San Diego Home Prices Doing Better than Other Cities

San Diego County home prices have fallen less than than all but two other metropolitan areas over the past year, according to the closely watched Standard & Poor’s Case-Shiller Home Price Index for October that was released Tuesday.

That’s an improvement from fifth or sixth place in the last few months.

San Diego prices were down 2.4 percent from a year earlier, with only Denver and Dallas down less, 0.1 percent and 0.6 percent respectively. San Diego home prices rose 0.4 percent from September to October, behind Phoenix’s 1.3 percent and San Francisco’s 1.2 percent boost.
The national index for 20 metro areas stood at 146.58, unchanged from September and down 7.3 percent from October 2008. The index, set at 100 in January 2000 for all areas, is based on paired-sales data of single-family resale homes.

Index Chairman David Blitzer took note of San Diego’s improvement, noting it had seen six consecutive months of improvement, compared with San Francisco’s seven and five each for Los Angeles and Phoenix.

Renting to Students is Good Business

Off-campus student rental housing is surviving the recession nicely, say landlords who rent apartments and rooms to students near campuses all over the country.

"I wouldn't say it's recession-proof, but it's recession-resistant," says Jim Arbury, an executive with the National Multi-Housing Council, a Washington, D.C.-based trade group for the apartment industry. "It's still one of the bright spots in the housing market."

For instance, Brad Hastings, whose company Walk2Campus rents 400 units in South Carolina, has about a 94 percent occupancy rate.Hastings says it’s not a business for everyone because it’s management-intensive. "You have a customer base who, possibly for the first time, are living out on their own. There's a certain amount of hand-holding, teaching of life lessons.”

Source: Inman News, Mary Umberger (12/30/2009)

Loan Modifications Can Hurt Your Credit

According to a recent report. applying for a mortgage modification and being in a months-long trial period can devastate a home owner’s credit score.

Under the government plan, troubled borrowers can have their mortgage payments reduced to 31 percent of their pre-tax income. They are first put in a trial modification for several months to test whether they can meet the requirements of the new mortgage.

Borrowers who were previously current on their mortgages will see their FICO scores fall about 100 points while they are in the trial period, according to the Treasury Department. Borrowers who were previously late or missed payments will see their scores fall more, the government says.

The longer a borrower is in the trial period, the greater the impact on their credit scores, Once the modification is approved, the borrowers’ mortgage credit status will be listed as current and that should improve their scores, the Mortgage Bankers Association explains.Even so, the delinquency remains on credit reports for up to seven years and can make getting credit for something else like a car difficult and expensive, borrowers report.

Source: CNNMoney.com, Tami Luhby (12/28/2009)

Interest Rates to Go up to 6%?

Interest rates are likely to rise to 6 percent by the end of 2010, predicted Amy Crews Cutts, deputy chief economist at Freddie Mac.

The end of the Federal Reserve program that buys mortgage-backed securities will drive rates higher because private buyers will demand more return than the Fed.

"Extraordinary resources have been put into keeping the rates down and supporting the mortgage markets and it's hard to imagine that the rates can go much lower than they are," Crews Cutts said. "Anything we get at or below 5 percent is a gift at this point."

Source: Washington Post, Dina ElBoghdady (12/26/2009)

Luxury Home Owners Use Short Sales as Exit Strategy

Homeowners with mortgages of more than $1 million are defaulting at almost twice the U.S. rate and some are turning to so-called short sales to unload properties as stock-market losses and pay cuts squeeze wealthy borrowers.

“The rich aren’t as rich as they used to be,” said Alex Rodriguez, a Miami real estate agent with JM Group USA Inc., whose listings include a $2.9 million property marketed as a short sale because the price is less than the mortgage, leaving the bank with a loss. “People have reached the point where they can’t afford the carrying expenses of a $2 million home.”

Payments on about 12 percent of mortgages exceeding $1 million were 90 days or more overdue in September, compared with 6.3 percent on loans less than $250,000 and 7.4 percent on all U.S. mortgages, according to data from First American CoreLogic Inc., a Santa Ana, California-based research firm. The rate for mortgages above $1 million was 4.7 percent a year earlier.

Click here for more.

California Median Home Prices Up 5.8%

Home sales in California increased 4.7 percent in November compared with the same period a year ago, while the median price of an existing home rose 5.8 percent, according to a report released yesterday by C.A.R.

The median price of an existing, single-family detached home in California during November 2009 was $304,520, a 5.8 percent increase from the revised $287,880 median for November 2008, C.A.R. reported. The November 2009 median price rose 2.4 percent compared with October’s $297,500 median price.

The median home price in California has risen nine consecutive months in month-to-month comparisons, but November marked the first time California’s median home price has risen in year-to-year comparisons since August 2007.

Top 10 Projects that Will Add Value to Your Home

Realtor.com just listed 10 big impact, low cost remodeling projects that will bring value to your home. Check them out!

1. Tidy up kitchen cabinets.
"Potential buyers do open kitchen cabinets and look inside," says Morrissey. "Home owners can add rollout organizing trays so when buyers peek in, they feel like there’s lots of room for their stuff."

2. Add or replace tile.
"By retiling very inexpensively, you make a room look way cleaner that it was," says Javier Zuluaga, owner of Home Repairs and Remodeling LLC in Tempe, Ariz. "Every city has stores that offer $1 to $2 tile, so home owners have to pay only for the low-cost tile and labor to replace a dated backsplash or add a new one. We also use inexpensive tile to upgrade bathrooms."

3. Add a breakfast bar.
When a wall separates a kitchen from a family room, suggest cutting out an opening to create a breakfast bar. "In one home, there was a cutout in the wall between the kitchen and living room," explains Matthew Quinn, a sales associate at Quinn’s Realty & Estate Services in Falls Church, Va., who handles estate and real estate sales for family members whose loved ones have passed away. "We left the structure of the cutout, added an oversized granite breakfast bar, and put chairs in front of it. That cost about $600."

4. Install granite tile instead of a slab.
"Everybody is hot for granite kitchen countertops, but that can be a $5,000 upgrade," says John Wilder, a general contractor and owner of Fence and Deck Doctor in New Castle, Ind. "Instead, home owners can put in 12-inch granite tiles for about $300 in materials and get very high impact for little money."

5. Freshen up a bathroom without retiling.
"With a dated bathroom, I recommend putting in a new medicine cabinet for $100 to $150, light fixtures for about $100, a faucet for $50 to $75, and a vanity for $200 to $300," says Wilder. "And instead of replacing the tile, the existing grout can be lightly scraped and regrouted, which leaves a haze that can be buffed out and will make the tile look brand new. Also install glass shower doors. A French door adds a lot of panache and elegance for $250, and people will notice the door, not the tile. With all that, you’ve done a bathroom remodel for $1,000 to $2,000."

6. Freshen up the basement.
"If home owners have cement block or poured concrete walls in the basement, suggest they have a contractor fill in cracks with hydraulic cement and then paint with waterproofing paint," recommends Wilder. "They can then add a top coat to add color. They can also paint the basement floor with a good floor paint, which spiffs it up. The basement may not be finished, but it’s no longer a damp dungeon."

7. Add a room.
Look for large spaces that can be enclosed to create a new bedroom for just the price of creating a wall. "One time, we closed off a half-wall to an office and added a door to the other side of the room, thus creating another bedroom," says Quinn. "That $400 procedure, which took a contractor one day, netted about $40,000 in the sales price." Zuluaga has also added bedrooms inexpensively. "In a two-bedroom house, there was an archway that led to a third room that was used as a den," he explains. "It had a dry bar where there would have been a closet, so we took out the dry bar and created a closet so the owners had a third bedroom."

8. Spruce up cabinet fronts.
Suggest home owners update tired-looking kitchen cabinets. Reconditioning is the least expensive move for under $1,000. "If the wood is starting to look shabby from use or contaminants in the air, we take out the nicks and scratches, recondition it with oil, and put new hardware on," explains Heidi Morrissey, vice president of marketing and sales at Kitchen Tune-Up in Aberdeen, S.D. For $1,500 to $4,000, owners can replace the cabinet doors and drawer fronts, and for $4,000 to $12,000, they can have all the cabinets refaced. "With refacing, owners can change the color of the cabinets by replacing the door and having a new skin put on the boxes," says Morrissey. "If they have oak cabinets today, they can have cherry the next day."

9. Replace light fixtures.
"In a foyer and in bathrooms and kitchens," says Wilder, "replacing overhead light fixtures provides a lot of pop for a little money." If the kitchen has track lighting, Zuluaga suggests the home owner spend $450 to $600 to have an electrician replace it with recessed canned lights on a dimmer switch to add ambience. For about $700, Zuluaga also suggests installing pendant lights over a kitchen island or peninsula.

10. Tech-up the garage.
"Sometimes we replace the garage door opener with a remote touchpad entry system," says Zuluaga. "That costs about $425 and makes it look like a high-end system."

Source: Realtor.com

More Luxury Shortsales/foreclosures on Horizon for San Diego

Owners of properties with mortgages greater than $1 million are feeling pain the same as—if not worse than—less well-heeled owners.

More than 12 percent of mortgages exceeding $1 million were 90 days or more past due in September, compared to 6.3 percent of loans less than $250,000 and 7.4 percent of all U.S. mortgages, according to research firm First American CoreLogicThe reason for the shortfalls seems apparent.

The number of U.S. households with a net worth of more than $1 million, not counting their primary residences, fell to a five-year low of 6.7 million last year from 9.2 million in 2007, according to consulting firm Spectrum Group.

While holders of ordinary mortgages can hope for government help, there is no such thing for holders of big mortgages and it’s also difficult to find a re-fi. “There is no refinance market for you if you are underwater and outside the Fannie and Freddie framework,” says Keith Gumbinger, vice president at mortgage data firm HSH Associate. The answer for some is a short sale. While there are no official statistics, practitioners like Adrian Heyman, owner of Property

Advisors in Scottsdale, Ariz., is seeing increasing numbers of luxury short sales. “A lot of wealthy people are upside down in their mortgages and they just can’t afford the second or third vacation home anymore,” Heyman says.

Source: Bloomberg, Kathleen M. Howley and Dan Levy (12/17/2009)

What you Need to Know about Obama's New Short Sale Plan

Obama’s standardized short-sale plan could help troubled homeownersThe U.S. Dept. of the Treasury recently announced the Home Affordable Foreclosure Alternatives Program (HAFA), which provides instructions for lenders and servicers participating in the Making Home Affordable Program and Home Affordable Modification Program (HAMP). The purpose of HAFA is to create an alternative to foreclosures for homeowners unable to successfully modify their troubled mortgage under HAMP, and to streamline the short-sale process.

In a nutshell:
-A short sale is when the lender agrees to accept less than the amount owed on the mortgage instead of foreclosing. Many homeowners and REALTORS® have expressed their frustrations in the short-sale process, criticizing lenders for the amount of time it takes to process and approve a short sale. The CALIFORNIA ASSOCIATION OF REALTORS® listened to members’ concerns, worked with other industry groups, and responded by helping to create provisions to streamline the short-sale process.
-The HAFA program simplifies and encourages short sales and deeds in lieu of foreclosure. It will permit pre-approved short sale terms before a property is listed; release borrowers from future liability for the debt; provide financial incentives to borrowers, servicers, and investors; and prevent servicers from attempting to reduce real estate commissions established in the listing agreement as a condition for short sale approval.
-Under terms of the program, the borrower and/or listing broker have three business days to submit an executed purchase offer and related documents to the servicer on a short sale, and the servicer has 10 business days to respond to an executed purchase offer.
-The servicer also will determine the minimum net proceeds for a short sale. If an offer presented to the servicer by the borrower or listing broker meets the net proceeds requirement, then the servicer must accept it.

The program currently is available only for non-Fannie Mae- or Freddie Mac-owned loans up to $729,750 and is scheduled to take effect April 5, 2010. However, C.A.R. expects that many lenders will choose to implement it before the deadline.

Click here for the full story.

Pending Home Sales Up for Nine Consecutive Months

Pending home sales have risen for nine months in a row, a first for the series of the index since its inception in 2001, according to the latest survey.

The Pending Home Sales Index increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.

Lawrence Yun, NAR chief economist, said home sales are experiencing a pendulum swing.

“Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the home buyer tax credit stimulus,” he said. “This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future."

15 Year Loans Increase in Popularity

Home buyers and home owners who are refinancing are increasingly enthusiastic about 15-year, fixed-rate mortgages.

Originations of 15-year mortgages at Wells Fargo & Co. are up 55 percent through November compared to a year ago. At J.P. Morgan Chase & Co., 20 percent of refinances are 15-year loans, up 10 percent in 2008.

One reason is that rates on 15-year fixed-rate conforming mortgages averaged 4.46 percent in early December, according to HSH Associates in Pompton Plains, N.J.Source:

The Wall Street Journal, Ruth Simon (12/09/2009)

A Picture's worth a thousand words!

House Flipping Makes a Comeback? The Wall Street Journal Says it Is.

Don't try this at home. Flipping houses is a risky business!

But, according to an article from the Wall Street Journal, an increasing number of investors are bringing cold, hard cash to foreclosure auctions and scoring homes at bargain-basement prices. Then, they are reselling them for a profit!

Click here to read more of the article.

Thinking of Collecting on Your Tax Credit? Read this first.

Reporting from Washington - If you're thinking about applying for the new $6,500 home buyer federal tax credit or the extended $8,000 version, the Internal Revenue Service has just issued its first formal guidelines for you.

Tops on the agency's list of advice: Cool it for a couple of weeks. Even if you qualify for one of the credits, don't send in any requests to the IRS quite yet. Wait until later this month when the agency publishes its revised Form 5405 with the key instructions needed to get you a check from the government.

The forthcoming version of the form will incorporate the major changes to the tax credit program made by Congress in legislation signed by President Obama on Nov. 6. These include expanded income limits, a cap on home prices, additional documentation requirements and prohibitions against claims by dependents.In a tax bulletin issued just before Thanksgiving, the IRS emphasized that all home purchasers after Nov. 6 "must use this new version [of Form 5405] to claim the credit."

Put another way: If you send in the old version -- the one you can currently download from the agency's website, www.irs.gov -- your request for the credit will probably go nowhere.

Click here for more.

How Mortgage Defaults Will Actually Help the Economy

The increasing willingness to abandon home ownership in favor of renting could, in a counterintuitive way, be an important step in the economic recovery, some analysts say.

The U.S. home ownership rate has declined to 67.6 percent as of September, down from its peak of 69.2 percent in 2004. Much of the reason for this decline is the number of foreclosures.

Deutsche Bank Securities expects 21 million U.S. households to be underwater by the end of 2010. If 20 percent of these homeowners default, loses to banks and investors could exceed $400 billion.

While these losses are definitely bad for banks, relief from paying a mortgage makes more money available—an estimated $5 billion a month—for consumers to purchase other things.

"It's a stealth stimulus," says Christopher Thornberg of Beacon Economics, a consulting firm specializing in real estate. "The quicker these people shed their debts, the faster the economy is going to heal and move forward again."

Source: The Wall Street Journal, Mark Whitehouse (12/10/2009)

FHA Helps Condo Buyers

New Federal Housing Administration condo-loan guidelines that took effect Dec. 8 could make it much easier for condo buyers to get a loan.

Under previous guidelines, half the units in a new condo development had to be sold before the FHA would underwrite a mortgage in the complex. New guidelines cut the requirement to 30 percent and raise the ceiling on FHA loans in a development to 50 percent from 30 percent.

Source: Investor’s Business Daily, Marilyn Alva (12/10/2009)

Where's the Refund?

First-time home buyers who bought as long ago as last winter are still waiting for their $8,000 tax refund.As of mid-September, more than 1.4 million taxpayers had requested the credit by amending their federal tax returns.

The IRS announced in October that it expects 5.1 million claims by year-end. That count doesn’t reflect the extension and expansion of the credit in November.

IRS spokeswoman Carrie Resch says the agency is experiencing a higher-than normal number of amended returns and because amended returns are reviewed by hand, the process is delayed.U.S. Sen. Amy Klobuchar (D-Minn.) has been fielding constituent calls for weeks from irate home buyers.

She sent a letter to the IRS that said in part: "The full and immediate economic impact of the tax credit is lost when it takes up to four months for people to get the money due to them ... such lengthy delays are unacceptable and erode the public's trust in the competence of the government.”

Source: Minneapolis-St. Paul Star Tribune, Kara McGuire (12/10/2009)

Coronado Best Buys List for Dec 12, 2009

Greetings!
If you’ve been waiting for prices to drop in Coronado…we’ve got news. They’ve dropped! Savvy buyers are scoring great deals this holiday season—taking advantage of anxious sellers who want to have a deal locked in before the end of the year.

20 properties are currently in escrow in Coronado right now. 7 of them are have made our Best Buy List.

15 homes also closed escrow the last month—6 of them were Best Buys. The average sales price was $1,211,110.Here are is our complete BEST BUY LIST. Don’t let these great deals pass you buy…sign up for our ASAP property emails, and you’ll find out the second something comes on the market—just as soon (if not sooner) then other agents!

BEST BUY LIST FOR DECEMBER 11, 2009
$455,000--730 E, condo, 2/2. SHORT SALE! Charming upgraded condo. Sweet deal on the island!579,000—1830 Avenida Del Mundo, #1714, condo, 1/1. Fantastic deal on the least expensive 1 bedroom at the Coronado Shores! Great views of Glorietta Bay all the way to Mexico.

$615,000—418 E Avenue, condo, 2/2. A beautifully maintained, move-in ready, 2 bedroom, 2 bathroom condominium in the Village of Coronado. Open and bright with an extra special roof-top deck boasting views of Point Loma and city lights. Unit offers central air conditioning, a fireplace, and an attached 2-car tandem garage.

PRICE DROP--$759,800—23 Delaport, house, 3/3. FORECLOSURE! Don't miss this terrific opportunity to own a Coronado Cays, BANK-OWNED, detached town home in 'Mardi Gras' at a below market price! Just fell out of escrow, will go fast, don’t hesitate! Most recently listed pre-foreclosure at $999,999! Great end-unit locale with terrific ocean views across the highway from the second level, updated kitchen with travertine floors, a warming living room fireplace and an expansive master suite with bay nook and private terrace taking in the ocean views-this is just the start! More than 1800 square feet.

$785,000--801 G Ave, #A, condo, 2/2. Very private townhouse seems like a SFR. Corner unit on Corner Lot give open views in two directions. Two car attached garage, cozy fireplace in Living room. Can be purchased furnished. Hardwood floors through out, laundy in attached garage. Has central Air. Seller may carry 1st TD.

$797,000—14 Antigua Court, Condo, 2/2. The Coronado Cays welcome you to the prestigious Antigua Community! This upper view unit provides the most desirable eastern views with a large patio over the Bay (great for entertaining) along with your personal boat slip! Relax in the inviting cozy living room with fireplace. The kitchen opens to the dining area facing the water view. Mirrored wall provides beautiful bay reflections & lots of light. Private master suite with large full bath and generous closet space.

$798,000-$898,000--1405 First Street, condo, 3/3. SHORT SALE! Bay views and highly desirable location just steps away from world famous Coronado shops, restaurants, fishing pier and more. Incredible value for this highly upgraded town home including granite kitchen, Brazilian hardwood floors throughout, marble bath rooms, community pool and more. Please see supplement and property website for more about this amazing value.

$899,000—247 D Ave, house, 3/ 4. Highly Upgraded Unit Built by Owner for Owner. Custom Entertainment Built-in and Additional Built-ins at Fireplace. Hardwood Floors in All Rooms. No Carpet. Beautiful Decorator Tiles in Kitchen and Bathrooms. Much Thought put into Window Placement to Maximize the City Views. No Other Two-Stories on Either Side. Lots of Light. Gorgeous City Views from Rooftop Deck.

$920,000—257 Alameda, house, 2/3. SHORT SALE! Almost 2,000 square feet. Rare opportunity to buy a short sale in Coronado.

$998,000—425 E house, 3/3. SHORT SALE! 2,000 square feet of home. Beautiful Spanish-style. Buyer lost patience for short sale—great chance for new buyer to jump in an take advantage of great price!

$1,085,00—452 C Avenue, house, 2/2. Charming Spanish Bungalow in beautiful village neighborhood. Immaculate 1,344esf floor plan seated on 5,227esf lot. Two bedrooms, one bath, front and back porches, oversized double garage. Fireplace in living room. Multiple windows allow entry of natural light. Coved ceilings, oak plank floors, granite kitchen counters and ceiling fans. Additional studio retreat with full bath. Prime location.

$1,150,000--611 Fifth Avenue, house, 3/3. Step back into simpler days in this adorably and well appointed quaint Coronado Cottage by the sea. Nestled comfortably on a reverse corner 50'x70' lot leaves you with great options for improvement. Currently setup as a 3 bedroom, 1.5 bathroom 'beach house' but could easily be improved upon. Current owners remodeled property including appliances, bathrooms, paint, beautifully finished hardwood flooring and more. Enjoy a short bicycle ride to our Top 10 rated Coronado Beach! Coronado Living....begins here!

$1,450,000—468 B Ave, house, 4/3. PRICE DROP! Great open floorplan with 10ft. ceilings, lots of natural light and hardwood floors. Custom kitchen opens to large family room with french doors to the cute backyard. Terrific family home. Close to Spreckels Park and the heart of the village.

$1,575,000—420 J, house, 3/3. PRICE DROP! Gorgeous Like New..."Tommy Bahama Style" Interior... Nothing 'ordinary' here! Warm & wonderful home, w/ 3 spacious bedrooms including a beautiful master suite. Plenty of closet space & storage. Warm granites & designer features. Kitchen w/breakfast bar & built in nook. Sound system, Backyard w/fountains, BBQ area + 2 car garage w/ storage & epoxy floors.

We update this list every two weeks based on price, location, square footage, and condition of ALL homes currently on the Coronado MLS. To subscribe to the Coronado Best Buys List and get pictures and additional information, please email christinevt@prusd.com with BEST BUYS in the subject line.

Thanks for reading!
Christine Van Tuyl
Prudential California Realty
Leading Edge Award Winner
101 Orange AvenueCoronado, CA 921188
58.405.7264
christinevt@prusd.com
Search properties free on our website:
www.sandiegosurfandsand.com
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Top 5 Reasons to Buy a House During the Holidays

Shop for Christmas presents, decorate the tree, and buy a house? That’s right. You might think its nuts to buy a home during the already jam-packed holiday season, but the holidays are actually a fantastic time to score an incredible deal on a new property.

December is typically a very slow month for sellers and they’re more motivated than ever. So whether you’re looking for a new principal residence, a vacation home or an investment property, the holidays are an amazing time to find a killer deal.

Top 5 Reasons to Buy a House During the Holidays

1. Interest rates are usually lower. Experts say that interest rates typically drop every December through January. Combine cyclical drops with already incredibly low rates, and you’re looking at a phenomenal opportunity.
2. Sellers are more motivated. With high unemployment and holiday expenses looming around the corner, many home sellers are especially motivated to negotiate a lower sales price. In addition, many sellers are anxious to sell before the end of the year because it helps on their taxes.
3. Less competition. While everyone else is shopping, traveling and entertaining, smart buyers can score great deals on the most desirable homes. Bypass bidding wars while everyone else is at the mall!
4. Buyer tax benefits. When you buy a new home before the end of the year, you'll be able to report items such as mortgage interest, points, closing costs, property taxes and more on your tax return.
5. Faster closings. Fewer transactions mean faster closings. Experts say that financial institutions and lenders might be more willing to accept offers on short sales properties and foreclosures

How to Score a Good REO Deal in San Diego

REO and short-sale properties can be money pits when offers take forever to close and vacant properties are trashed. Here are some suggestions for expediting the deals:

-The best short-sale deals are those where the bank has pre-approved the sale price. The property may still take a long time to close, but not as long as it would otherwise.
-Buyers of a short-sale should be prepared for multiple offers. If the short-sale property is an attractive one, the lender will continue to market the property even after signing a sales contract. And if it gets a better offer, it may sell the property without giving the original buyers a chance to negotiate.
-Seek out houses protected by the Cash for Keys program, which gives short-sale and foreclosed owners money to prevent them from trashing the place on the way out.
-Inspections are important. If a home has been vacant, get the property re-inspected prior to closing.
-Buyers shouldn't focus on price alone. Homes that are in poor neighborhoods, have serious maintenance issues, or have terrible floor plans aren’t bargains despite the price.

Source: Inman News, Bernice Ross (11/30/2009)

Trouble on the Horizon for San Diego Buyers: FHA Loan Requirements to Get More Difficult?

Are things going to get more difficult for San Diego buyers using FHA loans?

U.S. Housing and Urban Development Secretary Shaun Donovan on Wednesday asked Congress for authority to raise borrower premiums and down payments in order to bring the Federal Housing Administration’s reserves above the mandated 2 percent minimum.

The agency plans to reduce the maximum permissible seller concessions from 6 percent to 3 percent. The minimum borrower FICO score will be raised above the current 500, although the final number has not yet been determined.

It also will likely increase the down payment to 5 percent, but that number hasn’t been decided either.

Donovan also wants lenders to take responsibility for losses associated with loans not underwritten to FHA standards and to be accountable for origination quality and compliance.Critics said tightening up FHA could slow the housing recovery.

"What would cripple the housing market is the FHA changes its down payment requirement," said Rodney Anderson, a broker with Supreme Lending in Plano, Texas, the top individual originator of FHA loans in the country.

Source: Reuters News, Lucia Mutikani (12/02/2009)

Option ARMS Borrowers Facing Resets

About 93 percent of option-ARM buyers chose to pay a minimum amount less than the interest due, according to a report released last week by Standard & Poors.

That means that nearly all of the 350,000 option-ARM borrowers now owe more than they owed when they first purchased their homes.

Many of these loans were written in 2004 and are close to their five-year reset when the loans convert to a standard amortization. Some more recent loans will reset early if the accumulated interest has pushed the loan-to-value ratio above 110 percent.I

n one example outlined in the S&P report, the payment on a $400,000 mortgage goes from $1,287 to $2,593.The authors of the report say that many ARM borrowers aren’t good candidates for refinancing or modification because their loan-to-value ratios are too high for the government’s Making Home Affordable program.

Also, about 80 percent of option-ARM loans were stated-income loans and borrowers could be held legally liable for deliberate inaccuracies on their original applications.

Source: CNNMoney.com, Les Christie (11/26/2009)

Short Sales to Get Easier? Government Releases New Short Sale Guidelines!

The U.S. Treasury Department announced new guidelines this week designed to make short sales go more smoothly.

To qualify under these new guidelines:
-The property must be the home owner’s principal residence.
-The home owner must be delinquent on the mortgage or close to defaulting.
-The loan must have been made before Jan. 1, 2009, and be for less than $729,750.
-The borrowers’ total monthly mortgage payment must exceed 31 percent of their before-tax income.

Under the plan, borrowers will receive $1,500 from the government for selling homes for less than the amount of their mortgages. Mortgage-servicing companies will get $1,000 for each completed short sale. Second-mortgage holders can receive up to $3,000 of the sales proceeds in exchange for releasing their liens. Investors who hold the first mortgage can collect up to $1,000 from the government for allowing the payments.Borrowers who complete a short sale under the program must be "fully released" from future liability for the debt, according to the guidelines.

Source: Associated Press, J.W. Elphinstone (11/01/2009) and The Wall Street Journal, Ruth Simon (11/01/2009)