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 Leon Williams  Friday, February 25th, 2011  Leon Williams Federal Reserve has Finalized Rule on Jumbo Loan Escrow Requirements
The rule raises the threshold requirements for establishing an escrow account (property taxes ad insurance) on a first-lien jumbo mortgage.
The rule essentially says that if the APR on a first-lien jumbo loan is 2.5 percentaage points (previously 1.5 percentage points) or more above the average prime offer rate, an escrow account is required.
The provision was one of the reforms outlined in the Dodd-Frank Wall Street Reform and Consumer Protection Act, three years ago. Yes, three years to finally wade through that act to come up with this.
Other proposed rules are listed here:
- A rule that effectively Continue reading: Federal Reserve has Finalized Rule on Jumbo Loan Escrow Requirements
Caylyn Brown Thursday, February 24th, 2011
Newly-elected Gov. Jerry Brown released his proposed budget which extends previous tax increases and makes $12.5 billion in cuts to state programs to close the $25.4 billion state deficit over the next 18 months. Gov. Brown would like the Legislature to approve his spending cuts prior to a special election on extending tax increases. This proposed special election could happen as soon as June. The full state budget would be passed after this special election. The non-partisan Legislative Analysts Office has reviewed this proposal and reports it is a very good starting point. The plan does not use the budget gimmicks of the past several years which dug the state into its current hole of over-projecting revenue and borrowing from Program A to pay for Program B.
Among the many cuts proposed, Gov. Brown includes limiting Medi-Cal services to six prescriptions per month (excluding life saving medications), ten doctor visits per year, and setting a $5 co pay for services. Other cuts include Cal Works, welfare-to-work, and cuts to the CSU and UC.
Tax extensions in the special election include the one percent sales tax increase and the ½ percent vehicle license fee increase. These two extensions are expected to raise $5.9 billion. Brown is also asking voters to continue the ¼ percent income tax increase. These are the current tax rates California residents are paying, which were set to expire at the end of June. The increases were approved in a 2009 budget deal.
Much is still unknown about the vote count needed to pass a proposed budget. In the November 2010 election, voters passed Proposition 25, requiring only a simple majority of legislators to approve a state budget rather than the previously required two-thirds supermajority. Some of the reductions Gov. Brown has proposed, including cuts to welfare and higher education, may still require a two-thirds vote despite Prop. 25, which states that laws can be changed by a majority vote only after a complete budget plan is approved. But as proposed, the budget is passed after the changes in law are made. These details of Prop. 25 and the proposed budget are still being sorted out, and it may take several months to get a final decision.
Continue reading: Governor Brown’s Budget
Patti Martinez Tuesday, February 22nd, 2011
 We’re off and running into 2011 now with lots of REALTOR® events to look forward to in the coming year. Last year was challenging, but it surely wasn’t because the offerings through SAR were limited. A plethora of classes, seminars and workshops were offered. This year will be no different.
Besides all of the classes offered through SAR, the Masters Club has a number of upcoming events that are sure to help you garner new business. In fact, the Educational Roundtables that were just held were an outstanding success! It was again a sold out event and attended by new as well as seasoned agents. What a bargain to learn all the tips of the “Masters” AND receive a free breakfast to boot. I am a firm believer in gleaning as much information as possible from those who have already done it…..and rarely do you find a successful REALTOR® who isn’t willing to share their knowledge with anyone who asks.
Speaking of things past….the deadline has now passed for submission of Masters Club applications. However, applications for the 2010 production year may still be submitted for review with a $100 late filing fee in addition to the regular $65 Masters Club dues assessment. The $100 late filing fee acts as a gentle but firm motivator to submit your application on time.
Masters Club Annual Luncheon
Mark your calendar for March 11. This is the date for the Masters Club Luncheon to be held at the Sheraton Grand Hotel downtown. Invitations will be going out soon. Everyone is invited. Make sure you mail your check as soon as invitations arrive, as space will be limited. It is always a fun and lively event.
Masters Club Spring Mixer
Reserve Thursday, March 31 for our next mixer. The venue has not been determined as of this writing, but invitations will be going out with all pertinent information very soon. The last mixer at the Rail Bridge winery was a rousing success with a silent auction and live music. All of the proceeds from the auction benefitted the SAR Scholarship Fund.
Continue reading: Masters Club Corner-February 2011
Leon Williams Sunday, February 20th, 2011
Leon Williams Taxes, taxes, taxes, we are taxed on everything. You paid a “whop” for the house, didn’t include escrows in your closing costs so you were able to come to the closing table with less money and now that $5,000 annual tax bill on that $400,000 purchase price is making you teeter on the edge of financial catastrophe, and you have no idea where the next payment is going to come from. So you ask, if my house in this market is worth half as much, why does my tax bill not follow suit? HA! Welcome to the new economy.
As I told you before, we are fighting a “War On Wealth” like never before. Money is scarce all around us. Cities, Counties, States, and our entire Country is thinking of new and creative ways to pay their bills on “YOUR BACK”! Even if you had included the taxes in your escrow, imagine what $200 of that $416.67 a month tax bill (In Sacramento County) would do going into your investment account earning 6% interest compounding annually. In 10 years you would have $16,765.97. In 15 years, $29,607.03. Continue reading: Market Down But Your Taxes Are Still High! This Is How You Can Reduce Your Real Estate Taxes
Dave Tanner Sunday, February 20th, 2011
 With the passage of Senate Bill 931, a new section was added to the California Code of Civil Procedure that should be of great benefit to many short sale sellers. The new CCP §580e provides “No judgment shall be rendered for any deficiency under a note secured by a first deed of trust or first mortgage for a dwelling of not more that four units, in any case in which the trustor or mortgagor sells the dwelling for less than the remaining amount of the indebtedness due at the time of sale with the written consent of the holder of the first deed of trust or first mortgage. Written consent of the holder of the first deed of trust or first mortgage to that sale shall obligate that holder to accept the sale proceeds as full payment and to fully discharge the remaining amount of the indebtedness on the first deed of trust or first mortgage.”
So what does that mean? The short sale seller generally does not need to worry about a deficiency judgment as long as the property being sold is a one-to-four unit residential and is only encumbered by a first deed of trust. Approval by the short sale lender discharges the remaining indebtedness. No need for the seller to negotiate a release of liability from that lender.
But I said generally, so what does that mean? The new law does not affect liability of junior lienholders. A sold out second may still be able to sue on the note. The new law does not apply to loans secured by other types of real property. The short sale seller of a fiveplex is not helped. The only relief is to short sale sellers of one-to four units.
Even if the note is covered by the new law there are still two exceptions. The first is for waste. Waste is a legal term for damage done by a person legally in possession that diminishes the value of the property. A simple example would be a short sale seller who, on the way out, takes out the built-in appliances or strips the lighting fixtures. The lender can still come after them for damages.
Continue reading: The Brave New World of Short Sales
Nelson Janes Thursday, February 17th, 2011
 Since you sell communities when you help consumers buy and sell homes, it’s good to note that Sacramento has been ranked one of the top cities in America for its quality of life by Money magazine and Sperling’s.
The city’s rich historical heritage, commitment to quality of life and abundance of trees and parkland contributed to Newsweek magazine’s naming Sacramento one of the ten best cities in the United States.
We’re lucky to live here with the many opportunities we have to enjoy the outdoors and entertainment including myriad museums, galleries, historical attractions and theatres. Seasonal festivals can be found every weekend throughout the year. Farmers markets are sprinkled throughout the area. The wine growing regions of nearby Sierra Foothills offer wine tastings and other travel opportunities.
Newcomers continue to arrive seeking opportunity, sunshine and lower housing costs than found in coastal California.
Downtown and Midtown are seeing a resurgence of fine restaurants, entertainment venues, galleries and unique watering holes.
There are many great colleges and universities in and around Sacramento as well.
Over the years, high-tech companies have moved here, and now their output places Sacramento at 21st out of 100 other metro areas.
Continue reading: EVP Exchange-February 2011
Judy Wegener Monday, February 14th, 2011
Recently SAR launched several mobile versions of its website. Now you can view an optimized version of the website on your Blackberry, Android, iPhone or other mobile device.
As a real estate professional, SAR is aware you are always on the go. During any given work day you may be driving with clients, [...]
Leon Williams Friday, February 11th, 2011
 Did you hear? The Obama Administration just delivered a report to congress where it is outlining major reform to our housing market. What does this mean? According to Treasury Secretary Tim Geithner, they are laying out a plan for fundamental reform on a responsible timeline. The goal is to: 1. wind down the GSEs, 2. strengthen consumer protection, and 3. preserve access to affordable housing for people who need it.
In the long run I think the plan calls for some much needed reform in our markets, however those of you wanting to make moves in the housing market better do it now, as this is a sure sign of rising interest rates, Albeit probably for the better.
The Ideal is to fix the fundamental flaws in the mortgage market by shrinking the governments footprint while better targeting the government’s support for affordable homeownership and rental housing, but all in a responsible manner.
As I have said previously in my “War on Wealth” postings, less reliance on a “Big Government” will hopefully decrease the need for the government to unreasonably attack us where it hurts the most, our Pocket Books.
Sounds like a great goal. I wonder if the Special Interests can actually get behind this and help instead of constantly trying to throw a monkey wrench in the works. If we can learn to stop thinking bipartisan and actually chip in and help no matter who is in office, we just might be able to take back our lead and standing as the place to be.
The plan call for:
Continue reading: Obama To Provide Path To Major Reform Of America’s Housing Market
Janelle Fallan Friday, February 11th, 2011
After the holiday lull, the Sacramento market is returning to normal activity, showing a pick up of pending sales – making way for increase closed escrows for next month. Pending sales this month totaled 1,333, 15.5% more than the 1,154 pending sales in December. Despite the positive trend in pending sales, closed escrows decreased month to month from 1,504 to 1,239 units (17.6%). Making up these sales were 579 REOs (46.7%), 320 short sales (25.8%) and 340 conventional sales (27.4%). These numbers have changed month to month with REOs up by 7.1%, short sales up by 14.1% and conventional sales down by 18.9%.
The median home sales price decreased 5% from $179,000 to $170,000. Compared with the same month last year ($170,000), the number is unchanged. The $200,000 – $249,999 price range mode still accounts for a majority (15.5% or 192 units) of the 1,239 total sales this month, while homes under $100,000 totaled 201 (16.2%) units. Conventional financing continued as the primary source of all home and condo sales (472, 35%) with cash (422, 31.3%) and FHA financing (338, 25%) making up the two other large categories. The median amount of days spent on the market (from list date to opening escrow) was 47 – the same amount of days on market as December.
The Total Listing Inventory has recently been split up to more accurately display the current market. Active Listings numbered 5,004 properties and Active Short Sales Contingent showed 1,333. Active Short Sale Contingent properties are short sale properties on which initial offers have been made and are not entirely “active.” After breaking down Total Listing Inventory, we find that the Housing Market Supply figure is more accurately reflected. The Housing Market Supply figure for January was 4 Months – up 17.6% from the 3.4 Months Inventory of December. This figure represents the amount of time – in months – it would take to deplete the Active Listing Inventory (5,004) given the current number of closed escrows (1,333). According to MetroList® MLS data, the average home was 1,732 square feet. Of the 1,239 sales this month, 110 (8.8%) had 2 bedrooms or fewer, 671 (54.1%) had 3 bedrooms, 375 (30.2%) were 4 bedroom properties and 83 properties (6.6%) had 5+ bedrooms.
Continue reading: The New Year Starts Off With Seasonal Norms, Home Values Remain Affordable
Scott Short Thursday, February 10th, 2011
 The only good thing about interest rates going up is the “fence sitting” buyers jump in to the market.
Normally December and January are relatively slow months, but not this time. We are experiencing a high volume of borrowers wanting to buy now. Some of the buyers trying to qualify for a home loan are more challenged. Along with the lenders’ tightening standards, we in the lending industry are taking longer to figure out creative solutions to help more of your clients qualify. We are seeing more credit-challenged, budgetchallenged, employment-uncertaintychallenged and house-challenged borrowers. This is the time your mortgage professional needs to know how loans were structured back in the early 1990’s.
Almost every loan will need full documentation of the following: three months of bank statements (underwriters are scrutinizing the bank statements for overdrafts and unusual deposits), explanation letters for credit (especially all inquiries), job status (state employees need a supervisor to write a letter to address the borrowers’ furlough impact now and in the foreseeable future), motivation to buy (they are not just buying a home for a displaced family member who lost their home in foreclosure) plus other scenarios that defy the imagination some days.
At the time of this writing, HUD/FHA had not issued an extension for the “less than 90-day flip rule.” My sources inform me that HUD is working on it (not sure what “it” is going to look like when it comes out). We have seen a majority of the lenders that offer the program retract from offering the program for flips where the seller re-sells for greater than 20% over their purchase price.
Continue reading: 2011 Starts off with a Bang
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