Oct 29, 2009

First Time Buyer Tax Credit Extended

HELLO Neighbors !!!

GREAT news today!

The first time buyer tax credit is getting extended. Buyers have to be in contract by the end or April.

For us car guys, "Cash for Clunkers" was fun... but we knew it would only spur short term demand and sales volume upticks. THIS? This is how you bring the economy back!

From the Wall Street Journal:


WASHINGTON -- Senate negotiators reached a tentative deal to extend a tax credit for first-time home buyers, but its passage remains uncertain.

The agreement would extend the existing credit for first-time home buyers, worth up to $8,000, while offering a new credit of up to $6,500 for some existing homeowners, Senate aides said. The reduced credit would be available to all home buyers who have been in their current residence for a consecutive five-year period in the past eight years.

The new provisions are aimed at broadening availability of the credit beyond first-time buyers and giving the weakened real-estate market a bigger boost while preventing real-estate investors from benefiting.

Many property experts have cited the credit as a reason for signs of recovery in the housing market in recent months. But that recovery was somewhat undercut by the September drop in new-home sales reported Wednesday.

The credit would be extended from its current expiration date of Dec. 1 to all contracts entered into by April 30, and closed before July 1. It is expected that income limits on people claiming the credit would be increased to $125,000 for singles and $250,000 for couples, from the current $75,000 and $150,000, aides said. The credit phases out for people making more than those amounts.

.While Senate lawmakers appear to have reached a deal on the substance of the tax credit, they are still at odds over how it would be brought to the Senate floor. Senate Majority Leader Harry Reid (D., Nev.) hopes to add it to a bill currently on the Senate floor to extend federal unemployment insurance benefits. But agreement on that hasn't been finalized.

While Senate Republicans are likely to support the measure, House Democrats have raised concerns that it carries a high cost to the government. The Internal Revenue Service is examining the program for alleged abuse.

Thank you Wall Street Journal for the content!

This is wonderful and fantastic news.

- Jim




Oct 27, 2009

Home Values in California to RISE in 2010 !!

Hello Neighbors,

A great update from CAR (California Association of Realtors) economists!

This echoes what we've been saying (and hoping) for the last year - 2010 should be a year of recovery, although some significant unknowns still exist (bank owned homes, Fed bailout programs).

Thank you CAR for the data!

LOS ANGELES (Oct. 7) –“California’s housing market continued its strong sales rebound this year, resulting from the continued pace of distressed properties coming to market,” said C.A.R. President James Liptak. “This follows two years of double-digit sales declines in 2006 and 2007. Looking ahead, we expect sales to moderate to a more sustainable pace.”

The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) "2010 California Housing Market Forecast" will be presented this afternoon during CALIFORNIA REALTOR® EXPO 2009 (www.realtorexpo.org), running from Oct. 6-8 at the San Jose Convention Center in San Jose, Calif. The trade show is expected to attract more than 7,000 attendees and is the largest state real estate trade show in the nation.

“After experiencing its sharpest decline in history, we expect the median price to rise modestly next year,” Liptak added. “2010 will mark the beginning of the ‘new normal’ for California’s housing market. This ‘new normal’ likely will feature a steady stream of sales driven by distressed properties in the low end of the market, coupled with moderate home-price appreciation.”

The median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 this year, according to the forecast. Sales for 2010 are projected to decrease 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.

“Housing in California has become a tale of two markets,” Liptak said. “The low end continues to attract first-time buyers and investors, with a resulting shortage in the number of homes for sale. Sellers at the high end, however, continue to be challenged by the ability of home buyers to secure financing as well as their concerns about where prices are headed. While demand from first-time buyers for low-end properties will continue throughout next year, sales could be impacted if discretionary sellers do not return to the market by the second half of 2010.

“2009 marked a unique opportunity for first-time home buyers,” Liptak said. “Homes were more affordable than they have been in years, interest rates hovered near historic lows, and the federal tax credit helped more than 1 million people become homeowners nationwide. Now is the time for Congress to extend the federal tax credit and to expand it to all buyers, not just first-timers.”

“With distressed properties accounting for nearly one-third of the sales in 2010, inventory will be relatively lean, under six months during the off-season months, and a roughly four-month supply during the peak season,” said C.A.R. and Vice President Leslie Appleton-Young. “We expect the median price to decrease slightly through the remainder of 2009 and into next year, then rise before leveling off next summer. For the year as a whole, home prices are forecast to reach $280,000.”

“Although it appears at this time that lenders are closely monitoring the flow of distressed properties onto the market, there could be an exertion of downward pressure on home prices should a heavier than expected wave of foreclosures come to market next year,” she said.

“The wild cards for 2010 include foreclosures, loan resets, the labor market, and the California budget crisis, as well as the actions of the federal government,” Appleton-Young said.

- Jim




Oct 21, 2009

Neighborly Financial - now a "Tier 1" Wells Fargo Direct Lender

Hello Neighbors,

Congratulations to Neighborly Financial, John Graham, and his team.

That group is now a direct lender with Wells Fargo. Even better, they hold a "Tier 1" status - which means real dollars to clients. That status drive a further reduction in costs of at least .25%.

Nicely done Neighborly Financial!

- Jim




Oct 13, 2009

C.A.R. Confirms - Longer Escrow Periods Likely

Hello Neighbors,

As mentioned in a blog article from a couple of months ago, be ready for potential extensions in escrows due to changes in financing regulation.

But... don't just take our word for it, take a look at what the California Association of Realtors (CAR) just published.



Starting July 30, 2009, if the APR on an initial Good Faith Estimate is no longer accurate (within a 0.125% range) at close of escrow, a lender must generally provide a residential borrower with a new disclosure and a three-day right to rescind before consummating the loan. REALTORS® are forewarned that, because of this new three-day waiting period, a lender's failure to timely provide corrected disclosures has the potential of delaying funding of the loan and close of escrow.

This new requirement is part of the Mortgage Disclosure Improvement Act (MDIA) implementing new loan procedures to protect borrowers and foster greater transparency in mortgage lending. For loan applications submitted on or after July 30, 2009, the new MDIA changes to the Truth in Lending Act are generally as follows:

Applicability: The new MDIA rules pertain to federally-related mortgage loans covered under RESPA and secured by a consumer's dwelling. The rules apply to both purchase and refinance loans.

Early Disclosures: A lender must provide a borrower with an initial Good Faith Estimate within three business days of receiving the borrower's written loan application as specified. For this provision, a "business day" is generally defined as a day on which the lender's offices are open for business.

Upfront Fees Restriction: Neither a lender nor any other person may impose an upfront fee on the borrower (except for credit report) until the borrower has received the early disclosures in person or, if mailed, three business days after the early disclosures are mailed. For this rule, a "business day" is defined as all calendar days except Sundays and legal public holidays as specified.

Seven-Day Waiting Period: A lender must wait seven business days after providing the early disclosures before consummating the loan. For purposes of this waiting period, a "business day" is defined as all calendar days except Sundays and federal legal holidays as specified. A borrower may waive the waiting period in writing in case of personal financial emergency, such as an imminent foreclosure sale.

Re-disclosure Requirement: If the final Annual Percentage Rate (APR) at loan consummation varies more than 0.125% (or 1/8 of one percent) from the initial APR on the early disclosures of a regular transaction, the lender must provide the borrower with a corrected disclosure at least three business days before the loan is consummated. For purposes of this waiting period, a "business day" is defined as all calendar days except Sundays and federal legal holidays as specified.

Three-Day Waiting Period: For corrected disclosures, a lender cannot consummate a loan until three business days after the borrower receives the corrected disclosure in person. If the corrected disclosure is mailed, the borrower is deemed to have received it three business days after it is placed in the mail. A borrower may waive this waiting period in writing in case of a bona fide personal financial emergency, such as an imminent foreclosure sale.

Source: The new MDIA rules and regulations are set forth at 74 Federal Register 23,289 (May 19, 2009) (to be codified at 12 CFR 226) available at http://www.federalreserve.gov/reportforms/formsreview/RegZ_20090519_ffr.pdf.

Again, our sincere thanks to CAR for this content.

- Jim




Oct 2, 2009

Neighborly Financial Joins Calaveras County Search & Rescue Efforts

Hello Neighbors,

John Graham, manager of Neighborly Financial is back.

He's been gone for the last several days, helping a search and rescue effort in a neighboring county.

From John:

I went to help search for the missing deer hunter in Calaveras County, last Wednesday. We spent all day looking for the subject. We were able to track his footsteps from the truck for about 7 miles, step by step, until darkness forced us to retreat for the night. Attached is a photo of the footprint we were following during the Calaveras County search. As of Friday, his location is still unknown. I have no details on the outcome, other than he is alive.

I am a member of the Placer County Sherriff's Search and Rescue team. We are recognized as one of the largest and better trained teams in the state, and therefore we get called out to assist with searches in many other counties. We assist with both backcountry and urban searches, for missing hikers, hunters, motorcycle riders, children and Alzheimer's patients. We also assist the Sherriff with evidence searches for criminal cases. We get called out about once or twice a month. Volunteers spend many hours training and in the field on searches. We all serve as ground searchers, willing to hike in any conditions and any terrain, but also we are divided into teams with specialties in 4WD, radio communications, motorcycles, mountain rescue, horses, and canine search, to name a few.

NICE work John. Another example of supporting our local community. We love doing it, just wish it wasn't a tough story.

Our thoughts go out to this family as they continue the search,





Oct 1, 2009

"Shadow Inventory"

Hello Neighbors,

I attended this month’s Finance Forum (meeting) at the Sacramento Association of Realtors branch office.

Interesting stuff.

A term we’ve been hearing more and more of recently was discussed….. “Shadow Inventory”.

What is Shadow Inventory?

Homes that are in some sort of Notice of Default (NOD) or foreclosure proceedings… but haven’t yet been taken back by the banks. Meaning? Homes that are vacant – or will be soon – that aren’t yet being reported on the bank’s financial books.

How much?

I heard an estimate this morning that shocked me: 35,000 – 40,000 homes in the “Greater Sacramento area”. Now that area probably includes parts of Sacramento County, Placer County, and even El Dorado County. If those numbers are correct, it is a HUGE amount of homes that will some day come to market. If. If. If.


Obviously, if such numbers exist, that has huge macro-economic implications. Prices will drop. Banks will be in financial trouble. Buyers will benefit – if they can get loans. Sellers will have to hold tight for much longer, or compete with insanely low price points.

HOWEVER, there is a problem – accurate data.

No one has actually published the data we need to verify such speculation. Search MLS and you will find that there isn’t much bank owned inventory now. It’s dried up. You can search county tax records, but those tools aren’t very user friendly. It would take days and days to compile such data. One industry professional says the inventory is there… another say the Obama plans have curbed the problem.


We continue to listen. Speculation runs from all ends of the spectrum. If we had the data, we could guide you in the right direction. Until then, we (all of us in this industry) continue to be reactive instead of proactive.

I’m looking forward to changing that behavior.

- Jim




Home Sales Are UP !

Hello Neighbors,

Two blog posts today....

The first one is from the NAR (National Association of Realtors) chief economist - Lawrence Yun - on the recovery underway! Thanks NAR!

The second? Direct contrast to the first. "Shadow Inventory". Stay tuned... here's the first:

Headed in the Right Direction:

Numbers Show Sales are Up and Heading in the Right Direction

Pending home sales in July reached their highest mark in two years, and closed sales also continued on an upward path. As a result, inventories are tightening; in June there were 3.8 million properties for sale nationally, compared with 4.5 million at the same time last year.

More broadly, there are other indications the economy is heading up. Durable goods orders have risen for three straight months because business inventories have been depleted. The stock market has also made a nice comeback, and exports have been rising faster than imports.

Thanks to these promising signs, we forecast higher home sales and stabilizing prices in the year ahead. But there are still some concerns.

First, although inventories are improving, it’s possible that many owners want to put their house on the market but are waiting for conditions to improve. Banks may be doing the same with their foreclosed properties. These concerns might be off the mark; in areas where housing has been recovering, we would expect to see inventories softening as ¬sellers and banks jump back in, but we haven’t been seeing that.

Beyond the housing market, there are other economic factors that could hold back recovery. The country is looking at a continuing long-term budget deficit that could translate into higher mortgage rates. We’re also looking at rising oil prices ($70 from $50 earlier this year), with that extra money shipping overseas rather than staying home. And heavy job losses make it likely foreclosures will keep rising through the remainder of the year.

Still, we have reason to be confident. With home sales heading up and inventories shrinking, prices are stabilizing. These are the key conditions needed for housing to lead the economy into growth mode. Once that happens, jobs will follow.

Thanks NAR, the recovery is more than a welcomed visitor... it's a way overdue guest.

- Jim