Barry Ripp ~ East Bay Area Real Estate

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WASHINGTON — The Federal Reserve signaled Wednesday that a full economic recovery could take nearly three more years, and it went further than ever to assure consumers and businesses that they will be able to borrow cheaply well into the future.

The central bank said it would probably not increase its benchmark interest rate until late 2014 at the earliest — a year and a half later than it had previously said.

The new timetable showed the Fed is concerned that the recovery remains stubbornly slow. But it also thinks inflation will stay tame enough for rates to remain at record lows without igniting price increases.

Chairman Ben Bernanke cautioned that late 2014 is merely its “best guess.” The Fed can shift that plan if the economic picture changes. But he cast doubt on whether that would be necessary.

“Unless there is a substantial strengthening of the economy in the near term, it’s a pretty good guess we will be keeping rates low for some time,” he said.

The Fed has kept its key rate at a record low near zero for about three years. Its new time frame suggests the rate will stay there for roughly an additional three years.

The bank’s tepid outlook also suggests it’s prepared to do more to help the economy. One possibility is a third bond-buying program that would seek to further drive down rates on mortgages and other loans to embolden consumers and businesses to borrow and spend more.

Information obtained from the Calif. Asso. of Realtors with permission.

Article printed in the Mercury News and A.P.  Jan. 25,  2012.

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Last year, more than two million people were turned down for home loans, according to federal data, often because the applicants didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic. With lenders’ underwriting criteria becoming more strict in recent years, it’s important buyers know the most common triggers for mortgage-loan rejection. 

• Insufficient income: Lenders want to be sure borrowers can afford to make the mortgage payments. Lenders typically look for at least a two-year track record of income, which could hurt those who have changed jobs recently.
• Cloudy financial picture: Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of a borrower’s adjusted gross monthly income. Overtime and bonuses are included only if the borrower has worked for the same employer at least two years, and has a history of receiving them.
• Poor credit: Lenders typically reject applicants with FICO scores below 620.
• Low appraisal: One of the predominant reasons buyers are turned down for home loans is because the appraisal on the property is too low.
• Property problems: Sometimes issues turn up within a house, like a major repair or safety issue that needs to be addressed, before an application can be approved.
• Information mix-ups: Approximately 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

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We are now in the fifth year of a housing crisis in which more than 3 million Americans have lost their homes to foreclosure, with millions more still at risk.

Every initiative to stem the tide of misery has fallen short in the face of continued economic gloom.

Over the next few weeks, several initiatives aimed at reforming the foreclosure process, holding mortgage lenders and services accountable for their past abuses, and creating more effective mortgage workouts are coming to a head.

Typically, banks and other lenders retained almost no financial interest in the mortgages they originated, other than the duty to service them — collect payments and pursue delinquent borrowers, say — for which they received a fee.

Several drawbacks to that system emerged when the housing economy crashed. Because the loans weren’t going to stay on their books, the lenders hadn’t been too careful about whom they lent to and on what terms.

Perhaps the biggest problem is that although the servicers, which include huge banks such as Bank of America and Wells Fargo, are burdened with the responsibility to renegotiate mortgages to keep borrowers out of foreclosure, their authority to do so on behalf of investors is murky.

As a result, though the investor, the borrower and the economy in general benefit if a home is kept out of foreclosure, even if that means its owner makes lower payments than were required by the original mortgage, the servicing banks are leery of renegotiating too aggressively.

The most closely followed remedial effort involves the 50 state attorneys general under the leadership of Iowa Atty. Gen. Tom Miller.

Last March, the group produced propsal for foreclosure reforms that drew fire from some consumer advocates for being too lenient — its provisions include mandates that banks comply with state law in dealing with borrowers, as if that’s a novel concept — and from business interests for putting too much pressure on banks to reduce principal balances for homeowners having trouble keeping up payments on homes with values that have fallen below the mortgage balance.

Information obtained by the Calif. Asso of Realtors & the L.A. Times. For the whole story: http://articles.latimes.com/2011/aug/14/business/la-fi-hiltzik-20110814

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In anticipation of the expiration of current loan limits on Sept. 30, 2011, Bank of America has decided to stop accepting conventional and government applications for loan amounts that will exceed the permanent loan amounts.  The deadline to submit loan applications was July 1.

According to an email from Bank of America, conventional loans that exceed the permanent loan limits will now be required to use non-conforming programs.

Barring Congressional action, the maximum FHA, Fannie Mae, and Freddie Mac conforming loan limit will decline to $625,500 beginning Oct. 1, 2011, from the current $729,750 limit, though the majority of counties will fall far below the $625,500 maximum.  The conforming loan limit determines the maximum size of a mortgage that FHA, Fannie Mae, and Freddie Mac government-sponsored enterprises (GSEs) can buy or guarantee.

Non-conforming or jumbo loans typically carry a higher mortgage interest rate than a conforming loan and require a higher down payment, increasing the monthly payment and negatively impacting housing affordability for California home buyers.

This information was obtained from the Calif. Asso. of Realtors, and used with permission.

Alameda County Planning staff is urging the Board of Supervisors to adopt an ordinance that would require property owners to complete energy efficiency retrofits prior to their homes being sold. The proposal is part of the latest version of the County’s draft Community Climate Action Plan (CCAP). Bay East members and staff worked with the County during 2010 to remove the point-of-sale requirements from the CCAP. However, in response to a threat of litigation from another interest group, County staff is now suggesting the retrofits be added back into the plan.

If the County Supervisors accept the the staff recommendation of including a Residential Energy Conservation Ordinance (RECO) in the CCAP, all homes being sold in Castro Valley, San Lorenzo, Fairview, Sunol and the rest of unincorporated Alameda County would be subject to energy retrofits at the time of sale.

The Alameda County Board of Supervisors will review the draft CCAP at a meeting on May 17.

Due to recent struggle in the real estate market, it’s now more difficult to get approved for a loan.  Underwriting standards have tightened, meaning that borrowers need higher credit scores, more income and larger down payments in order to qualify. But that doesn’t mean you can’t buy a new home.  Here are the biggest hurdles to home financing and what you can do to overcome them:

Higher credit score requirements – although you may get approved with a 620 credit score, you likely won’t get the most favorable interest rate and fee.  The solution?? Contact all three credit reporting agencies—Equifax, Experian & TransUnion, by calling 1-877-3222-8228 or going to www.AnnualCreditReport.com . Once you get your credit reports, check all information for accuracy.  If you find any discrepancies, report it to the credit company immediately.

Greater scrutiny of income & assests – mortgage lenders have to verify your information, so be prepared when you apply for your loan by having documentation that supports your income & assets. Have copies of tax returns, paystubs, bank statements and any investment accounts.

With a little preparation, you’ll be able to take advantage of today’s low interest rates and reasonable home prices…and buy the home of your dreams.

California home sales rose in January, marking three consecutive monthly increases and posting their highest level since May 2010, while the statewide median price declined to its lowest level since June 2009, according to data C.A.R. 

“With lower home prices and rates edging up from their historic lows of late last year, prospective home buyers should consider the opportunities in today’s market,” said C.A.R. President Beth L. Peerce.

California home sales rose 5.1 percent in January compared with December, to a revised pace of 520,080 units.  Sales also increased 2.5 percent in year-over-year comparisons, marking the first year-over-year sales increase since May 2010.  The statewide sales figure represents what would be the total number of homes sold during 2011 if sales maintained the January pace throughout the year.  It is adjusted to account for seasonal factors that typically influence home sales.

The statewide median price of an existing, single-family detached home sold in California was $278,900, down 8.6 percent from a revised $305,020 in December and was down 2.0 percent from the $284,600 median price recorded for January 2010.  The January 2011 median price was the lowest since June 2009, when it was $274,640.

On Tuesday, Dec 21 the Alameda County Board of Supervisors will review and adopt a Climate Action Plan (CAP). The CAP is a comprehensive plan to reduce the emission of “green house” gases and will impact transportation, land use, economic development and residential and commercial real estate in the unincorporated communities of Cherryland, Ashland, Castro Valley, Sunol, Fairview and areas south and east of Livermore.

Local Realtors testified at several public hearings about the CAP during 2010 urging the County to encourage property owners to make their homes more energy efficient on a voluntary basis.  The final version of the CAP should not include a Residential Energy Conservation Ordinance or point-of-sale requirements. However, pressure from other interest groups could result in these measures being added by the Board of Supervisors at the last minute.

The final public hearing on the Alameda County Climate Action Plan will be held Tuesday, December 21 at 2:00 pm in the County Administration Building Supervisors’ Chamber at 1221 Oak Street in Oakland. Realtors will attend and testify at the meeting.

  There’s triple trouble for the Golden State’s struggling real estate market: the usual seasonal slowdown, a weak economy and “unrealistic asking prices” by some sellers, according to a report today from the California Association of Realtors.

 Statewide, the seasonally adjusted home sales rate dropped 3.5 percent in October from the month before, the group reported. Year over year, though, sales were down 19.6 percent, although the market last fall was bolstered by federal tax credits for many homebuyers. The median price of a resale single-family house was up 2.3 percent from a year earlier to $304,220.

 ”We’re really seeing two different housing markets — one at the lower-end driven by first-time buyers and investors, which is keeping prices stable, and one with nostalgic sellers who set unrealistic asking prices,” Leslie Appleton-Young, the group’s vice president and chief economist, said in a news release today.

 ”Sellers need to consider current market conditions when pricing their home in order to facilitate a shorter time on the market,” she said.

 “The housing market is experiencing an uneven recovery, and a temporary foreclosure stoppage in some states is likely to have held back a number of completed sales,” Lawrence Yun, the group’s chief economist, said in a statement. “Still, sales activity is clearly off the bottom and is attempting to settle into normal sustainable levels.”

 ~ Barry Ripp  

information provided by Calif Assoc of Realtors with permission: www.car.org

Back in 2008, when the housing market was in even deeper trouble than it is in now, Congress passed the Housing and Economic Recovery Act to help move a glut of homes off the market. One of the key provisions was a tax credit for first-time homebuyers. That provision would be extended (twice) – and getting in early would have been a mistake.

If you claimed a federal income tax credit for a 2008 home purchase, you’ll probably have to pay it back over 15 years, starting with your 2010 Form 1040 (due next April). In contrast, if you claimed a credit for a 2009 or 2010 purchase, you probably won’t have to pay it back. (Blame Congress’s patchwork legislating.) 

It gets much more complicated, so please click the following link to get more information.  

http://www.smartmoney.com/personal-finance/taxes/do-you-have-to-repay-your-homebuyer-credit/   

~ Barry Ripp