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Roseville’s project of retrofitting 16,000 homes with water meters has finally come to an end. Mayor Roccucci installed the final meter at a celebratory event calling the ten year project completed. “Becoming a fully metered city helps define Roseville and the region as leaders in water use efficiency in this state,” said the mayor in a written statement. http://www.roseville.ca.us/news/displaynews.asp?NewsID=2922&TargetID=1 The administration is now considering a new refinance program that would provide millions of homeowners with new, lower interest, lower payment mortgages… The initiative would reportedly allow borrowers with loans backed by Fannie Mae and Freddie Mac to refinance at today’s rates, even if they are in negative equity or have bad marks on their credit. Two Columbia business professors say such a move would save homeowners an average of $350 a month and pump an extra $118 billion into the economy, the report stated. This would be wonderful for Sacramento area homeowners that can’t currently qualify a refinance at today’s low rates, and in turn have a positive effect on the local economy as people have more money to spend every month. There really is no negative. Since this would apply to mortgages already backed by Fannie Mae and Freddie Mac there is no additional risk to the government. In fact it will reduce risk to Fannie Mae and Freddie Mac by making it so homeowners can more easily make their monthly mortgage payment. Let’s see how this all plays out in today’s Washington… A few weeks ago Bank of America agreed to participate in a state-run program to reduce mortgage balances for struggling homeowners in California. This announcement makes them the 7th to do so and also the biggest mortgage lender to be part of the aid program.
Keep Your Home California provides a number of forms of help to homeowners, from interest rate modification all the way up to reducing the actual principal balance of the mortgage. The principal-reduction program requires the lenders to match the program’s assistance dollar for dollar. Meaning if the Keep Your Home California program were to offer $20,000 in assistance, the lender/servicer (BofA in this case) would also have to contribute $20,000, reducing the mortgage balance by $40,000 in total. California Housing Finance Agency’s (CalHFA) program manager, Diane Richardson, said $94 million worth of aid has been committed to over 5,000 homeowners so far. Of those, about 10% have received some amount of principal reduction. For more information click on www.keepyourhomecalifornia.org ~Greg While the Congress tries to find a solution to the debt ceiling mess, even though it has nothing to do with the debt ceiling what-so-ever, higher ups in Washington are trying to bring the mortgage interest deduction into the conversation. Opinions differ from those that want to get rid of it entirely, to those that want to make adjustments, and those that simply say leave it alone.
Proposals include cutting the cap in half, to $500,000 of mortgage debt, for primary residences and possibly eliminating the deduction for second homes. On the other side of the coin are those who believe that the credits should favor investors, rather than primary residents, as that would create more financial incentive for real estate investment. I think we’ll probably see something more like capping the maximum deduction to interest on the first $500,000 of mortgage debt, as this is the most fair way to the vast majority of Americans to alter the tax credit, as it will not affect them at all. This is most likely and seeing the credit disappear completely is almost guaranteed not to happen. Either way it seems that some sort of change is coming. The good news is it appears that the credit will still be here for the vast ~Greg Governor Jerry Brown just signed a new California law (SB 458) that will further protect homeowners looking at short sales by ensuring the current lien holder/servicer cannot go after the homeowner after the short-sale closes (usually done in the form of a “deficiency judgment”).
This law adds to some protections already in place (SB 931) that ensures 1st lien holders don’t go after the borrower with a deficiency judgment after the short sale is completed. Of course, that only makes sense. Why would they be allowed to go after the (previous) homeowners AFTER the bank agreed to a short payoff? The new law holds 2nd and 3rd lien holders to the same standard. “As the economic recession continues to impact Californians, SB 458 will allow homeowners forced to sell at a loss to have closure at the end of the process,” said California state Senator Ellen Corbett (D-San Leandro). “By extending anti-deficiency protection to all loans on a home when a short sale occurs, a homeowner can use a short sale as an alternative to foreclosure or bankruptcy.” The new law is effective immediately and now prohibits 2nd and 3rd lien holders from pursuing a deficiency judgment after they agreed to a short payoff and the sale closes. ~Greg Cowart If you have heard about the coming expiration of temporary higher loan limits for FHA, VA, Fannie Mae, and Freddie Mac mortgages put into place in 2008 as an attempt to not let the housing market in higher priced areas fall off a cliff, you may have heard reports of doom and gloom for the housing market. There have been numerous and varied contentions about the future state of the mortgage market once loan limits drop from the current maximum of $729,750 to $625,500.
“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.” This is what Fed Chairman Ben Bernanke said to Congress this week. A study done by George Washington University suggested the same thing; the decrease in the maximum loan amount would raise the cost of borrowing for very few people (forcing them into JUMBO loans) and this world have no effect on most mortgage shoppers and a negligible effect on local housing markets. FHA loans should see the same (lack of) change. According to the G.W. report “The FHA still could serve 95 percent of its historic targeted market even if the maximum FHA loan limit were reduced by nearly 50 percent” and “FHA’s expansion played a major role in keeping the housing market afloat during the economic collapse of 2008 and 2009. However, we now are left with large loan limits that were set when home prices at the top of the bubble. They don’t reflect current market conditions and are unlikely to assist the FHA in reaching its historical constituencies – first time, minority and low income homebuyers.” “I understand the private sector is taking at least a significant number of the jumbo mortgage market but at a higher cost,” Bernanke also said. Bernanke does admit that jumbo loans will come, “at a higher cost,” but we have to put in perspective what exactly that higher cost will be. Interest rates on mortgages today are already near historic lows at about 4.5% today and bond yields don’t look like they will be changing too much in the near future. The bond market doesn’t seem to think the U.S. is really in danger of defaulting on its obligations, so rates should remain steady. If a jumbo rate is higher, even by a full percentage point, it’s still historically pretty low, and buyers looking at a higher-priced home likely expect to pay a higher interest rate already anyway. The jumbo market has always been like this, except before the temporarily loan amount increase the maximum loan amount was $417,000 (more than $200,000 less than the new lower amount will be) so in all reality no one, not even the homebuilders association, should complain. -Greg 75% of all American homes are “affordable” to median-income households… American housing affordability hit a new record high in the first quarter, surpassing the previous high set in fourth-quarter 2010, according to an index released by the National Association of Home Builders (NAHB) and mortgage giant Wells Fargo.
“With interest rates remaining at historically low levels, today’s report indicates that home-ownership is within reach of more households than it has been for more than two decades,” said Bob Nielsen, chairman of the NAHB. “While this is good news for consumers, homebuyers and builders continue to confront extremely tight credit conditions, and this remains a significant obstacle to many potential home sales.” Of course this index is more telling nationally and we need to do more investigation into our local market to see what our affordability looks like. Lucky for us the NAR’s Housing Affordability Index breaks it down locally and our local Sacramento-Roseville market is also more affordable, when compared against the local median-income, than at any time in history too! ~Greg Cowart I have some GREAT news. Government-chartered mortgage giant, Fannie Mae announced they are bringing back closing cost assistance to buyers of HomePath-eligible homes. People buying one of the Fannie Mae owned REO’s will receive a 3.5% credit towards closing costs. In most cases this 3.5% should be enough to cover 100% of the buyer’s costs, or even buy the interest rate down further! HomePath is already a GREAT program for local homebuyers, especially those with decent to above average credit. These loans already…
B.) require no appraisal, saving $400-$500 as compared to pretty much any other loan C.) have no Mortgage Insurance premium added on to the payment, realizing a significant saving over other low-down options To qualify for the credit the offer must be submitted by 4.11.10 and escrow has to close no later than 6.30.11. to be eligible for the incentive. Also, while HomePath is available to investors (with at least a 10% down payment) ,the 3.5% closing credit is only available to people intending to live in the property as their primary residence. “Terry Edwards, VP of Fannie Mae’s Credit Portfolio Management team said “attracting qualified buyers to the market and reducing the inventory of vacant homes remains essential to stabilizing neighborhoods and helping the market recover. Since interest rates remain low, the incentive will go a long way toward helping even more families buy a new home so this is a great time for Fannie Mae to offer some assistance.” To find a list of HomePath eligible homes give me a call/e-mail or check it out yourself at http://Homepath.com. You can also ask your Realtor to do a search for HomePath homes for you (if you need a referral to a top-quality Realtor in your area let me know). I see a lot of these properties in the Sacramento and Roseville real estate markets. The lists are updated with new properties as they come to the market. ~Greg
Check out this article from the “Eye Of The Tiger” (Roseville Highe School’s blog) webpage…
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BofA’s participation was almost necessary for the $2 billion program, called ‘Keep Your Home California’, which originally rolled out in February but was not able to reach many homeowners with the small lenders that were participating at the time.
As of today any homeowner is able to deduct the amount of interest they pay on their mortgages from their taxable income. The deduction is very valuable for many, and can even bring down your income tax bracket, significantly lowering the amount of tax you owe. This deduction is limited to the first $1,000,000 on the home. Home equity line of credit (HELOC) interest also qualifies, but the deduction for those are limited to $100,000 over the first mortgage’s deduction (and the two combined are still limited to the first $1million of the home’s debt).
The National Association of Homebuilders released a report saying it will be catastrophic however there isn’t really much to worry about for most American markets according to many economists and academics…
The Housing Opportunity Index (similar but not the same as NAR’s Home Affordability Index) found that 74.6% of new and existing homes sold in the first quarter were affordable to families earning at least the national median income of $64,400. That’s up from 73.9% in the fourth quarter of 2010, and is the highest level ever recorded since the index was created over twenty years ago.