Bush Administration Proposes Mortgage Origination Commission

In a bold move this morning, Treasury Secretary Henry Paulson called for establishment of Mortgage Origination Commission. The commission would be created to develop "uniform, minimum licensing standards for mortgage market participants".

This was only a portion of the entire proposal to increase regulation of the nation's entire financial markets. The entire plan has come under fire from those saying that it either goes too far or doesn't go far enough, especially in the case of the mortgage industry.

The plan will require congressional approval and will likely not go into effect until after the new administration is in place.

AMIDST CHAOS-LIGHT IS SHINING

You think you're confused, you're not alone. It is difficult keeping up with the day to day changes in the real estate and mortgage industry, but slowly the guidelines are being defined. We,the professionals, have a more concrete idea of what will and won't fly. Now we can better advise our clients. Everyone asks is it easier to get a loan now? The answer is still NO. However, we have some consistency. The higher loan limits are in place which have enabled more individuals and families the option of at least considering refinancing or purchasing. Rates are still low.

The lending industry has changed and will continue to change throughout 2008. Business will be done differently. The consumer now is painfully aware of the importance of understanding what you are signing your name to. The painful scenario that many families are facing will serve as an education tool for the future. Consumers have a responsibility in the home purchase and mortgage process......

ASK QUESTIONS AND READ ALL OF THE INFORMATION!!!!

In the end, it will be okay, and we'll all be better as a result. What do you think?

Data Quick Reports California Home Sales

According to DQNews.com, a total of 20,513 new and resale houses and condos were sold statewide last month. That makes it the slowest February in DataQuick's records, which go back to 1988. Sales were up 7.1 percent from 19,145 in January and down 34.3 percent from 31,228 for February last year.

The National Association of Realtors said that sales of existing homes rose by 2.9 percent in February to a seasonally adjusted annual rate of 5.03 million units. It marked the first sales increase since last July, but even with the gain sales were still 23.8 percent below where they were a year ago.

Prices continued to slide. The median sales price for single-family homes homes and condomiums dropped to $195,900, a fall of 8.2 percent from a year ago, the biggest slide in the current housing slump. The median price for just single-family homes was down 8.7 percent from a year ago, the biggest decline in four decades.

The median price paid for a California home last month was $373,000, down 2.6 percent from $383,000 for the month before, and down 21.0 percent from $472,000 for February a year ago. The median peaked last March/April/May at $484,000.

Around half the drop in median is due to shifts in the types of homes selling, and how those homes are financed. Last month 15.5 percent of the state's financed home purchases were purchased with "jumbo" loans over $417,000. A year ago it was 37.3 percent.

The typical mortgage payment that home buyers committed themselves to paying last month was $1,665. That was down from $1,743 in January, and down from $2,196 for February a year ago. Adjusted for inflation, mortgage payments are back to where they were four years ago. They are 22.2 percent below the spring 1989 peak of the prior real estate cycle. They are 32.8 percent below the current cycle's peak in June 2006.

A portion of this story comes courtesy of the Associated Press.

5 MISTAKES TO AVOID WHEN BUYING A HOME

According to the Today Show's Real Estate Contributor, Barbara Corcoran, there are at least five mistakes home buyers should work to avoid prior committing to a purchase of a home. By not doing so, the new homeowner could find him/herself paying far more than anticipated. They are as follows:

1) Waiting for prices to come down.

Nobody knows when the tide will turn, and based on historic data it always inevitably does. The best you can do is buy within the low and we're definitely in the low right now.

You also need to keep the interest rates in mind. If you wait for prices to come down by 10%, and interest rates go up by a half a point, your monthly payments will be the same. Historically speaking this also makes now a good time to buy. The people I would advise not to buy right now are those who don’t plan to stay in their homes for very long. If, however, you are ready to make a long-term commitment, now is as good a time as any to buy a home.

2) Picking the wrong town.

Every town has a personality, and the town that you live in should match yours.

Buying a house ought to be at least a five-year proposition for you to recoup the costs of the actual move, so you need to be careful you don’t find yourself stuck in the wrong town for five years.

Don’t plump for a town arbitrarily: Try picking up and dropping off at the local school, if that’s what you’ll be doing every day for the next five years. Buy a cup of coffee on Main Street on Sunday morning; see if it is a pleasant experience. Get school data online at homefair.com, you'll find test scores and college acceptance rates. Good schools also mean good future values.

The block determines value more than the actual home. It is always better to move into the worst house on the nicest street.

3) Not asking to see the last six months of electric and water bills.

Check to see if utility bills match what you were told, so you'll have a realistic idea of what you'll be spending. If the heating system in the house is old it may bleed money, which will mean one of two things: High bills or the high costs of replacing it. If you are already stretched on the mortgage this could land you in real trouble.


4) Falling in love with the décor.

If the house is decorated in a way you find very appealing you may find yourself instantly smitten and forget the things you are really looking for in the house. Conversely a house with unappealing décor may scare you away. Try to think more in terms of the floor plan than the surface stuff. Try to take in the size, the condition and natural light situation.


5) Buying a money pit.

Money pits always cost you more than you think. A small kitchen renovation usually costs between $25,000-$40,000. A standard bathroom renovation can cost you between $15,000-$25,000. Even painting a house costs between $7,000-10,000.

If you’ve bought a house that is in a state of total disrepair, you could end up doubling the original sticker price. Be realistic when you go into it about what you can and cannot achieve.

With a glut of properties to chose from in the market right now, there should be no reason to make any of the above mistakes. You just need to be aware of them.

Barbara Corcoran is the Real Estate contributor for the Today Show and a columnist for New York’s Daily News. She founded The Corcoran Group, one of New York’s largest and most prestigious residential real estate firms. Barbara’s Web site can be found at http://barbaracorcoran.com.

Most Home Announces Launch of Wireless Realty Consumer Edition

March 20 /PRNewswire/ -- Most Home RealEstate Services Inc., a wholly owned subsidiary of Most Home Corp. and a leading provider of wireless solutions to the North American real estate industry today announced the launch of Wireless Realty(TM) CE (Consumer Edition), an innovative consumer wireless service that enables home buyers to search Multiple Listing System (MLS) information from the convenience of their mobile phone.

Wireless Realty CE debuted at MarketLinx's Tempo Users Group Meeting in Laguna Beach, California on March 18, 2008. The new on-demand mobile service is available to consumer markets through real estate boards, associations, and MLS's across North America.

"We're incredibly excited to be launching our new consumer wireless service," said Jim Secord, president of Most Home Real Estate Services. "The cell phone is quickly becoming tomorrow's desktop PC. It's the most interactive and frequently used device of all time. We're in the infant stages of a mobile revolution called mobile search and it's fueled by a growing consumer appetite for on-demand information. Consumers want information fast and they want results that matter, from wherever they are.

Wireless Realty CE provides a mobile consumer gateway to real estate information direct from the most complete and up-to-date source, the local MLS."

Powered by the real estate industry's most widely adopted mobile search platform, Wireless Realty CE allows consumers to search all active listings -- anytime, anywhere -- from their web-enabled phones and quickly retrieve real-time MLS data. Searches can be initiated by location, street address, agent name, or MLS number. With a single click, the home buyer can connect instantly with the listing agent via phone or email, generating a source of market-knowledgeable, high-value prospects for real estate professionals.

By providing a convenient and intuitive service for consumers to access property data and connect with REALTORS(R), real estate boards and associations can empower the new mobile consumer to take more control over the information gathering stage of the real estate transaction and have more focused and productive interactions with their REALTOR(R).

In addition, Wireless Realty CE provides a dynamic new marketing channel for listing agents that further strengthens their listing presentation and allows them to bring more advertising value to potential home sellers.

WHY NOW IS A SMART TIME TO BUY

FACT: Low mortgage rates give buyers more house for their dollar.

With the 30-year fixed rate hovering between 6-7%-a 45-year low-qualified buyers continue to have access to incredibly low interest rates. This means that although housing prices have risen, monthly mortgage payments remain reasonable for those who look at real estate as a long-term investment. For example, today if a buyer secured a 6.5% interest rate on a 30-year fixed loan for a $300,000 home (with no money down), the monthly mortgage payment would be $1,896.20. In 1991, the same monthly mortgage payment would have bought a house worth only $230,492 when mortgage rates were 9.25%. In 1982, when the 30-year fixed rate was 14.6%, the same payment would have bought a house worth only $151,657.

FACT: Heavy speculation and overbuilding result in an increase in foreclosures when prices go down.

The media has been focusing on the hardest-hit areas of the country that have seen a dramatic downturn in the market: California, Nevada, Florida and Arizona. Over the past five years, these markets have experienced an abundance of new housing, a rise in investment properties and a rise in prices that was high above the national average.

Now that home prices are starting to drop and stabilize, the areas that went through a building frenzy and experienced the largest price increases are suffering a heavy devaluation in home prices, which in turn has caused homeowners to foreclose on loans.

Those suffering the most in California, Nevada and Florida are far above the national average of foreclosure with one out of every 325, 152 and 282 homes in foreclosure, respectively. Washington, Oregon and Idaho are well below the national average of one in every 617 homes in foreclosures because fewer home buyers in the Pacific Northwest opted for subprime mortgages and because home values have continued to steadily appreciate.

Washington has seen one in 1,072 homes in foreclosure, and Oregon and Idaho have one in 1,275 and 893, respectively.

FACT: Subprime borrowers get a reality check.

Then there are the problems that are affecting subprime borrowers: those who are considered at a higher mortgage risk due to a past history of bankruptcy, delinquent loan payments and low credit scores. During the last number of years, some home buyers in the U.S. qualified only for these riskier subprime loans to fund the American dream.

But, again, unlike the media’s portrayal, the reality is that subprime loans comprise only 9% of total loans nationwide and of those 9%, less than 11% of those subprime ARM and fixed borrowers have defaulted on their loans. The Pacific Northwest stands apart as its own micro-market, with more home buyers qualifying for prime loans. Homeowners in the Northwest have been able to successfully sell their homes for a profit or refinance to pay off their subprime loans.
Real Estate Cycles and Economics

FACT: Over the long-term, real estate has always appreciated in value.

The continuing appreciation of homes in the Northwest is not an anomaly. Real estate has always been one of the most solid investments in the U.S, because, after all, people always need a place to live. Real estate has less volatility than the stock market and over the historical long-term it remains a guaranteed return-on-investment. Take this example from NAR’s Yun: If a buyer were to put down $10,000 for a down payment on a “typically priced home in the United States at a typical appreciation rate of 5%…(he/she) would see a return of $110,300 after 10 years. The same $10,000 invested in the stock market appreciating 10% annually will result in $23,600.”

As history has shown, for those who choose to keep their home for six to 10 years (and not flip for a quick profit) real estate investments do pay off, and pay off well. In fact, what we’re seeing now is a repeat of a housing cycle we’ve seen before. In the early 1980s and 1990s, some areas of the country experienced the worst downturn they had seen in the last 25 years, which were caused by localized economic weaknesses and loss of jobs while on a nationwide average, others, including the Pacific Northwest were barely affected at all. But even those areas that were hit the hardest in the past experienced a historic uptick in prices, and then a continuing long-term appreciation.

Excerpted from a January 2008 Report from John L. Scott Real Estate

For more information, please visit www.johnlscott.com.

This story comes courtesy of RIS Media.

Fannie, Freddie to Pump $200 Billion into Market

The Government Is Easing Cash Cushion Requirements for the Two Agencies

By MARCY GORDON

WASHINGTON (AP) -- The U.S. government on Wednesday relaxed capital requirements at Fannie Mae and Freddie Mac as part of a plan to inject an additional $200 billion (euro127.4 billion) of financing for home loans.

The initiative, which will require Fannie and Freddie to raise substantial funds, is part of a broader government strategy to ease a credit crisis that has made it difficult for consumers and businesses to borrow, and spread fear throughout global financial markets.

The Office of Federal Housing Enterprise Oversight, which oversees the government-sponsored companies, said the mandatory cash cushion for Fannie and Freddie -- now nearly $20 billion (euro12.7 billion) for the two -- will be reduced by a third under the new plan. The freed-up money will go toward buying mortgages of struggling homeowners, enabling them to refinance into more affordable loans.

The capital requirement for each company will be reduced from the current 30 percent to 20 percent, and further reductions will be considered in the future. Fannie and Freddie will raise additional capital through special sales of stock or cuts in dividends.

It was the third step the government has taken in recent weeks to allow Fannie and Freddie to shoulder larger burdens in the mortgage market despite their multibillion-dollar fourth-quarter losses and expectations of further red ink this year.

The $168 billion (euro107 billion) economic stimulus package enacted last month included a temporary increase in the cap on mortgages that the companies can purchase or guarantee, from $417,000 (euro265,740) to $729,750 (euro465,050) in high-cost markets. And, as a reward for filing timely financial statements following multibillion-dollar accounting scandals, Fannie and Freddie were freed on March 1 of a combined $1.5 trillion (euro960 billion) cap on their mortgage-investment holdings.

The oversight agency estimated that the combination of these efforts should allow Fannie and Freddie to purchase or guarantee roughly $2 trillion (euro1.2 trillion) in mortgages this year.

The two companies together hold or guarantee around $4.9 trillion in home-loan debt. As the mortgage crisis and ensuing credit crunch have worsened in recent months, policy makers have increasingly looked to them to step up their participation in the hobbled market for securities backed by mortgages.

"This is what (Fannie and Freddie) were put in place for. ... And we will deliver," Freddie Mac Chairman and chief executive Richard Syron said.

Influential Democratic lawmakers have been pushing for a reduction in the companies' capital-holding requirements. Bush administration officials and numerous Republican lawmakers, on the other hand, have long opposed allowing Fannie and Freddie to take on more debt, contending that doing so could threaten the global financial system.

Story comes courtesy of ABC News Corp.

Updated Information

According to David Gaffen over at Wall Street Journal's Market Beat:

One benefit of these developments is increased liquidity, and with that, presumably, more accurate pricing. “The effort to bring liquidity back is an effort to bring some certainty,” says Adolfo Laurenti, senior economist at Mesirow Financial. “It doesn’t matter that if with certainty comes big write-downs — at least know the value of what you have.”

Some have questioned this move, particularly considering the accounting and risk-control problems that both government-sponsored entities found themselves in over the last few years, which caused OFHEO to initiate these caps. “It wasn’t that long ago when Fannie and Freddie were the problem, now they are the solution,” writes Calculated Risk.

The move should reduce Freddie’s capital requirement by about $2.6 billion and Fannie’s by $3.2 billion.

FED CUTS RATES BY THREE-QUARTERS PERCENT

NEW YORK (CNNMoney.com) -- The Federal Reserve slashed a key interest rate by three-quarters of a percentage point Tuesday, the latest in a series of moves by the central bank to try and restore confidence in the economy and battered financial markets.

The Fed cut its federal funds rate, an overnight bank lending rate, to 2.25%. It is the sixth cut in the past six months and comes at a time when the Fed is trying to keep the economy from slipping into recession - although many think it's already entered one.

Interest rate cuts are usually viewed as beneficial for the economy since they typically lead to more lending. The federal funds rate affects how much consumers pay on credit cards and home equity lines of credit, as well as the rate paid by many businesses on loans tied to banks' prime rate. But some experts think lower rates won't solve the credit crunch paralyzing Wall Street.

Fed's Statement Reads as Follows:

The Fed cited a weakening labor market and a slowdown in spending by consumers, as well as a continued crisis in financial markets and tight availability of credit to justify the cut. U.S. employers have cut 85,000 jobs so far this year, according to the Labor Department, the most in four years.

But two members of the central bank's policymaking body - Dallas Fed President Richard Fisher and Philadelphia Fed President Charles Plosser both voted against the cut. According to the Fed's statement, they "preferred less aggressive action."

Some economists have argued the rate cuts will cause a continued weakening in the value of the dollar and a further spike in commodity prices -- which could lead to higher prices for gas, food and imported goods. According to a new national CNN/Opinion Research Corp. poll released Tuesday, Americans said inflation is their top economic concern.

The Fed acknowledged in its statement that inflation pressures have grown more than expected, and it promised to monitor prices in the months ahead. But it said it still believed the greater risk to the economy was that of slowing growth, not a spike in prices.

To that end, many investors were hoping the Fed would cut rates even further. According to federal funds futures on the Chicago Board of Trade, investors had priced in a 100% chance of a full percentage point cut Tuesday. What's more, traders are betting on another half-point cut by the end of April, the Fed's next meeting.

This story comes courtesy of CNNMoney.com.

Housing Loan Limits Have Been Raised!!

The Federal Housing Administration (FHA) yesterday announced that it will raise the limits on mortgages. The new limit, which increases from $362, 790 for high cost areas, will vary from county to county across the state.
In California, counties that will be placed at FHA's new $729, 750 maximum limit are Alameda, Contra Costa, Los Angeles, Marin, Monterey, Napa, Orange, San Benito, San Francisco, San Mateo, Santa Barbara, Santa Clara, Santa Cruz and Ventura.
Governor Arnold Schwarzenegger said no state been hit harder by the national mortgage crisis than California. The new FHA limits "will help more working Californians achieve the American dream of home ownership through less expensive and more secure loans," he said in prepared remarks.
The Economic Stimulus Act recently approved by Congress is scheduled to soon raise the "conforming" limit on such loans nationally to as much as $729, 750. HUD was given until mid-March to revise loans limits for the FHA.
Although the anticipated higher limits for Fannie Mae and Freddie Mac will make conforming loans more affordable, the new loans may be slightly more expensive than mortgage of less than $417,000.
And while the stimulus act will raise lending limits for Fannie Mae, Freddie Mac and the FHA, all of the new limits are scheduled to expire at the end of the year.
SO DON'T DELAY!!! GIVE ME A CALL RIGHT AWAY!!!



Excerpts taken from signonsandiego.com by Emmet Pierce

New Standards for Home Appraisals....What this means to you as the Consumer?

Fannie Mae and Freddie Mac agreed yesterday to require greater independence for real estate appraisers. Industry leaders expect the changes to apply nationally. The agreement will:

* Ban mortgage brokers form selecting appraisers.

* Prohibit lenders from using staff appraisers or appraisers working for
for appraisal companies they own or control.

* Institute an 11-part "Home Valuation Code of Conduct, " which all
lenders dealing with Fannie Mae and Freddie Mac will have to follow, to
eliminate "coercion, extortion, collusion" and other means for
influencing appraisals.

* Establish the "Independent Valuation Protection Institute" to monitor
appraisal practices.

* Set up a consumer hot line to handle complaints about questionable
appraisals.

Jim Park, a Denver appraiser said, "This is going to be a good thing for borrowers, very good for consumers", because they can presumably rely on appraisals to be accurate. Park predicts that the cost of an appraisal will remain the same, typically $350 to $450 for a home. On the other hand, Roy DeLoach, executive director of the National Association of Mortgage Brokers, said the agreement will remove "thousands of Small-business competitors from the marketplace" and thereby increase consumer costs.

Some observes think the time it takes to obtain an appraisal might increase, especially if an appraisal sought from one lender is not accepted as valid by another lender.

These changes will be affective January 1, 2009.

Excerpts taken from signonsandeigo.com. by Roger Showley

5 Ways to Raise your Credit Score Fast to Obtain Best Mortgage in This Market

If you are looking to improve your credit score quickly, now is the time to get started. Give us a call. We can help. In the meantime, here are some great strategies you can utilize right away to give your score a little boost.

1) Create some Balance: Paying down or paying off revolving debt such as credit cards, can cause a quick jump in your credit score. This trick is to get and keep your balances below 30% of your credit limit on each card.
Do not close your accounts

2) Know your Limits: Make sure that your credit card issuers are reporting the correct limits on your accounts. Without an available limit, your account will appear to be maxed out at its highest reported balance each month. This can cost you up to 80 points.

3) Take Some Credit: If you have a credit card account in very good standing, make sure that all three credit bureaus know about it. Some creditors don't report your information to all three credit bureaus. Correcting this oversight could provide a significant boost to your score.

4) Protect Your Interests: If you have a HELOC, make sure it is listed as a mortgage or an installment account on your credit reports and not a revolving debt. If you had a bankruptcy, be sure that all items associated with the bankruptcy are being reported correctly, that is with a zero balance. This could increase your score by 50-100 points.

5) Even the Score: If you find information on your credit report that you believe is inaccurate or incomplete, then you have the right to dispute it free of charge.

If you would like more information give us a call right away. We'll be glad to help you in any way we can or, if it becomes necessary, refer you to credit professionals you can trust.