Reduced conforming loan limit to hit Monterey County hardest

Barring Congressional action, Monterey County will be California's hardest hit county later this year when the conforming loan limit drops nationwide from the $729,950 limit to a maximum $625,500.

by Broderick Perkins
© 2011 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - If you plan to buy a California home that will require a big mortgage, move fast -- if you aren't already too late.

Barring Congressional action, Monterey County will be California's hardest hit county later this year when the conforming loan limit drops nationwide from the $729,950 limit to a maximum $625,500.

In Monterey County, the conforming loan limit will fall nearly $247,000 to $483,000, according to the California Association of Realtors (CAR).

Under the new FHA loan limits, after Monterey County the greatest drop in the loan limit would be Merced ($201,450) followed by Riverside ($164,650), San Bernardino ($164,650), Solano ($157,300), and San Diego ($151,250) counties.

Right now, non-conforming or jumbo loans typically carry a mortgage interest rate a quarter percentage point or more than a conforming loan, resulting in a higher down payment and larger monthly payment, according to Marc Mungaray, a loan officer, at Academy Mortgage in Monterey.

That reduces housing affordability and how much the spread could change is "anybody's guess," he says.

"Generally it's a quarter point but it could go up to a full point," Mungaray said.

Approximately 9 percent of home sales could feel the squeeze in Monterey County, CAR projects, 30,000 statewide.

The conforming loan limit determines the maximum size of a mortgage that the Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee. The GSEs back 95 percent of today's mortgages.

"By reducing the conforming loan limit, thousands of California home buyers will be shut out of homeownership," said CAR President Beth L. Peerce.

"The higher mortgage loan limits are critical to providing liquidity in today’s housing market and are essential to our housing recovery. We urge Congress to maintain the current limits and make them permanent to provide homeowners and home buyers with affordable financing and help stabilize local housing markets," Peerce said.

That's not likely given federal legislators' penchant for budget-balancing efforts that include rolling back housing relief provisions put in place even before and after the Great Recession.

The higher conforming loan limits were part of the Housing and Economic Recovery Act (HERA of 2008 to the GSEs to insure, guarantee and buy more mortgages at a time when private funding froze during the financial crisis.

While some say private banks will pick up the slack, others aren't so sure.

On July 13, 2011, Federal Reserve Chairman Ben Bernanke told the U.S. House of Representatives' Financial Services Committee the private market was set to fill the void when the conforming loan limits on government-backed mortgages are set to expire in October, but at a higher cost to homebuyers.

"As far as Fannie Mae and Freddie Mac are concerned, there is a tradeoff there between supporting the higher priced homes and weaning the housing finance system off of unusual limits it was put under during the crisis," Bernanke said.

"I understand the private sector is taking at least a significant number of the jumbo mortgage market but at a higher cost," he added.

However, CAR said, in anticipation of the expiration of current loan limits on Sept. 30, 2011, Bank of America on July 1 stopped accepting conventional and government applications for loan amounts that will exceed the lower loan amounts.

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Housing bust withered California's economy, job market

Nov. deadline looms for
emergency BP oil claims

New home construction contributed only $13.8 billion to California's economy in 2009 and nearly 77,000 jobs, down 80 percent from $67.7 billion in economic output and a whopping 84 percent from 487,000 jobs when the home-building boom peaked in 2005 statewide.

by Broderick Perkins
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Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - When housing went down in the Golden State it took Californian jobs and a chunk of the economy with it.

The bust has cost the Golden State hundreds of thousands of jobs, and $54 billion in economic output.

According to "The Economic Benefits of Housing," study by the California Homebuilding Foundation, an economic research and consulting group, every newly constructed single-family home generates 3.24 jobs during construction and supports another 1.2 jobs, and each dollar spent building a home generates another 80 cents in total economic activity.

With deep fissures in the housing market, an economic cornerstone, new home construction alone contributed only $13.8 billion to California's economy in 2009 and nearly 77,000 jobs, down 80 percent from $67.7 billion in economic output and a whopping 84 percent from 487,000 jobs when the home-building boom peaked in 2005 statewide.

In Monterey County, in 2008, builders constructed 456 new homes and only 194 in 2009. Monterey's new home construction generated 811 jobs in 2008 but only 372 last year. New home construction generated nearly $140 million in economic output in 2008 in Monterey County, but only about $64 million in 2009.

At the peak statewide, the 205,000 new homes permitted accounted for almost 3 percent of the state's total economic output. That fell to 0.4 percent in 2009, when only 35,000 new homes were permitted statewide, the study says.

Even at the peak, the number of new homes permitted fell below the 220,000 that the state Department of Housing and Community Development said are needed annually to meet normal population growth.

It's not just the direct economic effects of the new home building industry's construction efforts.

Toss in a range of related services including remodeling, repair, brokerage, property management and financing and the industry generates more than $347 billion of economic output and supports nearly 1 million jobs statewide, according to the study.

Nearly 11 percent of California's total economic output is from the entire housing industry, ranking it first among the state's leading output industries. Even after the downturn the industry's economic output outpaces wholesale and retail trade; professional scientific and technical services and information.

While the output contributes to all counties, benefits are highest in the largest regions, including Los Angeles, Orange and San Diego Counties.

The study was designed to reveal the significance of the housing industry on two levels:

• The full range of economic impacts of new housing construction, including support industries and consumption of expenditures generated through the multiplier or ripple effect.

• The still greater significance of the entire housing industry including residential real estate, financing, maintenance and repair, additions and alterations, construction, homeowner expenditures, property manage and all other aspects of the entire stock of owner- and renter-occupied housing.

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Special homeowner relief extended to more 'hardest hit' states

More qualified homeowners struggling with unemployment or under-employment in additional states have been targeted by two expanded foreclosure-prevention efforts from the Obama administration.

by Broderick Perkins
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Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - More qualified homeowners struggling with unemployment or under-employment in additional states have been targeted by two expanded foreclosure-prevention efforts from the Obama administration.

First, from the U.S. Department of the Treasury's Housing Finance Agency (HFA) Innovation Fund for the Hardest Hit Housing Markets (the Hardest Hit Fund), comes $2 billion in additional assistance available for HFA programs for homeowners struggling to make their mortgage payments due to unemployment.

Earlier this year the Hardest Hit Fund launched with $1.5 billion going to only five states Arizona, California, Florida, Michigan and Nevada, where home values have fallen more than 20 percent from peak 2006 and 2007 markets.

The money was earmarked for state housing agency programs that reduce so-called "preventable" foreclosures faced by unemployed home owners, so-called "underwater" home owners and home owners struggling with second mortgages.

The extra $2 billion is earmarked for states that have experienced an unemployment rate at or above the national average over the past 12 months -- Alabama, California, Florida, Georgia, Illinois, Indiana, Kentucky, Michigan, Mississippi, Nevada, New Jersey, North Carolina, Ohio, Oregon, Rhode Island, South Carolina, Tennessee and Washington, D.C.

Each state must submit for approval, proposals for targeted unemployment programs that provide temporary assistance to eligible homeowners to help them pay their mortgage while they seek re-employment, additional employment or undertake job training. The original states can add the new money to previously approved programs or design new ones.

"Keeping unemployed people in their homes is only a good idea if there is hope of obtaining a job near that home. The last thing many of these well-intentioned programs should do is to restrict the mobility of labor," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.

"Additional assistance for people who are in need of relocating to another state or area for a job, who are currently underwater in their home value or in making their mortgage payment, is something that should be given priority as well," she added.

HUD 'bridge' loans sweeten pot

Building on the Hardest Hit Fund, the U.S. Department of Housing and Urban Development (HUD) will soon launch, for the same 17 states and the District of Columbia, a $1 billion Emergency Homeowners Loan Program specifically for emergency zero-interest "bridge" loans to help struggling homeowners make house payments for up to two years.

The loans are earmarked for qualified homeowners who are at risk of foreclosure and have experienced a substantial reduction in income due to involuntary unemployment, underemployment, or a medical condition.

Administered by state and non-profit entities, the emergency loan program will offer declining balance, deferred payment loans for up to $50,000 to assist eligible borrowers in making house payments, including property taxes and homeowners insurance for up to 24 months. The loans will be non-recourse, zero-interest, subordinate loans, that help borrowers "bridge" their financial troubles until they find work.

Eligibility requirements will include:

• The borrower must be at least three months behind on his payment but have a "reasonable likelihood" of resuming his regular monthly payments and related housing expenses within two years.

• The borrower must demonstrate a good payment record prior to the event that caused the reduced income.

• The property must be the borrower's primary residence. Vacation homes and investment properties don't qualify.

HUD promised more details in the coming weeks when the programs roll out.

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Perkins is managing editor of HomeAway.com's Gulf Coast Response Center.

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San Francisco Bay Area ground zero for national housing recovery

Go offbeat! Click my head!

"Right now, the Bay Area is leading California's recovery because the area has fewer sub prime loans and this area is truly unique, with unique properties."

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - With some Golden State home prices skyrocketing again, the focus is turning to the California region that could be truly ground zero platinum for the nation's next real estate boom.

According to California Association of Realtors (CAR) vice president and chief economist Leslie Appleton-Young, the San Francisco Bay Area, including Silicon Valley, is at the top of the heap.

"Right now, the Bay Area is leading California's recovery because the area has fewer subprime loans and this area is truly unique, with unique properties," Appleton-Young said at a recent Silicon Valley Association of Realtors (SILVAR) meeting in Palo Alto last week.

Even the Bay Area weather is cooperating. After several unusually heat-wave filled summers, the region has returned to its temperate-best Mediterranean like climate, a perfect inducement for home shopping.

In May, 8,264 homes closed escrows in the nine-county San Francisco Bay Area, up 18 percent from April and 11 percent from May 2009, according to MDA DataQuick.

In the Bay Area, the May median price of all homes was $410,000 up smartly more than 20 percent from May 2009.

That's a boom time pace.

In Santa Clara County (Silicon Valley), sales were up 28.2 percent from the previous year and the median price of $525,000 was up 18 percent from $445,000 in May of 2009.

Again, boom time stuff.

"The fortunes of California, including its state coffers, tend to rise and fall along with the returns generated in the stock market. A significant rise in the median price of a home in the Bay Area is likely linked to the dramatic recovery seen in the stock market in the past year, particularly in the tech sector, as market returns translate into home-buying cash," said Nancy Osborne, chief operating officer of Erate.com, a Santa Clara, CA-based financial information publisher and interest rate tracker.

Dataquick pointed out the median sale price of all homes moved above $400,000 for the first time in 21 months because of action in the mid- to high-end markets of $500,000-plus homes, as sales fell in many affordable inland areas where investors and first-time buyers faced a dwindling inventory of low-cost foreclosures.

"The median has increased because the high end is making a comeback as there is a little more willingness on the part of sellers to take concessions; there are fewer distressed properties in the Bay Area compared to the rest of the state; and the jumbo market has started loosening for high-end borrowers," Dataquick reported.

California's volatile housing market is known for fast stops and faster starts.

Appleton-Young, often conservative in her estimates, said in five to 10 years California will see the beginning of a housing shortage and that could cause skyrocketing prices -- again.

She told the SILVAR meeting there has been an 83 percent drop in building of new homes since 2004, yet household growth for the state is projected at approximately 200,000 a year.

When demand outpaces supply, boom happens.


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California gets $700 million slice of special $1.5 billion homeowner bailout pie

Spontaneous orgasms real

Earlier this year, President Obama announced a $1.5 billion infusion for state housing agencies in Arizona, California, Florida, Michigan and Nevada. The Golden State scored $700 million of it.

by Broderick Perkins
© 2010 DeadlineNews.Com


Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - California struck gold, receiving the biggest chunk of a special $1.5 billion federal fund pie for programs that target struggling homeowners in states hardest hit by the housing crash.

California Housing Finance Agency (CalHFA) recently announced the fat $700 million slice would go toward four different programs ultimately assisting 40,000 homeowners.

Earlier this year President Obama announced the $1.5 billion infusion for state housing agencies in Arizona, California, Florida, Michigan and Nevada, where home values have fallen more than 20 percent from peak 2006 and 2007 markets.

The $1.5 billion will be withdrawn from funds set aside for housing under the Emergency Economic Stabilization Act of 2008 (EESA).

The money is earmarked for state agency programs that reduce so-called "preventable" foreclosures faced by unemployed home owners, so-called "underwater" home owners and home owners struggling with second mortgages.

In addition to California's $699.6 million stake, Florida gets $418 million; Michigan, $154.5 million, Arizona, $125.1 million and Nevada, $102.8 million.

"We are very grateful that the Obama Administration recognizes that California and several other states have been severely impacted by the twin problems of unemployment and home price depreciation," said Steven Spears, executive director of CalHFA

The details aren't finalized and homeowners, who needn't be CalHFA loan holders, must otherwise quality before approval. CalHFA's federally approved "Keep Your Home" programs are:

• Mortgage payment assistance for jobless. Up to six months of mortgage payment assistance, with a $1,500 cap for homeowners who have lost their jobs.

• Mortgage payment assistance for past-due homeowners. Up to $15,000 each, with a mandated match from the mortgage lender, the help those with past-due payments.

• Mortgage principal reduction. Underwater borrowers, who owe significantly more on their loans than their homes are worth, get a mortgage principal reduction to "market levels."

• Transition assistance. For those who can't afford to stay in their homes and are completing a short sale or handing over the deed in lieu of a foreclosure, financial assistance for the transition will be provided.

For more details contact CalHFA's Keep Your Home program online or by phone (916) 373-2585.


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California home prices golden again, sales rusty

Since the home price trough in February 2009, single-family, detached home prices in California have risen a golden 32.3 percent from $245,230 to $324,430, as of May 10, according to the California Association of Realtors.

by Broderick Perkins
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Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - California's home prices are literally skyrocketing again, soaring in some of the Golden States' largest metro areas by 30 percent to more than 50 percent in little more than a year.

The price surge may be an indication of California's readiness to take the lead again in the nation's housing recovery -- if it can only get its sales engine going.

Fence-sitters and those looking to go West and put down stakes?

Take note.

California's home prices have been known to take off like wildfires, burning buyers who waited for the bottom only to find it long gone and themselves priced out of the market -- again.

California led the nation as one of the states hardest hit by foreclosures and did not fully hit bottom until February last year, according to the California Association of Realtors (CAR).

However, since that home price trough in February 2009, single-family, detached home prices have risen a whopping 32.3 percent from $245,230 to $324,430, as of May 10, according to CAR.

Get the full story here: "California home prices shine golden again, sales rusty"


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Housing's hard landing due third quarter 2010

Credit score myths

Despite continued tight market conditions, housing should stop bleeding in the third quarter this year according to Zillow, a real estate information provider and home listings portal. Healing is another matter.

by Broderick Perkins
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Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - Nearly one-in-four homeowners were underwater on their mortgage, foreclosures reached a new peak and home values in most U.S. market continued to slide, all in the first quarter this year.

But, says Zillow, the end is near.

Despite continued tight market conditions, housing should stop bleeding in the third quarter this year according to Zillow, a real estate information provider and home listings portal.

Healing is another matter, reports Zillow, in its first quarter Real Estate Market Reports covering 135 metropolitan markets.

"We believe national home values are more likely to reach bottom in the third quarter of 2010, rather than in the second quarter, as we had hoped. When we do get there, we expect the high rates of negative equity and foreclosures to keep national home value appreciation near zero for some time, possibly as long as five years," said Zillow Chief Economist Dr. Stan Humphries.

Zillow may be a bit conservative. Some sources predict a much longer recovery.

Humphries is, however, bullish on a third quarter landing for the housing market because home values in several large California markets have stabilized significantly, and they show tentative signs of reaching market bottom.

"As goes California, so goes the nation," is a long recited phrase of both hope and doom, depending upon which way the market is moving, given the sheer size of California's housing market and the state market's past impact on nearby states.

Erate.com has the full story "Zillow: Housing's hard landing due July-September 2010"


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California's improved home buyer tax credit a day late, but still great

Horse-drawn cart art down payment

California's new and improved home buyer tax credit provides $200 million in home buyer tax credits, double the original $100 million and the new version is not just for first-time home buyers.

by Broderick Perkins
© 2010 DeadlineNews.Com



Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - A repeat windfall for home buyers, and once considered as hopeless as a balanced budget in the Golden State, California's popular home buyer tax credit is back -- and it's better than ever.

In fact, it's twice as good as it was before.

The Golden State's home buyer tax credit sequel, AB 183, recently signed by movie star Governor Arnold Schwarzenegger, is back and it's upstaged the original deal by providing $200 milliion in home buyer tax credits, double the original $100 million for qualified first time home buyers who purchased new homes, and the new version is not just for first-time home buyers.

"I have been up and down the state pushing this important housing bill that will get people off the fence and into homes while creating jobs and stimulating our economy and today I am proud to take action and put it into law," said Governor Schwarzenegger at the legislation's signing ceremony.


At 12.5 percent, California has the fifth highest unemployment rate in the nation.

The new law's $200 million allocations is split 50/50 between eligible first time home buyers who purchase an existing home and anyone purchasing a new home. First-time buyers are defined as those who have not owned a home in the past three years.

"The American dream is on sale. It's the Blue Light Special of home buying in California!" exclaimed Julie Larsen Wyss, a broker associate with Intero Real Estate in San Jose, CA.

Unfortunately, the immediately obvious flaw in California's home buying carrot is that it takes effect May 1, 2010 the day after the existing and also expanded federal home buyer tax credit is scheduled to end, April 30, 2010.

When both the California and federal home buying tax credits were available simultaneously, Californians struck a mother lode of a home buying tax credit up to a maximum total of $18,000.

The first $100 million tax credit, approved in February 2009 was only for first time home buyers who purchased only new homes. Funds ran out after just four months with 10,659 Californians claiming the credit.

Under the new California home buying tax credit there's $100 million for first-timers purchasing resale homes and $100 million for anyone buying a new home. There's no limit on the price of the home and no income limitations on buyers.

The tax credit is equal to the lesser of 5 percent of the purchase price or $10,000. It is not a refundable tax credit like the federal tax credit but must be taken in equal installments over three consecutive years to offset state taxes due.

Home buyers taking the credit will be required to live in the home as their principal residence for at least two years or forfeit the credit by repaying it to the state. Buyers also must be at least 18 years old and be unrelated to the seller.

First come-first served eligible taxpayers must close escrow between May 1, 2010 and Dec. 31, 2010, or after December 31, 2010 and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010.

Watch for clarifications from the states Franchise Tax Board

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Perkins is also the first Examiner to cover three beats for the Examiner.com news service:
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California home sellers' losses become first-time home buyers' gains

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offers 'free' credit reports

Sixty-seven percent of all home sellers in California did so in 2009 because they had a tough time making the mortgage payment. The first-time home buyer share of the buying market, 47 percent, exceeded the state's long-run average of 38.6 percent and was the highest since 1995.

by Broderick Perkins
© 2010 DeadlineNews.Com



Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - As economic turmoil forced most California home sales last year, doors opened to a near record share of first-time home buyers.

According to the California Association of Realtors' (CAR) "2009-2010 Survey of California Home Sellers", 67 percent of all home sellers in California did so in 2009 because they had a tough time making the mortgage payment.

Unemployment and adjustable rate mortgage (ARM) resets, along with tough underwriting and equity losses preventing refinanced bailouts, converged on home owners, forcing them to sell, the report said.

Meanwhile, CAR's "2009-2010 "State of the California Housing Market" said first-time buyers enjoyed the spoils. First-timers represented nearly half, 47 percent, of all Golden State home buyers in 2009.

The first-time home buyer share exceeded the state's long-run average of 38.6 percent and was the highest since 1995, when more than half of all buyers were first-timers.

"It is clear that the federal tax credit for home buyers worked well in 2009 and is continuing to drive home sales," said CAR President Steve Goddard.

"The home buyer tax credit is arguably the most successful strategy employed by the government's efforts to stimulate the economy," Goddard added.

Some qualified Californian home buyers enjoyed both a federal and state home buying tax credit totaling as much as $18,000. The state version, for new homes only, ran out of cash months after it was introduced last year.

Home buyers also cashed in on distressed properties. More than half of all first-time buyers purchased a foreclosure or short sale property. Distressed properties accounted for almost half of all the state's sales in 2009, an increase from 35.6 percent in 2008.

"2009-2010 Survey of California Home Sellers" also found:

• On average, homes sold for $20,958 less than the original asking price in 2009. The median difference between the selling and listing price was $32,315. The list-to-sold-price ratio was $30,000 below list for first-time sellers, but only $8,000 below list for those who had sold before.

• Among sellers, 44 percent were first-time sellers, a 33 percent increase from 2008, and nearly three times the 2007 percentage of 15 percent.

• Sellers in 2009 cited difficulty meeting the monthly mortgage obligations (30 percent); job loss (18 percent); and a higher mortgage payment (15 percent) as the primary motivation to sell. In 2008, only 20 percent cited the ability to meet their mortgage payment obligation; while 11 percent sold due to financial difficulties.

• Financial difficulties caused 63 percent of homes to fall out of escrow prior to closing often because the buyer could not land mortgages, the buyer backed out, buyer's remorse and home prices declined, among other reasons.

2009-2010 "State of the California Housing Market" also found:

• One-third of sellers experienced a net cash loss in 2009, the highest level on record since CAR started tracking the statistic in 1989.

• The median net cash gain from home sales declined 50 percent last year to $50,000 from $100,000 in 2008.

• Nearly 40 percent of buyers were prompted to buy by the federal tax credit.

• Lower home prices boosted affordability. CAR's First-Time Buyer Housing Affordability Index rose to a record 64 percent in the third quarter of 2009.

• Lower-priced distressed properties prompted more than half buyers to take the plunge. More than 70 percent of properties purchased by investors were either short sales or foreclosures.

• Low-down payment Federal Housing Administration (FHA) loans were also a lure. The percentage of home buyers using an FHA-insured loan increased to 32 percent in 2009, compared with 18.9 percent in 2008. The median down payment for FHA-insured loans was $9,888 compared with $92,000 for conventional purchase loans.

• The median price of distressed properties declined nearly one quarter to $250,000 in 2009 compared with $330,000 in 2008; non-distressed property prices decreased only 10.4 percent to $485,000 in 2009 compared with $541,000 in 2008.

• Over all, California's median home price hit bottom in February 2009 at $245,170; for the year 2009, the median was listed at $271,000 and is projected to increase to only $280,000 in 2010.

• Statewide, annual sales of existing homes are projected to reach 527,500 units in 2010, a 2.7 percent decline compared with 2009's annual rate of 540,000 units.


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Suffering states to share $1.5 billion in home owner aid

Credit Card Act confusion

Select state housing finance agencies are anxiously awaiting a small windfall to help as many as 125,000 struggling home owners in five states hardest hit by the housing crash.

by Broderick Perkins
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Deadline Newsroom - Select state housing finance agencies are anxiously awaiting a small windfall to help as many as 125,000 struggling home owners in five states hardest hit by the housing crash.

President Obama announced late last week a $1.5 billion infusion for housing agencies in Arizona, California, Florida, Michigan and Nevada, where home values have fallen more than 20 percent from peak 2006 and 2007 markets.

Looking for their share, officials from state housing finance agencies (HFAs) were scrambling Monday to come up with the required program proposals that target unemployed home owners, so-called "underwater" home owners with homes worth less than their mortgage and home owners struggling with second mortgages.

"We don't have any details, just the announcement that was made Friday, but we are working on proposals even without the knowledge of how much we'll receive and that's hard to do without knowing," said Mary Lou Keenon, spokeswoman for the Michigan State Housing Development Authority (MSHDA).

State housing agencies engage in public and private partnerships to promote affordable housing and community economic development activities. Low cost loans, grants, education and other efforts typically target needy low- and moderate-income households.

The $1.5 billion will be withdrawn from funds set aside for housing under the Emergency Economic Stabilization Act of 2008 (EESA).

The money is earmarked for state agency programs that reduce so-called "preventable" foreclosures. The U.S. Treasury must approve any programs before they begin.

Programs can vary, but mortgage modification has been the primary tool to help home owners stay in their homes.

A mortgage modification occurs when the lender reworks the terms of an existing home loan, typically to lower payments and make the home more affordable. To get the payment down, lenders lower the interest rate, extend the loan term, reduce the principal (rarely) or use any combination of those approaches.

Treasury estimates are putting the cost of modifying troubled loans at approximately $12,000 each, which would provide help to around 125,000 homeowners. That's not much considering some 1.5 million homeowners are in need of help.

Other programs could include financial assistance for unemployed home owners and using funds to pay cash incentives to second mortgage holders, in an effort to encourage first mortgage holders to provide mortgage modifications.

"I've got to again repeat — government can’t stop every foreclosure. There's not enough money in the Treasury to stop every foreclosure. And we shouldn’t be using tax dollars to reward the same irresponsible lenders or borrowers who helped precipitate the crisis," Obama cautioned during a town meeting with 1,800 residents Feb. 19 at Green Valley High School in the Las Vegas suburb of Henderson, NV.

"During these difficult economic times, we will work to help responsible homeowners stay in their homes and stabilize the housing market so home values can rise," the president added.

Las Vegas had the nation's highest metro area foreclosure rate, with one in every 82 housing units receiving a foreclosure filing in January, according to RealtyTrac.

The high rate came despite a nearly 2 percent decrease in foreclosure activity from the previous month and a nearly 21 percent decrease in foreclosure activity from January 2009, RealtyTrac reported.

On the state level, four of the states awarded the $1.5 billion fund, also have the nation's highest foreclosure rates. One in every 95 Nevada housing units received a foreclosure filing during in January — more than four times the national average. The rate was one in every 129 for Arizona; and one in 187 for both California and Florida. Michigan's foreclosure rate was 1 in 258 and not among the top five, according to RealtyTrac.

"We are really excited and grateful for this help, and we intend to hit the ground running as soon as we know how much we will receive," said Evan Gerberding, assistant director of marketing for the California Housing Finance Agency (CalHFA).

"We have a loan modification program in place, but we will develop new programs to help borrowers who are unemployed or under employed or are underwater because that's the administration's goal," Gerberding added.

There will be a formula for allocating the funds among the five states based on home price declines and unemployment.

HFAs must submit programs that target struggling home owners as well as affordable home programs. Funded programs and programs' efficacy ratings will be posted online to promote transparency and accountability.


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Rebounding California housing market a leading indicator for US

Surviving cold winter blackouts

California's housing market is rebounding, perhaps leading the way for the nation and year-to-year numbers shows Santa Cruz and Silicon Valley are leading the way in California.

by Broderick Perkins
© 2009 DeadlineNews.Com



Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - California's housing market is often a bellwether for the nation and if the Golden State's housing market trends continue, conditions could bode well for the rest of the nation.

Both home prices and home sales are on the upswing in California, previously one of the hardest hit states in the nation during the recession.

The California Association of Realtors (CAR) reported this week, the state's median home price rose to $304,520, a 5.8 percent increase from the $287,880 median for November 2008.

A smaller supply is helping push up prices. CAR's Unsold Inventory Index fell to 4.5 months in November, compared with 7.1 months in November 2008, according to the association.

"The median price for most regions hit bottom during the first half of the year, and the statewide median home price now is nearly $60,000 higher than its lowest point in the current cycle," said CAR President Steve Goddard.

"First-time buyers continued to drive the market in November, as many opened escrow to take advantage of the federal tax credit prior to its original Nov. 30 expiration," said Goddard, who expects further price boosts due to sales generated by the extension of the first-time home buyer tax credit and an expansion of the credit to include qualified move-up buyers.

Meanwhile sales statewide were up 4.7 percent from a year ago.

"With sales bottoming out more than two years ago, and the median home price reaching its trough in February 2009, California remains ahead of the nation in market recovery," said CAR's Vice President and Chief Economist Leslie-Appleton-Young.

The condo segment is, by far, both the price and sales leader, with prices are up 12.1 percent from a year ago and sales jumping by a whopping 26.3 percent, according to CAR.

Statewide, the cities with the greatest median home price increases in November 2009 compared with the same period a year ago were: Cupertino, 37.8 percent; Poway, 35.8 percent; Morgan Hill, 33.2 percent; Lake Forest, 25.6 percent; Atwater, 24.4 percent; San Rafael, 23.8 percent; Atascadero, 22 percent; Vista, 21.2 percent; Tulare, 19.8 percent; Fountain Valley, 18 percent.

Year-to-year regional sales leaders were Santa Barbara South Coast, up 115 percent; Santa Cruz County, up 50 percent; Santa Clara County (Silicon Valley), up by 45.5 percent; San Luis Obispo, 40 percent and Orange County, where sales were up 28 percent from last year.

Prices and sales appear well on their way in the Golden State to live up to CAR's projections for 2010.

In October, CAR said California's median single family home price in California will rise 3.3 percent to $280,000 in 2010, up from the projected median of $271,000 this year.

Sales for 2010 were expected to decline 2.3 percent to 527,500 units, compared with 540,000 units (projected) in 2009.

During the current boom-bust cycle, California's median price for single family homes peaked in 2007 at $560,300 and sales rose to 625,000 units in 2005.

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Home prices buoyed by favorable market conditions

Banks charging fees for
NOT using credit card

Investors are back. Home prices are lower. Interest rates are at record lows. Foreclosure abatement is up. It all adds up to rising home prices.

by Broderick Perkins
© 2009 DeadlineNews.Com



Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - If home prices were up all year as much as they've risen in the past two quarters, the housing market would be enjoying home price increases in the 6 percent neighborhood this year, thanks to a host of favorable factors.

Lower home prices, tax incentives, record low mortgage rates, foreclosure abatement measures and returning investors are coming together to send more buyers to market.

Home prices were up in the third quarter at an annualized rate of 3.8 percent and 8.2 percent in the second quarter, according to Freddie Mac's Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series.

The index registered an actual 0.9 percent quarterly gain, during the third quarter 2009 following a 2.0 percent gain in the second quarter. Together the two-quarter increase erased two-fifths of the home price declines registered during the final quarter of 2008 and the first quarter of 2009.

Happy days aren't quite hear again, however.

U.S. home sale prices remain down 3.9 percent from a year ago, according to the index.

Also, over the past five years, home prices remain down by double digits in some regions including the West South Central Division, by 20.5 percent; Middle Atlantic Division, by 16.2 percent and East South Central Division, by 15.4 percent, Freddie Mac Reported.

But even California's new home market is showing signs of recovery.

The pace of new home sales in the Golden State rose above year-ago levels for the first time since December of 2006, according to the California Building Industry Association (CBIA).

The October 20009 CBIA/Hanley Wood Market Intelligence (HWMI) New-Home Sales and Pricing Report showed that sales in new-home communities of 10 units or more, were 25 percent above October 2008, the first notable increase since the start of the housing downturn.

"While this month's figures are encouraging, we must keep in mind that we're comparing the figures to October of 2008, which was the second lowest month of nominal sales we've seen during the downturn," said Jonathan Dienhart for HWMI.

"Examining the data in a rolling twelve months, tells a more realistic increase, with a 1.5 percent rise from last month," he added.

The same is true nationwide.

"Prices are still down relative to their peaks in most markets. For example, as measured by the CMHPI, values in the New England, East North Central and Pacific divisions are at 2004 levels, on average, and the South Atlantic, West North Central, and Mountain states' home values are at 2005 levels. In contrast, average values in the West South Central area have tied their previous peak from the third quarter of 2008, while average home values in the Middle Atlantic and East South Central states have reached 2006 and 2007 levels, respectively," said Frank Nothaft, Freddie Mac vice president and chief economist.

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California home buyer tax credit extension dead

Crib recall CPSC's largest ever

California's $10,000 tax credit on new home purchases only, combined with the new and improved federal $8,000 tax credit to give thousands of Californians a Mother Lode of a tax credit. It was also a boon to home sales in high-priced California. Now, it's gone.

by Broderick Perkins
© 2009 DeadlineNews.Com



Unauthorized use of this story is a copyright violation -- a federal crime


Deadline Newsroom - California won't renew its home buyer tax credit any time soon, if at all.

The California Building Industry Association's Allison Barnett told the Sacramento (CA) Bee, plans to extend the quickly depleted funds for the $10,000 tax credit for new home buyers in the Golden State died in both houses of the state's legislature.

An Assembly bill to extend the credit failed to get the vote in the Senate and a similar Senate bill likewise failed in the state's Assembly.

"We were disappointed neither of those bills panned out this year," she told Bee writer Jim Wasserman.

"We're looking for options next year," Barnett said, according to Wasserman's story.

The news comes during hard times for California's new home building industry.

New home permits for 2009 are on track to be, by far, the lowest on record, according to the nonprofit Construction Industry Research Board (CIRB), which predicts permits for just 36,000 total units this year.

Compare that to the nearly 213,000 housing starts in 2004 and the more than 322,000 starts in 1963, according to the California Building Industry Association's (CBIA) own data.

Last year, housing starts numbered about 65,000, CBIA statistics show.

CIRB said builders pulled just 29,901 permits during the first 10 months this year, a 46 percent drop from the 55,632 permits pulled in the same period in 2008.

Thus far this year, permits for single-family units are down 30 percent, while permits for multifamily units are down 64 percent.

California's $10,000 tax credit on new home purchases only, combined with the new and improved federal $8,000 tax credit to give thousands of Californians a Mother Lode of a tax credit.

It was also a boon to home sales in high-priced California.

According to California's Franchise Tax Board, more than 10,600 household benefited from a portion of the $100 million plan to subsidize new home purchases with a tax break.

The board is no longer accepting applications.

Last week CBIA called on state legislators to reconsider the tax credit, given the home building industry's potentially positive impact on the state's economy.

And as is often said, as goes California, so goes the nation.

"The state tax credit generated much positive momentum earlier this year by way of helping to generate new-home sales, and in turn, job-generating new-home construction. California lawmakers should reexamine these benefits and work to implement a new tax credit in hopes of continuing that positive momentum and encourage a broader economic recovery in the coming year," said Liz Snow, CBIA's President and CEO.

"Bolstering the housing sector would only help to foster a broader economic recovery," she added.

California home buyers, like others nationwide, are left with a federal tax credit of up to $8,000.

The extension and expansion of the popular federal home buyers tax credit gives both new and move-up buyers a tax incentive to buy a home until at least April 30, 2010, longer for military personnel.

The new law extends the existing credit for first-time homebuyers, worth up to $8,000, through April 30, 2010.

A new credit of up to $6,500 is available to qualifying existing homeowners who buy a new primary residence (or have one built) by April 30, 2010, if they owned their existing home for five consecutive years over the last eight years.

Home buyers have to repay the federal tax credit if they live in their primary residence less than 36 months and are not members of the military.

The new rule also raises the qualifying income limits to $125,000 for single taxpayers and $225,000 for joint taxpayers, from the current $75,000 and $150,000.

The maximum allowed home purchase price is $800,000.

Both first-time home buyers and others must close escrow by June 30, 2010.

Military personnel, deployed overseas for a minimum of 90 days in 2008 or 2009, would have until April 30, 2011 to claim the tax credit.

By October 9, 2009, more than 1.2 million tax returns had claimed about $8.5 billion in the refundable federal tax credit, for both new and resale homes, according to the Treasury Inspector General for Tax Administration (TIGTA).

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