All Orange County Homes

Foreclose/Shortsale - Another perspective

2009-07-03T14:23:00.000-07:00

New insight into the foreclosure crisis

According to Stan Liebowitz, professor of economics at the University of Texas, popular explanations such as sub-prime lending and rise in unemployment and interest rates do not adequately explain the high rise in foreclosures since 2007. Liebowitz's study of foreclosure data, pertaining to the period after the third quarter of 2006 when foreclosures started rising significantly, shows that 51% of all foreclosed homes had prime loans, not subprime. In addition, the foreclosure rate for prime loans grew by 488% compared to a growth rate of 200% for subprime foreclosures. In today's Wall Street Journal, Liebowitz says negative equity -- the balance of the mortgage being greater than the value of the house -- is the single most important factor driving foreclosures. While one may argue that negative equity does not mean a loss of homeowners' ability to pay their mortgage, it does point to the possibility that homeowners may be more willing to walk away from their mortgages.

Liebowitz argues that methods behind the government's $2 trillion package for stabilizing house prices are poorly targeted. Liebowitz highlights the importance of underwriting standards, including a requirement of high down payments in mortgages. High down payments would have limited the growth of the housing bubble and the impact of negative equity would have been much smaller when home prices fell. If homeowners have positive equity, they would have lesser incentive to default on mortgages and the lenders' salvage value, in the event of a default, would be much higher. Liebowitz exhorts politicians to "face up to the actual causes of the mortgage crisis, not fictitious causes that fit political agendas and election strategies."

Mortgage rates fall; will they stay low?

According to Freddie Mac, rates for 30-year fixed home loan dropped this week to an average of 5.32% from an average of 5.42% last week. The rate was 6.35% this time last year. Rates on 30-year mortgage rose from a low of 4.78% earlier this year to 5.6% in June on account of rising yields on government securities. Analysts were worried about the rising mortgage rates hampering the recovery of the housing market. Yields on government securities have dropped in the recent past, leading to a drop in mortgage rates.

"Lower mortgage rates are helping to support the housing market," said Frank Nothaft, Freddie Mac's chief economist. The average rate on a 15-year fixed-rate mortgage dropped to 4.77%, down from 4.87% last week, while rates on five-year, adjustable-rate mortgages averaged 4.88%, down from 4.99% last week. These rates do not include add-on fees.

Lies, more lies and statistics

Data drives everything in our economy. The government makes important decisions on the basis of data. But what if the data is incorrect? Robert Kleinhenz, Deputy Chief Economist for the California Association of Realtors (CAR), has said in an interview that the California home sales data for the current year had mistakes. Home sales data pertaining to San Diego county was incorrect on account of a computer error. The CAR had previously reported a 63% increase in April's San Diego home sales from a year earlier and an 89% increase in May from a year earlier.

Thomas Lawler, an independent economist, said last week the numbers reported by the CAR vastly exceeded those reported by other agencies. The CAR has now revised the gain in April to 20% and the gain in May to 6.5%. The mistake is confined to just San Diego data and the state-level data will not be impacted significantly by the downward revision. "It's going to reduce the statewide number by a couple percentage points, but it's not going to make a huge difference in the statewide," said. Kleinhenz.

Seven more banks fail, taking the total to 52 this year

Six banks in Illinois and one in Texas, with total assets of $1.49 billion and deposits of $1.34 billion, were closed by regulators this week. Buyers have been identified for all the closed institutions. The failures will cost the insurance fund of the Federal Deposit Insurance Corporation (FDIC) a sum of $314.3 million. "The six failed Illinois banks are all controlled by one family and followed a similar business model that created concentrated exposure in each institution," the FDIC said.

All the failed banks had significant exposure to the real-estate sector. "The common denominator for most of the bank failures so far has been troubled construction loans," said Matthew Anderson of Foresight Analytics. "There's no easy way out with defaulted construction loans in today's environment." The number of failed banks this year has risen to 52, the most in a year since 1992. With the economy not showing any signs of sustained recovery, the FDIC's insurance fund is likely to take more hits in the months to come.

Private equity players unhappy with takeover rules proposed by the FDIC

The Federal Deposit Insurance Corporation (FDIC) has proposed rules which would require firms buying out banks to put in more capital at risk. According to the FDIC's "source of strength" rule, a bank's owner should be a source of strength "for their subsidiary depository institutions." The rule will force private equity firms interested in acquiring or investing in the assets and liabilities of failed banks to stay invested in the bank for at least three years and be capitalized at a Tier 1 leverage ratio of 15%. The FDIC believes that the new rule will prevent the acquired banks from being "flipped" for a short-term gain. The new rules are subject to a 30-day comment period.

Not everyone inside the FDIC is convinced about the usefulness of the proposed rules. John Bowman, a member of the FDIC's board, said the new rule could "choke off capital." Douglas Lowenstein, president of the Private Equity Council, an industry group, said: "The FDIC's proposed guidance would deter future private investments in banks that need fresh capital."

Now on to our real estate investor education section...

The Fear Factor - Fight, Flight or.... Faint?

You have heard it a million times before; buy low and sell high. It sounds simple enough so why do so few people fail to heed this common sense approach to investing? Plain and simple - it's the fear factor. Successful short sale investors have learned how to proactively invest with their intellect rather than react from an emotional response. Fortunately, once you realize how fear is responsible for the majority of short sale investing mistakes it's easy to take action and get your investments back on track.

How do you respond to fear and uncertainty?

Fight. Some people are naturally motivated through fear. It provides just the right level of encouragement to get them moving and keep them alert to the potential opportunity afforded by short sales. No matter how bad the market has treated them they realize the need to not go down without a fight and fight they do. These are the people that take inventory, weigh the risk and reward then get busy informing themselves and working the program to begin rebuilding wealth.

Flight. These people are energized all right but they are unable to properly channel that energy into productive results. This is one of the worst situations to be in because it consumes all your time, energy and extra income while leaving you very little to show for it. Sadly, the majority of most self-proclaimed "investors" fall into this category - they believe the activity level makes them an investor...it doesn't. The proof is in the PROFIT. Don't trade a lot of activity for actual results - instead, go with a proven system that generates real returns.

Remember, your time and energy as well as hard earned dollars should show a very real profit. It's okay to begin slow and learn as you go - but learn how to measure the results.
Faint. The fight or flight response is well known in nature but there is one other response less commonly mentioned...the tendency to faint. Have you ever met a person confronted with a perceived threat or something like blood that simply melts away rather than run or turn and confront the problem? Some investors are the same; they become immobilized by fear. Doubt, confusion and outright anxiety over-ride their normal senses. Without a clear plan of action they fall prey to unethical schemes or simply give-up on their hopes and dreams for the future...their own and often that of their family.

Recognize your tendency then take steps to restore your financial future with the help of a short sales system that has been proven to work. Get involved with others able to provide the information and tips you need to succeed until you have a proven track record of success under your belt. It's one of the best reasons short sales remain such a popular investment vehicle; you can start at whatever level your tolerance for risk, level of energy and assets allow. There is literally something for everyone.
------
See you at the top!

Chris McLaughlin

Great News!

2009-04-17T19:40:00.000-07:00

Breaking news about California home sales...
and this time its something you will actually WANT to read!
(this is great news)
For the first time in months.....California home sales....have actually
INCREASED by nearly 50% over this time last year!
This isn't being reported in the media and I wanted you to know.
Told you it was great news....
Go here now to read the whole blog post.

California July 2008 Home Sales

2008-08-25T18:12:00.000-07:00

August 20, 2008

A total of 39,507 new and resale houses and condos were sold statewide last month. That was up 12.2 percent from 35,202 in June and up 12.3 percent from 35,185 for July last year. While below the 47,756 average for the last 21 Julys, last month's sales count was off the record low sales level which the market went into last September.
Of the homes sold in June, 44.8 percent were foreclosure resales, up from a revised 42.5 percent in June and 7.6 percent in July a year ago.
The median price paid for a home last month was $318,000, down 3.0 percent from $328,000 for the month before, and down 33.5 percent from $478,000 for July a year ago. Around half the drop in median is due to depreciation, the other half due to shifts in the types of homes selling, and how those homes are financed.
The typical mortgage payment that home buyers committed themselves to paying last month was $1,501. That was down from $1,543 in June, and down from $2,316 for July a year ago. Adjusted for inflation, mortgage payments are back to where they were in early 2002. They are 27.8 percent below the spring 1989 peak of the prior real estate cycle. They are 41.7 percent below the current cycle's peak in June 2006.
MDA DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. The numbers cover all sales, new and resale, houses and condos.
Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages is near an all-time low. Down payment sizes and flipping rates are stable, non-owner occupied buying activity is flat, DataQuick reported.
Media calls: Andrew LePage (916)456-7157 or John Karevoll (909) 867-9534
Copyright 2005 DataQuick Information Systems. All rights reserved.
A total of 39,507 new and resale houses and condos were sold statewide last month. That was up 12.2 percent from 35,202 in June and up 12.3 percent from 35,185 for July last year. While below the 47,756 average for the last 21 Julys, last month's sales count was off the record low sales level which the market went into last September.
Of the homes sold in June, 44.8 percent were foreclosure resales, up from a revised 42.5 percent in June and 7.6 percent in July a year ago.
The median price paid for a home last month was $318,000, down 3.0 percent from $328,000 for the month before, and down 33.5 percent from $478,000 for July a year ago. Around half the drop in median is due to depreciation, the other half due to shifts in the types of homes selling, and how those homes are financed.
The typical mortgage payment that home buyers committed themselves to paying last month was $1,501. That was down from $1,543 in June, and down from $2,316 for July a year ago. Adjusted for inflation, mortgage payments are back to where they were in early 2002. They are 27.8 percent below the spring 1989 peak of the prior real estate cycle. They are 41.7 percent below the current cycle's peak in June 2006.
MDA DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts. The numbers cover all sales, new and resale, houses and condos.
Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages is near an all-time low. Down payment sizes and flipping rates are stable, non-owner occupied buying activity is flat, DataQuick reported.
Media calls: Andrew LePage (916)456-7157 or John Karevoll (909) 867-9534
Copyright 2005 DataQuick Information Systems. All rights reserved.

Prices drop again

2008-08-25T17:40:00.000-07:00

Southland home sales post annual gain -- prices drop again
August 18, 2008
La Jolla, CA---The number of Southern California homes sold last month edged up to its highest level in more than a year as bargain hunters swept up foreclosure properties in affordable neighborhoods, a real estate information service reported.
A total of 20,329 new and resale houses and condos sold in Los Angeles, Riverside, San Diego, Ventura, San Bernardino and Orange counties last month. That was up 16.7 percent from 17,424 the previous month and up 13.8 percent from 17,867 for July a year ago, according to San Diego-based MDA DataQuick.
Last month's sales count was the highest since 21,856 homes were sold in March 2007, though it still fell 23 percent short of the average July sales total since 1988, when MDA DataQuick's statistics begin. From last September through June, sales for each month were at an all-time low for that particular calendar month, with the exception of April which was the next lowest. Last month's sales total was the first since September 2005 to rise above the year-ago level.
"What we're looking at is a fire sale of properties in newer affordable neighborhoods that were bought or refinanced near the price peak with lousy mortgages. What we're still not seeing is this level of distress spreading to more expensive or established neighborhoods," said John Walsh, MDA DataQuick president.
The median price paid for a Southland home was $348,000 last month, down 2.0 percent from $355,000 in June and down 31.1 percent from $505,000 for July 2007. That peak of $505,000 was reached in March, April, May and July of last year.
The median has fallen because of depreciation, especially in inland markets, and because of the steep drop off in home financing in the so-called jumbo category, which until recently was defined as loans above $417,000.
Before the credit crunch hit in August 2007, nearly 40 percent of Southland sales were financed with jumbo loans. Jumbos last month accounted for 15.8 percent of Southland sales.
Foreclosure resales continue to be a dominant factor in today's Southern California market, accounting for 43.6 percent of all resales. That was up from a revised 41.8 percent in June, and up from 7.9 percent in July 2007. Foreclosure resales -- where a foreclosure had occurred at some point in the prior 12 months -- ranged from 22.2 percent of all resales in Orange County last month to 64.4 percent in Riverside County.
MDA DataQuick, a subsidiary of Vancouver-based MacDonald Dettwiler and Associates, monitors real estate activity nationwide and provides information to consumers, educational institutions, public agencies, lending institutions, title companies and industry analysts.
The typical monthly mortgage payment that Southland buyers committed themselves to paying was $1,632 last month, down from a $1,671 the previous month, and down from $2,447 a year ago. Adjusted for inflation, the current payment is at its lowest level five years. It's 36.9 percent below its year- ago level and 24.2 percent lower than the spring of 1989, the peak of the prior real estate cycle.
Indicators of market distress continue to move in different directions. Foreclosure activity is at record levels, financing with adjustable-rate mortgages is near the all-time low as is financing with multiple mortgages. Down payment sizes and flipping rates are stable, non-owner occupied buying activity appears flat but may be emerging, MDA DataQuick reported.

Fast Facts

2008-05-29T09:44:00.000-07:00

Residential Home Sales - Statistics for California per California Association of Realtors

Calif. median home price - April 08: $403,870 (Source: C.A.R.)

Calif. highest median home price by C.A.R. region April 08: Santa Barbara So. Coast $1,170.000 (Source: C.A.R.)

Calif. lowest median home price by C.A.R. region April 08: High Desert $210,860 (Source: C.A.R.)

Calif. First-time Buyer Affordability Index - First Quarter 08: 44 percent (Source: C.A.R.)

Mortgage rates - week ending 05/22/08 30-yr. fixed: 5.98% Fees/points: 0.5% 15-yr. fixed: 5.55% Fees/points: 0.6% 1-yr. adjustable: 5.24 % Fees/points: 0.6% (Source: Freddie Mac)

Fed Cuts Rates by 3/4 Percentage PointMar 18, 3:38 PM (ET)

2008-03-18T14:14:00.000-07:00

By MARTIN CRUTSINGER -WASHINGTON (AP)

The Federal Reserve on Tuesday slashed a key interest te three-fourths of a percentage point, moving aggressively to contain a credit crisis threatening to push the country into a severe recession.The latest action brought the federal funds rate - the interest that banks charge each other - down to 2.25 percent, the lowest point since late 2004. It marked the second cut of three-fourths of a percentage point this year. The first occurred at an emergency meeting on Jan. 22 and was followed by a half-point cut at a regular meeting on Jan. 30.Fed Chairman Ben Bernanke and his colleagues have now cut the funds rate six times since last September, with the reductions becoming more aggressive since January as the central bank has faced growing turmoil in global financial markets.However, there has been opposition inside the Fed to the aggressive moves. The latest rate cut came on an 8-2 vote with two members of the Federal Open Market Committee dissenting. Both Richard Fisher, president of the Dallas regional Fed bank, and Charles Plosser, president of the Philadelphia regional Fed bank, voted against the rate cut, arguing they would have preferred less aggressive action.In explaining its actions, the Fed said that it was having to navigate a difficult policy environment that included sluggish economic activity and rising inflation pressures.The Fed statement said that "the outlook for economic activity has weakened further" but that "inflation has been elevated" with some signs that expectations of future inflation pressures are rising, a dangerous sign for the Fed.But the Fed signaled that it stood ready to cut rates further if necessary, saying that "downside risks to growth remain." Bernanke and other Fed officials have said in recent comments that they view the threat of economic weakness as a bigger risk at the moment than inflation given the risks to financial markets."Financial markets remain under considerable stress and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters," the Fed said in its statement.In Jacksonville, Fla., Tuesday, President Bush said the government will take further action - if necessary - to help the sagging economy.The rate cut Tuesday caps an unprecedented period of Fed actions aimed at trying to stabilize financial markets and ward off a recession or at least keep it from being too severe.While the cut was larger than the Fed's normal quarter-point moves, investors were initially disappointed that the central bank did not cut rates by a full percentage point.The Dow Jones industrial average fell 100 points within two minutes of the Fed's mid-afternoon announcement but it then resumed climbing and was up nearly 200 points within the first half-hour after the announcement. It had been up 286 points just before the announcement as stocks had posted a strong rally after Lehman Brothers and Goldman Sachs reported better-than-expected results for the first quarter. That came as welcome news following the collapse over the weekend of Bear Stearns, which was forced into a fire-sale to JP Morgan Chase & Co.The reduction in the funds rate was designed to lower borrowing costs and boost spending by consumers and businesses and thus increase economic activity. Economic growth slowed to a near standstill in the final three months of this year as the economy was hit by a series of blows including the credit crunch, a prolonged housing slump, rising unemployment and surging energy prices.The funds rate cut quickly triggered announcements from commercial banks that they were cutting their prime lending rate to 5.25 percent from 6 percent, where it was before the Fed meeting. This rate is the benchmark for millions of business and consumer loans.The spectacular fall of Bear Stearns, which had been the nation's fifth largest investment bank, has raised concerns about what other banks might fail as a result of multibillion-dollar losses that began last year with rising defaults on subprime mortgages, loans made to borrowers with weak credit histories.The purchase of Bear Stearns by JPMorgan Chase & Co. (JPM) was helped by a pledge from the Fed that it would supply a $30 billion line of credit to back up Bear Stearns' assets.That offer was the latest in a number of unconventional moves the central bank has made, including employing Depression-era procedures to pump cash into the financial system.In addition to providing support for the Bear Stearns sale, the Fed also announced Sunday one of the broadest expansions of its lending authority since the 1930s, saying it would allow securities dealers for at least the next six months to borrow directly from the Fed. That privilege had been confined to commercial banks.In other moves, the Fed last week announced that it would lend up to $200 billion of Treasury securities that it owns to investment banks starting March 27 for a period of up to 28 days in return for a like amount of the investment banks' shunned mortgage-backed securities. The Fed also announced recently that it was boosting the size of special loans it has been making since December to commercial banks.====================================================================================================

Hot news on St. Patrick's Day!

2008-03-17T15:10:00.000-07:00

In a pair of unusual moves announced late Sunday, March 12th, the Fed cut its discount rate by a quarter of a percentage point, to 3.25%, and offered to lend money to a broader range of firms.
More good news to follow.

Happy St. Patrick's Day

Great Irish Pabs? Muldoons Pub in Newport Beach near Fashion Island
http://www.muldoonspub.com/
or
Molly Blooms, San Clemente off El Camino by the golf course
http://www.mollybloomsirishbar.com/

Fed Calls For Reducing Mortgage Foreclosures

2008-03-06T09:14:00.000-08:00

Federal Chairman Ben S. Bernanke
At the Independent Community Bankers of America Annual Convention, Orlando, Florida
March 4, 2008

FED CALLS FOR MORE AGGRESSIVE PLAN TO AID DISTRESSED HOMEOWNERS:

Fed Chairman Ben S. Bernanke yesterday called for a more aggressive response to the nation's housing and foreclosure crisis, suggesting that lenders do more to help struggling homeowners avoid foreclosure and, in turn, help stave off further erosion of home prices in distressed areas and the broader economy."This situation calls for a vigorous response," Bernanke said. "Measures to reduce preventable foreclosures could help not only stressed borrowers but also their communities and, indeed, the broader economy. At the level of the individual community, increases in foreclosed-upon and vacant properties tend to reduce house prices in the local area, affecting other homeowners and municipal tax bases."

His concluding remarks:

The rate of preventable foreclosures would promote economic stability for households, neighborhoods, and the nation as a whole. Although lenders and servicers have scaled up their efforts and adopted a wider variety of loss-mitigation techniques, more can, and should, be done. The fact that many troubled borrowers have little or no equity suggests that greater use of principal writedowns or short payoffs, perhaps with shared appreciation features, would be in the best interest of both borrowers and lenders. This approach would be facilitated by allowing the FHA the flexibility to offer refinancing products to more borrowers.
Ultimately, though, real relief for the mortgage market requires stabilization, and then recovery, in the nation's housing sector. Modernization of the FHA would be of help on this front as well. I am sure that the FHA and the Department of Housing and Urban Development, given the appropriate powers by the Congress, will make every effort to expand their operations and to help improve the functioning of the market for home-purchase mortgages. For community bankers, FHA modernization and expansion would provide an important opportunity--of which I urge you to take advantage--to better serve your customers and community.
The government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, likewise could do a great deal to address the current problems in housing and the mortgage market. New capital-raising by the GSEs, together with congressional action to strengthen the supervision of these companies, would allow Fannie and Freddie to expand significantly the number of new mortgages that they securitize. With few alternative mortgage channels available today, such action would be highly beneficial to the economy. I urge the Congress and the GSEs to take the steps necessary to allow more potential homebuyers access to mortgage credit at reasonable terms.

New Loan Limit=$729,750

2008-03-05T21:53:00.000-08:00

WASHINGTON (AP) - The government on Wednesday raised the mortgage limits for loans guaranteed by the Federal Housing Administration in 14 high-cost California counties.
The Department of Housing and Urban Development released the new loan limits for California -- a hotbed during the housing boom that now is suffering the worst home-price declines in the nation. The limits, with the maximum at $729,750, are derived from median home prices in each county.
HUD is expected to raise the limits in other counties nationwide in the coming days.
The economic stimulus package includes a temporary increase in the limit on FHA-backed loans, from $362,790 to as high as $729,750 in expensive areas, to let more homeowners with high-rate subprime mortgages refinance into federally insured loans.
The package also includes a temporary increase in the cap on mortgages that the government-sponsored mortgage companies Fannie Mae (nyse: FNM - news - people ) and Freddie Mac (nyse: FRE - news - people ) can buy or guarantee from $417,000 to $729,750.
The idea is to stoke investor demand for securities made up of more expensive mortgages -- so-called jumbo loans -- backed by Fannie and Freddie, the two biggest mortgage financers in the country. That would drive interest rates lower and spur home buying and refinancing.
Roughly half of all jumbo mortgages are in California, according to federal regulators.
California Gov. Arnold Schwarzenegger said the new limits will 'help California's housing market rebound.'
'No other state has been more impacted by the ongoing mortgage crisis than California, and the announcement today ... will help more working Californians achieve the American dream of homeownership through less expensive and more secure loans,' he said in a statement.
Schwarzenegger has pressed Congress to make the increased limits -- which expire at year's end -- permanent.
The Federal Housing Administration, a Depression-era agency within HUD, insures mortgages for low- and middle-income borrowers.
Counties that get the $729,750 maximum for FHA loans are likely to get that same level for Fannie and Freddie mortgages, experts said. HUD is expected to designate new Freddie and Fannie limits for other parts of the country too.
In California, the counties at the maximum level for FHA loans are Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, San Benito, San Francisco, San Mateo, Santa Barbara, Santa Clara, Santa Cruz and Ventura. At the other end, Lassen, Modoc and Trinity counties are subject to a loan cap of $271,050 -- a standard amount in an area with normal home prices.
HUD Secretary Alphonso Jackson said Wednesday the new limits will make FHA-backed loans available to as many as 30,000 Californians and 250,000 homeowners nationwide.
The new limits 'will allow for greater economic stability for our communities,' Jackson said in a speech in Los Angeles. A text of his remarks was distributed by HUD

It's a great day in the OC Riveria even with a little higher rate.-

2008-02-27T10:58:00.000-08:00

Rates have moved higher again this week, as is normal for this time of year with our March Rate spike. Energy costs tend to rise considerably this time of year, which is perceived as inflationary, and that is only one reason for increase in rates. There is so much conflicting data in the market right now its hard to make heads or tails out of it sometimes.

Some good news is that as of March 1st, the conforming loan limits are supposed to be increased. However, I don't think we're lucky enough to have someone with a $700,000 loan get the base conforming of price of 6% (today). In other words, it will most likely be tiered.

The following is a hypothetical example of what the tier might look like:

Loans from $417,000-$550,000 might be .125% (an eighth) higher
Loans from $550,001-$700,000 might be .25% (a quarter) higher
loans from $700,000 to $730,000 might be .5% (a half) higher

Even with the tier, this should still inject some much needed activity into the purchase market, particularly those that are looking at property over the $500,000 mark. Sometimes the suggestion of lower rates, even if not a dramatic difference, will get people off the fence and in the market.

Looking forward to your phone calls and helping you with all your real estate needs.
Elizabeth 949-400-3606

Senate Passes Stimulus Package -- Final Bill Includes Increased Loan Limits

2008-02-26T11:43:00.000-08:00

Thanks in part to the lobbying by C.A.R. and NAR members; the Senate passed their version of an economic stimulus package on Thursday, February 07, 2008. The Senate version expands rebate checks for seniors and disabled veterans and includes the same increases to the conforming loan limits for both GSE and FHA found in the House stimulus package. The House has already announced that they plan to vote on the Senate version of the stimulus package and expect to quickly pass the stimulus package with a bipartisan vote. The President is expected to sign the legislation early next week, ahead of the Congressional self-appointed deadline of February 15th. The increase in the conforming loan limits will last through 2008, but C.A.R. and NAR continue to lobby for FHA and GSE reform, making these increases permanent. The U.S. House of Representatives passed a stimulus package last week that raised the FHA and conforming loan limits to as high as $729,750 in high-cost areas. By increasing the loan limits, borrowers will see immediate relief with new liquidity in the mortgage market and the nation will see an additional 300,000 home sales. Research shows that an increase in the FHA limit would enable an additional 138,000 Americans to purchase homes, and 200,000 families to refinance their homes safely and affordably.

Increasing the FHA loan limits is critical to bolstering California's housing market. Current law restricts FHA loans to levels well below the median home price in many areas of the country and caps loans in high cost states at $363,790. These limits are preventing many homebuyers from using FHA to purchase or refinance their loan. The proposed provision will increase FHA loan limits nationwide by raising the floor to $271,050 and the limit to 125% of local median home prices. Additionally, raising Fannie Mae and Freddie Mac's (GSEs) conforming loan limit will provide immediate relief to borrowers and alleviate downward pressure on current housing markets. For instance, increasing the GSE loan limit could result in more than 300,000 additional home sales and strengthen current home prices by 2-3%. The critical role that GSEs play in providing liquidity to the mortgage market has never been more evident than it is today. The national subprime meltdown has had a dramatic impact on both the cost and availability of mortgages in many markets. Since August 2007, the interest rates for jumbo borrowers have been more than 1 percentage point higher than conforming loans, which can cost homeowners up to $400 month in higher interest payments.

DON'T KEEP ME A SECRET If you know someone who is considering buying or selling a home, please give me a call. I will provide professional & courteous service along with knowledgeable guidance through the process. (949)-857-1002 Thank you.

test

2008-02-26T11:29:00.000-08:00

this is my first post