HUGE Changes in Foreclosures, Government Mandated

Wow Neighbors,

EXCITING NEWS (and huge!) for those of you trying to stay one step ahead of tough financial times.

BAD NEWS for those Buyers out there who are waiting for the "next wave" of foreclosures to bring more housing supply to the market.

This WILL slow down Short Sales as well.

Read these details carefully (from our friends at CNN - thanks CNN!).

Obama Expands Foreclosure Fix

Two steps: Second liens now covered by modification program; servicers must offer eligible borrowers principal reduction under Hope for Homeowners.

NEW YORK (CNNMoney.com) -- The Obama administration said Tuesday it is expanding its foreclosure prevention program to cover second mortgages and to direct more troubled borrowers to the Hope for Homeowners program.

Announced with great fanfare in mid-February, the president's $75 billion program has gotten off to a slow start. Loan servicers only recently started taking applications and many delinquent borrowers have complained about being left in the cold because their home values have dropped or they've lost their jobs.

The administration is seeking to address some of the concerns by tweaking the original modification plan, which calls for adjusting eligible borrowers' loans so monthly payments are no more than 31% of pre-tax income.

Servicers covering 75% of the nation's mortgages are now participating in the program, which also allows some homeowners with little or no equity to refinance their mortgages, a senior administration official said Tuesday. Together, the plans are expected to help up to 9 million avoid foreclosure.

Second Mortgage Roadblock

During the housing frenzy, many borrowers obtained second mortgages to allow them to put little or nothing down when buying a home. Up to half of at-risk borrowers have second liens, according to the administration.

These loans have complicated the modification process. For one thing, they add to troubled homeowners' debt levels. Also, mortgage investors have balked at reducing payments on first mortgages when the second loan was left intact.

Under the administration's new program, the interest rate on second mortgages will be reduced to 1% on loans where payments cover interest and principal and to 2% for interest-only loans. The government will subsidize the rate reduction, with the money going to the mortgage investor.

Servicers will be paid $500 for each modification and an additional $250 annually for three years if the borrower stays current. Borrowers can receive up to $250 per year for five years to pay down their first mortgage.

Investors can also receive a payment in exchange for extinguishing the second lien. They would receive 3 cents on the dollar for loans more than 180 days delinquent and between 4 cents and 12 cents for less delinquent loans, depending on the borrowers' debt levels.

Servicers who join the new program must modify second loans when a borrower's first mortgage is adjusted. It will likely take a month to implement, but it should not slow down the modifications of primary mortgages, the administration said.

"By bringing both the first lien and second lien program together, we can reduce monthly payments for borrowers and make it much more likely that they can stay in their homes," a senior administration official said.

Hope for Homeowners Option

Also Tuesday, the administration said it is now requiring servicers to offer troubled borrowers access to Hope for Homeowners as a modification option if they qualify.

Expanding Hope for Homeowners would address one of the major holes in the original Obama foreclosure prevention plan. It helps homeowners whose homes are now worth far less than their mortgages.

Servicers had balked at participating in the Hope program because it required they reduce the mortgage principal balance to 90% of a home's current value.

Hope for Homeowners, which began in October, is being revamped in Congress. Servicers would have to reduce the principal to 93% of the home's value. The change would also reduce the program's high fees, which turned off many troubled borrowers.

As an incentive to participate, servicers will be paid $2,500 for each refinancing, while lenders who originate the new loans will receive up to $1,000 a year for three years, as long as the loan remains current.

Separately, however, another pillar of the president's plan appears to be headed for defeat this week. The Senate is not expected to pass legislation allowing bankruptcy judges to modify mortgages. The administration had sought this change to pressure servicers to modify loans before borrowers declare bankruptcy.


How will all of this impact you? How will it impact your future housing options? CALL ME. I'd like to share some thoughts.

- Jim

www.NeighborlyRealty.com

www.NeighborlyFinancial.com

Banks Out of the Real Estate Business

Hello Neighbors,

Wow is this good news for the consumer. For the last several years, the National Association of Realtors has been fighting hard to keep banks out of the real estate business.

That seems self centered, but WOW am I thankful this has come to an end.

All we do now is deal with banks - whether it is on property they now own through foreclosure, or through property they have to be involved with due to a Seller's short sale status.

NOTHING is more painful than dealing with these banks. It's terrible. Point in case - our agent Juli just closed an escrow on a bank owned property yesterday THAT LASTED 7 MONTHS! That's right. This one escrow went 7 months because the banks simply couldn't manage the transaction. They are understaffed and under skilled. It goes against all common sense – but don’t get confused with logic. Banks still don’t have it figured out.

Realtors Gain Victory on Banks in Real Estate

NAR’s 8-year battle to keep national banking conglomerates out of the real estate brokerage and management business ended with a win in March when President Barack Obama signed the 2009 Omnibus Appropriations Act. The legislation permanently prohibits banking regulators from taking any action that would make real estate brokerage and management permissible lines of business for federally regulated banks. “This is a great victory for the real estate industry and consumers,” says NAR President Charles McMillan. If banks had been allowed to engage in real estate brokerage, it would have created anti-competition and anti-consumer concentrations of power within the financial services sector, according to NAR.

I'm all for a free market economy, creating competition, and letting the consumer benefit. BUT banks in real estate? It's been nothing but headache and heartache these past couple of years. Ask my clients who have over a dozen offers out, who have waited and waited for responses from banks / lenders, AND who have lost their own loans just a couple of weeks after getting pre-qualified.

Banks don't understand the real estate transaction. They can't get it done. Keeping them at arms lenght from this business is a win for everyone, especially Buyers.

- Jim

www.NeighborlyRealty.com

www.NeighborlyFinancial.com

1-800-960-0860 - A New Information Service !!

Hello Neighbors,

Just an FYI.

Please make a note of this toll free telephone number: 1-800-960-0860

It is our newest vehicle to get you up to date industry information. Much like this blog, we do our best to get you current news in a manner that fits your schedule. This new toll free number is available 24 hours a day, with messages we've recorded.

Stay tuned. As we create more informational messages, we will get the word out through this forum (blog), our web site, and email.

PLEASE - if you have a topic you would like to hear about, let me know! Drop me an email at Jim@NeighborlyRealty.com or call at 916.801.3940.

Many thanks, and happy calling!

- Jim

www.NeighborlyRealty.com

www.NeighborlyFinancial.com

From CNN: "Signs of Life in California Real Estate"

Hello Neighbors,

This just in from our friends at CNN.... and we are experiencing this on a daily basis! Lots of folks asking to see property, lots of shopping, and offers going out on a daily basis - almost faster than we can manage!


Signs of life in California real estate

There's is a lot of activity out on the coast that may indicate a reawakening of the housing market there - and across the country.

By Les Christie, CNNMoney.com staff writer

NEW YORK (CNNMoney.com) -- No state has been harder hit by the housing bust than California.

It has piled up more foreclosures and has endured among the worst home-price declines. The median price of a single-family home sold in February was $247,590, down 41% from 12 months earlier, according to the California Association of Realtors (CAR).

And home construction in the Golden State has nearly vanished: December housing permits shrank to about a quarter of what they were during the boom years, according to the National Association of Homebuilders.

But there are signs that California's housing market may be coming out of this tailspin: Sales volume is increasing, investors are returning and inventory is shrinking.

Bringing back buyers

Low prices have brought out droves of buyers. In February, they purchased more than 600,000 homes, some 80% more than they bought in February 2007, according to CAR. And most of this activity is where prices are off 40% to 60% from their peaks.

In the Sun City area of Riverside County, for example, prices have fallen more than 35% over the past 12 months. Two-thirds of February's sales in the area were of foreclosed properties owned by banks, according to Chuck Whitehead, broker with Coldwell Banker Associated Brokers.

"The sales rebound is largely centered around areas that have experienced the biggest impact from the subprime crisis," said CAR chief economist Leslie Appleton-Young.

How low can home prices go in your city?

In more stable communities, where fewer homes were saddled with toxic mortgages, prices have not crashed as badly and sales are rebounding more slowly. But foreclosures still account for a significant portion of sales, according to Phil Jones, a broker with Coldwell Banker Coastal Alliance in Long Beach.

Most analysts foresee continued price declines in California, according to Nicholas Retsinas, director of Harvard's Joint Center for Housing Studies. "But [there'll be] a slowing of that decline, which portends the end of price drops."

That may already be happening in Long Beach, according to Jones. The measure he uses to judge market trends there, price per square foot, turned up in February, growing 5% to $360.

"Every one of my agents is very busy," Jones said.

Investing 2.0

Another positive sign that markets don't have much further to fall is that investors are returning to some markets.

"I spoke with one investor who is putting together a group of buyers and they're ready to get back into the market," said Jones. "They're planning to buy single-family homes in bulk."

John Dugan is one such investor. The San Francisco-based medical supplies salesman is using a portion of his Entrust Group-managed IRA to buy townhouses in the Sacramento area.

So far he's purchased three 840-square-foot, two-bedroom, one-bath duplexes. He paid just $35,000 to $80,000 a piece - down from their $180,000 to $200,000 selling prices a few years ago.

He paid cash for the first property and rents it out for $750 a month, a profit of $550 after dues and common charges. That's a 19% return on investment, without figuring on appreciation.

"This kind of pricing is something you only think of as Midwestern, not Californian," he said.

Supply dropping

The booming sales have whittled away existing home inventory to just six and a half months - down from 15 months a year ago.

"Typically, I would describe a normal market as having a six to seven month supply of homes," said Appleton-Young. "We have that now."

California's inventory now compares favorably with the rest of the nation, where there's a 9.7 month supply of homes on the market, according to the National Association of Realtors.

One wildcard, however, is that banks have kept many repossessed homes off the market. "Banks are spoon feeding them out very slowly so they don't overload the market," said Whitehead. But, he added, if they release a lot of properties during the heavy spring buying season, they "will be eaten right up by buyers."

Could the end be near?

All of those factors add up to a more optimistic forecast for California, which is seen as a harbinger of things to come for the rest of the country.

Appleton-Young said that while home prices should continue to decline for the rest of 2009, she predicts that the pace of decline will slow. In total, she's predicting a total loss of 19% for the year. But, "I think we could see home price stabilization by early next year," she said.

If that happens in California, it could spread to the rest of the hard-hit Sun Belt markets - and beyond.

"California was the pace setter for lots of the mortgage products that went toxic," said Retsinas. "The sense is if the problems can be addressed there, the rest of the country will follow."




Thank you CNN !!

- Jim

www.NeighborlyRealty.com
www.NeighborlyFinancial.com

Clos du Lac Visitors - Nice to See You!

Hello Neighbors,

Many thanks to the dozen+ families who stopped by our open house in Clos du Lac yesterday. We enjoyed meeting and talking to you.

If you have any questions about that home, please do give us a call.

If you have any questions about the markets in general, we are here to help.

Our apologies if we didn't get to talk in depth. John and I were very surprised at the level of turnout.

Funny.... the common thread for 70% of our conversations? The Obama bailout activity! The themes among all of you were pretty much the same...

So?

Keep an eye on this spot! As we learn more on these plans / activities, we share them through this forum.

Thanks again for your time yesterday,

- Jim

www.NeighborlyRealty.com
www.NeighborlyFinancial.com

Straight From the IRS - Credits for Buyers

First-Time Homebuyers Have Several Options to Maximize New Tax Credit

WASHINGTON — As part of the Treasury Department’s consumer outreach effort and with the April 15 individual tax filing deadline approaching, the Internal Revenue Service today began a concerted effort to educate taxpayers about additional options at their disposal to claim the new $8,000 first-time homebuyer credit for 2009 home purchases. For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.

The Treasury Department encourages taxpayers to explore these options to maximize their credit and get their money back as fast as possible.

“The new credit can get money in the pockets of first-time homebuyers quickly,” said IRS Commissioner Doug Shulman. “For people who recently purchased a home or are considering buying in the next few months, there are several different ways that they can get this tax credit even if they’ve already filed their tax return.”
First-time homebuyers represent a significant portion of existing single-family home sales. The expansion in the first-time homebuyer credit will make it easier for first-time homebuyers to enter the housing market this year.

Under the American Recovery and Reinvestment Act of 2009, qualifying taxpayers who purchase a home before Dec. 1 receive up to $8,000, or $4,000 for married individuals filing separately. People can claim the credit either on their 2008 tax returns due April 15 or on their 2009 tax returns next year.

The filing options to consider are:

• File an extension — Taxpayers who haven’t yet filed their 2008 returns but are buying a home soon can request a six-month extension to October 15. This step would be faster than waiting until next year to claim it on the 2009 tax return. Even with an extension, taxpayers could still file electronically, receiving their refund in as few as 10 days with direct deposit.

• File now, amend later — Taxpayers due a sizable refund for their 2008 tax return but who also are considering buying a house in the next few months can file their return now and claim the credit later. Taxpayers would file their 2008 tax forms as usual, then follow up with an amended return later this year to claim the homebuyer credit.

• Amend the 2008 tax return — Taxpayers buying a home in the near future who have already filed their 2008 tax return can consider filing an amended tax return. The amended tax return will allow them to claim the homebuyer credit on the 2008 return without waiting until next year to claim it on the 2009 return.

• Claim the credit in 2009 rather than 2008 — For some taxpayers, it may make more financial sense to wait and claim the homebuyer credit next year when they file the 2009 tax return rather than claiming it now on the 2008 tax return. This could benefit taxpayers who might qualify for a higher credit on the 2009 tax return. This could include people who have less income in 2009 than 2008 because of factors such as a job loss or drop in investment income.

The IRS reminds taxpayers the amount of the credit begins to phase out for taxpayers whose modified adjusted gross income is more than $75,000, or $150,000 for joint filers. Taxpayers can claim 10 percent of the purchase price up to $8,000, or $4,000 for married individuals filing separately.

IRS.gov provides more information, including guidance for people who bought their first homes in 2008. To learn more about the overall implementation of the Recovery Act, visit www.Recovery.gov.

Another Special Loan Program - USDA

Hello Neighbors,

With much thanks to one of our newest agents - Marjorie Suzanne', we've just added another "Special Loan Program" link (to the right).

The URL for this link is:

http://eligibility.sc.egov.usda.gov/eligibility/welcomeAction.do

What is this program for?

Special home loans for areas that the government qualifies as "rural". What defines rural? Well... take a look at their website and see!

You might be surprised. Parts of Placer County, Sacramento County, Yolo & Yuba Counties, and of course Nevada & El Dorado Counties can all qualify.

Give it a shot, and let us know what you think!

Many thanks,

- Jim

www.NeighborlyRealty.com

More on the Bailout: Buyer Incentives & Tax Credits

Hello Neighbors,

For those of you who have registered on our website for property searches and industry news, you've seen this update. It went out from our web engine within the last 24 hours.

For those of you who haven't yet registered with the web site, here is an update and some analysis Buyer incentives. It's all part of the waves of new legislation and bailout planning.

Tax Credit for Homebuyers
First-time homebuyers who purchase homes from the start of the year until the end of November 2009 may be eligible for the lower of an $8,000 or 10% of the value of the home tax credit. Remember a tax credit is very different than a tax deduction - a tax credit is equivalent to money in your hand, as opposed to a tax deduction which only reduces your taxable income.

The tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000. Buyers will have to repay the credit if they sell their homes within three years.

Tax Credit Versus Tax Deduction
It's important to remember that the $8,000 tax credit is just that; a tax credit. The benefit of a tax credit is that it's a dollar-for-dollar tax reduction, rather than a reduction in a tax liability that would only save you $1,000 to $1,500 when all was said and done. So, if you as a homebuyer were to owe $8,000 in income taxes and would qualify for the $8,000 tax credit, they would owe nothing.

Better still, the tax credit is refundable, which means you as a homebuyer can receive a check for the credit if you have little income tax liability. For example, if a homebuyer is liable for $4,000 in income tax, he can offset that $4,000 with half of the tax credit; and still receive a check for the remaining $4,000!

Phaseout Examples
According to the plan, the tax credit starts phasing out for couples with incomes above $150,000 and single filers with incomes above $75,000.

To break down what this phaseout means to homebuyers who are over those amounts, the National Association of Homebuilders (NAHB) offers the following examples:

Example 1: Assume that a married couple has a modified adjusted gross income of $160,000. The applicable phaseout to qualify for the tax credit is $150,000, and the couple is $10,000 over this amount. Dividing $10,000 by $20,000 yields 0.5. When you subtract 0.5 from 1.0, the result is 0.5. To determine the amount of the partial first-time homebuyer tax credit that is available to this couple, multiply $8,000 by 0.5. The result is $4,000.

Example 2: Assume that an individual homebuyer has a modified adjusted gross income of $88,000. The buyer’s income exceeds $75,000 by $13,000. Dividing $13,000 by $20,000 yields 0.65. When you subtract 0.65 from 1.0, the result is 0.35. Multiplying $8,000 by 0.35 shows that the buyer is eligible for a partial tax credit of $2,800.

Remember, these are general examples. You should always consult your tax advisor for information relating to your specific circumstances.

Homes that Qualify
The tax credit is applicable to any home that will be used as a principle residence. Based on that guideline, qualifying homes include single-family detached homes, as well as attached homes such as townhouses and condominiums. In addition, manufactured or homes and houseboats used for principle residence also qualify.

Higher Loan Amounts
More good news - there is an extension on the additional tier of conforming loan amounts which had been first established in 2008. This tier of home loans are those greater than $417,000, and with a maximum that depends on the area, but is not greater than $729,750. These loans will again be eligible for rates that are slightly higher than conforming loan rates, but less expensive than the standard jumbo loan rates.

Additional Housing-Related Provisions
Tax Incentives to Spur Energy Savings and Green Jobs - This provision is designed to help promote energy-efficient investments in homes by extending and expanding tax credits through 2010 for purchases such as new furnaces, energy-efficient windows and doors, or insulation.

Landmark Energy Savings - This provision provides $5 Billion for energy efficient improvements for more than one million modest-income homes through weatherization. According to some estimates, this can help modest-income families save an average of $350 a year on heating and air conditioning bills.

Repairing Public Housing and Making Key Energy Efficiency Retrofits To HUD-Assisted Housing - This provision provides a total of $6.3 Billion for increasing energy efficiency in federally supported housing programs. Specifically, it establishes a new program to upgrade HUD-sponsored low-income housing (for elderly, disabled, and Section 8) to increase energy efficiency, including new insulation, windows, and frames.

Expanding Housing Assistance - This provision increases support for several critical housing programs. It includes $2 Billion for the Neighborhood Stabilization Program to help communities purchase and rehabilitate foreclosed, vacant properties.

More Help for Homeowners in the Future
Another thing to keep an eye on in the coming weeks is President Obama's plan to help struggling borrowers before they are faced with a default on their mortgage.

According to reports, the Obama administration is discussing plans to help borrowers who are struggling to stay afloat, but who have not yet fallen behind on their payments. At this point, details are scarce; however, reports indicate that President Obama is looking to spend approximately $50 Billion to directly help homeowners before they face foreclosure and financial disaster.

While this is good news for individual homeowners, it will likely be good for the housing industry as a whole. That's because, assisting struggling borrowers before they default should help stop the wave of foreclosures, which are estimated to top two million this year. That, in turn, will help stabilize home prices.

We will continue to update you as more news and analysis becomes available.

Watch this space for further details!

- Jim

www.NeighborlyRealty.com

Lowering Your Property Taxes - It's Already Happening

Hello Neighbors,

You've probably received the mailers, most are from businesses in Southern California: "Challenge your property taxes now, for only $179.00".

DO NOT DO THIS

It is a scam.

Confirmed this morning by Ken Stieger, Sacramento County Tax Assessor. In fact, the Sacramento County DA and others are working with the Los Angeles DA to go after these companies.

Unfortunately, these companies are popping up faster than they can be shut down (I think it's where the sub-prime mortgage brokers from a few years ago are now operating!).


In 2008, Sacramento County re-assessed and lowered property tax base values on 85,000 residential properties (homes) - AUTOMATICALLY.

In 2009? They are predicting a lowering of 130,000 residential properties - again, AUTOMATICALLY.

How does this work?

We've all heard about Proposition 13. What you may not know about is Proposition 8. That was passed at a similar time, and stated that property tax baseline values would be reset during periods of non-growth.

That's right.

Of the roughly 400,000 residential properties in Sacramento County, over 1/3 are going to be reset automatically as part of the processes built in to the County Tax Assessor's procedures.

Where are these value re-sets ending up? On average? Equivalent to property values (and tax bases) from the years 1999 and 2000.

Nice.

- Jim

www.NeighborlyRealt.com

150 Foreclosures in 2006. 2008? 18,000+ !!!

Hello Neighbors,

We had a great guest speaker at this morning's SAR (Sacramento Association of Realtors) Real Estate Finance Forum: Ken Stieger, Sacramento County Tax Assessor.

Yep, the guy who runs the shop for Sacramento County. His group (about 170 staff) set your property tax values. We talked about the processes, the billing cycles, and the data....

For Sacramento County:

* In 2006, there were 150 foreclosures TOTAL during that 12 month period.

* In 2008, there were 18,000+ foreclosures during that 12 month period!

* September of 2008 saw a little over 2,000 homes get foreclosed on.

Stunning.

He showed graphs and graphs of good trend data.

2009 foreclosure rates are WAY below 2008.

Let me say that again - to you Buyers on the fence - 2009 foreclosure rates are WAY below 2008. Regardless of what you hear in the media, the county data shows that banks / lenders ARE working with home owners to save their homes.

If you are waiting for huge waves of foreclosures, we'll still see them... but it will be below the rates of 2008. Hopefully we've turned the corner - which also means huge price reductions will cease.

If you are chasing REOs (foreclosed properties), take note of this trend.

- Jim

www.NeighborlyRealty.com

The New "New Deal" (for Mortgage Holders)

Hello Neighbors,

We continue to keep an eye on the updates from Washington for you.

This came in yesterday from CNBC:

New Mortgage Plan: Who Qualifies and How It Works
© 2009 CNBC.com

For homeowners looking to make sense of the Obama administration's new mortgage rescue plan, the program can be basically broken down into two sections.
One part is for homeowners facing foreclosure due to missed payments and are at risk of defaulting on their loans. For them, the government will give the lender financial incentives to "modify" the existing mortgage, reducing the monthly payments so that the homeowner can stay current on the loan and keep their home.

The other part is for homeowners who are keeping up with their mortgage payments but can't refinance with their lender because the value of their home has fallen below the amount of the mortgage.

For these "under water" homeowners, the rescue plan will help refinance the mortgage to lower the monthly payments. There are several restrictions, however, so relatively few homeowners in this category will actually qualify.

That's the simple explanation. But both plans have a lot of moving parts, so here's what you need to know if you want to take advantage of them.

Mortgage Modification
If you're facing foreclosure and want to "modify" your mortgage to keep your home, you must meet the following criteria:
• Have secured your mortgage before Jan. 1, 2009
• Have a primary mortgage of less than $729,500
• You must live on the property
• Must fully document income with tax returns and pay stubs
• Sign a financial hardship statement
• Go for counseling if your total household debt totals more than 55 percent of income.

"Homeowners must be late on their payments to qualify," says Trish Summers, a private mortgage banker with Luxury Mortgage company in Stamford, Connecticut.
If you meet all those qualifications, your lender will then determine how much to lower your monthly payment so it's about 31% of your gross monthly income. The interest rate could be as low as 2%.

Homeowners pay no fees for the modification. However, homeowners could face a balloon payment at the end if your lender reduced your monthly principal payment during the modification. So if your lender reduced your total payments $20,000, you could owe that amount when paid off your loan, refinanced or sold your house.
But there is some financial benefit for the homeowner in the plan. For every month a homeowner makes a payment on time, the Treasury will pay an incentive that reduces the principal balance on a loan. Over five years the total principal reduction could add up to $5,000.

There's also a trial period for the modification.

"The loan servicer gets paid by Fannie (Mae) or Freddie (Mac) after three months," says Summers. "If the homeowner pays the mortgage on time, the servicer gets $1,000 from the government each year for the next three years. If the mortgage is not paid on time in those three months, the deal is over."

And the new loan rate can go up after 5 years. It's only a low in the beginning to help the homeowner dig themselves out.

The plan is in effect until the end of 2012 and can only be used once.

Refinancing Option
If your current on your mortgage but your bank won't let you refinance because your mortgage is "under water," here's how you qualify for the government refinancing program:
• Your home must be the primary residence
• Your loan must be owned by Fannie Mae or Freddie Mac
• You must have sufficient income to support the new mortgage debt
• You can't take cash out of the new loan to pay other debt

There's another big restriction, however, that will make many homeowners ineligible for the program: the value of your house can't have fallen much below the amount of the mortgage.

"The ceiling of eligibility is 105 percent of current market value of the property—so that’s not going to help homeowners who have suffered home price declines," says Greg McBride, senior financial analyst at Bankrate.com. "Say you bought a house for $320,000. Your mortgage balance is now $300,000 But the house is now worth only $225,000. You are stuck, you can't refinance, even if you made your payments on time."

McBride says the loan to value ceiling should be raised. "It should be something in the neighborhood of 150 percent," says McBride. It's too low to help people in Florida, California, Nevada and Arizona. Those markets are at the epicenter of the foreclosure crisis."

Still, if you do qualify, here's what you get:
• Your mortgage will be refinanced to 30 or 15 years with a fixed interest rate.
• The rate will be based on market rates in effect at the time of the refinance and any associated points and fees quoted by the lender
• Interest payments but be reduced but not principal

Plenty of Critics
The Obama plan says it will help as many as 4 million struggling borrowers modify their loans and some 5 million refinance their current loans. But industry experts remain skeptical.

"One in five homes have come down in value across the country," says Summers. I'm not sure this plan is going to help in refinancing. I think they really need to reduce the balance on the loans to make this work."
And as for the modifications, McBride says there will be those getting help when they made bad decisions.

"I don’t have much hope for it," says McBride. "In reviewing the guidelines, I see nothing to prevent a homeowner that cashed out equity when prices were on the way up, from getting a modification. Are they going to give back the big screen TV and BMW? Probably not."

Call me if you need to unload that BMW cheap. Our son will be 16 in just 13 years.

Many thanks to the folks at CNBC,

- Jim

www.NeighborlyRealty.com

Economist Predicts Recovery in Sacramento

Hello Neighbors,

A very brief blurb in the news that caught my eye:

http://www.fox40.com/pages/landing_local_headlines/?Sacramento-Housing-Market-May-Be-First-T=1&blockID=230025&feedID=190

What did the article say?

Just a few quick paragraphs, reported through the AP:

Associated Press
March 4, 2009

SACRAMENTO - If Sacramento was the first housing market to fall, real estate experts say it may be among the first to recover.

Leslie Appleton-Young, chief economist at the California Association of Realtors, says Sacramento County is through about 80 percent of its subprime mortgage resets. Those were the adjustable-rate loans of less qualified borrowers that contributed to mass foreclosures.

WE HOPE SO!

- Jim

www.NeighborlyRealty.com

Options for Distressed Mortgage Holders

Hello Neighbors,

This article just in from CAR (the California Association of Realtors).

If you've found yourself drowning in mortgage obligations and debt recently, you're not alone. Declining home values, overall economic malaises, job losses, and other forces are driving homeowners like you to consider options that just a few years ago were unthinkable.

While a new state law known as SB 1137 took effect in September 2008, effectively blocking lenders from initiating foreclosure proceedings until 30 days after contracting the borrower or making "due diligence" efforts to do so, many California homeowners are still in need of financial relief.

In response, the US Department of Housing and Urban Development has established a free hotline (877-HUD-1515), staffed with HUD-approved counselors to assist homeowners who are facing a reset on an adjustable mortgage, are three to six months from defaulting on their mortgage, or are experiencing health and/or employment issues.

The Options:

Some homeowners are finding relief in an option known as a loan "recasting" which involves a modification to the mortgage and typically results in reduced mortgage payments, with payments recalculated with the same interest rate and a new maturity date.
Pro: The upside to recasting is that you'll be working with your existing lender, which means no closing costs.
Con: The challenge is that not all lenders are willing to negotiate such deals

Another option is a short sale, or the negotiation of a payoff amount lower than what was originally agreed upon with your lender.
Pro: This option allows the homeowner to sell the property without suffering the stigma of foreclosure. In addition, H.R. 1424, the Emergency Economic Stabilization Act of 2008, extended the federal income tax exemption for mortgage debt forgiveness on home loans under the Mortgage Forgiveness Debt Relief Act of 2007 until Dec. 31, 2012.
Con: California does not grant this exemption any longer. Short sales of primary residence - sold after Jan 1, 2009 - can trigger taxes (depending on your income) associated with debt forgiveness, which is considered taxable income

Foreclosure is the final option and occurs when a homeowner loses the rights to his or her property, thus allowing the bank to sell the property to satisfy the debt.
Cons: This route will negatively impact your credit rating- and ability to buy or even rent another home - and wipe out any equity that you had in the home. Finally, it can also result in a tax obligation on the debt forgiveness. To learn more able the tax consequences of a short sale versus a foreclosure, visit the IRS' Web site (www.irs.gov). Before executing any of these options, consult with a certified public accountant or tax attorney.

By Bridget McCrea
Distressed Options
Home Edition/News From your Realtor
California Real Estate Magazine:March 2009

Resources:

Mortgage Workout Programs for Homeowners. To learn which lenders are recasting or offering workout arrangements visit: www.car.org/economics/

Avoiding Foreclosure in California: www.hud.gov/local/ca/homeownership/foreclosure.cfm

Consumer Home Mortgage Information: www.yourhome.ca.gov/mortgage-help.shtml

CALL US if you need to talk. We’re here to present options.

- Jim

www.NeighborlyRealty.com

Natomas Area - Flood Insurance Changes

Hello Neighbors,

With sincere thanks to our friend Chris Altobell (916.214.2126) at Farmer's Insurance, here is an update on Flood Insurance policies for Sacramento's Natomas area.

If you live locally, it's likely you've heard about this issue already. Levee questions. Developer mismanagement vs. local government / engineering mistakes... Who knows. What matters is the outcome.

Flood insurance premiums in Natomas have gone up. Please take a read through the Q & A that Chris prepared below, and pass along to friends and family in Natomas.

Thanks again Chris!

Flood Insurance Changes in Natomas

Following are Frequently Asked Questions (complete with relatively informative answers) regarding recent changes to the Flood Insurance Program for the Natomas area of Sacramento.

What happened?
On January 15, 2008 the Federal Government announced that they would change the flood zone in Natomas from the Preferred X zone to an AE flood hazard zone effective December 7, 2008.

Why did they do that?
A U.S. Army Corps of Engineers study indicated the levies surrounding the Natomas area do not meet the minimum requirements for a Preferred X flood zone. As such, FEMA changed the flood designation in Natomas to AE (High-Risk.)

What does it mean?
With the new AE designation, all properties with a federally-backed loan will be required to purchase a flood insurance policy.

What is the difference in price?
Under the OLD designation (Zone X), the annual premium for $250,000 of Dwelling coverage and $100,000 of Personal Property coverage was $348.00. Now the cost can be over $1,300.

Can an existing flood policy transfer from the seller to the buyer?
Yes! You’ll just need some cooperation from the seller and their insurance agent. But if it’s a new policy, the new rates apply.

What if the seller didn’t have flood insurance or the home is bank-owned?
While the Preferred rate is not available for new policies, the new policy can be obtained at the “grandfathered” Zone X Standard rate. Those policies can range from $700 to $1,200.

Is the old Preferred rate still available?
Yes, but only for renewals of existing Preferred policies. The policy can be renewed one time before December 7th 2009 at the Preferred rate. Any renewals after December 7th 2009 will be at the higher rate (unless the levees have been repaired by then.)

Can you tell me how I can get the lower rate for my client buying a house in Natomas?
I thought you’d never ask! Here’s an example: Let’s say a homeowner smartly purchased flood insurance before December 7 of 2008 at the Preferred rate of $348. Fast forward to March 2009 and they put their house on the market and one of you clients buys it. During the transaction, the seller transfers the current
flood policy to the buyer. No payment is due at this time since the premium should have been paid for the year. When the policy comes up for renewal in 2009, the new home owner will be able to renew that policy at the Preferred rate ($348/year) for one more year. The policy will be renewed in 2010 at the new rates.

- Jim

www.NeighborlyRealty.com

The CA $10,000 Tax Credit for Buyers

Hello Neighbors,

I'm still digging for more info on this, so stay tuned.

To sum it up very briefly though, it looks like buyers of "new" houses get a credit of $10,000 or 5% of the purchase price - whichever is less. The sale must be made between 3/1/09- 3/1/10 and must be a primary residence.

This is for the purchase of newly constructed homes only, and appears to be targeted at restarting segments of the construction industry.

I've heard rumors about other CA credits for non-new, but am still digging around for details.

Remember - we can help you negotiate with new construction. It is REALLY fun for us, and very financially worthwhile to the Buyer.

We saved one couple nearly $124,000 last year on new construction!

- Jim

www.NeighborlyRealty.com

License Rates? 20% of 2006 Volumes

Hello Neighbors,

We came across an interesting statistic tonight.

It's a true indicator of how this industry has shaken out. Those who are still in the business - or who are just jumping in - are clearly here for the long haul.

In 2006, the California Department of Real Estate was averaging 5,000 new licenses issued per month. 5,000 per month!

Now? The DRE is issuing 1,000 per month.

That's right. Those who were in it for the boom (and only to make money) have stopped entering this business.

We couldn't be happier.

- Jim

www.NeighborlyRealty.com

An Inside Look at Foreclosures - Video

Hello Neighbors,

Many thanks to Patty at HP for sending this video along:

http://www.silverbearcafe.com/private/11.08/foreclosure.html

I haven't been to the "Inland Empire" down South to look at real estate yet, but we experience exactly the same things up here in Northern California.

What happens to personal belongings when a home is foreclosed upon?

What happens to pools?

Watch this video and see. "Trash Outs" are something done on a regular basis - historically though, it's been in apartments and duplexes. Now the same processes are used with 4000+ square foot homes. Very sad.

Pools? If you are looking at bank owned property, and you see an empty pool - or a pool with only half the water - BE CAREFUL. Pools are designed to hold the weight of the water. When the water is gone, they can actually "pop". A good pool inspector is important.

Those mosquito eating fish? We see them all the time... placed in the pools by the county / city teams. In our area, the pools are actually located by overhead flight teams.

- Jim

www.NeighborlyRealty.com

Your Recovery Money - Where is it Going ?

Take a look at this!

http://www.recovery.gov/

Hello Neighbors,

Want to see the nearly 1100 page recovery bill signed into law?

Want to see how your $760,000,000,000.00+ is being spent by the federal government?

Take a look the Recovery.gov website noted above.

In an effort to be more transparent, the folks in Washington are making as much of this public as they can.

We'll see how it all ends up, but certainly applaud the effort.

A wonderful change from the previous few years.

Many thanks to our friend Laura from Chevron Energy Solutions for sending this our way.

- Jim

www.NeighborlyRealty.com

Mortgage Workout Programs - Found 'em !

Hello Neighbors,

CAR (California Association of Realtors) Legal has been working to identify and consolidate information from those major lenders who are helping home owners with their mortgage problems.

You can find all of the information here:

http://www.car.org/legal/mortgage-workout-programs/

Who is included?

* HOPE
* Countrywide / Bank of America
* Citigroup / CitiMortgage
* JP Morgan Chase / Washington Mutual
* IndyMac
* Fannie Mae, Freddie Mac, ...and a bunch of others.

Here is the general overview from CAR Legal:

The following information is intended for REALTORS® and homeowners seeking information on existing mortgage workout programs. In general, the loan modification programs on the chart (see link below) and consumer information sheets (see links below) are intended for primary residences only.

For a lender comparison chart on existing mortgage workout programs, click here (revised 2/09). The chart is a compilation of programs offered by the larger lenders and government entities. If a specific lender or loan servicer is not on the chart, homeowners may wish to contact the lender or loan servicer to determine if a workout program is available.

Mortgage loan modifications typically are handled on a case-by-case basis. Homeowners having difficulty meeting their mortgage obligation or interested in finding out more about a loan modification program should start by contacting their lender. Prior to calling a lender or loan servicer, homeowners should have the following information available:

. Loan number
. Income information and documentation
. Most recent mortgage statement
. Bank statements
. Letter demonstrating financial hardship

PLEASE pass this information along to anyone you know in this situation.

Good luck.

- Jim

www.NeighborlyRealty.com

Stimulus Package: Do You Qualify for Mortgage Help?

Hello again Neighbors,

Many of you have asked.... and we've held our thoughts, since the final details really weren't clear yet.

As of yesterday votes, it looks like we are moving forward with the Stimulus Package. GOOD. VERY GOOD.

Here is a pretty good article from our friends at CNN. THANK YOU CNN!

- Jim

www.NeighborlyRealty.com

Mortgage help: Do you qualify?

President Obama's new real estate rescue plan offers two key possible benefits: More refinancing opportunities and greater chance for a loan modification.
By Les Christie, CNNMoney.com staff writer
Last Updated: February 18, 2009: 7:11 PM ET

NEW YORK (CNNMoney.com) -- The eagerly anticipated foreclosure prevention program unveiled Wednesday by President Obama targets 9 million borrowers for help - are you one of them? The $75 billion effort, dubbed the Homeowner Affordability and Stability Plan, boils down to two basic solutions: First, the government is aiming to help more homeowners refinance to take advantage of new low interest rates. Second, it provides incentives to lenders and servicers to restructure your mortgage to more affordable levels. Official guidelines won't be unveiled until March 4, but here's how to know whether you'll likely be able to take advantage of either of these options.

Help for those seeking refinancing
This part of the program targets borrowers who have kept current on their mortgages. Many of the homeowners in this group have been unable to lower their housing costs through refinancings because of falling home prices. Right now, if you're underwater on your mortgage, owing more than the home's market value, forget about qualifying for a refi. In fact, at least 20% equity in your home is now a must. The new guidelines should help. Even homeowners with debt that exceeds home value by 5% could be eligible. And there will be no prepayment penalties. The Administration estimates that this will enable up to 5 million homeowners to obtain lower interest rate mortgages.

Who's not eligible.
Homeowners whose property values have dipped severely, putting them underwater by more than 5% are out of luck. Those with "jumbo" mortgages also don't qualify - only those with "conforming' mortgages do. To be absolutely sure what kind of loan you have, you need to check with your servicer or lender after March 4. But in general, until the past year, loans above $417,000 were considered jumbo mortgages, and Fannie Mae and Freddie Mac were not allowed to buy and guarantee them. All borrowers will have to prove they have sufficient income to be able to keep up their loan payments, though what would be sufficient proof wasn't yet clear.

Mortgage modification help for at-risk borrowers
Homeowners in default or at risk of default may qualify for loan modifications, which restructure the terms of loans. Anyone with high combined mortgage debt compared to income or who is underwater may be eligible for a loan modification. Borrowers with high levels of other debt, such as car loans and credit card debt exceeding 55% of their incomes, may still qualify for a modification but they'll be required to accept debt counseling in a HUD-certified program. If you qualify, your servicer or lender will reduce your monthly mortgage payments to 31% of your gross income. The payment would stay there for five years and then gradually revert back to the conforming loan rates in place at the time. The reduction would come mostly through interest-rate reductions, though in some cases, principal reduction also would be an option. Borrowers would also receive incentive bonuses of up to $1,000 a year for five years for making payments on time. President Obama estimated 3 to 4 million homeowners could benefit from the new modification procedures.

Who's not eligible
Speculators, those who bought homes for investment purposes, do not qualify for help -- all homes must be owner/occupied.The program will also not reward homebuyers who were irresponsible in their borrowing. All applicants will be closely examined by lenders and those who acted unscrupulously by, for example, misrepresenting their incomes in no-doc loan applications, would not qualify. And, in order to protect taxpayers from excessive expenses, no loans will be modified unless it results in a net savings compared with the costs of foreclosing. Finally, rates would not be lowered below 2%. That will disqualify many borrowers who simply can't afford any reasonable mortgage payment because of illness, for example, or job loss. "[The plan] will not reward folks who bought homes they knew from the beginning they would never be able to afford," said Obama. "In short, this plan will not save every home." No mortgages for amounts above comforming loan limits would be eligible.