Freddie Mac Suspension of Foreclosure Sales

Hope you have a Happy Thanksgiving.

Starting today, sale of single family homes and 2-4 units on loans held by Freddie Mac will not be sold until the suspension period is over on January 9, 2009. Vacant single family homes are excluded from this suspension. This is to allow more time for Freddie Mac's loan modification program to be implemented. Read the Do's and Don'ts of Foreclosure.

If you are in this position, or close to it, please don't stop answering your phone or reading your mail. Lenders are now attempting loan modification programs, and engaging representatives to speak to you in person. (Ask for identification.) You could be hurting your chances of success if you ignore the many attempts made to contact you; some loan modification programs are the only chance the borrower will have to catch up, until you improve your FICO score and can get an improved refinance. If you would like to know more, please call me.

Are You Taking Advantage of Your Decline in Market Value and Homeowner Exemptions?

Do you know about your property tax reduction option? Generally, the median home price in California is about the same as 2004, so if you bought your residence after that time, you might want to apply to the Los Angeles County Assessor for a reduction. You have until the end of this month to get your application in, so there's not much time left, but basically, you need to find two comparable properties that support your application that sold close to January 1 and through March 31 of 2008. The Assessor's site has the form and directions needed for this. You can find your own comparables through this site, but if you want help from me, please e-mail me or call me, and I will gladly provide you, via e-mail, with MLS closed listings.

If you live in Orange County, please contact your tax assessor there.

Also, some people may not be filing their Homeowner's exemption -- you may obtain a $7000 reduction in your assessed tax value (that's usually based on the selling price of your home). Originally, $7000 was a significant amount when the home values were $35,000. Today, you may get about $50-$70 off your total tax dollars owed, but a penny saved is a penny earned. You can download the form from the Los Angeles County site, for this and other exemptions including those for veterans, instititutions, real property transfer exclusions between parent/child and grandparent/child, seniors' exclusions, and disaster relief.

Lender-Owned Property Inventory in Long Beach Areas

As mortgage lenders develop their loan workout programs, the number of lender-owned properties coming on the market may slow down. In the meantime, many REO (real estate owned, or bank owned) properties are an opportunity for the investors and 1st-time buyers who are ready to buy.

Long Beach - 14% of the single family houses and condos listed in the CARETS-SoCalMLS (new expanded version of combined MLSs in Los Angeles, Riverside, Orange and San Bernardino Counties as of 11/11/2008!) are REO properties: 228 out of a total of 1,636.

Multi-unit (2+ units): 11%, 44 out of a total of 389.

(for photo at right, see post on Long Beach Ebell)

Cerritos - 10% of SFRs and condos: 11 out of a total of 112.

Lakewood - 13% of SFRs and condos: 29 out of a total of 226.
Multi-unit listings: 0 out of 9 listings.

Signal Hill - 11% of SFRs and condos: 5 out of a total of 55.
Multi-unit listings: 0 out of 10 listings.

Huntington Beach - 6% of SFRs and condos: 42 out of a total of 647.
Multi-units: 0 out of a total of 55.

Los Alamitos/Rossmoor - 5% of SFRs and condos: 4 out of a total of 73.

Seal Beach - 1% of SFRs and condos: 1 out of a total of 68.

Cypress - 4% of SFRs and condos: 4 out of a total of 90.

San Pedro - 4% of SFRs and condos: 11 out of a total of 280.
Multi-units: 14%, 2 out of 14.

Active listings only are given here, but for reference, per Dataquick on 10/23: "Foreclosure resales have emerged as a major market factor, accounting for 47.6 percent of all California resale activity last quarter." Not all market areas are equally impacted.

What is not shown in the list above are other "special condition" listings, such as short sales, probates, relocation or bankruptcy listings. The short sale listings in particular are an indication of future REO listings. For a list of short sale listings, please contact me.

For a comprehensive list of REO properties not all of which may be listed on the MLS, contact me.

For information on guidelines for loan modification, please contact me. I may be able to help you with Countrywide, Washington Mutual/Chase, IndyMac, Citigroup and the Hope for Homeowners.

What's the Life Expectancy of Your Home?

Consumerism has taught us to think about fast replacement, instead of "making it last".

How long will your house last? Watching the house restoration shows on TV should give some clues, but here's some specifics from a Los Angeles Times article by Calvin Woodward dated 2/16/1997, and more from the a 2006 National Assn of Homebuilders home life expectancy chart:

Dishwasher - 10 years

Microwave - 9-11 years (mine was going strong at 16 years)

Brick, masonry, stone wall - 100 years

Wood decks - 15-20 years

Garage door openers - 10-15 years

Furnaces - 15-20 years

Drywall -

Heat/Smoke detectors - 5-10 years

Natural stone counters - lifetime

Cultured marble counters - 20 years

Kitchen cabinets - 50 years

Garage/laundry cabinets - 100 years

Gas range - 15 years (that depends, too, some are 50-60 years old or more)

Wood flooring - 100 years +

Vinyl floors - 50 years

Carpet - 8-10 years (depends on traffic)

Roof, asphalt or wood shingles and shakes- 15-30 years; slate, 50-100 and more

Gutters - 30 years

Concrete walk - 24 years

Swimming pool - 18 years

PVC piping - 25 years

Polyvinyl fences - lifetime

Asphalt driveway - 15-20 years

These are general guidelines only, because quality of maintenance is a strong factor in the life of any of these items. Geography is the other: a salt-air climate will have a much different impact than a dry desert climate.

2009 FNMA and Freddie Mac Loan Limits Just Announced

Fannie Mae and FHA loans limits were "temporarily" increased to $729,750 in our market area as a part of an overall Economic Stimulus Plan. Well, those loan limits are due to sunset on December 31, 2008.

The Federal Housing Finance Agency just announced today that, for the Los Angeles-Long Beach-Santa Ana metropolitan region, the new 2009 conforming loan limits are $625,500 for one unit (house, condo, etc.), $800,775 for 2 units, $967,950 for 3 units, $1,202,925 for 4 units. The conforming loan limit in other areas will remain at $417,000. Link to high cost area loan limits.

Consult your lender for more details.

Long Beach First-Time Home Buying Assistance

Good news for first time buyers in the Long Beach area: The buyer affordability index is higher than it's been in several years--in Los Angeles County it's up to 40% or higher. Condo prices in particular have softened a great deal, and house prices are lowering also.

One of the best bets for first time buyers right now are FHA loans because of 3% or 3.5% down payment, flexible credit score guidelines, and somewhat more forgiving debt ratios. For a few people with FICO scores over 740 who plan on buying a single family residence, there might be minimal opportunities for a 5% down loan. Otherwise, buyers will need to have 10% down payment or more. Additional programs (requiring specific lenders) is the California Housing Finance Agency, a program that may work in combination with loans.

Down Payment Assistance Program

The City of Long Beach, however, does have a second mortgage assistance program for first-time buyers who purchase a primary residence in the City and in certain areas, with as little as 1% of the purchase price out of their own funds, and who meet certain eligibilty requirements, as of October 1st.

The borrower must currently live or work in Long Beach or show evidence of a job offer in the city, and household income for two adults cannot exceed $57,400, for example, or $71,800 for 4 adults. The maximum sales price for the City's program is for condos under $332,500 and single family residence with a sales price under $500,650. For example, today, in the Southern California MLS, there are over 475 active listings for 2+ bedroom condos or houses priced at $350,000 and under in Long Beach. Not all of these fall within the areas specific to the City program, but, for example, if you enjoy the downtown area and adjacent sections, this program could be for you. First, you must be pre-approved with a qualified lender for this program. If you contact me, I can help you find a lender working with this City program.

As part of your homebuyer education, it's important to find a good loan officer; yes, internet research helps with some basic information, but one of the pitfalls for many buyers is in making decisions or coming to conclusions about financing based on random internet searches that only tell part of the story. Lending guidelines have changed radically during 2008; keeping your information updated and developing contact with an experienced financial person is crucial to your home purchase.

You Can Buy a Home Now

It's not a trick, you can buy a home now!

Just go to my property search page at http://www.juliahuntsman.com !

How Many REO and Short Pay Properties Are There in Belmont, Alamitos Heights?

The filing of notices of default increases each quarter in California, per Dataquick on October 23rd, "Foreclosure resales have emerged as a major market factor, accounting for 47.6 percent of all California resale activity last quarter" but not all areas are impacted as heavily as others:

So far, for areas falling in the 90803, 90814 zip codes, the MLS listings are showing, out of 257 residential properties up to 4 units listed, there are 27 "short pay" and "NOD" listings, 3 in bankruptcy, and 11 REOs (bank-owned properties). The 4-bedroom, 2100+ sq ft Alamitos Heights single family home at right is an REO property that has been on the market for 8 days, and is competitively priced at $679,900. Looking for your next home? This is a great residential area close to the coastline, Cal State Long Beach, the 405 and 605 Freeways, and a few blocks from a major grocery chain store, bank and eateries.

BUT, did you know that we (meaning Realtors) have an REO Advisory that goes along with your offer on a bank-owned property? Be sure and ask for this important disclosure because you the buyer should know that owners of bank-owned properties are not legally required to provide you with certain information that you would expect from a "equity" seller, and you may even be asked to sign the bank's addendums, and in some cases, the bank's own contract form, that are not the same as the standard Realtor contracts. They are exempt from the transfer disclosure statement, the natural hazard disclosure statement (although the listing agent is not exempt from this), the supplemental property tax notice, Mello-Roos lien disclosure, the 1915 Improvement Bond Act notice (that's how you learn about other taxes affecting your property), and notice of private transfer fees, or the earthquake guide book. After all, they never lived in the property, and took it back in foreclosure, so they just want to sell it. Also, they often will do no repairs, including termite repairs, or so they say. As time goes on, though, I'm hearing that banks are more willing to contribute towards buyer closing costs.

Unlike the last recession, REO properties in this market are not well-prepared for sale, may need a lot of repairs, or just plain smell bad requiring the buyer to use a lot of imagination to see the ultimate potential. The issue in some communities has been such that laws have been passed forcing banks to maintain their properties and drain the swimming pools.

So, buyer beware, but if you can get past the physical condition and the disclosure issues, or lack thereof, you may find a great home.

The same story goes for a "short pay" property, and indeed, there are a growing number these days. If you make an offer on one, be sure you receive a "short pay" advisory with your contract--this details conditions surrounding the bank's approval of the seller's market value of the property vs. the mortgage amount owed and how it may affect you, the prospective buyer. You may be in a for a wait just for an initial response, especially if there is also a second lender whose approval must also be obtained. Banks vary in their efficiency handling these offers, and much depends on the completeness of the seller's package, along with the growing number of properties affected.

One thing that's immediately affecting the number of Notices of Default filed right now is that lenders are required to contact borrowers in advance of filing default notice. Just how much this is affecting the market, and how far into the future, is unknown:

"It's unclear just how much foreclosure activity will be time-shifted into future months. We'll know more when we have fourth-quarter numbers. What's interesting is that the surge in activity certainly did level off during the second and third quarters. A lot of the market's distress is working its way through the system and the spectacular jumps in activity may be behind us. Or it may be that those processing the default paperwork are just maxed out," said John Walsh, DataQuick president.

So, when all is said and done, take advantage of the opportunity before you.

Foreclosure or Short Pay Debt? New Laws

Starting September 25, 2008, the federal income tax exemption for debt forgiven on a home loan now partly applies to California's state income taxes.

Federal law provides a tax exemption for debt forgiveness on a loan incurred for acquiring, constructing, or substantially improving a principal residence up to $2 million if the debt is discharged from 2007 through 2012.

Under the new California law, the maximum qualifying debt is $800,000, and the maximum exclusion is $250,000. The California law only applies to a debt discharged in 2007 or 2008. (Info by California Association of Realtors)

Market Forecast for 2009 by CAR

It's time for the annual California Association of Realtors' market forecast which always consists of many more Powerpoint slides than what is shown here.

For the buyers and sellers of the next year, it's time to think, if not act. The trends already show certain things:

• Contrary to the decrease in sales for the past two years, this year California single family home sales have jumped up by 12%, and will continue to increase next year, along with an increase in the 30-year-fixed rate mortgage.
• The overall median house price is projected to decline from 2008's 37% decline to a much smaller decline for 2009 of another 6%.
• The notices of default issued in Southern California during the second quarter of 2008, over 68,228, exceeded the previous record high of 61,541 notices in the first quarter of 1996.
• Highest number of the sub-prime adjustable rate loan resets (69% of all California subprime loans) peaked in 2008, declining to 24% in Los Angeles County in 2009 and to 8% in 2010. The decline is similar for the rest of California.
• The Alt-A adjustable rate loan (58% of all Alt-A loans in California) resets, however, will peak again in 2010, with the highest percentage of those loans being in Southern California and San Francisco.
• FHA and VA mortgages are now just over 20% of the mortgages, offering favorable rates for first-time buyers.
• Percentage of first-time buyers is the greatest in the last 7-8 years, getting closer to 40% of all buyers.
• Los Angeles County had the highest number of sales in August, 2008.
• In Los Angeles County, bank-owned (REO) properties sold at about 80% of all sales prices, and non-bank-owned sales prices were over 100%--OR, the median price of REO properties were $325,000, compared to non-REO properties at $420,000. Why? Unlike the last down market, the bank-owned properties are often in the "fixer" category, to the extent that laws are recently passed forcing banks to physically maintain their inventory of homes to prevent blight in neighborhoods. For another "take" on the business of making an offer on bank properties, read this Realtor's candid description of her experience.
• Overall, California 2008 sales are up by 85%, compared to an overall decline in sales in the rest of the country.

For buyers, it's very important at this time to know what to expect when submitting an offer on the bank-owned property, or the seller's short sale property, where the bank is again involved in approving the seller's request to sell for less than is owed on the property. The "credit crunch" and bank bailouts come into play here, the seeming inefficiency of many banks along with organizational mergers, have all impacted how those properties are dealt with. So buyers need to know what kind of seller they are dealing with, the difference between the distressed sale and the "normal" equity seller, who might be in a better position to help a buyer with closing costs.

As more buyers recognize their opportunity, will it mean once again having to compete with other offers? The temptation to wait for a lower price may also ultimately bring more buyer competition into the market.