a home in an urban/central city area.
• More than 80 percent of homes purchased had central air conditioning and garages, and less than half had basements.
• More than 90 percent of home buyers were satisfied with the home they purchased, and nearly two-thirds of all buyers were very satisfied.
SEARCHING FOR A HOME
• Nearly four out of five home buyers worked with a real estate agent to purchase their home.
• When searching for a home, the most desired features were central air conditioning, an oversized garage, a walk-in closet, and a backyard or play area.
• The most desired rooms/spaces were garages, living rooms and laundry rooms.
• Repeat buyers placed more importance than first-time buyers on almost all home features.
• Home buyers that purchased a home without a desired feature or room would be willing to pay extra for central air conditioning (typically $1,880), two or more full bathrooms (typically $2,040) and hardwood floors (typically $1,900). [Remember, these are national averages, not SoCal numbers.]
• Over 90 percent of recent home buyers thought energy efficiency was an important consideration when searching for a home to purchase.
• When comparing the home they recently purchased to their ideal or preferred home, most home buyers were satisfied with regard to their home’s age, overall size, size of the kitchen, number of bedrooms and bathrooms, and closet and storage space.
HOME IMPROVEMENT AND REMODELING
• About six-in-ten recent home buyers took on remodeling or home improvement projects within three months of their home purchase.
• The typical buyer spent $4,350 on home improvement projects within the first three months of buying their home. Repeat buyers spent more than first-time buyers.
• Nearly half of home buyers remodeled or made improvements to their kitchen, and close to half remodeled or improved a bathroom in the first three months following the home purchase.
HOME PURCHASE, INVESTMENT, AND FINANCING
• The median home price was $205,000, and over 90 percent of home buyers used a mortgage to finance their home purchase. [Again, this is a national average not SoCal]
• Over half of home buyers believe their home has high investment potential.
• Older buyers are more optimistic about their home’s investment potential; more than 60 percent of buyers 55 or older rate their home’s investment potential as high.
Harika “Anna” Barlett
Jessica Lautz
National Association of Realtors®
Purchasing a home involves countless decisions about financing, options, where to buy, and the specific features and amenities buyers value most in a home. Many of the preferences are related to the buyer’s age and income —
younger buyers just purchasing their first home or older buyers looking to trade down perhaps in anticipation of retirement. Other features in a home are embraced by most home buyers of all ages, while still other preferences depend on how long the buyer expects to remain in their home.
The desirability of some features is also reflected in the buyer’s choice of a new or previously owned home.
Once a home purchase is completed, many buyers invest in their home by upgrading kitchens and bathrooms, replacing appliances or adding landscaping. Differences in the types of improvements are evident between those buyers who purchased newer and older homes or those that expect to own their home for a number of years or only a short period of time. Home improvements not only add value to the home that can often be recaptured upon sale, but also enhance the desirability of the home for the new owner.
To more accurately assess these variations in preferences for home features and the types of home improvements buyers undertake, the National Association of Realtors® conducted a survey of home buyers who purchased a home in the period from late 2005 to early 2007. The survey gathered information about those features that buyers considered very important when searching for a home and whether or not these features were present in the home they purchased. The survey also queried recent buyers about the home improvements that they undertook during the first three months following the purchase.
The information gathered from this survey confirms many of the observations that real estate professionals make each day when working with home buyers. More importantly, however, the information gleaned from this survey provides insights into the priorities of home buyers. This information can be used by Realtors® to assist home buyers who are searching for a home, including first-time buyers or buyers transitioning to a new location. The analysis in this report will also help home sellers and real estate professionals evaluate the desirability of various features when marketing a home for sale.
CHARACTERISTICS OF HOMES PURCHASED
• The typical home purchased during the survey period was 12 years old, 1,840 square feet in size, and had three bedrooms and two bathrooms.
• First-time buyers typically purchased smaller and older homes than repeat buyers and were more likely to purchase a home in an urban/central city area.
• More than 80 percent of homes purchased had central air conditioning and garages, and less than half had basements.
• More than 90 percent of home buyers were satisfied with the home they purchased, and nearly two-thirds of all buyers were very satisfied.
SEARCHING FOR A HOME
• Nearly four out of five home buyers worked with a real estate agent to purchase their home.
• When searching for a home, the most desired features were central air conditioning, an oversized garage, a walk-in closet, and a backyard or play area.
• The most desired rooms/spaces were garages, living rooms and laundry rooms.
• Repeat buyers placed more importance than first-time buyers on almost all home features.
• Home buyers that purchased a home without a desired feature or room would be willing to pay extra for central air conditioning (typically $1,880), two or more full bathrooms (typically $2,040) and hardwood floors (typically $1,900). [Remember, these are national averages, not SoCal numbers.]
• Over 90 percent of recent home buyers thought energy efficiency was an important consideration when searching for a home to purchase.
• When comparing the home they recently purchased to their ideal or preferred home, most home buyers were satisfied with regard to their home’s age, overall size, size of the kitchen, number of bedrooms and bathrooms, and closet and storage space.
HOME IMPROVEMENT AND REMODELING
• About six-in-ten recent home buyers took on remodeling or home improvement projects within three months of their home purchase.
• The typical buyer spent $4,350 on home improvement projects within the first three months of buying their home. Repeat buyers spent more than first-time buyers.
• Nearly half of home buyers remodeled or made improvements to their kitchen, and close to half remodeled or improved a bathroom in the first three months following the home purchase.
HOME PURCHASE, INVESTMENT, AND FINANCING
• The median home price was $205,000, and over 90 percent of home buyers used a mortgage to finance their home purchase. [Again, this is a national average not SoCal]
• Over half of home buyers believe their home has high investment potential.
• Older buyers are more optimistic about their home’s investment potential; more than 60 percent of buyers 55 or older rate their home’s investment potential as high.
Sunday, October 07, 2007
Beware Legislative 'Fixes' to Housing
Some of the so-called 'reforms' being proposed will create worse problems for the housing market.
Democrats Move to Further Destabilize Housing
Friday, October 05, 2007 - By Staff Writer, National Realty News
WASHINGTON, D.C. – This week the House Judiciary Committee's Subcommittee on Commercial and Administrative Law passed HR 3609, by a party-line vote of 5-4. The legislation would allow bankruptcy judges to modify the terms of a mortgage contract during bankruptcy proceedings. While the sponsors of the bill claim that it would help up to 600,000 people from losing their homes, opponents of the legislation claim that the legislation as written would drive interest rates up for everyone seeking a home loan.
According to their press release, Rep. Brad Miller (D-NC) and Rep. Linda Sánchez (D-CA) who introduced the bill said the legislation “will treat home mortgages the same as mortgages on investment properties and family farms. The bill repeals a provision that prohibits a bankruptcy court from modifying a home mortgage, but allows a bankruptcy court to modify any other secured debt, including mortgages on other properties.”
By repealing the current provision for owner occupied loans, proponents to the bill claim the legislation will push interest rates on owner occupied properties significantly higher. Currently, typically investment loans carry a higher interest rate to offset the losses sustained by lenders caused by the treatment of these type of loans during a bankruptcy proceeding. Typical investment loans can be up to 1 percent higher than an owner occupied loan.
"Giving judges free rein to rewrite the terms of a mortgage would further destabilize the mortgage backed securities market and will exacerbate the serious credit crunch that is currently hindering the ability of thousands of Americans to get an affordable mortgage," said Kurt Pfotenhauer, Senior Vice President for Government Affairs and Public Policy for Mortgage Bankers Association (MBA). "The current legislation gives no guidance as to the proper parameters for judges to modify existing loan contracts."
By allowing judges to rewrite loan contracts and provide whatever relief they individually deem appropriate, HR 3609 would cast doubt on the value of the asset against which the mortgage loan is secured. As a result, lenders and investors would likely demand a higher premium for offering these loans. This premium could come in the form of higher fees, a higher interest rate or the requirement for a larger downpayment, all of which would serve to make the American dream of homeownership less attainable for many Americans, said the MBA
"The reason you only pay six percent on a mortgage loan, where another type of consumer loan may cost ten percent or more, is that the mortgage loan is secured by an asset - the home," explained Pfotenhauer. "When a judge can unilaterally reduce the amount that the lender can get when the home is sold, it devalues the asset securing the loan and the lender and investor will either not fund a loan, or will increase the cost of the loan. Either way, consumers are the ones who pay the price."
Democrats Move to Further Destabilize Housing
Friday, October 05, 2007 - By Staff Writer, National Realty News
WASHINGTON, D.C. – This week the House Judiciary Committee's Subcommittee on Commercial and Administrative Law passed HR 3609, by a party-line vote of 5-4. The legislation would allow bankruptcy judges to modify the terms of a mortgage contract during bankruptcy proceedings. While the sponsors of the bill claim that it would help up to 600,000 people from losing their homes, opponents of the legislation claim that the legislation as written would drive interest rates up for everyone seeking a home loan.
According to their press release, Rep. Brad Miller (D-NC) and Rep. Linda Sánchez (D-CA) who introduced the bill said the legislation “will treat home mortgages the same as mortgages on investment properties and family farms. The bill repeals a provision that prohibits a bankruptcy court from modifying a home mortgage, but allows a bankruptcy court to modify any other secured debt, including mortgages on other properties.”
By repealing the current provision for owner occupied loans, proponents to the bill claim the legislation will push interest rates on owner occupied properties significantly higher. Currently, typically investment loans carry a higher interest rate to offset the losses sustained by lenders caused by the treatment of these type of loans during a bankruptcy proceeding. Typical investment loans can be up to 1 percent higher than an owner occupied loan.
"Giving judges free rein to rewrite the terms of a mortgage would further destabilize the mortgage backed securities market and will exacerbate the serious credit crunch that is currently hindering the ability of thousands of Americans to get an affordable mortgage," said Kurt Pfotenhauer, Senior Vice President for Government Affairs and Public Policy for Mortgage Bankers Association (MBA). "The current legislation gives no guidance as to the proper parameters for judges to modify existing loan contracts."
By allowing judges to rewrite loan contracts and provide whatever relief they individually deem appropriate, HR 3609 would cast doubt on the value of the asset against which the mortgage loan is secured. As a result, lenders and investors would likely demand a higher premium for offering these loans. This premium could come in the form of higher fees, a higher interest rate or the requirement for a larger downpayment, all of which would serve to make the American dream of homeownership less attainable for many Americans, said the MBA
"The reason you only pay six percent on a mortgage loan, where another type of consumer loan may cost ten percent or more, is that the mortgage loan is secured by an asset - the home," explained Pfotenhauer. "When a judge can unilaterally reduce the amount that the lender can get when the home is sold, it devalues the asset securing the loan and the lender and investor will either not fund a loan, or will increase the cost of the loan. Either way, consumers are the ones who pay the price."
Major Discount Broker Calls It Quits
[Shades of the early 1990's! This is exactly what happened then, both nationally and locally. If you are a struggling small broker or franchise that just isn't making it in this market, we invite you to give us a call at 661-287-9164 and we can help get you going again with Keller Williams Realty, a national real estate company with over 70,000 agents. Each office is independently owned and operated.]
Friday, October 05, 2007 - By Staff Writer, National Realty News
WEST LONG BRANCH, NJ - Discount brokerage firm Foxtons announced on October 2nd that it will liquidate its business and file for bankruptcy. After 7 years in the real estate business serving the tri-state New York City area, vice president of sales, Mark Horvat, stated that “this action is a direct result of the down turn in residential real estate.”
While many full service brokers welcome the news, it does illustrate the continued difficulty for the industry. The National Association of Realtors’ (NAR) September 2007 outlook predicts continued softness into the 3rd quarter of this year with a 10% decline in year over year sales of existing homes. NAR’s outlook for the 4th quarter of 2007 is only marginally better with a 6% decline in year over year sales.
Foxtons was considered one of the leading discount brokerage firms in the United States. The company started in New Jersey with 40 employees and 2000 square feet of office space and grew to 500 employees and 50,000 square feet in just over 7 years. Until the shut down, the company had planned to expand to major markets around the US but fell well short of that lofty goal.
Industry experts say that discount brokerages are the most vulnerable during a downturn since they operate on smaller margins.
A press release on their website stated that Foxtons is going to ask the bankruptcy court to allow them to authorize the assumption and assignment of their current inventory of listings. This means if the request is granted current customers of Foxtons would be bound by the terms in their listing agreements, regardless of the broker that assumes the listings.
While their listings are still under contract, many clients are asking themselves - What now? For those in the real estate business the real question is who’s next?
Friday, October 05, 2007 - By Staff Writer, National Realty News
WEST LONG BRANCH, NJ - Discount brokerage firm Foxtons announced on October 2nd that it will liquidate its business and file for bankruptcy. After 7 years in the real estate business serving the tri-state New York City area, vice president of sales, Mark Horvat, stated that “this action is a direct result of the down turn in residential real estate.”
While many full service brokers welcome the news, it does illustrate the continued difficulty for the industry. The National Association of Realtors’ (NAR) September 2007 outlook predicts continued softness into the 3rd quarter of this year with a 10% decline in year over year sales of existing homes. NAR’s outlook for the 4th quarter of 2007 is only marginally better with a 6% decline in year over year sales.
Foxtons was considered one of the leading discount brokerage firms in the United States. The company started in New Jersey with 40 employees and 2000 square feet of office space and grew to 500 employees and 50,000 square feet in just over 7 years. Until the shut down, the company had planned to expand to major markets around the US but fell well short of that lofty goal.
Industry experts say that discount brokerages are the most vulnerable during a downturn since they operate on smaller margins.
A press release on their website stated that Foxtons is going to ask the bankruptcy court to allow them to authorize the assumption and assignment of their current inventory of listings. This means if the request is granted current customers of Foxtons would be bound by the terms in their listing agreements, regardless of the broker that assumes the listings.
While their listings are still under contract, many clients are asking themselves - What now? For those in the real estate business the real question is who’s next?
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