Home ownership in the East Bay is sky-rocketing as renters become owners.

Of course, every taxpayer in America is now a home owner - so to speak. With the bail-out of Fannie Mae and Freddie Mac.

Come April 15, 2009 – maybe all of us will get property deeds along with our tax bills for bailing out the all the financial institutions that were willing to ignore common sense and basic business and financial principles to make a buck.

Part of the costs American taxpayers will be bearing will be the legal bills for some of the big boys facing litigation – and – don’t forget the golden parachutes of some of those same big boys that created this mess.

AMERICA – where else can you lie, cheat and steal, stick the taxpayers with the bill, and ride off into the sunset with a personal fortune??

Is there anyone, besides me, wondering about the Sanity Index in Washington, D.C.???

East Bay Russian Roulette Home Sales

East Bay home owners continue to gamble and lose more money on the sale of their homes than many U.S. citizens earn in a year.

Sellers refusing to face the reality of a housing market that is continuing to settle and a lending and mortgage industry that is experiencing weekly kaleidoscopic change are losing tens of thousands of dollars chasing the market down.

Without a doubt, our biggest challenge these days is trying to get sellers to face the reality of their local real estate market. Over 90% of the sellers we talk to want to over price their home for existing market conditions.

Sellers are holding on to their wishful thinking that there is that one “magic buyer” that will appear, fall in love with their home and pay more than market value to own the seller’s dream home. In most life situations 2 out of 3 isn’t bad, but with  dreaming sellers – it’s 3 out of 3 or hit the road Jack.

Mortgage Industry Continues to Change

WASHINGTON — U.S. federal regulators, in a dramatic move highlighting the
tenuous state of global credit markets, outlined a takeover of Fannie Mae and Freddie Mac on Sunday morning, including giving control of the firms to their regulator and allowing the Treasury Department to purchase billions of dollars of the firms' senior preferred stock.

What’s this mean to YOU the local home buyer/seller? According to Dan Green of The Mortgage Reports – As of today, mortgage debt is government debt and by the transitive property of risk premiums, mortgage debt is now risk-free.  Therefore, conforming mortgage rates are down.

Wall Street Journal – The government takeover of Fannie Mae and Freddie Mac likely will help ease mortgage rates for home buyers, say economists, home builders and housing experts. But it won't cure the housing markets biggest ailments: falling home prices and rising foreclosures.

Are there any glimmers of hope? The National Association of Realtors said on Tuesday that pending home sales dropped again in July, dashing expectations of a continuing rebound after positive results in June. And prices of existing homes fell 7.1% in July.

Thinking about buying a home or refinancing?

Business as Usual does not apply to the lending business these days – especially the home mortgage business. In case you haven’t noticed, lending standards are changing everyday, banks and other lending institutions continue to try, die or sigh.

If you don’t read Dan Green regularly, give it some consideration – if you’re interested in what’s happening in the mortgage industry. Dan doesn’t serve up canned goods. His Daily Mortgage Reports offer real time, real person insight and analysis of what’s happening with YOUR potential to buy a home – in plain English.

Here’s part of what he is saying today:

If you plan to buy a new home in 2008 or 2009, give a lot of thought to moving up your time frame. 

Mortgage approvals are about to get more scarce and more expensive for everyone.

The Supporting Evidence From The News

1. FHA is increasing its mortgage insurance premiums and up-front loan fees for a lot of borrowers
2. With IndyMac's demise, other banks should follow and Alt-A loans may go the way of Sub-Prime
3. Fannie and Freddie are in financial crisis again and may be forced to add mandatory loan fees for everyone
4. Banks are doing the unthinkable just to get suspect loans off their books
5. Wall Street is losing its appetite for "guaranteed" mortgage bonds

California Mortgage News

Yesterday Governor Schwarzenegger signed a California Mortgage Bill.

Lenders must now call California homeowners or visit them in person and explore restructuring options before foreclosing on their homes under legislation signed Tuesday by Gov. Arnold Schwarzenegger.

The new law also doubles the amount of time tenants have to relocate from a foreclosed property to 60 days and requires owners to maintain foreclosed properties.

California being a community property state, the division of property resulting from a divorce can be pretty straight forward – if the parties are in agreement. But what happens when the home in question has lost significant value and is no longer an asset but a liability? What if the couple in question is upside down on their loan or in the process of allowing the home to be foreclosed on?

More and more situations like these are arising these days as the woes in the housing industry continue to drag on and ripple through the economy and society. In the best of times, a do-it-yourself divorce appeals to many, but the more complicated the situation or the more aggravating the economic influence, it makes sense to seek out professional help – attorney, CPA, Realtor, and etc.

I read a story a while back about a woman who couldn’t refinance her home and remove her former husband from the loan, because he was nice enough to pay the child support in cash. Fannie Mae and Freddie Mac won’t take your word for it, they want a paper trail.

The current real estate dynamics have created very challenging situations for many couples considering a divorce. Often times in a divorce, someone wants the house, but if the house is losing value, it can change the situation.

A divorce situation is often emotionally charged and may add unrealistic pressure to pricing the home too high in hopes of minimizing the financial impact of selling the home. But over pricing the home can cost more money in the long run and drag out the divorce proceedings.

And what about a situation where the home has to be sold for division of assets, but the one in the home does not want to cooperate? And who decides on which real estate agent to hire?

Divorce can be a very complicated affair. What makes the most sense is getting good advice and knowledge – in advance. As market conditions change, take the time every year to meet with your financial advisor, CPA or attorney to review how current conditions are affecting your personal situation. If you find yourself in a situation heading toward a divorce seek advice sooner than later from someone with expertise.

Deciding who gets the house or how we are going to go about selling it may not be as difficult as who gets the dog, but these days it can be more complicated than when the home was appreciating 10% a year.

Here are the much anticipated new guidelines set by Fannie Mae and Freddie Mac for the temporary increase to the conforming limit.

Loan Eligibility - Loans must be conventional first lien mortgages only

Ineligible Products, Features, or Transaction Types

• Cashout refi's
• Cooperative Projects
• Interest Only products
• Temporary Buydowns
• 2-4 unit properties

Intial parameters introduced a couple of weeks ago indicated the 5/1 ARM and 5/1 interest only products would be part of the product scope, however these programs were not released at this time.  It is possible these products could be forthcoming.

LTV - is the loan amount expressed as a percent of either the purchase price or the appraised value of the property.

CLTV -the proportion of loans (secured by a property) in relation to its value.

FICO - a credit score used by many mortgage lenders that use a risk-based system to determine the possibility that the borrower may default on financial obligations to the mortgage lender.