primohomesearch

Exterior Remodeling Proves Best Bang for Your Buck

2010-08-11T20:35:00.000-07:00

Despite a slow market and a slight decrease in the resale value of most remodeling projects, Realtors® report that the smartest home improvement investments may also be some of the least expensive. Results from the 2009 Remodeling Cost vs. Value Report show that small-scale exterior projects are the most profitable at resale, according to estimates by Realtors who completed a recent survey.
On a national level, eight out of the top 10 projects in terms of costs recouped were exterior replacement projects that cost less than $14,000. Certain types of door and siding replacements, as well as wood deck additions all returned more than 80 percent of project costs upon resale. A steel entry door replacement – a new addition to this year’s list – recouped 128.9 percent of costs, followed by upscale fiber-cement siding replacements at 83.6 percent. Wood deck additions recouped 80.6 percent of costs.
"Once again, this year’s Remodeling Cost vs. Value Report highlights the importance of a home’s first impression," said NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Ariz. "With exterior projects returning a high percent of project costs upon resale, Realtors can help give your home curb appeal while adding value to the real estate transaction."
The 2009 Remodeling Cost vs. Value Report compares construction costs with resale values for 33 midrange and upscale remodeling projects comprising additions, remodels and replacements in 80 markets across the country. Data are grouped in nine U.S. regions, following the divisions established by the U.S. Census Bureau. This is the 12th consecutive year that the report, which is produced by Hanley Wood, LLC, was completed in cooperation with REALTOR® Magazine, as Realtors® provided their insight into local markets and buyer home preferences within those markets.
On a national level, the project with the biggest improvement from 2008 was the attic bedroom addition, recouping 83.1 percent of remodeling costs compared to 73.8 percent in 2008. The only other interior project that landed in the top 10 was a minor kitchen remodel with 78.3 percent costs recouped.
Other exterior projects in the top 10 include midrange vinyl and upscale foam-backed vinyl siding replacements, which returned more than 79 percent of costs. In addition, several types of window replacements – midrange wood, midrange vinyl, and upscale vinyl – all returned more than 76 percent of costs upon sale.
Similar to last year’s report, the least profitable remodeling projects in terms of resale value were home office remodels and sunroom additions, returning only 48.1 percent and 50.7 percent of project costs.

Written by Realty Times Staff

Love The House, Hate The Traffic Noise -- There Is Hope!

2010-08-09T22:00:00.000-07:00

Depending on the location, whether you're shopping for a new home or trying to sell your current residence, one of the biggest challenges is trying to reduce street noise.
Tony Sola, founder of Acoustics.com cautions homeowners and buyers about too high expectations when it comes to reducing traffic noise.
"Too many times I have seen homeowners try to do something about the noise by adding another layer of drywall, or something to the wall itself. It's not minimal return, it's zero return. Unless you control the weak point, that does nothing," says Sola.
Sola says there are some cases where the wall might be the weak point but he says usually that's just one percent of the time. Generally the windows are the weakest noise link.
So, if you've fallen in love with a home that's perfect for you but butting up a little close to a busy road, there are options to help make the traffic less noticeable.
Starting with the interior of the house, the first area to listen closely to are the windows. They can tend to let in a significant amount of noise.
"The sound almost always goes through the window and doing anything at all to the walls will be pointless until you have fixed the noise that comes through the window," says Sola.
Windows have a Sound Transmission Class (STC) rating. The higher the rating the less outside noise you should hear inside the home. A typical single-pane window only has a 22-25 STC rating whereas a dual-pane window might have a STC rating of 27-32. There are also specialty windows with even higher STC ratings available.
Choosing the right STC rating depends on what you're planning to do.
"If you're looking at a STC 30 window versus a STC 33 window, you're not going to notice a huge difference in that but it might be worth it to you, if they're about the same price. But if you're looking at replacing windows and you're planning to go from a STC 30 to a STC 33, that's a lot of work to get virtually little improvement. If you can get a five or six decibel difference, then that can start to make a noticeable change," explains Sola.
Keeping sound from coming into your home is usually only part of the solution. Many people want to enjoy a traffic-noise-free backyard. This can be a little more complicated but not impossible.
"One of the first things you would look at is the barrier. If you've got a view wall or wrought iron fence that's not going to block anything, or if you have large oleander bushes, that might block the view but it doesn't block the sound at all," says Sola.
Instead he says a solid wall that doesn't have gaps in it will help a little.
"Auto noise comes from the tires. So to control auto noise the wall will work pretty well because the source is really low -- it's at ground level but truck noise -- the medium trucks or the semi truck -- comes from about eight feet off the ground, so even if you build a six, seven, or eight-foot wall, that won't help much," says Sola.
However, if you couple a barrier wall with a noise-masking system such as a water feature then you can virtually wash away the traffic sounds.
"A water feature, if done right, can work very well," says Sola.
"You wouldn't want a water feature that's just trickling water. You would want something more substantial that does have a noise level to it and more of a broad band noise," says Sola.
He says the problem with water features is they tend to be very localized. Sola says he's been to some homes where the homeowner placed one water feature in the backyard and it drowned out the traffic noise in that one area of the yard but the street noise could be heard from other parts of the backyard. He says that's when a couple of fountains might need to be used.
Getting creative is the key. Working with a sound acoustic expert and landscaper can result in a beautifully designed outdoor area that's doesn't reveal any sign of the chaotic hustle and bustle of the nearby road.

Written by Phoebe Chongchua

Sell Faster When You Understand The Buyers Mindset

2010-08-06T21:17:00.000-07:00

When most sellers list their home for sale the first thing they think about is how much will I get and that is usually followed by how soon will I get the money. It's certainly understandable that those two concerns are, most often, top of mind. After all, you're likely selling your home to buy another one or invest the money in something else.
But, if as a seller, you can get into the buyer's mindset, the sale of your home can come faster and for more money.
Understanding the way buyers think involves seeing things not from your perspective but from your potential buyer's mindset. It can sound easy but actually it's often harder to do than most sellers think. The psychology of buying is driven by emotional experiences, money, and timing. With that in mind, sellers can help create optimal circumstances that literally help walk the buyer through the process and completion of the sale of your home.
It starts with a feeling. When you meet someone for the first time, you form a first impression based on a feeling. That's exactly what happens when buyers set foot into your home. Work with an experienced agent to learn exactly what kind of impression your home is giving off. If it's a small home, make sure it's not overfilled and cluttered.
Pick up all the loose clutter that's floating around. Throw out old magazines. People like to see things that are streamlined or clean or fresh looking. There's nothing worse than walking into a place and seeing a stack of magazines all over the place or an unmade bed.
Go the extra step and take care of items that might have been overlooked for quite some time. Steam clean the carpets, the upholstery, the furniture, if that's what's needed. Have the windows cleaned, light fixtures cleaned. Make it feel clean when you walk in.
Go back to basics. You may love your turquoise carpet but do you really think buyers will? Getting inside the buyers mind will help you answer these questions. You can also pick up home décor magazines and see what appeals to the masses. You don't have to change everything in your home, but going back to basics in a few areas will help buyers see how your home can become their home.
As soon as buyers see a really loud red, orange or lemon-green color they automatically think about re-doing. That, of course, means the buyers are already beginning to calculate the amount of money they need to take off of the sale price in order to get the home in the condition they would like it.
If instead you stick with neutral colors such as painting the walls off-white, light beige or Navajo white, you have a better chance in preserving the sale price.
Repair anything that looks torn, worn or broken If you walked into a retail store and saw a garment that you liked but it was torn or missing buttons, chances are you'd search for another one or ask for a discount if that were the only one of its kind.
That's what buyers will do with your home when they spot torn screens, garage doors that don't open, or broken light fixtures that are hanging out of the wall. Buyers, if at first they don't get completely turned off and walk away from the sale, will first begin to think that there is more damage to the home than what they're able to see and then they start to calculate the cost of repairing those damages. But buyers often exaggerate the amount of money needed to fix the repairs.
In today's market people are looking desperately to find out what's wrong with a home so that they can lower the price.
In the buyers' minds, they come up with some kind of incredible price to fix repairs. In their mind, they go way overboard and eventually it affects the bottom line price for the seller.
Don't miss an opportunity to get the word out about your home being listed for sale. It only makes sense to let your neighbors know. By doing this your neighbors can sometimes become great facilitators and supporters of the sale.
Most people are visual buyers. If the home doesn't look clean, spotless, and repaired then the buyer thinks what's behind the walls, how much more money do I have to put into this home.
Remember understanding the psychology of the buyer's mindset can help you sell faster and for the price you really want.

Written by Phoebe Chongchua

First-Timer's Guide To Mortgage Shopping

2010-08-04T17:17:00.000-07:00

It's not everyday you go looking for a mortgage.
It's not a trip to the mall.
It's a methodical, step-by-step process requiring planning, time, effort and attention to details.
Here are some guidelines for beginners, especially first-time home buyers -- assuming you've already laid the groundwork by inspecting your credit report.

Inspecting your credit report and getting it in the best shape possible is your first step to the best mortgage. In today's tight money world it behooves you to take the time necessary to carefully scrutinize your credit report and credit score to be prepared to explain to creditors any dings you can't fix.

Shop around for a mortgage from a variety of sources to determine what's available. Shop mortgage brokers, mortgage lenders, banks and credit unions. Don't forget to examine your local and state mortgage programs as well as community service and housing agency mortgages and mortgage assistance programs.

Obtain all loan cost information, not just the monthly mortgage payment and annual percentage rate (APR). Check the cost of points (in dollar amounts, not just number of points), broker fees, origination fees, underwriting fees, administrative costs, mortgage insurance, yield spread premiums, commissions, escrow and closing costs -- each and every cost associated with your mortgage. You need these numbers to make a fair comparison.
Get an explanation for every fee you don't understand. Use the Federal Deposit Insurance Corporation's (FDIC) "Mortgage Shopping Worksheet" to help keep your costs in check.

Check the loan terms for a variety of loans. Know what down payment you'll need, the term of the loan, whether the loan is a fixed rate mortgage (FRM) or an adjustable rate mortgage (ARM) and the specific terms of each. For ARMs, ask for the beginning rate, when and how often adjustments occur, how much adjustments could cost, and the ARM's ceiling rate.

Be aggressive. Prepare to negotiate with the information you've gathered on the mortgage worksheet. The more information you have about each loan the move negotiating leverage you'll have. A pristine credit record can also give you an edge. Look particularly to quibble over points, yield spread premiums and other broker's fees or commissions. Don't be afraid to ask the lender or broker to waive or reduce one or more of its fees or to agree to a lower rate or fewer points.

Make sure the lender or broker isn't just lowering one fee to raise another or lowering the rate to raise points. There's also no harm in asking lenders or brokers if they can give better terms than the original ones they quoted to you, especially if you've found better terms elsewhere.

Once you are satisfied with the terms you have negotiated, consider a written lock-in from the lender or broker. The lock-in should include the rate that you have agreed upon, the period the lock-in lasts, the number of points to be paid and a lock on as many other costs and terms as possible.

Also seek a written loan commitment that guarantees you the terms and costs you've locked. A loan commitment puts you ahead of the pack in the eyes of the home seller who wants to sell quickly.

Written by Broderick Perkins

50 Ways to Gain Neighbor

2010-08-02T21:39:00.000-07:00

Paul Simon wrote a song called "50 Ways to Leave Your Lover" which never really got around to actually listing fifty ways. I guess it's the thought that counts. But one of a homeowner association's challenges is helping neighbors "make nice." It seems that neighbors have lost the art of making friends and, instead, want the board to intervene in conflicts between the strangers that live next to each other.

What exactly is a "good" neighbor? To be one, you don't need to be friends or hang out together. A good neighbor attitude allows you to live as privately or as sociably as you wish. Being a good neighbor is an attitude. Here's how to cultivate and nurture it:

Meet Them. While marching up to their door with hand extended is great, the chance encounter works well, too. Introduce yourself at the mailbox, while walking the dog or when you take out the trash. Learn their names and offer a friendly: "Hello," "Good Morning" or "Howdy Doody" when you see them. (As weird as "Howdy Doody" is, it does make you memorable.)

Keep Them Informed. Contact them before undertaking something that might affect them, such as hosting a big party, building a fence or cutting down a tree. Contacting a neighbor in advance so rarely happens, it will take them weeks to recover from the shock and by that time the announced event will have passed. Seriously, you will gain their respect.

Be Aware of Differences. Age, faith, ethnic background and marital status can drastically affect lifestyles. Be aware of the differences between you and your neighbors that could create friction or disagreement.

Look for Things in Common. You both might like to garden, bike or jog. Zero in on what you have in common. Be a keen observer of your neighbors and look for tell-tale signs that can draw you closer.

Point of View. From your neighbor's viewpoint, how does your compost pile, swing set or junk car look? Would you like that view? (If you do, refer to your neighbor's viewpoint).

Be Appreciative. If a neighbor does something you like, tell them! They'll be pleased that you noticed the new awning, patio furniture, plants, etc.

Assume the Best. Most people don't intentionally create problems. Assume the neighbor doesn't know about the annoyance when you speak to them. Your delivery will be dramatically kinder. And assume they will be cooperative.

Be Candid. If your neighbor does something that bothers you, let them know as soon as possible in factual, not emotional terms.

Be Calm. When discussing a point of contention, speak calmly, listen carefully and thank them for telling you how they feel. You don't have to agree or justify your behavior. If you don't react defensively, anger usually subsides, lines of communication remain open and resolution is possible.

Take Your Time. If caught in angry confrontation, take a break to reflect and finish the discussion when cooler heads prevail. Don't leave it hanging. Time and lack of resolution will intensify hostilities.

Best Advice of All. Treat others as you would like to be treated. This attitude will pave the way for good neighborliness. Love your neighbor as yourself.
Oh, I could go on and list 50 ways but like the song, you probably catch my drift. Being a good neighbor is worth the effort. If one of these ways doesn't get you there, try 50 more until one does.

Written by Richard Thompson

Five Tips for a Successful Home Remodel

2010-07-30T22:04:00.000-07:00

As spring approaches, many home owners grow eager to start remodeling projects to update and refresh their surroundings. Before getting started, it's a good idea to hire a professional remodeler for a workable plan and better results, according to the National Association of Home Builders (NAHB).
"A professional remodeler knows how to translate a home owner's dreams and budget into a beautiful reality," said Donna Shirey, CGR, CAPS, CGP, President of Shirey Contracting in Issaquah, Wash. and 2010 chairman of NAHB Remodelers. "They have the expertise and skills to satisfy a customer while keeping the budget in check."
Here are five tips for planning a successful home remodel that you can enjoy for many years to come.

Compile a list of home remodeling ideas and draft a budget for the work.

You likely have some projects in mind, such as modernizing the bathroom, renovating the kitchen, replacing windows or repairing the roof. Prioritize your wish list: Maybe you don't have the budget for your dream remodel, but professional remodelers can maximize your dollars by doing the work in phases, suggesting budget-friendly products and materials, and implementing creative design solutions.

Look for a professional remodeler to help plan the project.

Start by searching NAHB's Directory of Professional Remodelers at nahb.org/remodel. You'll get a list of nearby remodelers to contact. Asking friends and neighbors for names of qualified remodelers will also help you find a match for your project.

Check the references and background of the remodeler.

After you start speaking with remodelers and find one or two who match your project's needs, be sure to conduct some background research by checking with the Better Business Bureau, talking to their references, and asking if they are a trade association member (such as NAHB Remodelers). Remodelers with these qualities tend to be more reliable, better educated, and more likely to stay on top of construction and design trends.

Agree on a contract.

Talk over the details of the home remodeling project and begin reviewing the contract. You'll want to check the remodelers' insurance coverage, ask about any warranties on their work, know who is responsible for obtaining any building permits, and understand the process for making any change orders after the contract is signed. Make sure that you and your remodeler see eye to eye before you sign on the dotted line.

Take advantage of the energy efficiency tax credits.

If your remodel includes replacing windows or doors, adding insulation, installing new roofing, upgrading heating or air-conditioning units, updating the water heater, or installing energy generating products (such as solar panels, heat pumps, or wind turbines) then you can take advantage of federal energy efficiency tax credits through 2010 that will help defray costs and maximize your remodeling budget while reducing home energy bills. Written by Realty Times Staff

Pre-Qualifying for a Mortgage

2010-07-28T17:18:00.000-07:00

One of the first steps to take as a potential home buyer is to get pre-qualified for a loan. This step helps both you and your lender learn just how much home you can afford. And you should begin this process before you even start looking for a home.
According to the Federal Housing Administration (FHA), their pre-qualification essentials include:

Having a steady employment history, at least two years with the same employer.

Consistent or increasing income over the past two years.

Credit report should be in good standing with less than two thirty day late payments in the past two years.

Any bankruptcy on record must be at least two years old with good credit for the two consecutive years.

Any foreclosure must be at least three years old with good credit for the past three years.

Mortgage payment qualified for must be approximately 30 percent of your total monthly gross income.

Other lenders' ideas regarding pre-qualification are all similar to those outlined above. A mortgage lender will look at your credit report, earnings, debts, and savings in order to see how much home you really can afford.

Why is this important? In recent years there has been a “mortgage crisis,” where the industry was rampant with fraud and with loans that put homeowners into situations they could not afford. As payments rose, homeowners found themselves unable to meet their monthly obligations. According to Realtytrac.com and their U.S. Foreclosure Market Report, in January 2010, one in every 409 households in the country had received a foreclosure filing.
Since pre-qualification for a home loan typically costs you nothing, but gives you both a goal of what homes are in your affordability range, as well as how much money you should look to have saved for a downpayment, you can hardly wait to take this step.
What if the home you want is out of your reach? Experts recommend reducing your debt and saving up a larger amount for your down payment. Let's say your dream home is $225,000, but you only qualify for a $180,000 loan. If you have a downpayment of $45,000, then you are ready to make a move!
During the pre-qualification process, you will be expected to provide the following information:

your gross monthly income

your total monthly payments (car payments, credit cards minimums, child support payments, student loan payments, any other monthly debts)

The lender will be looking to see that your debt to income is below about 40 percent, and the lower the better. So, if you are looking to buy in the near future, be sure to talk to your lender soon!

Written by Carla L. Davis

Does Moving Up Make Sense?

2010-07-26T17:59:00.000-07:00

The following are some questions that will help you decide whether you’re ready for a home that’s larger or in a more desirable location than your current one.
If you answer yes to most of the questions, it’s a sign that you may be ready to move.
Have you built substantial equity in your current home?

Look at your annual mortgage statement or call your lender to find out. Usually, you don’t build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you’ve owned your home for five or more years, you may have significant, unrealized gains.

Has your income or financial situation improved?
If you’re making more money, you may be able to afford higher mortgage payments and cover the costs of moving.

Have you outgrown your neighborhood?
The neighborhood you pick for your first home might not be the same neighborhood you want to settle down in for good. For example, you may have realized that you’d like to be closer to your job, relatives, or live in a better school district.

Are there reasons why you can’t remodel or add on?
Sometimes you can create a bigger home by adding a new room or building up. But if your property isn’t large enough, your municipality doesn’t allow it, or you’re simply not interested in remodeling, then moving to a bigger home may be your best option.

Are you comfortable moving in the current housing market?
If your market is hot, your home may sell quickly and for top dollar, but the home you buy also will be more expensive. If your market is slow, finding a buyer may take longer, but you’ll have more selection and better pricing as you seek your new home.

Are interest rates attractive?
A low rate not only helps you buy a larger home, but also makes it easier to find a buyer.

Written by Realty Times Staff

Top 10 Home Buying Mistakes.

2010-07-23T22:04:00.000-07:00

Buying a home is perhaps the most arduous, expensive and, ultimately, valuable acquisition you'll ever complete
Just one mistake could mean disaster -- perhaps the worst mistake you'll ever make.
In order to avoid titanic trip ups during such a trying transaction, buyers should get to know the most common home buying blunders.
To know them is to avoid them.

Going solo: Buying a house is a complex transaction. It should be a team effort. You'll need a REALTOR®, lender, inspector, insurer, perhaps a lawyer, and other team members to help you through each step of the way. Team build before you start the search.

Love at first sight: If you believe in fairy tales you probably shouldn't be buying a home. You won't live happily ever after if you emote your way through the home buying process. Your home should fit your real needs, not your yen for drama. Buy a home that fits your budget and your lifestyle. Be sure the home is in a community and neighborhood you desire. Visit neighborhoods several times before you buy to check out schools, noise and traffic patterns.

'Loanless' shopping: Being pre-qualified gives you a general idea of how much you can afford to borrow. It's better to be pre-approved for a given loan. Sellers will take you more seriously. You'll stay on budget.

Overbuying: Home buyers buying more than they could truly afford, in part, led to the collapse of the housing market. Buy more than you can afford and your dream home will become the same nightmare. Analyze all your monthly costs including debts, food, transportation, entertainment, and savings. Your total monthly debts, including your mortgage, should not exceed 36 percent of your income before taxes. Don't forget to budget closing costs (often two to five percent of the home's purchase price), plus moving, redecorating and maintenance. Look ahead and allow for increases in ongoing expenses such as utilities and taxes.

Misplaced trust: You are engaged in what's likely your most valuable acquisition ever. It's a business transaction. Ask family, friends, co-workers, professionals and others you trust for referrals, but don't take their word for it. Vet your team members.

Accepting oral agreements: Get it in writing. The rate lock, the home inspection, disclosures, the contract. Always. Should a dispute arise, you've got the details documented.

Skipping the fine print: Understand what's really in any document before picking up a pen. Get documents in advance, take time to read them and ask questions. Get copies of your mortgage and closing papers a few days ahead of closing.

Forgetting or betting on resale: Avoid buying a home that costs 50 percent more than neighboring homes. Reconsider buying the most expensive home on the block. Neighbors' lower home values will weaken yours. Buy intending to flip your investment only to have the market fail means when it's time to sell your price may not cover your costs.

Making an unconditional offer: Protect yourself with these contingencies:

1. Mortgage financing: You may be preapproved but is the house? A formal appraisal confirms -- or not -- that there is sufficient value in the home to warrant the loan. If the house appraises lower than the sales price, the loan may be declined.

2. Inspection: Never buy an existing or new home without a thorough home inspection. Walk through the home with the inspector to learn more about the house and any concerns he or she may have.

3. Insurance: Confirm you can get adequate insurance coverage. In some areas, or following certain disasters, it can be difficult to get types of hazard insurance.

Written by Broderick Perkins

Top 10 Tips for Satging a Home

2010-07-21T22:31:00.000-07:00

Provided your home-for-sale has the curb appeal to get potential buyers inside, keeping them inside for a further look requires a staging strategy that sticks the deal.
HGTV's FrontDoor.com offers what it considers the Top 10 tips that can turn a languishing listing to a multiple offer attraction.

Reclaim the yard. First impressions rule. Spruce up curb appeal by maintaining a clean yard, adding plants for a splash of color and applying a fresh coat of paint to the front door.

Let the foyer flourish. The home portal sets the tone for the entire home. Make the space up-to-date, well-maintained and eye catching -- top to bottom.

Back off beige. Don't let neutral colored walls dominate a room. Splashes of color liven up boring spaces. Throw pillows, artwork and fresh flowers add pops of color and personality.

Cure kitchen craziness. Consistency pleases. All countertops and cabinets should match. New hardware, a new backsplash and a thorough cleaning can transform a bleak kitchen into one with smiles.

Denude the dining room. De-cluttering and depersonalizing is the first rule of home staging. Homebuyers can have trouble envisioning themselves living in a home that's full of the seller's personal items.

Avoid focal point faux-pas. Highlight the great features in a home by positioning furniture to highlight them. Windows, fireplaces and other architectural details will be noticed by a buyer if they are emphasized in the home correctly.

Perk up the patio. The outdoor space is an extension of the home. Capture a higher selling price by cleaning and adding style to any outdoor space with furniture, lighting and accessories.

Master the master suite. The best approach to staging is often working with existing accessories. Using what is already in the room and repositioning the furniture will highlight the room’s best features.

Cure bathroom blues. Older vanities and dreadful wallpaper will make any bathroom feel outdated. Apply a fresh coat of neutral-hued paint and new hardware to modernize and brighten.

Repurpose extra rooms. The value of a space decreases when homebuyers see a room without direction (think part office, part playroom, part home gym). Though almost every homeowner is guilty of having a "junk room," take sure to stage each room with a clear purpose before putting the home on the market.

Written by Broderick Perkins

Common Buyers Fears.

2010-07-19T21:54:00.000-07:00

Whether you are a first time home buyer or someone who is looking to move up or down, getting into the market can be a fearful time.
Here are some of the most common buyer fears:

Do I have enough money to buy a home?
To first step to finding out how much home you can truly afford is to get pre-qualified for a mortgage.
Also, take a step back and look at your finances. Ideally, you should have around 20 percent of the purchase price to put down. You should also have less than a 36 percent debt to income ratio. Be sure to include all of your monthly obligations in that equation, including student loans, child support payments, alimony, car payments, credit cards, etc.
Once you've looked at your savings, make sure that apart from your down payment, you'll have enough left over to pay closing costs, which include such things as attorney fees and transfer fees. The National Association of Realtors (NAR) reports that this amount averages between 2 and 7 percent of the home price. You also need to have money left as a cushion. What if unexpected repairs, either to your house or car, come up? What if you or a family member needs medical attention? Be sure that you have enough money leftover after the purchase to keep your life running smoothly.

Will I have buyer's remorse?
There is no such thing as the perfect house, so you should prepare yourself for some mild feelings of "what if". You may have to give up a few "wants" to get a few "needs" when you buy your next home. Or if this is your first purchase, you may have to buy something a little short of your dream house, and build equity in order to move up at a later date. Try not to lose sight of the big picture. This is a home that you own. You now get the benefits of tax breaks. You are building equity as you pay off the loan. And, hopefully, your home will appreciate in value over the coming years.

How can an unhandy owner handle repairs?
Before you swear off doing some of your own projects or repairs, know that everyone starts somewhere. Take a class at your local home improvement store, invest is a handyman's guide, or ask a friend that has already tiled their bathroom or fixed a leaky sink to come and give you some pointers.
Be prepared for repairs, maintenance, and updates. Even with a new home, there will be projects. Plan accordingly financially. And if all else fails, hire a professional.

What if I need to move?
Experts recommends that to build equity, you need to have owned your home for at least 3 to 5 years. The NAR recommends, "Look at your annual mortgage statement or call your lender to find out. Usually, you don't build up much equity in the first few years of your mortgage, as monthly payments are mostly interest, but if you've owned your home for five or more years, you may have significant, unrealized gains." If the time is less than five years, then you should be prepared to not make any money on the sale of your home, and even, to "lose" some -- in the form of closing costs.

Written by Carla L. Davis

Five Key Areas to Pay Attention to When Buying a Home.

2010-07-16T23:19:00.000-07:00

Looking for a new home can be exciting and frustrating. You can help alleviate the frustration by paying close attention to five key areas of the homes you're considering buying; it may save you money in the long run.
Don Walker is an inspector and owner of Ace Home Inspections. He says there are five areas in homes that he frequently reports problems with. They are electrical, foundation, plumbing, the attic, and landscaping.

Electrical
Walker says sometimes homeowners assume with newer homes that all will work just fine but that's often not the case. "I inspected a brand new house—four years old but the electrical was all done incorrectly," says Walker.
Having a complete home inspection will help to rule out any problems and point out any areas of concern. However, even as you're browsing homes, buyers can start to make note of the key areas that Walker mentioned, such as the foundation.

Foundation
Walker says a four-year-old home he inspected recently was already showing trouble signs which could result in a costly repair project. "It was a model home. What the homeowners did was plant trees for shade to make it look really nice, but they planted the wrong trees and they're going to crack the foundation and it's going to cut the property value down by $50,000," says Walker.
Walker says in the case of that home, the trees were causing micro-fractures in the tile in various locations of the home. "As you walk through the house, 21 feet in and 30 feet deep, there's just too much root invasion and it's going to ruin their tile," explains Walker.
He says some tell-tale signs with this home were the minor cracks in the foundation that were causing a lifting and separation of the foundation. Also, the windows were not opening and closing properly, "which means the foundation is moving."
However, just because you see cracks doesn't mean there is a foundation problem. "Most people don't understand that there are natural cracks in a house. That's why when we do an inspection report we have to look at it and say 'Okay, this is a typical crack and this one is an untypical crack,'" says Walker. He says some cracks may lead to other problems while others won't.

Plumbing
Walker says another big area of concern is the plumbing. It's an area that you can't always spot as easily but it can create expensive repairs if plumbing issues go either undetected or are not properly fixed. "Mold forms underneath sinks when people have a leak and they fix the pipe but they don't take care of the mold," says Walker.
He says things like caulking the sink can help prevent mold. "That's my number one thing I always find—bad sinks," says Walker.
He says that when you look at the sink, look behind it and most of the time you will discover a little crack. "What happens is, when you wash dishes or you wash your hands in the bathroom or the kitchen, the water gets in that crack and seeps down. Once the water gets behind the cabinet it's in a perfect position to create mold," says Walker. The dampness, humidity, and lack of light can turn that area beneath the sink into a mold-breeding ground.

Attic
"You can tell everything about the house by the attic," says Walker. He says other areas of the home can be covered up if a repair had occurred. For instance, if there was a leak and it damaged a wall, with the right contractors and repairs it can be made to look like new and, hopefully, function like new. But Walker says the attic is sort of the eyes to the soul of the home. "In the attic you can tell where all the damage has been," says Walker.
"If you're in a 20-year-old house and you see that the insulation is brand new, you know that there was a water leak because it had to be replaced," says Walker. He adds, "You can tell if the roof is good because you can look right at the wood."

Landscaping
"There should not be moisture or plants next to your house," says Walker. He says there should be a 12 inch barrier between the landscape and the house. Walker says otherwise you run the risk of having the foundation crack and affect the home. What happens is, as the landscape that is too close to the home is watered, the foundation and soil expand. Then, when no watering occurs, the foundation dries up and shrinks and this can cause it to crack.
Remember, knowledge is power, so learning about the home before you close the deal on it will keep you from making a mistake that may cost you extra out-of-pocket money later.

Written by Carla Davis

Buyers Should Be Careful About Credit Use Prior to Closing.

2010-07-14T21:27:00.000-07:00

Buyers and their agents need to be aware that it is a very bad idea for buyers to increase their credit balances or to open new lines of credit shortly before they close escrow on their new home. More specifically, they should avoid such activity during the period of time between loan application and closing. This is because policies under Fannie Mae's Loan Quality Initiative, effective June 1, 2010, requires lenders to "refresh" a borrower's credit report just prior to closing.
Here's what happens: Bill and Betty Buyer are excited to make an offer on a home they just love. They realized that they are stretching, but the loan officer has pre-qualified them and is confident that they will receive full loan approval. When formal loan approval comes, then, they are ecstatic. In eager anticipation of closing, they visit their favorite furniture store and purchase (that is, charge) a new bedroom set, dining room furniture, and a sectional that will be perfect for the family room. It all adds up to a pretty penny, but they are confident that they will be able to pay it off in a timely manner. Things are going well at work. What could go wrong?
Well, here's one thing that could go wrong: Following FNMA's guidelines, the lender runs an updated credit report on Bill and Betty just before closing. With their newly-acquired credit balance, Bill and Betty no longer meet the required debt-to-income (DTI) ratio in order to qualify for their loan. The loan is pulled. Sadness reigns.
Fannie Mae's Loan Quality Initiative was introduced in a lender letter February 26, 2010. The letter noted that, during the past three years, the need had been highlighted "for an improved approach for working with lenders to deliver loans that meet Fannie Mae's underwriting and eligibility guidelines." In other words, the loans that had been delivered to Fannie Mae turned out too often not to meet Fannie Mae guidelines. Regrettably, this tended to be discovered well after Fannie Mae had purchased the loan. The idea of the Loan Quality Initiative, which was to become effective June 1, 2010, was to focus "on capturing critical loan data earlier in the process and validating it before, during, and immediately after loan delivery."
Borrower qualification was not the only issue of concern. Among others were determining owner occupancy, verification of social security numbers, a new policy on excluding certain entities from Fannie Mae loans, and updated quality-control requirements.
Technically speaking, the Fannie Mae guidelines do not require that updated ("refreshed") credit checks be performed for borrowers. Fannie Mae states that "It is the lender's responsibility to develop and implement its own business processes to support compliance with Fannie Mae's requirements on loans delivered to Fannie Mae." But, in the same memo, Fannie Mae does provide "tips for lenders to consider." One of those tips is "Refreshing a credit report just prior to closing."
Does anyone think that a lender who sells its loans to Fannie Mae is going to ignore such tips? Hardly.
The tips point out that not only might a refreshed credit report show newly-acquired debt (as in the example), but also that it may show new credit inquiries. "Credit inquiries listed on the credit report should be investigated to determine whether the borrower did in fact open additional credit resulting in repayment obligations." Don't go buy a new car until after you close.
Given recent history, it would be unreasonable to fault Fannie Mae for tightening up its procedures in every way possible. Buyers just need to remember that loan approval is based on statements of income and liabilities at the time of the loan application. If those factors change materially prior to closing, it is likely to be discovered and it could undo a deal.
Congratulations on your new home, and go ahead and buy new furniture; but wait until after escrow has closed.

Written by Bob Hunt

Home Warranty FAQ's

2010-07-12T16:28:00.000-07:00

Home warranties are on the rise. Let's take a moment to look at some of the most common questions regarding these products.

What is a home warranty?
A home warranty is a residential service contract giving the homeowner repair and replacement coverage for major operating systems and appliances in a home. These repairs must be due to wear and tear, and not negligence or damage.

How can you benefit from a home warranty?
Repairs to homes are inevitable. And while homeowners cross their fingers in hopes that these repairs are relatively inexpensive, what if an entire system needs replaced, and you are left staring at a bill with a few too many zeros? A home warranty can offer you some level of protection.
Your home warranty plan also provides you with a selected network of professionals from which to choose. Many homeowners prefer having a list to choose from instead of taking a guess at which repair company will be reliable.
According to the Service Contract Industry Council (SCIC), a home warranty, also called a home service contract, offers many benefits to buyers and sellers, including:
Repair or replacement coverage of most major appliances and home systems including heating, plumbing, and electrical;
Toll-free access to technical support and prequalified repair professionals;
Comfort for new owners and protection for sellers while their property is on the market;
Optional coverage for structural components such as roofs; recreational equipment such as swimming pools; etc.
Ability to transfer the contract from homeowner to buyer.

What are the average costs of a home warranty? MSN Money says you will be looking to spend somewhere from $250 to $600. And then expect to spend from $25 to $75 for each service visit.

What isn't covered?
According to The Home Warranty Review, you should make sure you get any repairs approved by your warranty company prior to calling a repair company. This will help to ensure you are reimbursed. Keep in mind that pre-existing conditions, improperly installed or mismatched equipment, and poorly maintained systems are not usually covered.
Warranties also do not cover "acts of God." This means the pet damage, the graffiti, and the lightning strike are your own responsibility.
Keep in mind, as well, that items "outside the perimeter" of your home may also be off limits. The Review writes, "Some people are surprised to learn that the plumbing leak in the yard is not covered."

How have home warranty changed in our current economy?
According to the SCIC director, Timonty Meenan, there was a "significant increase in home warranty contract renewals in 2009. Existing homeowners fueled the increase over the previous year, while sales by real estate professionals to home sellers and buyers held nearly steady."
Florida broker/owner Ed Smith has seen a jump in home warranties sales over the past five years, noting, "buyers and sellers have come to understand the benefits of home warranties and there are plenty of customer testimonials demonstrating their value. It's both a good marketing tool for selling and good protection policy for buyers and sellers."

How do I choose a company?
MSN Money reporter, Liz Pulliam Westom, gives you three helpful tips.
Find out which government agency, if any, regulates home warranty companies in your state and check its complaint records.
If regulation is loose or nonexistent, pick a company that has a long track history in your state and solid financials. (If the company is public, you can ask for an annual report to see if its home warranty operations are making a profit.)
If someone else -- the home seller or a real estate agent -- is paying for the policy, insist that the warranty premium be paid in full for the term of the agreement before the sale closes. Check to be sure the amount is listed on the final escrow statement.
A final tip for anyone considering a home warranty, is to read carefully. A warranty is a contractual agreement, and like all contracts, you should know what you are signing. Warranties can vary in price and coverage depending on the company you choose, so be sure to shop around before signing on the dotted line.

Written by Carla Hill

Choosing The Best Home

2010-07-10T11:32:00.000-07:00

After weeks of searching for your next home, you now have it narrowed down to two great options. One offers a shorter commute, but the other offers more square footage for your growing family. How can you make the best choice?
There are several strategies you can employ in your decision making process. Above all, be confident in your decision making abilities. "The fear of making serious decisions is a new kind of fear, called decidophobia," proclaimed by Walter Kaufmann at Princeton University in 1973. Worry and procrastination do nothing to aid the process, so buyers, be confident that you will make a sound choice.

Pro/Con list: In this case, you are deciding between two houses as your prospective home. For each house, divide a sheet of paper into two columns: pro and con. Be realistic about what the positive and negative factors would be for each purchase. Considerations could include: price, location, schools, repairs, square footage, floorplans, street noise, neighborhood value, comparables, and gut intuition.

Brainstorm scenarios: Chances are, whatever house you decided upon will be your residence for many years to come. Try and think ahead to situations that may arise in the future, and how each residence would affect those situations. Do you have aging parents that could move in? If so, then which house provides the best floorplan for this? Planning on having children? Check out ratings on local schools.

Do the math: Business executives might call this the "cost/benefit analysis." Buying a home is a huge financial decision, and while personal preferences (e.g. location, schools, square footage) all come into play in homebuying, many purchases are based on what makes the best financial sense. Discuss numbers and neighborhood comparables with your real estate agent. One home may be a smaller dollar amount, but the other may be a better deal in the long run. Some neighborhoods are up and coming, while others have come and gone. Are either homes overpriced or underpriced for their neighborhoods? Do either homes need repairs or updates?

Priorities list: Yes, you know you want the pool, landscaping, granite counters, close proximity to work, extra bath, and the list goes on. But when push comes to shove, and it might, what items are your priority, really? For some, driving a longer commute is worth having a larger house or a cheaper price. For other buyers, the exact opposite can be true.
Change perspectives: Sometimes you simply must step out of your own shoes to see a situation clearly. There are many different ways to approach this decision. You can look at it from an emotional point of view (which home do you love), an intuitive view (what does your gut tell you), and even a devil's advocate view (what if). Experts consider this the "Six Thinking Hats," introduced by Edward de Bono in a book of the same title, where you put on six different hats during a decision making process. Try and see the buying process from the perspective of your spouse, your children, friends, and even your worst enemy.
Finally, be realistic in your own abilities. While the final decision rests on your capable shoulders, you should rely on the professionals that are by your side. This includes your agent, lender, attorney, and even your family. And while you are the final say, remember that you have a team to help give you information to fuel that sound decision.

Written by Carla Hill

Debunking Credit Score Myths

2010-07-07T17:57:00.001-07:00

In March, ING Direct bank commissioned Harris Interactive to conduct an online survey of 1,042 parents of children age 17 years and younger.
The survey discovered more than half, 56 percent, of those surveyed thought bouncing a check or paying a fee for having non-sufficient funds in their bank account would reduce their credit scores.
Wrong.
Credit reports typically don't include information about checking and debit accounts, nor non-sufficient fund issues unless they somehow impact an attached credit account.
Also one in five (21 percent) thought checking their credit scores would hurt credit scores. Nearly as many (18 percent) thought accessing their credit report, would hurt their credit scores.
Wrong and wrong.
Obtaining your credit report and credit score has no bearing on your credit standing.
In fact, you should check your credit reports regularly. Every year, federal regulations allow you three free credit reports (ONLY through AnnualCreditReport.com), one each from the three credit reporting agencies, Equifax, Experian and TransUnion.
If you visit some other sound-alike, come-on web site, instead of AnnualCreditReport.com, expect to pay for credit services you may not need in exchange for that so-called "free" report.
From AnnualCreditReport.com, get the three free reports all at once if you haven't seen them for years. Otherwise get one from a different company every four months to regularly monitor your credit report for errors, identity theft, black marks you may need to work on and other issues.
For your credit score it will cost you a nominal fee (it's worth it) paid to each of the three credit reporting agencies.
A credit score -- virtually always examined by lenders when you apply for a mortgage, credit card, car loan, other credit, even homeowners insurance and other financial accounts -- is a numerical rendition of your creditworthiness.
Scores range from about 300 to about 850. The higher the number the more likely you are to get credit and the more likely you are to get cheap credit. Your score should be at 760 or above to land the best interest rate, according to FICO, a leading credit scoring system provider.
Debunking the myths
To help debunk credit score myths, misunderstandings, misdirection and to stop financial behaviors that could be passed onto future generations, ING Direct and Experian developed five tips to help parents separate fact from fiction.
Practice what you preach. Simple financial behaviors such as paying your bills on time will keep your credit in good standing and will allow you to obtain better interest rates on big asset purchases like a house or car. Lead by example.
Start early. When you kids start to ask you to buy things for them, it's time for the "money talk." Later, introduce more complex credit topics with stern statements like "credit is not free money." Talk about interest rates, paying on time, paying off balances and saving money.
Make credit a family affair. Let children in on household financial discussions that reveal the true cost of necessities. Sit them at the table during budget and bill paying sessions. Explain the fallout from making poor financial decisions.
Set family financial goals. Teach children how money doesn't grow on trees. Show them how to save for things they desire rather than accessing credit to spend money they do not have. It's a way to encourage your children to set financial goals and work towards achieving them. Children savor things more when they put in the time and effort to purchase items with their hard earned cash.
Explain the difference. Talk to children about the differences between needs versus wants, especially at times when they want you to give into impulse buying. During grocery store visits, show kids the difference in prices between name brands and generic brands as a way to expand on this lesson.

Written by Broderick Perkins

Transform Your Home With Home Staging

2010-07-05T13:52:00.000-07:00

We know that dressing for success is important when it comes to establishing an image. Well, when it comes to selling your home, it's important to dress it up too. Staging homes has become increasingly more popular because it works.
I think of it like setting the stage for a theatrical production. The director wants everything on the set to have a specific place. Using a critical eye, the director makes sure that the set ambience (furniture, decorations, and even open space) is going to convey the exact feel she intends. That's what staging can do for your potential buyers - if done correctly.
Staging a home can allow buyers to understand how to best use the space in a particular room. It de-clutters a home. Think about those pictures of model homes … you never see all the electrical cord chaos in an office, right? Instead, you see a single computer (likely an Apple because they look cool) atop the desk. There might also be a big window offering plenty of natural light and that has an unobstructed view to the outside grassy hills. Nearby, a Feng Shui combination of flowing water, rocks, and glass in some sort of ornamental water fountain might sit on a countertop. A filing cabinet that isn't overstuffed with files takes up a small area of the room. And, yes, it's important that it really not be overflowing. Buyers will snoop around … in closets and cabinets. Anything that looks like it's been stuffed to capacity leaves an uneasy feeling for many buyers. But this look is streamlined. The emotional feeling conveys a non-verbal message of accomplishment, success, and an attitude that shouts, 'Wow! I can get a lot done here!' Bingo. That's good staging. And, perhaps, the very thing that causes a buyer to make an offer.
You can hire an expert to stage your home. Your real estate agent will likely also have many valuable tips. And you can also start to do some things on your own. It's often said, "You don't stage a home the way you live in a home." But, sometimes a staged home looks so good (if it's practical) you might want to keep your home that way. I have seen amazing changes from home stagers…sometimes you don't even recognize the home! Debra Gould of Six Elements, a home staging company, says that staging your home can increase the sale of your home by $10,000 to $70,000. She also points out on her Web site that "One of the side benefits of home staging is that it helps you see your house as a real estate listing instead of your home." This gives you the chance to really think about the sale of your home from a buyer's perspective. If you're selling your long-time home, it might have been a while since you shopped for a home. When we live in our homes, we begin to see them through a single lens. When home staging is completed it can give your home a completely new look, transforming it into a home that others can see as theirs.
There are typically a few major tasks to act on first when it comes to staging. They are:
1. De-clutter: I know we all accumulate lots of clutter and then get used to living with it. But really, clutter is a big distraction for buyers. Often they simply can't imagine what the home would look like without all that clutter. So, make it easy for them. Start with a clutter-free home when you list it for sale.
2. De-Personalize: do you want buyers spending more time looking at your personal photos or your home? Easy answer…so, put away the photos and trinkets. Besides, you're moving…you need to pack them up anyway.
3. Deep clean: don't leave dirty floors, carpets, windows, hallways, railings, or floorboards. It's just too easy to lose a buyer's interest due to something that really is such an easy fix.
4. Lighten and brighten: dark and mood lighting can be good for your creative ambiance but light and bright is best for showing the home.
5. Keep traditional rooms traditional. Gould writes on her Web site that she has seen hundreds of homes where the dining room is not used for its original purpose. While that might work for the homeowner, Gould explains that buyers need to see it as a dining room or else they might be inclined to think there isn't one.
Doing just these five tips will help improve the look and feel of your home and increase the chance of buyers seeing their belongings and their family in your home—and that means you may be closer to getting and offer and, ultimately, a sale.

Written by Phoebe Chongchua

Five Key Areas to Pay Attention to When Buying a Home

2010-07-02T21:51:00.000-07:00

Looking for a new home can be exciting and frustrating. You can help alleviate the frustration by paying close attention to five key areas of the homes you're considering buying; it may save you money in the long run.
Don Walker is an inspector and owner of Ace Home Inspections. He says there are five areas in homes that he frequently reports problems with. They are electrical, foundation, plumbing, the attic, and landscaping.
Electrical
Walker says sometimes homeowners assume with newer homes that all will work just fine but that's often not the case. "I inspected a brand new house—four years old but the electrical was all done incorrectly," says Walker.
Having a complete home inspection will help to rule out any problems and point out any areas of concern. However, even as you're browsing homes, buyers can start to make note of the key areas that Walker mentioned, such as the foundation.
Foundation
Walker says a four-year-old home he inspected recently was already showing trouble signs which could result in a costly repair project. "It was a model home. What the homeowners did was plant trees for shade to make it look really nice, but they planted the wrong trees and they're going to crack the foundation and it's going to cut the property value down by $50,000," says Walker.
Walker says in the case of that home, the trees were causing micro-fractures in the tile in various locations of the home. "As you walk through the house, 21 feet in and 30 feet deep, there's just too much root invasion and it's going to ruin their tile," explains Walker.
He says some tell-tale signs with this home were the minor cracks in the foundation that were causing a lifting and separation of the foundation. Also, the windows were not opening and closing properly, "which means the foundation is moving."
However, just because you see cracks doesn't mean there is a foundation problem. "Most people don't understand that there are natural cracks in a house. That's why when we do an inspection report we have to look at it and say 'Okay, this is a typical crack and this one is an untypical crack,'" says Walker. He says some cracks may lead to other problems while others won't.
Plumbing
Walker says another big area of concern is the plumbing. It's an area that you can't always spot as easily but it can create expensive repairs if plumbing issues go either undetected or are not properly fixed. "Mold forms underneath sinks when people have a leak and they fix the pipe but they don't take care of the mold," says Walker.
He says things like caulking the sink can help prevent mold. "That's my number one thing I always find—bad sinks," says Walker.
He says that when you look at the sink, look behind it and most of the time you will discover a little crack. "What happens is, when you wash dishes or you wash your hands in the bathroom or the kitchen, the water gets in that crack and seeps down. Once the water gets behind the cabinet it's in a perfect position to create mold," says Walker. The dampness, humidity, and lack of light can turn that area beneath the sink into a mold-breeding ground.
Attic
"You can tell everything about the house by the attic," says Walker. He says other areas of the home can be covered up if a repair had occurred. For instance, if there was a leak and it damaged a wall, with the right contractors and repairs it can be made to look like new and, hopefully, function like new. But Walker says the attic is sort of the eyes to the soul of the home. "In the attic you can tell where all the damage has been," says Walker.
"If you're in a 20-year-old house and you see that the insulation is brand new, you know that there was a water leak because it had to be replaced," says Walker. He adds, "You can tell if the roof is good because you can look right at the wood."
Landscaping
"There should not be moisture or plants next to your house," says Walker. He says there should be a 12 inch barrier between the landscape and the house. Walker says otherwise you run the risk of having the foundation crack and affect the home. What happens is, as the landscape that is too close to the home is watered, the foundation and soil expand. Then, when no watering occurs, the foundation dries up and shrinks and this can cause it to crack.
Remember, knowledge is power, so learning about the home before you close the deal on it will keep you from making a mistake that may cost you extra out-of-pocket money later.

Written by Carla Davis

How To Make Buyers Want Your Home

2010-07-01T21:23:00.000-07:00

You love your home but when it comes time to sell, you have to share the love. In the other words, you have to make your home be seen in the eyes of potential buyers as their home. That can be tricky.
But if you do some of the basic things such as clearing clutter, creating light, bright, and open space, adding curb appeal, removing personal items (family photos, trinkets), fresh paint, and clean or new carpet -- you'll be on your way to attracting serious buyers.
Let's look at specific areas that create widespread appeal inside the home.
Here are some of the top areas to improve: countertops, flooring, built-in furniture, and old-style attached fixtures such as those big sheet mirrors in the bathroom. However, when making these improvements, there's one important consideration.
Functionality is the greatest concern cited by homeowners, according to the latest poll conducted by the National Association of the Remodeling Industry (NARI).
"The functionality of a home is very important, especially over the long term, as many homeowners in this economy have opted for remodeling over moving to new homes," says NARI National President Paul Zuch, CR, president of Capital Improvements.
So let's explore the areas I mentioned earlier and see how improving these items can lead to greater interest in your home. Countertops are fixtures in homes. So making sure that you select the best material to endure the daily wear and tear is important. If we're talking about the kitchen, for instance, there are many options: granite, tile, recycled glass (for a green option), solid steel, composite stone, butcher block, laminate, and even concrete. Yes, that last one sounds surprising but concrete is being used for countertops and laminate isn't necessarily trying to mimic other materials anymore. Instead, homeowners are embracing laminate's own unique high-tech look. The popular trend is a mixing of several styles creating a blended custom look for the kitchen. But in the end, functionality will rate highest for potential buyers. All of the countertop materials mentioned above have advantages and disadvantages when it comes to maintenance and usage; make sure you completely research the material before selecting it for your home.
Fixtures are an important area to improve. "People know a lot more about design," Laura Kirar from Larua Kirar-TRU Design told the Alexandria Times. These days, quirky, eclectic styles from international trends are becoming more prevalent in the United States. However, push the envelope too far with quirkiness and you just might lose a potential buyer. What's important to know is that buyers are paying attention to fixtures. If you have damaged or worn out faucets or lighting, it's best to replace them before showing your home. Also, replacing those big, nothing-special sheet mirrors with some framed mirrors can add a unique look without costing very much. While you don't want to have to spend a lot just before you sell your home, remember that these seemingly small items can have a great impact on improving buyers' interest in your home.
Flooring is a big interest for buyers. Wood floors are still very popular. Many Realtors say buyers are looking for hardwood floors. That's partly because they endure and don't go out of style. However, if they're damaged it can be a drawback because buyers may focus on how much work it will take and cost to do the repairs.
Built-in furniture can improve a home. Built-in bookcases and entertainment centers can save space and help make the room look larger. However, there's a downside. Built-in furniture isn't easily movable. So, potential buyers will have to really find the furniture useful and suitable for their needs. "It's all about personalization—homeowners want to know that their space can be converted easily into a different space in the future," Zuch said in a press statement by NARI. And that's what buyers want as well—the ability to make your home theirs when the sale closes.

Written by Phoebe Chongchua

Loan losses put Granite Bay bank at risk of failure, seisure

2010-06-30T22:04:00.000-07:00

By Charles Piller
cpiller@sacbee.com

Problem loans for residential and land development have placed Granite Community Bank, a small lender in Granite Bay, at risk for failure and seizure by the government, according to regulatory filings and banking analysts.
The bank lost more than $5.5 million last year, including more than $3.5 million in the fourth quarter. According to Oakland-based Foresight Analytics, Granite Community holds $14.2 million in loans that are in default or close to default – about four times the bank's reserve fund to cover such losses.
"They do face a takeover at some point in time unless they can improve their capital situation," said Bert Ely, a banking industry analyst in Alexandria, Va., who reviewed the bank's most recent government filing for The Bee. Ely said the bank reported an unusual burden of bank-owned real estate – a result of area foreclosures – and a perilous dependence on construction and commercial real estate loans.
"It's quite possible that their losses … will wipe out their capital and render them insolvent," said Ely.
Last March, just 30 U.S. banks or thrifts faced such severe problems, according to data from Foresight, a market research firm. All but one have since been seized by regulators. As of September, 56 banks or thrifts struggled with challenges as extreme as Granite Community's current plight; since then, 41 of those have failed.
After a bank failure, depositors are safe, protected by insurance for up to $250,000 each, but shareholders lose their investments and local commerce could suffer.
"Our special marketplace, south Placer County, has been impacted dramatically" by the recent economic downturn, said David R. Kaiser, Granite's chief executive. "We've been aggressive at recognizing problems. We haven't tried to sugarcoat anything.
"We see a fairly bright future," he added, noting that remaining challenges are "not a bottomless pit." Kaiser said he hoped to increase lending to small businesses this year as the economy recovers.
The Granite Bay lender, founded in 2002, is among several small local banks that have been hammered by the region's exceptionally severe real estate bust and ill-fated lending practices. Just five of the 15 commercial banks based in the Sacramento area made money last year.
Granite Community did not receive funds from the federal TARP bailout, unlike the second-biggest regional loser in 2009, Community Business Bank in West Sacramento. It lost nearly $4.2 million – more than its entire $4 million bailout.
Last year, The Bee examined Community Business Bank's unusually high level of insider lending to its own directors and their family members. Since then, the West Sacramento lender has sharply reduced its loans to officers and directors.
Mark Day, Community Business Bank's chief financial officer, said tax disadvantages due to his bank's status as a relatively new institution worsened its 2009 losses. He did not respond to a question about whether the bank still intends to repay its bailout funds, as officials said last year it would.
Sacramento's River City Bank lost $3.3 million in 2009, Five Star Bank in Rocklin lost nearly $2.3 million, and Community 1st Bank, a Roseville lender that also got TARP funds, lost $1.2 million.
Granite Community's condition is by far the worst of any local bank, according to leading financial rating companies. It's the second lowest-rated bank of its size in California and is in worse shape than more than 98 percent of peers nationally, according to Bankrate.com. Bauerfinancial.com gave Granite Community zero stars – the lowest possible rating.
In 2008, Granite Community entered a formal agreement with its chief regulator, the U.S. Comptroller of the Currency. The agency required the bank to increase capital reserves to cover bad loans. But the bank's condition has since deteriorated, as demand for housing and commercial development collapsed.
Granite Community is trying to raise $6.5 million from investors to return its capital holdings to levels demanded by regulators. So far, the bank has taken in about $2.2 million, Kaiser said, which is being held in escrow until other funds are raised.
Raising enough capital "is definitely an uphill battle" for a small, struggling bank in today's economic climate, Foresight's Matthew Anderson said. Takeover by a larger, healthier bank might be another option, he said.
"Someone putting capital in has to ask," Ely said, "is this bank insolvent, and if so, am I throwing good money after bad?"

10 indicted in Elk Grove case of alleged mortgage fraud.

2010-06-28T21:50:00.000-07:00

By Jim Wasserman
jwasserman@sacbee.com

Three years after a 30-home buying spree during the worst excesses of the housing boom, five Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Elk+Grove/" rel=nofollow>Elk Grove residents and five accomplices face federal charges of writing phony loan applications and defrauding lenders of $5.5 million.
Allegations surfaced in a 48-count federal grand jury indictment announced Wednesday against the owner of Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Elk+Grove/" rel=nofollow>Elk Grove-based Liberty Mortgage Co. and Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Liberty/" rel=nofollow>Liberty Real Estate and Investment Co. Nine others, including Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Liberty/" rel=nofollow>Liberty employees, homebuyers across California and an Elk Grove attorney alleged to have written phony letters for three buyers, also were indicted.
Charges include conspiracy to commit mortgage fraud, mail fraud and making false statements in Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/mortgage+applications/" rel=nofollow>mortgage applications to federally insured banks.
This week's action is one of the biggest sweeps yet against locals alleged to have helped seed the housing meltdown through real estate fraud. Following thousands of foreclosures across the Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Central+Valley/" rel=nofollow>Central Valley, federal authorities say prosecuting mortgage and real estate fraud is one of their highest priorities.
U.S. Attorney Benjamin Wagner alleged Wednesday that Liberty owner Hoda Samuel, 58, of Elk Grove and nine others masterminded home purchases from April 2006 through February 2007 with loan applications that lied about incomes and job histories. Their goal, said the indictment, was to "enrich themselves" with "substantial" loan brokerage and closing fees or with thousands of dollars kicked back to buyers after close of escrow.
Most of the homes were financed by subprime lenders that later failed or imploded due to lax loan standards used at the height of the housing frenzy. Lenders financed 26 of the homes with so-called "100 percent financing" in which buyers in the alleged scheme made no down payments. Later, all but two of the 30 homes in Sacramento, Elk Grove, Oakley, Lodi and Olivehurst were foreclosed, costing the U.S. financial industry $5.5 million, said Wagner.
Liberty's real estate and loan firms are closed, said Samuel, reached by telephone Wednesday in Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Elk+Grove/" rel=nofollow>Elk Grove.
"We're not doing any business," she said.
Citing advice from her attorney, Samuel said: "I cannot talk about it. I know I am not guilty. But I cannot talk about it."
Four other indicted Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Elk+Grove/" rel=nofollow>Elk Grove residents included Connie Devers, 40, Charles Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Robert+Maness/" rel=nofollow>Robert Maness, 32, Ronald Burris, 36, and Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Sean+Patrick+Gjerde/" rel=nofollow>Sean Patrick Gjerde, 34.
Those indicted from Lodi, Oakland and San Diego included Dana Faulkner, 43, Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Tracy+Painter/" rel=nofollow>Tracy Painter, 50, Ygnacia Bradford, 34, Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Nicole+Dawson/" rel=nofollow>Nicole Dawson, 40, and Daniel Harrison, 40.
Samuel, Devers, Maness, Painter, Gjerde and Harrison pleaded not guilty in federal court.
Appearances by the others are pending, federal authorities said.
The indictments allege that buyers represented by Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Liberty/" rel=nofollow>Liberty offered sellers $15,000 to $40,000 more than the asking price for their homes, saying the extra money was going to contractors to make the properties livable for disabled people.
That money never paid for any work, however, but was funneled back to Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Liberty/" rel=nofollow>Liberty's clients, their friends and family members, the indictments state.
Liberty employees made up jobs and incomes for buyers, then acted as contacts to verify the information when lenders called, said the indictment.
Gjerde, an Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Elk+Grove/" rel=nofollow>Elk Grove attorney, is accused of writing letters for three buyers, "falsely" verifying their employment, and claiming he had prepared their tax returns for years, according to the indictment.
On Wednesday, Gjerde's attorney, Tom Johnson of Sacramento, said: "We intend to go to trial. We intend to contest the allegation."
Johnson also said the federal government is targeting the wrong people.
"The real culprit was the lenders and the large banking institutions," he said. "The same people who were just venomous to our economy are the same people who are not being indicted."

Sacramento region's housing market slowly, fitfully rebounds.

2010-06-25T22:15:00.000-07:00

By Jim Wasserman
jwasserman@sacbee.com

As housing led us into the Great Recession, goes popular wisdom, housing needs to lead us out. And housing looks unready to lead us anywhere.
Those words were used to tease a national radio broadcast Wednesday about the housing market.
The message: Housing is down. Run for your life.
Every day the media report some confusing new monthly data about housing. It's all breathlessly urgent. But it often makes no more long-term sense than the stock market. Markets plunge one day when investors get more pessimistic about the recovery. They soar the next when they get more optimistic. Daily, a blizzard of reports arrives. Something's looking better. Or it's worse.
Home Front knows nothing for certain in this fragile economic environment. But inside a swirl of dueling data, a few things are still real.
All real estate is local
What's true on national news may not be true where you live. Nine days ago the nation hyperventilated because a federal agency reported May single-family housing starts fell 17 percent from April. It was "the largest monthly drop since January 1991." Oh no!
But Thursday came new California counts from the Construction Industry Research Board. May housing starts in Sacramento, Placer, El Dorado and Yolo counties were up almost 10 percent. End of the world? Not here.
This is a long, slow slog
Nobody said recovering from a crash would be easy or fun. But one day, one house at a time, this market is resetting itself. Foreclosed homes get buyers at today's prices. These owners stay and heal neighborhoods.
Negative equity – owing more than your house is worth – is still terrible. But it's slowly, slowly easing. A year ago more than half of area mortgaged houses had negative equity. Now it's less than half. The trend is moving the right direction. It is not getting worse.
Foreclosures are stalling
It's hard to fathom why this is true. More people than ever are behind on payments with unemployment at 12 percent. But banks have managed to prevent a tidal wave of repos that would further tank your home values. Maybe it's just muddling through. But it has slowed foreclosures.
Government, too, has muddled along with program after program to save borrowers. Most of them have been perceived as lame. But more than 6,200 area borrowers did have permanent loan modifications at May's end.
Now, governments, even lenders, are drifting toward principal reduction. That cuts what people owe to keep them from walking away. It's too late for many. But slowly, institutions are becoming more open to what many believe is the best possible cure.
It's still cheap to borrow
Predictions since 2006 said interest rates would cross the 7 percent barrier and shut down homebuying. They remain below 5 percent. And almost all of today's mortgages have safer terms. The supply of people with the nastiest loans is shrinking, not growing.
Many who can refinance are also trimming their debt. Day in and out, that's a big thing happening amid the daily blizzard of economic reports. Many who can are slowly deleveraging. It's painful. It was necessary.
Nobody's saying things are swell. But keep perspective. From the bottom, so slowly, the direction is usually up.

California to offer program to trim underwater mortgages

2010-06-24T20:41:00.000-07:00

By Jim Wasserman
jwasserman@sacbee.com

Lots of people will want to get in on this one: California is going to use federal money to pay down the mortgages of struggling homeowners.
The California Housing Finance Agency announced Wednesday that it will spend $420 million to trim individual mortgages by up to $50,000. Lenders will be asked to match the amount, a deal that could make thousands of mortgages newly affordable across the Sacramento area.
The program, launching Nov. 1, will be run on a first-come, first-served basis, said Evan Gerberding, marketing manager for the CalHFA's "Keep Your Home" initiative.
"Unfortunately, there will likely be more demand than funding," she said.
Specifics on the selection process are still in the works. But CalHFA will exclusively fund applicants from low- to moderate-income households. In Sacramento, that's expected to mean people earning less than $68,000 a year. Borrowers will have to be delinquent or in imminent danger of defaulting, but have adequate income to continue paying after getting the help.
Gerberding advised people to keep checking the Keep Your Home website for applicant criteria to be posted later. She said people struggling to make payments shouldn't wait for the program to start, but should contact lenders and loan counselors now.
Thousands of Californians who meet the income guidelines will want in, but one fact will block many.
"This is to help people with purchase loans," Gerberding said Wednesday.
That rules out borrowers whose troubles began with cash-out refinances when their homes were worth more than now. Gerberding said exceptions may be made for people who refinanced to get lower interest rates. The program also requires that homeowners live in the house they mortgaged.
For years, federal and state governments have rolled out programs to stimulate loan modifications, and most have proved disappointing. California's new program is one of the first large-scale attempts at wholesale "principal writedowns," where loans are shrunk to more closely match today's home values.
"We think it's encouraging that they took on principal reduction in the way that they did, devoting most of the resources to it," said Kevin Stein, associate director of the California Reinvestment Coalition.
The low-income advocacy group has campaigned for principal reductions since 2007.
"That's the real need in California, to address the negative equity of borrowers being underwater," Stein said.
CalHFA, the state's affordable housing bank, estimates it will help 40,000 or more households avoid foreclosure with principal writedowns and other plans unveiled Wednesday. In all, the agency received $700 million for the relief programs, part of a $1.5 billion federal initiative to curb foreclosures in the hardest-hit housing crash states.
"We anticipate offering this over the next three years," Gerberding said.
The agency will also spend $129 million providing up to $15,000 to help people catch up with late payments.
An additional $64 million will provide the unemployed up to $1,500 a month to pay the mortgage for six months.
Finally, homeowners will receive up to $5,000 to move when they cannot afford the mortgage under any circumstances.
In all, the program will steer a maximum of $50,000 to qualifying households to avert foreclosures.
The CalHFA manager said there is no geographical quota. But help will roll first to hardest-hit counties, including much of the Central Valley.
In Sacramento, Placer, Yolo and El Dorado counties, 12 percent of mortgages are seriously delinquent or in the foreclosure process. And nearly half the region's mortgaged households owe more than the house is worth, according to housing industry tracker CoreLogic.
"There are thousands who could benefit," said Pam Canada, executive director of Sacramento nonprofit loan counselor NeighborWorks Homeownership Center.
Gov. Arnold Schwarzenegger pledged Wednesday to work with CalHFA "to ensure that these programs are implemented in a way that assists the greatest number of Californians."
CalHFA hopes banks will match the $700 million.
"We're asking lenders to come to the table with us on this," Gerberding said. "We can't force them to do that. But many of them have indicated they are happy to do that," she said.
Gerberding said CalHFA will add fewer than 10 new staff members to run the program. Administrative costs are estimated at about $52 million – 7.5 percent of the funding.
More information is available at the Keep Your Home website: www.keepyourhomecalifornia. com; or call (916) 373-2585.

$ 1 million-plus homes selling again in Sacramento region

2010-06-21T18:38:00.000-07:00

By Bob Shallit
bshallit@sacbee.com

There's life again at the upper end of the region's residential real estate market, with a spate of recent home sales in the $1 million to $2.5 million range.
"We haven't seen anything like this in two years," says Kim Pacini-Hauch, a Lyon agent who specializes in upper-end homes.
Among the 30 or so closed escrows since April 1 in the $1 million-plus category: a home at 630 Hawthorne Road, for $2.23 million and one at 1213 Mariemont Ave. for $1.8 million, both in Sacramento County; a home at 1964 Shoreview Drive in El Dorado Hills for $2.23 million and one at 6110 Terracina Court in Loomis for $2.5 million.
Among sales currently pending: a home at 2671 Huntington Road in Sacramento County that had an asking price of $2.3 million.
Why the recent pickup after a two-year stretch of extremely limited activity?
Pacini-Hauch cites several factors, including "realistic" pricing by motivated sellers, attractive interest rates and a decision by buyers – many of them sitting on cash – to finally get off the fence.
"They're feeling confident," she says, "that we've found the bottom" of the market.
Stop, thief
Credit a sewer upgrading crew with taking a bite out of crime in south Sac.
The crew, from Insituform Technologies, is working to reinforce an eight-mile stretch of pipeline running from Power Inn and Fruitridge roads to the sewage treatment plant in Elk Grove.
On a recent afternoon, project superintendent Rich Frymire heard a woman screaming that her purse had just been snatched. He saw a guy jump into an SUV and tear off.
Frymire, a former Marine, got into his truck, followed the bad guy and flagged down a cop. An arrest was made, the purse returned.
The victim was thankful, says Dillon Miele, a project engineer with the Sacramento Area Sewer District.
"She bought the whole crew lunch," he says.
Planning on the cheap
A Sacramento company has come up with a novel way to help cash-strapped municipalities complete general plan updates: It's teaching them to do the work themselves.
After a year of preparation, Mintier Harnish has just taken the wraps off of a three-day training program it's offering to cities and counties for between $10,000 and $25,000.
That's compared with the $1 million or more regional planning firms like Mintier Harnish often charge to update general plans, which guide municipalities in development and land-use decisions.
"We're giving away some of our trade secrets, I suppose," says principal Jim Harnish. "But it's an opportunity to benefit us and the public agencies as well."
Get a whiff of this
Turns out that Sactown magazine may have a "first" after all with that dazzling citrusy scratch 'n' sniff cover on its current issue.
We reported last week about the "Best of the City" issue, suggesting it could be the first time such technology was employed on a mag cover. Then we threw some cold water on that assertion.
The New York Times had also written in a blog about the unusual cover – prompting a reader's e-mail pointing out that Wired mag had published its own s 'n' s cover in 1999.
Sactown co-editor Rob Turner did some research and found that Wired merely used a sticker. It didn't embed a scent into its cover, as Sactown did.
So Sactown rules.
Still, Turner gives props to Wired, which mimicked an underarm odor on its cover.
As he notes in a posting on the Times' site, that's "nothing to sniff at either."

Sacramento-area home sales for May reported strongest in 4 years

2010-06-18T21:12:00.000-07:00

By Jim Wasserman
jwasserman@sacbee.com

More than 3,700 Sacramento-area buyers claimed keys to new and existing houses in May, the strongest sales month in four years, a La Jolla researcher reported Thursday.
Sales prices also continued to drift upward. Sacramento scored a fifth straight month in which prices beat the same time last year, La Jolla-based MDA DataQuick reported.
Sacramento County's median price for existing homes and new houses combined is $182,000 – 4 percent higher than in May 2009. Median is that point where half sell for more and half for less.
The latest numbers show that a spring homebuying surge that started in March has strengthened in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties. Altogether, 3,716 homes changed hands in the region. About 9 percent were new houses, DataQuick reported.
But the region is also seeing a steady rise in for-sale signs. At month's end, 7,424 – the most in a year – dotted the streets and roads of Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/El+Dorado/" rel=nofollow>El Dorado, Placer, Sacramento and Yolo counties, Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Sacramento/" rel=nofollow>Sacramento researcher TrendGraphix reported.
Distress also continues to haunt the capital region. An estimated 12 percent of mortgages in El Dorado, Placer, Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Sacramento/" rel=nofollow>Sacramento and Yolo counties are delinquent, in the foreclosure process or tied to a bank repo, says Orange County housing analyst CoreLogic. Bank repos still accounted for 47.6 percent of sales in Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Sacramento/" rel=nofollow>Sacramento County, said DataQuick.
But those who have money and jobs are buying, says Sacramento real estate agent Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Ted+DeFazio/" rel=nofollow>Ted DeFazio of Ellington Properties. He brokered three of the region's closed escrows in May. DeFazio confirmed that a statewide trend of fewer bank repos and more higher-end sales is also happening locally.
"I sold two houses in the $500,000 range in May," he said. Those sales, growing as sellers become more realistic about values, are tugging the county's median toward $200,000. Sacramento County prices bottomed out at $160,000 in February 2009.
Prices are also edging up for cheaper houses. Mike Lyon, head of Lyon Real Estate, cited a 15 percent rise in the price per square foot for houses under $200,000 the past year.
DeFazio said higher-end sellers are proving more willing to deal this year, and buyers "are getting into neighborhoods they wouldn't have been able to afford back when."
The numbers reveal a sizable number of first-time buyers who started sales contracts before April 30 to collect a federal Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link" href="http://topics.sacbee.com/tax+credit/" rel=nofollow>tax credit of $8,000. Many are also staking claim to California's first-time buyer tax credit of up to $10,000. Those became available May 1.
More than 15,000 first-time California buyers have applied for the state tax credit, which is now 80 percent claimed, according to the state Franchise Tax Board.
In addition to the tax credit, buyers are attracted by interest rates that have remained below 5 percent for six weeks.
Senior loan consultant Brent Wilson, of Comstock Mortgage in Sacramento, said most home loans are going to "first-time homebuyers and investors in that more moderate price range."
According to DataQuick, investors accounted for 25.4 percent of Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Sacramento/" rel=nofollow>Sacramento County sales. Buyers paying cash constituted 31 percent of sales.

State says recession may have bottomed out.

2010-06-16T11:02:00.000-07:00

The state Department of Finance, agreeing with most other economic forecasters, says California's economy appears to have hit the bottom of the recessionary trough and is beginning to recover.
"A resurgent labor force is one of several signs that the economy is slowly getting back on its feet," the department says in its monthly economic bulletin. "A resumption of job growth pulled discouraged people back into the labor market. Building activity, both residential and nonresidential, appears to have stabilized and, while still at low levels, has improved modestly from the beginning of 2009."
The department, echoing a report last week from Controller John Chiang, says that general fund revenues so far in the 2009-10 fiscal year, are running slightly ahead of the state budget forecast. By the end of May, one month before the fiscal year closes, general revenues were $76.2 billion, about $300 million over the forecast.
Earlier in the year, the state was hoping for a multibillion-dollar windfall, but revenues in April, when income taxes were due, fell well short of expectations. Overall, income taxes ran $424 million above expectations through May, but sales taxes fell short and other, minor sources of revenue ran on track.

Builder to lease solar-power equipment

2010-06-14T20:45:00.000-07:00

By TIFFANY HSU
Los Angeles Times

One of the country's largest home builders is offering a new financing option that could make it easier for people to afford solar-powered homes.
Calling it the first large-scale program of its kind, Lennar Corp. plans to announce Tuesday a partnership with solar panel manufacturer and installer SunPower Corp. to lease panels rather than requiring home buyers to purchase the technology outright along with the house. Last year, Lennar and SunPower launched a successful test run of the leasing option in 150 Sacramento, Calif., homes.
Under the program, customers would essentially buy the electricity produced by the solar panels, making monthly payments to SunPower that the company says will average $65 over 10 years, or about $7,800 total.
Previously, the roughly $20,000 cost of the system was automatically folded into the price of a new home and added to the mortgage. The actual out-of-pocket cost was less because of rebates and tax credits.
Still, some buyers balked at the expense, said David Kaiserman, president of Lennar Ventures. He said he expects the leasing program to attract more homeowners to solar-equipped properties.
"Solar's something most people would like to have but just can't afford," said David Kaiserman, president of Lennar Ventures. "Even with state and federal subsidies, people still stretch to come up with the upfront money."
The Lennar partnership with SunPower is also more convenient than leasing programs through third-party manufacturers and installers, executives said. SunPower adds the panels as the home is being built without dragging the homeowner through the permitting and installation process necessary on an existing structure.
Miami-based Lennar has installed SunPower solar panels on more than 1,700 homes in California since 2006.
The photovoltaic systems, which blend in with surrounding tiles on the roof, are made of monocrystalline cells and can produce an average of about 3.5 kilowatts at any given time, said Matt Brost, general manager of SunPower's New Home Division.
Under the leasing system, any government incentives associated with the panels are passed along to SunPower. That allows the company to charge homeowners less than their average utility rates.
Participants Dalia and Dan Mask pay $26.90 a month for the electricity produced by the panels on their three-bedroom home in the Kavala community in Rancho Cordova, Calif. For those times that they need more energy than the solar system can deliver, they're still hooked up to the local utility grid. Their last utility bill was just $4.80 and usually comes in under $50, compared with $125 a month when they lived in an apartment.
"The savings is huge," said Dan Mask, 52. "In the summer time, you've got a tremendous amount of sun, and we don't use a tremendous amount of electricity. You could save hundreds on your electricity bill."
The companies said they expect most customers to renew their lease at the end of the 10-year term, but homeowners may also buy the system, have it removed or turn it off.
Lennar, which may expand the leasing option to states with favorable solar incentives, is considering rollouts throughout California and also in Colorado and New Jersey. The program is already being offered in Lennar communities in Sacramento, Fresno, San Diego and Corona in the Inland Empire.
"The incentives are in such a state of flux that we're really monitoring it moment by moment," Kaiserman said. "We're going to be nimble and evolve the program as incentives continue to evolve."

Short sales -- and ways to explain them -- rise in Sacramento

2010-06-11T23:07:00.000-07:00

By Jim Wasserman
jwasserman@sacbee.com

Every for-sale sign tells a story. These days, most tell about trouble making the house payment.
Yet in Sacramento, more such stories are ending with short sales and fewer with foreclosures. The numbers show it. In mid-May, 58 percent of homes for sale in Sacramento County were short sales and only 13 percent were bank repossessions, said Tom Beede, president and chief executive officer of Metrolist Services Inc.
"Short sales are more profitable for the banks and they're doing a better job of processing them," he said.
In short sales, lenders accept offers from new buyers that are below what current owners still owe.
But as short sales become the next big thing and promise to remain strong for five years or more, they're fertile ground for misbehavior, say real estate professionals and regulators. In today's Wild West of distressed real estate, short sales can appear as a game of everyone for themselves: scammers vs. home sellers, sellers vs. their lenders and even lenders vs. lenders.
Nearly 4,500 borrowers in Sacramento County are trying to do short sales right now. Here are just a few of the things to watch out for, and what players say they're seeing:
• Unlicensed short sale "negotiators" are approaching homeowners, asking for thousands of dollars up front to negotiate with lenders, said Tom Pool, spokesman for the California Department of Real Estate. Only attorneys and licensed brokers can ask for money up front – and only after the DRE approves the agreement with an individual seller. The DRE recently published a consumer alert about this and other scams.
• Real estate agents or these negotiators are lowballing offers to overwhelmed banks, a practice called "flopping." After the bank approves a short sale at a low price, the agent or negotiator quickly flips the house to a new buyer for much more. Elizabeth Weintraub, a Sacramento short sale agent with Lyon Real Estate, said would-be floppers often want to use their own title companies. That's a red flag.
• Real estate agents say banks are illegally seeking extra money in hidden side deals before approving short sales.
Here's how it works: A bank that holds the "second" loan, such as a home equity loan or down payment, asks a seller for more money without telling the lender that holds the primary loan. It's an unrecorded deal outside the escrow process.
"I'll say, 'I can't make side deals. It's illegal,' " said Edda Nix, a Lincoln short-sale specialist with Century 21. "They say, 'That's too bad. You can't get our approval.' "
"That's really a huge problem," added Gloria Borges-Valdez, a Lyon Real Estate agent in Sacramento.
• Some homeowners, especially savvy, well-off owners who owe far more than their houses are worth, are hiding savings and income to persuade lenders to agree to short sales. Many can afford their mortgages, said Coldwell Banker short-sale specialist Mike Toste of Roseville. But they also know it will take years to recoup their 2006 values.
Short sales do less damage to credit scores. They also make it possible to buy another house sooner.
Said Toste, "We turn away more people than we take on, because of their financial ability to pay (the mortgage). People just want out."

Central Valley counties are major areas for cheaters targeting lenders

2010-06-09T23:17:00.000-07:00

By J.N. SBRANTI
The Modesto Bee

Lenders are being warned there's a higher risk of mortgage fraud in Stanislaus County than anywhere else in the United States, and it's almost as bad in Merced and San Joaquin counties.
The risk of borrowers ripping off lenders is twice as high in the Northern San Joaquin Valley compared with the national average, according to mortgage application data analyzed by Interthinx.
"When you talk about mortgage fraud, you're talking about bank robbery without a gun," said Ann Fulmer, Interthinx vice president of industry relations. "It robs a community of its value and security." Interthinx analyzes mortgage applications for more than 1,100 lenders, running data through its computers to spot potential fraud.
Apparently, fraud is rampant in Stanislaus, where foreclosures are high and median home prices have fallen about 66 percent since 2005.
"Fraud flourishes in unstable markets," Fulmer warned. She said there was lots of mortgage fraud when the region's home prices soared several years ago, and now new scams are being used to push down prices. "Fraudsters are really adept entrepreneurs,"she said.
Computer analysis is getting more sophisticated, too, enabling Interthinx to spot suspicious trends.
"We are seeing a resurgence of schemes involving real estate agents," Fulmer said.
Interthinx has started publishing the Mortgage Fraud Risk Report for lenders, and the latest issue puts Stanislaus atop the list.
"It gives lenders an idea where they really need to pay attention," Fulmer said, "which allows them to take defensive action." Stanislaus' real estate insiders are well aware of this type of fraud.
Mortgage fraud comes in many flavors. Basically, mortgage fraud is any material misstatement, misrepresentation or omission used to obtain a real estate loan. Lenders are the victims.
That's different from predatory lending, in which borrowers are victimized by lenders or mortgage brokers who put them into overpriced loans.
The hottest form of mortgage fraud in the Northern San Joaquin Valley involves bogus property valuations.
Fulmer said a lot of the fraud involves the resale of foreclosed bank-owned homes and "short sales," in which homes facing foreclosure are sold for less than their outstanding mortgage.
Here's one way that scheme works, according to Fulmer: A bank repossesses a home, then hires a real estate agent to resell the property. That agent secretly creates a limited liability corporation that offers to buy the property for a very low price.
Meanwhile, other interested buyers also submit bids for the home, offering considerably more than the LLC's bid.
But the dishonest agent tells the seller (which in this case is the bank) only about the low bid from the LLC. It illegally keeps the other bids secret.
Figuring that the LLC's bid is the best deal available, the bank agrees to sell for the low price just to get the foreclosed home off its books.
Then the agent immediately resells the house on behalf of the LLC to one of the other bidders for the house.

More California homeowners walk out on mortgage

2010-06-07T22:16:00.000-07:00

By TIM SHEEHAN
McClatchy Newspapers

A generation ago, a house was more than a house.
It was part of the "American dream." And foreclosure was a horrifying but unlikely prospect for families who plunked down their savings and took out mortgages to become homeowners.
But a two-year recession has driven foreclosures to a record pace. For many families whose homes are worth far less than what they owe, financial and emotional stress is changing the "stay-at-all-costs" mindset.
In areas hardest hit by plunging real-estate values - including the San Joaquin Valley - some people who can afford their mortgage are opting to walk away from their loan and let their bank repossess the house.
"It's very stressful to get to that point," said James Graham, a 48-year-old power-plant worker who walked away from his home in Bakersfield last fall. "You're raised up to do the right thing and pay your mortgage, pay your bills."
"But when you get to that point where it's time to walk, it's time."
It's called "strategic default," and experts say it stems from frustration with home values that have plummeted since buyers bought or refinanced at the peak of the real-estate boom, and banks dragging their heels on loan-modification requests.
"If you've got a mortgage that's $400,000 and the homes around you are selling for $150,000 ... it doesn't take a rocket scientist to figure out there's a compelling reason to walk," said Robin Kane of RCK Organization, a Fresno property broker. "Especially when you find out the guy across the street is renting for $1,200 a month and your mortgage payment is $3,600 a month."
There's no definitive figures on how many mortgage defaults are by choice versus crisis. But a recent survey by the University of Chicago suggests that about one-third of U.S. home mortgage defaults are strategic.
"Foreclosure is no longer the 'F-word,' " said Jon Maddux, CEO of YouWalkAway.com, a San Diego company that charges a fee to coach homeowners through the foreclosure process. "There's much less stigma attached to it now."
With foreclosure and mortgage delinquency rates in the San Joaquin Valley among the highest in the country - and uncertainty over how long it will take home values to recover - experts believe strategic defaults in this region will increase.
A GROWING CONCERN
"People are walking away from homes in every county in California," said Walter Dees, the Los Angeles-based lead housing counselor for the nonprofit Clearpoint Credit Counseling Solutions. "They don't see the value of continuing to pay for a house that will take 10 years or more to regain the value it had before."
Many in that situation don't feel like they're getting the help they need from their lender, Dees added. "People are trying to do modifications first, and depending how that goes, frustration sets in and they start talking about walking away."
Economists estimate that about 25 percent of U.S. mortgage borrowers are "under water," owing more on the loan than the home is worth. In the San Joaquin Valley, where median home values have fallen by 40 percent or more since 2006, nearly half of home mortgages were under water by the end of 2009, according to CoreLogic, a real-estate tracking company in Santa Ana, Calif.
Graham, a control-room operator for a power plant, bought his three-bedroom, two-bathroom Bakersfield home for about $162,000 in 2003. As property values roared upward in 2005 and 2006, lenders inundated Graham with offers to refinance against the rising value the house.
"People were just dying to give me money and I was just dying to take it," said Graham, who eventually refinanced for $320,000 to consolidate some other debt. "I thought I'd always have my house to back me, that it would keep going up in value." But when the market collapsed, "my house was worth 60 percent of what I owed."
Graham was transferred for work to Sacramento and had no takers when he tried to sell his home. Rent in Sacramento and mortgage payments in Bakersfield "financially drained me to the point where something had to break," he said. "It was so stressful, I decided to let (the house) go because it was just eating me up."
Graham's home was taken over by Fannie Mae in August, and a new owner bought it in December for $171,000. But Graham, who transferred back to Bakersfield and now rents an apartment there, doesn't regret his decision despite a sizable knock to his credit score from the foreclosure.
"It was very hard to get to that point where you actually make that choice," he said. "It's such a prideful thing when you're used to making your payments. ... But my life has improved greatly since I walked away from that mess."
A SENSIBLE CHOICE?
For homeowners who owe substantially more than the home is worth, an Arizona law professor suggests walking away makes more economic sense than continuing to throw money at a mortgage.
"Millions of homeowners could save hundreds of thousands of dollars by strategically defaulting on their mortgages," said the University of Arizona's Brent T. White in a discussion paper published earlier this year.
"Homeowners should be walking away in droves. But they aren't," he said.
The reasons, he added, are more emotional than financial: "the desire to avoid the shame or guilt associated with foreclosure," and "fear over the perceived consequences of foreclosure."
A national housing survey made public in April by the Federal National Mortgage Association, or Fannie Mae, shows the considerable cultural pressure to hang in with a mortgage.
"The public (still) strongly believes in the importance of upholding the financial commitment involved in buying and owning a home," Fannie Mae CEO Mike Williams said, "even during these challenging times when home values have fallen."
The Fannie Mae survey revealed that almost 90 percent of Americans, and about 70 percent of mortgage borrowers who are delinquent on payments, "do not believe it is acceptable for people to stop making payments on an underwater mortgage." But borrowers reported they were twice as likely to consider stopping payments if they knew someone else who had defaulted.
FACING CONSEQUENCES
Like any foreclosure, a strategic default leaves a scar on a borrower's credit history.
Credit counselor Dees - whose housing counseling program is underwritten by an assortment of federal grants and grants from banking organizations and other industries - said many of his clients are frustrated after their bank has denied a plea for help, especially after so much news about bank bailouts and government programs to modify loans.
"One of the first things we explain is that you're not hurting the bank by walking away," Dees said. "You're only putting yourself in a worse situation."
While still a red flag, either a short sale - in which a bank agrees to let the owner sell the home for less than the balance owed - or a deed in lieu of foreclosure "look more favorable on a credit report," Dees said. "It's much better to work with the lender to get it sold the right way."
Maddux and White suggest that the effects of foreclosure are overblown.
"The perception is grossly misrepresented," said Maddux. "The damage isn't as bad as people think - it's about 100 (to 125) points on a credit score."
White said most people "can expect to recover from the negative impact of foreclosure on their credit score within a few years." By renting for far less, they can apply the rest of their mortgage payment to get ahead on other bills, he said.
"The financial costs of foreclosure, while not insignificant, are minimal compared to the financial benefit of strategic default, particularly for seriously underwater homeowners," White wrote.
Kane, the Fresno broker, said he believes a modest surge in consumer spending across the country may be in part because more people have stopped making mortgage payments.
"When you've got 7.9 million mortgages in the United States that are delinquent or in default, that money is going somewhere else," he said. "These people are doing something with their money."
Part of what is slowing down bank willingness on loan modifications, he added, are credit checks that reveal many delinquent borrowers are current on their credit cards, medical bills or other expenses, Kane said: "The only thing in delinquency is their mortgage."
EMOTIONAL DISCONNECT
Kane said the latest generation of homeowners views real estate differently than their fathers and grandfathers.
"Up until this decade, people bought a home because they wanted a place to raise their kids," he said. "They wanted good neighborhoods, good schools."
Now, however, "What was an American dream became an asset to trade," he said. "There's no emotional attachment to an investment. ... And the older generations are perplexed by that attitude."
Adding to the detachment, Kane said, are the changes in banks and the entire process of dealing with loans.
"Years ago, you went to the bank, met with someone who trusted you and loaned you the money. Those days are gone," he said. "The moral justification not to walk is really diminished because the relationship between the borrower and the banker is gone."
As more mortgages are sold to other servicers as investments, Kane added, "when you call about your loan, you're not a person. You're a number on a computer screen in India."
Despite incentives from the federal government to modify loans for struggling homeowners, Kane said banks have been largely disinterested in working out mortgage modifications that involve reducing the principal owed to reflect the deflated value.
But, he added, a rise in strategic defaults may work to bring more bankers to the table to work with borrowers on loan modifications and avoid the costs of a foreclosure.
"As long as someone keeps making their payment, there's no reason for a lender to step up and give you a break," Kane said. "The best thing about this is that lenders may finally get serious about modifying loans."

Home prices nationwide decline 1.1 percent in first quarter

2010-06-04T22:39:00.000-07:00

Home prices nationwide registered a 1.1 percent decline in the first quarter of 2010 compared with the first quarter of 2009, according to Freddie Mac’s Conventional Mortgage Home Price Index (CMHPI) Purchase-Only Series. The Index was down 2.1 percent compared with the fourth quarter. The CMHPI Purchase-Only Series includes only property values based on home purchases with a conventional mortgage in its calculation.
Regionally, the Pacific Division, which includes California, decreased 2 percent in the first quarter of 2010. Over the last 12 months, home values increased 4.5 percent, and during the last five years, home values have decreased 13.2 percent, according to the CMHPI.
More info.

California's foreclosure crisis begins to wane

2010-06-02T22:26:00.000-07:00

By Jim Wasserman

For once California's economy looks good compared to that of some other states.
A foreclosure crisis that has dimmed the state's golden glow with images of financial ruin and broken government is beginning to wane, says a leading trade group for the U.S. mortgage industry.
The Mortgage Bankers Association said Wednesday that California foreclosure starts have fallen from a year ago – even as problems grow in Midwestern Rust Belt states such as Ohio, Michigan, Indiana and Illinois.
"California is showing signs of improvement. We are seeing it on a quarter-to-quarter basis and year-over-year basis," MBA Chief Economist Jay Brinkmann said.
Consider:
– In the past year California moved from fourth place among U.S. states for foreclosure starts to seventh.
– Mortgage delinquencies, while up from early 2009, fell slightly in early 2010.
– The percentage of California mortgages in the foreclosure process fell, too, during the past year.
California's fragile improvements come as the national picture is less clear. Collectively, the longtime mortgage disaster areas – Florida, California, Arizona and Nevada – are becoming less of a problem nationally, MBA data showed.
"A year ago they had 45.3 percent of the problem loans," said Brinkmann. "That's down to 37.9 percent.
"We're looking now at Illinois, Ohio, Michigan and Indiana. They're climbing back into the list of problems," he said. Those states have longer-term structural problems as their manufacturing economies continue to decline.
The new data confirmed improvements in California and the Sacramento area recently cited by researcher MDA DataQuick. Last month the firm said mortgage defaults have fallen for a year straight in the state and region, with foreclosures dropping now as well.
In hard-hit Sacramento suburbs such as Natomas, Lincoln and Elk Grove, residents see dwindling evidence of the crisis.
"All those houses that were vacant before were sold in the last year or two," said Yuri Ramirez, a Keller Williams agent in Elk Grove. "A year ago it seemed every other house on some of those streets were vacant."
Homeowners in distress are increasingly using short sales to unload their properties rather than losing them to foreclosure.
That's helping preserve neighborhoods, because these owners stay in the homes until they're sold rather being evicted and leaving an empty house behind.
Make no mistake: California's long journey into a financial meltdown is nowhere near its conclusion, economists say.
They foresee prolonged trouble for the state economy and government revenues. At best, said Los Angeles economist Chris Thornberg, "The worst is behind us." He added, "We have years yet of dealing with this."
Like everything about the foreclosure crisis, even explaining a sense of improvement is open to interpretation. Thornberg said a fall in California foreclosure starts shows only that banks are taking longer to deal with late mortgage payments.
Jeff Michael, director of the Business Forecasting Center at the University of the Pacific, said simply, "This suggests we've reached the point where the number moving into delinquency equals the number moving out."
Even that might be declared victory. More people are moving out of delinquency through short sales – selling their homes for less than they owe. And despite criticism of government loan modification efforts, the U.S. Treasury Department reported this week that 5,400 homeowners in the eight-county Sacramento region received permanent loan modifications since December 2009. Regionally, banks foreclosed on 4,300 more in the first quarter of 2010.
Any slowdown of last year's frightful rise in delinquencies, said Michael, "indicates we're close to a peak."
The state still has a long way to go before it regains a healthy economy, 6 percent unemployment and a budget in the black, Thornberg and Michael agreed Wednesday. But for once, California is falling off lists of the worst performers.
Eventually, the supply of distressed properties will simply be exhausted, Michael said, adding, "The fire will burn itself out for lack of fuel."

Squeeze Inn expands to feed Roseville fans

2010-05-31T22:27:00.000-07:00

By Ed Fletcherefletcher@sacbee.com

The Squeeze Inn, one of Sacramento's best-known hamburger dives, has gone uptown by opening a third location this week, in Roseville.
The majority of Roseville's recent restaurant openings have been national chains. The Squeeze Inn, at 106 N. Sunrise Ave., adds diner fare to the mix.
The new location is owned by two longtime Squeeze with Cheese aficionados who are trying to make the shift from patron to proprietor.
To prepare for this week's opening, co-owners Charles Rogers and Keith Lenheart stole time away from their jobs at Skatetown in Roseville to pull shifts at the south Sacramento location.
"It was nice to be on the other side of the counter making it instead of eating it," Rogers said.
On Wednesday, Rogers was the problem solver as his team of a dozen cranked out burgers for a hungry mix of first-timers and longtime fans.
Lenheart was on the griddle dropping cheese by the handful to form the "cheese skirts" that earned its mention on the Food Network show "Diners, Drive-ins and Dives."
By noon, the line to order was 12 deep and growing fast.
Joe Fassler of Fair Oaks brought his buddies, both first-timers.
"It's not health food," said Brian Buhl of North Highlands.
Having made the trek to the south area for a Squeeze Inn burger before, Fassler and his two friends arrived early. Despite getting in the door by 11:45 a.m., they didn't eat until 12:30 p.m.
Compared to the original location with only 12 stools indoors, that might be called progress. The new franchisee location is a converted Round Table in a strip mall on the corner of Sunrise Avenue and Douglas Boulevard. It's squeezed in among an orthodontist's office, a paper supply company and a place selling hearing aides.
Rogers said he wasn't surprised at the early turnout. "Squeeze Inn has a big following," Rogers said.
Early marketing was all through social networking and word of mouth.
"I've been a follower on Facebook for a few months now, waiting for them to open in Roseville," Fassler said.
In February, the south Sacramento location moved from 7916 Fruitridge Road to 5301 Power Inn Road after co-owner Travis Hausauer chose to find a new site rather than face a disability lawsuit. The restaurant also has a Galt location.

Dave & Buster's to open restaurant in Roseville

2010-05-28T21:54:00.000-07:00

By Ed Fletcherefletcher@sacbee.com

Roseville will welcome another signature eatery to its lineup of restaurants when Dave & Buster's opens its first Sacramento-area establishment.
For the uninitiated, Dave & Buster's is like a Chuck E. Cheese for adults – except that kids are allowed.
So it's like a Chuck E. Cheese with a full bar and menu.
The restaurant officially opens at 11:30 a.m. Monday at the Fountains shopping center, 1174 Roseville Parkway. At 17,000 square feet, it is one of the smallest of the Dallas-based chain's 57 restaurants.
Chris Merino, who got a sneak peek at the restaurant Thursday, would have preferred one closer to the mammoth, 65,000-square-foot establishment in San Jose, but he was plenty happy nonetheless.
"I've been waiting for years for them to open one here," said Merino, who tried out some of the 300 video and parlor-type games at the eatery.
Kids are welcome when accompanied by adults, but it's kids like Merino, 38, who are the target audience.
"I'm still a kid; I love playing this hoops game," he said. "I was a video game kid … Pac-Man and Asteroids."
Dave & Buster's video games emphasize action, from shooting, to racing, to Whac-A-Mole, to dancing games.
Parlor games reward players with tickets that can be redeemed for prizes.
If televised action is what you want, General Manager Brandon Ball said they have you covered.
"We're flooded with TVs throughout, so it's a great place to watch the game," Ball said.
Thursday, dozens of the restaurant's 165 employees were put though their paces with the grand opening just days away.
With the down economy, Ball said there were plenty of qualified people among the 3,000 who applied for jobs. He even had a lawyer and real estate agent apply, Ball said.
Dave & Buster's moving to Roseville is a case of the rich getting richer.
A recent survey of 18 local governments, including Sacramento, Yolo, El Dorado and Placer counties, and 14 cities found that Roseville trails only Placerville in sales tax collections per resident.
At $278 per person, Roseville takes in more than double the city of Sacramento's per capita take of $126.
The Fountains at Roseville also boasts a McCormick & Schmick's, a California Pizza Kitchen and Tres Agaves restaurants, among others.

Lincoln welcomes highway bypass but worries about downtown

2010-05-24T21:43:00.000-07:00

Downtown Lincoln's historic main street boasts picturesque brick buildings, quaint shops and one gnarly traffic jam.
Thousands of commuters and truckers rumble through each day on old Highway 65, kicking up dust and noise and generally making G Street – as it's known in town – a place locals don't care to go.
Soon, though, this traffic stream will be diverted.
Caltrans is well into building an 11-mile highway to the west that will bypass downtown Lincoln. Opening day is slated for sometime in 2012, and could knock G Street traffic from 31,000 vehicles a day down to 18,000.
City officials and G Street merchants can't wait. Almost none of the pass-through traffic stops to spend money in town, they say.
But when the cars leave, a question remains: Will Lincoln residents and other visitors return, or will the downtown struggle even more as fewer people pass by?
Bypass roads have weakened downtowns across America. Lincoln leaders need only look to Sutter Creek to know they face a challenge. The state recently built a Highway 49 bypass. Sutter Creek Mayor Gary Wooten calls the results a mixed bag.
"Downtown is more peaceful," he said. People can cross the street without worrying about getting hit by a truck. But we've lost business."
Sutter Creek officials have put up signs at the turnoff encouraging drivers to come visit.
Lincoln leaders say they're convinced their bypass will be a blessing, but only if the city takes action now to bolster downtown. The city has hired consulting firm Gruen Gruen & Associates of San Francisco to write an action plan. The company will offer the city preliminary ideas next month.
When the bypass opens, the state will decommission the old highway and turn ownership of G Street over to Lincoln.
Mayor Tom Cosgrove said the city needs to mold a distinct personality for its historic core, which got its start in 1859 as the terminus for a rail line into Sacramento. City incorporation came in 1890.
"We want it to be a place, for lack of a better word," Cosgrove said. "I'm hoping, anytime of day or evening, we can see people on the streets."
The city's seven-block downtown contains attractive brick buildings that have been restored – some with significant city loans. But there are also vacant storefronts and restaurants.
Some are casualties of the recession, which has hit this once high-flying city hard. But the economy isn't the only force at work.
G Street also is suffering because of competition from newer, bigger stores, such as Target and Home Depot, in shopping centers on the south side of town, and in Roseville and Rocklin.
The city population boomed in the last decade from 10,000 to 41,000. Yet downtown's share of the city sales pie fell in that time from 93 percent to 20 percent, and total sales in downtown are down.
Competition won't lessen in the future. The city plans regional shopping centers hugging the bypass to the west in coming decades, as well as smaller retail outlets mixed with new residential villages. A Walgreens is planned for later this year on the south side of the city.
Lincoln's task, when the new road opens, is to woo its own residents back downtown by offering something they can't find in the big box stores and shopping centers along Highway 65, consultant Aaron Gruen says. That may be difficult, since most are newcomers who never had a connection to downtown in the first place.
"They didn't grow up there," Gruen said. "They don't have memories of going to the shoe store downtown with Mom and Dad."
But Lincoln's downtown has positives to build on, Gruen said. It has personality and history. It's compact and walkable. It feels safe. Rents are low, and it will remain centrally located as the city grows.
It could be a place, Gruen said, for professonals to rent small offices. It could be a center of nightlife, dining and art.
"The downtown should almost be the anti-mall," he said.
While the city lacks money for a major redo, Gruen said it could do some small things right away to make G Street feel more friendly, like washing traffic grime off the sidewalks, putting in streetlights and adding diagonal parking.
Downtown business owners talk about farmers markets, festivals and parades.
Fashion Fo Paws shop owner Crystal Pierson pictures a dog-friendly event on G Street.
"We need to have a pet parade," she said. "We have to be open-minded about things like that. It'll bring people in from everywhere."
One idea: Give downtown distinct entrance points, possibly using terra cotta art inspired by the town's stalwart manufacturer, Gladding, McBean, which set up shop on G Street 135 years ago.
Standing at the corner of 5th and G streets last week, with logging trucks blocking the view across the street, Mayor Cosgrove said he has pushed for the traffic rerouting project for more than a decade, knowing it is the right thing for downtown Lincoln.
"This traffic took control out of our hands," he said. "The bypass gives us the opportunity to plan our future."

Sacramento April home sales prices increase from year earlier

2010-05-21T23:08:00.000-07:00

More people bought pricier houses in April, signaling the end of Sacramento's bargain basement-only sales scene.
Buyers picked up the pace from last year in Granite Bay, El Dorado Hills and older neighborhoods near downtown Sacramento, researcher MDA DataQuick reported Thursday. Simultaneously, buyers dwindled in Oak Park, North Highlands and other repo zones of the past two years.
What gives?
There are fewer available repos after a long blowout sale, market trackers say. There's also a sense at the higher end that this market is as good as it's going to get for a while.
"Sellers are becoming more realistic (about) what they can get," said Tim Collom, a Sacramento real estate agent who specializes in east Sacramento, Land Park and Curtis Park. "The gap between buyers and sellers is a lot more narrow than last year."
He said he sold three houses this week valued between $350,000 and $800,000.
The shifting sales mix tugged Sacramento County's median sales price for resale houses nearly 10 percent higher than the same time last year, DataQuick reported. The median, where half cost more and half less, was $175,000.
Resale home prices also beat April 2009 levels in Placer, Sutter, Yolo and Yuba counties.
Less than half of Sacramento County's April sales were cheap bank repos – compared with two-thirds a year earlier. With fewer repos this year, sales in the $200,000 to $400,000 range grabbed a larger market share.
"We've had 70 people coming through open houses in the $300,000 to $400,000 range," said Bob Bronswick, president of Coldwell Banker Residential Brokerage in Sacramento and Lake Tahoe.
"That's the trend across the state," said DataQuick analyst Andrew LePage. He said sellers are cutting prices and buyers are still getting low interest rates to make deals work.
"Sellers are not thinking about 2005," said Collom of Windermere Dunnigan Realtors. "They're thinking: 'We might have to take it back to 2003 or 2002 prices and sell it at that.'"
This doesn't mean expensive is back. LePage said homes priced above $400,000 are only a tiny percentage of Sacramento-area sales.
But the shift is part of restoring balance to a market where repos accounted for a majority of sales for much of 2008 and 2009. Banks have cut repossessed homes on the market.
"The way banks are managing it now will probably keep prices from falling much further," said Rick Sharga of Orange County foreclosure analyst RealtyTrac.
Overall, 3,255 homes changed hands during April in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, DataQuick reported. That was down slightly from March – and fewer than April 2009.
Analysts attributed the slight drop to fewer repo listings for first-time buyers and people delaying escrow closings until May. The state began offering homebuyer tax credits of up to $10,000 May 1.
New homes accounted for 5 percent of sales in the region.

Homebuyers rush to claim state tax credits

2010-05-19T23:41:00.000-07:00

High numbers of pending home sales suggest California's new $10,000 tax credit for first-time homebuyers will run out as soon as next month, officials said Monday.
Nearly 2,500 buyers have already staked claims to $13.3 million in tax credits since the program's start May 1, according to estimates by the state Franchise Tax Board. That includes 2,040 applications last week. The previous week an estimated 430 buyers applied for shares of a $100 million statewide allocation.
"People respond to financial incentives," said Leslie Appleton-Young, chief economist for the California Association of Realtors, on Monday. "Absolutely, it's going fast."
The pace suggests that initial estimates of the credit lasting just "six to eight weeks," according to tax board spokeswoman Brenda Voet, are accurate. Pending sales of existing homes – those between an accepted offer and close of escrow statewide – are running 20 percent ahead of last year at this time, said Appleton-Young. If last year's history holds true, nearly half are first-time buyers sure to apply for tax credits within days of closing escrow.
The FTB couldn't provide application totals received to date from the capital region.
Voet said a second $100 million allocation for buyers of new unoccupied homes will last longer. But even that "could take as little as six months" to allocate, she said Monday. The FTB had no estimates for those applications.
Late last week, the tax agency began warning first-time buyers that it could take up to an hour to connect to its fax machines due to "the high volume of faxes we are receiving."
The state's popular new housing stimulus follows a similar $100 million allocation last year for buyers of new, unoccupied homes. Nearly 11,000 buyers claimed those state credits within four months, trimming a massive glut of vacant new houses.
Some first-time buyers delayed scheduled April escrow closings until May to qualify.
"We had Realtors in the field say that was happening," said Appleton-Young.
That might be a small, partial explanation for a fall in closed escrows from March to April, said Bob Bronswick, president and chief operating officer of Coldwell Banker Residential Brokerage in Sacramento and Lake Tahoe. He said some buyers managed to snag both the state credit and an $8,000 first-time federal credit that expired April 30.
The FTB said on its website that estimates of applications are tentative and may be overstated given last year's history of duplicate or invalid applications.
The state projects that 17,500 first-time homebuyers will receive tax breaks averaging about $5,700 apiece over three years. An additional 14,000 buyers of new homes will get three-year tax breaks totaling about $7,000 each.
State lawmakers and Gov. Arnold Schwarzenegger approved the tax credits in March to boost home sales and help stimulate a lagging construction economy. Homebuilders have expressed hopes it will revive an industry that's seen construction fall to post-World War II lows. Read more:

Permanent Loan Modification rising slowly in Sacramento

2010-05-17T22:01:00.000-07:00

Slightly more than 5,000 struggling borrowers in El Dorado, Placer, Sacramento and Yolo counties have received permanent mortgage modifications, reports the newest look at April loan modification data from the U.S. Treasury Department. Another 380 borrowers in Yuba and Sutter counties have gotten the permanent modifications.The data suggest that ever more people are getting their loans permanently modified through interest rate cuts, longer payback periods and temporary suspension of payments. But the number of people in trial modification payments - the pipeline leading to permanent modifications - is apparently falling. Some fear this may mean fewer people will get help in the longer run.Here is five months of data showing how permanent modifications are rising: Sacramento MSA Yuba City MSADec. 2009 1,156 90Jan. 2010 2,078 159 Feb. 2,921 213March 3,882 296April 5,019 380(Sacramento MSA: El Dorado, Placer, Yolo, Sacramento counties)(Yuba City MSA: Yuba and Sutter counties)Here now is the number of active trial modifications in place by month. As you can see these numbers are falling locally. Home Front hasn't been able to analyze this fully yet, but it would seem to suggest that fewer people are getting into the modification process period. That seems to follow some of the criticism implied in articles that the government loan's modification program is running out of steam. Is this how you're reading it? Here's the number of loans in trial modification programs in recent months (usually for three to six months, a test period for possible permanent modifications). Sacramento MSA Yuba City MSADec. 2009 11,848 908Jan. 2010 12,346 941 Feb. 12,450 956March 11,653 884April 9,624 727According to the report most of these permanent modifications are reducing monthly payments by an average of $500. They include lowered interest rates, longer periods to pay off the loan and temporary suspension of payments.

Selling Short Sale can be scary

2010-05-14T19:13:00.000-07:00

As attempted short sales proliferate across the capital region, many people are worried about bad things that might happen to them – even if they succeed in selling.

Foremost among worries are nasty state tax bills for forgiven debt. With short sales, banks take less than they are owed to avoid the high costs of foreclosing. And governments typically have taxed that kind of forgiven debt as extra income.

Home Front checked this week into the status of legislation that would get people off that hook. As many know, the federal government already has ordered the IRS not to tax forgiven mortgage debt through the end of 2012.

The state of California did the same last year with Senate Bill 1055. It told the Franchise Tax Board not to tax forgiven mortgage debt through the end of 2008. So what about 2009 and beyond? Two bills to extend the protection through the end of 2012 – Assembly Bill 111 and SB 97 – are parked in Assembly and Senate revenue and tax committees.

Technically, if they don't pass, people who do short sales in 2009 will owe taxes on that forgiven debt on April 15, 2010. But don't fret yet; SB 97, at least, by Sen. Ron Calderon, D-Montebello, provides an out.

Even if passed after April 15, "the bill says there are no penalties or interest imposed for failure to pay," said Eileen Newhall, consultant to the Senate Banking, Finance and Insurance Committee. In other words, if the bill passes after the tax filing deadline there are no tax problems for those who do short sales in 2009. (Again, this is only for people who own and occupy their homes, not for investors.)

There's another out, which also applies to investors, said Linda Hainsworth of Sacramento. She conducts classes on short sale complexities for other real estate agents.

"There's an exemption if you're insolvent," she said. The definition of insolvency is tricky, she added, so advice is best taken from a tax attorney.

A second concern

People trying to do short sales also are worrying about reports that some lenders are selling second mortgages – typically the down payment loan – to collection agencies. They fear that in three or four years those agencies will be on the phone seeking payment.

Hainsworth confirmed it's happening. Elk Grove bankruptcy attorney Jonathan Stein said the owner of a "second" has up to four years after the default date to collect. He said it's critical that your real estate agent negotiates a solution to the second.

Stein fears some people will rebuild credit scores after the hit of a short sale only to file bankruptcy when confronted later by a collection agency.

Both offer the same counsel: get good advice about that short sale.

Credit extension in limbo

So, what's the newest on extending $10,000 state tax credits to more buyers of new unoccupied homes in California? The short answer: nothing.

As you'll remember, the Franchise Tax Board stopped taking applications July 3, while home builders and lawmakers tried to work out a deal to extend the tax credit to thousands more buyers. But lawmakers left for summer vacation without a deal.

None of three bills dealing with extending the credit – AB 765, SB 49 and SB X3 38 – shows signs of changes to make it happen. Staffers say to check back after Aug. 17. Meanwhile, the Franchise Tax Board has awarded certificates worth $70.9 million so far to 7,567 new homebuyers.

Getting back to good

One new housing project at a time, the capital region is restabilizing. One project that's finally gone all the way is North End Lofts at 14th and C streets in the Mansion Flats district of downtown Sacramento. It's an 11-unit loft project that started in 2006 with sales prices in the $400,000s. As the housing bust settled in, the developer lost the project to the bank, which recently slashed prices to the low $300,000s.

Thursday, property managers Frank Sherman and Cory Smith were finishing the interior of the last unit sold. The project is an anchor now in a neighborhood that needs it.

New occupants include Lynn Mayo, who moved to Sacramento from Portland.

"They're really nice," she said of the three-story lofts. "Hopefully, this will be an up-and-coming neighborhood."

Also just arrived are Sacramento artist John Krempel and architect Phil Harvey. They sold their house in Land Park and moved downtown.

"We've been looking for something like this for a long time," Krempel said.

California Tax Law unsettled on Home sellers Short Sales

2010-05-12T20:05:00.000-07:00

Sacramento-area accountants say rising numbers of taxpayers who did short sales or received loan modifications in 2009 now fear they'll be walloped anew by a cash-starved state government intent on taxing their forgiven debt.
It's impossible to ease the fears or specifically answer many questions, these accountants say.
"We've had quite a few clients fall into that category," said Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/Jennifer+Neronde/" rel=nofollow>Jennifer Neronde, office manager at Rocklin-based Cramer and Associates CPA.
Uncertainty reigns with less than six weeks before the April 15 filing deadline because the forgiven debt question has gotten caught up in a larger tussle over business taxes between the Legislature and Gov. Arnold Schwarzenegger.
It's headed for a Capitol showdown next week.
Monday, the Assembly is scheduled to vote on SB32 X8, a bill by Sen. Lois Wolk, D-Davis, that would ban the state from taxing mortgage debt forgiven in 2009.
But Schwarzenegger is threatening to veto the bill over an obscure clause opposed by business groups. That clause establishes new tax penalties on firms that file unfounded claims for refunds. Business associations believe it will unfairly punish them for tax withholding decisions they claim are difficult to calculate. The clause, along with forgiven mortgage debt, is among dozens in the bill to align Roman',Times,serif; FONT-SIZE: 15px; CURSOR: pointer; FONT-WEIGHT: 400" class=" lingo_link lingo_link_hidden" href="http://topics.sacbee.com/California/" rel=nofollow>California's tax codes with federal codes.
The governor wants the business penalty provisions stripped from the bill, said his spokesman Mike Naple.
"The governor would prefer that the provision be taken out of the bill and addressed in separate legislation," Naple said.
The state gave homeowners who occupied their homes a pass on forgiven mortgage debt in 2007 and 2008. The federal government, meanwhile, has backed off on taxing forgiven mortgage debt through the end of 2012. In the past, both branches of government treated forgiven debt as taxable income.
In a short sale, for instance, a lender might accept a sales price of $200,000 on a home where it's owed $325,000. The $125,000 left unpaid is classified as forgiven debt, which used to qualify as new taxable income. The Bush administration, backed by the real estate industry, blocked the IRS from taxing forgiven debt in 2007. It's a temporary measure to encourage borrowers to call lenders and negotiate alternatives to foreclosure.
In many cases, borrowers try short sales after they fail to get loan modifications, say real estate agents like Larry Henderson, of Prudential Norcal Realty in Carmichael. He said he gets frequent questions about the complicated tax implications of short sales.
"I make it clear to my clients they should talk with a lawyer or a CPA," he said.

Most Homes to begin building Positive Equity by late 2015

2010-05-10T19:37:00.000-07:00

The typical U.S. homeowner in a negative equity position will begin to build positive home equity by late 2015 or early 2016, according to a forecast by First American CoreLogic. In some depressed markets, typical borrowers with negative equity may not experience positive equity until 2020 or later, according to the report. Research conducted by First American CoreLogic indicates more than 11.3 million, or 24 percent, of all residential properties with mortgages, had negative equity at the end of the fourth quarter of 2009.
Although house price appreciation will, over time, offset negative equity, in most cases, amortization will be a more significant remedy to negative equity. According to the report, over the next 10 years, the average loan balance will decrease by an annual rate of 3.3 percent, while home price are expected to increase at a three-percent annual rate over the next decade.
More info.

California REALTOR Showcase

2010-05-06T22:01:00.000-07:00

June 10, 2010, Thurs., 8:30 a.m. - 5 p.m.Sacramento Convention CenterC.A.R. will present the California REALTOR® Showcase during the June business meetings in Sacramento. Taking place at the Sacramento Convention Center, the Showcase will feature FREE seminars to help REALTORS® stay informed. The Showcase also features a 2010 Mid-year Update Luncheon featuring C.A.R. Executive Vice President Joel Singer. LEGISLATIVE DAYLegislative Day takes place one day before Showcase; be sure to maximize your trip to Sacramento and attend both events.For more information, please visit our Legislative Day page.
LUNCH TICKET SALES2010 Midyear Update Luncheon: Looking Back to Look ForwardPresented by C.A.R. Executive Vice President Joel Singer $55Thursday, June 10, 2010 ~ 11:30 a.m.-1 p.m.Click here to purchase luncheon tickets.
SEMINARSRegistration not required to attend the FREE seminars below. Limited seating on a first-come, first-served basis.
Your Guide to the New California Residential Purchase Agreement(Thursday, June 10, 2010 - 8:30 a.m. - 10 a.m.)Presented by Gov Hutchinson, assistant general counsel, C.A.R.This class will familiarize REALTORS® with the 2010 changes to the California Residential Purchase Agreement and Joint Escrow Instructions (Form RPA-CA). The RPA-CA form is the cornerstone of every successful real estate transaction in California, and there are several essential concepts, principles, and facts about this form that all REALTORS® should know. This 90-minute seminar will address the changes only and does not offer the 4-hour Continuing Education (CE) credit.Exploring Emerging Technologies and the Future of Consumer Engagement(Thursday, June 10, 2010 - 9:30 a.m. - 11:00 a.m.)Presented by Mark Flavin, director of information technology, Bay East Association of REALTORS®Location awareness technologies allow you to connect a physical location with a user's device and return information based on the user’s location. Learn how one association is integrating location awareness into its mobile open home search. Enjoy a glimpse of the technologies that are on the horizon and learn the strategies that brokers, business owners, agents, and association executives will need to effectively engage and capture consumer interest with these technologies.You will: • Learn how to identify several major technology trends already beginning to enter the real estate market. • Understand how to effectively leverage emerging media channels to communicate with consumers. • Walk away with examples and suggestions on how to engage with consumers in the areas discussed.Tools to Mitigate Your Risk in Today's Market(Thursday, June 10, 2010 - 1:30 p.m. - 3 p.m.)Presented by Jo Gaerlan, field sales development manager, American Home ShieldGiven today’s “clean offers” and the number of short sales, are brokers 100 percent confident that buyers, investors, and others are receiving the standard of care to which they’re entitled? Are brokers risking liability by not fully educating their agents about important transaction post-sale services? Are their agents’ actions well documented? This fast-paced, engaging discussion with attorneys and other experts will uncover the answer to these questions and more by providing current examples of real-life lessons.
You will learn: • To define who the new sellers and buyers are in today’s market environment • How the needs of the new sellers and buyers affect your real estate transactions • The risk they pose to your brokerageNavigating Through the Mortgage Process in a Changing Environment(Thursday, June 10, 2010 - 2 p.m. - 5 p.m.)Presented by George Lawrence, Commercial Real Estate Lending and ConsultingThis initiative is a collaborative effort sponsored by C.A.R., CitiMortgage and Freddie Mac designed to instruct C.A.R. members and real estate professionals throughout California on how to assist the homeowner under HAFA and effectively work with lenders and their potential home buyers.
HOUSINGFor information on housing, please visit Sacramento-area hotels.AIR TRANSPORTATIONFor airport and airline information, please click here.CONTACT USPlease call Betty Thomas at (213)-739-8236 or email bettyt@car.org

Home Buyers Tax Credit Extended: Great News for Military Families

2010-04-28T22:29:00.000-07:00

In an effort to spur economic growth and home ownership, President Obama signed the Worker, Home Ownership, and Business Assistance Act of 2009 into law on Nov.6. And, a special provision in this new legislation will help military families take advantage of the tax credit for at least two more years. Now, military home owners won’t have to rush to close on a new home by the old deadline of Nov. 30, 2009 in order to be eligible for the $8,000 tax credit — the new deadline is April 30, 2011.
This bill's extension for military families is one year longer than civilian home owners’ extension — April 30, 2010 — and will also help financially strapped military personnel by making mortgage payments tax deductible.
Current home owners will also benefit from the newly signed law. If they have been in their principal residence for five consecutive years home owners will have until April 30, 2010 to buy a new home and receive a $6,500 tax credit.
Charles McMillan, president of the National Association of Realtors, and a proponent of this bill, stated on the organization’s website that the original home buyers tax credit bolstered the national housing market and will continue to do so if extended.
“This important incentive is helping to stabilize the housing market, stimulate the economy, and create new jobs in communities all across our great nation,” said McMillan in a NARS press release.
“Extending and expanding the home buyer tax credit will enable more families to take advantage of low interest rates and affordable prices to invest in their future through home ownership,” McMillan added.
Additional provisions include expanded income limits for single and married home owners. Previously, single home buyers couldn’t make more than $75,000 to be eligible for the tax credit — the limit is now $125,000. And, the income limit for couples has been raised from $150,000 to $250,000. However, you’re not eligible for the tax refund if the purchase price of you new home is $800,000 or more.
Speaker Nancy Pelosi praised the legislation stating on her website that it has “already been successful” and that the new provisions will help more American home owners and will promote further economic recovery.
“We've seen the positive impact -- the steadier foundation in our housing market. Most significantly, we've watched a new generation of Americans start living out their dream of home ownership and economic security,” continued Pelosi.
If you want to learn more about using your VA Loan to buy a new home and eligibility for the $8,000 tax credit, visit Military.com’s Home Buying channel.

What $300,000 Buys You Now

2010-04-26T22:50:00.000-07:00

Five years ago, an upscale version of the American Dream -- living space, location, property, charm and more -- in most U.S. metropolitan areas started at around $500,000. Then the housing bubble popped. Since October 2005, values on existing homes have dropped 27% nationally, according to the National Assn. of Realtors.
Is $300,000 the new $500,000? Here's a look at 12 properties on the market, all in the $250,000-$350,000 range. See how far your real estate buck stretches now.

Detroit, Mich.
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Asking Price: $245,000 Square Footage: 3,288Bedrooms: 4Bathrooms: 4Acreage: 0.35
Palmer Woods, a neighborhood of the Motor City, is an architectural preservation district of English Revival and Tudor-style houses just like this one. This home was built in 1938, with hardwood floors throughout, stained glass windows and doors, and a fireplace. With an asking price of $75 per square foot, you'd be hard pressed to build a new home with such amenities more economically.

Rowlett, Tex.
Price: $250,000Square Footage: 3,670Bedrooms: 4Bathrooms: 4Acreage: 0.21 acres
Priced at $81 per square foot, this Texas-style mini-mansion includes a two-story entry foyer, open floor plan, two dining areas, a game room, study and a three-car garage. If landscaping isn't your thing, the grass-less backyard features a large stone pool. And it's only 16 miles from downtown Dallas.

Omaha, Neb.
Price: $260,000Square Footage: 2,726Bedrooms: 4Bathrooms: 3
Built in 1909, this corner-lot house is in the Old Market neighborhood of Omaha, an historic preservation district with a lively rhythm and blues scene. The nine-room home has all its original woodwork -- hardwood floors, giant ceiling moldings and baseboards and an ornate staircase. It also features important updates, such as a new roof and new siding.

Marietta, Ga.
Price: $279,000Square Footage: 2,622Bedrooms: 5Bathrooms: 3Acreage: 1
Located on an acre of land in a quiet cul-de-sac, this home typifies the great values available in the Atlanta metro area -- at about $106 per square foot. Marietta, 23 miles outside of Atlanta, is one of the area's premier suburbs, and the local school district is one of the most coveted in the state.

Roland, Ark.
Price: $287,900Square Footage: 2,752Bedrooms: 4Bathrooms: 4Acreage: 4.37
Here's a real estate trifecta -- four bedrooms, four bathrooms... and four acres. The home features stainless-steel appliances and granite countertops in the kitchen and a backyard pool. It offers a combination of luxury and privacy 25 miles from Little Rock, which has fared better than most cities during the downturn.

Newport Center, Vt.
Price: $299,000Square Footage: 2,416Bedrooms: 3Bathrooms: 2.5Acreage: 4.60
This chalet with plenty of property overlooks Lake Memphremagog in northern Vermont. It also features a detached two-car garage, patio and two fireplaces. Quiet Newport Center has less than 2,000 residents, although it is only about a two-and-a-half-hour drive from Montreal.

Portland, Ore.
Price: $309,900Square Footage: 2,008Bedrooms: 3Bathrooms: 1Acreage: 0.13
This corner-lot home in the Beaumont Village area of Portland was built in 1926. But it has been fully updated and remodeled with hardwood floors, a fireplace, stainless-steel appliances and new windows. It features a beautiful backyard with deck and stone patio, and a full garage. The Portland rail system and Interstate 84 are less than two miles away. Portland is a charming city with plenty of diversity. And it's quite green, like the house.

New York, N.Y.
Price: $325,000Square Footage: 450Bedrooms: StudioBathrooms: 1
This studio apartment in Midtown Manhattan has more the feel of a one-bedroom because of its layout. Located in a building with doormen on duty 24 hours a day, it's close to the subway, Central Park and Columbus Circle, to name a few attractions in the Big Apple.

Lihue, Hawaii
Price: $334,900Square Footage: 1,032Bedrooms: 2Bathrooms: 1.5
Lihue, on the island of Kauai, boasts the island's premier shopping district. This two-bedroom town home is part of a community with access to a pool and the Puakea Golf Course, and it's close to the beach. Who needs the indoors in Hawaii?

Tucson, Ariz.
Price: $339,900Square Footage: 3,108Bedrooms: 4Bathrooms: 3
This spacious home is designed to stay cool during hot Arizona days. Other amenities include a three-car garage and a loft, all situated on the 16th green of an adjacent golf course. It's located 17 miles outside Tucson, which is in the midst of a downtown revitalization.

Boston, Mass.
Price: $339,000Square Footage: 1,240Bedrooms: 2Bathrooms: 2.5
This duplex is in the heart of Boston's historic Charlestown neighborhood. It has two levels, two bedrooms, two and a half bathrooms, two decks and high ceilings. The large space is perfect for a young professional, new family or retirees. It's also close to the Boston T and Route 93.

Sacramento, Cal.
Price: $339,500Square Footage: 1,036Bedrooms: 2Bathrooms: 2
Built in 1910, this home combines cottage charm with modern conveniences in midtown Sacramento. Everything is within walking distance: restaurants, art galleries, shops and a diverse culture. Small? Yes, but architecturally appealing and very practical.

In Sour Home Market, Buying Often Beats Renting

2010-04-23T18:11:00.000-07:00

In much of the country, for much of the last decade, renting a home has usually been a better financial move than buying one. It's been true in Southern California, San Francisco, Phoenix, Las Vegas and large parts of Florida, the Pacific Northwest and the Northeast.

Renting required you to suffer the scorn of many real estate agents and the skepticism of friends and relatives who believed that owning a home was almost always superior. But renting also would have typically saved you thousands of dollars a year.

More from NYTimes.com:

• 3 Emotional Questions Every Home Buyer Should Ask

• Economix: Breaking Down the Rent-Buy Equation

• Is Your House Overvalued?

Now, however, the situation is getting more complicated because the housing bust has been playing out unevenly across the country.

In some once bubbly markets, prices have fallen so far that buying a home appears to be a bargain, based on a New York Times analysis of prices and rents in 54 metropolitan areas. In South Florida, Phoenix and Las Vegas, house prices — relative to rents — are as low as in places that never experienced a bubble, like Indianapolis and St. Louis.

But in a handful of other areas, including San Francisco, Seattle and Portland, Ore., house prices remain significantly higher than they were before the bubble began. People who buy a home in these areas will face higher monthly costs than if they rented, even after taking tax deductions into account. As a result, buyers are effectively betting that prices will rise enough in future years to cover the difference.

The country's two biggest metropolitan areas, New York and Los Angeles, are a microcosm of today's more nuanced real estate market. Average house prices across both areas have fallen enough that buying may now be a good deal for many families. Yet there are still significant pockets where renting looks promising — including parts of Manhattan, the New York suburbs and Orange County, Calif.

The buy-versus-rent question is particularly relevant right now. To qualify for an expiring federal tax credit of up to $8,000, home buyers must sign a contract by April 30 and close on the house by June 30. Many economists also expect mortgage rates to rise in coming months.

Camela Witters, a 38-year-old trophy engraver in Las Vegas, plans to close on her first home purchase — a four-bedroom, $164,000 house nearly identical to the one she is now renting — in the next few days. She decided to buy, she said, when she found out she could save money by doing so. "I didn't buy a house when everyone did," said Ms. Witters, who lives with her companion and their children. "So I'm kind of taking advantage of all the foreclosures."

The Times analysis is based on comparing the costs of buying and renting a similar home, using data from Moody's Economy.com, a research firm, and from real estate agents. This kind of comparison can never tell someone for sure what the best financial move will be. But it does show whether a buyer will need a big jump in future prices to cover all the costs of owning — including the down payment, closing costs, property taxes, mortgage interest, repairs and co-op fees.

A simple way to do the comparison is to look at something called the rent ratio: the purchase price of a house divided by the annual cost of renting a similar one. The number 20 provides a useful rule of thumb. When you do the math, you discover that a ratio above 20 means you should at least consider renting, especially if you may move again in the next five years or so. When the ratio is well below 20, the case for buying becomes a lot stronger.

In many large metropolitan areas, including New York, Los Angeles, Chicago, Houston, Dallas, Atlanta and South Florida, the average ratio is now 16 or lower. It was more than 25 in several of these places at the peak of the bubble, about five years ago. With a ratio as low as 16 and interest rates as low as they are, the costs of owning can be less than the costs of renting — and buyers will end up worse off only if prices fall considerably more.

A two-bedroom Spanish-style condominium in Beverly Hills, Calif., for example, recently went on the market for $1.075 million, notes Don Heller of Prudential California Realty. Including taxes, condo fees and the tax deduction for mortgage interest, a typical buyer making a 20 percent down payment would face an effective monthly payment of about $6,000. Compare that with the monthly rent on a similar two-bedroom condo nearby — $7,600.

The math works out similarly in less costly areas, too, be it once booming cities like Phoenix and Orlando, Fla.; Midwestern cities like Minneapolis and Cleveland; or the outer-ring suburbs of most big cities. Much of New York's outer boroughs appear to fall into this category.

The problem for potential buyers is that many real estate agents argue for buying even in places where the numbers don't add up. In the Bay Area, the rent ratio remains around 30. In Seattle, it's about 28. In parts of Manhattan, it appears to be about 25, according to current listings.

"In most markets, you're better off buying," Thomas Lys, an accounting professor at Northwestern University, says. "But once the ratio gets to 25 or 30, I'd say, 'You know what? There may be a bubble.'"

The rent ratio has long been higher in New York and San Francisco than most places, perhaps because of zoning rules or because the cities are home to large numbers of affluent households willing to pay extra to own. So it's possible that prices will not fall. But they are already high enough that the monthly costs of owning often exceed the cost of renting — even without taking into account the down payment or other one-time costs.

A big reason is that prices still haven't fallen much in some places. In Rye, N.Y., the average per-square-foot sale price was only 9 percent lower early this year than at its 2007 peak, according to MDA DataQuick. Some similarly affluent parts of the Los Angeles, Miami and San Diego areas have experienced declines of 25 to 50 percent.

Obviously, owning a home brings benefits that are not strictly financial. It offers stability and, for many people, comfort. As I have written, I bought a house in 2008 (in part because the rent ratio in my area had fallen to about 16). Even in Manhattan, San Francisco or Seattle, a family confident that it will stay put for a decade or more may well be wise to buy today.

But it's worth remembering that the advantages of homeownership are frequently exaggerated. The mortgage-interest tax deduction doesn't eliminate the cost of borrowing money; it merely reduces it. The freedom to paint your house any color you wish comes with the responsibility of paying for a new roof when the time comes. The $15,000 or $30,000 or $50,000 that real estate agents' fees add to the price of a house can wipe out a lot of other savings.

The most striking part of the current situation may be that despite everything that has happened in the last few years, there are still places where renting does not get enough respect.

The 5 Factors Of A Good Home Location

2010-04-21T19:15:00.000-07:00

In a real estate boom, buyers will clamor for almost any house that hits the market. This is great while it lasts, but unfortunately when the party's over, some homebuyers will be left holding property that depreciates at a much slower rate. This discrepancy is largely a result of a home's location.
"Location, location, location" is a common mantra in real estate. And it's good advice - except for one thing: most people have no idea what this really means.
A "good location" can mean different things to different people, but there are also subjective factors that determine a home's value. Depending on your personal needs and preferences, you may not be able to buy a home with all of these factors. And that's OK - after all, a home is much more than just an investment. However, next time you're shopping for a new property, keep the following factors in mind.
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Centrality
What part of a city you choose to live in will undoubtedly affect how much you pay for your home. Land is a finite commodity, so cities that are highly developed and are bound from large amounts of additional growth, such as San Francisco, tend to have higher prices than cities that have too much room to expand. For example, many suburban communities have become what the media has dubbed "slumburbs" because such a large number of homes are uninhabited that the areas have fallen into disrepair. In most cases, this urban sprawl occurs as a result of population growth, according to the U.S. Bureau of Census Data on Urbanized Areas. Between 1970 and 1990, the 100 largest urban areas in the U.S. sprawled out more than 14,000 square miles. When sprawling cities experience a population exodus, it's the outlying areas that tend to suffer the most sever declines in property value.

Neighborhood
The neighborhoods that appeal to you will largely be a matter of personal choice. However, a truly great neighborhood will have a few key factors: accessibility, appearance and amenities. Your neighborhood may also dictate the size of the lot on which your house is built.
In terms of accessibility, you should look for a neighborhood that is situated near your city's major routes and that has more than one point of entry. Commuting to and from work is a big part of many people's day, so a house with easy access will be more desirable than one that is tucked away and can only be accessed by one route.
The appearance of the neighborhood is also important. Large trees, landscaping and nearby green or community spaces tend to be desirable. You can also judge the popularity of the neighborhood based on how long homes in that area tend to stay on the market; if turnover is quick, you're not the only one who thinks this is a desirable place to live.
A great neighborhood should also include important amenities such as grocery stores, shops and restaurants. Most people like to frequent places that are convenient - if you need to drive a great distance to get to anything, this is likely to make your house less attractive. Schools are another important amenity - even if you don't plan to have kids, if you want to sell your home this is something many buyers will be on the lookout for. The distance from and quality of local schools both play into this.

Development
It's not just present amenities that matter, but future ones as well. Plans for schools, hospitals, public transportation or other public infrastructure can dramatically improve property values in the area. Commercial development can also improve property value. When you're shopping for a home, try to find out whether any new public, commercial or residential developments are planned and consider how these additions might affect the desirability of the surrounding areas.

Lot Location
The next thing you need to consider is where the house is actually located. In this instance, there are a few things you should watch out for.
For example, if your home is on a busy road, you will probably get it for a lower price, but it will also be more difficult to sell down the road. The same may hold true for houses that stand next to or back onto commercial property, such as a grocery store or gas station, or houses on streets that get an unusual amount of parking traffic and parked cars, such as those near large churches or community centers. This is why a large number of such homes are rentals.

The House Doesn't Matter
Suppose that you have narrowed your choices to two homes that stand side by side in a great neighborhood. One needs repairs and updates, but has a huge lot. The other is in tip-top shape but sits on a lot half the size. The prices of the two homes are similar. Which do you choose? This is one aspect of house hunting that surprises a lot of people (except for maybe real estate investors). In most cases, the beat up house is the better investment.
Why? Your house is a depreciating asset. The lot, on the other hand, will maintain its value (or likely appreciate) relative to the house. If you bulldozed both houses, the larger lot would sell for more. So, if you can, choose a bigger, better shaped or better situated lot over a nicer house. A less attractive house can always be updated, added on to or replaced altogether while the lot can't be changed.
Location isn't entirely subjective - in fact, it's based on a fairly static set of criteria. So, when you set out to shop for a new home, make sure the neighborhood isn't just desirable to you.

California's Tax Credit Monies May Go Fast

2010-04-19T22:18:00.000-07:00

The $100 million allocated for California's first-time homebuyer tax credits may be depleted in about 10 to 20 days or sooner, according to C.A.R.'s Economics team. California's Franchise Tax Board (FTB) plans to begin accepting applications on May 1, 2010 for tax credits up to $10,000 for first-time homebuyers and for homes that have never been previously occupied. However, the total tax credit allocation for all taxpayers is $100 million for first-time homebuyers and $100 million for new homes, both on a first-come, first-served basis.
C.A.R.'s forecast of 10 to 20 days to deplete the $100 million allocation for first-time home buyers is based on estimated May sales figures and other parameters. It does not take into account the possibility that buyers scheduled to close escrow in April may delay closing until May to take advantage of the tax credit. If a shift in closings from April to May occurs, the first-time homebuyer tax credits may be depleted even more quickly than indicated above.
Applications for the California tax credit must be faxed to the FTB after escrow closes. The FTB will update its website when the 2010 application form and other information become availablee.
REALTORS® are reminded not to give their clients any tax or legal advice, such as the availability of funds under the California tax credit program. Agents should encourage their clients to seek specific advice from an accountant, attorney, or other professional as they deem appropriate.
For more information, please refer to C.A.R.'s Homebuyer Tax Credit Chart 2010.
SIGN UP FOR TAX CREDIT WEBINAR: Join us on April 27, 2010 at 1 p.m. for a C.A.R. Legal Live Webinar on the homebuyer tax credit. In this one-hour session, C.A.R.'s Senior Counsel Stella Ling will discuss the California and federal homebuyer tax credits. Topics to be addressed will include the eligibility requirements for both tax credits, how quickly California's $200 million allocation may run out, and potential liability issues for REALTORS®. Registration is simple, but space is limited, so sign up now at www.car.org/legal/legal-live-webinars.

Economic indicators in these metros have gone from bad to worse, with no sign of recovery

2010-04-16T21:46:00.000-07:00

Miami boasts a popular South Beach club scene, Art Deco Architecture, and perhaps the best Cuban food in the country. But residents don't have much else to celebrate.
More than three years after the economy started its downward slide, the Miami metro area, like a handful of Sun Belt cities, still hasn't begun to recover. Median home prices in Miami have fallen 38% since its market peaked in the second quarter of 2007; the city's 11% unemployment rate is above the national average and has grown more than most of the 40 cities we surveyed.

List: 10 U.S. Cities In Free Fall
Cities in the "Sand States" of Florida, California, Arizona and Nevada, where overbuilding was rampant, are also in trouble, claiming nine of the top 10 spots in our list of cities in free fall. In Las Vegas, Riverside, Calif., and Phoenix, median home prices have fallen 50%, 44% and 37% from their respective peaks. Jobs are vanishing. Though country-wide, employers added 162,00 jobs last month, Riverside gained 13% fewer jobs in February 2010 (the latest numbers available by metro) than it did the same month three years earlier. Tampa, Fla., saw a 10% drop, and Los Angeles added 9% fewer jobs over the same time period.
These cities are also slow to absorb their glut of unsold foreclosed homes, keeping recovery at bay.
"These were highly speculative housing markets," says Jonathan Miller, president of Miller Samuel, a Manhattan-based real estate appraisal firm. "In the markets that have unloaded a lot of foreclosed housing stock there's still a lot more coming."
Behind the Numbers
To find the country's cities in free fall, we rated its 40 largest Metropolitan Statistical Areas (MSA) on six metrics.
We ranked each MSA on the percent its median home price has fallen since its individual peak, using data provided by Local Market Monitor, a housing market data tracker. To get an estimate for the number of new homes being built, we used data from the U.S. Census Bureau, which tracks how many building permits are issued. Roughly 98% of these permits become new home starts. We looked at the percent change in new building permits between February 2007 and February 2010.
We also wanted to know how many people were moving in and out of these metros, since a growing population buoys a local economy. We used the Census Bureau's most recent population estimates to rank each metro on its net population change between July 2006 and July 2009. To judge each city's productivity we also ranked each metro on its per capita gross domestic product in 2008, the most recent year available, using data from Moody's Economy.com. Finally, we ranked the metros on the percent change in unemployment between January 2007 and January 2010 and the number of jobs they added between February 2007 and February 2010, with data from the Bureau of Labor Statistics. We averaged these rankings to arrive at a final score.
Sunshine State Stagnancy
Florida cities dominate our list, with Tampa, Orlando and Jacksonville joining Miami. Florida's real estate market keeps falling even as some herald the start of a rebound. The state's comparatively sluggish foreclosure process keeps those homes from getting easily flushed out of the market. Because every foreclosure must be approved by a judge, the procedure takes a minimum of five months to complete.
"In states with complex foreclosure laws, the recovery is clearly being delayed," says Mike Simonsen, CEO of Altos Research, a Mountain View, Calif.-based real estate research firm, who adds that lengthy foreclosures may be driving away real estate investors in these cities.
A Trouble Spot in the Northeast
Picturesque Providence, R.I., is the only New England metro on our list. Economically, it's struggling far more than other cities in the region. Although Providence saw a slower three-year increase in unemployment than some other major metros, it still has a high unemployment rate, at 14%. The city also added 9% fewer jobs in 2010 than three years earlier. Workers are getting the message and leaving town. Providence is the only city in our top 10 to see a net loss in population.
Grim News for the Golden State
California cities are struggling too. Riverside, Los Angeles and Sacramento are suffering because of the knocks they took after their inflated housing markets began to plummet. Unemployment in the City of Angels has nearly tripled in three years, to 12%. Riverside's unemployment has also ballooned, to 15%. Meanwhile Sacramento saw a 75% drop in new building permits. These are troubling signs for Cali metros, but not surprising. The end of the state's home-price climb triggered more than just a housing slump.
"In California, so many jobs were concentrated in construction," says Michael Fratantoni, vice president of research at the Mortgage Bankers Association, the professional association for real estate financiers. "Jobs building single family homes wound up not being sustainable, and there were a lot of job losses."
The long-term consequences of the housing crash in these cities are still playing out, and new factors that complicate a recovery keep cropping up.
"Places like Phoenix and Riverside may take even longer to recover because people might just pick up and leave to go to places doing better," says Fratantoni. "It may make more sense to leave, rather than wait for jobs to return."

Top 5 Cities in a Free Fall

1. Miami-Fort Lauderdale-Pompano Beach, FLNet Population Change, 2006-2009: 1.47%Per Capita Gross Domestic Product: $42,645.52Change in New Building Permits, February 2007-February 2010: -77.46%Change in Unemployment, January 2007-January 2010: 202.70%Change in New Jobs Added, February 2007 - February 2010: -9.68%Change in Median Home Price from Market Peak: -38%

2. Tampa-Clearwater, FL Net Population Change, 2006-2009: 2.33%Per Capita Gross Domestic Product: $42,562.92Change in New Building Permits, February 2007-February 2010: -44.18%Change in Unemployment, January 2007-January 2010: 235.90%Change in New Jobs Added, February 2007 - February 2010: -9.87%Change in Median Home Price from Market Peak: -32%

3. Riverside-San Bernardino-Ontario, Calif.Net Population Change, 2006-2009: 4.40%Per Capita Gross Domestic Product: $32,403.49Change in New Building Permits, February 2007-February 2010: -65.69%Change in Unemployment, January 2007-January 2010: 177.78%Change in New Jobs Added, February 2007 - February 2010: -12.94%Change in Median Home Price from Market Peak: -44%

4. Jacksonville, Fl.Net Population Change, 2006-2009: 3.83%Per Capita Gross Domestic Product: $16,035.65Change in New Building Permits, February 2007-February 2010: -66.09%Change in Unemployment, January 2007-January 2010: 227.03%Change in New Jobs Added, February 2007 - February 2010: -7.74%Change in Median Home Price from Market Peak: -23%

5. Phoenix-Mesa-Scottsdale, AZNet Population Change, 2006-2009: 7.85%Per Capita Gross Domestic Product: $40,870.16Change in New Building Permits, February 2007-February 2010: -83.61%Change in Unemployment, January 2007-January 2010: 148.65%Change in New Jobs Added, February 2007 - February 2010: -10.01%Change in Median Home Price from Market Peak: -37%Click here to see the full list of Ten U.S. Cities In Free Fall

Why Knocking on Doors is Back in Fashion?

2010-04-14T19:36:00.000-07:00

There is no question there have been hundreds of tantrums regarding the control of inventory REO agents have had in the past couple of years. Many who had those tantrums failed to create the relationships early enough to get a foothold on any meaningful accounts is the main reason. Other reasons follow – many discovered that being a rock and roll REO agent requires a lot of patient capital; extremely disciplined work standards and the fact REO agents resign themselves to server side applications that keep them at the keyboard for hours on end.
Well, times are changing and I’m going to make a short explanation of why door knocking is vogue…
Lenders statistically net more money on a Short Sale than on a REO. That is the shift that is taking place and the key to capitalizing on this requires an effort similar to what successful REO agents did; simply create the relationship before anyone else!
The only way you are going to find out who these sellers are is to find them prior to the Notice of Default (NOD) being filed. Once that happens, they are open and fair game for everyone and a new target for a litany of mail. Good old fashioned shoe leather will beat out direct mail on this one. Why? Because nothing beats a face to face call on a prospect and especially on this subject. Also, direct mail cannot ask and receive referrals like you can in person. Pretty simple.
Count on NOD’s rising too. There will still be an REO market of sorts, as a result of poor documentation of liens, uncooperative subordinate lien holders, high income sellers that don’t fit guidelines and poor yield spreads that will cause the lender to elect foreclosure over a short sale.

Home Buyers Can Go Green without Buying a Green Dream House

2010-04-12T22:15:00.000-07:00

It’s becoming more common that buyers are looking for homes with Energy Star approved appliances, windows, and fixtures, solar panels and more. This presents a problem for sellers whose homes were not built with the “going green” movement in mind. It’s time to think outside of the box with ways to amp up the environmental friendliness of a home without the expensive additions.
Here are some considerations that are healthy for the planet and helpful for the wallet to consider:
Use a service like WalkScore to figure out how to reduce carbon footprint – consider the home’s proximity via walking or biking to frequently used amenities, then play up how many fewer miles the home owner would drive in a month by living in this home.
Plant a garden – or at least rope off area for one. Home grown fruits and vegetables are environmentally sustainable, contain less pesticides and cut grocery costs.
Provide Neighborgoods information – a new website that is dedicated to helping people borrow, rather than buy, the things they need for single use. Perfect for home buyers and sellers who are trying to get packed up or settled in.
Plant a tree in the buyer or sellers name (preferably on site or in the area) and promise that it will benefit families, flora and fauna with clean air for years to come.

California's Home Buyer Tax Credit... Are you Staying Informed?

2010-04-09T19:09:00.000-07:00

There are a variety of places to go read about the latest home buyer tax credit that California is implementing starting up on May 1. As more of these credits come available from federal and state government groups, Realtors are responsible for helping buyers understand and be aware of these types of credits and whether or not they’re ready to take advantage of them.
So, to help you stay in the know about Cali’s latest fiscal endeavors and how it will affect your world, here are some links to stories that will give you the lowdown.

SF Examiner – California’s improved home buyer tax credit a day late, but still great

SF Chronicle – Some home buyers get new state tax credit

International Business Times – California Extends Home Buyer Tax Credit

Combined Homebuyer Tax Credits For a Limited Time

2010-03-31T23:00:00.000-07:00

$18,000 IN COMBINED HOMEBUYER TAX CREDITS FOR A LIMITED TIME

Californians have a brief window of opportunity to receive up to $18,000 in combined federal and state homebuyer tax credits. To take advantage of both tax credits, a first-time homebuyer must enter into a purchase contract for a principal residence before May 1, 2010, and close escrow between May 1, 2010 and June 30, 2010, inclusive. Buyers who are not first-time homebuyers may use the same timeframes to receive up to $16,500 in combined tax credits if they are long-time residents of their existing homes as permitted under federal law, and they purchase properties that have never been previously occupied as provided under California law.
Under the federal law slated to soon expire, a first-time homebuyer may receive up to $8,000 in tax credits, and a long-time resident may receive up to $6,500, for certain purchase contracts entered into by April 30, 2010 that close escrow by June 30, 2010. Additionally, under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied. The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)). California law generally allows buyers of never-occupied properties to reserve their credits before closing escrow, but buyers seeking to combine the federal and state tax credits will not be able to satisfy the timing requirements for such reservations (see Cal. Rev. & Tax Code section 17059.1(c)(1)(A)). Other terms and restrictions apply to both tax credits.
For more information, C.A.R. offers a Homebuyer Tax Credit Chart with a side-by-side summary of the federal and California laws. C.A.R. also offers a legal article entitled Homebuyer Tax Credit Update.
C.A.R. provides REALTORS® with many other legal articles covering a wide range of topics of interest. Some of the new or newly revised legal articles available at http://qa.car.org are as follows:
Federal Lead-Based Paint Renovation Rule: Provides new certification requirements and lead-safe work practices effective April 22, 2010 for contractors and property owners performing renovations that disturb lead-based paint in target housing.
HAFA Short Sales Fact Sheet.
Short Sale Tips for REALTORS®.
REO Tips for REALTORS®.

Home repos help rejuvenate some older Sacramento neighborhoods

2010-03-29T21:21:00.000-07:00

Home repos help rejuvenate some older Sacramento neighborhoods

ABOUT THIS SERIES: This is the eighth segment in an ongoing series by The Bee and Capital Public Radio examining the people and companies that will contribute to Sacramento's recovery.
Some of Sacramento's older working-class neighborhoods most devastated by the foreclosure crisis are seeing improvement as investors snap up properties at extreme bargain prices, fix them up and sell or rent them.
In places like Del Paso Heights, Oak Park and south Sacramento, you can now buy a fixer house for well under six figures – a price that has proved irresistible to investors, some of them contractors who can do remodeling work themselves.
They are stepping in where homeowners departed, unable to keep up with subprime loans whose payments reset to much higher levels starting in 2006.
Real estate experts say the cycle will likely continue until prices rise to a level where it no longer makes sense.
Players include people like Jeff Douglas, a former custom homebuilder who saw his business shrivel with the recession. He adopted a new strategy: rebuilding bank repos priced below $100,000.
"In the last couple of years I've spent a lot of time driving on these streets. It's getting better. The houses are getting sold and they're getting fixed, and it's spreading," Douglas said.
Douglas pointed to one of a dozen houses he bought in Del Paso Heights, a neighborhood that was heavily seeded with risky subprime loans that later went into foreclosure.
"This was a really nasty place," he said of his acquisition. "It was almost a tear-down. Now it's rented out, and across the street they cleaned up. Like blight spreads, rehab spreads."
Rehab work continues
Make no mistake. Sacramento neighborhoods like Del Paso Heights, Oak Park and Meadowview still need plenty of fixing after suffering an epidemic of foreclosures. City code enforcement officers are kept hopping by continuing house vacancies that can become nuisances.
At this point, the evidence of improvement is mostly anecdotal. The number of building permits issued by the city in Del Paso Heights and Oak Park, for instance, actually dipped slightly to 2,083 in 2009 from 2,238 in 2008, when most bank repos hit the market. That was up from 2,164 in 2007. Douglas said many rehabs don't require permits and noted that a lot of the "most seriously beat-up" properties were rehabbed in 2008.
Still, the ongoing work of investors is readily apparent during a drive through Sacramento's foreclosure distress zone. There are new roofs, all-new interiors, landscaping and windows where homes were boarded up and trash marked the spot.
Some people who have worked in the area for years say they see the improvements, though with homeowners still in trouble, it can be hard to tell which trend is winning.
"I think it's better than 10 years ago," said Ron O'Connor, operations manager for the city of Sacramento's code enforcement division. But the crash that followed a bloom of investment and renovation during the housing boom was ruinous, he said. And O'Connor still sees newly vacant homes even as investors buy and fix earlier repos.
The current house-by-house transformation of the city's lower-income neighborhoods reveals the stunning rise of a new investor class that has moved in after the storm.
Its ranks include contractors, professional investors and ordinary people tapping their retirement accounts and stock funds for more lucrative returns in real estate. Some come from the Bay Area, attracted by Sacramento's comparatively low prices.
Investors now buy 27 percent of the houses sold in Sacramento County. In February, buyers paying cash represented 34 percent of the county's sales, according to La Jolla researcher MDA DataQuick.
Investors irk some
Some first-time buyers have come to resent the phalanx of investors, who fuel bidding wars in the city's most affordable neighborhoods and win deals with all-cash offers. But while investors often carry a stigma as bottom-feeders and speculators, many are improving the distressed properties after buying.
Douglas and other investors handily score homes for well under $100,000, which enables them to spend more fixing them up. He said the widespread sprinkling of rebuilt houses signals an investor belief that the worst is over in these inner-ring neighborhoods. Values have fallen as low as they'll go.
"If you buy inexpensively, and the rent covers the mortgage, you're safe," he said.
High-end markets have emerged as the places to avoid for investors, he said. Values in such neighborhoods continue to fall, and many owners owe far more than their homes are worth.
Bargain prices aren't the only factor driving new investment in neighborhoods like Del Paso Heights, Oak Park and south Sacramento. The federal government also has played a role through its Neighborhood Stabilization Program. Congress steered $31.8 million to the city and county of Sacramento last year to rebuild neighborhoods plagued by foreclosures.
The Sacramento Housing and Redevelopment Agency said $9.6 million in federal funding has so far put 114 properties into the repair pipeline. The SHRA reports 33 sales of upgraded homes to income-qualified buyers. Prices average $45,000 above their values as repos, said agency spokeswoman Angela Jones.
One Sacramento investor-contractor company, the Housing Group Fund, is rebuilding 15 houses with government financial incentives, mostly in North Highlands. The firm is buying and rebuilding eight more houses privately in Oak Park and south Sacramento.
"There are some wrapped up we're selling, some in construction and some just starting," said co-owner Brooke Hammett. Sale prices for newly remodeled homes range from $105,000 to $139,000, she said. Hammett cited a noticeable improvement in some neighborhoods as contractors buy, fix and re-sell.
The Sacramento Municipal Utility District has invested $77,000 in three bank repo rebuilds to demonstrate energy-saving techniques in drafty older houses. Eventually, these methods will help retrofit older urban areas to use less electricity and gas.
"We think we can get a consistent 50 to 60 percent energy savings, said SMUD project manager Michael Keesee. "Some of these older homes have up to $200 a month in utility bills. You can cut that in half."
Re-sell prices still low
Sacramento contractor Harold Maker, who is rebuilding one of Douglas' newer repo acquisitions, said private investors are creating affordable housing by returning trashed houses to the market fixed up and still reasonably priced.
As an example, Maker pointed to a house in the 2800 block of Albatross Way near Del Paso Heights. It had a bullet hole in the front door, signaling a shot fired from inside. On the front window was a September 2009 foreclosure notice from the mortgage servicer. But the small house had a huge backyard. It was getting a one-month makeover, including a new kitchen, Maker said.
Its eventual price tag for a new neighborhood buyer: about $115,000, said Douglas.
Douglas said it's only because prices have fallen to a "once in a lifetime" level that he can afford to buy, replace stoves, cabinets, blinds, carpet, make extensive repairs and still sell at such prices to working-class buyers.
"You can't do this if the price is $300,000," he said. "We just buy bank-owned houses, and the worse the better. If we buy it for the right price, we can fix it."
North Sacramento-based homebuilder Allen Warren, president and chief executive officer of New Faze Development, agreed that this is an "unprecedented" time for such a business model, and it won't last too long once prices start to rise.
"As long as you can do that, the market will be there all day long," he said. "But that will be short-lived."
Douglas agrees that time is short. So before the bargain-basement sale ends, he savors one repo makeover in particular. It's an Oak Park rebuild, once the worst house on a nice block.
He put $65,000 into the house and made it like new inside. Then he sold it to people from Carmichael.
"It's a jewel on the corner. It was a nasty house on the corner," he said. "I don't care what neighborhood you live in. Nobody wants that in their neighborhood."

Schwarzenegger signs extended Tax Credit for Homebuyers

2010-03-26T22:25:00.000-07:00

Schwarzenegger signs extended tax credit for homebuyers

Nearly 32,000 California homebuyers can claim state tax breaks of up to $10,000 starting May 1 under a bill signed Thursday by Gov. Arnold Schwarzenegger.
But the hopes of thousands of Californians for a shield against state taxes on forgiven mortgage debt will have to wait until at least April 5, when lawmakers return to Sacramento.
The same day Schwarzenegger approved the homebuyer tax credit bill, Assembly Bill 183, he vetoed a bill that would prevent the state from taxing mortgage debt forgiven last year for Californians who got loan modifications or sold their homes in distress sales.
Schwarzenegger vetoed the bill over an unrelated provision regarding tax refunds for the state's largest businesses. It was a repeat of a veto last year over the same issue.
The bill vetoed Thursday would have aligned much of California's tax code with that of the federal government. But even in vetoing it, Schwarzenegger expressed support for one of its most widely awaited provisions – the ban on taxing forgiven mortgage debt.
"I signed a law in 2008 that forgave this debt for two years and I am supportive of extending the law," he said in his veto message. Schwarzenegger immediately called for the Legislature to send him a bill to provide the tax forgiveness before the April 15 tax-filing deadline.
"Everybody agrees we need to do something about that," said Schwarzenegger spokesman Aaron McLear.
Schwarzenegger objected to a provision in the bill, SBX8 32 by Sen. Lois Wolk, D-Davis, that would have penalized businesses for seeking some state tax refunds. The federal government has penalties similar to those proposed in Wolk's bill.
Two bills that also would provide tax relief on forgiven mortgage debt remain in the Legislature. Lawmakers are expected to pass one when they return.
"We will not hold people in desperate need hostage," said Alicia Trost, spokeswoman for Senate President Pro Tem Darrell Steinberg, D-Sacramento. But she called the governor's Thursday veto of a bill that promised relief "an unfortunate and ill-advised decision."
Thursday's tax credit launch got the most attention. The governor signed the bill in Fresno, a city hard hit by foreclosures.
The real estate industry immediately praised the governor's action, saying it would move buyers off the fence.
Liz Snow, chief executive officer of the California Building Industry Association, said in a statement, the tax credit will "jump start the home building industry, which will help create jobs and reinvigorate the state's economy."
The legislation allocates $200 million to new buyer tax credits. Half will fund credits for buyers of new unoccupied homes. The other half funds credits for first-time buyers who buy resale homes.
California Association of Realtors President Steve Goddard said the tax credit "will incentivize first-time homebuyers to purchase homes that have been abandoned, foreclosed upon, and returned to the lender, or have been sitting on the market for extended periods of time."
In both cases, buyers can waive whatever state taxes they owe – up to $3,333 – in each of the three years after buying. The program begins with escrows that close May 1 or after. Buyers who close escrow before then, and those who closed after a similar 2009 tax break ended last July, are ineligible.

Schwarzenegger expected to sign new $10,000 California homebuyer Tax Credit

2010-03-24T21:07:00.000-07:00

Schwarzenegger expected to sign new $10,000 California homebuyer tax credit

Homebuyer tax credits are almost certainly returning.
Sacramento-area buyers can begin claiming $10,000 tax credits starting May 1 under a bill expected to be signed soon by Gov. Arnold Schwarzenegger.
The legislation allocates $200 million for more state tax credits – twice what was offered last year to 10,659 buyers of new, unoccupied homes. The state's newest housing stimulus will grant $100 million in tax credits to first-time buyers of existing homes and $100 million to anyone who buys a new, unoccupied home.
The state Franchise Tax Board on Tuesday estimated nearly 32,000 homeowners statewide might get the tax breaks. Buyers must close escrow or reserve a credit on or after May 1 and before or on Dec. 31 to qualify.
The bill, AB 183, passed both houses of the Legislature by near unanimous votes. But one local lawmaker, Assemblyman Roger Niello, R-Fair Oaks, voted against it.
"I think it's a lot of money in a deficit situation that doesn't have the desired benefit," Niello said Tuesday, noting that housing prices are still depressed despite earlier credits designed to stimulate the market.
Niello's view was clearly a minority one, however.
"This tax credit has a proven track record," said Assemblywoman Anna Caballero, D-Salinas, who authored the bill along with Sen. Roy Ashburn, R-Bakersfield. Caballero said California's construction industry reported a 39 percent increase in building permits after the first round of tax credits began in March 2009 and proved more popular than expected. It ran out last July 2.
Schwarzenegger spokesman Mike Naple said Tuesday the governor supports the bill "and is expected to sign it."
The governor signaled his intent Monday while signing two other budget bills. In a signing message, he commended the Legislature for approving the tax credit bill, saying it will stimulate "the housing industry, creating jobs for thousands of Californians."
Schwarzenegger proposed the housing stimulus in his January State of the State Address to help revive the California economy. The new state tax credit would take effect one day after expiration of a federal $8,000 tax credit for first-time homebuyers.
As was the case last year, buyers won't be eligible for the full $10,000 credit if they owe the state less than that amount over a three-year period. Buyers can get up to $3,333 off their tax obligation in each of the three years after buying a house.
Buyers must be at least 18 years old and be unrelated to the seller. They must live in the home they buy. First-time buyers are defined as those who have not owned a home in the past three years.
The Franchise Tax Board estimates the tax credit will cost the state $6 million for the fiscal year ending June 30 and $69 million next year. For three years after that, it will cost the state treasury $67 million, $54 million and $4 million.
This year's legislation is different in that it allows buyers of new homes to reserve a tax credit in advance. A buyer signing a sales contract in June can claim the credit in November when the house is completed, a capital-area building industry official said Tuesday.
"In our parlance, that allows dirt sales," said Dennis Rogers, a vice president at the Roseville-based North State Building Industry Association. "We'll be able to build new houses now and get jobs going."

Sacramento-area home sales dismal in February

2010-03-22T21:28:00.000-07:00

Sacramento-area home sales dismal in February

Sacramento-area home sales hovered around two-year lows during February, branding the start of 2010 as real estate's long slow winter.
But prospects for spring are stronger with thousands of new sales contracts blossoming across the region, say real estate agents and mortgage brokers. Most will close escrow in March and April.
"The people who have money out there are buying right now," said Lori Mode, a Keller Williams agent in Elk Grove. They include first-time buyers and investors from as far away as Australia, she said Thursday. A $589,000 bank repo in Wilton fetched "10 offers the first week, and it went for almost $100,000 over the asking price," she said.
That's a silver lining in an otherwise lackluster February sales report. Amid a short month, wet weather and unemployment that has reached 13.1 percent regionally, buyers and sellers closed just 2,464 escrows in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, La Jolla researcher MDA DataQuick reported.
That was up from January's 2,428 sales, but well under 2,809 in February 2009. Buyers closed 2,162 escrows in February 2008 and 2,534 in February 2007.
"January and February were dismal," acknowledged Jon Dobbel, Elk Grove branch manager of Summit Funding. "It's the rain, the unemployment, the housing depression and the inability of people who own a house to buy a house because it's upside down. The move-up market is virtually dead."
The new home market is equally rough. Just 6.6 percent of February's regional sales were new homes, 163 in all, DataQuick reported. In 2005 new homes accounted for 25 percent of sales.
But Dobbel, too, is cheered by a March "that has just taken off. We're going to be up about 300 percent in closings over February."
February's median sales price for new and existing homes in Sacramento County rose slightly from January, reaching $169,000, DataQuick reported. That's a 5.6 percent gain from Feb. 2009 when repos were 70 percent of sales and prices bottomed out at $160,000. They went as high as $180,000 during the second half of 2009. Median is that point where half cost more and half less.
Sales prices were also 5 percent higher than last year in Sutter County and 2.7 percent higher in Yolo County. Other area counties, especially the affluent suburban zones, saw prices dip from last year as owners slashed them to sell.
At this point, Sacramento's housing recovery is lagging coastal California. The Bay Area saw sales prices jump 20 percent from last year. Prices rose 10 percent in the Los Angeles, Inland Empire and San Diego region.
DataQuick analyst Andrew LePage said the high-end markets there have awakened from being "asleep a year ago." Foreclosures are also a smaller part of their sales mixes.
Sacramento County's February repo market share was 54.8 percent, reflecting a continuing widespread mortgage crisis where 12.3 percent of area home loans are seriously delinquent, in foreclosure or tied to a bank repo listed for sale. The foreclosed inventory attracted large numbers of absentee buyers, usually investors, who accounted for 27.4 percent of sales. DataQuick said 34 percent of buyers paid cash in a county market where nearly one in four sales were priced below $100,000.
"As an investor you pretty much have to be cash," said Warren Adams, a broker associate with Security Pacific Real Estate in Fair Oaks. Banks, he said, have stopped lending to most investors after they buy four houses. First-time buyers are getting most of the rest.
"I would say a majority of my accepted offers are owner-occupied," he said. Adams attributed March's rise in activity to the season, low interest rates and possibly an April 30 deadline for an $8,000 first-time buyer federal tax credit. Buyers must be in sales contracts by then and close escrow by June 30 to qualify.
Mortgage rates have stayed below 5 percent, before paying points, for seven of 2010's first 11 weeks, according to federal mortgage giant Freddie Mac. Rates this week for 30-year fixed loans were 4.96 percent.

Option ARM mortgages still pose a risk

2010-03-19T21:48:00.000-07:00

Option ARM mortgages still pose a risk

Inside the fallout from risky housing boom loans in Sacramento, one particularly notorious brand of mortgage, the Option ARM, still looms as big potential trouble.
Analysts have debated its implications half to death. Will it or won't it spark a new wave of area mortgage defaults in 2010 and 2011?
The experience of Mark Mosley of Vacaville offers hope that another crisis may be averted. Last fall, Wells Fargo rewrote his dangerous Option ARM into a fixed-rate loan and cut what he owed by $59,000. He'll make it now.
This week, Wells Fargo executive Brad Blackwell told the state Senate Banking Finance and Insurance Committee the bank has modified thousands of Option ARMs assumed with its October 2008 purchase of Wachovia. He said Wells Fargo has cut average monthly payments by 25 percent and forgiven $2.6 billion in Option ARM debt. Mosley is one example.
At Sacramento's NeighborWorks Homeownership Center, a nonprofit loan counseling agency, executive Mike Himes said he's seen several clients get these deals from Wells Fargo. The counselor also has seen Bank of America, Wilshire and OneWest (formerly IndyMac) trim Option ARM loans, a phenomenon known as principal reduction.
Blackwell said just a few hundred of the bank's Option ARMs will put borrowers into foreclosure situations in 2010 and 2011. Most have 10-year horizons well beyond that, he said.
Still, plenty of borrowers out there remain in trouble. Like Jullean Ewers of Rocklin, for instance. She is edging toward the moment when her loan "explodes," and her monthly payment nearly triples. Her servicer, Aurora, has told her that as long as she's making the minimum payment she doesn't qualify for a modification. If she gets no help, she may not make it.
Ewers' story is common in that she didn't know exactly what she was getting into at a time when her mother had a stroke and her brother had heart bypass surgery.
"I feel embarrassed that I got into an Option ARM," she says. Yet she has always made her payment, almost always the minimum.
These minimum payments are the problem with Option ARMs, which Business Week magazine once declared "might be the riskiest and most complicated home loan product ever created."
Most people, like Ewers, make the minimum of four available payment choices: the one that doesn't even pay all the interest and makes the loan grow bigger as it's being paid off. When the loan amount reaches 10 to 15 percent above what was originally borrowed, it "recasts." Monthly payments can triple, and foreclosure is often not far behind.
Sacramento's economy partially rests on whether lenders create more examples like Mosley and fewer like Ewers. Almost one in five 2005 home loans in Sacramento, Placer, El Dorado and Yolo counties were Option ARMs. In 2006, they were one in four, according to First American CoreLogic.
Consumer advocates say 60 percent of the nation's Option ARMs are in California, an "affordability product" that's also a ticking time bomb if not altered.
Subprime is now yesterday's news. The jury is out on whether Option ARMs might be tomorrow's.

Sacramento area home sales remain depressed, but Sacramento County prices rise.

2010-03-18T22:29:00.000-07:00

Sacramento area home sales remain depressed, but Sacramento County prices rise

Sacramento-area home sales rose slightly from January, but remained below the same time a year ago, bucking a statewide trend of year-over-year sales gains.
Buyers and sellers closed 2,464 February escrows in Amador, El Dorado, Nevada, Placer, Sacramento, Sutter, Yolo and Yuba counties, La Jolla researcher MDA DataQuick reported Thursday. That was up slightly from January's 2,428 sales, and down from 2,809 in February 2009.
The median sales price for new and existing homes sold in Sacramento County reached $169,000, a 5.6 percent gain from the same time last year when prices bottomed out at $160,000.
The county's price gain is moderate compared with a 20 percent annual gain in sales prices in the Bay Area and a 10 percent rise in the Los Angeles, Inland Empire and San Diego region.
Sales prices were 5 percent higher than last year in Sutter County and 2.7 percent higher in Yolo County. Other area counties, especially the more affluent suburban zones, are still down from last year as owners cut prices to sell.
With the new sales numbers partially reflecting a normal winter slowdown, Sacramento researcher TrendGraphix this week reported a big rise in new sales contracts in February, which will show up in March and April escrow closings.
The firm attributed it to "attractive interest rates" and an April 30 deadline for an $8,000 first-time buyer federal tax credit. Buyers must be in binding sales contracts by then and close escrow.

California tax relief for forgiven mortgage debt delayed by politics

2010-03-16T21:34:00.000-07:00

California tax relief for forgiven mortgage debt delayed by politics

Sacramento-area residents are almost certain to get state tax relief for 2009 forgiven mortgage debt – eventually.
First, allow for politics.
On Monday, Gov. Arnold Schwarzenegger signaled his intent to veto a wide-ranging bill that – among other provisions – bans the state from taxing debt forgiven in short sales and loan modifications.
But the governor's spokesman said Schwarzenegger is "absolutely, 100 percent" committed to ensuring that Californians who escaped one harrowing financial encounter with lenders don't have another with the state this year. A majority of lawmakers have repeatedly said the same.
"We're looking to get this done with another bill," said Schwarzenegger spokesman Aaron McLear on Monday. McLear said the governor is looking at AB 1779 by Assemblyman Roger Niello, R-Fair Oaks, and SB X6 14 by Sen. Ronald Calderon, D-Montebello. Both would prevent the state from labeling forgiven mortgage debt as extra new income and taxing it.
The federal government has banned such taxes through 2012. California lawmakers and the governor banned them in 2007 and 2008, but haven't reached agreement yet for 2009. Niello's proposal extends protections through 2010; Calderon's through 2013.
The governor's veto threat stems from a dispute with the Democratic-controlled Legislature over SB X8 32, a bill passed by both houses in recent days. McLear said Schwarzenegger will likely veto it over a business tax issue unrelated to the forgiven mortgage debt issue.
The governor opposes a clause that penalizes the state's largest businesses for seeking some tax refunds. Businesses, backed by such groups as the California Chamber of Commerce, say they sometimes overpay taxes to avoid penalties for underpaying. But some businesses routinely fish for refunds whether or not they're fairly owed one, said Democrats, pointing to similar prevention measures by the federal government.
"This anti-fraud provision was adopted by the Bush administration in 2007," Alicia Trost, spokeswoman for Senate President Pro Tem Darrell Steinberg, D-Sacramento, said in a statement Monday.
The forgiven mortgage debt and business refund provisions are among dozens in a bill that aligns many of the state's tax codes with those of the federal government.

Years after homeowners default, collectors may still come after them

2010-03-15T20:36:00.000-07:00

Years after homeowners default, collectors may still come after them

Homeowners defaulting on mortgages today may be surprised to learn years from now that they still owe thousands of dollars – and a collection agency is coming after them to get it.
That's because lenders have been quietly selling second mortgages and home equity lines left unpaid after foreclosures and short sales. The buyers: collection agencies, which in California have up to four years to make a claim.
If they win court judgments, these collectors could have years to pursue borrowers with repayment plans, and even garnish their wages, said Scott CoBen, a Sacramento bankruptcy attorney.
"The only relief a consumer will have is entering into a debt negotiating plan or filing for bankruptcy," said Sylvia Alayon, a vice president with the New York-based Consumer Mortgage Audit Center. The firm provides mortgage analysis to lenders, advocacy groups and attorneys.
The phenomenon suggests an ominous, looming echo of today's real estate meltdown. As debt collectors surely seek at least partial repayment of millions of dollars in unpaid Sacramento home loans, some say renewed financial stresses on tens of thousands of local consumers could dampen economic recovery.
"I think there will be a lot of unhappy people when it hits," said CoBen. "We saw this in the '90s. This is not really new. Just when you think you're back on your feet, you're making money and the economy's good, they hit you with this."
Alayon said most people are so stressed out and exhausted by trying to save their homes today that they are unaware they could face another hit later. And many who are losing homes don't get the advice necessary to prevent future fallout, say nonprofit loan counselors.
"You've got tens of thousands of people in California who have this hanging over their heads who don't even know it," said Scott Thompson, principal at for-profit Carmichael-based Mortgage Resolution Services. He fears a new wave of bankruptcies might flatten people just starting to recover from losing their homes.
"So many of these are people with 750 or 800 credit scores who made a bad decision," said Thompson. "Or they're people who suffered income cuts. These are people, in terms of the economy, whom we need to participate."
But an entire industry is gearing up to buy their debt at deep discounts and collect what they can, Alayon said.
"It's a big business and investors are coming out of the woodwork. It's a very lucrative business," she said. Real estate insiders and financial players know it as "scratch and dent."
Total amount of debt unknown
One of the biggest players in the business, Texas-based Real Time Resolutions, did not respond to an inquiry on the subject from The Bee. Neither did Bank of America, which holds many defaulted Sacramento-area loans made by its Countrywide affiliate during the real estate boom.
Regionally, no one knows for sure how much unpaid debt is on the line. CoBen said people who used their borrowings for a traditional loan on a house in which they lived generally have little to worry about.
But statistics suggest that tens of thousands of borrowers locally may be vulnerable in years ahead. Generally, they are people who defaulted not only on their first mortgage but also on a home equity loan or second mortgage.
In California, banks can't collect from borrowers for primary, so-called "first-lien," loans that go unpaid. When a house is foreclosed or sold through a short sale, the lender of the first loan gets the house back or the proceeds from another buyer.
But banks also made thousands of "second-lien" loans, including those used to finance 20 percent down payments across Sacramento during the housing boom.
The Sacramento metro area – Sacramento, Yolo, Placer and El Dorado counties – now ranks second nationally for delinquencies on these loans, according to Oakland-based Foresight Analytics, a real estate consulting firm. The firm said 7.9 percent of the $2.9 billion in area "seconds" now on bank balance sheets are delinquent. Only Las Vegas has a higher rate. Read more:

California pension funds get burned again on real estate

2010-03-12T18:42:00.000-08:00

California pension funds get burned again on real estate

California's two big public pension funds took fresh hits to their troubled real estate portfolios this week, suggesting the fallout from the real estate bubble hasn't completely run its course.
First up was CalPERS, which Wednesday walked away from a controversial Boston investment that cost it about $91 million.
Then came CalSTRS. A New York skyscraper it co-owns is about to go into default, a credit-rating agency warned Thursday. Default could cost the California State Teachers' Retirement System its share of a $75 million investment.
The two losses by themselves don't represent enormous drains on the pension funds, which control portfolios totaling $336 billion. But they show that the funds have yet to completely extricate themselves from the financial debacles that cost them a combined $100 billion in the fiscal year ended last June 30, including several billion in real estate.
"Real estate remains a very difficult situation for us," said Joseph Dear, CalPERS' chief investment officer, in remarks to the pension fund's board last month.
Troubles in real estate and other sectors are straining the state and local government entities that rely on CalPERS and CalSTRS pensions. The California Public Employees' Retirement System is imposing rate hikes on state and local governments to help it recover from its investment losses. CalSTRS, which needs permission from the Legislature to raise rates, is preparing to introduce a bill next year.
Additionally, both funds are considering lowering their official forecasts of future investment returns, which could increase the funding pressure on state and local governments.
Real estate could be the biggest trouble spot for the foreseeable future. Ben Thypin, senior market analyst with New York consultant Real Capital Analytics, said all big real estate investors are continuing to struggle with post-bubble economics.
"I don't think it's going to get much worse," he said, referring to the market in general and not the California pension funds' investments. "That doesn't necessarily mean there won't be other bombshells."
CalPERS' real estate portfolio lost 47 percent of its value in a year's time and was valued at $13.7 billion at the end of January. CalSTRS' real estate holdings declined by 38 percent in the 12 months ending last June 30, falling to $13 billion.
In its latest headache, Cal-PERS this week notified Massachusetts officials that it's abandoning a massive mixed-use project called Columbus Center. The project, a six-building condo-hotel complex to be built over the Massachusetts Turnpike near downtown Boston, had been stalled for years. Besides financial problems, it got tangled up in a thicket of state and local politics, as neighborhood groups and some elected officials complained about the size of the project and the use of public subsidies.
State officials warned Cal-PERS last month that they were about to terminate a lease the developers need to build a deck over the turnpike. Now the CalPERS group is walking away.
"With the deterioration in the market, the project's no longer viable," said Steve Sugerman, a spokesman for Cal-PERS real estate consultant Wilson Meany Sullivan.
Sugerman said the investors spent $120 million on Columbus Center; CalPERS' share came to $91 million.

U.S Plan Will Help Homeowners Avoid Foreclosure

2010-03-10T18:30:00.000-08:00

U.S. Plan Will Help Homeowners Avoid Foreclosure

Homeowners across the United States who are undergoing financial hardship could avoid foreclosure under a plan announced on Nov. 30 by the U.S. Treasury Department. Under the plan, millions of at-risk homeowners could be free of mortgage debt without going through foreclosure, and given $1,500 for relocation.The Treasury plan, which potentially applies to 75 percent of the mortgages in the U.S., including those backed by Freddie Mac or Fannie Mae (those two organizations are currently devising guidelines), provides incentives for lenders and homeowners for completing Short Sales – transactions in which the lender agrees to a sale price that's less than the borrower owes on the mortgage. Short Sales are preferred to foreclosure because homeowners take less of a hit on their credit and lenders realize a smaller loss. However, Short Sales often get bogged down because of the complicated nature of the transaction. Deals can fall through because they take too long.The official effective date of the plan is April 5, 2010, but participating mortgage servicers can begin operating under the terms of the program before then if they are ready to meet all reporting requirements.Under the plan, which speeds up and simplifies the Short Sale process, mortgage servicers have 10 days to approve or reject a request for a Short Sale. And when the sale is done, the borrower must be fully released from the debt.