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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• Interest Rates will Stay Low, Low, Low (marvicirealtygroup.wordpress.com)

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The Fremont Planning Commission held a work session on Thursday, Nov 17 to discuss the proposed Climate Action Plan (CAP).  Among the implementing measures is a Residential Energy Conservation Ordinance (RECO) that would require energy retrofits be completed when a home is sold. This could cost a home seller hundreds of dollars.

 Realtor members have testified at several meetings and met with Fremont officials in an attempt to remove these proposals from the CAP.  The Planning Commission appears to understand the negative impacts such requirements would have on the real estate market. However, City staff are still set on including the RECO, and it’s point-of-sale requirements, in the final CAP.

Related articles

• Another Energy Retrofit Initiative (green.blogs.nytimes.com)

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.

Related articles

• How to Boost Your Odds of Getting Approved for a Mortgage (dailyfinance.com)
• First-time buyers hit by lenders’ caution (guardian.co.uk)
• How to Know if You Qualify for a House Loan (thinkup.waldenu.edu)

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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• FORECLOSURES!!!!!! How they effect you…… (hanksorangecountyrealestatepage.com)
• More on foreclosures and you (hanksorangecountyrealestatepage.com)

Short sales – a real estate transaction in which the homeowner needs to sell the property, but owes more on the mortgage than the home currently is worth – continue to dominate the housing market, but these real estate transactions aren’t for everyone.

• Typically with a short sale, the homeowner is underwater and has experienced a financial hardship such as a job loss. To limit the damage to his credit rating, a homeowner may attempt to work with his lender to negotiate a short sale. Not only must the bank approve of the short sale itself, it also must agree to the price, since the bank will accept the difference as a loss.
• Unlike foreclosures, in which the owner has walked away and the bank is looking to unload a vacant – and sometimes vandalized – property, a short sale isn’t a distressed home that will sell at an extremely low price. According to data from RealtyTrac, short sales typically sold for nearly 10 percent less than the market price in the first quarter of 2011, whereas foreclosures sold at an average discount of 35 percent.
• Home buyers wanting to purchase a short sale must have patience. In most cases, when a buyer makes an offer on a house, he receives a response from the seller within a few days, or even hours. With a short sale, the bank must approve of the sale and bank representatives are overloaded with cases. It may take 30 days or longer for a buyer to receive a response from the bank.
• In a traditional real estate transaction, it is common for a home buyer who currently owns his home to make his offer contingent on selling his current home. In short sales, most banks will not approve an offer that is contingent on the buyer selling his current home, as too many things can go wrong.
• Banks also typically won’t consider short-sale offers that have inspection contingencies in them, so buyers can either do an inspection prior to making an offer or get no inspections.
• Even with the challenges associated with short sales, buyers don’t have too avoid these transactions. Being prepared ahead of the time and working with an experienced REALTOR® can help buyers avoid frustration and surprises down the line.

When deciding which home improvements to make, many homeowners consider the amount of resale value the improvement may or may not make and compare that against the cost of the renovation.   Homeowners concerned with making home improvements that will pay off when it’s time to sell the property, should consider the following tips.

 The first improvement/repair homeowners should consider are those that impact the home’s basic structures and systems.  Potential home buyers generally do not want to face expensive repairs, and if items such as the foundation, roof, air conditioning, water heater, or other basic structure need to be fixed, the property will be considered a fixer-upper and its market price will be discounted accordingly.

Some minor replacements will produce big results for minimal cost.  Replacing and coordinating bathroom and kitchen hardware and fixtures are generally inexpensive, but tend to make a big difference.  The same can be said for getting rid of any dated finishes, such as old wallpaper and brass light fixtures.

Homeowners who don’t know when or even if they will be able to sell their home are advised to choose home improvement projects carefully.  Unless the home is located in an upscale neighborhood and the property already is immaculate, owners can skip expensive upgrades – such as remodeled bathrooms – and focus on the fundamentals.

Information obtained by the Calif. Assco. of Realtors with permission. Photo by Barry Ripp.

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.

Our Realty World cameras video taped almost every major city in Northern California.  This should help you learn more about the city that you may want to move to.    Just click the city you are interested in.   Please enjoy the show.

I look forward to helping you in anyway I can. 

Alameda, California – http://www.youtube.com/watch?v=umg9CUVhcm0

Albany, California – http://www.youtube.com/watch?v=UHtBnoRUEe8

Berkeley, California – http://www.youtube.com/watch?v=99hulMyHn50

Blossom Valley, California – http://www.youtube.com/watch?v=-NnhW9Aa8qo

Campbell, California – http://www.youtube.com/watch?v=0vW1XRohxnA

Carmel, California – http://www.youtube.com/watch?v=d_fv8raJvJs

Cupertino, California – http://www.youtube.com/watch?v=-t5-VBa-xDI

Dublin, California – http://www.youtube.com/watch?v=TrCa7J8vseY

Emeryville, California – http://www.youtube.com/watch?v=nIVFzcKDqJM

Fremont, California – http://www.youtube.com/watch?v=GxBg9z_aZX0

Gilroy, California – http://www.youtube.com/watch?v=zpIcevWc1T0

Hayward, San Lorenzo, California – http://www.youtube.com/watch?v=hj-9Q44DxoE

Livermore, California – http://www.youtube.com/watch?v=wIceLQhYBeo

Los Altos, California – http://www.youtube.com/watch?v=NGbdSewOpzs

Los Gatos, Monte Sereno, California – http://www.youtube.com/watch?v=xjz7pIcPVnI

Milpitas, California – http://www.youtube.com/watch?v=L70mGkUN-Ug

Monterey, California – http://www.youtube.com/watch?v=L5tAE6JFD9I

Morgan Hill, California – http://www.youtube.com/watch?v=zMtQmrp20-8

Mountain View, California – http://www.youtube.com/watch?v=UMRVDVYCNZE

Newark, California – http://www.youtube.com/watch?v=2G5FT6SGeio

Oakland, California – http://www.youtube.com/watch?v=3okcJIUIlwI

Palo Alto, California – http://www.youtube.com/watch?v=FkJBK3-R_Aw

Piedmont, California – http://www.youtube.com/watch?v=ErZ_obcGb54

Pleasanton, Sunol, California – http://www.youtube.com/watch?v=voAFmyM3NGw

Salinas, California – http://www.youtube.com/watch?v=R-EYkmN7WR8

San Jose, California – http://www.youtube.com/watch?v=dcK3X9J-awU

San Leandro, California – http://www.youtube.com/watch?v=OAu1Up1PNnw

Santa Clara, California – http://www.youtube.com/watch?v=AnmCscnxXKs

Santa Cruz, California – http://www.youtube.com/watch?v=o1_mh1uLlF8

Saratoga, California – http://www.youtube.com/watch?v=kESZB-7tyeg

Sunnyvale, California – http://www.youtube.com/watch?v=_LcGBiK7e1Y

Union City, California – http://www.youtube.com/watch?v=zFXiAOe1Yck

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.