Home Front: California Realtors stay busy online
Where do today's real estate agents go when they go online?
A new survey from their California trade group reveals a new generation of agents obsessed with e-mail, social networking, cruising multiple listing services and publicizing listings on a rising number of Web sites.
Realtors are getting intimate with the Internet (97 percent have high-speed access at home) or getting left behind, says a new California Association of Realtors technology survey conducted in July and August.
Almost half of 400 agents surveyed said they're now using social networking sites "to stay on top of trends in their business." Most popular, with 34 percent using it, was LinkedIn, a network of business contacts. Video site YouTube claimed 13 percent, MySpace 12 percent, Twitter 10 percent and Facebook 4 percent, CAR reported.
Wired agents most consistently seek information on Realtor.com, the Web site of the National Association of Realtors. Ninety-four percent named it as a top site. It's also a top site for homebuyers to look at listings.
After Realtor.com came their local multiple-listing services at 89 percent, their company Web sites at 86 percent and the California Association of Realtors site at 78 percent.
Increasingly, today's agents also appreciate the online valuation site Zillow, classified ad giant Craigslist and Yahoo Real Estate. In surveys three years ago, none of the three was mentioned.
In another break with the past, 70 percent of Realtors now promote listings online:
� 51 percent on Yahoo Real Estate.
� 37 percent on local newspaper Web sites.
� 29 percent on Zillow and 26 percent on Craigslist.
Nearly half the state's 172,000 Realtors carry laptops or tablet computers in the field, mainly to check e-mail and respond quickly, CAR said. Almost 40 percent carry a hand-held wireless device to do the same.
The survey results are based on a random telephone survey of CAR members. The survey has a margin of error of plus or minus ve percentage points. More details: www.car.org.
Mortgage lending bills fate uncertain
We're still waiting on Gov. Arnold Schwarzengger.
As of press time there was no word whether he will sign or veto bills that aim to tighten mortgage lending standards in California and ban loan modification firms from charging up-front fees. Bills to watch include Assembly Bill 260, which bans many risky loans, and Senate Bill 94 and Assembly Bill 764, which prevent loan modification firms from collecting fees before they begin work.
Industry officials and prosecutors are also watching Senate Bill 239, which creates a new felony category in California law for mortgage fraud.
The governor has signed very few bills while awaiting a deal on water issues. He has until Sunday to decide.
While we're addressing deadlines, there's also no word on whether a federal $8,000 homebuyer tax credit will be extended after expiring Nov. 30. (The House voted Thursday to extend for one year the credit for military service members who have served at least three months overseas in 2009).
The fate of the expired $10,000 tax credit for buyers of new California homes also remains uncertain.
Rates stay below 5 percent
It's like spring again for mortgage rates. Much like March, April and May, they've marked two weeks now below 5 percent � just as the sales season begins a fall and winter slowdown.
Mortgage giant Freddie Mac pegged this week's national average at 4.87 percent, plus points, for the benchmark fixed-rate 30-year loan.
That's down from 4.94 percent last week and the year's 14th week below 5 percent.
For Sacramento buyers, locking in a $200,000 loan this week is about $90 a month cheaper than in June, when 2009 rates peaked at 5.59 percent plus points.
Falling rates are generally a sign that investors believe the economy is weak and won't produce an inflationary spiral any time soon.
With rates falling for six straight weeks now, the Mortgage Bankers Association reported a 19-week high in mortgage applications this week.
Most aren't buyers. Two-thirds of applicants nationally want to refinance.
Monday, October 12, 2009
Friday, October 9, 2009
Economist expects California existing-home sales to fall in 2010
Economist expects California existing-home sales to fall in 2010
Sales of existing homes will fall slightly next year in California as people lose more jobs and cheap foreclosed homes become a smaller part of the market, California Association of Realtors economists predicted Wednesday.Fewer sales of foreclosed homes may also push median prices a little higher than this year, the group said.Watch, too, for growing trouble in the higher-end home market, which so far has been spared the huge price drops seen at the less expensive end, said CAR chief economist Leslie Appleton-Young.The California trade group for 172,000 real estate agents is predicting sales of 527,500 homes in 2010 - 2.3 percent less than in this year. It also foresees a 2010 median price of $280,000. That's 3.3 percent higher than this year's current estimate of $271,000.But anything could happen in a still-volatile and sluggish economic and housing climate, CAR said. The group, releasing the estimates during a trade show in San Jose on Wednesday, cautioned that numerous wild cards could hurt the real estate market in 2010, including the state budget crisis, rising unemployment and possibly rising interest rates."As we get through this, there are a lot of unknowns," said Appleton-Young.In California, the nation's largest struggling housing market, those wild cards include:• The supply of foreclosed homes. Appleton-Young said prices could be pressed downward again if a heavier-than-expected wave of foreclosures floods the market next year. Foreclosures accounted for slightly more than half the state's sales this year; the estimate for next year is one-third."I don't see a tsunami of foreclosures," said the CAR economist. "I see an elevated level of foreclosures over the next couple of years, and an acceleration of foreclosures at the upper end of the market."Analysts, including Irvine-based John Burns Real Estate Consulting, note that banks have been slow to foreclose and list existing repos, setting up the potential for a new wave of bank-owned properties going up for sale.Burns contends that continued government intervention - including tax credits for buyers - is necessary to stimulate housing demand in a slow economy. CAR is among the real estate groups lobbying Congress to extend a first-time homebuyer tax credit that expires Nov. 30.Sacramento-area real estate agents are also getting "calls to action" to lobby congressional reps for an extended tax credit, said Charlene Singley, president of the Sacramento Association of Realtors.• Sales of higher-end homes. Appleton-Young said many buyers are having trouble financing more expensive houses - and hesitating over fears they will lose value. Those factors, combined with rising joblessness among owners of higher-priced homes, have the potential to bring down prices in the upper segment.• Loan resets: Projections suggest that thousands of new risky adjustable-rate loans - including especially dangerous pay-option mortgages - will reset in 2010 across California, possibly triggering a new stream of loan defaults. Many of those, too, involve owners of more expensive homes.
Sales of existing homes will fall slightly next year in California as people lose more jobs and cheap foreclosed homes become a smaller part of the market, California Association of Realtors economists predicted Wednesday.Fewer sales of foreclosed homes may also push median prices a little higher than this year, the group said.Watch, too, for growing trouble in the higher-end home market, which so far has been spared the huge price drops seen at the less expensive end, said CAR chief economist Leslie Appleton-Young.The California trade group for 172,000 real estate agents is predicting sales of 527,500 homes in 2010 - 2.3 percent less than in this year. It also foresees a 2010 median price of $280,000. That's 3.3 percent higher than this year's current estimate of $271,000.But anything could happen in a still-volatile and sluggish economic and housing climate, CAR said. The group, releasing the estimates during a trade show in San Jose on Wednesday, cautioned that numerous wild cards could hurt the real estate market in 2010, including the state budget crisis, rising unemployment and possibly rising interest rates."As we get through this, there are a lot of unknowns," said Appleton-Young.In California, the nation's largest struggling housing market, those wild cards include:• The supply of foreclosed homes. Appleton-Young said prices could be pressed downward again if a heavier-than-expected wave of foreclosures floods the market next year. Foreclosures accounted for slightly more than half the state's sales this year; the estimate for next year is one-third."I don't see a tsunami of foreclosures," said the CAR economist. "I see an elevated level of foreclosures over the next couple of years, and an acceleration of foreclosures at the upper end of the market."Analysts, including Irvine-based John Burns Real Estate Consulting, note that banks have been slow to foreclose and list existing repos, setting up the potential for a new wave of bank-owned properties going up for sale.Burns contends that continued government intervention - including tax credits for buyers - is necessary to stimulate housing demand in a slow economy. CAR is among the real estate groups lobbying Congress to extend a first-time homebuyer tax credit that expires Nov. 30.Sacramento-area real estate agents are also getting "calls to action" to lobby congressional reps for an extended tax credit, said Charlene Singley, president of the Sacramento Association of Realtors.• Sales of higher-end homes. Appleton-Young said many buyers are having trouble financing more expensive houses - and hesitating over fears they will lose value. Those factors, combined with rising joblessness among owners of higher-priced homes, have the potential to bring down prices in the upper segment.• Loan resets: Projections suggest that thousands of new risky adjustable-rate loans - including especially dangerous pay-option mortgages - will reset in 2010 across California, possibly triggering a new stream of loan defaults. Many of those, too, involve owners of more expensive homes.
Wednesday, October 7, 2009
Mortgage rates below 5 percent fuel re-fi boom
Mortgage rates below 5 percent fuel re-fi boom
Every dollar counts in this economy.
Homeowners hustled last week to refinance their mortgages after interest rates fell below 5 percent for the first time since May.
Refinance applications climbed 18 percent from the previous week, the Mortgage Bankers Association reported Wednesday, as rates on 30-year home loans dropped to their lowest level in four months to 4.89 percent.
With extra cash lining their pockets each month, homeowners could help the economy recover. Since the recession began, American consumers have reined in spending, which accounts for up to 70 percent of the economy. A refinance savings of a couple hundred bucks could go a long way in boosting household finances.
"A lot of people are thinking: "If I can get something right now, let's get it and run,'" said Pava Leyrer, president of Heritage National Mortgage in Michigan.
But more than 16 million homeowners owe more on their mortgages than their properties are worth. To refinance they would have to cover the difference and then some. In some cases, that could mean forking over tens of thousands of dollars. Others simply don't qualify under stricter credit and income standards. And requirements for refinancing certain government loans will get tougher in November.
The Federal Reserve started buying mortgage-backed securities in January to drive down mortgage rates. But it plans to slow its purchases of mortgage-related debt and extend the program through the first three months of 2010, which will likely push rates higher.
Still, current low rates helped borrowers like Kimberly Austin in Kalamazoo, Mich., cut her monthly payment by more than $300 to $934. Austin, a 40-year-old accounts receivable clerk, ticked off a list of where that extra cash will go. A new roof, updating the electrical system and other improvements on the older house she bought in June of last year.
"That money would be a huge help," said Austin, who is set to complete the refinance on Thursday.
For Tanya Schlicht in Greenfield, Wisc., refinancing her mortgage will help cushion the blow from her husband's job loss earlier this year. He's working at a temp agency now, but makes less than before.
Schlicht, who works in a nursing home, is in the process of qualifying with just her income and wants to roll a costly second mortgage into just one loan. The move will save them a much-needed $200 a month.
"We're going to need it for the electric bill," she said.
She's a lucky one.
Many calls mortgage brokers received last week came from borrowers who couldn't qualify for a new loan because of lower incomes, higher credit standards or falling home prices.
New rules designed to limit conflicts of interest in the appraisal industry also are scuttling refinance applications because appraisals are coming in low, said Les Berman of EB Financial in Beverly Hills, Calif.
Lenders are stricter too. Before, Berman said they would accept a refinance application if the mortgage payment, taxes, insurance and all other debt added up to half a borrower's income. Now, the magic number is 41 percent.
The Obama Administration launched a plan in April to help borrowers refinance, even if their home has lost value. Fannie Mae and Freddie Mac are accepting borrowers who owe up to 25 percent more than their home are worth. But so far, only about 85,000 homeowners have had their loans refinanced under the plan, well below original expectations of 5 million.
"I personally haven't seen one yet," Berman said.
And on Nov. 18th, new requirements go into effect for borrowers who want to refinance a loan insured by the Federal Housing Administration. The so-called "FHA streamline" loan will require at least six months of payments before a borrower can take advantage of the program, and verification of assets, job and income. Also, more borrowers will need to come up with more cash to refinance because of new rules to calculate the maximum loan amount relative to the home's value.
"That'll stop up to 85 percent of my streamline borrowers," said Leyrer of Heritage National Mortgage.
Mortgage brokers say a refinancing is worthwhile if you can shave off at least $100 from your monthly payment or get a full percentage point rate reduction.
That's why rates below 5 percent are so appealing. It's only the second time this year they dipped that low. Rates hit a record low of 4.78 percent in the spring.
"The experts say rates are going back up," said John Stearns, vice president at Robbins and Lloyd Mortgage in Mequon, Wis. "We're making hay while we can now."
Every dollar counts in this economy.
Homeowners hustled last week to refinance their mortgages after interest rates fell below 5 percent for the first time since May.
Refinance applications climbed 18 percent from the previous week, the Mortgage Bankers Association reported Wednesday, as rates on 30-year home loans dropped to their lowest level in four months to 4.89 percent.
With extra cash lining their pockets each month, homeowners could help the economy recover. Since the recession began, American consumers have reined in spending, which accounts for up to 70 percent of the economy. A refinance savings of a couple hundred bucks could go a long way in boosting household finances.
"A lot of people are thinking: "If I can get something right now, let's get it and run,'" said Pava Leyrer, president of Heritage National Mortgage in Michigan.
But more than 16 million homeowners owe more on their mortgages than their properties are worth. To refinance they would have to cover the difference and then some. In some cases, that could mean forking over tens of thousands of dollars. Others simply don't qualify under stricter credit and income standards. And requirements for refinancing certain government loans will get tougher in November.
The Federal Reserve started buying mortgage-backed securities in January to drive down mortgage rates. But it plans to slow its purchases of mortgage-related debt and extend the program through the first three months of 2010, which will likely push rates higher.
Still, current low rates helped borrowers like Kimberly Austin in Kalamazoo, Mich., cut her monthly payment by more than $300 to $934. Austin, a 40-year-old accounts receivable clerk, ticked off a list of where that extra cash will go. A new roof, updating the electrical system and other improvements on the older house she bought in June of last year.
"That money would be a huge help," said Austin, who is set to complete the refinance on Thursday.
For Tanya Schlicht in Greenfield, Wisc., refinancing her mortgage will help cushion the blow from her husband's job loss earlier this year. He's working at a temp agency now, but makes less than before.
Schlicht, who works in a nursing home, is in the process of qualifying with just her income and wants to roll a costly second mortgage into just one loan. The move will save them a much-needed $200 a month.
"We're going to need it for the electric bill," she said.
She's a lucky one.
Many calls mortgage brokers received last week came from borrowers who couldn't qualify for a new loan because of lower incomes, higher credit standards or falling home prices.
New rules designed to limit conflicts of interest in the appraisal industry also are scuttling refinance applications because appraisals are coming in low, said Les Berman of EB Financial in Beverly Hills, Calif.
Lenders are stricter too. Before, Berman said they would accept a refinance application if the mortgage payment, taxes, insurance and all other debt added up to half a borrower's income. Now, the magic number is 41 percent.
The Obama Administration launched a plan in April to help borrowers refinance, even if their home has lost value. Fannie Mae and Freddie Mac are accepting borrowers who owe up to 25 percent more than their home are worth. But so far, only about 85,000 homeowners have had their loans refinanced under the plan, well below original expectations of 5 million.
"I personally haven't seen one yet," Berman said.
And on Nov. 18th, new requirements go into effect for borrowers who want to refinance a loan insured by the Federal Housing Administration. The so-called "FHA streamline" loan will require at least six months of payments before a borrower can take advantage of the program, and verification of assets, job and income. Also, more borrowers will need to come up with more cash to refinance because of new rules to calculate the maximum loan amount relative to the home's value.
"That'll stop up to 85 percent of my streamline borrowers," said Leyrer of Heritage National Mortgage.
Mortgage brokers say a refinancing is worthwhile if you can shave off at least $100 from your monthly payment or get a full percentage point rate reduction.
That's why rates below 5 percent are so appealing. It's only the second time this year they dipped that low. Rates hit a record low of 4.78 percent in the spring.
"The experts say rates are going back up," said John Stearns, vice president at Robbins and Lloyd Mortgage in Mequon, Wis. "We're making hay while we can now."
Monday, October 5, 2009
FHA Loans soar in Sacramento area
FHA loans soar in Sacramento area
The number of government-backed FHA loans jumped sharply last year, propping up a local real estate market otherwise saturated by loan denials.
During 2008, lenders issued 8,998 FHA loans in the Sacramento region, up from 649 during 2007, according to statistics released this week by the Federal Financial Institutions Examination Council.
"There's been such a shift in available financing as the market bottoms out," said Larry Bush, a regional spokesman for the U.S. Department of Housing and Urban Development.
FHA loans are primarily used by people who can't afford a big down payment, or who otherwise aren't able to obtain mortgage insurance. FHA buyers need put down only about 3 percent. With the credit market shot, most conventional loans require at least 10 percent down.
Other than FHA loans, there are "very few lenders out there that will even toy with 95 percent financing," said John Arvanitis, owner of Sunrise Vista Mortgage, a Citrus Heights-based company that specializes in FHA loans.
FHA loans fell out of favor during the housing boom, experts said, because it didn't matter much whether borrowers had enough for a substantial down payment. Banks were giving zero down, "no proof" mortgages left and right.
Also during the boom, FHA mortgages were capped locally around $360,000, which didn't buy much back then. Now, prices have plunged, and the cap has been raised to $580,000, covering the vast majority of the local market.
"Even during the subprime era, I was trying to get people to go with FHA loans," Arvanitis said, adding that it was a tougher sell back then.
FHA insures loans; it doesn't make them. Like any insurer, the government tries to be careful before it acts.
There's a pretty long list of standards that a home must meet before an FHA loan will be administered, said Scott Burton, who specializes in FHA homes and runs Burton & Co. Real Estate Appraisals, a local outfit.
For instance, homes often don't pass muster because of lead-based paint, or roof or termite damage, Burton said.
The number of FHA loans issued locally would be even higher if the banks that owned foreclosed properties were willing to fix them up to FHA standards. Instead, "they want to sell them as is," said Burton, adding that banks are slowly coming around.
The 8,998 loans for 2008 also includes a small number of VA loans, which have slightly different terms.
The FHA loans are one of the few bright spots in the new federal report. It showed lenders denying about one-third of home loan applications in the Sacramento region during 2008, roughly double the percentage of denials in 2005 and similar to 2007, another bad year.
Mark Van Winkle and his family recently bought a home in Carmichael using an FHA loan. He's been in the Sacramento area for decades and has owned a house before, but got into some financial trouble around the turn of the century, forcing him to rent.
"We had no choice but to go with an FHA loan because of financial reasons," said Van Winkle, who got his loan through Sunrise Vista.
Despite his hands being tied, "it went really smooth," Van Winkle added.
The number of government-backed FHA loans jumped sharply last year, propping up a local real estate market otherwise saturated by loan denials.
During 2008, lenders issued 8,998 FHA loans in the Sacramento region, up from 649 during 2007, according to statistics released this week by the Federal Financial Institutions Examination Council.
"There's been such a shift in available financing as the market bottoms out," said Larry Bush, a regional spokesman for the U.S. Department of Housing and Urban Development.
FHA loans are primarily used by people who can't afford a big down payment, or who otherwise aren't able to obtain mortgage insurance. FHA buyers need put down only about 3 percent. With the credit market shot, most conventional loans require at least 10 percent down.
Other than FHA loans, there are "very few lenders out there that will even toy with 95 percent financing," said John Arvanitis, owner of Sunrise Vista Mortgage, a Citrus Heights-based company that specializes in FHA loans.
FHA loans fell out of favor during the housing boom, experts said, because it didn't matter much whether borrowers had enough for a substantial down payment. Banks were giving zero down, "no proof" mortgages left and right.
Also during the boom, FHA mortgages were capped locally around $360,000, which didn't buy much back then. Now, prices have plunged, and the cap has been raised to $580,000, covering the vast majority of the local market.
"Even during the subprime era, I was trying to get people to go with FHA loans," Arvanitis said, adding that it was a tougher sell back then.
FHA insures loans; it doesn't make them. Like any insurer, the government tries to be careful before it acts.
There's a pretty long list of standards that a home must meet before an FHA loan will be administered, said Scott Burton, who specializes in FHA homes and runs Burton & Co. Real Estate Appraisals, a local outfit.
For instance, homes often don't pass muster because of lead-based paint, or roof or termite damage, Burton said.
The number of FHA loans issued locally would be even higher if the banks that owned foreclosed properties were willing to fix them up to FHA standards. Instead, "they want to sell them as is," said Burton, adding that banks are slowly coming around.
The 8,998 loans for 2008 also includes a small number of VA loans, which have slightly different terms.
The FHA loans are one of the few bright spots in the new federal report. It showed lenders denying about one-third of home loan applications in the Sacramento region during 2008, roughly double the percentage of denials in 2005 and similar to 2007, another bad year.
Mark Van Winkle and his family recently bought a home in Carmichael using an FHA loan. He's been in the Sacramento area for decades and has owned a house before, but got into some financial trouble around the turn of the century, forcing him to rent.
"We had no choice but to go with an FHA loan because of financial reasons," said Van Winkle, who got his loan through Sunrise Vista.
Despite his hands being tied, "it went really smooth," Van Winkle added.
Wednesday, September 16, 2009
Sacramento Association of Realtors Upcoming Events
Wednesday, September 16, 2009
Sacramento Association of Realtors Upcoming Events
Here are some noteworthy events coming up in September that you might be interested in:SAR Volunteer Opportunity: Rebuilding TogetherDate: Saturday, October 3rdTime: All DayLocation: TBASAR has been organizing a team of members to help rehab the home of a needy Sacramento citizen. This team gets together twice a year to paint, construct, and even clean homes. If you are interested please contact Tony @ 437-1205 and for more details you can sign up at www.rebuildingtogethersacramento.orgSAR 2009 Fall Conference & ExpoDate: Friday, September 18thTime: 8:00-9:00am Early-bird session9:00am-4:00pm Conference and ExpoLocation: Radisson Hotel SacramentoCost: $25 (SAR and MLS Members)$30 (Non-Members)There will be exciting speakers, fabulous prizes and an extensive trade show not to mention a delicious lunch will be served. Speakers include:-Right Tools Right Now: Matthew Ferrara-It's Easy Being Green: Jim Casey-Recharge Your Batteries: Jay GrantThe Housing Affordability Update: "Show Me the Money"Date: Wednesday, October 28thTime: 9:00am - 12:00pmLocation: SAR Mack Powell AuditoriumCost: $10 ($15 if paid after 10/23)Topics covered will include the EEM, 203K, MCC and many more. This will be an amazing opportunity for information because the following organizations will be featured FHA, CalPERS, and CalHFA.Young Professionals Council/Public Issues ForumDate: Thursday, September 17thTime: 9:00am - 10:00amLocation: SAR Mack Powell AuditoriumThis year the Forum has been moved to accommodate the 2009 Fall Conference and will be held jointly with the YPC meeting. There will be updates given on the Sacramento region's water issues by John Woodling, Executive Director of the Regional Water Authority.WCR LuncheonDate: Thursday, September 17thTime: 11:00am - 2:00pmLocation: SAR Mack Powell AuditoriumThe Women's Council of REALTORS is holding their monthly luncheon on Thursday following the YPC/Public Issues Forum. A one hour Crime Prevention Seminar will be given by Crime Stop USA. This seminar has been seen by over 30,000 agents. Laugh yourself safe!Source Sacramento Association of Realtors
Sacramento Association of Realtors Upcoming Events
Here are some noteworthy events coming up in September that you might be interested in:SAR Volunteer Opportunity: Rebuilding TogetherDate: Saturday, October 3rdTime: All DayLocation: TBASAR has been organizing a team of members to help rehab the home of a needy Sacramento citizen. This team gets together twice a year to paint, construct, and even clean homes. If you are interested please contact Tony @ 437-1205 and for more details you can sign up at www.rebuildingtogethersacramento.orgSAR 2009 Fall Conference & ExpoDate: Friday, September 18thTime: 8:00-9:00am Early-bird session9:00am-4:00pm Conference and ExpoLocation: Radisson Hotel SacramentoCost: $25 (SAR and MLS Members)$30 (Non-Members)There will be exciting speakers, fabulous prizes and an extensive trade show not to mention a delicious lunch will be served. Speakers include:-Right Tools Right Now: Matthew Ferrara-It's Easy Being Green: Jim Casey-Recharge Your Batteries: Jay GrantThe Housing Affordability Update: "Show Me the Money"Date: Wednesday, October 28thTime: 9:00am - 12:00pmLocation: SAR Mack Powell AuditoriumCost: $10 ($15 if paid after 10/23)Topics covered will include the EEM, 203K, MCC and many more. This will be an amazing opportunity for information because the following organizations will be featured FHA, CalPERS, and CalHFA.Young Professionals Council/Public Issues ForumDate: Thursday, September 17thTime: 9:00am - 10:00amLocation: SAR Mack Powell AuditoriumThis year the Forum has been moved to accommodate the 2009 Fall Conference and will be held jointly with the YPC meeting. There will be updates given on the Sacramento region's water issues by John Woodling, Executive Director of the Regional Water Authority.WCR LuncheonDate: Thursday, September 17thTime: 11:00am - 2:00pmLocation: SAR Mack Powell AuditoriumThe Women's Council of REALTORS is holding their monthly luncheon on Thursday following the YPC/Public Issues Forum. A one hour Crime Prevention Seminar will be given by Crime Stop USA. This seminar has been seen by over 30,000 agents. Laugh yourself safe!Source Sacramento Association of Realtors
Monday, September 14, 2009
Mortgage fraud bills sent to Schwarzenegger
Mortgage fraud bills sent to Schwarzenegger
As financial carnage from the housing crash continues across California, state lawmakers have sent several bills that crack down on mortgage fraud to Gov. Arnold Schwarzenegger's desk.In recent days, the Assembly and Senate have jointly passed bills to ban loan modification companies from asking for upfront fees and make mortgage brokers put their customers' financial needs ahead of their own commissions.They've also limited the size of pre-payment penalties and added California to the roster of states that allow prosecutors to file specific felony charges for those accused of mortgage fraud."No one right now is doing these risky loans," said Assemblyman Ted Lieu, D-Torrance. "But five or 10 years from now people (will) forget, and if you don't have these controls in place, the same thing happens again."Lieu carried one of the Legislature's most sweeping mortgage reform bills this year, Assembly Bill 260, which was sent to the governor this week. It bans so-called subprime "negative amortization" loans where the amount owed grows even as the borrower makes payments.It also prevents mortgage brokers from receiving thousands of dollars in special fees for originating subprime loans and those with pre-payment penalties. The bill also limits the size of pre-payment penalties for borrowers who pay off their loans early.Lastly, it requires that mortgage brokers have a fiduciary duty to borrowers – that is, they must place the "economic interest of the borrower ahead of the broker's own economic interest" when making loans.That provision is especially opposed by the California Association of Mortgage Brokers. Fred Arnold, a Santa Clarita-area broker and the group's past president, said the bill's definition of fiduciary duty is vague and an invitation to "frivolous lawsuits.""It's not necessary. We already have a fiduciary duty under the Department of Real Estate," said Arnold.Last year, the governor vetoed a similar broad-based bill by Lieu to rein in mortgage industry practices. But Lieu said he worked with the Governor's Office on this year's version, noting, "We hope we've hit the sweet spot for a compromise."The bills land on Schwarzenegger's desk as California continues wrestling with more than 410,000 foreclosures since the start of 2007, the aftermath of unfettered lending practices earlier this decade.During the housing boom, unscrupulous mortgage brokers could earn fees of $20,000 or more for making risky subprime adjustable-rate loans, often to unsuspecting borrowers.Among groups backing changes in mortgage practices is the California District Attorneys Association, which is pushing for new felony penalties for mortgage fraud. The group sponsored a bill now before the governor, Senate Bill 239, by Sen. Fran Pavley, D- Agoura Hills. It would create a specific category of felony mortgage fraud, which the DA's group calls "one of the linchpins in the demise of the California real estate market and the related crises in the financial sectors."The group says Sacramento ranks seventh among U.S. metropolitan areas in reporting mortgage fraud complaints to the FBI.Finally, Schwarzenegger faces a choice of two bills that would bar loan modification companies from asking struggling borrowers to pay upfront fees.Both bills banning upfront loan modification fees – Assembly Bill 764 by Assemblyman Pedro Nava, D-Santa Barbara, and Senate Bill 94 by Sen. Ron Calderon, D-Montebello – passed the Legislature earlier this week. The governor has 30 days from a bill's passage to sign it, veto it or let it become law without his signature.
As financial carnage from the housing crash continues across California, state lawmakers have sent several bills that crack down on mortgage fraud to Gov. Arnold Schwarzenegger's desk.In recent days, the Assembly and Senate have jointly passed bills to ban loan modification companies from asking for upfront fees and make mortgage brokers put their customers' financial needs ahead of their own commissions.They've also limited the size of pre-payment penalties and added California to the roster of states that allow prosecutors to file specific felony charges for those accused of mortgage fraud."No one right now is doing these risky loans," said Assemblyman Ted Lieu, D-Torrance. "But five or 10 years from now people (will) forget, and if you don't have these controls in place, the same thing happens again."Lieu carried one of the Legislature's most sweeping mortgage reform bills this year, Assembly Bill 260, which was sent to the governor this week. It bans so-called subprime "negative amortization" loans where the amount owed grows even as the borrower makes payments.It also prevents mortgage brokers from receiving thousands of dollars in special fees for originating subprime loans and those with pre-payment penalties. The bill also limits the size of pre-payment penalties for borrowers who pay off their loans early.Lastly, it requires that mortgage brokers have a fiduciary duty to borrowers – that is, they must place the "economic interest of the borrower ahead of the broker's own economic interest" when making loans.That provision is especially opposed by the California Association of Mortgage Brokers. Fred Arnold, a Santa Clarita-area broker and the group's past president, said the bill's definition of fiduciary duty is vague and an invitation to "frivolous lawsuits.""It's not necessary. We already have a fiduciary duty under the Department of Real Estate," said Arnold.Last year, the governor vetoed a similar broad-based bill by Lieu to rein in mortgage industry practices. But Lieu said he worked with the Governor's Office on this year's version, noting, "We hope we've hit the sweet spot for a compromise."The bills land on Schwarzenegger's desk as California continues wrestling with more than 410,000 foreclosures since the start of 2007, the aftermath of unfettered lending practices earlier this decade.During the housing boom, unscrupulous mortgage brokers could earn fees of $20,000 or more for making risky subprime adjustable-rate loans, often to unsuspecting borrowers.Among groups backing changes in mortgage practices is the California District Attorneys Association, which is pushing for new felony penalties for mortgage fraud. The group sponsored a bill now before the governor, Senate Bill 239, by Sen. Fran Pavley, D- Agoura Hills. It would create a specific category of felony mortgage fraud, which the DA's group calls "one of the linchpins in the demise of the California real estate market and the related crises in the financial sectors."The group says Sacramento ranks seventh among U.S. metropolitan areas in reporting mortgage fraud complaints to the FBI.Finally, Schwarzenegger faces a choice of two bills that would bar loan modification companies from asking struggling borrowers to pay upfront fees.Both bills banning upfront loan modification fees – Assembly Bill 764 by Assemblyman Pedro Nava, D-Santa Barbara, and Senate Bill 94 by Sen. Ron Calderon, D-Montebello – passed the Legislature earlier this week. The governor has 30 days from a bill's passage to sign it, veto it or let it become law without his signature.
Saturday, September 12, 2009
Mortgage-relief program helps relatively few troubled homeowners
Mortgage-relief program helps relatively few troubled homeowners
WASHINGTON – Major mortgage service companies boosted the number of trial modifications they offered to distressed homeowners in August, the government reported Wednesday, but the workouts still cover only a small fraction of the delinquent loans that are eligible for help.The Treasury Department released its second monthly report on loan modifications under the Obama administration's Making Home Affordable Program. It said that servicers had started 360,165 trial modifications through August, up by 124,918 from the modifications reported through July. The number of offers for trial modifications rose by 164,812, to 571,354 through August.The total number of trial modifications started represented 12 percent of all loans that are 60 days late on payments and considered eligible for the Obama administration's program. That's up from 9 percent through the end of July. "We think all the servicers could do more than they are doing now," Assistant Treasury Secretary Michael Barr told the housing subcommittee of the House Financial Services Committee on Wednesday.The program is on track to meet its target of 500,000 trial modifications by November, Barr said. That number, however, is a small percentage of the more than 6 million potential foreclosures over the next three years that many analysts forecast.Mortgage servicers, many of them large banks like Wells Fargo and Bank of America, are essentially middlemen that collect mortgage payments on behalf of investors who own securities backed by pools of mortgages. Although borrowers negotiate with servicers as if they were the lenders, the servicers represent the interests of investors, not homeowners.From 2005 to 2008, servicers modified just 3 percent of all delinquent loans, according to documents reviewed by the House panel.That low number led the Obama administration to create the servicer performance report, dubbed "Name and Shame," in a bid to pressure investors and servicers to do more. Forty-seven servicers now participate in the administration's program, up from 38 in July.Wells Fargo and Bank of America improved on their July numbers but are still modifying a low percentage of eligible loans under the government program. Bank of America increased from 4 percent of eligible loans to 7 percent; Wells Fargo improved from 6 percent to 11 percent.CitiMortgage, part of troubled Citibank, boosted its trial modification numbers to 23 percent of eligible loans in August from 15 percent in July. JPMorgan Chase, thought to be the nation's healthiest large bank, improved to 25 percent of eligible loans in August from 20 percent a month earlier.The government's trial modification program seeks, through financial incentives to servicers and the investors they represent, to get borrowers into loans whose monthly payments are equivalent to 31 percent of their before-tax incomes.Industry representatives said in testimony that their modification numbers were much higher than the report indicated, but there are no reliable breakdowns of individual servicer numbers to distinguish between, say, allowing a borrower to skip a payment vs. modifying an adjustable-rate loan into a low-cost fixed-rate mortgage."There may be other things going on out there, but to comply with our program rules and to count as a real modification you've got to get people down to an affordable (payment) level," Barr told McClatchy.The administration will ratchet up pressure on servicers, he said, requiring new data on why loans weren't modified."We are requiring next month the implementation of denial codes by each servicer, and at that point we will be able to have good empirical data on reasons for denial," Barr said.Representatives of JPMorgan Chase, Bank of America and Wells Fargo acknowledged in testimony that they fold legal fees and other foreclosure-processing costs into reworked loans, upping the balance that borrowers owe.Only Wells Fargo said it had a special program to help borrowers with strong payment histories should they lose their jobs.Bank of America's executive in charge of credit loss mitigation, Jack Schakett, acknowledged to the panel something long suspected but rarely spoken about publicly. Distressed borrowers who have equity built up in their homes, he said, are more likely to get foreclosed on, because there's a greater likelihood that servicers and investors who hold pools of mortgages will profit from the sales of the homes."The more equity that is in the house, the more the market will actually walk away with money, the less likely you will actually modify the loan," Schakett confirmed in an interview after the hearing.
WASHINGTON – Major mortgage service companies boosted the number of trial modifications they offered to distressed homeowners in August, the government reported Wednesday, but the workouts still cover only a small fraction of the delinquent loans that are eligible for help.The Treasury Department released its second monthly report on loan modifications under the Obama administration's Making Home Affordable Program. It said that servicers had started 360,165 trial modifications through August, up by 124,918 from the modifications reported through July. The number of offers for trial modifications rose by 164,812, to 571,354 through August.The total number of trial modifications started represented 12 percent of all loans that are 60 days late on payments and considered eligible for the Obama administration's program. That's up from 9 percent through the end of July. "We think all the servicers could do more than they are doing now," Assistant Treasury Secretary Michael Barr told the housing subcommittee of the House Financial Services Committee on Wednesday.The program is on track to meet its target of 500,000 trial modifications by November, Barr said. That number, however, is a small percentage of the more than 6 million potential foreclosures over the next three years that many analysts forecast.Mortgage servicers, many of them large banks like Wells Fargo and Bank of America, are essentially middlemen that collect mortgage payments on behalf of investors who own securities backed by pools of mortgages. Although borrowers negotiate with servicers as if they were the lenders, the servicers represent the interests of investors, not homeowners.From 2005 to 2008, servicers modified just 3 percent of all delinquent loans, according to documents reviewed by the House panel.That low number led the Obama administration to create the servicer performance report, dubbed "Name and Shame," in a bid to pressure investors and servicers to do more. Forty-seven servicers now participate in the administration's program, up from 38 in July.Wells Fargo and Bank of America improved on their July numbers but are still modifying a low percentage of eligible loans under the government program. Bank of America increased from 4 percent of eligible loans to 7 percent; Wells Fargo improved from 6 percent to 11 percent.CitiMortgage, part of troubled Citibank, boosted its trial modification numbers to 23 percent of eligible loans in August from 15 percent in July. JPMorgan Chase, thought to be the nation's healthiest large bank, improved to 25 percent of eligible loans in August from 20 percent a month earlier.The government's trial modification program seeks, through financial incentives to servicers and the investors they represent, to get borrowers into loans whose monthly payments are equivalent to 31 percent of their before-tax incomes.Industry representatives said in testimony that their modification numbers were much higher than the report indicated, but there are no reliable breakdowns of individual servicer numbers to distinguish between, say, allowing a borrower to skip a payment vs. modifying an adjustable-rate loan into a low-cost fixed-rate mortgage."There may be other things going on out there, but to comply with our program rules and to count as a real modification you've got to get people down to an affordable (payment) level," Barr told McClatchy.The administration will ratchet up pressure on servicers, he said, requiring new data on why loans weren't modified."We are requiring next month the implementation of denial codes by each servicer, and at that point we will be able to have good empirical data on reasons for denial," Barr said.Representatives of JPMorgan Chase, Bank of America and Wells Fargo acknowledged in testimony that they fold legal fees and other foreclosure-processing costs into reworked loans, upping the balance that borrowers owe.Only Wells Fargo said it had a special program to help borrowers with strong payment histories should they lose their jobs.Bank of America's executive in charge of credit loss mitigation, Jack Schakett, acknowledged to the panel something long suspected but rarely spoken about publicly. Distressed borrowers who have equity built up in their homes, he said, are more likely to get foreclosed on, because there's a greater likelihood that servicers and investors who hold pools of mortgages will profit from the sales of the homes."The more equity that is in the house, the more the market will actually walk away with money, the less likely you will actually modify the loan," Schakett confirmed in an interview after the hearing.
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