Keep this in mind. . .

• Last month, HUD told lenders and loan officers that under no circumstances can worksheet quotes be issued to a mortgage applicant in lieu of a good-faith-estimate form.Under the new law, once a mortgage applicant supplies the essential application information, including Social Security number, property address, and estimated value, among other data, lenders must issue a binding-cost good-faith estimate. Once this information is provided, lenders are required to issue the good faith estimate within three days of the application.
• Under the new law, once a mortgage applicant supplies the essential application information, including Social Security number, property address, and estimated value, among other data, lenders must issue a binding-cost good-faith estimate. Once this information is provided, lenders are required to issue the good faith estimate within three days of the application.

• Loan officers cannot refuse to provide a good faith estimate to an applicant who requests one, nor can they tell applicants that they must commit to moving forward with their mortgage company to obtain a mortgage prior to receiving a good faith estimate.

• Once an applicant has received a good faith estimate, they can take the form with them to comparison shop. The new form includes itemized boxes allowing mortgage applicants to compare quotes from up to four lenders, such as interest rates, loan fees, prepayment penalties, and total settlement expenses.

• The good faith estimate also ties upfront estimates to later charges at closing, and encourages borrowers to check line by line for any discrepancies. The form explains which fees come with zero tolerance for changes between upfront estimates and closing—generally the lender’s own fees and local transfer taxes—and which fees allow a 10 percent fluctuation for changes higher than the estimate, such as certain title and closing-related services.
• Some worksheets resemble good-faith estimates, but have titles such as “estimated settlement costs” at the top of the page. Others indicate on the bottom of the form that the worksheet is not a good faith estimate, so consumers should carefully review documents before making any decisions.

To read the full story, please click here

The Mercury News Reports
Refi program for underwater homeowners gets another year.
The government is giving homeowners another year to refinance their loans under a little-used program designed to help borrowers whose homes have plummeted in value.

To read the full story, please click here

Bloomberg News Reports
Home prices decline 1.2 percent, smallest drop in two years.
U.S. home prices fell 1.2 percent in the fourth quarter from a year earlier, the smallest loss in two years, as a federal tax credit for home buyers boosted demand.

To read the full story, please click here

The Wall Street Journal Reports
Bid to curb mortgage tax break falters.
The latest effort to scale back some tax deductions on mortgage interest, one of the nation’s most-enduring tax breaks, is finding little support in Congress.

To read the full story, please click here

The Los Angeles Times Reports
Many borrowers in default stay put as lenders delay evictions.
Despite being months behind, many strapped residents are hanging on to their homes, essentially living rent-free. Pressure on banks to modify loans and a glut of inventory are driving the trend.

To read the full story, please click here

The New York Times Reports
Another foreclosure alternative.
Homeowners on the verge of foreclosure will often seek a short sale as a graceful exit from an otherwise calamitous financial situation. Their homes are sold for less than the mortgage amount, and the remaining loan balance is usually forgiven by the lender.

To read the full story, please click here

The Washington Post Reports
Consumer optimism seen with January rise in spending.
Perhaps the lessons of the Great Recession are not so deep-seated after all. Consumers spent more and saved less in January, according to government data released Monday, a sign that Americans feel increasingly secure about their financial situation, economists said.

To read the full story, please click here

The Wall Street Journal Reports
Freddie Mac abandons ship on interest-only loans.
Freddie Mac said on Friday that it would stop buying and securitizing interest-only loans in September because those mortgages have performed so poorly.

To read the full story, please click here

The Mercury News Reports
Increasing numbers of Californians are suing lenders to avoid foreclosure.
In the last five years, the number of foreclosure lawsuits filed in federal courts in California has ballooned—like an exploding adjustable-rate mortgage—from only 29 statewide in 2005 to nearly 1,400 last year.

To read the full story, please click here

What you should know about the market. . .

• When house hunting, first-time buyers are advised to create long-term budgets to help estimate costs of homeownership. Items such as taxes, insurance, utilities, closing costs, appraisal fees, escrow fees, homeowner’s insurance fees, and moving costs should be included in the budget.

• A common mistake many home buyers make is being too close-minded while searching for a home. To avoid this, home buyers should sit down with their REALTOR® and create a needs/wants list. Thelist should include items that are must-haves or deal-breakers, as well as those that are not necessary, but would be nice to have in the home.

Barclays blames government programs that have slowed foreclosures. “The overhang of distressed inventory is a huge negative technical. It suggests that any price rise will probably be met by increased distressed sales,” the report says.

The report also concludes that home prices are cheaper than rents and incomes suggest they should be, “but not extremely so.”

Source: Property Wire (03/03/2010)

IRS issues new guidelines on obtaining home buyer tax credits
The Internal Revenue Service (IRS) recently issued new guidelines and clarified documentation that taxpayers must submit to successfully obtain the federal tax credit for home buyers.

Keep this in mind:

• The federal tax credit for home buyers was extended and expanded late last year. Qualified first-time buyers may be eligible to receive a tax credit of up to $8,000 on homes purchased before April 30, 2010. Repeat buyers may be eligible for a tax credit of up to $6,500. Visit http://www.irs.gov/newsroom/article/0,,id=187935,00.html for more information about the federal tax credit for home buyers, including eligibility requirements.

• To receive the tax credit, home buyers must comply with the IRS’s documentation requirements, including a fully executed IRS Form 5405. On the form, which is available on the IRS’s Web site, taxpayers provide information supporting their claim of eligibility, such as income and home purchase date.

• The IRS also requires home buyers to submit a copy of the closing or settlement statement that proves the transaction took place. The IRS previously said that the statement should show “all parties’ names and signatures, property address, sales price, and date of purchase.” However, since closing or settlement statements vary by state, and in some cases the form does not include both the seller’s and buyer’s signatures, the IRS has revised this requirement. As long as the closing or settlement statement conforms to prevailing local practices, the IRS will accept it.

• One stipulation for repeat buyers is they must provide documentation they lived in their former property for a consecutive five years out of the previous eight years. Accepted documentation may include property tax records, hazard insurance records, or copies of annual mortgage interest statements filed with their federal taxes.

To read the full story, please click here

CNN Money

Housing help for unemployed, underwater borrowers
Under pressure to do more for troubled homeowners, President Obama is expected to announce a $1.5 billion program to help borrowers in five states hit hardest by the housing crisis.

To read the full story, please click here

The Los Angeles Times

High-end home sellers lower their sights
The housing slump is finally bringing down prices in the luxury property market.

To read the full story, please click here

The San Francisco Chronicle

More using program to prevent foreclosure
The number of mortgages with permanently lowered monthly payments under the Obama administration’s foreclosure prevention program increased dramatically in January.

To read the full story, please click here

Bloomberg News

High-scoring borrowers pay cards ahead of mortgages
Consumers with high credit scores are more likely to default on mortgages than credit-card loans, said FICO, maker of the scoring formula most widely used by U.S. lenders.

To read the full story, please click here

The Los Angeles Times

Jumbo mortgage market is beginning to thaw
The mortgage meltdown sent interest rates soaring and availability shrinking, but rates are declining and lenders are more wiling to make loans that top the limits for Freddie Mac, Fannie Mae, and the FHA.

To read the full story, please click here

The Sacramento Bee

Struggling homeowners warned against phony foreclosure ‘audits’
State officials warned struggling homeowners Monday about a new variation on loan-modification scams: “forensic loan audits.”

To read the full story, please click here

What you should know about the market. . .

• When beginning the house hunt, some buyers go in blindly, not knowing how much house they can afford. Without this knowledge, buyers may find themselves viewing houses that aren’t within their budget. To prevent buyers from spending time viewing homes they may not be able to afford, real estate experts advise home buyers get pre-approved by lenders before house hunting. By providing copies of a recent credit report, W-2s, pay stubs, and bank and brokerage statements to a lender, buyers will have a better idea of the price range they can afford.

• Many financial and real estate advisors also recommend home buyers create long-term budgets to help create guidelines for affordable mortgage payments and long-term homeownership costs. Most experts advise clients to devote no more than 30 percent of their monthly household income toward housing costs, which should include mortgage principal, interest, taxes, and insurance. There are numerous worksheets available online to help consumers calculate how their income, debts, and expenses may affect the amount they can afford each month for the next 15 to 30 years.

Rising defaults on FHA loans have led to the FHA’s cash reserves falling below federally mandated levels.  FHA officials hope that policy changes will ensure borrowers have a stronger equity position and are less likely to default.

Policy changes include:

• Raising the up-front mortgage insurance premium: The premium will rise to 2.25 percent from its current 1.75 percent.  HUD is expected to release a Mortgagee Letter on Jan. 21 making the premium increase effective in the spring.

• Raising the minimum credit score requirements: New borrowers will be required to have a minimum FICO score of 580 to qualify for the FHA?s 3.5 percent down payment program.  New borrowers with less than a 580 FICO score will be required to put down at least 10 percent.  FHA expects this to take effect in early summer after it goes through the normal regulatory process.

• Reduce allowable seller concessions:  The agency is lowering the maximum permissible level to 3 percent from its current 6 percent limit.  FHA expects this to take effect in early summer after it goes through the normal regulatory process.

For more information to read these possible changes, click here

Those Who Wait Will Pay Thousands More This Spring…

Waiting a few extra days or weeks to purchase a home this spring could cost buyers thousands of extra dollars as the office of Housing and Urban Development (HUD) implements several changes for loans guaranteed by the Federal Housing Authority (FHA).

Coming just weeks before the April 30 deadline for the Home Buyer Tax Credit and just days after the March 31 expiration of the Federal Reserve Board’s mortgage backed securities purchase program (which has kept home loan rates artificially low for over a year), these FHA changes make it even more important to act now to save big.

Here are a few reasons why:

On April 5th, the cost of required up-front mortgage insurance for loans guaranteed by the FHA will increase from 1.75% to 2.25%. For a borrower purchasing a $200,000 home with a $7,000 down payment, the up-front mortgage insurance will increase by $965. Up-front mortgage insurance is typically financed in the final loan amount so the impact to a monthly payment will be minimal but overall, the increase is still borne by the borrower both upfront and monthly.

Later this spring, the amount of money that a seller can return to the buyer from their sale proceeds will be reduced from 6% to 3%. The reduction in these “seller concessions” can increase the amount of cash a buyer will be required to pay at closing by $6,000 for a home purchase of $200,000.

To discuss your financing options further, please contact Brad Wiese at Comstock Mortgage at 916.977.1248.

Keep this in mind. . .

• The FHA is federally mandated to maintain reserve funds at 2 percent or greater. As of November, the agency reported that its fund had declined to .53 percent. The funding is used to cover losses on mortgages insured by the FHA that go into default.

• Loans insured by the FHA generally are less expensive to borrowers because of the lower down payment requirements. However, these loans also have fees, such as up-front mortgage insurance. To help the agency raise its cash reserves, the FHA is increasing the up-front mortgage insurance premium from its current 1.75 percent to 2.25 percent. HUD released a Mortgagee Letter today making the premium increase effective in the spring.

• The agency also is raising the minimum credit score requirements. Currently, borrowers with FICO scores as low as 500 have been approved for FHA-insured loans. Under the policy changes, new borrowers will be required to have a minimum FICO score of 580 to qualify for the FHA’s 3.5 percent down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10 percent. FHA expects this to take effect in early summer once it passes the normal regulatory process.

• The new policy also will reduce the amount of money sellers can provide to home buyers at closing to 3 percent, down from its current 6 percent, of the home’s price. The change brings the agency in line with industry standards and removes the incentive to inflate appraisals. The FHA expects this to take effect in early summer after it passes the normal regulatory process.

To read the full story, please click here:

You can’t file for your $8,000 home buyer tax credit (CNN Money)
Did you purchase a home after Nov. 6? Don’t expect your $8,000 home buyer tax credit any time soon.

To read the full story, please click here:

What home sellers don’t tell buyers (The Wall Street Journal)
As buyers ease back into the battered real-estate market, they’re often hitting a stumbling block: Fibbing by home sellers.

To read the full story, please click here:

Government mortgage plan aids 7 percent of borrowers (CNBC)
The Obama administration’s mortgage relief plan provided help to only 7 percent of borrowers who signed up last year, another black mark for the struggling program.

To read the full story, please click here:

Low rates for just a few (The New York Times)
Mortgage borrowers might be forgiven for sometimes feeling like victims of a bait-and-switch scheme

To read the full story, please click here:

Investors dominate home flipping, auctions (San Francisco Chronicle)
House flipping, a quick-buck scheme pursued by amateurs and professionals alike during the real estate boom,
now is dominated by investors willing to pay all cash, who troll auctions for foreclosures that banks are
gradually trying to siphon off their books.

To read the full story, please click here:

Rates on 30-year home loans fall to 4.99 pct (Sacramento Bee)
Rates for 30-year loans fell to a shade below 5 percent this week, but remained above last month’s record
lows.

To read the full story, please click here:

Home loan applications jump 9 percent as interest rates fall (Los Angeles Times)
Applications for home loans jumped 9 percent last week as interest rates declined for all types of mortgages,
falling back to 5 percent for 30-year fixed loans, the industry trade association reported Wednesday.

To read the full story, please click here:

What you should know about the market. . .

• Customized rooms with extremely bright or dark colored paint, wallpaper, or wall fixtures can make a house feel like a home for the current homeowner, but often can be a turn off for home buyers. When selling a home, many REALTORS® recommend repainting rooms with neutral colors to help prospective buyers see the potential for the house.

• For homeowners who planned to overhaul the kitchen or bathroom with a major remodel but never found the time, there are some small, inexpensive changes that can be done. Replacing the hardware on cabinets, upgrading light switches, and changing outlet covers are a few examples.

Housing may be headed for double dip
A recent real estate report indicates that consumers may be taking their time house hunting this winter, which some economists believe could lead to a “double dip” in home prices. A recent report from the NATIONAL ASSOCIATION OF REALTORS® (NAR) showed that its pending home sales index declined 16 percent in November to a reading of 96, the first decline after nine consecutive months of gains.

Keep this in mind. . .

• NAR’s Pending Home Sales Index (PHSI) is a barometer of future sales. Typically, there is a one- to two-month lag between the signing of a sales contract and the close of escrow. Although government incentives, low interest rates, and affordable home prices have lured many buyers, especially first- timers, to the market, historically sales decline during the winter months and begin to rise in the spring.

• Because of the government’s efforts to stimulate the housing market, some economists believe that housing prices will decline once the incentives come to an end. However, the CALIFORNIA ASSOCIATION OF REALTORS®’ (C.A.R.) closely watched “2010 California Housing Market Forecast,” projected that the median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 in 2009.

• According to C.A.R.’s Vice President and Chief Economist Leslie Appleton-Young, unlike the rest of the nation, home sales in California already bottomed out more than two years ago, and the median home price reached its trough in February 2009.

• Although home buyers should not focus solely on future home price appreciation, according to data collected by C.A.R. over the last 40 years, homeowners who purchase a median-priced house, live in their home for at least five years, and sell it at the current median price, have averaged an annual rate of return of more than 11 percent.

To read the full story, please click here:

Sacramento Bee

Schwarzenegger proposes new round of home buyer tax credits
Gov. Arnold Schwarzenegger yesterday proposed a new round of $10,000 state tax credits for buyers of new and existing homes in California.

To read the full story, please click here:

The Wall Street Journal

NY Fed: Most successful mortgage modifications reduce borrowers’ principal
Borrowers who receive loan modifications that reduce loan balances and not simply interest rates are far less likely to redefault on their loans, according to a new study from the Federal Reserve Bank of New York.

To read the full story, please click here:

MSN Money

Losing a home? A tax bite may be next
You might avoid debt-relief taxes if your lender forecloses on your house and cancels your mortgage. But you could still wind up owing a lot of money to the IRS.

To read the full story, please click here:

Los Angeles Times

Homeowners forced to buy flood insurance after FEMA redraws maps
Tens of thousands of homeowners in Southern California are being forced to buy costly flood insurance because new maps issued by a federal agency say they live in a high-risk flood area.

To read the full story, please click here:

San Fransisco Chronicle

Foreclosures weigh on home appraisals
Across the country, agents and homebuilders are complaining too many appraisals are coming in low, scuttling deals.

To read the full story, please click here:

What’s ahead for home prices?

California remains ahead of the nation in market recovery with many first-time home buyers entering the market due to affordable homes prices, low mortgage rates, and first-time home buyer tax credits from the state and federal governments. However, credit still is tight and unemployment remains high, which could hinder a full market recovery until 2011.

Keep this in mind

• Home sales in California hit bottom more than two years, and the median home price of an existing, single-family home reached its trough in February, according to data collected by the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.). In November, the state’s median home price rose in year- to-year comparisons for the first time since August 2007.

• C.A.R.’s closely watched “2010 California Housing Market Forecast,” projects that the median home price in California will rise 3.3 percent to $280,000 in 2010 compared with a projected median of $271,000 in 2009.

• Some economists are forecasting another surge of foreclosures in 2010. However, C.A.R.’s economists expect that foreclosures will remain flat this year compared with 2009. In 2008, many lenders flooded the market with foreclosures, and as a result, the state’s median price declined by historic levels. By comparison, in 2009, lenders listed properties for sale at a more measured pace, which helped moderate another home price decline.

• Government efforts to maintain a low interest rate environment have stabilized the market. However, a mortgage analyst at a financial publishing company predicts that rates likely will rise to 5.5 percent by mid-2010 and close the year at 5.75 percent to 6 percent.

To read the full story, please click here:

(Chicago Tribune)

Rates on 30-year mortgages drop to 5.06 pct
Rates for 30-year home loans edged lower for the second straight week, a report said Thursday, but remained above last month’s record lows.

To read the full story, please click here:

(Los Angeles Times)

Signs of life in the home-building industry
A large-scale development in Irvine and profits posted by some builders bring hope for a turnaround, but the industry’s outlook remains fragile.
To read the full story, please click here:

(Daily Breeze)

State and national foreclosure filings continue to rise
Even as the economy and real estate market show signs of stabilizing, foreclosure filings continued to grow in California and nationwide last year.
To read the full story, please click here:

(Los Angeles Times)
Going to sell the house? Don’t wait for ’spring’ in February
The busiest season for home sales traditionally begins the day after the Super Bowl. But putting off getting the
word out about your property would probably be a mistake, some experts say.

To read this full story, please click here:

What you should know about the market…

• The government is expected to unveil a new program in the next couple of months that, if approved, may reimburse homeowners for up to half the cost of making their homes more efficient. Through the program, homeowners will receive the largest return from simple upgrades like caulking windows, adding insulation, and changing incandescent light bulbs to those that are more energy-efficient.

• To determine which energy-efficiency upgrades are best for their house, homeowners should obtain a home energy audit.  Homeowners are advised to hire a contractor licensed by the Building Performance Institute or the Residential Energy Services Network. These contractors have been trained to first test a home to determine the amount of energy it is losing, and then make suggestions on renovations.

Thinking about selling or buying, give us a call to discuss your next move, click here to send an email or give us a call at 916.759.1699.

In Sacramento County, 4,934 existing single-family detached homes were sold during the second quarter, up just under 1 percent from the 4,920 homes sold during the same period of 2008 - the fifth consecutive quarter that sales have improved compared with the previous year. With the percentage of sales of bank foreclosures down from a peak of 75 percent to about 54 percent in June, homebuyers increasingly faced multiple offers on competitively priced properties. All-cash offers accounted for 25 percent of transactions in June. That and strong interest from first-time buyers and investors caused the average number of days a home was listed before sale to remain essentially unchanged at 63 days, up slightly from 61 days in the first quarter and 55 days a year ago.

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If you would like to know more specific information about the value of your home or are thinking about buying in Sacramento County, give us a call at 916.759.1699 or email us.

You can SEARCH MLS Listings In Sacramento County at your convenience. SIGN-UP for FREE MLS Listing Notifications and you will be emailed new listings that meet your specific criteria for properties for sale in all neighborhoods. This is a great way to stay informed of the hottest listings and have an edge on the competition because you’ll see Sacramento County listings before everyone else!

In Sacramento County, 4,589 existing homes were sold during the first quarter, up from 2,619 sold during the same period of 2008 - the fourth consecutive quarter and twelfth consecutive month that sales have improved compared with the previous year. The strong sales results and a moratorium on new foreclosures generated at least a temporary reduction in the number of foreclosed and bank-owned properties on the market. As a result, the average time a home was on the market before sales dropped from 72 days a year ago to 61 days in the first quarter and multiple offers became commonplace among homes priced below $200,000.

Click the image below to read this article in it’s entirety.

If you would like to know more specific information about the value of your home or are thinking about buying in Sacramento County, give us a call at 916.759.1699 or email us.

You can SEARCH MLS Listings In Sacramento County at your convenience. SIGN-UP for FREE MLS Listing Notifications and you will be emailed new listings that meet your specific criteria for properties for sale in all neighborhoods. This is a great way to stay informed of the hottest listings and have an edge on the competition because you’ll see Sacramento County listings before everyone else!