Karen Card | Orange County | Mortgage News

Interest Rates below 4% - and Post-Holiday Updates

2012-01-09T11:37:00.000-08:00

Interest rates are once again at record lows. Rates on most loan products are below 4% with NO POINTS and for shorter term loans (5-yr fixed) below 3%. For loans over $417,000 and up to $625,000 rates are slightly higher-- unless you are willing to use FHA financing.

FHA rates are even lower although they command a hefty monthly mortgage insurance premium. There are some exceptions to this rule though: for 15 year fixed loans below 80% loan-to value there is no MI – and loan amounts go up to $729,000. To give you an idea of interest rates a $700,000 loan amount at 80% LTV would command a rate of 3.25% with no monthly mortgage insurance and NO points, with a substantial credit to closing costs.

It's a great time to buy with prices so low!

Fall and Winter News

The last quarter of the year was amazingly busy for me with my eldest son’s wedding, coupled with near-record low rates and lots of business (good news), then Thanksgiving followed by two hospitalizations for my mother in December (bad news), and holiday activities.

First things first: the wedding was beautiful and wondrous. Photos can be viewed at http://greenweddingshoes.com/diy-bohemian-picnic-wedding-mary-grace-drew /

This was the first time I was together with my three children and all the extended family at one time in years. Pictured below are Kenny, MaryGrace, Drew and Katie. A great time was had by all!

After Thanksgiving my mother was ill, but has recovered after two times in hospital, the second for an entire week which was pretty stressful. She was home before Christmas and spent the holiday with me. She is recovering and we expect to have her with us for many years to come. The upside was I was able to spend a lot of quality time with my beautiful loving sister Katie. Here is mom at her Birthday dinner:

Steve and I celebrated New Year’s Eve with close friends at a dinner dance at the Balboa Yacht Club and danced all night – practically! They do put on a fabulous party.

Steve is still actively biking and I’m practicing my dance moves in jazz class and Zumba. Steve continues to commute to Dallas for his position as VP of Marketing and Sales of Museum Tower, and has obtained an apartment there, so I’ll be visiting him more often. The Tower has topped out and sales activity is brisk – for those of you in need of a high-rise downtown condo in the $800 PSF range! The property is located next door to the Dallas Museum of Art and the Nasher Sculpture garden in the Arts District. The performing arts venues and the Symphony Hall are just down the block.

Steve and I still enjoy sunsets from our own balcony --and also from Sunset’s Bar and Grill on the Beach below us in Capo Beach. If you haven’t visited it yet, put it on your list. http://sunsetsbar.com The owners have opened a new Sunset’s across from the pier in San Clemente, and word is out that they have taken over ownership of The Renaissance-Dana Point which is a big positive.

Next on our agenda is a week-end trip to Santa Barbara for Steve’s birthday, and then our big splurge, a diving trip to the Cayman Islands at the end of March. We can’t wait!

Interest Rate Update...Marathons and Calistoga!

2011-09-14T11:09:00.000-07:00

Rates have hit record lows again! I feel like a broken record saying the same thing, over and over… Suffice it to say rates have hovered at or near record lows the last few months and at this point it appears only an economic recovery to spur inflation will cause them to rise. Here goes:

For 30-yr fixed-rate loans:
3.875% (under $417,000)
4.125% (over $417,000 up to $625,000)
4.75% (jumbo over $625,000)
For 5-yr ARM loans:
2.75% (under $417,000)
3.25% (over $417,000 including jumbo)

Rates vary depending on Loan-to-value, FICO scores, loan purpose , occupancy, and points.

MARATHONS and NORCAL

I flew to the Bay Area to root for my daughter Katie as she ran a marathon in Santa Rosa the last weekend of August. She finished in a very respectable time under 4 hours, but missed her goal time to qualify for Boston. She’d experienced a quad pull earlier in the week, so was happy with her race.

We enjoyed exploring downtown Santa Rosa, but left for the drive over the hill to Calistoga after she recovered --for a little wine tasting.
Calistoga is one of our favorite places to relax and walk. Monday we visited Rombauer for chardonnay and zinfandel tastings, and then drove to the Frank Family Vineyards’ for a picnic and more tastings. Frank Family offers fine chardonnays, as well as champagnes. Both are family-owned and operated with some of the best wines in the valley.

Our dinner Monday was at Jolē, the farm-to-table restaurant located in the lobby of the historic Mt. View Hotel. www.jolerestaurant.com The food was outrageous! We brought in our leftover wines to enjoy with dinner (you can’t take them with you) and they were gracious about letting us drink our wines with their food. Their heirloom tomato salad was fabulous.
We also recommend Brannen’s Grill, named for the founder of Calistoga. www.brannensgrill.com

Although we’ve stayed at the Mt. View in the past, we elected to stay at the recently renovated Stephenson Manor, a Best Western, which was more economical and offered larger and more comfortable accommodations.

SEPTEMBER

The end of the summer has brought us thunderstorms, hailstorms, The Dana Pt. Tall Ships Festival, football…and weddings!
My eldest son Drew is marrying the lovely and talented MaryGrace this Saturday, so I will tell more about that event next time. I will see all three of my children together for the first time in almost two years this weekend. Kenny (best man) flies in from Spain, and Katie (bridesmaid) from Ann Arbor. Never a dull moment!

Dog Days of Summer -- 2 Important Updates!

2011-08-02T14:14:00.000-07:00

The Top News is interest rates have officially hit their lows of 2011 on the economic news...and we are very near last year's ALL-TIME lows.

Number Two News:

I have moved my office to 542 N. El Camino Real in San Clemente. New office phone is 949-373-7673 and my cell phone remains same at 714-290-6940. I am working out of a satellite office of Catalyst Lending, a full-service mortgage banker.

July - The Heat is On!

2011-07-14T17:54:00.000-07:00

Rates continue to hit records lows, and property values are following suit. Sales volume appears to be picking up. Of course, this is the traditional buying season!

Reminder: if you’re holding onto a loan with a rate over 5.5%, you most likely should refinance. Rates are in the low 3’s for 5,7 and 10 year loans, and in the mid-4’s for 30 year fixed rates. Specific rates all depend on loan size, property value, and FICO score; and for loan approval you’ll need to offer up your firstborn child. NOT! But sometimes it feels that way these days!

Fun in the Sun:

Our Fourth of July was spent with old friends on their boat in the Dana Point Harbor. We kayaked around the harbor, and witnessed the water fights in the main channel where young and old alike—on all kinds and sized watercraft -- enjoyed splashing each other with power hoses, water guns, buckets of sea water, etc. What a sight to see!

We’ve attended the first two free concerts in the park here in Dana Point: a Fleetwood Mac cover band, and last week --the Parrot Heads. You’ve got to love Dana Point and all their community events. The parks offer harbor and ocean views in the Sunday afternoon sun while participants of all ages dance and socialize.

We’re loving summer. We had a short camping trip to Santa Barbara, where I crashed on my mountain bike. Then Steve and I explored the Jalama Beach Resort north of Gaviota, which we’d read about but never seen. It’s beautiful but very remote. www.jalamabeach.com We camped at our favorite spot in El Capitan. And, I’ve recovered from my knee injury!

Steve is still commuting to Dallas, and I’ll accompany him later this month. I hope it isn’t sweltering! At least I’ll have a swimming pool…What have you been up to

First of Summer Update

2011-06-01T15:32:00.000-07:00

Rates are moving south again! We’ve officially hit the lows of the 2011 on poor economic and employment reports. If you’ve been putting off a refinance, don’t wait. And, it is better than ever for home buyers with home values at a five-year low.

3% down, no Mortgage Insurance

Fannie Mae has a program for home buyers called Homepath, offering minimum down payments of 3% with no mortgage insurance, and no appraisal! This is for a new primary residence only, but they also allow 15% down for a rental property purchase. The program only applies to homes owned by Fannie Mae. Find out more at www.homepath.com

Reverse Mortgage News

Reverse loans aren’t only for refinancing…they are becoming a more popular way for seniors to buy a “retirement” home or new primary residence. I actually closed a reverse mortgage purchase loan for a client a few years ago, and I was told it was the first in California.

Depending on the buyers’ ages (and they must be 62) these loans will provide anywhere from 60% to 75% of the purchase price in a reverse loan. The buyer must provide the balance of purchase price in cash, typically from the sale of their existing residence. Assuming they own their home outright, or have a low-balance mortgage, this frees up cash for investment/liquidity, and eliminates the need to “qualify” for the payments associated with a new mortgage.
Best of all, the rates are as low as 4% fixed.

Bezerkeley

I visited my son Kenny in early May in Berkeley. He was there to present a paper at a conference in the School of Architecture. We had only a few days together, but we had a great time, and glorious weather. I’d forgotten how beautiful the UC Berkeley campus is, with the creek running through it, rolling lawns, huge old trees, and expansive views down to the Bay and beyond, to the skyline of downtown San Francisco.

Our first stop Sunday was the outdoor deck of the Paragon Café at the Claremont Resort for an afternoon cocktail and a view of San Francisco in the distance. Afterwards, we took a stroll at the Cesar Chavez State Park on the Bay. During our time Monday, Kenny preferred to hang out in coffee houses, studying and talking to students.

We had dinner Monday evening at an old favorite, ẦCộté, a charming tapas restaurant in the Oakland Rockridge district, on College Avenue. It felt a little like old home week for me, since I had visited Berkeley so often while Katie was in school there.

This was my first sighting of Kenny since last September, when he left for Europe for his graduate program. So far, he’s been to Cottbus and Berlin, Germany; Tallinn, Estonia; Lisbon, Portugal; Wroclaw, Poland, and London in-between. He’s been in each location for at least six weeks studying architecture at various universities participating in his program. He won’t be home until this September for his brother Drew’s wedding! Best Man...

Claremont Colleges

I’ve seen my daughter Katie, who lives in Ann Arbor, a number of times this spring around her visits here to Cali, most notably on her 27th birthday in April while she was out here with her team for water polo games in San Diego and Claremont. The Claremont campuses were wonderful to visit on a warm April Sunday. You sort of feel like you’re back East on an Ivy campus. Katie’s also been out to visit for Mothers’ Day and Memorial weekend. What a treat!

Local News

Sunset’s is still our favorite local haunt in Capo Beach. As the name implies, it has great sunset views and offers music and dancing every Thursday through Sunday. Walking distance from our home, we frequent it for happy hour, or after dinner and almost always run into friends there! They are hosting a special event this Saturday with music and dancing all day, a live band starting at 6:00 p.m. and a caribbean themed buffet with mojito and sangria bar. Join us! www.sunsetsbar.com

The California Wine festival at Doheny State Beach, held the end of April, was a great time as usual. They hosted even more wineries than last year’s event, more breweries, and the food selections were fantastic! We found a new local restaurant that was serving a killer salmon ceviche…the Next Door. Steve and I visited the restaurant last week and sampled the ceviche, and bacon wrapped dates stuffed with blue cheese. Yummy!

Steve continues to commute to Dallas regularly for consulting on Museum Tower, a high-rise luxury residential development. I’m planning to visit again soon, but in the meantime we have a camping trip planned to our favorite Beach campsite at El Capitan overlooking the Pacific with panoramic views. We take our kayak and bikes, and fill our days with exercise, reading, relaxing…and Steve paints. We are hoping for warm weather!

Hope your Memorial holiday weekend was wonderful! Happy June!

Mortgage Rates under 3%!

2011-05-18T16:46:00.000-07:00

Calling all mortgages with rates over 5.25%! 30 year fixed at 4.5% …

Today rates are below 3% for a 5-year ARM loan; and as low as 3.5% on a 7-year ARM, depending on loan size. It is harder to qualify for the 5-year loan than the 7-year, since the rates is bumped up for underwriting purposes.

Quick Rate Update for April

2011-04-26T14:13:00.000-07:00

Rates have steadily improved during the month of April, and are hovering just on this year’s lows, while property values are also at their lows in most areas. Great time to buy, and also to refi!

Up to $417,000

5/1 ARM – 3.125%
15 YR FIXED – 4%
30 YR FIXED – 4.75%

$417,000 to $729,000

5/1 ARM – 3.5%
15 YR FIXED – 4.125%
30 YR FIXED – 4.75%

True Jumbo loans (over $729,500)

5/1 ARM – 3.875%
15 YR FIXED – 5%
30 YR FIXED – 5.5%

FHA rates are a bit lower, but they come with mortgage insurance which increases the monthly payment. That said, it is still possible to make a purchase up to $729,000 with as little as 3.5% down. WOW!

Rates, Industry Updates, and Dallas Arts District

2011-04-12T15:23:00.000-07:00

The mortgage market closed up yesterday by 52 bps, which is a nice improvement on news of the increased danger in Japan and an overall weaker economic outlook. Bad economic news = good news for interest rates.

Mortgage rates are currently running in the 4.75% to 5.125% range for 30 year fixed rate loans up to $729,000, depending on loan size, FICO score, loan to value and occupancy. Rates are lower for shorter terms, i.e. five, seven, and 15 year fixed terms.

The “conforming jumbo” program allowing lower rates for loans over $417,000 and up to $729,000 is scheduled to sunset this September 30th. The government could extend the deadline again, but it is unlikely given the fact that the government wants to get out of the business of guaranteeing mortgages. This is also a precursor for a sunset of the 30 year fixed rate loan. So, if you want one, get it now while they are still available. Rates will rise for those loans over the current conforming limit of $417,000 and it is possible that the limit could drop due to average home values having dropped since the limit went into place.

Dallas and the Arts

I visited Dallas last week to attend various events revolving around the Dallas Art Fair. Steve has been handling the marketing of a high rise luxury home project called “Museum Tower” that is closely aligned with the arts--both fine and performing-- in downtown Dallas.

We toured individual galleries; attended the Gala preceding the opening of the Art Fair; attended a private event at the Trammel Crow Asian Art Museum; had a private tour in the Dallas Museum of Art with the curator of the Gustav Stickley exhibit (think Craftsman home movement); and attended an event for the unveiling of a new sculpture at the Nasher Sculpture Garden. Amazing works of art and sculpture were all around us! I was floored by the sight of many famous pieces I’ve only seen in books.

All of the above were attended by lots of waiters offering food, champagne, wines, etc. Also attending were lots of beautiful and fascinating people. All I could say was WOW.

Dallas seems to have more trendy restaurants and bars within walking distance of the “Uptown” area and the “arts district” than anywhere I’ve been. And, those people love to party! I even had a glass of wine on the terrace of the fabled Mansion on Turtle Creek.

I can’t wait to go back to visit, and will follow up with more in-depth reports on hotels, museums, restaurants, the Katy Trail, etc. I even found a great 24 Hour Fitness downtown with a great Zumba class on Saturday morning…what could be better?

Springtime Mortgage News...and International Travel!

2011-03-16T14:53:00.000-07:00

Spring is almost here, and I can’t tell you how happy I was to move the clock forward to enjoy more daylight! Rates are enjoying a little down-spring…due to market conditions following the tragedy in Japan. The stock market is off, so we are currently seeing improvement in interest rates across the board.

Please call me for specifics, as rates are all subject to adjustments for loan-to-value, loan purpose, FICO scores etc.

I have a number of clients who are planning remodels and/or upgrades to their homes. We are refinancing their current mortgages at lower or equivalent rates, to pull some cash out of their homes for completion of their home projects. Now is the time to move while rates are so attractive! Current fixed rates are lower than the rates for most HELOCs (Home Equity Lines of Credit) that adjust monthly and only have one way to go…up!

The other big news for loans is this: Although we don’t know exactly how it will look, or if it will go into effect on April 1st, loan officer compensation is scheduled to change. This will have an effect on the competitive pricing of your loan and ultimately is not in the best interest of the consumer.

Finally, the future of the 30 year fixed rate loan may be relatively short…so get it while you can. Projections of changes to the entire mortgage industry, and complete privatization of same (to get it off the taxpayer’s back) will mean a complete switch over to ARM loans. Banks don’t like to portfolio long term fixed rate loans. Period.

From Russia and Portugal…with love

Thanks to modern technology, I’ve had the unique experience of speaking via live video chat with Steve, who is currently in Russia on business, and with my son Kenny, who is in Lisbon with his graduate Architecture program. Yesterday I actually had both of them on my Gmail chat at the same time. Wow! One on video chat and the other on e-chat…

Steve is in Russia meeting with the developers of a luxury residential resort development in St. Petersburg, and had the opportunity to tour The State Hermitage museum among other historical sites.

Kenny is in Lisbon for six weeks and then off to Poland with his traveling school program. In the middle, he will be flying to UC Berkeley to present a paper at a conference entitled “The Death + Life of Social Factors,” A Conference Reexamining Behavioral and Cultural Research in Environmental Design. The conference is sponsored by the Berkeley Architecture Department and the College of Environmental Design. http://arch.ced.berkeley.edu/events/conf/deathandlife

He’s also writing articles for publication in a few international design magazines. He doesn’t let much grass grow under his feet!

I have been keeping the home fires going, working at my office and working out at the gym. My latest discovery is BT-Fitness, a new gym in San Clemente. The owners/trainers Adam and Kimberly are passionate about their work and expert trainers offering classes with TRX/Kettlebell and SPX/Proformer systems. Check them out at www.bt-fit.com. Great workouts!

Dana Point Whale Festival

I attended the beach concert in the Harbor last Sunday afternoon with friends. The close of the annual Whale Festival, this is always a super fun and casual event. Families and groups of friends hang out on the sand, and there is dancing both in and out of the water. Lots of smaller water craft float around the barge where the bands play at Baby Beach.

After the concert my friends and I walked over to the island in the Harbor to check out the new Island Bar at Aventura. www.dpislanderbar.com
The restaurant is located above the Aventura Sailing Club with nice views of the Harbor and the ocean. They have live music Thursday through Sunday. We listened to the Flock of 80’s, a favorite of mine and a local San Clemente group who play around South County regularly.

Rates Have Improved!

2011-02-24T13:30:00.000-08:00

Interest rates have slowly improved since February 10th…here are the details:

Loan amounts of $150,000 to $729,500

30 YR fixed - 4.75 to 4.875%
15 YR fixed – 4.125% to 4.375% depending on loan size
5/1 ARM - 3.375% to 3.625% depending on loan size

Jumbo loan amounts – over $729,500

30 YR fixed - 5.625%
5/1 ARM - 4.25%

Rates are down and so are home prices…what are you waiting for?

I’m looking forward to the Oscars…who are you rooting for? Hmmm-- The Social Network, The King’s Speech, or the Black Swan to name a few?

New Year's State of the Union for the Mortgage Industry

2011-02-04T17:20:00.000-08:00

I survived January with only a short bout with the flu. Unfortunately I’m not sure how the mortgage industry is going to survive the continuing wave of regulation from Washington. To quote my market research source, at www.TBWSratealert.com

“After the collapse of the mortgage and housing markets there is a push to make changes based on beliefs that servicers have not done their job well, and are responsible for extending the housing recovery. A long stretch, but that is what the industry has dealt with for the last three years; beat up the lenders but don’t tread on Wall Street as the fuel for the housing market disaster . Blame it on brokers, blame it on servicers, blame it on anyone and don’t let the smoke clear. We don’t really have to say it for our audience; originators didn’t make an Alt A loan or most of the junk originated unless they had an upstream market to sell it to.”

So, who is ultimately taking the fall for all this? The consumer, of course. It is much harder to qualify for a loan. Even if you are qualified! You’d better have perfect credit or you’ll be paying a lot more in interest rate for that new loan. You’d better have adequate equity, or refinancing is more difficult, and more costly in rate, if not impossible; your tax returns need to reflect adequate income, and it had better not be declining.

Your loan modification chances are next to nil, even though the erosion of your property value was completely out of your control and you’ve made all your payments in a timely fashion (almost worse!) but you can’t qualify for a normal refinance due to lack of equity.

I could go on and on…the government programs that were forced onto the banks (after paying them lots of bail-out $$) are parsed out in a very limited basis, and only those who scream loudest are heard, and oftentimes not even then.

Some surmise that only a few mega banks will survive… which doesn’t make for a better deal for the consumer. Who is the real winner in all this? The banks. They pay less, and their agents don’t need the licensing etc. the rest of us brokers/mortgage bankers do. Their profits are rising.

Enough whining today! Enjoy Superbowl. Go Black Eyed Peas!

Interest Rates, Napa Valley and Private Planes

2011-01-27T16:20:00.000-08:00

Quick Rate Update:

Not much change, but the markets didn’t react favorably to the State of the Union so rates were slightly worse yesterday, with slight improvement today.
30 Yr fixed rates range from 4.75% to 5% depending on loan size; 15 year rates are slightly lower, and 5-yr arms still hovering in the 3.25% to 3.5% range. All rates and programs are sensitive to FICO score, loan-to-value, reason for financing (purchase, refinance, cash-out) and occupancy type. Underwriting guidelines continue to contract and become more conservative. (!)

Napa Valley Report

We flew to the Bay area for a weekend of wine tasting with Steve’s sisters and their spouses over the Martin Luther King Holiday, which happens to coincide with Steve’s birthday. The most exciting part was flying up and back in a private plane owned by Steve’s younger sister and her husband, who is a pilot. Our “ride” was a four seater and my first comment upon seeing it was “we’re flying in that?” Everyone laughed. Although I’d flown in private planes in the past, nothing quite this small. They all assured me size doesn’t matter! The flight from Carlsbad took two and ½ hours, and was pretty amazing. The weather was clear and we could see forever. We hit a couple of bumpy sports over the grapevine but nothing major.

We took off in a van the next morning for Napa. First stop was Clos Pegase, where we tasted and bought a few bottles for our picnic on their lovely grounds. They have an amazing art collection, and offer tours twice a day. I heartily recommend visiting them. Next stop: Cuvaison, home of a favorite chardonnay. We then headed up into the hills for a private tour and tasting at the O’Shaughnessy Winery, which was a real treat. They offer really “big” reds and an enormous cave build into the hill, including a private dining room and private wine collection to boot.

Afterwards we drove up to our friends’ home on the hill above Calistoga for a glimpse of sunset accompanied by more wine and cheese before heading off to dinner at Brannan’s Grill downtown Calistoga. We had a lovely dinner and enjoyed listening to live jazz. I found out the restaurant is named for the founder of Calistoga, who named the city for its springs, e.g. the “Saratoga Springs” of California, hence Calistoga! www.brannansgrill.com

Sunday morning we visited Rombauer – our favorite Chardonnay – and then lunched at Frank Family Vineyards. Our final stop of the day was a tour and tasting at Schramsburg. Their sparkling wines are the best! www.schramsberg.com

Back in Palo Alto, we dined at Trader Vic’s, which is an institution there. Our return Monday was delayed due to heavy fog, and we finally took off after 2:00 in the afternoon. Luckily our pilot Chuck is instrument-rated, so we could have left earlier-- but we waited for better viz. Our flight home was entirely beautiful and uneventful and we arrived to witness a fabulous sunset just behind Catalina before landing. What Fun!

2 Exciting New Mortgage Products!

2011-01-13T16:55:00.000-08:00

There are many big changes on the horizon this year. First and foremost, there are two great improvements to programs:

Jumbo Reverse loans

Yes, they are back! We are going to be offering new jumbo reverse loans as high as $5,000,000 for high value homes. This is great news for many Orange County homeowners, since the FHA loan products currently available “cap out” at a $625,000 value.

Make Sense Underwriting – Asset based loan programs

Second, we have a new loan program offering loans to $5,000,000 that are asset based, for purposes of determining income and loan amount eligibility. They will also take assets as “pledged” additional security for loan amounts up to 90% LTV.

For example, if you have assets of $1,000,000 and are 50 years old, you are imputed with monthly income of $5000 a month in addition to income reflected on tax returns. If you have assets of $2,000,000 you are awarded an additional $10,000 a month in income. This “imputed” income is used to determine your eligibility for a refinance or purchase loan. The loans are all 5-, 7- or 10- year terms at competitive rates. THIS IS GREAT NEWS!

Financial planners especially like these programs since the assets are maintained “under management” even if pledged toward the new loan, and if they appreciate substantially they may be released.

Loan Officer Compensation

Last, but certainly not least, the manner in which originators will be paid is up for interpretation at present, due to new legislation l due to go into effect April 1st. No one knows for certain how it’s going to actually work.

Legislators have attempted to cap or limit the fees earned by loan originators so a flat amount per loan. Think of it as a stockbroker or salesman or any other individual paid on a commission basis having their gross commission per transaction limited to a fixed amount. Sound strange? Talk about too much regulation!

The Holidays are Over, and so are Record Low Rates!

2011-01-06T14:28:00.000-08:00

Happy New Year! I hope everyone had a wonderful holiday season. Mine was filled with lots of fun as well as stress, but more about that later!

Interest rates have moved higher. The uptick in rates was very sudden in mid-November, and appears to be the result of improvement in the economy coupled with anticipated increasing inflation. There is also the spectre of higher yields demanded by investors to fund the burgeoning budget deficit.

Rates are up approximately 1/2% to 3/4% across the board…which is quite a jump. That said, we are still looking at fixed rates that should continue this year in the 4.25% to 5.25% range which are very low relative to the last 25+ years.
Home affordability index should continue to be high this year. Low home values coupled with rates in the low end of the range make this a great time to buy… and I encourage you, your children and friends to act in 2011.

This year may not be as attractive for refinancing...but much depends on your individual circumstances and current loan program/rate. If you are still on a 5/1 arm due to reset soon, now is the time to act.

We are still dealing with a massive number of foreclosures on the market with more to come at an accelerating pace. It is likely we’ll see more foreclosures in 2011 than 2010. In many markets, over one-third of all housing sales are distress sales, either houses that were in foreclosure, or short sales or some similar non-normal situation. This will continue to keep values down.

Can you identify the Waterfall?

My holidays started with a turkey feast in Ann Arbor with my daughter and her friends, followed by an intimate Thanksgiving Day at my mother’s home, and finally a third Turkey Fest Friday evening after Thanksgiving in Oceanside with Steve’s family. I was entirely turkeyed out!

December brought an extended visit from my daughter Katie, an engagement party for my son Drew and his fiancé Mary Grace, brief hospitalization of Steve in Colorado, (he’s fine now) a minor flood at my mother’s home, and finally Christmas!
We rang in the New Year with a group of old friends at the Balboa Yacht Club and had a blast, complete with slumber party afterwards.

Finally, the waterfall in Dana Point Harbor was flowing again with all the rains before and after Christmas, and I won a bet for a bottle of wine with a co-worker who took this picture of the falls and challenged me to identify it…not realizing I ride my bike in the harbor on a regular basis and have seen it myself during rainy periods!

I wish everyone a happy, healthy and prosperous 2011!

Post Election Market Update -- Don't Postpone the Refi

2010-11-03T16:00:00.001-07:00

Now that the dust has settled, so to speak, it’s time to turn our attention back to interest rates before the holidays arrive.

Mortgage-backed securities are still moving up and down in a tight trading range…so interest rates follow, and are just off the record lows of the year.

However most of the data/market info suggests that with the Fed trying to stimulate the economy, inflation will soon kick in and rates will move up. No one thinks it will happen next week, but maybe by next month or the first quarter….so don’t delay!

NO COST / NO POINT RATES:
4.375% for a 30 YR fixed under $417,000;
4.625% for a 30 YR fixed from $418,000 to $729,000

Obviously you can obtain a lower rate if you want to pay for the closing costs and /or origination fees. Rates for adjustable loans are even lower. They can be difficult to qualify for, however, since they use a higher interest rate to underwrite due to the higher assumed risk of a shorter term loan.

I can’t believe it is already November, and Thanksgiving will be here before we know it! Hope everyone had a Happy Halloween!

Market Update...& The Battle of the Paddle

2010-10-20T16:18:00.000-07:00

Rates are still hovering right around their record lows. If you can qualify, and your property appraises out, you can get a rate in the 3’s to low 4’s depending on your loan size and the term. Money is cheap, but is still relatively hard to qualify for in terms of documentation required!

Underwriting guidelines continue to contract, and seem to take the heaviest toll on self-employeds – for whom two years’ tax returns and YTD P& L’s are the norm. Investors don’t want to take any chances on any file, lest they be forced to “buy back” the loan at a later date…which is happening right now with hundreds of thousands of loans that went into default. Oftentimes these defaults aren’t the fault of the original mortgage lender, but are due to loss of income or other related effects from the economy, but banks as well as Fannie and Freddie are enforcing their “buy back” provisions in the contracts they have with mortgage bankers. This is why so many mortgage banks are out of business – the tremendous liability they face to buy back defaulted loans.

Battle of the Paddle

We rode our bikes down to Doheny State Beach a few Sundays ago, before the onset of rainy weather. We often jump on our bikes for a little “road riding” on weekends. Last month we rode down to San Onofre State Beach to check out the sharks we’d read about at Trail One. Alas we saw none!

This trip we planned to witness day two of the Battle of the Paddle, the largest SUP (Stand Up Paddle) competition in the world. In case you haven’t heard of this, the sport involves standing up on a large surf-type board--while using a paddle to move forward. Lots of people are doing it in harbors and in the ocean for exercise, to surf, or just to “get around.”

We hoped to watch our friend Jerry Meador. He is an old friend of mine from high school. I literally hadn’t seen him for about 40 years, YIKES!

Jerry was competing in a couple of different events, and we watched the “relay” event which was really fun. Each team had four members --with at least one woman. They had to paddle out through the surf, rounding two buoys, ride waves and/or paddle back in, and run up the sand to a spot on the beach where their teammate waited to take off next. They all had to paddle the route twice, and there were some pretty funny crashes, near misses, etc. since there were competitors both coming in and heading out at the same time --after the start of the race.

The waves got bigger in the middle of the event with some pretty nice sets coming in. Some paddlers handled the waves well and others…well, wiped out! It definitely separated the surfers from the non-surfers, albeit on super large SUP boards.

I learned there are all different kinds of SUP boards…some are more like regular long surfboards. I also found out that people of all ages can do this.

The oldest participant, who won for his age class, was on my friend Jerry’s team and is 72. They also had a team member who is a pro surfer—Leah Dawson—who is ranked as one of the top female long boarders in the world. She was fun to meet…friendly and down-to-earth. When I met her I asked her where she was from, and she replied, “Heaven. I live in Hawaii…” with a big smile on her face! Jerry had sort of arranged for a ringer on his team since his daughter Kassia is also a pro surfer.

Steve and I can’t wait to try it next, in the Harbor where there are no waves!

Rates Are Still Hot...To Match Last Week's Weather

2010-10-04T15:02:00.000-07:00

Last Monday evening we had to sleep in our living room under the ceiling fan, with the French doors open to the ocean breeze to escape the heat! I really enjoyed the rest of the heat last week though. This morning I woke up to rain…what is going on with our weather?

Thankfully at least interest rates are still hot! Rates are still hovering at/near record lows… these are quotes for 45 day locks:

Up to $417,000
Ranging from 3% for 5/1 ARM to 4.25% 30 year fixed

$418,000 to $729,000
Ranging from 3.375% for 5/1 ARM to 4.375% for 30 yr fixed

True Jumbo loans (over $729,000)Ranging from 3.875% for 5/1 ARM to 5.375% for 30 yr fixed

Remember rates and fees/costs depend on occupancy, property type, loan-to-value and credit scores. The rates shown above all assume a one point origination fee plus costs, but may be more or less depending on loan size.

GERMANY

I had to bid adieu to my son Kenny who left Saturday afternoon for the Brandenburg University of Technology to study Architecture in a Graduate school program. His program is located in Cottbus, but they will be traveling to a number of different locations in Europe during his two years there! He was accepted less than two weeks ago, so it was a hectic time for him to say the least. He drove cross-country with all his belongings from Vermont, stopping to visit his sister Katie in Ann Arbor, and in Boulder to see old friends on his way.

After a brief two days here in the OC, he flew to Berlin and arrived Sunday evening, when he took a train to meet new university friends. His biggest packing challenges were whether to bring his tripod for his video camera, and which books to discard.

I hope he enjoys the food there…I was expecting Kenny on a trip through Germany in 1986, and to this day just the thought, much less the smell of sausage and sauerkraut makes me nauseous.

I learned of his university acceptance while on a Mexican Riviera cruise with my mother, who celebrated her 85th birthday on-board. We had a wonderful and relaxing trip complete with lovely dinners, and made new friends from Great Britain who sat at our dining table. We really enjoyed the Salsa & Salsa excursion in Mazatlan where we learned to make authentic Mexican salsas, guacamole, and margaritas AND learned to dance the salsa. (Well, mom didn’t dance, but I took a brief lesson) You can find out more about the classes with Two Dancing Chefs on www.salsaandsalsa.com . They have just opened classes at another venue in Cozumel. They are also on Facebook under Salsa Mazatlan Mexico.

Our Cruise was with Carnival and they did a great job, so I’d highly recommend them. Waiting until September we didn’t have many children on-board, but there were adults of all ages-- which was nice. My mother played in a bridge tournament during our days at sea which kept her busy and I kept her busy in-port at Puerto Vallarta and Mazatlan.

More next time on the Battle of the Paddles...

Rate Snapshot--Edging Up

2010-09-16T15:36:00.000-07:00

Rates are edging up the last week. It hasn't been dramatic, so not time to panic yet...if you haven't taken advantage. Here goes:

Up to $417,000

Ranging from 3.125% for 5/1 ARM to 4.25% 30 year fixed

$418,000 to $729,000

Ranging from 3.375% for 5/1 ARM to 4.5% for 30 yr fixed

True Jumbo loans (over $729,000)

Ranging from 4% for 5/1 ARM to 5.375% for 30 yr fixed

All rates quoted assume a one point origination fee plus closing costs, and are dependent on FICO scores, loan-to-value, loan amount, property type, and occupancy.

I am going to be out of the office next week on a cruise down the coast to Mexico with my mother. We are celebrating her 85th birthday! If you want to take advantage of these rates before my departure, please contact me prior to Saturday evening the 18th as I will leave Sunday the 19th.

Viva la Mexico Y mi Mama!

End of the Heat Wave for Rates -- and Summer Too!

2010-09-03T16:22:00.000-07:00

We are still seeing rates in the low 3’s to low 4’s depending on program, loan term, FICO score, etc.

Last week delivered extreme volatility in the fixed income markets. Translation: interest rates have been up and down. By Friday, we'd seen prices drop and rates had eroded as of the week's end.

Mortgage loan rates traditionally move in tandem with the pricing of Mortgage Backed Securities. Friday’s better than expected job and unemployment news sparked improvement in the stock market and pushed rates up a bit as a result.

Although the long term view is that rates will hold fairly steady at lows through year-end, the short term outlook is for increased volatility. Remember, any “good” economic news will cause funds to flow into the stock market and out of bonds, causing rates to rise.

Catching the wave and timing your rate lock will be more important in the next few months. I don't recommend waiting any longer to start a refi process, if you are still considering it.

Underwriting guidelines continue to contract. Some of the latest news is that we are required to pull a 2nd credit report at funding…and there had better not be any new inquiries on that report, or evidence must be provided that no new debt has been established. This is just another move to prevent loan fraud. It can slow down or prevent closing altogether.

Another new twist is any deposit to checking or savings accounts over $500 must be documented, unless it is an auto-deposit from employer. Also, we need all income and asset documentation to be dated within 30 days of closing, e.g. paystubs, bank statements, etc.

I like to joke that the loan process is now similar to giving birth. Possibly even more painful!

Rate Snaptshot - HEAT WAVE

2010-08-24T12:04:00.000-07:00

We’re having a heat wave here in Orange County, both in terms of weather and rates!

Here goes:

Up to $417,000
30 yr fixed—4. 25%
20 yr fixed—4.0%
15 yr fixed—3.75%
5/1 Arm—3.125%
10/1 arm—3.625%

$418,000 to $729,000
30 yr fixed—4.375%
15 yr fixed—3.875%
5/1 Arm—3.375%

True Jumbo loans (over $729,000)
30 yr fixed—5.375%
5/1 arm—4.0%
10/1 arm—5.0%

All rates quoted assume a one point origination fee plus closing costs, and are subject to FICO scores, loan-to-value, loan amount, property type, and occupancy.

HEAT WAVE

Summer has finally arrived in Orange County--now that it’s almost over! The rest of the country has been sweltering for some time, while we were still wearing sweaters. Hopefully temperatures will remain warm at the beach through September. I was awakened last week by the fog horn in Dana Point Harbor which was a first for the summer months!

We’ve experienced a bigger than usual swell though, which is supposed to get even bigger. I noted it kept most of the swimmers out of the water this weekend—at least where I was watching at Doheny, Capo Beach and Table Rock in Laguna. Lifeguards were out in full force keeping most swimmers out of the water.

My daughter Katie has been visiting most of this month, and we stopped at Sunsets in Capo Beach on PCH on our way home Sunday. They have live music playing on their outdoor patio--with a front seat view of the ocean--every Sunday afternoon, which adds a lot of fun. This is my new favorite haunt for Sunday afternoons in South County. They usually host a big crowd of locals on Friday and Saturday nights though, complete with DJ and dancing-- for all ages. www.sunsetsbar.com

I spent five days mid-month at Rock Creek Lake in the Eastern High Sierra. (elevation 10,000 feet) My mother, who began visiting Rock Creek Canyon around 1949 joined me, along with my daughter and sister. Girls’ trip! We hiked, fished (yes we caught and ate trout) and played a lot of cards. One night we ventured out to dinner at the Convict Lake Restaurant outside Mammoth, and had a fabulous meal. Rock Creek is a very special place that I’ve been visiting since I was 3 or thereabouts (my mother claims I went there the first time when she was pregnant with me). This is where I learned to ride horses and fish. I’ve joined the pack station in the past for the fall horse drive which is a four-day endurance event driving stock down the Owens’ River Valley to Independence. For more information go to: www.rockcreeklake.com or www.rockcreekpackstation.com

Dinosaur Dash XX

2010-08-05T13:07:00.000-07:00

This November 7th is the 20th anniversary of the Dinosaur Dash, a running event and fundraiser for the Tustin Public Schools Foundation (TPSF). It is held annually at the Tustin MarketPlace. More than 10,000 people attend each year, including volunteers and participants. This year’s Dino Dash has added a cycling tour in addition to the 10K, 5K and 2K “fun run.” Each year the logo is selected in a contest among Tustin student entries.

Last year’s Dash earned $125,000 for the District’s student and teacher support through event registrations and sponsorships. The prior year, in a better economic environment, they raised $170,000. To give some perspective, TPSF has donated over $2.3 million to the school district over the past twenty years--from all income sources—including the Dinosaur Dash.

TPSF is seeking residents who participated in the inaugural Dash to share their memories, so here goes!

I was a founding Board Member of the Foundation, and was Chair of the Inaugural Dino Dash. As Fundraiser chair on the Board, I was given the responsibility by the Board to create an annual event that would involve the entire community in an effort to support our schools.

We decided on a running event, interviewed race directors, and hired Herb Massinger of Race Pace. Hence the Dino Dash was born. I remember how hard it was initially to obtain the Board’s approval to proceed…I practically had to twist their arms and stand on my head…but finally received the go-ahead.

We held weekly meetings for what seemed months at my home with the race director and race volunteers to organize the event. The first year was tough going, and we finished with something like a meager $5000 net profit. We had big goals though, and were optimistic that the event would build over time. Of course optimism is my middle name!

I remember that Linda Jennings and I met with the General manager of Tustin Lexus, who agreed to be our Major Sponsor… and we were off and running! The first year ALMOST everything on the day of the event came off without a hitch, although the weather was cold and windy that first Sunday. I have photos of my children, who were quite young then, wearing ear muffs and jackets.

Every Board member worked the event…and we also had lots of community and school volunteers. We decided to invite local Olympians to sign autographs for young and old athletes, with the help of our own home-grown Olympians who had children in our school district. My good friend Dana Schoenfeld Reyes (Breastroke, Silver, Munich ’72) put us in touch with most of them including a number of swimmers, triathletes, runners, and more.

The event has morphed and changed over the years with all kinds of related activities: A food court, games, community booths, costume contests, contests between schools for registration, and more.

The Foundation offers grants to teachers throughout the district, sponsors a Teacher of the Year event, teacher training, scholarships for college-bound students, books, technology, a Go Green Initiative, and tutoring.

To this day one of my most treasured possessions is the baby dinosaur hatching from an egg that was presented to me for “hatching” the Dinosaur Dash. It was a difficult birth but well worth it!

for more information on Dino Dash XX or to register, go to: http://www.tpsf.net/dash.htm

Market Update and Summertime Blues

2010-07-28T12:57:00.000-07:00

We haven’t had much sunshine to enjoy along our Orange County coastline so far this summer, but we have continued to enjoy record low interest rates. If you haven’t yet considered a refinance to lower your rate, please give me a call.

I have a number of “no point, no cost” refinances in process for clients. Although their monthly payment and interest saving is not as great as it might be if they paid all loan costs, they are not out of pocket any cash, or adding to their loan balance to enjoy a reduction in their mortgage payment.

Much of the final decision about a refinance rests on how long you expect to remain in your property. Obviously a longer time horizon makes the decision for the lowest rate possible more attractive.

New federal laws make “full disclosure” a requirement, and I have had many clients ask me questions about the total costs, and the new good Faith Estimate. In the past many loan-related costs were paid by the bank or broker, and were essentially “hidden” from view. Costs haven’t increased so much as they are just more fully disclosed today, in an attempt to provide the consumer with better and more complete information.

Newport’s Back Bay

Steve and I visited Newport Beach last Saturday afternoon for one of our favorite activities…a bike/kayak adventure. We parked at The Dunes, unloaded our bikes, and took off on the 10.5 mile loop that winds through the Upper Newport Bay Ecological Reserve and Nature Preserve, then around through the residential area off Irvine Avenue, to PCH and back. We stopped for a break at the Muth Interpretive Center to view an art exhibit by the Southern California Plein Air Painters Association-- ”SOCALPAPA” -- with wonderful renderings of the Back Bay and other local beaches, etc.

The map of the trail loop and complete information on the nature preserve can be found on the Irvine Company website at http://www.irvinecompany.com/Our-Legacy/forever-wild/back-bay-loop.aspx

After our return to the car, we packed up the bikes and changed into attire more suited to kayaking, only to discover we’d forgotten our paddles. (we own three!) So, we drove to the kayak rental spot on the bay, just under the bridge on PCH, to rent them. We decided to head inland into the preserve and enjoy the quiet…since we usually head out for a circuit of Balboa and Lido Islands. It is always fascinating to check out the “wildlife” in the inhabited portion of Newport Bay.

This trip we had expected complete quiet, but we found ourselves on the water with a large number of children and young adults playing around on kayaks and racing outrigger canoes. We were in front of the Newport Aquatic Center. We didn’t realize we could have parked here for free, and launched our kayak from here. The Aquatic Center is located on a public beach, (ahem on a man-made land extension) and is a non-profit organization that offers membership on an annual or daily basis. They house an on-site gym, shower/locker facilities, and warehouse a large number of water recreation craft. They rent their kayaks, outriggers, sculls and a few motorized boats, all of which are free for members. NAC holds all kinds of events and they train competitive teams for both juniors and adults. NAC boasts Olympic champions as members/trainers. www.newportaquaticcenter.com

But back to our kayak experience: our wildlife sightings including primarily birds and crabs (and a few fish). We needed a bird book along to identify the birds, but we counted at least five or six different ones including a group of odd-looking black ducks (cormorants I believe, after some research) that were sleeping on the sand. My best guesses for the rest were sandpipers, egrets, and swallows. The bay is host to over 200 species.

After drying off and sharing a couple of beers we drove the coast home to Capo Beach, braving the crowds through Laguna, and were thoroughly exhausted when we arrived. And still wishing for more sunshine.

Rate Snapshot and Strategic Defaults

2010-07-13T15:28:00.000-07:00

The market continues to enjoy all-time lows in rates, although they are slightly off today.

Up to $417,000
30 yr fixed—4.5%
20 yr fixed—4.25%
15 yr fixed—3.875%
5/1 Arm—3.375%
10/1 arm—4.125%

$418,000 to $729,000
30 yr fixed—4.75%
15 yr fixed—4.25%
5/1 Arm—3.875%

True Jumbo loans (over $729,000)
30 yr fixed—5.625%
5/1 arm—4.375%
10/1 arm—5.25%

All rates quoted assume a one point origination fee plus closing costs, and are subject to FICO scores, loan-to-value, property type, and occupancy.

STRATEGIC MORTGAGE DEFAULTS

New research based on national consumer credit files, and academic papers, shows that many high credit borrowers are defaulting on their mortgages in the face of large negative equity situations. This is particularly true in states such as California and Arizona, where state laws limit the lenders’ ability to collect post-foreclosure or short sale deficiencies, vs. states such as Florida and Nevada where lenders have more recourse available to them.

Many strategic defaults are not motivated by an inability to make the mortgage payments. They are typically more related to the extended time horizon necessary to achieve a breakeven situation, e.g. 100% loan-to-value, much less realizing equity once again in the property. Many of these homeowners would still face a loss of 20% or more of original property value they paid in a cash down payment at the time of property purchase. Some are so far "under water" their property value is less than 1/2 of original value.

The Deed-in-Lieu is a more attractive option for many borrowers, vs. a short sale or foreclosure. In this case, the borrower simply deeds the property over to the lender, who saves time and money by not going through the foreclosure process or spending months processing a short sale transaction. Further, the bank does not try to execute on any deficiency (shortage) of payoff. Their goal is to quickly sell the property during the traditional summer months, while interest rates continue at record lows.

Bank of America is one lender who has instituted a new deed-in-lieu program and offers cash incentives to their borrowers in some cases.

A deed-in-lieu doesn’t have as negative an effect on your FICO score as a foreclosure or bankruptcy, but will reflect the same as a short sale, or “not paid as agreed” on the credit report.

In the case of a short sale, the bank agrees to accept less than the amount due on the mortgage through the sale of the property. These can be very sticky transactions that may take months for approval by the bank, and are especially tedious when there are two lenders, e.g. one in first position and one in second position. Although the first TD lender has priority, the second lender often jockeys for some sort of payoff as well from the seller and in some cases will pursue the seller after the close of the sale.

Many thanks to my dear friend and real estate broker Cynthia White, for providing the research on this timely issue.

The Pacific Queen

2010-06-29T18:05:00.000-07:00

My son Drew, who earned his captain’s license in ‘05, recently became partners with Pacific Queen owner Bill Cavanaugh. The Pacific Queen is an 88’ sport fishing boat, originally built in 1944 to rescue downed planes… and has since been converted to a sport fisher. Drew has been part of the sport fishing industry for eleven years, and his partner Bill has been in it for 30 years. Drew earned his captains’ license while working on the Apollo, beginning with summers during college at UCSD.

The Pacific Queen runs anywhere from one- to eight-day trips out of Fisherman’s Landing in Point Loma. They fish primarily in Mexican waters, and mainly catch tuna in the summer, along with yellowtail and dorado. Average fares are $200 a day…and their boat holds up to 33 passengers.

Next time you want a maritime adventure I hope you give them a call! I can’t wait to go out…

Their website is www.Pacific-queen.com . For more information call Fisherman’s landing – at 619-221-8500.

I can’t say how proud I am of Drew for his achievements and for following his dream. He is a true Waterman! i.e. captain, fisherman, surfer, spearfisher…and jack of all trades on the boat!

Mortgage Bonds Hit Record Highs = Low Rates...and Vermont In May

2010-06-22T17:25:00.000-07:00

Mortgage-backed securities today traded at a high of the last two years plus…which means rates are at their lows.

Pass it along if you know of anyone who needs to take advantage of these rates.

VERMONT

I made a visit to Vermont in May, to witness my son Kenny’s graduation from Marlboro College.

It was a wonderful experience for many reasons, but primarily because my son chose his own path, a bit outside the norm…and is pursuing his own dream, which is very different from the “typical”… especially for Southern California.

We stayed in a lovely Bed and Breakfast called the White House Inn in Wilmington. It is near many of the skiing areas in southern Vermont. Please call me for more info if you ever decide to visit for the fall foliage, or the summer Marlboro Music Festival-- which I attended last July with my mother, and is replete with world-renowned musicians who “re-charge” there for the summer, and offer amazing classical music, in a lovely setting. For tickets and information go to: http://www.marlboromusic.org/

I don’t recommend springtime for a visit, which is “Mud Season” and is far more mud (and deeper) than you can ever imagine, unless you have lived in it. Cars get stuck all the time!

Vermont is a horse of a different color. I joke every time I visit Vermont that most everyone looks to me as if they are camping. The truth is, they just look like they wear clothing that is functional and works for their environment. I shouldn’t talk. When I camp I still blow-dry my hair…If there is an electric outlet nearby!

People who live in Vermont are very concerned about the environment, sustainable lifestyles, energy efficiency, and the Eaarth. (more on the Eaarth in another Blog) Most Vermonters live in rural settings on or near farms, and spend time caring for their sugar bush, (think maple syrup) animals, caring for their spectacular home gardens, reading a lot, and thinking even more.

They don’t allow “big box” stores in Vermont, so you have to drive to Massachusetts or New Hampshire to find a WalMart, etc. It is a very interesting place that cherishes local products only.

Kenny is staying in Marlboro this summer, building his Greenhouse, (see my earlier blog on his Greenhouse) and working at a bakery/coffee shop in Brattleboro. He is a self-sustaining unit who thinks for himself, is pursuing his passion, and I am very proud of him. I don’t think he’ll live there forever…but I also don’t think he’ll return to California. He reminds me of that periodically. Here is the link to his Grenhouse design on YouTube: http://www.youtube.com.watch/

Interest Rate Update: Don't Miss!

2010-06-17T22:21:00.000-07:00

Interest rates have continued to hover at record lows for the year; consternation abounds since the pundits all predicted rates would deteriorate at the end of March, at the finale of the Fed’s mortgage back securities buying program. If you are still considering a refinance or purchase, I’d suggest taking action now.

Up to $417,000
30 yr fixed—4.625%
20 yr fixed—4.375%
15 yr fixed—4%
5/1 Arm—3.375%
10/1 arm—4/125%

$418,000 to $729,000
30 yr fixed—4.75%
15 yr fixed—4.25%
5/1 Arm—3.875%

True Jumbo loans (over $729,000)
30 yr fixed—5.5%
5/1 arm—4.5%
10/1 arm—5.25%

Interest-only products are available, but rates are slightly higher. All rates quoted assume a one percent origination fee, and are subject to FICO scores, loan-to-value, property type, and occupancy.

June Already!

2010-06-04T13:43:00.000-07:00

Rates have been holding pretty steadily at their lows…beyond almost everyone’s expectations.

You can enjoy a rate in the 4’s for all fixed rate loan amounts below $729,500, and in the 3’s for ARM products! Call me for specific quotes, since they vary based on loan size, property type, FICO score and occupancy.

Underwriting standards continue to contract. We are now required to re-check credit, employment and a variety of items just prior to loan closing, to insure nothing has changed from the time of application.

Social security numbers are now verified through the IRS prior to close. If you apply for a mortgage loan, be advised you should not apply for new credit, and don’t move funds from one account to another without fully documenting the transfer and source.

All unusual deposits must be documented, and all funds for closing must be sourced. All in the name of Fraud Prevention!

The federal tax credit for homebuyers expires June 30th and sales are expected to slow after that. It will be interesting to see whether they slow, or pick up steam. Most realtors I speak to would have us believe that prices are increasing and sales will continue to build steam.

We are almost half-way through it, and the year seems to have flown by. Now it is wedding season and I have two to attend this summer!

I am looking forward to a sunny, warm and relaxing weekend. Hope yours is the same.

One suggestion: The Dana Point Harbor Boat Show (which started Thursday and runs through Sunday) sounds like fun, and the weather will be perfect. They are celebrating their tenth anniversary.

My favorite pick: The Saturday night Live Music Cruise on the Dana Pride, from 6:30 to 8:00 for only $10. This cruise is always a blast! Ticket prices increase during the summer. Go to www.danawharf.com for tickets and details.

Reverse Financing Update and The Big Short

2010-05-27T13:33:00.000-07:00

I am very excited to be able to provide Reverse mortgage financing to my clients with increased loan limits up to $625,500.

There are fabulous new programs to benefit seniors, including some with NO upfront costs to the clients. Reverse loans are all FHA loans, which carry the typical FHA mortgage insurance premium that increases the up-front costs. Now, clients can choose a program where they don't pay any of the costs.

New products include fixed rates as low as 5%. These fixed rate loans require that all cash is withdrawn at the time of loan closing. In many cases a Line of Credit makes more sense for clients, although the rate is floating vs. fixed. The interest rate is just over 2% on the line of credit, vs. 5% to 5.5%. for fixed rate loans.

Remember, Reverse loans improve cash flow since there are no payments during the loan term and all interest due accrues to the note, and is paid the end of the loan term. Funds can be accessed up front in a lump sum, monthly payments, or a line of credit--just like a HELOC--or a combination of these.

THE BIG SHORT

I’d like to highly recommend The Big Short by Michael Lewis. This author, who also wrote The Blind Side, has written a number of exposés on Wall Street and the financial industry, but none as damning as this…which was just published in March.

Recently cited by Bill Gross, Managing Partner of PIMCO, in his monthly newsletter, this book clearly lays the blame for the world-wide financial crisis at the doorstep of greedy Wall Street Bond traders who operated in secret, setting up transactions most people, even in their own companies, didn’t understand..or were unaware of.

Very interesting reading…I couldn’t put it down. The next time someone tells me the meltdown was all the government’s fault (yes they hold blame for encouraging more lenient lending guidelines) or subprime lenders’ fault for making fraudulent loans (which they certainly did, along with the knowledge of their clients) be advised nothing of this magnitude could or would have happened without the secondary market provided by Wall Street; faulty securities ratings; and the facilitation of "shorting" these instruments (Investment Banks, AIG and others) which exponentially increased the risk of every single layer (tranche) inside the securities backed by subprime loans.

California Home Buyer Tax Credit

2010-05-19T12:29:00.000-07:00

The state tax credit isn’t as attractive as the Federal Tax Credit for first time homebuyers, which was a true credit, regardless of whether you pay or owe taxes. This state “credit” is spread out over three successive tax years, at a max of $3333 per year, and is a credit to be used for actual taxes OWED. The tax credits cannot reduce regular tax below your tentative minimum tax (TMT). It is nonrefundable and unused credits cannot be carried over. So, you need to owe up to the max to get the full benefit.

The tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011. Additionally, these tax credits are available for taxpayers who purchase a qualified principal residence on or after December 31, 2010, and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010. The purchase date is defined as the date escrow closes.

The total amount of allocated tax credit for all taxpayers may not exceed $100 million for the New Home Credit and $100 million for the First-Time Buyer Credit. The state will allocate the tax credits on a first-come, first-served basis.
Only one tax credit is allowed per taxpayer. If a taxpayer qualifies for both tax credits, the law specifies that we will allocate the amount under the New Home Credit.

Property must be occupied by the taxpayer as their principal residence for a minimum of two years immediately following the purchase.

A first-time buyer is any individual (and the individual’s spouse/RDP, if married) who did not have an ownership interest in a principal residence during the preceding 3 year period ending on the date of the purchase of the qualified principal residence.

Reservations: Taxpayers who qualify for the New Home Credit may, but are not required to, reserve a tax credit prior to the close of escrow. Reservations will become important as the state nears the $100 million cap for homes that may not close escrow before the cap is reached.

To reserve a tax credit, the taxpayer and seller need to complete, sign, and submit a reservation request to certify that they have entered into an enforceable contract on or after May 1, 2010, and on or before December 31, 2010. A copy of the signed contract must be included with the reservation request.

If you are only applying for the First-Time Buyer Credit, you will not be able to reserve the tax credit before escrow closes. Final closing statement must be filed within two weeks of closing to be eligible.

For complete information and forms, go to http://www.ftb.ca.gov/individuals/new_home_credit.shtml

Spring is in the Air!

2010-05-12T11:39:00.000-07:00

Springtime brings sunshine, graduations, and sports playoffs!

The sunshine seems to have finally arrived to Orange County although it was in short supply last Sunday for Mother’s Day. After my usual Sunday morning yoga class at Yoga Works, http://yogaworks.com/ I took a bike ride down to the Harbor in Dana Point with Steve… his first outing on the bike since he broke his leg in January. The sun finally greeted us as we neared the headlands, which was a treat. The tide was low and there were lots of families exploring the tidepools under the watchful guidance of volunteers coordinated jointly by the City and the Ocean Institute.

On our way back home we stopped to check out the Harbor Art Show under the arbors, near the restaurants. We loved some of the work by both painters and photographers, and suggest you check it out some time. They hold an Art Show in the Harbor a couple of times during the year.

MORE MOTHER'S DAY

Steve and I took out my mother to Opah’s Saturday night to celebrate Mother’s day and had fantastic food and even better service. I was really impressed. They also own 230 Forest, our favorite in Laguna Beach, and just opened a new restaurant named Watermarc on PCH in Laguna Beach.
http://www.opahrestaurant.com/

GRADUATION

My son Kenny graduates from Marlboro College this weekend, and I am flying to Vermont to attend. I am so very proud of him. His degree is in sociology with an emphasis on urban planning and architecture, and he achieved an A on his senior thesis/project which is presented to an academic panel in an oral exam setting. He plans to finish building the college Greenhouse this summer, (see earlier blog about it for the link) and then decide about graduate school. Kenny transferred from Boulder (University of Colorado) to Marlboro in his sophomore year, seeking a more intellectual and challenging academic environment. I was sad to see him leave Boulder, but he has been incredibly happy at Marlboro.

NCAA WATER POLO

This weekend also brings the NCAA Women’s Water Polo Championships hosted by San Diego State. My daughter Katie arrives in San Diego today to coach for Michigan, who is currently ranked #7 nationally and #5 in the tournament. They face-off with #4 Cal in their opening game Friday night at 5:45…which should be interesting since Katie played for Coach Corso at Cal and was his team captain. I must say Go Blue! Sorry Mike!

http://www.ncaa.com/sports/w-wpolo/ncaa-w-wpolo-body.html

The field of teams is as follows, in order of ranking: Stanford, USC, UCLA, Cal, Michigan, Loyola Marymount, Marist and Pomona Pitzer. I am so sorry to miss it but I will be in Vermont.

LACROSSE CHAMPIONSHIPS

Finally I can’t resist congratulating the Foothill High Lacrosse team under the fine leadership of Jon Fox for winning the Orange County title again (they defeated number one ranked Corona del Mar yesterday) and will play for the CIF SS championship title this Friday night in Valencia vs. Palos Verdes, who is the northern section leader. Hope they win it all!

Rate Snapshot

2010-05-07T13:11:00.000-07:00

The last week has seen the greatest market volatility on record, primarily in the stock market…which has had a positive effect on interest rates, at least in the short term.

As of today, here are some sample rates:

Conforming Loans (Up to $417,000)

30 YR - 4.75%
20 YR – 4.375%
15 YR – 4.125%
5/1 – 3.125%
10/1 – 4.125%

Agency Jumbo ( $418,000 to $729,000)

30 YR – 4.875%
15 YR – 4.25%
5/1 – 3.625%
7/1 – 4%

Jumbo Loans ($729,000 to $2 million)

30 YR - 5.5%
5/1 - 4.375%

All these rates assume a one point origination fee, and are dependent on loan-to-value, FICO score, property type and type of occupancy.

Don’t wait to take advantage of these, as we aren’t likely to see them again for years!

Sales Trends, Mortgage Insurance & California Wines

2010-04-26T15:53:00.000-07:00

Sales are trending up in the OC both in terms of prices and volume. Some realtors are jumping on the bandwagon telling us that we’re past the bottom, and prices are going up….but personally I agree with those naysayers who attribute the increase in volume and prices to competition to qualify for the Homebuyer Tax Credit which expires April 30th. In order to qualify, your property must be under contract to purchase by this Friday.

The County median price was $432,000 in March, with a 9% volume increase as well. We are still seeing a substantial percentage of “distressed sales”… 1/3 were foreclosures and I didn’t find any stats on short sales but I know there are plenty.

Over 20% of last month’s sales were ALL CASH BUYERS. This is most common in sales below $450,000…which is pushing out a lot of first-timers. The investors are winning the battle unfortunately.

Mortgage Insurance

The big news of last week is that the private mortgage insurance (PMI) has just become more easily accessible to conventional borrowers (non-FHA). For the last few years there have been substantial limitations on areas of “declining values” i.e. California, Arizona, Michigan, Nevada and Florida.

The new guidelines provide Mortgage Insurance up to 90% and 95% LTV in some cases, depending on the individual company guidelines. The minimum FICO scores required in order to qualify for mortgage insurance have also been reduced. Companies “back in the market’ include MGIC, Radian and Genworth.

Up until now, the only path available was an FHA loan for those buyers without 20% down and a FICO score below 720-- here in California. I have a client with a score just below 700, and before this change he wasn’t able to qualify for PMI, although his debt-to-income ratios met the stringent guidelines.

For those of you who don’t know, PMI is typically paid monthly by the borrower, and guarantees the lender (insures) for the portion of the loan over 80% loan-to-value. These companies have been under great financial strain due to the last few years’ tremendous losses.
This announcement comes on the heels of more restrictive guidelines handed down by HUD for FHA loans. HUD is tightening up on FICO scores, by restricting loan-to-value for those borrowers with lower scores. So, they will have to come up with a larger down payment.

California Wine Festival

The first annual California Wine Festival in Dana Point was held last Thursday through Saturday. Thursday evening they held an event at the Ritz Carlton, Friday evening at the Dana Point Yacht Club, and Saturday afternoon at Doheny State Beach Park. I attended the Saturday event which was sold out at 3000 attendees. There were over 60 wineries, both well-known and boutiques that poured a wide variety of wines. Five breweries had beers and ales to sample, and a number of restaurants provided tasty appetizers. All the food and wine was unlimited, although a few booths ran out of some wines near the end of the day.

Lines were minimal, fun was in abundance, and the music was reggae/calypso style so of course I practiced my Zumba technique. The weather cooperated with sun and a light breeze, to provide an afternoon that couldn’t have been more perfect. We made new friends, and ran into old ones.

Next stop for the afternoon was Turk’s in the Harbor, on the water… for some sightseeing… and we finished the day at Sunsets’ on PCH across from Capistrano Beach…. where a band of guys my age (or older!) played surf music while we dined on pork from a whole pig they’d roasted across the street in a pit on the state beach. What a hoot! This lively bar has big screens for the sports’ fans, and live music on weekends.

Back to the Wine Festival – although this was their first time in Dana Point, they will host the same event in mid-July in Santa Barbara for the 7th year. For more info, here is their website: http://www.californiawinefestival.com/index.html

Rates, Foreclosures and BeachFire

2010-04-18T13:55:00.000-07:00

Interest Rate Update

The end of the government’s purchase program –on March 31st—of mortgage-backed securities, was widely heralded as the precursor of a steep rise in mortgage interest rates. However, after an initial steep decline in MBS prices (pushing rates up) rates have improved and stabilized for the time being. Scott Simon, managing director of PIMCO says “We are unlikely to see a significant market disruption in the agency market stemming from the Fed’s retreat.” Translation: he doesn’t think rates are going to rise. Much.

30 year fixed rates are currently ranging from the high 4’s to the low 5’s depending on loan size, fico score, property type, loan purpose and loan-to-value. FHA rates are in the same range and go up to 96.5% loan-to-value (3.5% down.)

There is a new purchase program called HomePath requiring only 5% down on properties currently owned by Fannie Mae. The rates are a bit higher, but there is no requirement for mortgage insurance which is a big plus.

The BIG news is that true “jumbo” financing is returning to the market place. We are suddenly seeing very competitive rates from Chase, US Bank, Wells Fargo and GMAC. Great news for those with loan balances over the current high-balance Agency limit of $729,000. However, be warned, these programs are very conservative in terms of credit, personal liquidity, and loan-to value.

Foreclosure Activity Report

8.33% of all mortgages in Orange County are more than 90 days late. The national average is 8.78% and the California average is at 11.68%. Government programs to prevent foreclosures are slowing foreclosure rates…but most of these homes will likely convert to “short sales.”

My clientele’s purchases this year have primarily been short sales requiring bank approval…which is hard to come by, and can takes months to achieve. Then, when they finally agree to a price, they typically want to close the purchase within 15 to 21 days making for a mad dash at the end! Banks are not easy to deal with!

The highest percentage of distressed sales in the U.S. is in the Riverside SMSA, then Las Vegas and Sacramento.

Happy Hour at BeachFire

Friday evening I went to the BeachFire Bar & Grill in San Clemente. BeachFire opened in 2002 and is credited with the revitalization of downtown San Clemente.

They host a regular Friday evening Happy Hour all night, if you show up in “island” attire…whatever that means. I wore my yellow shell necklace from Maui and it did the trick. I had an aloha shirt in my purse as a back-up though. Drinks are $4 to $5 each, and appetizers range from $4 to $6. What a deal! Any time it rains, they also offer Happy Hour prices….otherwise known as “When it rains we pour.”

In addition to great drinks and appetizers at discounted prices, they have live Reggae music every Friday. We were rockin’… or whining, rather! (Jamaican-style dancing) The band manager treated my friends and I to Jaeger shots which was a hoot. See, you can still have fun over 50. http://beachfire.com/home.asp

My favorite Reggae band had performed the prior week…Smoothie Jones and the RedX. Now they play authentic Jamaican Reggae! I was sorry we missed them. http://www.myspace.com/smoothiejones
They used to play regularly in Dana Point, on the summer cocktail harbor cruises.

State of the Union for the Mortgage Loan Process, Part 2

2010-04-14T13:42:00.000-07:00

I am pleased to announce I have moved to Western Reliance Funding. Western has been operating for over twelve years in Orange County, and offers some new bells and whistles in terms of service, to include in-house underwriting, and both correspondent and brokering capabilities.

Western works with a number of investors as a correspondent including CitiMortgage, Chase, BofA, GMAC, US Bank, Flagstar, Wells Fargo and more! Most exciting for me is the ability to get back into the business of Reverse loan financing, which I couldn’t offer any longer through Clarion.

My new contact information is:

kcard@westernreliancefunding.com
24422 Avenida de la Carlota, Ste. 180 Laguna Hills, CA 92653
949-470-1333 x111

As a postscript regarding Clarion: I loved working there, and they had a great run. Unfortunately, times have changed and the mortgage industry has undergone dramatic metamorphosis, necessitating my move….in order to be more effective and responsive to my clientele.

State of the Union for the Mortgage Loan Process, Part 2

HVCC is the Home Valuation Code of Conduct. It went into effect May 1, 2009, and effectively cut off all communication between loan officer, or any “party of interest,” and the appraiser. New Appraisal Management Companies (AMCs) sprung up overnight, but there are a number of companies that provide appraisals on a national basis that have been in operation for many years with fairly good results.

Mortgage companies have created their own appraisal management companies, some more equal than others. Unfortunately some of these organizations pay appraisers so little, their quality is very poor. There are others who charge more and tend to have higher quality and success.

The biggest issue, other than appraisal quality, is non-portability. The problems arise when different lenders require appraisals to be performed by specific AMC’s. This means a mortgage banker must determine where a loan will be placed BEFORE ordering appraisal. Otherwise, the appraisal may not be accepted by the lender/bank of choice.

Correspondent lenders typically have two or three choices of AMC’s to use, and as a correspondent, the target lender will accept the appraisal. However, if a loan needs to be brokered to a specific bank due to loan program and parameters, the appraisal must be ordered through that bank’s AMC. This is very limiting to borrowers since it removes much of the flexibility of choice…without ordering a second appraisal. If for some reason a file is declined or does not meet the target investor’s guidelines, a new appraisal will be required in most cases! I have had to order second appraisals on a number of loans this last year, much to my dismay (and my clients’!)

Gone are the days of calling one of my regular appraisers, asking them to “comp” a property for me to give me an idea of value, before embarking on a refinance. We are all operating “blind” these days. HVCC has also caused many appraisers to go out of business (since they AMC’s take a percentage off the top the appraiser earns much less per report than in the past) which is very unfortunate.

Why did this happen? An official of New York State put pressure congress to act to prevent “value inflation,” and this is what they came up with. Initially HVCC only affected Fannie and Freddie loans (those under $729,000) but now it has also been adopted by HUD for FHA loans.

In my opinion this bad law has made it harder for clients to obtain competitive pricing for their loan. It is very limiting, in many ways.

The State of the Union for the Mortgage Loan Process

2010-03-31T16:22:00.000-07:00

This is the first in a series of commentary and helpful information regarding the current state of home mortgage financing. The industry has changed so dramatically in the last twenty-four months, I felt it would be helpful to explain in detail some of the changes that affect borrowers.

After the mortgage-back security debacle (MELTDOWN)-- in which subprime and stated income loans (that eventually went into default in large numbers) were packaged and sold in bulk to unsuspecting investors world-wide, sweeping changes have taken over the industry. These changes purport to be for the protection of the consumer.

A number of new laws have been enacted to change the way appraisals are performed, and the manner in which costs are incurred and disclosed to clients. In addition, mortgage originators are now required to register with a national database, and to be fingerprinted, vetted and tested.

INCOME DOCUMENTATION

There are no more “stated income” loans at this point in time-- although they may return to the marketplace at some point in the future. This is especially troublesome for those self-employed individuals who have habitually “expensed” much of their income in order to avoid taxation. Unfortunately they are not eligible for a new mortgage in most cases.

Underwriting guidelines governing loan-to-value, FICO scores, and debt-to-income ratios for all loans are much more conservative than in the recent past for obvious reasons. Unfortunately the pendulum seems to have swung a bit far in the conservative direction at present.

Virtually all lenders now require IRS transcripts of individual tax returns prior to underwriting approval. This ensures that income reported on the application and attending documentation is accurate in an attempt to avoid fraud.

As a result, it is standard practice now to collect full income documentation, to include two year’s federal tax returns with all schedules, W-2’s, 1099’s, and paystubs evidencing current employment. Also required are bank and asset/saving statements for at least one month, including all pages of the statements. On-line statements are not allowed unless they evidence the borrower name and address on them.

YES, it is back to “full documentation” in the loan world, just like the old days when I started in residential lending back in 1990.

Next time I will address HVCC, or the Home Valuation Code of Conduct, which governs the way appraisals are performed today. In my opinion this is the most detrimental change from the perspective of the client in any new mortgage transaction.

WHALE TAIL

Why the picture of the Whale's tail? Well, did you read about the woman who just completed a Stand-Up Paddle from Catalina to Dana Point Harbor? She had a whale swimming with her for over an hour during her 40 mile adventure!

I took my kayak out with Steve at Zuma Beach a few years ago, and just off Point Dume we came upon a mother whale with her baby, frolicking just off the point. It was an amazing and inspiring thing to see such large animals so close up. Very humbling.

US Tax Breaks

2010-03-29T09:23:00.001-07:00

It’s that time of year again, and if you haven’t filed yet, here are some tips for tax breaks:

Home-buyer tax credit

Expires 4-30 (must be under sales contract) This affords first time homebuyers a credit of $8000 or $6500 for move-up homebuyers for a new primary residence. This credit is immediate and doesn’t require owing taxes to receive the refund.

Car-buyer Break

If you bought a car in ‘09 you can claim a deduction for the state and local sales taxes for up to $49,500 of purchase price.

Golf cart or Low Speed neighborhood vehicle

Yes ….that’s right… you can get a credit of up to $15,000 if you purchased one of these in ’09 or ’10. It must be a “qualified plug-in electric drive vehicle. “

Energy Credits

This is a direct dollar-for-dollar credit for moving to solar power, or buying an energy-efficient furnace, water heater, air conditioner or stove, or replacing windows…you can claim a credit up to 30% of the cost or a maximum of $1500.

College Credits

Available to those who pay college bills for themselves or a dependent, subject to maximum income levels of $90K for filing single, and $180k if filing jointly.

Jobless exemption

Up to $2400 in unemployment benefits are tax free.

Property tax deduction – without itemizing

You can claim a credit for property taxes by filling out Schedule L without itemizing deductions on your return.

Haiti Donations

If you made a donation to Haiti relief prior to March 1st of 2010, you can claim it as a charitable contribution on your ‘09 return.

Hope these help!

Help and Hope - Outreach Concern

2010-03-19T16:43:00.000-07:00

The recent tragedy at an Orange County high school involving a student athlete was overwhelming for many in that school community, and throughout our county. It is hard to imagine what the family and friends experience in the face of such a devastating event. Outreach Concern stepped in, and provided on-site counseling.

Outreach Concern, based in Santa Ana, has been providing services to school districts for 16 years. They have been instrumental in grief counseling for many schools, but their primary focus is providing counseling services for at-risk students whose academic performance is being impacted, in order to allow faculty and administration to focus on academics.

Dr. Rick Capaldi, a client of mine, is both Executive and Clinical Director of Outreach Concern. I’d like to thank Rick and his staff for being there for those in need. www.outreachconcern.org

Post Script to Perils of Short Sales

2010-03-19T16:37:00.000-07:00

The following information was kindly provided by a client of mine who is a tax professional.

Here are a couple of important notes regarding Cancellation of Debt (COD):

1. The Mortgage Forgiveness Debt Relief Act of 2007, only applies to “Qualified Principal Residence Indebtedness”, not to second or vacation homes, investment property or rentals. Further, the debt must have been used for the purchase or substantial improvement of the residence – not to pay off credit cards, start a business, take a vacation, buy a car, etc.

2. Those not qualifying for forgiveness of COD, can generally avoid paying tax by filing under the Insolvency clause, or one of the other eight exceptions.

3. Different elections can be made on the Federal return and the California return, which helps in the non-conformity issue.

Bottom line, very complex area; individuals with this problem should see a qualified professional tax preparer.

K.E. Noland, EA, President
Enterprise Management Corp. CFO TO GO®
17461 Irvine Blvd., Suite M, Tustin, CA 92780
Tel: (714) 505-1925 / Fax: (714) 505-9691
ken@companycfo.com / www.companycfo.com

The Perils of Short Sales

2010-03-10T11:18:00.000-08:00

Just under 50% of the closed sales in Orange County presently are “short sales” which means the homeowner sold their home for less than the balance due on their mortgage. In such cases, the bank must approve the sale price since they are taking a loss, and the homeowner/seller may end up receiving a 1099 for the unpaid portion of the mortgage which needs to be provided with your tax returns. The federal Mortgage Forgiveness Debt Relief Act of 2007 provided an exception for homeowners who lost their home in foreclosure or a short sale, or had their loan balance reduced in a modification. (gee, I don’t know of anyone who got a balance reduction!)

You still have to report the forgiven debt on your tax return, but it’s typically not included in your income for federal tax purposes if it was your primary residence, the debt was less than $2 million (that lets most people out) and it was forgiven in years ‘07 through ’12. The bad news is California hasn’t updated their law to conform with the federal law after January 1, 2009, so you may owe taxes to the state unless this is resolved. See http://tinyurl.com/yhx89zw to see if you may receive relief prior to filing April 15th if this affects you.

One final note: A short sale will normally appear on your credit report as such, and have a negative effect on FICO scores and also prohibit mortgage financing for a period of at least two years. So proceed with caution.

Mortgage Update...and GO BLUE News

2010-03-07T16:30:00.000-08:00

Home loan rates have been fairly stable the last few weeks, ranging from the mid-4’s to low 5’s depending on a number of specific loan factors. Rates are definitely expected to rise by the end of this month due to the termination of the government’s buying program of mortgage-backed securities. This program basically generates demand for Fannie Mae and Freddie Mac pooled mortgage securities, which in turn, maintains rates at a lower level. Once the buying stops, most experts expect demand to wane, and prices to drop, thereby causing a rise in interest rates for home loans.

Also be aware that the deadline for the Tax Credit for homebuyers is rapidly approaching – to qualify you must be under contract by April 30th and close by June 30th. This program is widely credited for the current housing demand.

The University of Michigan Women’s Water Polo Team was here in Orange County last weekend for the annual UCI Invitational Water Polo Tournament. The event is one of the premier tournaments of the women’s collegiate polo season. This year, the Michigan Wolverines, currently ranked 8th in the nation, finished the tournament in 8th place. After a strong start, they lost their leading scorer to an injury and struggled in their remaining games. Michigan has completed the season in the top ten the last two years; and participated in the NCAA championships four of the last eight years.

Oh, did I forget to mention my daughter Katie is the Assistant Coach? Katie, who captained the Cal Bears her junior and senior years at Berkeley, is in her third season coaching at Michigan…and bought a condo in Ann Arbor last year. Yes, she earned the first-time homebuyer tax credit. She’s adjusted to the cold and snow nicely. But I remember the first time she called me and said, “Mom, it is snowing, and I fishtailed twice in the parking lot when I left to go out tonight…so I decided to stay home.” Good call.

Summers are especially nice in Ann Arbor, which has a thriving downtown filled with the typical college town restaurants, galleries, bars and boutiques! Every spring they host a parade of outrageous giant-size papier-mâché puppet creations called the FestiFools parade. I attended last year with Katie. What a blast! This year it is April 11th.

The puppets are created by students and community members who perform on downtown’s State Street, to the back beat of GROOVE, a percussion ensemble from the University. These huge handmade puppets represent everything from crazy dancing eggplants to dinosaurs and famous people. FestiFools is all about the three F’s: Fun, Free and Foolish! www.festifools.org

Ann Arbor is also home to the annual Top of the Park Music Festival, which runs for three weeks at the end of June, and an Art Fair in mid-July. The Art Fair attracts over 500,000 visitors annually, and was founded in 1960. It has been recognized as a top art fair in the nation many times…I hope to get back to visit one of their fun events this year.

Market Rate Update...and A Healthy Fun Fix!

2010-02-16T13:55:00.000-08:00

Rates continue at very attractive levels, but are not expected to last here for long. The current 30 year fixed rates are hovering at 4.75% for loans under $417,000 and 4.875% for those that are up to $729,000.

Five year adjustable rates are still between 3.5% to 3.75%, based on loan amount. Of course these rates depend on a number of factors, such as FICO score, Loan-to-value, total debt ratios, property type, purpose of loan, i.e. purchase, cash-out refinance, etc.

Speaking of loan-to-value, although values appear to be stabilizing in most areas of Southern California, I am still seeing appraisals resulting in values lower than property owners expect. Be advised that appraisers must put the most emphasis on recent sales (primarily in the last 3 months) that are comparable in terms of age, size and amenities. Unfortunately, as we all know, the majority of sales are foreclosures or short sales.

Now for the Fun Fix…
For those of you who don’t know me well, I love Zumba. Well, to be honest, I love to dance. And Zumba class satisfies my itch in addition to providing a fabulous workout.

Cumbia has become my favorite dance, then Salsa, but Samba is the most aerobically demanding. I read an article in the Wall Street Journal today about an author who swears by Zumba and its health benefits. Read about her at www.wsj.com/workout.

I usually take classes at 24 Hour Fitness, but they are offered at many gyms and YMCA's etc. You can locate a class or an instructor anywhere in the world, at the Zumba website by just plugging in a City, Zip Code, or an Instructor name. www.zumba.com

Zumba uses a whole bunch of muscles we don’t normally use here in the good ‘ole USA, with a LOT of hip action. I hope to see you there sometime! You can’t miss me, I will be the one laughing!

Under Water Properties Still Spell a Seller's Market

2010-02-10T15:58:00.000-08:00

Online real estate tracker Zillow www.zillow.com reports that the share of Orange County single-family homes with mortgages larger than the current value of the home — so-called “negative equity” or “underwater” — was 14.4% percent in the 4th quarter of 2009, barely up from Q3’s 14%.

If that percentage sounds low, it is because according to Steve Thomas at Altera Real Estate, distressed properties now represent 33% of the market in Orange County.
But the Thomas numbers are active sales. Zillow’s math covers all single family homes in O.C., including those not on the market. (About a quarter of homes here have no mortgage to begin with.)

“We estimate 62,988 single-family homes in negative equity in Q4 out of an estimated 436,163 single-family homes (with mortgages) overall in Orange County,” said Jill Simmons of Zillow.

The number of homeowners losing their homes to foreclosure across the country peaked in December, with more than one in every thousand homes being repo’d, a high since Zillow began recording this foreclosure data in 2000.

Back to Orange County statistics, Steve Thomas of Altera Real Estate writes,

“Current statistics…do not reflect that there are fewer distressed homes coming on the market; rather, they mean that increased demand is eating up the active distressed inventories. Over the past month, the number of distressed and non-distressed homes to hit the market has been increasing, but many are going off the market as pending sales just as quickly as they are coming on.

“The number of foreclosures increased in the past two weeks from 355 to 375. The expected market time for foreclosures is a sizzling 0.90 months, a deep seller’s market. Foreclosures garner so much activity that they are like individual mini auctions and the successful buyer is really the successful bidder.

“The number of short sales on the active inventory decreased by 69 and now totals 2,249. The expected market time for short sales is 1.63 months, also a deep seller’s market. 33.7% of the active inventory is distressed. Last year at this time 44% of the inventory was distressed.”

For the breakdown, go to the Mortgage Insider Blog

What does this mean for buyers? I have a number of pre-approved buyers with 20% down and better who have made multiple offers, but can't get one accepted. They are running into all-cash buyers, or buyers with higher down payments. It is extremely tough to get an offer accepted. It is important to provide a complete package at the offer stage and put as much down as possible to sweeten the deal in the eyes of the seller.

First Thursday Laguna Beach - Art Walk

2010-02-02T15:23:00.001-08:00

I’ve been a big fan of Laguna’s monthly Art Walks for years. This Thursday is the twelfth anniversary of the event. It runs from 6:00 to 9:00 p.m. and is always entertaining, not only for the art but the people-watching. Plein air painting abounds, as it is very popular in Laguna, along with many other styles suitable for almost any appetite. Steve oftentimes gets new ideas, and completed a four-painting series last year that was inspired by the painting of Linda Christensen, who had a show at the Sue Greenwood Gallery. www.suegreenwoodfineart.com

Speaking of the Greenwood Gallery, my friend Sally Storch shows there regularly and always sells out! We met in college, at USC, and her openings typically are a great time to catch up with old friends.

I can’t make it this month due to Steve’s accident (it’s hard to get around Art Walk on crutches) but will look forward to March’s event!
www.firstthursdayartwalk.com

Rates, Credit Score Hints, Sales Stats and Risk Factors

2010-01-28T15:56:00.000-08:00

Interest rates continue to be very attractive…in the 4’s to low 5’s depending on loan amount, loan-to-value, purpose of loan, and credit scores. But they have nowhere to go but up, and the market reacted poorly this week to the news that the government is definitely ending the purchase program for mortgage-backed securities as of March 31, 2010.

Speaking of credit scores, I have seen a number of credit reports recently where my client’s scores were hurt because they had closed credit card accounts. They THOUGHT they were doing the right thing, but they inadvertently hurt themselves. If you pay off a credit card, it isn’t smart to close the account. Keep it open, with a zero balance, and use it once every few months for minimal purchases such as gas or food, and pay it off. In this fashion you are increasing the credit “available” to you, but not using it. The goal is to have all balances on revolving credit at or below 30% of total credit available. High balances to total credit available are the primary culprit in driving down FICO scores, right behind collections or delinquent payments.

Interest rates today are very sensitive to FICO scores, and you will pay a price for any score below 720, and in some cases with larger loan amounts, scores below 740. It is tough out there!

Sales stats for Orange County show that home sales at the “low end” of the housing market – below $500,000 – consisted primarily of foreclosures and short sales, and accounted for all of the sales gains (increases in volume) seen in the last year.

The median sale price for single family homes in Orange County was $496,070 in December. Newport Beach posted a median price of $938,500 and Laguna Beach was at $1.23 million. The sales at the higher end of the spectrum, although much lower in volume, still helped to push the median prices up.

DataQuick reported that 20% of homes sold are going to investors (vs. primary housing) and almost 25% of homes sold to all-cash buyers.

What’s The Risk?

The recent terrorist attempt on a Northwest flight bound for Detroit hit close to home for me. My daughter, who lives in Ann Arbor, Michigan, was in Europe at the time and heading for Amsterdam where the fateful flight originated. Further, she was flying home to Detroit after the holidays.

So, what are the real chances of being involved in a terrorist event on an airplane? In the decade of the 2000’s, the only American fatalities occurred on 9/11, and including those stats, only one passenger in every 25 million was killed in a terrorist attack on an American airplane during the past ten years.

Contrast that with the chance of being hit by lightening…one in 500,000 each year. Further, the stats show that these violent passenger incidents –bombing, hijacking or sabotage- were five times less common in the 2000’s than in any decade from the 40’s through the 80’s. Source: Nate Silver http://www.FiveThirtyEight.com.

Mr. Silver opines that we would be more rational to focus on prevention of a nuclear terrorist attack that could affect millions.

So the bottom line, as I always reminded my children, is to be far more worried and cautious when driving your car than flying. And don’t stand under trees in a lightening storm!

Rate Update and Remedies for Post-Holiday Blues

2010-01-18T15:44:00.000-08:00

Rates improved nicely by the end of last week. A new 30 year fixed rate loan, up to $729,000, is going to be somewhere south of 5%, down to 4.75% if your loan amount is below $417,000.

Five year fixed rates are still at or below 4% for loans up to $729,000. The CPI figures that came out at the end of the week were lower than expected, helping keep interest rates down, and the government spending spree for mortgage backed securities is also providing assistance.

However, keep in mind these rates won’t last since we have repeatedly been reminded that the mortgage-back securities buying program will end by the end of the first quarter this year. In addition, as soon as inflation raises its ugly head it will bode ill for interest rates.

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.

My prescription for the end-of-the-holidays blues is great food, wine and music.

On a recent Sunday afternoon we drove to downtown San Clemente and strolled the length of Del Mar for some window shopping. Yes, we bought some touristy gift-cards too! We headed for the San Clemente Wine Company to check it out after reading a few reviews in the local newspaper. This wine shop offers a comfortable tasting area in the back of the store, where for $15 you can taste a flight of 6 wines. We had cheese, crackers and some great reds…Pinot Noirs, Cabs, and Syrahs.

The SC Wine company specializes in moderately-priced wines from California, Australia and New Zealand. The owners are currently visiting in New Zealand to locate new wines for the shop. They regularly host vintners for special tasting events, and are open 7 days a week.

Next on my “fight the blues” list is Iva Lee’s restaurant, on Camino Capistrano in San Clemente. Offering outrageously good food and music, the theme is southern-style N’awlins all the way. Gumbo, catfish, fried green tomatoes, sweet potato fries and the like are all on the menu. Blues is the obvious music of choice, and we were lucky to catch the Blue Machine Band. They play regularly on Thursdays at Iva Lee’s but also appear in other Orange county venues.

If you love Blues and Cajun cooking, you can’t miss Iva Lee’s.
The restaurant was busy for a Thursday night, so call for a reservation. After it cleared out a bit, we took advantage and danced in the dining room near our table, and in the bar. Weekend crowds might make that a bit difficult however.

Last, but not least, we dined with friends at Bistango, an old favorite in Irvine near the airport. We were celebrating three birthdays, and as always the food was outstanding and the dancing was a blast. Bistango has live music every night, with a real live dance floor. We appreciated not only the cuisine, but the art as well, which is inspiring (at least inspiring for artists like the one I live with.) Definitely my special occasion choice!

I think I have beaten the blues. Now if only the hurricane will stop so I can go outside again!

Capo Beach Sunset

2010-01-14T15:39:00.000-08:00

I took this photo in late December from our balcony in Capo Beach. The sunset is over the ocean, looking towards San Clemente Island and the southern tip of Catalina, and was one of the most spectacular we've seen!

Renter's Paradise?

2010-01-13T17:21:00.000-08:00

The latest vacancy rates, 8% nationwide, reflect that the U.S. is a renter’s market. Rental vacancy rates are at a 30 year high, primarily due to the economy, but also due to competition from a wave of new supply that hit the market last year. The oversupply came from a lot of condo projects gone bad, that had to be converted into rental property.

If you are renting, now might be a good time to renegotiate your lease. Many landlords are offering enticements to tenants to renew.

Orange County is number seven on the list of biggest rent declines in the country, behind San Jose, Seattle, San Francisco, Las Vegas, New York and LA. Our decline in rental rates is just under 5%.

Thanks to falling home prices, and record low mortgage rates, it now costs less in most markets to own than over the last decade, on a mortgage-payment-to-rent-payment basis. Of course, this doesn’t take into account the down payment required for ownership.

Remember-- the Homebuyer Tax Credit currently expires in June of 2010, and must be under purchase contract by April 30th to qualify. I understand the State is considering a renewal of a statewide tax credit that may pick up the slack, at least here in California. That is, if they don’t run out of money like they did last time!

Greenhouse Design

2010-01-06T12:18:00.000-08:00

My son Kenny has designed a greenhouse for his college, Marlboro, located in Vermont.

He plans to start building in the spring--once the snow thaws and the building permits are approved by the local jurisdiction.

When it is complete, the college will be able to grow produce for their cafeteria year round, instead of just during the spring-summer-fall season.

Here is a link to his design on YouTube, or you can find it yourself on YouTube by searching for Marlboro Greenhouse.

greenhouse

Foothill High Recognized in National Rankings

2010-01-06T08:34:00.000-08:00

US News & World Report released their national high school rankings in December, and Foothill High School, the Alma Mater of my three children, received Silver honors. Only 100 schools nationwide received Gold honors, and 461 received Silver honors.

Foothill was joined by Beckman High in the Tustin School District, and was honored among a total of 24 high schools in Orange County.

To check out the entire list, go to http://www.usnews.com/sections/education/high-schools.

There were 1750 schools recognized nationwide in all categories--Gold, Silver, Bronze and Honorable Mention.

Way to go, TUSD!

Property Sales Gaining Momentum

2009-12-30T17:19:00.000-08:00

According to Steve Thomas of Altera Real Estate, inventories have decreased over the past year in the OC. Average time to sell is just under three months vs. almost six months’ marketing time for properties one year ago.

However, there is currently a much longer market time for homes listed at over $1,000,000 vs. those under the $1 million mark. I might guess this is due to fewer financing options available in the marketplace today for traditional jumbo loans over the $729,500 high-balance conforming loan limit in Los Angeles and Orange Counties.

Distressed properties are just over 1/3 of total listings, with 43% under $1 million listed as short sales or bank sales (foreclosures), while only 7% of higher priced listings are distressed sales.

In other news, prices overall are nearly flat over last month…except in Las Vegas where they have seen prices falling for 38 consecutive months and a peak to bottom drop of over 55%. WOW.

Home Values...Up or Down?

2009-12-16T16:12:00.000-08:00

MDA DataQuick reported this week that Orange County median home prices jumped 8.1% in November. The median price was $432,250. However, the data indicates that pricier homes are selling more quickly than earlier this year which may be skewing the data. Many believe the tax credit is helping to fuel volume.

The $432,000 figure is still 33% lower than the June 2007 market peak.

Foreclosures and short sales are still huge factors. We had over 1800 new foreclosure notices files last month county-wide.

Nationwide, home prices declined by 9.8% in September 09 vs. September 08. Top-ranked states for depreciation are Nevada, Arizona, Florida, Michigan and Idaho.

Supporting the data reported earlier by the Real Estate Research Council appraisers, First American CoreLogic reports that the Los Angeles-Long Beach statistical area showed a 13.37% decrease in average values over the last twelve months ending September 09. On the brighter side, it is projected to increase by 7.92% in the next twelve months.

OC Home Prices off 15% According to Appraisers

2009-12-07T16:51:00.000-08:00

According to the Real Estate Research Council of Southern California, values have been falling in the OC for a full three years.

Orange County home prices are down 15% from one year ago, an increase over the 14% loss reported from the prior twelve-month period. North OC losses are greatest at 20.9%, Central OC is at 17.7%, and South County and Beach communities are down only 9% over the prior year. The calculations are based on the year ending in October.

This report is in direct opposition to the California Association of Realtors report that single-family values were flat for the year ended October 2009.

Who to believe?

5 Year Arms at 3.75%

2009-12-03T09:27:00.000-08:00

Yesterday I checked rates and programs for a few clients interested in Five-year fixed rate loans. They only make sense if you don't plan to stay permanently in your current home (or new one). These loans are available in amortizing and interest-only loans, and depending on loan size, come are for minimum ten-year interest ony periods, although the rate is only fixed for the first five.

WOW! A rate under 4% for five years is something to talk about!

Thanksgiving in Cabo Pulmo, Mexico!

2009-12-01T19:23:00.000-08:00

We ventured to the eastern tip of Baja California (Sea of Cortez) for a quiet getaway the week before Thanksgiving. We planned to scuba dive and just relax -- and that is exactly what we got! Warm, sunny weather, (80-ish days, 70-ish nights) with a bit of breeze toward the end of the week, and lots of quiet was just what the doctor ordered. The only music we heard—except for restaurant radios—was from our battery -operated IHome Ipod player! We pretty much lived in our swimsuits.

We had been warned we could run into trouble finding our way after dark, and to watch for cows on the road. We arrived without mishap around 9:00 p.m. to be greeted by an entirely dark village. Everything rolls up around that time. This was a Friday night! Directions to our home were left in an envelope at the door to the office. No keys allowed here! We literally locked up nothing all week!

Cabo Pulmo is about an hour and a half drive from the airport at San Jose Del Cabo, but seems worlds away from the activity center of Cabo San Lucas. Pulmo is located on the East Cape facing the Sea of Cortez. The last 6 miles of the trek are on a dirt road. You can take a dirt road the entire way from San Jose along the coast, but it takes much longer and isn’t wise in the dark.

Cabo Pulmo offers the only coral reef located in the Sea of Cortez. Jacques Cousteau called this the aquarium of the world, and for good reason! We dove three days, two-tanks each. We saw more fish, in sheer numbers, than anywhere else we’ve been diving. Although we missed out on seeing whale sharks, we saw huge fish balls and schools of jacks, that went on and on, forever. We saw sea turtles, and dozens of different kinds of local tropical fish. This is a fabulous place to dive and fish. They primarily use panga boats for fishing, and for diving as well. Back entry into the water only!

Steve spent much of his time painting his favorite fish, while I read a couple of books lazing in the sun. We generally just relaxed. Other than our diving, we snorkeled daily at the reef right off the beach, took a hike in the local hills, and drove up the coast to Los Barriles one afternoon.

This is not a destination for those seeking a lot of day- or night-time “action” although we had great dinners out every evening at one of the four different restaurants available. We ate a ton of fresh fish…either grilled, pan fried in oil and garlic, or in tacos. We met some interesting ex-pats who live in the area full-time, and chatted up the new divemaster over a couple of meals (and margaritas, beer and wine of course).

Be sure to shop in San Jose before you get on the road, as supplies are virtually non-existent in Cabo Pulmo (except for restaurants) and groceries are limited in La Riberia-- which is the closest “city.” On the plus side, there are no vendors on the beach, so you can have the beach essentially to yourself! We stayed in a “casita” in the village which was a large one-room home with full kitchen, bathroom, and best of all, a private outdoor shower. We had two patios, one at ground level and one at roof top level with a view of the hills and peek-a-boo water view. Our patio home was entirely private, surrounded by a hedge. We were a one to two minute walk to the beach, down a path. There are a few beachfront rentals in the village, although there are other rentals in the general vicinity that are completely isolated both on and off the shore.

I’d love to return with a group and rent a compound, or larger private home, of which there are a few in the immediate area. Viva la Mexico!

Rates Repeat Record Lows of 2009

2009-11-30T16:03:00.000-08:00

Interest rates finished the day at their lows of the year...at least equal to the lows of January and March. A 30 year fixed rate loan under $417,000 can be had at 4.375%-- depending of course on credit scores, loan-to-value and debt-to-income ratios.

If you have been sitting on the fence, now is the time to act! Expect delays in processing time due to high volume just as we saw earlier this year.

October Housing Market Stats

2009-11-18T09:40:00.000-08:00

The numbers have just been released, and they indicate rising home prices and fairly stable volume. This is primarily attributed to continued low interest rates and prices, coupled with the federal tax credit.

The median closed sale price in Orange County last month was $436,500, which is up 3.9% over October 2008.

Sales of existing homes were basically flat, but foreclosures and defaults are rising. Entry level homes are the big news—60% of sales are in the price range under $400,000 and 10% are under $500,000. Anything in the high end, over $800,000, is taking much longer to sell and represents less than 4% of total sales.

Average down payments are just under 20% meaning most successful buyers are utilizing conventional financing. Any time a bank seller is involved, whether for bank-owned or a short sale situation, they tend to avoid FHA financing like the plague.

Short sales are picking up steam and getting easier as banks are avoiding foreclosure and are more amenable to work with the property owner.

Beautiful Buena Ventura

2009-11-18T09:23:00.000-08:00

I visited downtown Ventura last weekend. Much to my surprise, it was a happening place! I was amazed at the number and variety of restaurants, clubs, and activities.

Although we were in Ventura earlier this year in March, on that trip we drove directly to the Harbor on a Friday evening. We had dinner at a restaurant, and slept on our dive boat in preparation for an early morning departure for scuba diving the Channel Islands. Our favorite Santa Barbara seafood restaurant, Brophy Bros, has a restaurant located there. The Harbor offers a great selection of other fun eateries and bars.

That Saturday we dove around Anacapa Island (the closest to Ventura) at three different locations. The most exciting was on the west side of the island, where we swam with a large group of sea lions, who followed us around and played with us.

During our visit last weekend—primarily for a high school football game—we stayed at a motel walking distance to the beach and historic pier, and a block to the downtown area.

After an early dinner on the pier to watch a spectacular sunset, we headed out to the game. Our first stop back in town, around 10:00 p.m., was the Bombay Bar & Grill which we had been advised was a dancing “hotspot.” Expecting to see a crowd of 20- and 30-somethings, we were greeted by a large group of all ages, dancing to a live band playing current top 40’s. No cover charge to enter! There was plenty of room at the bar, which was nice, and the bartender kindly held my purse while dancing. In the back of the restaurant, the club scene with a DJ was just getting started. Definitely a younger set there—and the action starts later.

Next we headed out on California towards Main Street, and crossed to another restaurant where we heard live music playing. On Main Street itself, we were greeted by more music on all sides. It felt like a battle of the bands. We heard everything from Jazz and Reggae to Rock and Hip Hop. I can’t wait to go back and explore some more!

More Details on the Tax Credit for Home Buyers

2009-11-16T12:53:00.000-08:00

The tax credit extension for first-time homebuyers includes some new twists and turns:

1. Buyers must have a binding contract in place by April 30th, and the purchase must close by June 30, 2010.

2. The credit has been expanded to include a $6500 credit for existing homeowners. They must have owned a home in the last three years, and have lived in the same primary residence for five consecutive years during the past eight-year period.

3. Income limits have increased – up to $145,000 for individuals and up to $245,000 for joint filers. The amount of the tax credit decreases as the income increases.

Don’t procrastinate if you think you may be eligible for a full or partial credit and want to take advantage of this program. It can take you more than one or two offers in the current climate before an offer is accepted, and oftentimes bank sellers move more slowly to process offers than a typical owner-occupant. Most of my buyer-clients this year had to make multiple offers before one was accepted. Also, they seemed to have better luck with individuals or rehab companies than with the banks.

Remember, home prices over $800,000 don’t qualify. And, tax credit qualifiers must be at least age 18.

RATE UPDATE:
Rates have improved the last few days – but beware, as we are trading near the bond price highs of the year. They can deteriorate rapidly which could result in a rapid increase in rates. If you want to refinance take advantage of the rates ASAP!

Tax Credits and Rate Outlook

2009-11-10T16:25:00.000-08:00

The big news last week in the Mortgage Biz was the extension of the tax credit for first time homebuyers. This credit is actually worth, dollar-for-dollar, any taxes paid or due for this year or next, up to a maximum of $8000. The amount of the credit depends on a number of factors including purchase price, gross income, etc. * This means you have to have paid taxes, or owe them, to collect the credit.

The bigger news is that the credit was actually amended to include “move-up” buyers who owned a home in the last five years.
There is quite a bit of fine print to the guidelines-- including a maximum home price of $800,000.

Please call me with questions and if I don’t know the answers, I will find out.

My daughter Katie qualified for the credit this year after her purchase of a condo in Ann Arbor. The whole process went very smoothly post-closing and she received her refund check in a few weeks.

On other fronts, interest rates continue to exhibit volatility, but are still very attractive.
Mortgage backed securities are currently trading just below their earlier highs of the year. This translates to rates that are near bottom, and long-term these will begin to rise as our economy levels out and improves. As soon as the hint of inflation is on the horizon we will see movement towards increasing yields. Translation: higher rates.

The Federal loan programs to refinance loans owned by Fannie and Freddie continue. If your loan is currently owned by one of these entities, and you do not currently pay mortgage insurance, you will not have to pay for MI, even if your current loan balance is equal to 125% of current value. Rates are comparable to current market rates, with good credit scores. The big catch is, who owns your loan? You can check this out yourself on these websites:

http://loanlookup.fanniemae.com/loanlookup/
https://ww3.freddiemac.com/corporate/index.html