Real Estate and Politics...

Yes, Real Estate is very political, no way to avoid that.

Part of my yearly dues to be a member of the National Association of Realtors, and of the California Association of Realtors (not all agents are members, and it makes a big difference. Members in particular adhere to a code of ethics that is much more stringent), go towards political action aiming at protecting the rights of homeowners, and preventing unnecessary involvement into the real estate transaction, with unwanted fees and requirements.

As such, here is a little news from that front:

C.A.R. leadership meets with members of Congress

Next week, C.A.R.’s Leadership Team will be in Washington, D.C., meeting with members of California’s Congressional Delegation, Fannie Mae, Freddie Mac, FHFA, FHA, and other real estate industry groups. C.A.R. will be advocating on members’ behalf on housing policy issues such as
- protecting the mortgage interest deduction,
- improving short sales,
- reforming the mortgage finance system, and
- modifying the FHA condo rules to encourage more FHA certifications.
C.A.R. also will voice its concern with a proposal to sell large blocks of Fannie Mae- and Freddie Mac-owned foreclosed homes to large investors and ask the GSEs to increase the number of loans to small investors.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Current Mortgage rates

Refinance Program for Underwater Borrowers - more info...

To add more info to one of my previous blogs ( "Refinancing problems? Here is a suggestion" ) on the refinancing options for people owing more than the value of their home, I'd like to reproduce the information I just received from Joan Fischer from First American Home Buyers Protection (a home protection plan company), which originates from DSNews.com (Authors: Krista Franks and Carrie Bay).
A little long, but of great interest for some people.

Francis

Foreclosure Evictions Temporarily Suspended

Foreclosure Evictions Temporarily Suspended

Both Freddie Mac and Fannie Mae are temporarily suspending all scheduled evictions involving foreclosed occupied single-family 1- to 4- unit residences with owned mortgages beginning December 19, 2011 through January 2, 2012.

The suspension will apply only to eviction lockouts related to Freddie Ma and Fannie Mae owned REO properties and will not affect other pre- or post-foreclosure processes. During this period, legal and administrative proceedings for evictions may continue, but families living in foreclosed properties will be permitted to remain in the home.

Francis

Silicon Valley Real Estate

Local market trends

useful links

Mortgage rates

Refinancing & the Economy .. A Missing Link ...

There is a lot of noise right now about the “occupy wall street” movement. And the economy is giving ulcers to everyone. The world is full of catch 22’s in many important areas. Consider the following situation if you have a second with me, and tell me if this is not illogical:

Someone wants to refinance their property but the value has gone down so much that it is under the value of the loan. The rules of the banks, the way they are right now, are such that the bank will not allow the borrower to refinance the same amount of loan as before (because of the “loan-to-value ratios” rules). How does that make sense? The lender is taking a much bigger risk in most cases by leaving someone obligated to pay a high interest rate that will sink them, when they could pay a lower rate and have a better chance of affording their loan.

The borrower, in front of such an illogical catch 22, decides to stop paying and to go to foreclosure. If you look at my previous blog, it is clear to many analysts that a lot of these borrowers are not inherently a “bad risk”, just because they decided to default on a loan that they cannot change. When these borrowers have only one default on their record, and it is this kind of default, they are often ready to buy something else, at today’s value, with today’s interest rate. It is often cheaper than to rent. But they cannot do it because of their credit history (since they just defaulted on a loan).

The system is blocked. It is thought that many people, if they were allowed to buy a new property, would prefer that option to renting.

  - 1/ the market would be a lot less depressed, as many properties would sell instead of sitting forever,

  - 2/ because more properties would sell, the market values would be more sustained and in many cases would slightly go up. This in turn would help the banks, since the total market value of their distressed properties would be higher.

This blog does not go into judging anyone, or deciding if it would be fair to do this or that. But the difficulty to refinance falls under rules that are counter-intuitive in my opinion.

As I write this I learn that the HARP program (see one of my previous blogs on refinancing) has just been expanded to the end of 2013, and removed the 125% ceiling on “loan-to-value” cap for fixed rate mortgages backed by Fannie Mae and Freddie Mac. More on this PDF from the Federal Housing Finance Agency.  However, I need to underline that it is for mortgages backed by FNMA and Freddie Mac only...

Still, it is estimated that between 1.5 and 2 million people may take advantage of these new rules.  (just heard on NPR).

Couldn't all the banks think in the same manner, for their own ultimate good? And couldn't they waive some qualifying rules on a case-by-case basis? - It would make a lot of "cents" to them in the end.

Thanks for reading,

Francis

Silicon Valley Real Estate

Local market trends

useful links

Refinancing problems? here is a suggestion...

Are you trying to refinance but you cannot because your equity is too low?

This is the classic catch 22 in which you cannot take advantage of great rates because the bank’s appraisal is too low.

The HARP refinancing program is addressing precisely this need. HARP: Home Affordable Refinance Program, administered by Fannie Mae and Freddie Mac.

Good News !!

Set to expire June 30, 2011, this program has been extended one year. In 2010, Fannie Mae and Freddie Mac purchased or guaranteed more than 6.8 million refinanced mortgages. Of this total, 621,800 were HARP refinances with Loan-To-Values between 80 percent and 125 percent !! This is more than 3 times the number in 2009.
Some limitations apply of course, but fairly reasonable.  One of them, for instance, is that you need to spend more than 31% of your pre-tax income on your mortgage payment. (thank you Nicolas!  ;-)  for the input). Check out the details on the Freddie Mac web site, or the Fannie Mae web site:  Fannie Mae web site.

Another program worthy of noting if you have financial problems: the "Making Home Affordable" Program.

Thanks for reading!
Francis

Silicon Valley real estate
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