David Ormonde's Homes for Sale

Although the concept of global warming remains controversial and the science behind climate change continues to be challenged, the issue will not go away soon and is probably here to stay as a way of life.  The issue of climate change and the effort to reduce greenhouse gas emissions in California is her to stay and is required by law.  In fact, California is not leading the way to change in how we handle global warming.

In California a new layer of conditions has been added to the land entitlement process and green house emissions must now be analyzed and mitigated under the California Environmental Quality Act before individual land projects are considered by local jurisdictions and they will need to analyze greenhouse gas (GHG) emission in environmental impact reports (EIR).  

The greenhouse gas emissions issue will now be added to the already exhaustive list of typical reports required for an air, which generally include traffic and circulation, land use, noise, biological resources, agriculture, historic/cultural resources, hazardous materials, geology and soils. public services,  and aesthetics.

Our state’s effort to regulate GHG emissions is required by Assembly Bill (AB) 32 and (SB) 375.  AB 32, passed in 2006, established an overall GHG emissions reduction target and a policy framework for al of California. The AB 32 target is to cut GHG emissions to a 1990 level by ear 2020.  SB 375, adopted in 2008, established a GHG target and funding incentives for metropolitan planning organizations and focuses on land use.  The cost to cities is not yet determined, but the city of Stockton reportedly created a Climate Action Plan as a comprehensive way to address GHG emission reduction city wide at an estimated cost of $800,000.  Tracy is also working a similar plan. 

For more information about AB 32 click here.    For information about SB 375 click here.   

Good News for Tracy/Central Valley Real Estate – California home sales and price edge up from July
California home sales edged up 1.8 percent in August compared with July, but were down 14.9 percent from August 2009, according to C.A.R. (California Association of Realtors).  The statewide median home price also increased 1.2 percent from July and was up 8.6 percent from a year ago.  See trends below for the Central Valley and Tracy. 

“Buyers who are holding out should consider the opportunities in today’s market,” said C.A.R. President Steve Goddard.  “Favorable home prices and interest rates at or near historic lows make housing affordability the best in recent memory.  Anyone who is in a position to buy a home should do so before either of these key factors rise.”

The statewide median home price posted its 10th consecutive year-over-year gain in August.  The median price of an existing, single-family detached home sold in California during August 2010 was $318,660, an 8.6 percent increase from the revised $293,400 median price recorded in August 2009, C.A.R. reported. The August 2010 median price was up 1.2 percent compared with July’s $314,850 median price.

“The housing market is transitioning from the conclusion of the housing tax credits as is evidenced by stronger home sales in the higher-price range and weaker sales in entry-level homes and condominiums, which are typically favored by first-time home buyers,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “As a result of the strength in the upper-end market and inventory levels that are higher but still lean by average, we’re seeing home prices holding steady.”

Consumers see mixed outlook for housing
A recent survey by Fannie Mae found that 70 percent of Americans think it is a good time to buy a house, with 47 percent of respondents saying they believe home prices will hold steady over the next year.  However, 33 percent said they would be more likely to rent their next home if they were to move.

A majority of Americans (67 percent) continue to believe that housing is a safe investment; however, that number is down 16 percentage points from a similar survey conducted in 2003, according to Fannie Mae.  Delinquent borrowers and renters are notably more discouraged than mortgage borrowers and underwater borrowers about a home’s safety as an investment and the appeal of buying versus renting. More than 70 percent of all respondents believe it will be harder for the next generation to buy a home, an increase of three percentage points compared with the beginning of the year.

Other key findings in the survey include:

• Seventy percent said it is a good time to buy a house, up six percentage points from January. However, 83 percent believe it is a bad time to sell a house.
• More than half of respondents think it would be very difficult or somewhat difficult to get a home loan today, down six percentage points since January.
• Nearly one quarter of mortgage borrowers said they have reduced their mortgage debt significantly in the last year, and 27 percent of mortgage borrowers say they have reduced their non-mortgage debt significantly.

Good News for Tracy/Central Valley Real Estate – California home sales and price edge up from July
California home sales edged up 1.8 percent in August compared with July, but were down 14.9 percent from August 2009, according to C.A.R. (California Association of Realtors).  The statewide median home price also increased 1.2 percent from July and was up 8.6 percent from a year ago.  See trends below for the Central Valley and Tracy. 

“Buyers who are holding out should consider the opportunities in today’s market,” said C.A.R. President Steve Goddard.  “Favorable home prices and interest rates at or near historic lows make housing affordability the best in recent memory.  Anyone who is in a position to buy a home should do so before either of these key factors rise.”

The statewide median home price posted its 10th consecutive year-over-year gain in August.  The median price of an existing, single-family detached home sold in California during August 2010 was $318,660, an 8.6 percent increase from the revised $293,400 median price recorded in August 2009, C.A.R. reported. The August 2010 median price was up 1.2 percent compared with July’s $314,850 median price.

“The housing market is transitioning from the conclusion of the housing tax credits as is evidenced by stronger home sales in the higher-price range and weaker sales in entry-level homes and condominiums, which are typically favored by first-time home buyers,” said C.A.R. Vice President and Chief Economist Leslie Appleton-Young.  “As a result of the strength in the upper-end market and inventory levels that are higher but still lean by average, we’re seeing home prices holding steady.”

Consumers see mixed outlook for housing
A recent survey by Fannie Mae found that 70 percent of Americans think it is a good time to buy a house, with 47 percent of respondents saying they believe home prices will hold steady over the next year.  However, 33 percent said they would be more likely to rent their next home if they were to move.

A majority of Americans (67 percent) continue to believe that housing is a safe investment; however, that number is down 16 percentage points from a similar survey conducted in 2003, according to Fannie Mae.  Delinquent borrowers and renters are notably more discouraged than mortgage borrowers and underwater borrowers about a home’s safety as an investment and the appeal of buying versus renting. More than 70 percent of all respondents believe it will be harder for the next generation to buy a home, an increase of three percentage points compared with the beginning of the year.

Other key findings in the survey include:

• Seventy percent said it is a good time to buy a house, up six percentage points from January. However, 83 percent believe it is a bad time to sell a house.
• More than half of respondents think it would be very difficult or somewhat difficult to get a home loan today, down six percentage points since January.
• Nearly one quarter of mortgage borrowers said they have reduced their mortgage debt significantly in the last year, and 27 percent of mortgage borrowers say they have reduced their non-mortgage debt significantly.

For more information about the local housing market visit www.DavidOrmonde.com  or contact David Ormonde at 800-788-2973 or 209 832-0679 (direct).

Foreclosure has many harsh realities, not to mention the effects of foreclosures on families.  Even if you lose your home through foreclosure, you may still be personally responsible for the difference between your mortgage loan balance and what your property is worth today.  This difference owed to your lender is also called a “deficiency judgment”.  California’s anti-deficiency rules may protect you from personal liability, but it depends on your particular circumstances.  

Determining whether California’s deficiency protections apply to your situation can get complicated.  Bu it’s a big deal if your lender obtains a deficiency judgment against you, you will be legally obligated to pay that amount of money.  If you don’t pay, your lender may enforce the judgment by, among other things, garnishing your wages, levying your bank accounts, and attaching judgment liens against any real property you may own.  Considering your personal liability after foreclosure is also critical when you’re weighing the pros and cons of foreclosure as against your other options, such as selling your property, getting a loan modification, or filing bankruptcy.  

To help you determine whether you are protected against personal liability, here are basic explanations for some of the major anti-deficiency protections, as well as situation where the protections do not apply: 

For information about the HAFA program or to talk to a real esate agent who is certified to handle HAFA Short Sales click here or go to GoTracy.com  or contact David Ormonde at 800 788-2973.

While San Joaquin County unemployment rate still hovers around 16%, residents in the Tracy/Central Valley area of California feel disenfranchised because of slow economic times that hit the area hard with the foreclosure melt down.   There is also a resentment and feeling of distrust against the government because the mortgage bankers seem to have recovered and the residents of San Joaquin County have not.  All this bad news notwithstanding, the HOI (Housing Opportunity Index) has risen to all time record highs. 

Housing Opportunity Index rises to 72.3 percent in Q2
Housing affordability remained near its highest level nationwide for the sixth consecutive quarter, according to the most-recent National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).

The HOI indicated that 72.3 percent of all new and existing homes sold in the second quarter of 2010 were affordable to families earning the national median income of $64,400. The index for the second quarter was slightly more affordable than the previous quarter and almost equaled the record-high 72.5 percent set during the first quarter of 2009.  Major metro areas with the least affordable housing markets included San Francisco-San Mateo-Redwood City; Santa Ana-Anaheim-Irvine, Calif.; and Los Angeles-Long Beach-Glendale, Calif.

Mortgage banker profits increased in Q2
Independent mortgage bankers and subsidiaries made an average profit of $917 on each loan they originated in the second quarter of 2010, an increase from $606 per loan in the first quarter of 2010, according to the Mortgage Bankers Association’s (MBA) 2nd Quarter, 2010 Mortgage Bankers Performance Report.

The increase was driven by a rise in the average production volume for each firm to $196.6 million in the second quarter of 2010 compared with $157.8 million in the first quarter of 2010. As a result, production operating expenses decreased to $4,677 per loan in the second quarter of 2010, from $5,147 per loan in the first quarter of 2010.

“The significant rise in loan origination volume during the second quarter reflects the surge in first time home buyers seeking to take advantage of the tax credit before the deadline expired,” said Marina Walsh, MBA’s associate vice president of industry analysis. “Higher production operating expenses typically are associated with purchase production compared to refinances. But in this case, fixed costs were spread out over more loans and lenders experienced higher pull-through rates. These factors help explain why operating expenses dropped on a per-loan basis by $470 between quarters.”

More info.

Actually, it’s simple; everybody has to believe that they are a winner.  Going into a short sale you must believe you will be a winner, or don’t go into it at all.   The truth is that doing a little bit of homework can make a big difference in the outcome of today’s short sale.  Ask your Realtor to investigate the details of the transaction so that you have a good understanding of what your are going to have to overcome in order to successfully buy a short sale. 

 Knowing how many loans and liens are against the property, what type of loans you are dealing with, what type of liens are going to affect the sale, how much back taxes, HOA dues, and other liens are past due, if any, will greatly affect the outcome.  Your Realtor can find out all of this information for you and also determine whether or not you are getting into a HAFA (Home Affordable Foreclosure Alternative) sale or not, and more importantly, how committed the seller is to closing the transaction and keeping all of their HAFA commitments themselves, as your success will depend on their determination and commitment. 

 The seller needs to know that they’ve gotten out of a bad situation with less credit damage and a new start.

• The buyer wants to make a purchase of a property below the true market value, at least in the near future.
• The lender must believe that the short sale will net them more money than a foreclosure action.  This is important to know.

If you are  the buyer, then your interests are best served by a purchase at the lowest possible price that will be approved by the lender. The seller gets no cash, so we are just showing them a way out of a foreclosure action.   If it is a HAFA short sale, then the seller will also need to meet a lot of obligations imposed on them by the government as well. 

Here’s what you’re looking for as the buyer in a short sale transaction:

• A homeowner upside-down in their loan. Their home is worth less than they owe on it in various mortgages and liens.
• Clear title and no prohibitive liens or claims against the property, unless these can be resolved in the process.
• Enough time to complete the process before foreclosure action, or extensions can be granted as needed. 
• A willing seller with a desire to help in order to avoid foreclosure, and willing to meet all their obligations on the selling side.
• A current valuation that will allow you to buy the home at a bargain price, creating instant equity.
• True hardship on the part of the seller to convince the lender of the necessity of a short sale.
• If VA or FHA, the situation meets their criteria for short sale.

In short, you are looking for a homeowner owing more on their home than they can get in a sale and a situation where the lender will approve a purchase price that meets your investment goals; and of course a closable transaction.  For more information contact David Ormonde as www.DavidOrmnde.com or go to www.GoTracy.com .

Through their association with the California Association of Realtors, the Tracy/Central Valley Realtors have sent a strong message to Governor Schwarzenegger to sign SB  1178 , extending anti-deficiency protections to homeowners who have refinanced their homes and are not in jeopardy of having to pay state tax on the amount of deficiency if their homes go into foreclosure, or even short sold to prevent foreclosure. 

C.A.R. has issued a Red Alert! asking REALTORS® to contact Gov. Schwarzenegger and urge him to sign SB 1178 (Corbett), extending anti-deficiency protections to homeowners who have refinanced “purchase money” loans and now are facing foreclosure.  C.A.R. is sponsoring this critical piece of legislation to protect homeowners in foreclosure from attempts by lenders to sue homeowners for the difference between the value of the foreclosed property and the outstanding balance on the mortgage loan.

Here are the key talking points of the bill:

•  SB 1178 is fair. SB 1178 preserves the legitimate understanding between the homeowner and the lender when the property was originally purchased.
• SB 1178 only applies to the amount originally financed, not any “cash out” that an owner may have borrowed above and beyond the initial loan.
• SB 1178 is does not re-write existing contracts. The bill does apply to new suits brought on existing loans, even if the loans were made prior to the passage of the bill. However, the homeowners may still owe the difference between the mortgage balance and the discounted amount as a result a “deficiency judgment.” If granted, this judgment will affect the homeowner and their credit report just as any other judgment.

  The obvious goal is to get the bank to accept the “payment in full without pursuit of any deficiency judgment”.  Homeowners need to know that the discounted amount (the difference between the mortgage balance and the short sale) may be declared as income on their income tax return by means of a “1099.”

  Since the homeowner has probably been under such extreme duress and probably hasn’t made much income, a 1099 may not adversely affect them. The homeowner can speak with an accountant for advice to determine whether or not in fact the 1099 will create a tax liability or how much tax liability.  A 1099 may be given to the homeowner as a result of income they’ve received. For example, if the bank is owed $100,000 and agrees to accept $65,000 on a short sale, the homeowners may have actually made $35,000 (the short sale amount) and could receive a 1099 for that amount.

  The bank can seek a deficiency judgment for the shortage on the actual amount received versus the amount that was due. Using the example above, the judgment would be recorded against the homeowner in the amount of $35,000.  Likewise, the same judgment can be sought when the property sells at the courthouse for less than what is owed or after the REO department sells the property for less than the full amount of the loan. When negotiating a short sale, you can require that the bank waive its right to a deficiency judgment as part of your agreement to short sale.

  For more information about the bill click here   California State Assembly passes SB 1178 protecting homeowners  or visit DavidOrmonde.com

 While prices have hit near all time affordability prices, the Tracy and Mountain House areas of the Central Valley have managed to maintain relatively stable prices.  Even though the stock market continues its roller coaster ride and rumors run amok about the housing market and the thousands of foreclosures yet to come on the market.  For the most part the appetite for real estate in the Tracy and Mountain House areas of the Central Valley seem to be handling the foreclosures that come on the market keeping prices there fairly stable. 

 According to Trulia, the current prices for the Tracy area are in fact up 6.7% year over last year.  Mountain House prices are similarly up 6.6% over last year.  Although there are no guarantees, it would seem that holding on to your house in these areas would make sense in the long run if you can, even if the payments are a little tough right now.  If you are facing difficulties making your mortgage payments now, consider loan workouts, loan modifications, and even a short sale or deed in lieu.  Contact a housing counselor from an approved list at www.hud.gov/offices/hsg/sfh/hcc/fc or contact a certified HAFA specialist at www.GoTracy.com or click here for a list of certified agents. 

 As if the Central Valley of California needed more changes affecting the cost of real estate in the Central Valley of California, the mortgage industry continues to adapt to ongoing change by tweaking the system.  On August 12, 2010, the President signed into law, Public Law 111-229, which provides the Secretary of Housing and Urban Development (HUD) with additional flexibility regarding the amount of premium charged for PMI insurance on FHA loans.  While the overall changes are a little more complex, let’s just address a 30 year loan with a minimum down payment of 3.5%, which is the most common FHA loan. 

 FHA collects two types of fees from borrowers. 

 First is an upfront fee mortgage insurance premium (UFMIP) presently at 2.25% of the base loan amount and which is typically financed with the loan.  The UFMIP fee will be reduced to 1% of the base loan amount.  This is a good thing and would lower the overall cost to the consumer if not for the second tweak.

 The second fee is the monthly PMI insurance premium.  Presently the monthly PMI insurance premium is .55% of the base loan amount divided by 12.  The new monthly PMI insurance premium is .90% of the base loan amount divided by 12 – quite a substantial increase.

 How will this affect buyers? 

 The change goes into effect on FHA loans after October 4, 2010.  It is not enough for a borrower to just be pre approved.  The lender must request a case number for a specific property so you must be in contract at the time of the request.   The easiest way to look at the change is that everything else being equal (same interest rate) a borrower’s monthly payment will increase approximately 4% effective October 4, 1020; or, the maximum dollar amount the borrower qualifies for will now be approximately 4% less.    

 Lending standards are also tightening.  Additional overlays on top of FHA Guidelines are becoming more restrictive.  You may wonder why if FHA guarantees the loan for the lender; then why does the lender place more restrictions on top of the FHA guidelines?  Lenders are evaluated by the losses from the loans they originate.  Too many loan losses and one day a lender gets a call from the regulators and is cut off with no more ability to make FHA loans.  With FHA loans such as large part of most lenders production this could put a lender out of business.  So it is in the lenders interest to be more conservative if they want to stay in business.

 The two areas of focus by most lenders are FICO scores and total debt to income ratios.  Historically higher loss ratios on lower FICO scores and higher total DTI ratios are driving the changes.  Attached is an interesting chart comparing delinquency rates by FICO score.  For more information about these changes contact john@GoTracy.com , Bernie@GoTracy.com, or Matt@GoTracy.com  .

If you are facing foreclosure, you may find it challenging just understanding the foreclosure process and procedures your lender will use in order to sell your property to satisfy your debt.  Yet, you may want to beat the clock by selling your home yourself or pursuing another alternative to avoid foreclosure.  So to help you prepare yourself for what’s to come, here is a quick summary of the approximate minimum timeframe for the typical non-judicial foreclosure in California (the type you would be facing if your home is in California). 

Things to remember:  This is not absolute and many factors can change in your particular circumstances.  When you are facing foreclosure the best thing to do is for you to call your lender and find out what type of help, if any, they can provide.  Waiting until your home has a sale date may be too long to wait and it may be too late in order to save your home from foreclosure.