en-us Bella Esshaki, San Diego Real Estate Agent | Realty Executives All Area, San Diego http://www.san-diego-real-estate-for-sale.com/ Fannie Mae Servicer Ratings For Foreclosure Prevention http://www.san-diego-real-estate-for-sale.com/blogpost-67552/Fannie-Mae-Servicer-Ratings-For-Foreclosure-Preven.html Fannie Mae Servicer Ratings For Foreclosure Prevention

 

 

Government sponsored enterprise Fannie Mae recently announced additional results from its Servicer Total Achievement and Rewards Program (STAR). Fannie's initiative, which helps evaluate servicers seeking to assist homeowners in preventing foreclosure, released more rankings from the second-quarter, highlighting those servicers that achieved at least a 3 STAR measurement for the period.

 

Targeting consistency in customer service and foreclosure avoidance when dealing with borrowers, STAR examines servicers overall performance and rates them on a 5 STAR scale. The latest reports from Fannie Mae looked at the so-called Peer Group Three. Servicers are categorized into three peer groups based on the number of Fannie Mae loans they service. Group Three includes those with smaller servicing volumes. In total, 11 out of 13 servicers in Peer Group Three were named as being on track to receive a 3 STAR or better evaluation for 2011.

 

They include: American Home Mortgage Servicing, Arvest Mortgage Company, Associated Bank, Branch Banking and Trust Co. (BB&T), Capital One, Colonial Savings, Doral Bank, Nationwide Advantage Mortgage, Navy Federal Credit Union, Manufacturers and Traders Trust Co., and Sovereign Bank.

 

Those in Peer Group Three receiving a 3 STAR ranking demonstrated median or better success in servicing distressed borrowers, as compared to their peers. They join financial institutions categorized among two additional peer groupings, and evaluated earlier in the year. Fannie's September survey data noted the companies from Peer Group One and Peer Group Two that are deemed as performing at an above average standard and are producing better results than their peers. GMAC Mortgage (Ally Bank), CitiMortgage, Everhome Mortgage, and Wells Fargo from Peer Group One will likely end 2011 with a minimum 3 STAR rating. Within Peer Group Two, Fannie named Fifth Third Bank, the Huntington National Bank, HSBC Mortgage, Aurora Bank, Regions Bank, and Central Mortgage Company as receiving at least a 3 STAR rating.

 

Fannie Mae's VP of servicer portfolio management, Leslie Peeler, said of the findings, "Fannie Mae's mission is to help stabilize the housing market. By working with servicers to prevent foreclosure whenever possible, we can help bring about stability and recovery to America's neighborhoods. Servicers who achieve the highest rankings in the STAR Program are the market leaders in providing assistance to homeowners who are having difficulty making their mortgage payments."

Peer groupings are subject to a 10-point examination of key performance indicators, and Fannie's STAR program provides monthly snapshots of each company's servicing activities. Fannie is simultaneously conducting operational business process assessments, which impact STAR rankings. Servicers coming in below a median level according to the STAR scale do not gain any type of rating.

 

Bella Esshaki | Realty Executives All Area | 619.820.0607 | www.HomesByBella.com

 

]]> Bella Esshaki Fri, 21 Oct 2011 12:00:00 PST 6 Reasons Mortgage Applications Are Rejected http://www.san-diego-real-estate-for-sale.com/blogpost-67551/6-Reasons-Mortgage-Applications-Are-Rejected.html 6 Reasons Mortgage Applications Are Rejected

 

Half of refinance applications are abandoned or rejected, as are 30 percent of purchase mortgage applications, according to the Mortgage Bankers Association. The Federal Financial Institutions Examination Council (FFIEC) says that well over 2 million mortgage applications were rejected last year.

Want to avoid falling into that number? It's tough, especially in light of the fact that mortgage lenders have become increasingly restrictive in terms of their lending guidelines since the housing market crash.

Here, as a cautionary tale and primer on what to expect, are the top six reasons mortgage lenders reject applications.

 

1.      Income issues

Most failed applications falling into this category have income too low for the mortgage amount they are seeking. Often a spouse's credit issues can create this problem, too, as the income the spouse plans to actually chip in toward the mortgage cannot be considered by a lender. But increasingly, the recent vagaries of the job market are also causing this issue, as people who have changed their line of work or have changed from salaried employee to freelancer over the last couple of years can also have their home loan applications rejected based on income.

 

2.      Muddled money matters

If the mortgage for which you're applying plus your monthly payments on credit card, car and student loan debts will comprise more than 45 percent of your total income, you could have problems qualifying for a home loan. You might also run into problems if you rely too heavily on bonuses, overtime, cash wages or rental income -- all of these can be difficult or impossible to get a mortgage bank to consider, and if they do, they might not take all of it into account.

 

3.      Credit issues

Today, the mortgage qualifying FICO score cutoff falls somewhere between 620 and 660, depending on which lender and which loan type you seek. More than one-third of Americans, by some numbers, have credit scores too low to qualify for a home loan. Even if your credit score is high enough to qualify, if you have any late mortgage payments, a short sale, a foreclosure or a bankruptcy in the last two years, loan qualifying could be difficult to impossible.

 

4.      Property didn't appraise.

Since the whole industry had its hand smacked for allowing home values to skyrocket in a very short time, appraisal guidelines have tightened up. Some would say even more than overall mortgage guidelines. So, it is increasingly common to have the property appraise for a price lower than the sale price negotiated between the buyer and seller. This is especially common in the refinance realm, as well over a quarter of U.S. homes are now upside-down, meaning the mortgage balance owed is greater than the value of the home.

 

5.      Condition problems.

With all the distressed properties on the market, and with most non-distressed sellers barely breaking even, more home-sale transactions than ever are falling apart due to condition problems with the property. Many lenders will not extend financing on homes where the appraiser points out problems like cracked or broken windows, missing kitchen appliances, electrical problems, or wood rot. And in the world of condos and other units that belong to a homeowners association, if more than 25 percent of units are rented (rather than owner-occupied) or more than 15 percent are delinquent on their HOA dues, new applications for refinance or purchase mortgages on units in the development are likely to be rejected.

 

 

6.      Technical difficulties with application.

The days when lenders just took your word for it are long, long gone. Applications with incomplete or unverifiable information are doomed. If any of these mortgage loan application glitches arise in your home buying or refinancing process, it's critical that you connect with your mortgage professional, be it your banker or mortgage broker, to determine what course of action to take. In some cases, it might be as simple as buying a stove you find at Craigslist and installing it before escrow closes; but with income issues your mortgage pro will need to help you determine whether it makes sense to pay some bills down, get a co-signer, or even wait six months so your income documentation will qualify.

 

Bella Esshaki

REALTY EXECUTIVES ALL AREA

619.820.0607

www.HomesByBella.com

 

]]> Bella Esshaki Tue, 18 Oct 2011 12:00:00 PST Overpriced Homes http://www.san-diego-real-estate-for-sale.com/blogpost-67265/Overpriced-Homes.html Overpriced Homes

 

Beautiful homes in desirable locations can sit on the market for months simply because they are priced too high and the sellers won't reduce the price. Sellers often tell their agent to encourage buyers to make offers, but buyers usually don't. Although this may seem counterintuitive to sellers, buyers have good reasons for not making offers on listings that are overpriced for the market. A high price can signal an unrealistic seller.

 

Today's market is challenging. Buyers are nervous, busy and usually not in a rush to buy. There is no sense of urgency to buy now, so buyers are waiting for the right house at the right price. Buyers don't want to waste time trying to convince sellers that they are right about the market value of their home and the sellers aren't. Most buyers prefer to wait until the sellers reduce the price to a reasonable level and then make an offer.

It's not uncommon for a seller to receive an offer almost immediately after the price is lowered, and sometimes more than one offer. Buyers wait until they know their offer won't be made in vain.

 

Buyers who have serious interest in a house that's priced too high often don't make an offer because they're concerned about offending the seller. They fear this might jeopardize their chances later when the sellers reduce their price. In areas where there are plenty of listings to choose from, there's no incentive for buyers to make an offer on an overpriced listing. Why battle with an unrealistic seller when there are several other homes on the market that are equally appealing and priced competitively?

 

Today's buyers are looking for a good deal. A listing that receives no serious interest is usually priced too high and is not a good value at that price. It's easy enough to determine whether a house is priced right for the market. If a listing isn't selling but other similar well-priced listings in the area sell soon after they come on the market, the message is clear. One of the first things buyers want to know when they discover a listing is: How long has it been on the market?

 

Many sellers are in denial about the current market value of their homes. It's difficult to accept that you can't sell for the price you paid, or the price you need to buy another home, or the price you want because you think your home is worth it. We're in a buyer's market. In terms of pricing for the market, the only price that's relevant is what a willing and able buyer will pay, not what the sellers hope they'll receive.

 

Buyers who are interested in making an offer on an overpriced listing should first have their agent check with the listing agent to find out if there is any flexibility in the sellers' price and why the home is on the market. This will help you assess the sellers' motivation.

Do the sellers need to sell because of a job relocation, death or divorce? These are motivated sellers. They need to sell, even though they may not want to. If they don't price right for the market initially, they will probably become realistic about the price at some point.

 

Bella Esshaki

Realty Executives All Area

619.820.0607

www.HomesByBella.com

 

]]> Bella Esshaki Fri, 14 Oct 2011 12:00:00 PST Is An ARM The Right Choice For You? http://www.san-diego-real-estate-for-sale.com/blogpost-67264/Is-An-Arm-The-Right-Choice-For-You.html Is An ARM The Right Choice For You?

 

 

Mortgage rates continue to be at historic lows, which raises the question: Why would anyone still get an adjustable-rate mortgage? With rates about as low as they could possibly be and with nowhere to go but up, where's the upside and logic to financing property with an ARM?

Jacqueline Racz, a loan originator with Pennsylvania-based PrimeLending, has been in mortgage banking since 1993 and has seen shifts in which consumers gravitate to various products.

"Even back in the '90s when fixed rates jumped up into the nines, the ARMs were always very low in comparison," she says. "Right now they just seem so close to each other because fixed rates haven't been this low for a very long time. But ARMs are always popular for certain individuals in certain situations. Everyone is quick to jump on that 30-year fixed, but there are many scenarios to consider."

 

Where ARMs were once frequently sought out by those scraping by to make a home purchase-- pitting the money saved with a lower rate against the hope that their future income would keep pace with future payment increases -- those seeking out this type of loan these days are more likely to be either wealthier or more strategic. Racz sees three key areas where homebuyers might gravitate toward an ARM:

 

To lower payments further, especially on jumbo loans.

 

If they have a job that moves them around every few years.

 

If they know that they will be downsizing or moving - after their children finish school, for example - or no longer need the home they are in and that paying the loan off in full over 30 years is not a goal.

 

On a large loan amount, the difference between 4.5% on a 30-year fixed-rate mortgage and 3.25% on a 3/1 ARM can be hundreds of dollars a month. In addition to lower payments, a lot of them will allow interest only payments, which can be a significant savings a month. When you are looking at something in the $700,000 range, going from even a point spread between the fixed and adjustable can save you about $1,500 a month.

 

 

Bella Esshaki

619.820.0607 | REALTY EXECUTIVES ALL AREA | www.HomesByBella.com

 

]]> Bella Esshaki Tue, 11 Oct 2011 12:00:00 PST “E-Closings” http://www.san-diego-real-estate-for-sale.com/blogpost-66975/e-closings.html "E-Closings"

 

When Charles Schaffner of West Haven, Utah, closed on a home recently, he didn't leave with a giant stack of paperwork. Instead, he left with a CD containing electronic versions of all closing documents. The closing took less than 20 minutes, and yet Schaffner knew exactly what he was signing; he'd reviewed all of the documents at home the night before. Schaffner got his loan through Mountain America Credit Union, which is one of the first banks in the country to roll out an electronic-closing option. Encompassing home contracts, closings and loans, electronic processes are saving time and money. Schaffner says his experience with electronic closing was a far cry from previous closings. "In the five closings that I've been involved in the past, people are just telling you the short version of what the documents are, you sign off, and you go on to the next one and you don't have any knowledge or recollection of what it was about," Schaffner says. This time, Schaffner didn't sign a single piece of paper. He signed his name once on a signature pad, then applied that signature electronically in every place it was needed. No hand cramping or shoddy, hurried signatures. "This was a very pleasant change," he says. "It was interesting using new technology."

 

MACU's e-closing product is called QuickClose, and it uses eClosingRoom technology from PropertyInfo, a division of Stewart Title Co. Stewart's business-development director, Nancy Pratt, says e-closing is being embraced by consumers, who are already comfortable with signing a signature pad when they make purchases at stores. She also says older buyers aren't intimidated by the technology. In fact, they appreciate being able to sign once and be done. "So many people say they are uncomfortable with the way their signature looks after signing it 80 times," she says.

 

Benefits of e-closings


Of course, a good looking signature isn't the only perk of an e-closing. The process saves time, money - and reams of paper. According to data from Stewart, 460 pieces of paper are used in the typical pen-and-ink closing. Lenders save money because they save time. In the paper world, an escrow company employee is responsible for shipping loan documents in a specific order to the lender and investor. The documents usually number between 70 and 100. The "shipper" may be busy, and the loan may sit for days before documents are sent. With e-closing, the file is shipped within minutes of closing. The lender may eventually pass savings on to you.

 

Paul Anselmo, CEO of SigniaDocs, another provider of technology that allows for a paperless mortgage process, says the method ensures compliance with new mortgage regulations. An electronic, tamper-proof seal means there is never a question of who signed what when.

"The electronic version can track what was disclosed, use a date and time stamp and authenticate the IP address used," he says. "It would eliminate the finger-pointing you have going on now. The paper files are such a mess." Pratt says it's also easy to misplace a piece of paper, which could delay any step of the process. "Many times, a title company has to go back to a borrower and ask (the borrower) to re-execute a document after the fact," she says. "That goes away in the electronic world."

 

BELLA ESSHAKI

Realty Executives All Area

619.820.0607

www.HomesByBella.com

 

]]> Bella Esshaki Fri, 7 Oct 2011 12:00:00 PST Has the American Dream of Homeownership Changed? http://www.san-diego-real-estate-for-sale.com/blogpost-66974/Has-The-American-Dream-Of-Homeownership-Changed.html Has the American Dream of Homeownership Changed?

 

As threats of a second recession loom, housing remains a critical wound to the economy and political rhetoric heats up leading up to an election year, real estate practitioners are feeling the heat. Do Americans even care about owning a home anymore? According to a Trulia.com study, 70 percent still say that homeownership is still central to their American dream which is unchanged from January despite declining economic conditions. The dream of homeownership has changed, however, as demand for McMansion sized homes over 3,200 feet has declined 36.5 percent in just the last twelve months. Trulia cites a variety of reasons from environmental awareness, practicality and even the political discussion surrounding removal of the mortgage interest deduction (MID). If the MID is no longer offered to homeowners, it could reduce demand on larger homes which Trulia's newly appointed Chief Economist, Dr. Jed Kolko said "could be a permanent shift."

 

Although Americans still want a home, the dream of mansion living is being removed from the national ethos and being replaced by the idea of more compact, city living and as demand shifts from oversized suburban homes, suburbs won't end up abandoned, rather, the absorption rate will take longer to recover than urban areas, according to Trulia. The good news highlighted by the study is that there is long term demand for housing as the dream of homeownership is still alive. For example, 59 percent of current renters say they aspire to own and over two thirds of respondents over the age of 55 say they still plan on buying a second home.

 

The largest obstacle to those wishing to buy is saving up for a down payment, according to half of everyone surveyed. This presents a problem on Capitol Hill as Congress has proposed requiring all home buyers to put 20% down. Furthermore, nearly one in three respondents cite job instability as a barrier to their owning a home, pointing out the toll unemployment has taken on housing. Independent of income, 36 percent feared they would not qualify for a mortgage.

Based on current data, Kolko told AGBeat that he expects to see the number of Americans aspiring to own a home to stay flat or increase in the next twelve months, noting there is pent up demand in the youngest demographic, many of whom are not living alone, but with parents which has held back demand and lowered expectations, therefore, demand has been deferred to the future.

 

Americans still want to own homes, but the dream is that of a smaller footprint, more urban living, and finances are the top obstacle that buyers perceive to be standing in their way. People over 55 still plan on buying a second home, and there is pent up demand with Americans under 34 who do not yet live alone. Housing may be limping, but the future looks hopeful based on the perception consumers have about homeownership- the dream is not dead, it's just a different dream.

 

Bella Esshaki | REALTY EXECUTIVES ALL AREA | 619.820.0607 | www.HomesByBella.com

 

 

]]> Bella Esshaki Tue, 4 Oct 2011 12:00:00 PST What Real Estate Agents Do For Buyers http://www.san-diego-real-estate-for-sale.com/blogpost-66658/What-Real-Estate-Agents-Do-For-Buyers.html What Real Estate Agents Do For Buyers

Homebuyers, including first-time buyers, usually use the Internet for the preliminary work of finding homes for sale and collecting information on neighborhoods and recent sales. But those buyers, particularly if they are first-timers, often use real-estate agents to identify long-term value in properties, negotiate prices and ensure that deals go through. "Many first-time homebuyers will not be purchasing their dream home as their first place, and (they) often have difficulty seeing the true value in homes," says Ben Hoefer, a real-estate agent with John L. Scott Real Estate in Seattle. "Since many of these buyers will be moving in the future, I think it is a good idea to think about resale when the buyer is purchasing. Buyers may not be aware of things like the problem of living on a busy street, or know to check on issues with homeowner-association covenants." Real-estate agent can point out potential issues that could affect the resale price of a home and suggest small changes to increase the home's value.

"I have a three-legged approach to working with buyers," says Mark Lesses, an associate broker and vice president with Coldwell Banker Residential Brokerage in Arlington, Mass. "I start by getting to know what the buyers want by picking up on the hidden signals that a prospective buyer shows when they see a home. They may not know what they want, but they can feel what they want. When I'm showing a house that absolutely does not work, I dig into why it doesn't work. When we see other houses that may be a better fit, we discuss what does work for them and why." The other two parts of the approach are negotiating a transaction and bringing that transaction to settlement.

"The most important function of a real-estate agent is negotiating a good deal on behalf of the buyer and educating the buyer about the market," says Brian Block, managing broker and branch vice president of the Block Real Estate Group with Re/Max Allegiance in McLean, Va. First-time buyers should rely on their Realtor to provide them with data about comparable homes that have sold, how long a home has been on the market, what homes haven't sold and all the activity that has been happening in the local real-estate market. Ultimately, it is the buyer's decision what price and terms they wish to offer. However, buyers should be able to rely on their Realtors to guide them toward an educated offer on the home. Negotiation occurs not only at the beginning of a transaction over price and terms, but also possibly after a home inspection, an appraisal and at other times between contract and closing.


While real-estate agents can help buyers in myriad ways, there are some things they cannot do. "Fair-housing laws prohibit discrimination," Block says. "Thus, an agent cannot steer a client to or away from particular neighborhoods based on their knowledge of an area's demographics. Further, agents cannot explicitly describe a neighborhood based on racial, religious, age or other demographic criteria. The agent can point buyers to websites and other reference sources where buyers can discover this information for themselves."Bottom of Form

First-time homebuyers need to recognize that they must work with other professionals during the home buying process, such as an attorney or title company representative to review legal documents, as well as a mortgage lender. "Agents are not lawyers, home inspectors, mold experts, financial advisers or tax advisers," Block says. "While a real-estate agent can give some general background information in each of these areas, they cannot claim to be an expert and must suggest that the buyer retain the services of one of these other professionals should the need arise." The biggest concern for most buyers today is whether a home will keep its value. An experienced real-estate agent can provide a buyer with the local market knowledge needed to make an informed decision about what to buy and how much to spend.

 

Bella Esshaki

Realty Executives All Area

619.820.0607

www.HomesByBella.com

 

]]> Bella Esshaki Fri, 30 Sep 2011 12:00:00 PST How Tweeting Can Cost You a Deal http://www.san-diego-real-estate-for-sale.com/blogpost-66657/How-Tweeting-Can-Cost-You-A-Deal.html How Tweeting Can Cost You a Deal

 

Pity the poor Tiburon, Calif., homebuyer who shared her real-estate triumph too soon on Facebook. The post went something like: "Found our dream house!" and she named a coveted neighborhood where she'd long been shopping. "She didn't think anyone but those in her own network, which was quite small, was listening," says Ginger Wilcox, who was her real-estate agent. "Unfortunately, a friend saw the post and shared it with a pal who was looking in the same neighborhood." The friend of the friend moved quickly. She tracked down the listing and offered more money, snatching the home from under the Facebook poster, who later learned through the grapevine how she'd shot herself in the foot with her post.

The Facebook poster did, eventually, buy another home. This time, she was discreet until the deal was done, Wilcox says. Wilcox, head of agent training at real-estate website Trulia, uses the story to warn salespeople to tell their clients not to share deal-killing personal details on Facebook, MySpace or Twitter. Social media are embedded in many people's lives. But as of now, most homebuyers, sellers and real-estate agents are using these sites just to comment and report on their experiences and feelings.

More adventurous buyers are crowd-sourcing property searches and asking for help with questions such as, "I'm considering moving to this location. What do you think about it?" Or they are asking for recommendations on sales agents, neighborhoods and school districts; about where to find amenities such as parks, churches, cafes, restaurants and dry cleaners; or information about commutes. As these new communication outlets expand, however, some buyers, sellers and agents are finding that their forays into social media can inflict harm in a variety of ways.

"You feel that you are in this trusted network," Wilcox says. "But we don't know what our friends are sharing. Unfortunately, many of these seemingly innocuous updates could cost you as homebuyer or seller thousands of dollars, if not an entire deal." Unless you adjust the privacy of your Facebook wall and ensure that your profile doesn't come up in Facebook search results, strangers could read your posts just by searching for you. On Twitter, you have a number of choices when it comes to privacy. By default, your tweets will be seen by your followers and anyone else who comes across them in a search, Twitter says. If you want to reach only selected recipients, use Twitter's "direct message" option. Only followers whom you select and to whom you send a message can see these messages. If you don't want your followers sharing or "retweeting" your messages to others, or if you don't want the general public to see your tweets, check "protect my tweets," an option on your account-settings page.

.Success in negotiating, as in love or poker, depends on preserving mystery. Giving the other side insight into your thinking, agents call it your "motivation", may weaken your position. For example, a tweet such as this, forwarded to Wilcox from another agent, may make the buyer appear naïve or too eager: "Tomorrow... Oops, today, I'm going to go tour a new neighborhood and look at buying a new house. Excited and freaked out. Am I crazy??"

In Carmen Brodeur's $1 million to $3 million market in Scottsdale and Paradise Valley, Ariz., as everywhere, "so many people are so entwined with Twitter and social media that they find it hard to not disclose every detail of their lives. They just blurt it out," says Brodeur, of The Brodeur Luxury Group at Realty Executive. "I'll see on Facebook or Twitter someone saying, 'I found a house I love. I just put in an offer. Cross your fingers for me. I hope I get it. But I'll do whatever it takes. I'll go another $20,000 higher." She says she warns clients to reveal little about their search, sale or purchase, online or off. This doesn't mean you shouldn't use your network and social tools. But experts advise that you avoid using them impulsively, particularly if you're annoyed or angry. "We're talking about having 750 million users on Facebook," Wilcox says. "It's no longer a question of whether people are using it; it's how they're using it."

BELLA ESSHAKI | Realty Executives All Area | 619.820.0607 | www.HomesByBella.com

 

]]> Bella Esshaki Tue, 27 Sep 2011 12:00:00 PST New Mortgage Limits in the Near Future http://www.san-diego-real-estate-for-sale.com/blogpost-66220/New-Mortgage-Limits-In-The-Near-Future.html New Mortgage Limits in the Near Future

 

Prospective homebuyers and sellers could run into additional roadblocks in coming months as new mortgage regulations set to take effect this fall filter into the system. Although the new limits on conforming loans, mortgages eligible for government guarantees, won't officially roll out until Oct. 1, buyers and sellers alike could feel the pinch of even tighter credit availability much sooner as lenders start gearing up for lower loan caps. "As these regulations are rolled out, every individual lender takes a different amount of time to implement and get the changes into the pipeline," says Mona Marimow, senior vice president at Lendingtree.com "Many lenders might start implementing and affecting their rates prior to the October 1 rollout."

 

To shore up a faltering housing market, Congress increased the maximum loan amount that government-sponsored enterprises Fannie Mae and Freddie Mac could guarantee, to a high of $729,750 in some markets. That made it easier for borrowers in pricier markets to get loans because lenders and investors were guaranteed to receive payment regardless of whether the homeowner defaulted.  Now, as the government begins to gradually reduce its footprint in the housing market, limits on government backed loans are scheduled to reset to prior levels, a high of $625,500 in some markets, which experts say could ultimately lead to higher mortgage rates and more downward pressure on home prices. The brunt of the impact will fall on middle-of-the-market buyers and sellers in pricier housing markets, says Paul Bishop who heads up research at the National Association of Realtors. "The biggest change could potentially happen in higher-cost areas, because for a number of buyers in higher-cost areas [such as] New York, Washington, Los Angeles, a home that would require a mortgage above $625,000 is not an unusual purchase," Bishop says. "It's really going be a hit for those buyers in those areas right at the middle of the market, and what we've seen over the last several months is that the middle segment of the market have really been the weakest."

 

Prospective borrowers could face higher mortgage interest rates for loans that exceed the new caps, also called jumbo loans, which would increase the overall cost of owning a home. That, in turn, would likely discourage the house hunters the economy desperately needs to jump-start the housing market.Top of Form "It's a concern for homebuyers thinking about whether they want to move forward in an economic environment where there's one more type of uncertainty in the decision making process," Bishop adds. House hunters might also be drawn to less-expensive properties as a result of the change, which could exacerbate existing weakness in the middle-priced segment of the market. "When you consider the new jumbo rate plus you have to put a greater amount down, it's going to have implications for consumers who are probably going to decide to take a home with a lesser value," Marimow says. But buyers aren't the only ones who will feel the ripple effects of a drop in conforming loan limits. Sellers, too, are likely to feel the impact, especially if their asking price is above the new limits. "If home sellers want to make their sale attractive to potential buyers, then there may be some downward pressure, such that it's more likely that the buyer walking in the door would be able to get a conforming loan at the new level," Bishop says. That means that if normally a house might sell for $750,000, for example, the seller might find it in their best interest to push down the price to accommodate buyers seeking mortgages under the new limits.

 

That's not good news for the housing market or the U.S. economy, neither of which can afford fresh obstacles to recovery. "At this point, the timing in reduction of any loan limits is probably not good in any real way, simply because the housing market is struggling," Bishop says. "In terms of the big picture, it's still fragile, but we would like to see that move forward because history shows the rest of the economy really doesn't recover in any meaningful or robust way unless the housing market is also on stable footing."

Nevertheless, consumers can start preparing for the shift now, ahead of the Oct. 1 transition. "The good news is that there is information being shared about this now," Marimow says. "This is the right time to be talking about it because once the changes do take effect, the people who are affected will already not have other options."

The best thing consumers can do now is evaluate their needs and do their research, especially in an environment as frenetic as this one. "Consumers should look for a closing guarantee and lenders that are going to be able to lock in your rate as quickly as possible, because your rate could float even over the time [it takes] to close your loan," Marimow says. "You truly need to shop around as much as you can to make sure you're comparing and contrasting to know you're getting the best one."

 

Bella Esshaki

Realty Executives All Area

619.820.0607

www.HomesByBella.com

 

]]> Bella Esshaki Fri, 23 Sep 2011 12:00:00 PST Obama’s New Tax Rate http://www.san-diego-real-estate-for-sale.com/blogpost-66219/Obamas-New-Tax-Rate.html Obama's New Tax Rate

 

The White House will propose a new tax rate for people earning more than $1 million a year to ensure that they pay at least the same percentage of their earnings in taxes as middle-income Americans. Called the Buffett Rule, the proposal will be part of a comprehensive deficit reduction plan President Barack Obama will unveil on Monday, according to a senior administration official and White House sources who spoke on condition of not being identified. The information was first reported by The New York Times. The plan's name refers to billionaire Warren Buffet, who has complained that wealthy Americans like himself pay less than their fair share in taxes under the current tax code.

 

Obama will propose several tax changes, one White House official said, adding that the Buffett Rule would replace the current Alternative Minimum Tax that was created to ensure people paid a minimum percentage of their income in taxes. According to the White House official, the Buffett Rule would impact only 0.3% of taxpayers -- fewer than 450,000 individuals. The president will not specify a specific rate or details of the Buffett Rule in announcing his proposal, leaving it to Congress to decide how to calculate such a rate as part of the larger debate over rewriting the tax code, the official said.

"I think [Buffett's] basic observation that he pays too little taxes is right," former Congressional Budget Office Director Alice Rivlin told CNN's Candy Crowley on Sunday. "But the way to fix the tax code is to fix the tax code -- not to add another complication."

 

Obama's deficit reduction plan is expected to also propose changes to the Medicare and Medicaid government health care systems for senior citizens, the disabled and the poor.

It will come out as a special congressional committee created under last month's debt ceiling agreement continues its early efforts to forge a deficit reduction plan that can pass Congress by December 23. If the committee's effort fails, more than $1 trillion in spending cuts will automatically kick in, on top of $900 billion in cuts already mandated under the debt ceiling deal. The issue of tax increases has been at the heart of a divisive policy dispute between Democrats and Republicans. Obama wants to end Bush-era tax cuts on families earning more than $250,000 a year, but Republicans have blocked his efforts, arguing that it will hinder investment. House Speaker John Boehner last week reiterated his opposition to any tax increases being part of a deficit reduction package being negotiated by the special congressional panel.

 

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]]> Bella Esshaki Tue, 20 Sep 2011 12:00:00 PST