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 (CNNMoney.com) -- 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 Economy.com. 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

www.NeighborlyRealty

www.NeighborlyFinancial

www.CashOutoftheBayArea.com

Can You Get a Loan Modification ??

Yes neighbors, you can!

Take a look at this website:

http://www.bankrate.com/dls/news/mortgages/20090521_obama_loan_modification_a1.asp

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

If you qualify? WE CAN DO IT FOR YOU.

Outstanding!

Call Jim today at 916.801.3940

- Jim

www.NeighborlyRealty.com

www.NeighborlyFinancial.com

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.

Thanks,

- Jim

www.NeighborlyRealty.com

www.NeighborlyFinancial.com


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: http://www.dre.ca.gov/mlb_adv_fees_list.html

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: http://www.dre.ca.gov/cons_drs.asp

Contains just the opposite. THESE ARE THE COMPANIES AND PEOPLE WHO HAVE BEEN CAUGHT SO FAR.

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

www.NeighborlyRealty.com

www.NeighborlyFinancial.com

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 Zillow.com. 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 zillow.com). 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 Zillow.com.

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

www.NeighborlyRealty.com

www.NeighborlyFinancial.com

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: Jim@NeighborlyRealty.com

DETAILS:

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: Jim@NeighborlyRealty.com

Many thanks,

- Jim

www.NeighborlyFinancial.com

www.NeighborlyRealty.com

$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 CNNMoney.com staff writer
Last Updated: May 19, 2009: 12:45 PM ET

NEW YORK (CNNMoney.com) -- 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

www.NeighborlyRealty.com

www.NeighborlyFinancial.com

Sacramento Recovering?

Hello Neighbors,

Take a look at this video from CNN:

http://www.cnn.com/video/#/video/us/2009/05/06/simon.ca.housing.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

www.NeighborlyRealty.com

www.NeighborlyFinancial.com

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