Patty McMillen

Say goodbye to the lowest mortgage rates in about 50 years!  For the past 16 months the Federal Reserve has helped keep rates low-around 5% for a 30 year loan but purchasing mortgage backed securities.  But that program is scheduled to end on June 1 and private investors aren’t expected to step in to fill the void at the same low rates.  As a result, the consensus amount economists is that the rates will climb to between 5.3% and 6% by the end of the year.  It will be a gradual rise, if this happens the Fed will get back into the market.  Jumbo mortgages are expected to hold steady at about 6% or so and that is because the government wasn’t propping up the jumbo market, so these loans won’t be affected much by the Fed’s exit.  The upper end housing in the Mendocino County area is still just sitting there…housing over 500,000 are just not moving.

For a while last year it might have seemed as if the long-awaited housing recovery was just about here.  Home prices stopped falling in spring and have stayed fairly stable since, according to the housing index.  Sales rose from their recessionary lows and inventories came down from their highs.  But this pickup turned out to be a short-lived scene.  Sales of existing homes dropped sharply in January from the previous month, and inventories crept back up.  The economists predict that the national median price for homes will dip another 5% before finally bottoming by year-end 2011.    More than 3 million homes are expected to get foreclosure notices this year, as job losses increase.  We can continue to hear these results thru the news and various opinions but I feel that we are starting to make turns for the better.  More sellers are seeing an small increase over the last couple of years and less inventory always helps.  The foreclosures are still hitting the market daily so until these stop we are going to see marginal progress.

The Alquist-Priolo Earthquake Fault Zoning Act prohibits building for human occupancy astride active faults. Sellers of existing residences MUST disclose to a potential buyer that the property is located in a designated fault zone.  Homeowners don’t know what the legal laws are on Earthquake reporting, this is why it’s important to hire a real estate professional.  We keep abreast on all new laws and regulations being required to sell a home.  If you don’t disclose that a home is in a earthquake fault you might be liable to buy this home back from the buyer if something happens.

l.  Mortgage insurance premium (MIP) will be increased.

•     First Step will be to raise the up-front MIP to 2.25%

2.  Update the combination of FICO scores and down payment for new borrowers

• New borrowers will now be required to have a minimum FICO score of 580 for FHA’s 3.5% down payment program.  New borrowers with less than a 580 score will be required to put down at least 10%.

3.  Seller concession will be limited from 6% to 3%.

Cash-starved California just came up with $200 million more to throw at the housing market.

On Thursday, Gov. Arnold Schwarzenegger signed a bill that will award an estimated $200 million in state income tax credits to people who buy a home starting May 1.  The credit is worth up to $10,000, spread evenly over three years.  The credit is available to anyone who buys a newly built home or first-time home buyers who buy a newly built or existing home. To qualify a buyer is one who has had no ownership interest in a principal residence for the three years before the date of purchase.

People who are not first-time buyers can get the credit if they buy a newly built home but not an existing one., it must be a single-family residence, attached or unattached   be used as a buyer’s principal residence for at least two years.

The credit is equal to 5 percent of the purchase price or $10,000, whichever is less.  It must be claimed in equal amounts over three years, beginning with the year of purchase.

Buyers of existing homes must close escrow between May 1 and Dec. 31.

Buyers of new homes can reserve a credit by entering into an enforceable contract between May 1. 31, filing the property paperwork with the tax board and closing escrow by Aug 1, 2011.

We are still a long way from economic growth and increased employment, the pace of job cuts seems to be slowing and there are signs of life in the housing market that indicate a possible recovery is on it’s way…if not already happening.  California experienced a 59 percent peak-to-trough decline in price, hitting bottom in 2009 vs a 29 percent peak-to-trough decline experienced by the national market.  Some economist believe this steep decline indicates the state is further along in its return to a normal market than the national market…I just hope these guys are right for once!

Have you ever been in a short sale and the bank has approved the short sale and now you can’t get it closed.  Welcome to how our banks are servicing the clients.  I recently got into a transaction and the bank approved the sale and gave a closing date to close escrow or we would have a per diem per day… that day passed and the bank didn’t close.  Another week went by and the bank didn’t close.  Meanwhile the buyers loan documents expired and the buyer then had to extend for a cost to them and were still not closed.  You try to call the bank and the closer and their lines are full and they don’t return e-mails, very frustrating for everyone! You are at mercy of the bank…I’m recommending that you file a grievance against the bank..and one with Consumer Complaint.  I doubt that anything will happen but it will make you feel better.

You’re probably up to your next by now in forms and paperwork as the April 15th income tax deadline approaches.  Maybe you’ve already completed your taxes, paid your bill, or awaiting your refund check.  Either way, now is the perfect time to revisit the extended and expanded Home Buyer’s Tax Credit.

Why?  Because now, as you calculate your tax bill or refund, you can finally see in real terms just how beneficial a tax credit of up to $8,000 can be to your bottom line.

REMEMBER:

1. You don’t have to pay it back (as long as you stay in your qualified home for at least 36 months).

2. If you qualify for the credit, you can still apply it to this year’s taxes, even if you have already filed your returns, or save it for 2010 tax returns.

3. This is a true tax credit, not a deduction.  If you qualify for a full credit, there will be an actual dollar-for-dollar reduction of up to $8,000 on your tax bill now or in 2010.

4. You must be in contract by April 30, 2010 and closing by June 30, 2010, so don’t wait!!!!

Why order a natural hazards report… it lessens the liability of you trying to read a map to see if the property is on a fault line or in the earthquake zone, wildands area or flooding.  If you have a company do the disclosure they are now responsible for the accurate information. Most Natural Hazards companies carry insurance in case they report incorrectly.  Their job is to accurately report information contained in the government records… but remember they don’t look at parcel maps or survey maps… bottom line they assume the responsibility for accuracy not you.

Most foreclosed properties involve a non-judicial foreclosure.  This means it does not involve a court action.  When the deed of trust is initially signed, it will have a clause in it that says power of sale clause, which upon default allows a trustee to sell the property in order to satisfy the defaulted loan.  The trustee acts as a representative of the lender to make the sale.  Here in California the title companies serve as the trustee managing foreclosure sales. If the court is not involved there is no deficiency judgment.  If a judicial foreclosure happens the lender may recover a deficiency judgment in certain circumstances….I personally have not seen this happen but it could..