Jim Paterson

They say that all politics and real estate is local.  With that in mind, any forecasts of home prices for the nation cannot imply that every region will move the same amount or the same direction.

Nevertheless, I think it’s a little uplifting to read a story in which a respected analytical organization is forecasting a slight increase in home values to come.  (http://www.usatoday.com/money/economy/housing/story/2012-05-08/home-prices-predictions/54844880/1) Given that Warren Buffet stated a couple of months ago that if he could buy 200,000 houses in the U.S. and rent them out, he would do so; that’s a positive affirmation that home prices may be undervalued.

Anecdotally, I know of some people who have been buying foreclosure homes at the courthouse steps in Sacramento.  They generally are buying to fix up and sell (flipping).  Many of them have been making money.  A friend of mine said he made around $600,000 in profit from 2009-2010 doing so.

When you look at the cost of building a new home compared to what you can buy a used home for, that is one way to determine if homes are fairly valued, over valued, or undervalued.

The HARP refinance program which is helping people refinance even though they have negative equity is going to help a fair number of people justify keeping their house and thus avoid foreclosure or short sale.  While the implementation of the program has been horrible (not as many people can qualify as originally thought and there are a number of cumbersome bugs in the program) it is going to have a net positive effect for the real estate market and our economy down the road.

One last mention is a follow-up to remodeling activity.  I’ve passed along a couple of articles for your interest and just today, MarketWatch came out with this bit of information:

There’s more remodeling going on these days, with kitchen and bathroom projects still the most popular improvements, according to a survey released this week by the National Association of Home Builders.

Almost 50% of remodelers surveyed reported an increase in homeowners remodeling their homes to avoid moving, compared with the findings of a similar survey in 2010.
Kitchen and bath remodels are both popular, but there has been more interest in bathroom projects than kitchen projects since 2009, according to the report. That’s a switch from previous years, when kitchen projects were the most sought after.

Window and door replacements, whole house remodels, room additions and handyman services are also common requests, remodelers said. Sixty percent of remodelers said there has been more demand for repairs and replacement jobs over the past couple of years.

Discussing HARP, Refinancing Options and the Nation’s Opinion on Buying a Home today.

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I wanted to let you know what has been happening over the last 3 weeks regarding this program, HARP. Even If this does not directly apply to your circumstances, please forward it on to anyone you know who may benefit from this type of program – a friend, family member, neighbor, work colleague. I can be a reliable resource to help them understand their options.

We (I) am still moving ahead to help as many people as possible benefit from this program, which in an earlier newsletter I said was finally a common sense program from the federal government that benefits “regular people” and not bailouts for various entities that Big 3 Auto, Big Banks, AIG, etc.

To that end, I feel like I’ve been on Mr. Toad’s Wild Ride 15 times in a row and now I’m trying to walk in a straight line without falling over.

Here is an article http://blogs.wsj.com/developments/2011/10/23/twelve-questions-on-obamas-refi-plan/ that does a good job at hitting the main important points that you will find of interest. If possible, let your Congressman (woman) know about how badly the federal government ( the agency is FHFA, not FHA) and some of the Big Banks in our country has handled this. I remember President Obama announcing this Program publicly in October and mentioning it in his State of the Union address this past January.

In short, the federal government went back on their word on 3/15/2012 from an agreement made last September that they (Fannie Mae and Freddie Mac) would not hold lenders responsible for losses they may incur as a result of making these specific loans. Consequently, lenders have been pulling back from whether they would offer them at all or reduce their exposure to their perceived losses by dramatically cutting back on which borrowers they would accept. You can imagine after (I) sending out various updates to everyone since November of last year, that these developments are very disappointing to receive.

Fannie Mae and Freddie Mac have “automated underwriting online engines” (it uses artificial intelligence software…yes I know there is more than one joke there…). An approval with a waiver of needing an appraisal is key to proceeding towards a final loan approval. They (Fannie/Freddie) have been bombarded with phone calls telling them how difficult it is to get loans “AU approved” on their website. That indicates to me that they are making it more difficult than was proclaimed publicly by the President.

Nevertheless, I am hopeful that enough people in the country will voice their objections to what the federal government did and we’ll get back on track to having lots of options to offer borrowers. There are a lot of good people doing the right thing by making their mortgage payments on time even though their interest rate is higher than the national average and who also have negative equity. No one wants to see more foreclosures and short sales!!

On a positive note, here is an article reminding us spring is in the air and with change in weather, we are seeing a change for the better in the market. http://www.marketwatch.com/story/springtime-for-us-housing-2012-03-27

Call me or email me with any of your questions. 916.635.6737

Here is a video of my interview with Denise & Jennie discussing my recent visit with Congressman Dan Lungren.

With apologies to those of you who haven’t watched Championship Boxing matches, getting ready to rumble is trumpeted by the ring announcer for the main event.

The HARP refinance extension, which does not require an appraisal to qualify, is finally ready to get off the ground.

If your loan (or someone you know) was purchased by Fannie Mae or Freddie Mac before May 1, 2009 and you don’t have mortgage insurance imbedded in your loan, you will be able to refinance.  You will have to qualify for the loan but the loan qualifications will be a little more streamlined and easier than traditional loans.

As mentioned in an earlier newsletter notice, the early bird will get the worm.  So here is what I will need at a minimum to start loan applications to get you in line:

• Current paystub(s)
• Most recent mortgage statement
• Home owner insurance policy declaration page
• Most recent checking/savings statement (all pages)
• 2010 W-2’s**

This will help me get a loan application put together for you.  There will be disclosure forms that I’ll need to prepare for you and figure out at what point you can lock in your rate/fees.  I’m sure you know that mortgage rates can and will fluctuate from day to day.

**if your income is from a source other than salary or you are refinancing a rental house, 2010 federal tax returns will likely be needed.

It’s estimated that 3-4 million people can benefit from this program.  That’s going to help out a lot of people as well as provide a nice stimulus to the national and local economies!!  It’s also going to mean that lenders and title companies will be very busy.

I’ve seen at least two reliable reports noting the amount of remodeling that has been on going for the last year or so.

It would seem counter-intuitive to think that when sources for financing, particularly home equity lines of credit, dry up and home values decline with unemployment problems that there would be a significant amount of remodeling.

However, we just did some minor remodeling on a couple of bathrooms and then we have friends who have been doing things that range from repairs that had to be done to voluntary enhancements of their homes.

Cash seems to be the primary way of paying for the improvements and given that cash is earning next to nothing in savings accounts, maybe that is one of the motivations.

I think you’ll find the survey of people’s attitudes about owning a home along with the story on remodeling interesting and enlightening.

http://www.smartmoney.com/spend/real-estate/unable-to-sell-homeowners-remodel-1316782563508/

Considering all the problems that we know about in our real estate market as well as the rest of the U.S., this is an encouraging report. For the most part, people who were polled (likely to vote also) were still enthusiastic about owing their home now and in the future. Here’s an article I found interesting on the topic.

MarketWatch by Steve Kerch

ORLANDO, Fla. (MarketWatch) — Despite the beating that home prices have taken over the last five years, Americans are still optimistic about their own housing situation, a new poll shows.

Seventy-eight percent of Americans identified as likely to vote in the 2012 presidential election said that owning their own home was one of the most important things in their lives, according to the survey by Lake Research Partners done for the National Association of Home Builders and presented here Wednesday at the International Builders Show.

And 74% agreed, with 43% strongly agreeing, that owning a home was worth it even with all the ups and downs of the housing market.

“People told us that homeownership is more than just bricks and mortar, more than just having a big mortgage. It’s about family. It’s still part of the American dream,” said Alex Batty, a partner with Public Opinion Strategies who analyzed the results.

One-third of those polled even said housing was one of the best investments you could make, ignoring the 30%-plus drop in home prices nationally since the peak of the housing boom in 2006. The only better investment Americans can think of is a retirement account such as an IRA or 401(k).

Current homeowners were not discouraged in the least by the pitfalls of paying for and maintaining a house: 96% said they were happy with their decision to own a home and 85% said they were very happy with that decision.

“The desire for homeownership long-term is still there,” said Frank Nothaft, chief economist for mortgage agency Freddie Mac, even if economic and job uncertainty is keeping people from jumping into the market today.

The NAHB commissioned the election-year survey in the hopes of backing up its lobbying effort on Capitol Hill with data that could show Congress and the Obama administration that housing is still a valued commodity in the country and that Americans want the government to provide supportive housing policies, said Jim Tobin, the trade group’s chief lobbyist.

“It’s been frustrating for us, to see what we think is a lack of focus on housing,” Tobin said. “We’re just starting to see some of our efforts on this pay off with the Republican candidates and the president.”

Obama late in January unveiled a new mortgage-refinancing plan designed to help distressed homeowners. Read more about the mortgage-refinancing plan.

That kind of assistance is what respondents to the survey said is appropriate for the government to do in support of housing. Two-thirds said it was OK for the government to ensure the availability of 30-year mortgages and 75% said it was all right to use the tax code to support homeownership.

And in a warning to those would propose to cut the mortgage-interest tax deduction as part of the deficit-reduction debate, 65% said they would be less likely to vote for a candidate who supported that position.

Steve Kerch is assistant managing editor and personal finance editor of MarketWatch in Chicago.

http://realtytimes.com/rtpages/20111229_myths.htm

“Historically low interest rates!  Now’s the time to buy!” seems to be the headline for every mortgage company email blast and on the lips of every real estate agent these days.  And for the most part, it’s true.  But there’s conventional wisdom and then there are myths circulating out there as well.

Since transparency is a cornerstone of my way of consulting with would-be homebuyers and those wishing to re-finance their homes, I like to point out as much as I can to my clients so that they can approach their real estate investments with their eyes wide open.  I actively look for news and articles that help me explain nuances in lending that can aid in your decision to borrow.  Fitting the right loan program as well as rates and fees is one the best services a loan officer can provide.

In a recent article for RealtyTimes.com, long-time real estate journalist and finance writer Broderick Perkins dispels some myths regarding 30-year fixed rate mortgages, the 20% down rule when purchasing a home and just how much a rate must drop to make refinancing worthwhile..

“There may be fewer loan programs available today then there were five to 10 years ago,” says Perkins, “but lenders continue to offer a host of different home loan programs. And rates can vary by more than a percentage point from one lender to another. Always comparison-shop for home loans, but not just the interest rate. Look at closing costs and other fees that can amount to thousands of dollars.”

I don’t think that rates will vary by as much as 1% from lender to lender but there are differences day to day.  Lenders who regularly advertise on the radio or internet don’t provide all the information….just enough to try and entice people.  Comparison shopping is good but finding out how long a lender will take to complete the loan, if they’ll even approve the loan, what their lock in rate policy is and what their reputation is with past clients and professionals is just as important.  Also, Lending Tree makes their money by lenders who pay them to be on their list of lenders.

If you have not refinanced your home loan since May of 2009, the rules got a lot easier (and it’s about time)!

Think about this; If one million homeowners who have not been able to refinance due to the value of their house could refinance to a lower rate and drop their mortgage payments on average of $200/month that would mean an extra $200 million dollars each month in the hands of American consumers.  Probably one of the best economic stimulus plans that doesn’t increase government debt and isn’t a bailout of financial institutions!!

I wish this had been done 2 years ago but better late than never.  My own belief is that this will help people lower their mortgage costs enough that a large percentage of people who have thought about giving up and letting their house “go” will not do so and it will mean less foreclosures in the country and particularly California.

One of the biggest obstacles to lowering your rate has been the declining real estate values.  Although the final details are not yet published it appears that people who qualify and are current on their mortgage payment will be able to refinance to a lower rate without consideration for the home value…..no appraisal required in most situations.

Here’s what I know so far:

• Your loan is owned by Fannie Mae or Freddie Mac  (I can help you figure that out)
• Your loan MUST be owned by Fannie Mae or Freddie Mac
• You have not refinanced your loan since May 2009
• You have not had more than 1 late payment over the last 12 months
• You don’t need to pay off a 2^nd mortgage**

As far as we know, this new Refi Program can be used for your principal home or a rental home and possibly for a 2^nd home.

We may be able to start taking applications as soon as mid November so gather some of your current statements together and then call me or email me.

The list includes:

• Your current mortgage statement
• Your current home owner insurance policy statement
• 2009 + 2010 federal tax returns and W-2’s
• Current pay stub(s)
• Current checking/savings/investment statements

** Even if you have a 2^nd mortgage, you may be able to still refinance your current 1^st mortgage as long as your 2^nd lender will agree to “subordinate” to the new 1^st loan.  Most lenders will do that although they charge a fee to do that and they will require a review of your new loan information as part of their consideration to subordinate.

In order to refinance, your loan doesn’t have to be owned by Fannie Mae or Freddie Mac.  But to refinance where you owe more than 80% of your value of your house and do that without an appraisal and have no mortgage insurance charged on your loan, this HARP extension is the only way to get that done.

You still might find it beneficial to refinance even if your loan isn’t part of that particular program so call me or email me if you have any questions.

If you have friends, co-workers, or family members that might be helped, I’m always happy to answer their questions.