"The term mortgage meltdown has become so common -- on television, in headlines and even casual conversations -- that you might assume that this is a tough time to get a mortgage."

"But the reality is different: Mortgage money is plentiful, most mortgage products remain unaffected by troubles in the subprime segment, and interest rates for 30-year fixed-rate loans remain in the low 6 percent range for people with reasonably good credit. Even interest rates on loans of more than $417,000 have fallen after spiking during the summer." - Kenneth Harney, Nation's Housing

The main change during the past several months, said Ted Grose, president of 1st Mortgage Advisors in Los Angeles, is that "the products that allowed people to buy houses they couldn't afford have disappeared."

"Larger mortgages, which always have carried higher rates than loans eligible for purchase by Fannie Mae and Freddie Mac, have recently been in the low 7 percent range, down from the 8 percent and higher levels of a couple of months ago."

"Nonetheless, say lenders and brokers, there is a widespread and persistant belief by consumers that the entire mortgage market is in crisis."

"Other than subprime and high LTV (loan-to-value) stated-income" programs, Jim Brown, chief executive officer of Veteran Mortgage said, "we've got pretty much everything now that we did before. We've got a lot of outlets."

"Most lenders and investors are quick to note that while mortgage money is plentiful, underwriting standards are stricter than they were a year ago."

"Similarly, FICO score standards generally are higher than a year ago, stated-income mortgages with no verifications are hard to find, and major investors are on the prowl for anything hinting at fraud."

"Lenders are especially wary of excessive "layering of risk" - combining low down payments with marginal FICO scores and high-to-income ratios - in markets where prices are falling."

"A major legislative development under way on Capitol Hill could expand consumers' range of good mortgage choices even further."

Read the entire Article HERE.

Labels: Bay Area Real Estate, Fico Score, Interest Rate, Jumbo Loans, Mortgage Lenders, San Francisco Chronicle, Subprime Loans

Money's tight these days, so for the first time in many tears, seller financing is making a comeback. To get deals done, people are turning their backs and doing "the old end around." - Marni Leff Kottle, San Francisco Chronicle.

"Seller financing is simple in theory: The buyer and seller settle on a price and then the seller agrees to extend some amount of credit back to the buyer. The loan is secured by the property. Typically, the seller provides financing in the form of a second mortgage after a buyer has obtained a first mortgage from a bank."

"Sellers are still able to push their price points, and buyers are getting interest rates that are lower than the retail market." Heidi Rickerd-Rizzo, Branch Manager for Pacific Union-GMAC in St Helena.

Read the entire article HERE.

Doing the deal
If you're thinking of using or offering seller financing, here are some tips from real estate experts for buyers and sellers:

Buyers
-- Agree on a price with the seller and secure a first mortgage, if applicable.

-- Your agent can serve as the arranger of credit.

-- Terms are typically outlined in a standard three-page form provided by the California Association of Realtors, so you can often complete such a transaction without a lawyer.

Sellers
-- Make sure the buyer is creditworthy.

-- In a typical transaction, you're entitled to review a buyer's credit report, financial statements and other information.

-- You may want to consult with an attorney or accountant to understand the tax implications.

Source: California Association of Realtors, Pacific Union.

Labels: Bay Area Real Estate, CAR, Interest Rate, Mortgage Lenders, Seller Finance

If you've refinanced your mortgage, you may owe the IRS more than you thought. - by Ellen Hoffman, Personal Finance, BussinessWeek.

"Have you refinanced your mortgage and taken a chunk of the equity in cash? Will you do so when your adjustable-rate loan resets its interest rate? If you fail to follow some little-known rules for calculating your home mortgage deduction, you may be writing off too much interest. Instead of saving on taxes, you could wind up owing them."

"In general, the IRS lets you deduct 100% of the interest you pay on one or more home mortgages, up to a total loan value of $1 million. But when you refinance and withdraw cash, the rules change: Only the interest on your ***original mortgage balance***, plus an additional $100,000, qualifies for a deduction. (If you want to take out more cash, use a home-equity loan or line of credit. The law allows a separate deduction for interest on borrowings of up to $100,000.)"

***Acquisition indebtedness is debt that is incurred in acquiring, constructing, or substantially improving the principal or second residence of the taxpayer and is secured by such property.

"There's no sign the IRS is currently hunting down taxpayers who may be miscalculating the mortgage deduction, but the error could trip you up in an audit. Rosica says the best way to protect yourself is to make sure you calculate this year's taxes correctly. If you've taken excessive deductions in past years, you can also file an amended return."

Read the entire article HERE.

For further clarification ask the advice of a good tax attorney or tax accountant.

Labels: Bay Area Real Estate, BusinessWeek, IRS, Mortage deduction

Losing your house to foreclosure, involved in a "Short Sale?" Not only do you lose your house, your credit and have to deal with all the stress that goes with it, but any debt forgiven by the lender is considered taxable to the IRS. Seems a bit unfair to someone with a financial challenge ahead of them.

"A bill that would give homeowners facing foreclosure a tax break when lenders forgive part of their debt would make up for lost revenue by collecting more capital gains taxes on the sales of some second homes claimed as primary residences."

"HR 3648, the Mortgage Forgiveness Debt Relief Act of 2007, would eliminate a provision of the tax code that allows the IRS to tax debt that's forgiven as part of a foreclosure or loan modification as income."

"NAR said the bill would restore "fundamental fairness for homeowners in financial and economic distress" by eliminating taxes on the "phantom income" generated by foreclosures and workouts."

View the entire article HERE. (Inman News)

"To make up for the bill's $1.97 billion impact on tax revenue over the next decade, it would also tighten the rules for counting a second home, vacation or rental property as a primary residence for tax purposes. Under current law, up to $250,000 (or $500,000 if married filing jointly) of the gain on sale proceeds from the sale of a primary residence are exempt from capital gains taxes."

Labels: Bay Area Real Estate, Foreclosure, Inman News, IRS, NAR, Short Sale, Tax Relief

This is a revision from the July Post as an update for what the months supply is doing on a city by city basis for Contra Costa & Alameda Counties.

What is months supply? Basically, months supply is the ratio of inventory to sales. And what it tells us is how many months the stock of homes for sale would last, if sales continued at their current rate.

See how your City's doing.




We currently have a 8.4 month supply of homes in the entire SF Bay Area. How does this compare historically? "A state of equilibrium" is considered 6 months, a point at which you would have an equal number of sellers and buyers. Considerably less, would be considered a "seller's" market, while anything more than that number would be considered a "buyer's" market. Since 1988, our low in California has been 1.3 months in April of 2004. It was even less than that in the San Francisco Bay Area. Our high was in February of 1991 at 18.8 months. The long run average has been 6.9 months. (Statistics are from C.A.R.)

Labels: Bay Area Real Estate, CAR, Housing Inventory, Housing Statistics, Months Supply, Real Estate Cycles