Mortgage rates dropped last week to the lowest they have been since May of 2004.

Most 30 year fixed rate loans are less than 5%, while 1, 3, and 5, year fixed with adjustable rates have dropped below 4%.

A new wave of foreclosures is expected this summer due to the maturation of many of the 5 year balloon mortgages.

However, the impact of these will likely not drive prices lower, but may provide additional inventory that has not been previously available.

Many of those in the balloon payment type mortgages are trying for short sales versus going the foreclosure route. Low interest rates, plus the typical uptick in the number of homes available during the summer equal a situation of good inventory plus low rates.

Making this summer one of the best times to buy in recent years!

Financially strapped homeowners in San Diego looking to cut their mortgage payments through a loan modification …

… or principal reduction needn't destroy their credit scores in the process. Some of the most frequently used mortgage modification programs turn out to have minimal negative impact on homeowner's FICO scores.

As an example, people with excellent scores at the time of a loan modification (whose mortgage and other credit accounts are current) might find their scores down by 30-40 points after a modification that involved deferral of payments for a number of months.

The same consumers might see a small gain in their scores-average 30-40 points-if their lender modified their loan by reducing 10% of the balance owed and chose not to report the reduction as a charge-off; however, if the lender does report a charge-off, their score could drop by 100 points or more.

Homeowners who do not pursue or their lender does not grant a loan modification will most likely end up in a short sale, foreclosure or bankruptcy.

A short sale can knock scores down by 130 points instantly, a foreclosure can cause a 140 point decline and a bankruptcy filing has a huge impact with as much as a 365 point drop for homeowners who previously had good credit.

Erin McBratney, Realtor
Prudential California Realty
working with Peter Toner
DRE # 01846670

WINDOW OF OPPORTUNITY FOR CALIFORNIA BUYERS

Last week Gov. Schwartzenegger signed Assembly Bill 183, the Homebuyer's Tax Credit legislation, into law. This has created a brief window of opportunity for buyers in California to receive up to $18,000 in combined federal and state homebuyer tax credits!

Here are the basics:

A first-time homebuyer must enter into a valid purchase contract for a principal residence by April 30, 2010 and close escrow by June 30, 2010 in order to take advantage of both tax credits.

Buyers who are not first-time homebuyers may receive up to $16,500 in combined tax credits during the same timeframe if they have resided in their home for 5 of the last 8 years, and they purchase properties that have never been previously occupied under California law.

The newly enacted California law provides up to $10,000 in tax credits for a first-time homebuyer of an existing property or buyer of a property that has never been previously occupied. The first-time homebuyer is an addition to last year's state tax credit. The credit is equal to the lesser of 5% of the purchase price or $10,000, in equal installments over 3 consecutive years.

Buyers will be required to live in the home for at least 2 years or they will have to repay the state. California's previous Homebuyer Tax Credit program was so successful it ran out of the credits by the end of June 2009, which was 8 months prior to its expiration.

The positive impact of the homebuyer tax credits is clear. A C.A.R. research study conducted last year showed nearly 40% of first-time homebuyers said they would not have purchased a home if a tax credit has not been offered.

Written by Erin, Team Toner buyers agent

New guidelines were issued this month by the IRS ….

…. for the two tax credit programs for first-time homebuyers and existing homeowners. When Congress revised the programs in November, the IRS was instructed to tighten its rules and monitoring to prevent widespread frauds that had occurred since early 2009.

Some of the abuses included fictitious home purchases where people claimed and received $8000 checks on transactions that never happened. In some cases, fraud ringleaders were submitting multiple claims and splitting the tax credit with people who had no financial ability to purchase a home.

To avoid such abuses in the future, the IRS is listing documentation standards in detail and installing monitoring systems to detect fraud upfront. Those include:

1.  A fully executed IRS form 5405 which requires taxpayers to provide basic information supporting their claim of eligibility, including income and home purchase date.

2.  A copy of the "HUD-1 Settlement Statement" that proves the transaction really took place. The IRS said it should show all parties names and signatures, property address, sales price and date of purchase.

Customs vary from state to state and sometimes the HUD-1 does not contain both buyer's and seller's signatures on it, especially in escrow states like California. The IRS tried to address this issue in February by loosening up this requirement. They will accept a settlement statement if it is completed and valid according to local law.

According to the National Association of Realtors, 1.5 million repeat purchasers and 900,000 first-time homebuyers are expected to apply for credits this year nationwide. Because of the increased documentation and monitoring, IRS processing will take between four to eight weeks.

Erin McBratney

Search for homes in San Diego

FHA TRYING TO GET RIGHT BALANCE WITH NEW RULES

FHA announced tightened lending requirements in late January. The changes are being implemented to increase FHA's capital reserves and help the agency do a better job with risk management.

The new rules will require a Buyer to either spend more to obtain a loan or to purchase at a lesser sales price.

FHA is increasing the up front mortgage insurance premium to 2.25% from 1.75%, raising the minimum down payment to 10% for borrowers with a credit score of 580 and below (it stays the same at 3.5% for everyone else) and is reducing allowable seller concessions from 6% to 3%.

For many first time homebuyers who haven't developed much credit history, their FICO scores may fall below 580 making it necessary to come up with the 10% down payment. This could prove to be out of their reach unless they can get help elsewhere (like family).

Reduced seller concessions will also hurt because these funds are traditionally used to help with the Buyer's closing costs. The higher up front mortgage insurance premium could affect how much payment a Buyer can afford.

These measures are being taken to insure a healthier FHA, which makes approximately 40% of all mortgages nationwide.

Written by Erin McBratney, Realtor

A compromise may have been reached in the Senate …

I’m so glad I attended a seminar by John Altman a couple of days ago.

John has been in the real estate business for 40 yrs. and is an excellent speaker.

He also is a master at statistics.

As he started to give us some of the information he had compiled, I began to understand why I’ve been having such a tough time finding a home for my VA buyer in South Bay, San Diego County.

He said as of 07/16/09 there were 9357 "active" listings on Sandicor’s MLS. At the rate homes are selling, it would mean 3.5 mos. of inventory in San Diego County.

Approximately 10.5% of those listings are south of Hwy 94 (excluding Coronado). At the rate homes are selling in south county, it would mean only 1.25 mos. of inventory. Of those 988 homes, 868 are under the $546,250 conforming limit with 256 traditional listings, 443 short sale listings and 169 bank owned listings.

Obviously, the demand for homes is much greater than the current inventory.

One of the reasons for this is the $8000 tax credit implemented earlier this year for first time homebuyers and those not holding title to property in the last 3 yrs. This is scheduled to end 11/30/09 unless Congress extends the date.

Many people have taken advantage of amending their 2008 tax return to receive their refund sooner, although the IRS is quoting 12-20 weeks to receive it.

These facts are rather startling:

John has also been tracking the Notices of Default (NOD’s) and actual foreclosures by banks that have not been listed as of yet on the MLS. He calculates approximately 8000 homes in San Diego County are being carried on banks’ books. In other words they are sitting on piles of homes that could be offered for sale, but for one reason or another they are holding off.

Certainly one solution to our current inventory crisis would be for banks to release and list their foreclosed properties for sale. Another is for private sellers to take a chance on the market again and list their homes for sale.

Written by Erin McBratney, buyers agent for the Peter Toner Team at SanDiegoRealEstateAgent.com

Military Homeowners Sellers Assistance Program.

Relocating can be a significant part of being in the military.

With new orders and a potential relocation every 18 months or so, buying and selling a home becomes especially challenging. During the height of the housing boom, selling a home could be done in a few days to a few weeks and for top dollar.

Today, homes are selling but buyers are more cautious leading to much longer average days on the market.

This plus a drop in home prices, makes it especially troubling for someone who was relocated to the area in the past few years.

Recognizing this, the Federal government expanded the Homeowners Assistance Program (HAP) on 1 March 2009. The HAP provides reimbursement for part of a loss from selling your home, assistance if you don’t receive enough to pay off your mortgage when selling your home, potentially buying your home by paying off the mortgage or help if the applicant is in default on their mortgage.

As with any program, there are eligibility requirements for sellers to qualify. For additional, information contact any of us!

Written by Ana Maria Goodemote, buyers agent with Team Toner
 

CAR - the California Association of Realtors offer buyer protection …

It seems like stimulus packages and buyer incentives have become the norm these days.  First the car companies offered incentives that if you buy a car and lose your job, they will pay your car payment or even take your car back with no penalties. 

What a great idea! 

Following suit, the California Association of Realtors (CAR) announced a program aimed at offering some buyer protection.  

Starting April 2, 2009, CAR rolled out a program under the Housing Affordability Mortgage Protection Program where first time buyers are eligible to receive up to $1,500 per month (for six months) if they lose their job due to layoffs.  Co-buyers are eligible for up to $750 per month (for six months) if they lose their jobs due to lay off as well.  Also included is coverage for accidental disability, and a $10,000 death benefit. 

Of course, certain rules and restrictions apply (for instance self employed and military are not eligible). 

For more information on this new program please contact us and we would be delighted to fill you in on the finer details …

With low interest rates, reduced prices home prices, and now this mortgage protection program, this really is an excellent time to buy!

Search the San Diego MLS database here: SanDiegoRealEstateAgent.com

Written by Ana Maria Goodemote

This economy unfortunately can bring the worst out in people.

It’s not enought that homeowners are going through the trauma of possibly loosing their homes – there are unscrupulous people preying on them to add to the insult …

The California Association of Realtors has a short article highlighting the areas that are "Red Flags" – tips that should make you question what you migght be asked to do.

Many of these Foreclosure Rescue programs are only there to line thier pockets – not help you out of the hole

Here is the link to the CAR article – please print it up and share it around at work so as many people as possible are aware of potential problems.

Homowners tell their Lenders "Produce the note".

This often stays or delays the foreclosure process as often the Banks cannot produce the note!

There are thousands of renters who have become victims of the current housing crisis due to banks foreclosing on the properties they have been living in. Many of these tenants are totally unaware that their landlords are in trouble until an eviction notice arrives in the mail or is posted on the front door.

Approximately 40% of the 17,000+ foreclosed properties in San Diego County last year were occupied by renters which means that 7000 families were evicted from their homes.

Starting February 1, 2009, Fannie Mae plans to allow renters in 4000 homes it owns nationwide to rent on a month-to-month basis until a new owner buys the property. Freddie Mac, the other major secondary lender, expects to follow a similar policy shortly. Fannie Mae and Freddie Mac’s reasoning is that by keeping foreclosed properties occupied and in good repair, this will help support local property values and speed up the recovery of the housing market.

If you are planning to rent in the near future we strongly recommend you contact our office so we can obtain a title report to be sure the owner of the property is not in default. This is the best way for you to protect yourself from becoming one of the "other victims" of the housing crisis.

Tax Lien Relief for San Diego Homeowners

In the past when a home had a federal tax lien on it, the lien would have to be paid in full in order to refinance or sell. With the economy in distress, the IRS is now being a bit more forgiving when it comes to tax liens as well as working to decrease the processing time. Doug Shulman, the IRS commissioner, was quoted saying, “We don’t want to be a barrier to people saving or selling their homes.”

Two New Band-Aids for Foreclosures in Progress

 

Many thought “affordability” of homes was just a thing of the past, never to be seen again by homebuyers in San Diego. Recent statistics though, may prove otherwise.

In the 3^rd quarter for 2007 the affordability rate of 24% had many home buyers shaking their heads. Compare that to San Diego’s affordability rate of 51% in the 3^rd quarter of 2008 and things are definitely starting to look more in favor of San Diego homebuyers.