KB Homes Evelyn Glen in Sunnyvale is a Winner!

I have a wonderful client who just closed escrow on a new town home built by KB Homes in Sunnyvale and it is a beauty! This new town home complex is at the corner of Evelyn and Wolf which is less than a mile from vibrant downtown Sunnyvale. The 3 bedroom, 3.5 bath town home has about 1600 sq feet spread across three levels--each featuring gorgeous flooring, beautiful espresso color maple cabinets, and all the bells and whistles of a new home for a price in the mid $600,000 range. There are many new developments to choose from in the Bay Area and I can help you find the one that is best for you.

This development is definitely worth checking out. My client is delighted with his! 

Happy Thanksgiving!

Wishing you a very joyful Thanksgiving Holiday!

I hope you are able to take some time to rest, see your loved ones, and reflect on the positive things in your life! 

Steve Papapietro's Mortgage Bulletin: D Word Could Change Direction of Sales

For the week of Nov 24, 2008 --- Vol. 6, Issue 48

 Last Week in Review

        "THE IMPORTANT THING IN THIS WORLD IS NOT SO MUCH WHERE WE STAND, AS IN WHAT DIRECTION WE ARE MOVING." Oliver Wendell Holmes. And when it comes to the direction our economy may be moving, there was some surprising news from the Fed last week that the "Minutes" from their October meeting revealed.

After years of being concerned about inflation, the Fed is now concerned about deflation. So what exactly is deflation? Deflation is when prices drop, which generally is due to lack of demand, and therefore lack of pricing power. With the economy slowing down, we are hearing economists forecast that we may be in for a deflationary recession. In a deflationary environment, investors flee into fixed instruments like Bonds, because the fixed payment received would actually buy them more goods and services over time as prices decline.

 So what does this mean for home loan rates? Remember, home loan rates improve as Bond pricing moves higher - and more demand for Bonds would mean higher prices for Bonds. In the spring of 2003, when Alan Greenspan uttered the "D" word, deflation, Bonds rallied 400bp in just a few weeks, bringing a significant drop in home loan rates. Of course, the economy is different right now, but as more money may be headed towards Bonds in a deflationary environment, we could again see a significant improvement in home loan rates down the road.

On the inflation front, last week's Producer Price Index indicated that wholesale inflation plummeted last month - by the most since records began in 1947 - largely due to declines in energy prices. In addition, the Consumer Price Index showed that inflation at the consumer level fell by a record 1.0%, thanks again to lower costs of energy.

When it comes to the direction the economy is heading, the week did end with some hopeful news. Federal Reserve President Jeffrey Lacker said that an economic recovery could begin in 2009 as low interest rates, low energy prices, and less drag from the housing sector may shore up spending. In the meantime, Bonds and home loan rates spent much of last week trading near a key level of technical support called the 200-Day Moving Average, finally moving and staying above this level on Friday. As a result, Bonds and home loan rates ended the week unchanged to slightly better than where they began.

WHEN IT COMES TO CREDIT SCORES, IT'S MORE IMPORTANT THAN EVER TO DO ALL YOU CAN TO KEEP YOUR SCORE MOVING IN THE RIGHT DIRECTION! CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW FOR HOLIDAY SHOPPING TIPS THAT WILL HELP KEEP YOUR CREDIT SCORE ON THE UP AND UP.

        Forecast for the Week

        It will be a holiday shortened week in the markets as Thanksgiving is celebrated, but there are several important reports that could determine which direction Bonds and home loan rates move. On Tuesday, the Gross Domestic Product (GDP) Report will be released, and on Wednesday we will get the details on the Fed's favorite gauge of inflation, the Core Personal Consumption Expenditure (PCE) data, from the Personal Income report. Given the Fed's recent talk of deflation, it will be important to see what these reports reveal.

Also on Wednesday, we'll get a read on consumer and business consumption and buying behavior from the Durable Goods Report. Durable goods are items that are non-disposable, like cars, furniture, appliances, games, cameras, business equipment, etc. In addition, we'll get a read on the housing market with Monday's Existing Home Sales Report and Wednesday's New Home Sales Report.

Stocks hit some important technical support last week, and bounced higher on Friday, with the rally being boosted by the appointment of incoming Treasury Secretary Timothy Geitner. Some follow through to the upside in Stocks could pull money out of Bonds and cause some short term worsening of home loan rates...but if deflation starts grabbing more headlines, smart money will be headed towards Bonds, which will help home loan rates improve.

Keep an eye out for words from SEC Chairman Chris Cox, who must comment on some potential easing to "mark-to-market" accounting before January 2nd. If there is indeed some easing in mark-to-market accounting - which accelerated the financial crisis - it could set off a significant...perhaps very significant...rally in Stocks, which may temporarily hurt Bonds and home loan rates.

 The Bond market will be closed on Thursday in honor of Thanksgiving, and will also be closing early at 2:00pm ET on both Wednesday and Friday. I wish you and your family a very happy Thanksgiving!

        The Mortgage Market View...

Save on Your Credit Score this Holiday Season

With the economy slowing and holidays just around the corner, many consumers may be looking to credit cards to help them get through the heavy shopping season. While that may be a good short-term solution, you want to make sure you don't overlook the long-term impact on your credit rating. After all, the actions you take today could hang over your head for years to come--and may make it tough for you to get the home loan or car loan you want in the future.

 To help you make sure you manage your credit cards--and your credit score--during the upcoming holiday spending season, follow these steps:

 Double-check your card limits. Many credit card companies today have started lowering credit limits. That means you have less credit available, but it also may mean that your credit score is about to take a hit. That's because approximately 30% of your credit score is based on the amount you owe in relation to your available credit. So, if a credit card company cuts back your limit, you may find that you're suddenly almost maxed out. That's not a good sign for your long-term credit score rating.

Ask, pay down, or move around. If some of your credit limits have changed or are nearly maxed out, you can take a few steps to help alleviate the problem. First, consider simply asking for a higher limit to your card...not necessarily to use up with spending, but to allow more unused credit line to be available and therefore boost your credit score. You can also pay more money to the cards that are near the credit limit, if you can. Or, if you have cards with little to no remaining credit line, transfer some of the larger balances onto the cards with lower balances. That'll give you a more... well... balanced financial picture.

Leave home without it. One of the best tips for the holiday season is to: make a budget, identify specific items, and then leave home without your credit card. Instead, bring just enough cash to purchase the items on your list. That will help you resist the urge to impulse buy, and keep your credit card balances lower.

Pick a card... not just any card. If you can't bring cash, make a credit card plan. Identify specific items that you'll pay for on specific cards. By making a plan and spreading your purchases to different cards, you won't overspend and you won't risk running up one or two cards that are near the credit limit, which will hurt your credit rating.

 Resist card offers at the counter. Retailers are famous for offering "savings" when you open a credit card. But those savings often don't outweigh the long- and short-term negatives. For one thing, opening a new account--or multiple accounts in a short period of time--can negatively impact your credit score. In addition, consumers often spend more than planned when a new card is suddenly available. So this holiday season, resist the temptation.

Stay active. If you have older cards that you don't use, make sure you keep them active. For one thing, some of those older cards help establish a longer history of positive credit. For another, the available credit on those older cards can help keep your credit score higher because it improves your overall debt-to-credit ratio. To keep those cards active, make sure you charge one or two items on them throughout the year... like, say, when you go shopping for the holidays. Then, pay them off when the bill comes in.

Always pay on time. Your payment record is a very large part of your credit score, so it's crucial that you have an idea how your holiday shopping will impact your credit card bills and that you make a plan to pay those bills on time. If you have trouble for any reason, contact your card companies right away to work out a plan that helps you pay down your debt... and save your credit rating from a huge hit.

CAR Market Matters Advisory, Nov 20

Nov. 20, 2008

 C.A.R. Resource Guide

REALTORS(R) throughout the state have a long-standing tradition of community involvement and making a difference in the neighborhoods they serve. The recent wildfires throughout Southern California have devastated many families and caused a great deal of property damage in many Southern California communities. C.A.R. has compiled information in the REALTORS(R) Care section of car.org. There, REALTORS(R) and consumers will find a list of resources, including what to do and who to contact after a fire or other natural disaster, as well as insurance-related information.

 For a complete list of fire-related resources, please visit: http://takeaction.realtoractioncenter.com/ct/OpS3IDd1kSU1/

 C.A.R. Mortgage Update

 The CALIFORNIA ASSOCIATION OF REALTORS(R) (C.A.R.) has created consumer information sheets detailing the various mortgage modification programs available through the larger lenders and government entities, and also has created an easy-to-use reference chart about available programs.

 . The consumer sheets contain information such as eligibility requirements; who to contact to apply; costs associated with the program; and other vital data. In general, the loan modification programs on the chart and consumer information sheets are intended for primary residences only.

. Mortgage loan modifications typically are handled on a case-by-case basis. Homeowners having difficulty meeting their mortgage obligation or interested in finding out more about a loan modification program should start by contacting their lender. Prior to calling a lender or loan servicer, homeowners should have the following information available: loan number; income information and documentation; most recent mortgage statement; bank statements; and a letter demonstrating financial hardship.

To download the mortgage modification sheets, please visit: http://takeaction.realtoractioncenter.com/ct/W1S3IDd1kSUq/

 

 Wall Street Journal

What if you don't qualify?

The majority of the mortgage modification programs from the larger lenders only are available to homeowners who either already are in default or are at risk of defaulting on their primary residences. However, some homeowners, in particular those who may default on a vacation home or an investment property, have some options available.

MAKING SENSE OF THE STORY FOR CONSUMERS

 . Homeowners who are in default or at-risk of defaulting should contact a reputable credit counseling agency to discuss possible options other than foreclosure. When calling a credit counseling agency, the homeowner should have their loan number, most recent mortgage statement, bank statements and a letter demonstrating financial hardship. To find a credit counselor, visit the U.S. Dept. of Housing and Urban Development's (HUD) Web site at http://takeaction.realtoractioncenter.com/ct/I1S3IDd1kSUL/ or the non-profit organization National Foundation for Credit Counseling at http://takeaction.realtoractioncenter.com/ct/IpS3IDd1kSUM/.

. Homeowners should contact their loan servicer as soon as possible to try to work out potential solutions. According to the Federal Housing Finance Agency (FHFA), some borrowers who do not meet the requirements for an existing mortgage modification program may still be considered for a loan adjustment based on personal circumstances.

. If a mortgage modification is not possible, homeowners may want to consider a short sale-- sell the home for less than the amount of the mortgage. Although a short sale enables a homeowner to avoid foreclosure and often causes less damage to the homeowner's credit score than a foreclosure, the lender must agree to accept the loss and in some cases the homeowner may have to pay taxes on the difference. Also, many lenders are overwhelmed by the large number of short sales being submitted by homeowners, so it could take longer than usual to receive a short-sale acceptance from the lender.

. If a homeowner cannot qualify for a mortgage modification or a short sale, some lenders will consider a deed in lieu of foreclosure, where the homeowner transfers the title to the lender in exchange for debt forgiveness. Properties that have additional debt, such as home equity lines of credit or additional mortgages, may not qualify for a deed in lieu of foreclosure. Homeowners who have additional debt tied to the property must share this information with their lender for consideration when applying for a short sale.

To read the full story, please click here: http://takeaction.realtoractioncenter.com/ct/6dS3IDd1kSEJ/

 Wall Street Journal

 HUD Issues New Consumer Protection Rules on Mortgages

The U.S. Dept. of Housing and Urban Development (HUD) has announced updates to the Real Estate Settlement Procedures Act (RESPA), including the requirement of a three-page good-faith estimate that provides borrowers with rates, fees, prepayment penalties, and possible increases in monthly payments for every mortgage transaction.

MAKING SENSE OF THE STORY FOR CONSUMERS

. The Real Estate Settlement Procedures Act (RESPA) is a 1974 law that sets standards for home-purchase transactions. The purpose of RESPA is to provide consumers with information about the real estate mortgage transaction and the costs associated with it and to prohibit certain practices, such as referral fees between settlement service providers, that often result in higher costs and reduced quality to consumers

. A key change to RESPA is the creation of a standardized good-faith estimate (GFE) -- an itemized list of fees and costs associated with a mortgage loan. Currently, there are several good-faith closing estimate forms available, which can make it difficult for borrowers to compare rates and offers. Beginning in 2010, the U.S. Dept. of Housing and Urban Development (HUD) will require all lenders and mortgage brokers to use the standardized form. HUD officials estimate that the change will save home buyers as much as $700 at closing, due in part to a requirement limiting the increase between the good-faith closing cost estimate and actual fees to 10 percent. The new three-page good faith estimate also will outline rates, fees, any prepayment penalties, and the possibility of later increases in monthly payments.

. HUD also has created a new page on the HUD-1 Settlement Statement to help homebuyers better understand what they are being charged at closing and how these charges compare to the GFE issued by their lender. The new GFE is designed to help mitigate future foreclosures by ensuring home buyers thoroughly understand their loan terms. Many housing analysts believe the current number of foreclosures is due to many borrowers making "uninformed decisions" during the homebuying process. The new, standardized GFE and revised HUD-1 will not be required until Jan. 1, 2010.

To read the full story, please click here:

http://takeaction.realtoractioncenter.com/ct/67S3IDd1kSED/

In Other News

 Press Enterprise

 Fewer Inland default filings from September to October

To read the full story, please click here:

http://takeaction.realtoractioncenter.com/ct/7dS3IDd1kSU2/

 

Washington Post

Beyond White Walls and Empty Rooms

To read the full story, please click here:

http://takeaction.realtoractioncenter.com/ct/u1S3IDd1kSUx/

 

Bloomberg

Credit Score More Important Than Ever for Best U.S. Loan Rates

To read the full story, please click here:

http://takeaction.realtoractioncenter.com/ct/OdS3IDd1kSEV/

 

 San Francisco Chronicle

Bay Area homeowners owe more than home's worth

To read the full story, please click here:

http://takeaction.realtoractioncenter.com/ct/7pS3IDd1kSUs/

 

 Los Angeles Times

Credit card holders squeezed as issuers cut credit limits

To read the full story, please click here:

http://takeaction.realtoractioncenter.com/ct/I7S3IDd1kSUA/

 CNBC

Median home prices fall around US in Q3

To read the full story, please click here:

http://takeaction.realtoractioncenter.com/ct/WpS3IDd1kSUS/

Talking Points

Here's what to tell consumers

 . When searching for a home inspector, consumers should seek recommendations and referrals from their REALTOR(R), as well as other recent home buyers. It is recommended that consumers interview at least three potential candidates during this process. Home inspectors are not regulated as closely as other industries; so home buyers should consider choosing one that belongs to the American Society of Home Inspectors. The American Society of Home Inspectors requires its members to complete at least 250 inspections. Consumers also should inquire about fees, and whether the inspector is bonded and insured.

 . As credit underwriting guidelines tighten and down payment requirements increase, some home buyers, especially first-time home buyers, are finding it more difficult to qualify for a mortgage loan offered by a traditional financial institution. One viable option for some first-time home buyers, or those with challenged credit, is to apply for a home loan with the Federal Housing Administration (FHA). These loans are mortgages issued by a private lender but insured by the FHA. They often require smaller down payments and offer fixed-rate or adjustable-rate loans. However, not all home buyers will qualify. The FHA requires verification of income and assets along with a full home appraisal. While consumers with credit scores a low as 580 may qualify, home buyers should contact an FHA lender for an accurate assessment of their situation and ability to qualify.

Steve Papapietro's Weekly Mortgage Bulletin: Bad News Bears Down on Financial Markets, Vol 6

For the Week of Nov. 17, 2008

  Last Week in Review

        "NOBODY LIKES THE BRINGER OF BAD NEWS." Ancient Greek playwright Sophocles. Last week may have been a holiday-shortened week as the Bond market was closed on Tuesday in honor of Veterans Day, but it was far from quiet as financial markets reacted to several pieces of bad economic news brought throughout the week.

 The week began with the news that Circuit City filed for Chapter 11 Bankruptcy, and will be closing 150 stores - and this in advance of the holiday season, when most retailers make a larger portion of their profits for the year. Department store Nordstrom reported its growth rate is down 16%, where they were expecting an increase of 10%. Poor economic reports from Best Buy and Macy's followed a few days later, as well as lower future earnings guidance from Wal-Mart and Intel. As if the headlines of the week weren't enough, Friday's Retail Sales report showed that overall retail sales fell for the fourth straight month and plunged to their worst level since record keeping began in 1992. Looks like a pretty dismal holiday shopping season ahead...probably the worst that retailers will have seen in a long, long time.

 In addition, there was bad news for the automobile industry as Deutsche Bank downgraded shares of General Motors from hold to sell, giving a price target of $0...yes, $0. As a result, General Motors stock fell below $3 for the first time since April 13, 1943. Interestingly enough, the automaker was not even making cars at that time but producing only military equipment for WWII.

 And the bad news continued on the job front as well, as the Initial Jobless Claims report revealed the highest number of first time unemployment claim since 2001. In addition, Continuing Jobless Claims reached their highest level in 25 years. Remember, poor economic news and a weak labor market usually cause Bonds and home loan rates to improve. This is because fewer jobs and lower confidence about keeping or finding work causes people to spend less. In turn, businesses and retailers lose pricing power, and this is a cycle that keeps inflation - the arch enemy of Bonds and home loan rates - at low levels, especially if oil remains near present reasonable prices.

 However, despite all the bad economic news of the week, Bonds and home loan rates were unable to make significant improvements this week as they fought to defeat and move convincingly above a very important technical level called the 200-Day Moving Average. Read on, to understand more about the significance of this technical indicator.

LOSING A JOB IS ALWAYS A TOUGH EXPERIENCE, BUT IT PAYS TO FOLLOW GOOD ADVICE IF YOU OR SOMEONE YOU KNOW RUNS INTO THIS SITUATION. CHECK OUT THIS WEEK'S MORTGAGE MARKET VIEW FOR JOB SEARCH TIPS THAT CAN MAKE ALL THE DIFFERENCE IN TOUGH MARKETS.

 

        Forecast for the Week

        There are several important economic reports ahead this week...is more bad economic news on the way? Tuesday and Wednesday will be big days on the inflation front as Tuesday brings the wholesale measuring Producer Price Index while Wednesday's Consumer Price Index (CPI) report will show us inflation at the consumer level - that is, how much more expensive goods and services are for consumers this month over last month, as well as year over year. Given the Fed's recent rate cuts (which can trigger inflation), it will be important to see what these reports show.

 Wednesday will also bring a read on the new construction housing market with the Housing Starts and Building Permits Report, and Thursday is another important day to note as the Philadelphia Fed Report will be released. This monthly survey of manufacturing purchasing managers conducting business around the tri-state area of Pennsylvania, New Jersey, and Delaware is one of the most-watched manufacturing reports. Given both the poor Jobs and Retail Sales reports of late, this is likely to be somewhat negative as well. Weak economic news normally helps Bonds and home loan rates improve, as money flows out of Stocks and into Bonds, so I will be watching very closely for improvement during the coming week.

  However, to gain improvement, Bonds would have to convincingly defeat and move above a technical level called the 200-Day Moving Average. A moving average is the average closing price of a financial instrument over a given time period. In this case, the 200-Day Moving Average can act as a "ceiling of resistance", preventing Bond pricing from moving higher and helping home loan rates improve, or a "floor of support" that can keep Bond prices from moving lower and causing home loan rates to worsen.

 You can see in the chart below how Bonds danced around this level all last week, so I will be watching closely during the coming week to see if Bonds and home loan rates can breakthrough this resistance and move in an improving direction.

 Chart: Fannie Mae 6.0%% Mortgage Bond (Friday Nov 14, 2008)

 Japanese Candlestick

Chart<http://www.mmgweekly.com/templates/mmgweekly/reg_chart/168/images/

fnma11172008.gif>

 

        The Mortgage Market View...

Tips for Finding a Job in Tough Markets

 

Finding a job during tough economic times doesn't have to be tough...if you know which strategies work. Here are some tips for beating the odds:

 

Take Networking to the Next Level: Networking is always a great job strategy, but in the current economic climate, you need to go a step beyond letting your contacts know you are looking for a job, since many other people may be doing the same thing. Instead, develop a compelling business idea for your field or the field you would like to enter. Then, when you call or email your contacts, let them know you are researching your idea and would like to meet with industry insiders to discuss its viability. With this strategy, people will see you as someone with something to offer them, rather than as someone who needs something. And if the people you meet with like your idea, your meetings could lead to a job offer even though you never asked for a job.

Focus on Sectors That Are Hiring: No matter what industry your background is in, the skills or experience you possess may qualify you for a position in a new field. For instance, sales and customer relations are skills needed in a variety of industries. To begin, make a list of your experiences and skills that could help you find a job in a sector that is currently hiring. Then, gear your resume and cover letter to focus on these particular skills and experiences.

 Aim for Your Dream Job: Many job seekers begin to panic and apply for any job that's available. This is a mistake for several reasons. First, passion and enthusiasm are your best weapons for succeeding in your jobsearch. Employers can tell the difference between someone who really wants to work for them...and someone who will take any job. Second, when you are focused on finding a specific job versus any job, you make it easier for friends and colleagues to help you because they will have a clearer idea of who they could contact for you. Third, if you're in the middle of a job transition, why not use the opportunity to enter the profession you have always wanted to try?

  Be Creative About How You Start: During tough markets, many businesses are hesitant to add new employees and increase their level of fixed costs. You can offer to begin as an independent contractor for a period of time before receiving a review and possibly a future permanent job. This would give you a chance to earn an income while demonstrating your skills and value to the company. In turn, it lets the company evaluate your performance in a less costly way, because you would not receive benefits during this time; and with less risk for the company than having to make the decision to hire a permanent employee. You could also volunteer your way to a paid job. Many nonprofit organizations have powerful executives on their boards. By demonstrating your skills and work ethic as a volunteer, you could meet important connections that could lead to your next position.

The bottom line is this: Losing a job is tough during any market, but finding a job doesn't have to be tough when you are willing to be creative and use strategies that work!

Steve Papapietro

4300 El Camino Real

Suite 100

Los Altos, CA 94022

MetLife Home Loans is a division of MetLife Bank, N.A.

San Jose High-Rises Keep Sales Up in Santa Clara County

If you haven't checked out this article from a few days ago, published in Mercury News, you really should--it bears good news for buyers, sellers, and people just interested in an indicator from the real estate front about how the economy is going downtown San Jose. While new home sales in September were pretty dismal throughout California, one pocket in Santa Clara showed an opposite trend.  In downtown San Jose and parts of Palo Alto new condo sales were up nearly 150% from the previous year. 

Some of the condos were high-rise, expensive properties, and almost all of them attracted a specific kind of buyer--tech workers, empty nesters, people who'd been renting downtown for a while. There's an interesting question lurking behind this boom in condo sales--since the burst of the housing bubble, are condos in prime downtown areas simply a safer investment? Do people feel more comfortable purchasing condos over houses these days, or is this a matter of coincidence? What do you think?

Click here for the full story, written by Sue McAllister.

Bay Area Highlights, Thru Nov 23

Bay Area Highlights

The Peninsula and South Bay Edition: Check out these great events!

Music--

Palo Alto Philharmonic Chamber, 8:00PM, 11/15

Schubert's Trout Quintet. Tickets www.paphil.org

Classical Art Center Auditorium, Palo Alto

The Namedroppers starring Eddie Money plus Moreality, 8:00PM, 11/12

Fox Theatre, Redwood

Celine Dion, 7:30PM, 11/23

Pop HP Pavilion, San Jose

Brazilian Jazz Showcase With Ed Johnson & Novo Tempo, 4:00PM, 11/23

City Lights Theater, San Jose

Things To Do: 

Project Runway Finalist Daniel Vosovic, 11/7, 7:30PM

Daniel Vosovic discusses and signs Fashion Inside Out: Daniel V's Guide to How Style Happens From Inspiration to Runway and Beyond.

Kepler's, Menlo Park

The Peninsula French Fair, A Day in France, 11/8, 10:00AM--6:00PM

Original French products--start your Christmas shopping!

Hillview Community Center, Los Altos 

2008 San Mateo Harvest Festival, 11/14-11/16, 10:00AM--6:00PM

San Mateo County Event Center, San Mateo

Brought to you by Cindy Solomon, North American Title Company

Hope Now Alliance: Lifeline or Deadweight?

The recently created Hope Now Alliance seems like exactly what this country needs--a coalition of banks and government agencies working together to help people facing foreclosure stay in their homes.

Some banks, like Citibank, intend to work hand in hand with borrowers to settle on a mortgage borrowers can handle--Citibank has also vowed not to start foreclosure proceedings on anyone who has enough income to handle a reasonable mortgage. Statistical evidence seems to show that these attempts are working--drops in foreclosures are seen in CA. Even so, foreclosures in the last two years are unprecedented, and foreclosures are always bad news for the economy--they serve to bring down housing values, therefore spawning more foreclosures. 

The plan behind the program is to quicken the pace on the mortgage modification process so that mortgages become more affordable soon enough to save some people in critical danger of foreclosing. The plan also solidifies loan modification rules, and many companies have added staff to help handle the surge of cries for help. 

But the question still remains--will modified mortgages be low enough that people will be able to make their payments? Many people are doubtful that the new plan will actually be able to help them. Plus, a borrower can't get help until they're past due, even if they're having trouble keeping their head above water. Some people fear the banks encourage people to get past due before throwing them a lifesaver. 

Check out the full text article of this story in Mercury News, called Sweeping Mortgage Aid Plan Unveiled. It's written by Pete Carey and contains loads more details about the new plan and what it means for borrowers. 

C.A.R Market Matters, November 6

Thursday November 06, 2008

Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS

C.A.R's Mortgage Update

This week C.A.R is introducing an occasional new feature in Market Matters entitled Mortgage Update. Mortgage Update will update REALTORS and consumers on recent news about the mortgage market. 

This issue of Mortgage Update contains news and updates on the "Hope for Homeowners" program, and foreclosure assistance programs for borrowers with mortgages issued through Indymac, JP Morgan Chase and Co, and Countrywide.

MAKING SENSE OF THE STORY FOR CONSUMERS

Early projections indicate that only 20,000 troubled homeowners will apply for the "Hope for Homeowners" program, a considerable reduction from the previously estimated 400,000 homeowners who were expected to apply. The $300 billion program was launched Oct. 1 and is designed to help troubled homeowners rewrite a "risky" mortgage loan into a 30-yr, fixed-rate loan with a lower interest rate. During the first two weeks of the program, the Federal Housing Administration, which oversees Hope for Homeowners, reported receiving only 42 applications. Some housing experts believe the low application rate is due to the program being voluntary for lenders and provisions requiring homeowners to agree to an equity share with the government. 

Full Story

Less than half of homeowners with mortgage loans through IndyMac have responded to offers from the Federal Deposit Insurance Corporation (FDIC) to lower loan payments and interest rates. The FDIC, which is running IndyMac, mailed 35,000 letters offering homeowners an opportunity to rework the terms of their mortgages. The goal is to reduce the monthly payment on a loan, including taxes and insurance, to no more than 38% of the borrower's pretax income. The FDIC is prepared to implement the following: reduce the interest rate to as low as 3%; extend a loan's terms to 40 years; and waive interest on a portion of the mortgage balance.

Full Story

JPMorgan Chase % Co has reported that it is instituting a 90-day foreclosure freeze while it searches for ways to make payments easier for consumers. The program may enable up to 400,000 borrowers to reduce their interest rates or principal amounts. The bank will also open 24 mortgage counseling centers in areas with the highest delinquency rates. JPMorgan also is planning to hire 300 loan counselors to work with delinquent borrowers and employ approximately 150 additional staffers to review each mortgage prior to sending it through the foreclosure process. The program offer is extended to borrowers who have loans through Washington Mutual Inc., and clients of EMC, a mortgage unit of Bear Sterns Companies. Both companies were acquired by JPMorgan in recent buyouts and takeovers.

Full Story

Bank of America, which acquired Countrywide in July, said that nearly 400,000 troubled homeowners who have subprime mortgages and option adjustable-rate loans through Countrywide may be eligible for loan modifications. To be eligible for the Bank of America plan, homeowners must occupy the home as their primary residence, the mortgage must be seriously delinquent---or likely to become so; and the loan must have been serviced by Countrywide and originated prior to December 31, 2007. Bank of America will help borrowers by restructuring first-year payments of principal, interest, taxes and insurance to no more than 34% of the borrower's income; halting foreclosure sales against borrowers who are likely to qualify for a loan modification; and waiving restructuring fees and prepayment penalties. 

Full Story

 Chicago Tribune

Finding an area with appreciation potential

Some real estate experts believe that home buyers who purchase a house during the current market will gain equity if they stay in the house for at least five years and purchase in a desirable neighborhood.

MAKING SENSE OF THE STORY FOR CONSUMERS

Neighborhoods with strong employment bases, such as hospitals, universities, and government, tend to be recession-proof. People desire to live near their jobs, so housing that is in close proximity to these types of industries are generally higher in demand than those in other areas.

High gas prices and roadway congestion have led many people to see "walkable" communities--nieghborhoods that offer both daily needs such as grocery stores and coffee shops to more speciality items like hair salons, all within walking distance. Walkable communities also provide public transportation, which is becoming more desirable to many home buyers and is increasing demand for housing in these areas.  One web site, walkscore.com, calculates teh walkability of a community by locating stores, restaurants, schools, parks, and other attractions that are within walking distance. The scores are based on a 100-point scale with 100 points being a walker's paradise.

Home buyers who seek a new or nearly-new home should search in areas where the homebuilder is known for honoring warranties and building high-quality homes that are structurally sound. Homes in these areas are more likely to weather well and gain value in the future than homes in areas where the home builder is unknown.

Homes in neighborhoods with sales momentum generally appreciate at a faster pace than areas where sales are flat. Some real estate industry consultants advise clients to pay close attention to the "list to sale" numbers, which reflect the difference between the asking price and the final closing price. Usually if the gap in list-to-sale numbers is narrow, then the real estate market in that area is improving.

Full Story

CNN MONEY

7.5 million homeowners "underwater" 

Approximately 7.5 million U.S homeowners owe more on their mortgages than their homes are currently worth, and an additional 2.1 million Americans own homes valued at only 5% more than their loan.

MAKING SENSE OF THE STORY FOR CONSUMERS

According to some estimates as many as 12 million borrowers may have negative equity in their home, meaning that they owe more on their mortgage loans than their homes are currently worth. However, according to statistics gathered by C.A.R over the last 40 years, homeowners who purchase a house and keep it for at least five years have an average annual rate of return at nearly 12%. 

Although California's inventory of homes with high negative equity is higher compared with other states, lower home prices have increased affordability, making it easier for first-time home buyers to enter the market and other buyers to move up to larger houses or more desirable neighborhoods.

Borrowers who are facing foreclosure should work with their lender and apply for a loan modification program. Many financial institution are offering homeowners the opportunity to rewrite an adjustable-rate mortgage into one that is fixed for 30 years. Some banks are also offering existing customers zero interest for a short period of time and lowering the principle balance on the loan to make payments more affordable.

Full Story

Washington Post

Meltdown 101: How we'll know we're in a recession

Recent economic reports and many news stories have led some Americans to believe the country is in a recession. Although unemployment is high and incomes have failed to keep pace with inflation, the country is not yet in a recession, which must be declared by the National Bureau of Economic Research (NBER)

MAKING SENSE OF THE STORY FOR CONSUMERS

The National Bureau of Economic Research (NBER) is the entity that officially declares the country is in a recession. Founded in 1920, NBER consists of more than 1,000 university professors and researchers who study the economy. The Business Cycle Dating Committee within the NBER makes the call on recessions. Often times NBER doesn't declare a recession until after it's over.

Contrary to popular belief, a recession is not defined as two consecutive quarters of negative gross domestic product growth. NBER defines a recession as a significant decline in an economic activity spread across the economy, lasting more than a few months. This is usually based on reports such as the gross domestic product--a measure of the value of all goods and services produced within the United States; real income, employment, industrial protection, and wholesale and retail trade.

A recession's start and end dates are based on the high and low points within the nation's "business cycle" --periods of economic growth and contraction. A recession begins when the economy peaks at the top of an expansion period. It continues as the economy contracts until it hits the "trough", the lowest point on the downward cycle. After that, the economy begins to recover. The "peak" date is the beginning of the recession and the "trough" date is its end. The last official recession began in March 2001 and lasted eight months before ending in November 2001.

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LA Times

'Green' improvements can add to a home's appeal

Many home buyers are seeking "green" homes to offset their carbon footprints and pocketbooks. Although most green homes are new houses, owners of existing homes for sale can make "green adjustments" to be more competitive in the market.

MAKING SENSE OF THE STORY FOR CONSUMERS

C.A.R recently launched a new Green website--"At Home with Green", which provides information to consumers and REALTORS about how to find and sell green homes; how to make green home improvements; and other tactics for greening their homes, offices, and lives. To visit, "At Home with Green" CLICK HERE

Consumers can work with their local utility company to conduct an energy audit to determine how green a home is and to get pointers on how to further green the home. Although the changes could be costly and the homeowner likely will not recoup all the money spent making the green upgrades, the home could sell faster with the improvements. Some home buyers may make an offer on the home as is, but might request a credit towards making the green improvements. Often times the credit will be nearly twice the amount that it would have cost had the homeowner made the improvements prior to listing the home.

Homeowners can make green improvements in their homes by making simple changes, such as replacing regular light bulbs with compact fluorescent bulbs (CFLS) which use only one-fifth the energy of regular bulbs and last almost 12 times longer, or more substantial improvements like replacing appliances with ENERGY STAR-rated ones, which can use as little as one-quarter the energy of older models.

Full Story

In Other News...

CNBC

What Does 'Good' Credit Really Mean?

Wall Street Journal

The Stampede of White Elephants

Mercury News

Freddie Mac says fewer homeowners are borrowing from equity

Washington Post

A crackdown on credit fixes

LA Times

Banks, consumer advocates urge U.S to allow credit card debt forgiveness

Talking Points

Here's what to tell consumers

The U.S Dept. of Housing and Urban Development (HUD) offers an online guide to preventing foreclosure. The guide provides consumers with information such as how to contact a housing counselor; when and how to talk to their lender, how to find foreclosure resources, tips on avoiding foreclosure and foreclosure scams, as well as information for consumers who cannot keep their home. The guide to preventing foreclosure can be accessed here. 

New Proposal Attempts to Stave Off Future Foreclosures

On Wednesday, Gov. Schwarzenegger made a proposal that will instate a 90-day freeze period for homeowners on the brink of foreclosure--basically, once a notice of default has been posted against them, their mortgages companies have to halt proceedings until they can prove that they have modified their loan processes to make it easier for people to stay in their homes. The goal is to inspire "aggressive modification programs" that will hopefully benefit both homeowners and lenders. The proposal still has to be passed by legislature.

Click here for the full story, published in Mercury News and written by Sue McAllister.

Steve Papapietro's Weekly Mortgage Bulletin: Fed Cuts Again

For the week of Nov 03, 2008 --- Vol. 6, Issue 45

        Last Week in Review

        "TAKE TIME TO DELIBERATE; BUT WHEN THE TIME FOR ACTION ARRIVES...STOP THINKING AND GO IN." Napoleon Bonaparte. And taking action after deliberating was exactly what the Fed did last week, when they cut the Fed Funds Rate by .50%, lowering it to 1.00%.

Why did the Fed take action last week, after it had already lowered the Fed Funds Rate by .50% on October 8 in a coordinated effort with other central banks? To continue to help ease the credit crisis, and prevent a long and severe global recession. In fact, several foreign central banks followed the Fed's lead again last week, with Hong Kong cutting their lending rate by .50%, Taiwan cutting by .25%, and Japan cutting by .20%. This is important because cuts by other nations help stabilize the US Dollar, which typically loses ground after our Fed cuts rates, because of the lower yield offered comparatively offered in the US. Another interesting point to note: since oil is Dollar denominated, the price per barrel typically jumps after our Fed cuts rates, because of the decline in the value of the Dollar. The cuts by other central banks should keep oil...and gas prices, in turn...from skyrocketing again.

Another reason the Fed took action: The Fed's statement discounted threats of inflation, saying that slowing economic growth should lower inflation pressures over time, but added that downside risks to economic growth remain. And last week's negative Gross Domestic Product reading is confirmation that things have slowed quite a bit. Although experts have speculated that the US may already be in a recession, the first hardcore signs appeared when the Third Quarter Advance GDP report showed that consumer spending declined at the fastest pace in 28 years. The report also reflected the largest quarterly decline since the end of the last recession in 2001.

So what did all of this mean for Bonds and home loan rates last week? After worsening early in the week, Bonds and home loan rates attempted to stabilize by week end. And while it was a treat that Bonds did bounce off an important level of technical support, home loan rates still ended the week nearly .125-.25% worse than where they began.

SPECIAL NOTE: BRAND NEW VIDEO FEATURE IN THIS WEEK'S MORTGAGE MARKET VIEW! CHECK IT OUT TO LEARN SOME HOT TIPS TO CONSIDER WHEN BUYING OR LEASING YOUR NEXT VEHICLE.

        Forecast for the Week

        The excitement continues, as the heavyweight Jobs Report is scheduled for release this Friday, which will show the number of jobs lost or gained in October. Remember that the Department of Labor averages their numbers, and part of each month's report includes "revisions" to the several prior months' numbers. Last month, the Labor Department reported that 159,000 jobs were lost in September, which was worse than the 105,000 lost jobs that economists were expecting. As of last month's report, the US has lost 760,000 jobs so far in 2008. And the news for October is not expected to be any better.

A negative report could be bad news for Stocks and good news for Bonds and Home loan rates, as bad economic news typically causes money to flow from Stocks and into Bonds. But as has been noted in recent weeks, things are anything but typical at the moment. Bottom line: count on me to be watching closely to see how the markets react to this report and all the other news of the week...and feel free to call me anytime, even if you'd just like to do a quick review of your own current financial and credit situation.

As you can see in the chart below, Bonds did bounce off a key technical support level late in the week. I will let you know if Bonds can remain above this important support during the week ahead.

Chart: Fannie Mae 6.0%% Mortgage Bond (Friday Oct 31, 2008)

 Japanese Candlestick

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        The Mortgage Market View...

        Click Here to view the latest Video.

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Should You Buy or Lease?

By Mark K. Solheim

To hear the critics wail, you'd think leasing a car is as bad for your finances as smoking cigarettes is for your health. Does that mean you're a closet wastrel if you've ever been tempted by ads that trumpet affordable monthly payments for a new car? Or, worse, that you are hurtling down the highway to financial ruin if you've already given in?

Relax. Leasing is not a mortal sin of money management. For some drivers, in fact, it makes sound fiscal sense. Leasing's not for everyone, but there's no reason to scorn the 15% of our fellow travelers who choose leasing over buying.

A Closer Look

Leasing often gets a bum rap because the lingo can make your head spin. It's difficult to compare one lease with another, not to mention to compare leasing with buying. And it can be tough to get a handle on leasing because the decision to lease or buy often depends on your mindset. "A lot of people are freaked out by having to turn in their car at the end of the lease," says Phil Reed, author of Edmunds.com's Strategies for Smart Car Buyers. "What they fail to realize is that they got the first years of a brand-new car's life."

One of the biggest criticisms of leasing is that in a buck-for-buck comparison of leasing and buying, leasers usually shell out more money. That's because, after the loan payments are done, buyers get to keep the vehicle (pay cash and you come out further ahead). If your modus operandi is to buy a car and run it till it sputters and dies, leasing isn't right for you. But you're a good candidate, Reed says, if you've decided that you're always going to have a car payment - as many drivers do, now that six- and even seven-year loans are gaining popularity. It's a good bet that you can drive more car for less money if you lease. You'll never actually own the car, but who really owns a car when the bank holds the title until the loan is paid off?

A few other advantages: A lease usually ends about the same time as the warranty, so you probably won't pay for any repairs. You won't have to worry about whether you'll get a fair deal on a trade-in. In most states, you pay sales tax only on the monthly payments rather than on the full value of the car. Plus, many of today's leases include gap insurance to cover the difference between the lease payoff and an insurance settlement if the car is totaled or stolen.

Yes, there are early-termination fees if you change your mind. But if you finance a car and bail out before the loan is paid off, you could easily owe more on the loan than the car is worth. And it's true that you pay extra for exceeding the 10,000- to 15,000-mile yearly limit typically written into a contract. But buyers who rack up high mileage also pay a penalty: lower trade-in value.

Design Your Own Lease

If you choose a manufacturer-subsidized lease, you'll probably be locked in to the terms. But if the car you want isn't being pushed by the carmaker, there's plenty of room for bargaining. Either way, contact several dealers to see who's willing to cut you the best deal. Reed of Edmunds.com recommends a term of three years because that's often the turning point in a car's life (when the warranty expires, for instance, o r you may need new tires).

Ask the dealer to compare leasing offers on the car from the manufacturer's financing arm as well as a few banks. That may produce a lower "money factor" (basically the interest rate) or higher residual, either of which translates into lower payments.

  Next, target the capitalized cost - leasing lingo for the price of the car written into the lease. Gross cap cost includes the price of the vehicle, fees, extended service plans, gap-insurance premiums and any other add-ons. Adjusted cap cost is the gross cap cost minus reductions for trade-in, down payment, and rebates. That adjusted cost is the amount you actually finance. Don't pay sticker unless you have to. Both Kelley Blue Book (www.kbb.com) and www.Edmunds.com list actual transaction prices to give you an idea of what others are paying.

If you expect to drive more than the number of miles included in the standard contract, try to negotiate a higher limit. Or you may be able to buy extra miles up front for an extra 10 or 15 cents per mile, versus the usual 15- to 30-cent-per-mile penalty charged at the end of the lease.

You usually have the option of buying the car at the end of the lease instead of turning it in. The purchase amount, typically the residual value, is written into the lease. Buying may not be a good idea, though, if the residual was set artificially high.

Not up for haggling? Kiplinger's has teamed with CarBargains, a buying service from the nonprofit Consumers' Checkbook organization. Its LeaseWise service will negotiate with five local dealers for you. The cost is $335. Visit www.kiplinger.com/links/carbargains or call 800-475-7283.

Reprinted with permission. All contents (c) 2007 The Kiplinger Washington Editors, Inc.

Steve Papapietro

4300 El Camino Real

Suite 100

Los Altos, CA 94022

Metlife Loans is a division of MetLife Bank, N.A.