What is an EEM and is it even relevant in the world of real estate in the Roseville/Rocklin area or greater Sacramento?
Whether you’re purchasing or refinancing, today’s reality is that many of us should consider making energy conservation improvements to our homes. Most homes can benefit from energy upgrades.
Any home built before 1994 should benefit from an Energy Efficient Mortgage. Why? Simple… The energy codes used up until 1993 are no longer industry standard. Mechanical systems, insulation levels, and water heaters are the main determining factor in a home’s energy consumption. Those installed before 1994 are less efficient, not to mention they are old! With the Energy Efficient Mortgage, you can renew and upgrade all the critical factors that determine the energy consumption of your home, and include the total cost in your home loan.
Personal consumption has increased along with energy costs. Today’s homes use electronics to manage almost everything, from ovens, microwaves and refrigerators, to DVRs, iPods, and tablet computers; not to mention all the battery chargers needed to keep them running. Though prices are relatively stable, we use almost 25% more electricity today than we did in 1993. Natural gas, however, is a different story. Most of Californians cook, heat their homes, and their water, with gas. Our consumption has increased a modest 10%, while the price has skyrocketed over 70%.
Simply stated, utility bills have become the second largest monthly expense of modern living, behind the mortgage or rent payment. An Energy Efficient Mortgage may lower both of these costs, definitely utility bills and overall monthly expenses.
There is plenty opportunity to take advantage of an Energy Efficient Mortgage for those looking for homes in Roseville/Rocklin or anywhere in the greater Sacramento market. Like most of the lesser-known special programs ignored by other lenders I’ve become THE local expert in the Energy Efficient Mortgage! Give me a call any time if you’d like more information.
Edward DeMarco, director of the Federal Housing Finance Agency (FHFA), has stated the extremely popular HARP refinance program has been extended through 2015. This is good news as it will allow even homeowners to benefit from lower rates and payments.
Before this the program was set to expire at the end of this year.
We’ve talked about the HARP program before (here, here, and here). HARP allows some people with loans owned or guaranteed by Fannie Mae and Freddie Mac to refinance to today’s low rates even if they have little or no equity. Most of the time an appraisal isn’t even required. At first it didn’t help too many people but was expanded in 2012 as “HARP 2.0” to open it up to millions more homeowners and has now helped about 2.5 million people refinance that otherwise wouldn’t have been able to.
And, while the number of people underwater on their homes in the Sacramento area is going down every day, there are still many missing out on lower rates and payments because they think they will not qualify because they have little/no equity, or owe more than their homes are worth.
The program’s extension to 2015 also seems to take advantage of the Fed’s promise to keep interest rates low until at least mid-2015. Some experts estimate there is still somewhere between $2-2.5 TRILLION in mortgages out there that have not utilized HARP 2.0 yet that could benefit from the programs expanded guidelines that will allow them to access today’s lower rates and payments.
I have been doing these since the beginning and one of the great things about our banking platform is we don’t have all the underwriting “overlays” that many (if not most) other mortgage companies and banks have that make it hard to qualify for a HARP refinance. Many people find me after trying with thier current lender and calling around to other places with no luck. We usually get these done in short order even though others couldn’t because they add extra rules over the top of Fannie Mae’s guidelines that prohibit a lot of people from refinancing.
Please give me a call or e-mail if you have any questions about HARP or any of our other streamlined refinance programs.
Senior Mortgage Planner – 17 Years Experience
The amount of homes worth less than owed on their mortgage in the Sacramento area has continued to fall.
Just two years ago almost 50% were underwater and as recently as January 2012 over 40% were still underwater. Since then things have changed immensely. Looking at the immediate past, 4th quarter 2012 (data for the 1st quarter of 2013 is not yet available) there were only 32% in that same boat.
In the 4th quarter of last year, 32% or about 150,000, of all residential properties in the Sacramento region had a mortgage for more than their homes were worth. This is compared to 36%, or about 175,000 properties, in the previous quarter.
This is still a high number but that means about 25,000 homeowners in region now have equity when they didn’t have it just three months earlier.
The 1st quarter 2013 data is not available yet but there is no doubt in my mind there will be another dramatic change as property values are appreciating even more today than they were in the 2nd half of last year. My guess is when it is reported the number will be well under 30%. Not quite where we want it to be yet, but definitely headed in the right direction.
Senior Mortgage Planner -17 Years Experience
Three new bridges and a big change coming to Roseville, the Downtown Bridges Project.
The city is about to make some drastic changes to downtown and the Royer Park area. The main library bridge will be replaced with a new one, a new bridge will be built from the library to downtown Roseville, and the Oak Street bridge will be extended. Oh ya, and the firehouse will be graded as part of the project, connecting downtown Roseville with Royer Park.
The committee selected to choose which design plan (of a few) has recommended that the council choose Mark Thomas & Company’s plan because its design more closely matches the New Deal-era Works Progress Administration architecture called for in plans for downtown Roseville, as well as this design’s trail plans.
LINK TO MARK THOMAS & COMPANY’S SITE PLAN
It won’t be until at least 2014 before construction begins but soon enough we will see a dramatically different downtown Roseville.
Greg Cowart II
Mortgage Planner – 17 Years Experience
This program, administered by the SHRA, only applies to those in the city and unincorporated portions of Sacramento County (so not available in Citrus Heights, Elk Grove, Galt, Folsom, Rancho Cordova or Isleton) but it is a great deal for those that qualify in buying a home…
The CalHome Mortgage Assistance Program is a down payment assistance (DPA) program for low-moderate income buyers. The DPA equals a whopping 20% of the purchase price, up to $40,000!
The maximum purchase price is currently $199,000 and here are the income limits:
Please contact me if you have any questions about this fantastic program.
The ‘Responsible Homeowner Refinancing Act of 2013’ has been (re)introduced in the US Senate. This bill’s aim is to help homeowners that are not otherwise eligible to refinance through another program (such as HARP or Home Affordable Refinance Program) to take advantage of today’s historically low rates.
Originally introduced last year by Robert Menendez (D-NJ) and Barbara Boxer (D-CA) the bill did not have the support needed to move forward. If passed this time around it would direct Fannie Mae and Freddie Mac to require the same streamlined underwriting allowed under HARP for “same servicer” loans (refinancing with your current lender) to all lenders, leveling the playing field for all lenders.
The bill, if passed, will also extend HARP benefits to those that have 20% equity in their homes. Opening up a world of refinancing that had currently only be open to those with little to no equity (or negative equity). Currently homeowners that take advantage of the HARP program average about $2,500 in savings annually. This bill would also limit Fannie and Freddie from charging up-front fees to refinance any loan they currently guarantee. Lowering borrowing costs to deserving homeowners even further.
HARP loans currently use proprietary Automated Valuation Models, or AVMs, to determine home values without the need for slow and costly manual appraisals. However, borrowers who happen to live in communities without a significant number of recent home sales often cannot use these models and are forced instead to pay hundreds of dollars for a manual appraisal for a HARP refinance. This bill requires the Fannie and Freddie to develop additional streamlined alternatives to manual appraisals, eliminating a significant barrier and reducing cost and time for both homeowners and lenders.
HARP already requires the borrower has been current on their mortgage for at least 6 months, and has only been late (no more than 30 days) on a total of one payment for the 6 months before that, so there is no reason to require proof of employment or income for these loans. Especially since Fannie/Freddie already guarantees these loans, and lowering the monthly payment for these homeowners actually reduces the risk to Fannie/Freddie and the taxpayer. This bill eliminates employment and income verification requirements, further streamlining the refinancing process and removing unnecessary costs and hassle for lenders and borrowers alike.
The bill would also extend the expiration of HARP for an extra year, moving the date from 12.31.13 to 12.31.14.
The Congressional Budget office has analyzed the bill and determined that the bill more than pays for itself by reducing default rates on loans Fannie Mae and Freddie Mac already guarantee. As it does not add loans to the books, or allow homeowners to take cash out, there is literally no risk to the taxpayer. On top of that it would add billions of dollars of spendable/savable dollars into the US economy. Money that is currently going towards mortgage interest. It is a win-win.
According to the CBO, the bill pays for itself through reduced default rates on GSE loans, which saves taxpayers money.
~ Greg Cowart
Mortgage Consultant – 16 Years Experience
Rates have been going up, but why is that and what will happen next?
Many of you have noticed the stock market has been on a tear. As investments are drawn from the Bond market to chase gains in the hot stock environment, pressure is being put on bonds. The Fed has been buying bonds, which has kept rates from going up more than they otherwise would have, which has helped but rates are still on the way up.
However I don’t see this stock trend continuing for too long, there is a technical correction to the stock market that is more than overdue. The level of bullish sentiment now stands at 57% – a dangerously high number for stocks. When a large majority of traders are bullish they are already in the market. This scenario leaves few investors to come into the market with new buying to push prices even higher.
With the DJI at over 14,000 stocks are within striking distance of their all-time highs, it’s important to see why these levels can be dangerous.
See how the past two times stocks have approached these levels, it has been followed by sharp moves lower. Also notice that these occurred after long, extended moves higher. Stocks are now in the third extended run up to these levels. Going even further: the current 500+ day period without a 10% correction is one of the longest in the Stock market’s history.
While history may not repeat itself it usually does and I feel the chance of a long overdue correction is about to happen any day (it may have already by the time you are reading this), all of these factors tell us that a major drop in the stock market is near..
And (of course) I’m not the only one to recognize this. This means that some investors will be heading to the exits before the grand finale. Once the selling starts it will accelerate, quickly!
If (when) this happens where will all that capital go from the sale of these stocks? Yep, it almost certainly will flow back to the bond market, improving interest rates. Now there is no guaranty this will happen, and rates may get worse before they get better, but the writing is on the wall. This would essentially be the first time all of these factors presented themselves and a different result came to be from them if the stock market doesn’t have a major correction soon.
Mortgage Planner – 16 Years Experience
I know I know, it has been a long time since I have posted. And I meant to post this a few weeks ago, a HAPPY NEW YEAR and WELCOME 2013 post if you will. So consider it a belated one of those…
2012 was a very interesting, and depending on who you ask, a good year for jobs, the economy, and real estate (I of course will be focusing on the latter).
Completed Foreclosures were down a whopping 23% year over year (Nov 2012 compared to Nov 2011). The number is still too high but has been shrinking month after month, and year after year, for long enough to call it a trend.
There were approximately 1.2 million homes in some stage of foreclosure (the foreclosure inventory) in November, about 3.0 percent of all homes with a mortgage. In November 2011 there were 1.5 million homes or3.5 percent of all mortgaged homes in the inventory. This is a decrease of 18 percent year-over-year.
CoreLogic’s Mark Fleming said, “The pace of completed foreclosures has significantly improved over a year ago as short sales gain popularity as a disposition method. Additionally, the inventory of foreclosed properties continues to decline while the housing market demonstrates an ongoing ability to absorb the distressed sales that result from completed foreclosures.”
All data points show a continuing trend of ever improving housing markets, jobs increasing, and improvements to the economy. As mentioned these are not good enough, but I have a good feeling about the future!
Images and data courtesy of CoreLogic. http://www.corelogic.com
Telefunken Semiconductors, maker of computer microchips for the auto industry, located right here is Roseville, recently announced a major expansion of jobs at its Roseville plant.
The plant, that currently employs about 200, is supposed to grow in capacity by at least 200% in the next year. They have not announced if the number of jobs will increase by an equal amount (they probably will not) but even if they don’t more tech jobs coming to Roseville is never a bad thing.
The Federal Housing Finance Agency (FHFA) has announced new, more clear, guidelines, for mortgage companies that will bring many short sale programs into just one and streamline the timeframes as well. The new short sale streamline program is going to enable lenders to speed up the process of qualifying eligible homeowners, which should, in theory, speed up the short sale process (that can currently take many months to complete). The new guidelines show the FHFA’s and Fannie Mae’s desire to help people avoid foreclosure and stabilize communities.
The new guidelines, which go into effect on Monday (11.1.12), will permit a homeowner with a Fannie Mae or Freddie Mac backed-mortgage (remember Fannie/Freddie doesn’t make mortgages) to sell their home in a short sale even if they are current on their mortgage if they have an eligible hardship. Lenders will be able to expedite a short sale for homeowners with hardships such as divorce, job relocation, death of a spouse, etc without going to Fannie Mae or Freddie Mac for their approval.
Here are the details:
- Those that have already missed payments will no longer be requested to show hardship in order to have the short sale approved. Saving time and paperwork.
- Homeowner hardships such as death, divorce, disability, and job relocation will no longer require additional approval from Fannie or Freddie. The lenders that service the loan will be able to approve these without submitting it to the GSE that backs it.
- Fannie and Freddie will waive the right to pursue deficiency judgments against homeowners in exchange for a financial contribution when a borrower has sufficient income or assets to make cash contributions or sign promissory notes:
- Service members who are being relocated will be have their short sales approved automatically, even if they are current on their existing mortgages, and will be under no obligation to contribute funds to cover the shortfall
- between the outstanding loan balance and the sales price on their homes.
- Consolidating existing short sales programs into a single uniform program will give servicers more clear and consistent guidelines, making it easier to process and execute short sales.
- New guidance will clarify when a borrower must submit their application and a sales offer to be considered for a short sale when there is already an NOD, or the foreclosure process has begun, so that last minute communications and negotiations are handled in a uniform and fair manner and no homes are foreclosed on with a short sale closing scheduled for right around the corner.
- Fannie Mae and Freddie Mac will offer up to $6,000 to second lien holders to expedite a short sale. Previously, second lien holders could slow down the short sale process by negotiating for higher amounts. Increasing this offer to $6,000 will make it more likely for them to accept, as will the knowledge that $6,000 is also the cap and they will not be able to get any more out of the deal no matter what they do. It is basically take $6,000 or get nothing if the home goes into foreclosure.
- The last item, and this is a big one, is: Lenders/servicers are now required to review and respond to short sale offers within 30 days of receipt of the offer. Weekly status updates must be provided to the seller/buyer is the offer is still under review after 30 days and a final decision must be communicated to the seller/buyer they must provide weekly status updates to the borrower if the offer is still under review after 30 days, and they must make and communicate final decisions to the borrower within 60 days of receipt of the offer, no matter what.