May 29, 2009

Interest Rates Back Over 5% ??

Hello Neighbors,

We had a wild ride this week. Interest rates jumped up a bit, and the volatility was insane. As an example - on Wednesday, one of our underwriters notified us 5 different times on rate changes during that single work day!

Rates have come back down today, but we aren't sure how this volatility is going to play out in the coming weeks.

If you are thinking of Buying or re-financing, you may want to pick up the pace of your efforts.

CNN Financial posted this article on the topic this afternoon. THANKS CNN

NEW YORK ( -- Mortgage rates burst past the 5% mark for a 30-year fixed-rate loan late in May, peaking at an average of 5.45% on Thursday. It was the highest level reached by mortgage rates this year, but on Friday they fell back to 5.27%.

Still, the days of sub-5% mortgage rates may be over, which could threaten to depress already stagnant housing markets. A half-point rate increase adds about $30 a month to mortgage payments for every $100,000 borrowed. That could be enough to discourage some potential homebuyers from going through with purchases.

To figure out where mortgage rates are going, you have to watch the bond market. The price of a home loan closely follows the yield on the 10-year Treasury note. And Treasurys are trying to figure what direction they are heading.

"We had an ugly Treasury market the other day, which caused a flare up in mortgage interest rates," said Keith Gumbinger of HSH Associates, a publisher of mortgage data.

The government is currently issuing a great deal of debt -- otherwise known as Treasurys or bonds -- in order to pay for all its economic-recovery programs. But there haven't been as many buyers at recent auctions, which drove the yield on the 10-year note higher to 3.7% last week. It had stayed below 3% most of the year until late April, when the rate broke through the 3% barrier.

When supplies of Treasury bills increase - or demand for them falls - yields rise and price falls to draw in more buyers. "The demand for Treasurys won't grow [this year] as rapidly as the supply. Mortgage rates will take a direct hit. You can kiss 5% goodbye," said Stuart Hoffman, chief economist for PNC Financial Services, the nation's fifth-largest bank.

Price prop
The Federal Reserve has stated that it will prop up Treasury prices -- and tamp down yields -- by purchasing more longer-term Treasury securities over the next six months. It has committed up to $300 billion for that purpose.

But that still might be enough to keep mortgage rates from rising, according to Mark Zandi, chief economist for Moody's He said the Fed may need to spend closer to a trillion dollars to meet its goal.

Talkback: Lock in now, or wait?
Mortgage interest rates have been at historical lows all year, never surpassing an average of 5.25% (with 0.8 origination points and fee) before this week. But home sales have lagged despite these low rates, even with home prices at their most affordable levels in many years and a first-time homebuyers tax credit that, effectively, lowers purchase prices by up to $8,000.

Of course, the possibility of rising interest rates could convince people to buy, according to Tom Kunz, CEO of real estate agency franchiser Century 21.

"There's a segment of the market saying, 'Prices are still falling. I'll wait for the bottom,'" he said. "These people will probably miss the bottom. Even if they could save $15,000 or $20,000 on the purchase price, the savings could be wiped out by the rise in interest rates."

HSH Associate's Gumbinger argues that rates should plateau for a while, and that while they have risen, they are still very attractive - even if it doesn't feel that way to homebuyers trying to lock rates right now.

"We're coming out of emergency levels that we've been in so long they feel normal," he said. "Whether interest rates will remain at 50-year lows remains to be seen. But even if they don't, rates will still be favorable, just not as favorable."

Again, thanks CNN.

- Jim



May 23, 2009

Can You Get a Loan Modification ??

Yes neighbors, you can!

Take a look at this website:

It articulates the qualifications required to fit the Obama loan modification goals / programs.

If you qualify? WE CAN DO IT FOR YOU.


Call Jim today at 916.801.3940

- Jim

May 21, 2009

Roseville Construction Update

Hello Neighbors,

Just an FYI on the major Roseville construction projects in the works. You've seen the Kobra Properties work next to the Galleria.


- Jim

Roseville grants extensions to developers
May 15, 2009 - The Sacramento Business Journal

Developers of two large projects in Roseville now have more time before they have to build them after receiving two-year building permit extensions from the city’s Planning Commission Thursday night.

Steadfast Business Properties received an extension until March of 2011 for the Stone Point office project, which allows construction of two six-story office buildings in the Stone Point Master Plan on Eureka Road.

And Kobra Properties received an extension until January of 2011 for a conference center and 10-story Embassy Suites hotel.

The deadlines for construction for both projects had been previously extended by officials.

Loan Mods: Who Has Government Approval?

Hello Neighbors,

As we sign our affiliation agreement to offer Loan Modification services, it's important for the general public to know who has been approved to perform these services.

This site:

Contains a list individual and corporate real estate brokers have submitted Advance Fee Agreements for Loan Modification and/or similar services to the Department of Real Estate for review and have received "no objection" letters regarding their use.

Our parent company for these services is on this list. You won't see "Neighborly Financial" or "Neighborly Realty" on the list, because we are affiliates of the larger company.

This site:


The following persons and entities have been served with a Desist and Refrain Order and/or Accusation by the Department of Real Estate resulting from a loan modification and/or foreclosure rescue transaction. In some instances, the person or entity has been ordered to stop providing loan modification and/or foreclosure rescue services because the person or entity is not licensed by the Department of Real Estate. In other instances, the person or entity has been ordered to stop collecting advance fees. Before considering engaging the services of any of the persons or entities listed below, it would be prudent to inquire about the disposition of the action that has been filed against the respondent. Further information regarding any administrative action may be obtained through the Sacramento Office at (916) 227-0906.

Be careful.

- Jim

Short Sale Article – Not Totally Accurate

Hello Neighbors,

An interesting article hit the streets yesterday from Money Magazine. THANK YOU Money Magazine.

70% of the information mentioned in this article is good.

30% is terribly wrong! Be careful.

We deal with short sales every day. Our area has some of the highest short sale rates in the nation.

If you want the straight scoop, call me.

To summarize a few of the incorrect points:

* They aren’t a “Deal”. In most cases, they are at market price. In fact, the perception that they are a deal often drives a huge number of offers in, at the beginning of the listing’s life. In realty, the bank probably hasn’t approved the price that the house is listed for. That’s right. The bank doesn’t usually get involved until the first offers are submitted – THEN they figure out what price they want. Meaning? The price in MLS may be totally arbitrary.

* Don’t call your agent (the Buyer’s Agent) weekly and be a “squeaky wheel” as noted below. That will accomplish nothing. The Seller’s agents is absolutely doing their best to get quick answers and prompt feedback. They have the most to lose if the short sale fails! The house will be taken away from them (as the listing agent), the home will be foreclosed on, and the house given to a foreclosure Listing Agent. They want this sale to close as much as you do. All that work and energy will have been a waste. Listing agent’s have NO control over this process, will fight hard, but won’t get much traction with the Seller’s lender no matter what.

* Probably half the Short Sales in our area are occupied by tenants. That's right, not owners. When the market was hot, many people thought they could become real estate investors over night. Wrong. Those "investors" are now in trouble, and short selling their property. Remember too - when a house is occupied by a tenant, showing the property becomes more difficult. We are required to give 24 hour notice, and often times Tenants WON'T LET US IN. Yep - Tenants don't often cooperate with their land lords.

* What this writer doesn’t tell you is the success rates of Short Sales. At last note, only 25% - 30% of homes listed as a short sale actually make it to the close of escrow. The rest fail with the lender in negotiation for the sale, fall out of escrow, or become abandoned by the Sellers.

Short Sales are out there in HUGE volumes where we are – and we try hard to get them. Yes, they do challenge our wages, but we try anyway.

Short sales - where a lender agrees to take less than it's owed on a mortgage - are rising sharply. Here's how you can profit.

(Money Magazine) -- When Brian Gavitt, a physician, and his wife Gayleen, a stay-at-home mom, started to eye homes in Sacramento last winter, they knew they were looking in the hardest-hit areas of the housing bust. So the couple, who were relocating from Lansing, figured they could land a fantastic bargain in no time at all.

The part about the bargain turned out to be true. The Gavitts bought a five-bedroom house in the upscale Natomas Park neighborhood ("Even now, you don't see FOR SALE signs up anywhere," says Gayleen.) And it was a steal at $300,000, a full $200,000 less than they would have paid just two years ago.

The amount of time it took to land the deal was another story. It was more than six months from when the Gavitts first saw their dream home to the moment they held the keys in their hands. The reason: The home they bought was a short sale.

Not long ago, few people had even heard of a short sale, which occurs when the bank agrees to discount the loan balance for a seller who owes more on his mortgage than the home is currently worth.

If you're in the market for a home today, you're almost guaranteed to be looking at some short sales. Nationwide, 14% of homeowners are currently underwater on their mortgages, calculates real estate website And in many areas, it's far more: In the Gavitts' zip code, for example, over half of homeowners would owe more than their home is worth if they sold today, calculates Dee Schwindt, the Gavitts' realtor.

The good news is that short sellers are likely to still be living in the home and some may even be current on their payments. That means these aren't the run-down, distressed properties that you often find among foreclosures; in fact, there's a good chance that some of the most deluxe homes for sale in your market are underwater.

Before you get too excited about buying a short sale, know that they generally aren't, well, short. For the sale to go through, the seller's lender must approve the price and agree to take the shortfall as a loss. That extra step can cause the process to drag on three times as long as a normal home sale.

But as the Gavitts discovered, the hassles can be well worth it. Some buyers and realtors don't want to deal with short sales, leaving many choice homes with very few bidders. So if you're willing to brave the intricacies of the process, you'll be far more likely to land the home you always wanted. The key to snagging a good deal is knowing how to avoid the land mines.

Know what you're getting into. In a short sale, you are dealing with several parties: the sellers, their agent and the sellers' lender. That's why a short sale can take anywhere between two and six months to execute, compared with about 30 days for a typical sale. Though many banks are willing to take a loss on a mortgage in a short sale if it means avoiding an even bigger loss in a foreclosure, with so many owners trying to unload properties, the lender's negotiators are flooded with short-sale offers. So if you're moving or selling another property, keep in mind that you'll likely need to budget for a few months' worth of rental payments so you have somewhere to live in the interim.

Find the right pro. Lenders often make realtors who work on short sales take a hit on their commission, so some brokers may be loath to show you the listings. But don't even think about going solo. These deals take a lot of work and persistence, says Loni Parmelly, author of Success in Short Sales. Before you sign up with an agent, ask him how many short sales he's closed. If he hasn't done at least two, find someone more experienced.

Weed out candidates. In most cities, home listings will indicate in the description whether the property is a short sale. Ideally, you want to knock off ones that come with extra complexities. If possible, pass on any home that has more than one lien against it; having to negotiate loans with two lenders can greatly increase the amount of time it takes to complete the deal. Also avoid homes where the seller has other offers. That's because if another offer is pending, the seller's agent isn't likely to even submit yours for approval until the first one is rejected, meaning you'll have to wait for another negotiation to play out before you even get a chance.

Set the right price. The first step is to have your agent submit your offer to the seller. Don't just rely on the current list price to come up with your initial bid, says Bill Richardson, a district sales manager for the Keyes Co. Realtors in Boca Raton, Fla. The seller's agent may have far underpriced it in hopes of attracting buyers, but the bank likely won't accept a lowball offer. Ask your agent to determine the home's fair market value by searching comparable sales in the area, with an emphasis on other short sales and foreclosures (or get a rough estimate yourself at If the fair market value is lower than the list price, set your offer 10% lower than that.

At this point, you'll also want to get pre-approval for a mortgage; many banks won't even consider your offer if you don't have one, says Schwindt.
Protect yourself. Next, the seller's agent will submit your offer to the seller's lender. At this point, you'll be asked to sign a sales contract. See if the lender will agree to pick up all closing costs as part of the contract, says author Parmelly. Also ask your realtor to specify that you won't do an appraisal or inspection of the property until the offer is approved. That way you won't have to shell out hundreds of dollars until you know you realistically have a good chance of getting the home.

Finally, though most lenders will require you to make some kind of deposit along with the contract, don't put down more than $3,000 before your bid is accepted. That will give you room to put offers on other homes or even to pull out of the sale if it drags on for too long.

Be a pain in the neck. After your offer is submitted to the lender, you're likely to hear nothing for weeks, if not months. This is no time to relax. Call your agent at least once a week, and make sure the seller's agent is contacting the bank's negotiator nearly every day.

"These negotiators may have 400 files on their desk. They'll want to get rid of the squeaky wheels," says Parmelly, who worked as a loan negotiator for lenders for 16 years. To help the seller's realtor in her negotiations with the lender, it's a good idea to have your agent show her which comparable homes you used to arrive at your number.

If the clock keeps ticking and you're reaching the end of your rope, try playing hardball. After months, the lender the Gavitts negotiated with was still dragging its feet and their pre-approved loan rate was about to expire. "We said, 'We need an answer by Friday or we walk,' " Gayleen says. The bank responded by week's end.
Keep your eye on the market. When the bank finally sends its counter-offer, use it as a guideline rather than an ultimatum. Most of the time, the lender's number is based on its own research, that of a local realtor it hires and the outstanding loan balance. Usually its goal is to sell for at least 90% of the home's value, says Amy Bohutinsky, a spokes-person for

The lender's offer may not be what you'd hoped for, but don't despair: You have a chance to counter. If the market has been flat since your initial bid, try for 5% to 10% less than the bank's number. If the market has been sinking rapidly, however, you may be able to prove that the home's value has shrunk further and offer even less. Once you have the lender's ear, the new offer should take less time to process.

Despite all the legwork and wait, the Gavitts are thrilled with their new home. "I'm glad people are turned off by short sales," says Brian. "It just means more choices for the rest of us."

Many thanks,

- Jim

May 19, 2009

Loan Modification Program - Would You be Interested?

Hello Neighbors,

We have the option of teaming up with a very heavy hitter in the loan modification space.

Would this be of interest to you?

Please do let me know by emailing:


You know I find this segment of the lending industry to be a bit "fuzzy". In some respects, these loan mod guys are the new sharks. I truly believe many are the sub-prime lenders from a few years ago.

The DRE (Department of Real Estate) is scrambling to create new legislation to regulate these guys. There is a bunch of legal stuff in the works at the CA legislature level too. That business doesn’t require licensing of any kind, and their success rates aren’t as high as they should be. Those that take money first (before performing the service) are actually in violation of CA business code.

Through Neighborly Financial, we have the opportunity to become an affiliate of a larger organization.

They’ve covered some of my immediate legal fears right off the bat:

* They take their fees up front, BUT hold them in a trust fund and don’t pull from the fund until certain process points are reached.
* Their contract to do this (require the fees) has been approved by the Department of Real Estate.
* They do a quick “triage” at the beginning of the engagement to see if they realistically can help. If they can’t, they don’t take the up front fee.
* After spending the effort to get the mod done, If they fail in their effort they refund roughly 30% of the upfront fee to the borrower (the 70% has already been collected by them, used to pay staff and overhead while trying to get the mod done).
* Their account manager shared with me that their success rates are really high – 90% and above.

Knowing this segment of the lending industry is continuing to evolve - and because client's opinion drives so much of how we operate - what do you think? Is this service of interest to you?

It would allow us to offer another option to those of you who we can't help re-fi.

Please do let me know your thoughts via email to:

Many thanks,

- Jim

$8,000 Tax Credit Becoming "Cash"!

Hello Neighbors,

This is great news! From our friends at CNN financial. Thank you CNN!

FHA is looking at altering the $8,000 tax credit so that Buyers can actually use those dollars as part of their purchase dollars!

California isn't mentioned, but it's likely we will be one of the first states to rollout this program after the trial period - our volumes are just too high to be ignored.

$8,000 fast cash for first-time homebuyers
HUD plans to tweak $8,000 tax credit rules so first-time homebuyers can get instant down-payment assistance.

By Les Christie staff writer
Last Updated: May 19, 2009: 12:45 PM ET

NEW YORK ( -- Home prices are cheap. Affordability is at a record high. And the market is littered with distressed properties looking for a buyer.

But there is one big obstacle for many first-time house hunters looking to take advantage of the market: cash for down payments. The typical first-time buyer has only saved enough to cover 4% of the purchase price, according to the National Association of Realtors.

As part of the stimulus package, Congress created a refundable first-time homebuyers tax credit in hopes of helping on-the-fence buyers to take the home-purchase plunge. But buyers couldn't collect the $8,000 credit until tax time, rather than at closing time - when it's needed.

Now the U.S. Department of Housing and Urban Development is planning to change that. The agency is working on a plan that will allow Federal Housing Authority-approved lenders to provide buyers with the tax credit cash up front.

"We all want to enable FHA consumers to access the tax credit funds when they close on their home loans so that the cash can be used as a down payment," said Shaun Donovan, HUD secretary, in a speech last Tuesday before the National Association of Realtors.

States first
Donovan did not reveal many details, but the plan could be modeled after programs in Colorado, Missouri, New Jersey, Pennsylvania, Tennessee and Washington. To quickly infuse cash into their housing markets, these states created "bridge loans" that allow buyers to borrow against the $8,000 credit and then repay it with their tax refunds.

The first state to launch such a plan was Missouri, which rolled out its Missouri Housing Development Commission Tax Credit Advance Loan program on January 14 - a month before Congress approved the stimulus package. Since then, Missouri has approved applications by more than 300 borrowers and closed on 128 of them.

Lamar Cherry and his wife, Chrishanna, used the program to augment their down payment when they bought their home in Kansas City.

The couple purchased a four-bedroom, three-bath split-level home for $150,000, putting about 6% down. Much of that $9,000 came from the loan program, which they tapped so they wouldn't have to drain their reserves.

"We had money saved up that we were going to use for the down payment," said Cherry. "Now we can use some of that to buy some things we need for the house."

At closing, the Cherrys, like all buyers in the program, signed for their first mortgage, plus a second mortgage issued by the state. The second note is good for 6% of the price of the home, up to $6,750; there is a $350 set-up fee, but no interest is charged if the debt is repaid by June 2010.

In Missouri, borrowers can only access $6,750 of the $8,000 credit for down payments. "We wanted them to have a cushion below that $8,000 in case other tax liabilities show up," said Greg Spurgeon, the single-family homeownership administrator for the Missouri Housing Development Commission.

If borrowers don't pay off the note, it becomes a 10-year fixed-rate mortgage with an interest rate one-half percentage point above that of their first mortgages. For example, borrowers paying 6% on their first mortgages would be charged 6.5% on the second.

So far, Spurgeon said, a significant proportion of participating homebuyers have repaid their loans. He expects most of the others to do the same before the deadline.

Cherry has claimed the federal tax credit on his 2008 taxes, but he hasn't gotten his refund yet. He definitely intends to repay the loan before the 2010 deadline because, he said, not doing so would add about $75 a month to his house payments.

Thanks again to our friends at CNN.

Timing for all of this? Not known. As a Buyer, there may be advantages to waiting, but how will Supply of homes be in a few months? We don't know. The moratorium on foreclosures has really dried up supply.

- Jim

May 7, 2009

Sacramento Recovering?

Hello Neighbors,

Take a look at this video from CNN:

Are we recovering? Perhaps.

I think the note about the unemployment rate is very important.

I also know that we are VERY LOW on inventory right now under the $200,000 price point - less than 2 "months of supply" at current sales rates.

When offering on property under that price, you should absolutely continue as “business as usual” no matter what home you offer on. You should be prepared to offer on several homes (unfortunately).. and continue looking once your first offers are submitted.

The competition below the $200k price point is getting even more fierce. I was at a Finance meeting this morning at SAR (Sacramento Association of Realtors) for mortgage lenders… they reiterated what we are seeing – homes below the $200k price point in Sac County are generating a dozen offers, and quite frequently one is “all cash” from an investor. There were 70 mortgage lenders in this session, and nearly all agreed that’s the state of the market. Wow.

Hang on Buyers. If you are "on the fence"? Get going.

- Jim