Steve Papapietro's Mortgage Bulletin: For the Week of Nov 2nd

LAST WEEK IN REVIEW "Don't believe the hype!" The words from Public Enemy's hit song title rang true once again last week when the Commerce Department reported the Gross Domestic Product (GDP) for the 3rd Quarter. As you can see from the chart below, GDP rose by 3.5% for the first gain in a year and the strongest reading in two years. While most media outlets were giddy about the news and started the hype that the recession is behind us, it's important to remember that there's more to the economic data than just the headlines. The temporary "Cash for Clunkers" program has now expired, but was a big part of last quarter's GDP gain. If we remove it from the total, the reading would have been a more modest 1.9%. But there is even more to the rise in the latest GDP number that is just temporary... Also bolstering the economy has been the $8,000 first-time homebuyer tax credit - which is set to expire at the end of this month. Many home buyers have been taking advantage of this program - and wisely so. ----------------------- Chart: US Gross Domestic Product (By Quarter) New Home Sales were reported last week, showing a 7.5-month supply of inventory. While that number is slightly worse than last month's 7.3 reading, it's still a big improvement from where we were in January. Back in January, inventory levels reached a high of 12.4-month supply! The improvement in housing inventories has been due in large part to the $8,000 First Time Homebuyer Tax Credit, which is set to expire on November 30. There is a real possibility of an extension of this program through a proposed Bill, but it is not yet a certainty. The extension Bill still must be reconciled between the House and Senate, and then voted on for final approval. Under the current extension proposal, sales with signed purchase agreements by April 30th that close before June 30th, 2010 would qualify for the credit. Another positive element would be the possible addition of $6,500 tax credit for other primary home purchasers, meaning the tax credit would no longer be limited only to first-time homebuyers. There is also a possibility that qualifying income limits could increase from $75,000 to $125,000 for singles, and from $150,000 to $250,000 for joint tax filers. I will be keeping an eye on this for you, so stay tuned. After all last week's news and movement in the markets, Bonds and rates ended the week slightly better than where they began. DON'T FORGET: THIS WEEKEND MARKS THE END OF DAYLIGHT SAVING TIME. SO MAKE SURE YOU SET YOUR CLOCKS BACK TO AVOID UNEXPECTED PROBLEMS...LIKE THE KIND DESCRIBED IN THE MORTGAGE MARKET GUIDE VIEW ARTICLE BELOW!

FORECAST FOR THE WEEK

	This week brings us new employment numbers...and a chance to see if the labor market is showing signs of recovery. The employment news begins Wednesday with the ADP National Employment Report. Sandwiched between that report and Friday's Jobs Report, is the Initial Jobless Claims report on Thursday. The big news comes on Friday, when the all-important Jobs Report will be released. Last month's report underscored the struggling labor market, as the Labor Department reported 263,000 jobs lost in September and an increase in the unemployment rate to 9.8%. The report due out this week is expected to show 166,000 jobs lost in October, which would be significantly better than the previous month if it happens. However, the Unemployment Rate is expected to continue its climb to 9.9%. In addition to employment news, we'll also see the ISM Index on Monday. This is the king of all manufacturing indices and is considered the single best snapshot of the factory sector. Finally, the Federal Open Market Committee (FOMC) holds its two-day meeting this week, with an announcement of the Fed Rate Decision and Policy Statement due on Wednesday at 2:15 p.m. (ET). Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Mortgage Bonds were able to bounce back last week with help from weakness in the Stock markets. Chart: Fannie Mae 4.5%% Mortgage Bond (Friday Oct 30, 2009)

THE MORTGAGE MARKET VIEW

	Turning Back the Hands of Time This weekend, the sun set on another season of Daylight Saving Time. The extra daylight we now enjoy was actually the result of the Energy Policy Act, which was enacted by Congress back in 2005. But did you know that throughout its long history, Daylight Saving Time has had a remarkable and sometimes unexpected impact? A man was actually able to avoid the draft for the Vietnam War using a Daylight Saving Time loophole. When he was born, it was just after midnight, DST. When he was drafted, he successfully argued that in his home state of Delaware, standard time - not DST - was the official time for recording births. So he was technically born on the previous date--which had a much higher draft lottery number - and he was able to avoid being drafted. In September 1999, the West Bank was on Daylight Saving Time, while Israel had switched back to standard time. A group of West Bank terrorists prepared some timed bombs - but misunderstood the time change - and the bombs exploded early, killing the terrorists themselves, rather than the intended victims - two busloads of innocent citizens. In the 1950s and 60s, each state and locality was permitted to choose start and end DST dates as they desired. During 1965, Minneapolis and St. Paul - which are considered one metropolitan area - didn't agree on start dates, and for a period of time, these Twin Cities had a one hour time change between them. And on one Ohio to Virginia bus route, passengers technically had to change their watches seven times in 35 miles! To keep to their published timetables, Amtrak trains cannot leave a station before the scheduled time. So when the clocks "fall back" in the fall, all trains that are running on time actually stop at 2 am - the official time of DST change - and wait one hour before resuming their routes. In the spring, the routes instantaneously become one hour behind schedule, but they just keep going and do their best to make up the time. So Daylight Saving Time sure can have some unexpected impact. As we enter the first week of Daylight Saving Time, be sure to double-check all of your electronic devices and confirm that the time is correct. Although you may be accustomed to your computer and maybe even your digital clock in your car automatically updating, the recent change of dates for Daylight Saving Time may require that these devices be manually changed, as they now may NOT be ready to update to the correct time on the correct date!

THE WEEK'S ECONOMIC INDICATOR CALENDAR

	Remember, as a general rule, weaker than expected economic data is good for rates, while positive data causes rates to rise. Economic Calendar for the Week of November 02 - November 06 Date ET Economic Report For Estimate Actual Prior Impact Mon. November 02 10:00 ISM Index Oct 53.0 52.6 HIGH Mon. November 02 10:00 Pending Home Sales Sept 0.4% 6.4% Moderate Wed. November 04 10:30 Crude Inventories 10/30 NA 0.78M Moderate Wed. November 04 08:15 ADP National Employment Report Oct -190K -254K HIGH Wed. November 04 02:15 FOMC Meeting 11/4 unch .25% HIGH Wed. November 04 10:00 ISM Services Index Oct 51.5 50.9 Moderate Thu. November 05 08:30 Productivity Q3 5.8% 6.6% Moderate Thu. November 05 08:30 Jobless Claims (Initial) 10/31 520K 530K Moderate Fri. November 06 08:30 Average Work Week Oct 33.1 33.0 HIGH Fri. November 06 08:30 Hourly Earnings Oct 0.1% 0.1% HIGH Fri. November 06 08:30 Non-farm Payrolls Oct -175K -263K HIGH Fri. November 06 08:30 Unemployment Rate Oct 9.9% 9.8% HIGH

The material contained in this newsletter is provided by a third party to real estate, financial services and other professionals only for their use and the use of their clients. The material provided is for informational and educational purposes only and should not be construed as investment and/or mortgage advice. Although the material is deemed to be accurate and reliable, we do not make any representations as to its accuracy or completeness and as a result, there is no guarantee it is not without errors. As your trusted advisor, I am sending you the MetLife newsletter because I am committed to keeping you updated on the economic events that impact interest rates and how they may affect you. In the unlikely event that you no longer wish to receive these valuable market updates, please USE THIS LINK or email: spapapietro@metlife.com If you prefer to send your removal request by mail the address is: Steve Papapietro 4300 El Camino Real Suite 100 Los Altos, CA 94022 Mortgage Success Source, LLC is the copyright owner or licensee of the content and/or information in this email, unless otherwise indicated. Mortgage Success Source, LLC does not grant to you a license to any content, features or materials in this email. You may not distribute, download, or save a copy of any of the content or screens except as otherwise provided in our Terms and Conditions of Membership, for any purpose. MetLife Home Loans is a division of MetLife Bank, N.A.

Palo Alto Market Update, Feb 26th: Single Family Homes

Here's today's snapshot of the Palo Alto market--

123 active listings

25 pending sales

I'm in too much shock to deal with the sold homes. I'll get to that in my next post but I wanted to get this information out. 

What does this mean?

Last Dec. I commented that if Palo Alto's inventory got up to 120 active listings we'd be in trouble. Well, we are. There hasn't been this many homes for sale since 2001. We all know what happened then. The reasons for the decreased inventory are different than in 2001, but the results will probably be the same. I can only hope that sellers don't try to insult the buyer's intelligence, and that the buyers treat sellers with respect--even if they don't respect the asking prices. 

More on closed sales and price drops tomorrow. I'm off to the theatre tonight--my only occasional night off. Going to see "I Am My Own Wife" at the San Jose Stage Company, my very favorite area theatre.

If you're interested in finding the final selling price of any home, anywhere, you can do it on my website. Click here to get to my site. Once there, click on Cyberhome Home Valuation. You can then type in any address next to the search icon to get the  county records. 

If you need anything else or have any questions about the market, please contact me. I'm here to help.

Marcy Moyer, Intero Real Estate

650-619-9285

marcy@marcymoyer.com

Mountain View Market Update, Jan 10th

As of this morning, this is the snapshot of the Mountain View real estate market--

Single Family Homes:

Active Listings: 57

Pending Sales: 9

Sold Last Week: 1

Condos/ Town Homes:

Active Listings: 57

Pending Sales: 12

Sold Last Week: 4

So what does this mean? Not too much. There wouldn't normally be too many closed sales at the end of the year because of the holidays. The condo market and the single family home market have a similar ratio of pending to active listings, although it is a little better for single family homes. The result may be a little off, however, because there are more new condo/town homes on the market than single family homes, so these numbers are not an exact picture--not every new home in a development is on MLS. The inventory of both classes is shrinking, but that is to be expected as most sellers don't put their homes on the market at this time of year, preferring to wait until after the New Year. I will have a better idea of where the market is going a few weeks into January. If the inventory goes up a lot faster than the pending sales, we will see price declines. If the inventory stays the same and the pending sale rate stays the same, we should have some stability in prices. If the inventory goes down and pending sales stay the same or increase, we could see some appreciation. I will let you know when I think there is a real trend I can put my finger on. 

If you are interested in finding the final selling price of any home, anywhere, you can do it on my website. Click here to go to my website. Once there, click on Cyberhome Home Valuation. You can then type in any address and get the county records. 

If you need anything else, please contact me! I'm always here to help you. 

Marcy Moyer Intero Real Estate

650-619-9285

Palo Alto Market Update, Jan 6th: Condos

As of this evening, here is a snapshot of the Palo Alto condo/town home market--

Active Listings: 20

Pending Sales: 5

Sold in Last Week: 1

Sold Details:

2579 Park Blvd. X102: Listed for $639,950 and sold for $630,000

What does this mean? We are probably at the bottom of inventory for a while. The number of condos for sale should increase over the next few months, whether the market is good or bad. Things to watch for: is the inventory of condos over 35 active listings, and how are the pending sales going? Even if the active sales stay under 30, if the pending sales don't rise to at least 2 active for every pending listing we will see some more price decreases. If we can get up to 2 to 1 we won't see much change in the way of prices. If we go better than 2 to 1, we will see appreciation. 

If you are interested in finding the final selling price of any home, anywhere, you can do it on my website. Click here to go to my website. Once there, click on Cyberhome Home Valuation. You can then type in any address and get the county records. 

If you need anything else feel free to contact me-- I am always here to help! 

Palo Alto Market Update, Jan 5th: Single Family Homes

As of this morning, here is a snapshot of the real estate market in Palo Alto:

Single Family Homes:

Active Listings: 60

Pending Sales: 11

Sold in Last Week: 4

Sold Homes Included:

1. 1018 Los Robles: listed for $1,350,000 and sold for $1,390,000

2. 821 E Meadow: listed for $1,298,000 and sold for $1,350,000

3. 1151 Middlefield: listed for $1,495,000, reduced to $1,295,000, and sold for $1,600,000

4.  2774 Randers Ct: listed for $799,000, and sold for $800,000

What does this mean? We are probably at the bottom of inventory for a while. The number of homes for sale should increase over the next few months, whether the market is good or bad. Things to watch for: is the inventory of homes over 130 active listings, and how are the pending sales going? Even if the active sales stay under 100, if the pending sales do not go up to at least 2 active for every pending listing we will see some more price decreases. If we can get up to 2 to 1 we won't see much change in prices. If we go better than 2 to 1 we will see appreciation.

The fact that all four sold homes went for over asking price is interesting--I don't know if it's a fluke or not. They were all listed under 1.5 million, which is the lower end for Palo Alto. If this trend continues, I'll have more comments--but if not, then I guess it is just a fluke.

If you are interested in finding the selling price of any home, anywhere, you can do it on my website. Click Here to go to my website. Once there, click on Cyberhome Home Valuation. You can then type in any address and get the county records. 

I'm always here to help, so feel free to contact me with questions or comments. 

Steve Papapietro's Mortgage Bulletin: Jobs Report Miles Worse than Expected

For the week of Dec 08, 2008 --- Vol. 6, Issue 50

        Last Week in Review

        "I KNEW THE RECORD WOULD STAND UNTIL IT WAS BROKEN." Yogi Berra. And while last week's Jobs Report wasn't the worst record breaker of all time, it showed a loss of 533,000 jobs during the month of November, which represented the most job losses the US has seen in 35 years. And adding more pain to the Report were heavy downward revisions for September and October, which erased an additional 199,000 jobs. In addition, last month was only the fourth time in 58 years that our economy lost over 500,000 jobs.

 So what does this mean for Bonds and home loan rates? We first have to acknowledge that we are not in a typical trading environment, where weak or negative economic reports always lead to improved pricing for home loans and vice versa. The dynamics of hedge funds de-levering - where fund managers are selling all types of securities with whatever timing they need to, in order to raise capital - have caused unprecedented volatility of late, and it is not quite clear when that will end.

The Fed has indicated that they would like to be a buyer of Mortgage  Bonds, which has resulted in attractive, lower rates right now. But as stated above, the trading environment is extremely volatile, and opportunities to capitalize on lower rates that make sense should be taken advantage of. There have been recent rumors of interest rates being brought down towards 4.5% by the Treasury. This irresponsible release included no definitive plan, no indication of who might qualify, or what the restrictions would be. Like many other recent legislative "solutions", the restrictions might be very tight, with income limits set very low, and as a result, helping very few people. Remember, it may make sense for you to act now, and take advantage of current historically low rates...with the possibility of refinancing should rates decline further.

  In other news to note from last week, the Bank of England and the European Central Bank both cut their key benchmark interest rates in an effort to revive their sagging economies. The reduction in rates was expected as part of a global coordinated effort, and our Fed is widely expected to cut its benchmark rate during its meeting on December 16. While a cut by the Fed often causes home loan rates to rise - because a Fed rate cut can lead to inflation, which is the arch enemy of Bonds and home loan rates - the deflationary environment we are currently in may prevent home loan rates from worsening significantly after the Fed cut.

 Bonds and home loan rates tested their best levels of 2008 throughout last week, but could not improve beyond them. As a result, Bonds and home loan rates ended the week slightly worse than where they began...even in the midst of rumors of rates declining as mentioned above.

 GAS PRICES SURE HIT A RECORD EARLIER THIS YEAR, BUT NOW THAT THEY HAVE IMPROVED, THE IRS HAS ISSUED NEW MILEAGE RATES FOR 2009. SEE THIS WEEK'S MORTGAGE MARKET VIEW FOR ALL THE DETAILS!

        Forecast for the Week

        We will likely see another volatile Friday this week, with the release of several important reports at 8:30am ET. First we have the Producer Price Index, which measures inflation at the wholesale level. Given the recent whispers of deflation, this will be an important report to watch. Consumer Sentiment will also be released...but given the state of the economy, the results likely won't be much of a surprise.

 In addition, we'll get a read on consumer spending patterns with November's Retail Sales Report. This Report is a measure of the total receipts of retail stores from samples representing all sizes and kinds of business in retail trade throughout the nation. Black Friday kicked off the holiday shopping season last week and the National Retail Federation amazingly estimated that shoppers spent 7.2% more than last year...but this is likely a result of the deep discounting seen by retailers, and it could well be that many shoppers who normally wait until December to get started on holiday purchases went out early to take advantage of the sales. Don't be surprised if this is a horrible report, as not only have the holiday shopping lists become shorter, but the amount spent for each individual has likely been reduced. In any event, it will be important to see what the report reveals, as a lousy report should be friendly towards home loan rates.

Remember, as Bond prices move higher, home loan rates move lower. And as you can see in the chart below, Bonds have stalled out in their improving direction for the time being, after making some great gains over the last month. Home loan rates currently stand at historic lows.

 I will keep you updated as things progress, but give me a call to talk about the current historically low rates, and how this opportunity might benefit you.

        The Mortgage Market View...

IRS RELEASES NEW MILEAGE RATES

If you drive a car, truck or van for work, the Internal Revenue Service (IRS) has announced news that impacts you. That's because the IRS has released the new standard mileage rates for 2009. The rates will be used to calculate deductible costs for driving an automobile for business, charitable, medical and moving purposes. The new mileage rates for business, medical and moving purposes will be slightly lower than the rates for the second half of 2008, which were raised in the middle of last year due to spiking gas prices. The rate for charitable driving, however, is set by law and will remain unchanged from 2008.

 Beginning January 1, 2009, the standard mileage rates for 2009 are as follows:

 *       Businesses = 55 cents per mile driven

*       Medical or moving = 24 cents per mile driven

*       Charitable organizations = 14 cents per mile driven

Overall, these rates reflect the higher transportation costs compared to a year ago. However, the rates are slightly lower than the second half of 2008 to factor in the recent drop in gasoline prices. While gasoline is a significant factor in the mileage rate, other fixed and variable costs, such as depreciation, also enter the calculation.

But before you calculate your deduction, make sure you qualify. The IRS reminds taxpayers that they cannot use the business standard mileage rate for a vehicle after using any depreciation method under the Modified Accelerated Cost Recovery System (MACRS) or after claiming a Section 179 deduction for that vehicle. In addition, the business standard mileage rate cannot be used for any vehicle used for hire or for more than four vehicles used simultaneously.

Remember, you don't have to use the standard rate! Although the IRS provides the standard mileage rate for ease and convenience, you're not required to use it. If you choose, you have the option of calculating the actual costs of using your vehicle instead of using the standard mileage rates. So keep that in mind as you calculate your automobile usage for business, medical, moving, or charity driving in 2009!

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.

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.

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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. 

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 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.

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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.

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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.

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Washington Post

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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.