Los Angeles Times
Fannie Mae to prohibit lenders from changing home appraisals
To comply with the stricter lending guidelines of Fannie Mae and Freddie Mac, and to avoid accusations that the loans sold to Fannie and Freddie are based on inflated appraisals, some real estate professionals have reported lenders lowering home values on appraisals submitted to them. However, effective Sept. 1, Fannie Mae is prohibiting the purchase of loans from lenders who change appraisers’ numbers.

KEEP THIS IN MIND  

• Generally, lenders order a low-cost electronic valuation—based on publicly available statistical data—to review the accuracy of the information submitted by the appraiser. If there is a discrepancy between the electronic valuation and the appraiser’s report, the lender’s underwriters may reduce the appraisal figure.

• In some instances, real estate agents and consumers have reported that reduced appraisals have led to the derailment of home sales transactions, as some buyers refuse to pay more for a house than the appraisal says it is worth.

• This industry practice may soon change. In guidelines issued June 30, Fannie Mae said lenders must contact appraisers to resolve discrepancies between the valuations, rather than simply reducing the appraisal. If it is not possible to contact the appraiser, the lender should order a second appraisal.

• Borrowers and/or sellers who believe a home valuation is too low may appeal the valuation or request a second option. It’s important to note that the second valuation must be more than five percent higher than the first—anything less is considered an acceptable difference. To read the full story, please click here.

In Other News…

Los Angeles Times
Lenders’ data mining goes deep
Mortgage makers are going beyond tax returns and bank statements to determine whether you’re a good risk. They’re checking such things as where you have pizza delivered and where you shop online. To read the full story, please click here.

CNBC
Remember jumbo loans? They’re back!
Amid all the double-dip discussions in the housing market is an odd ray of hope on the high end. With little to no fanfare, it appears jumbo loans are not only getting cheaper, they’re getting easier to obtain. To read the full story, please click here.

North County Times
After ducking the bubble, Asian buyers seize upon lower prices
A substantial number of Asians and Asian-Americans dodged the housing crunch, and now they’re taking advantage of low home prices and low mortgage rates in California, say local real estate agents and a survey from a REALTORS® group. To read the full story, please click here. 

Los Angeles Times
Fed sees slowing in economic recovery
Federal Reserve policymakers, acknowledging a slowing in the economic recovery at their meeting in late June, began to consider the possibility of providing additional stimulus if growth fell sharply—a possibility that has become all the more real as signs of weakness have piled up. To read the full story, please click here.

Mercury News
Foreclosure crisis: 1 million in U.S. expected to lose homes this year
More than 1 million American households are likely to lose their homes to foreclosure this year, as lenders work their way through a huge backlog of borrowers who have fallen behind on their loans. To read the full story, please click here.

CNBC
Home loan demand jumps; purchase demand up
U.S. mortgage applications jumped last week as demand for loans to purchase homes rose for the first time in five weeks, the Mortgage Bankers Association said on Wednesday. To read the full story, please click here.

What you should know about the market

• Accurately pricing a home for sale continues to be one of the most important factors in determining whether a home sells or lingers on the market. In some cases, sellers may need to reduce their asking price to attract buyers and offers. Some homeowners may struggle with determining whether or not they should reduce their list price. Receiving the guidance of a REALTOR® may help sellers decide if they should reduce the asking price. Sellers also may want to consider reducing their asking price if the following applies:

o The sales prices of recently sold homes in the area are lower than the list price of the home listed for sale.

 o Feedback from buyers’ agents suggests the home is overpriced.  

o The home isn’t receiving any showings, even though it is well marketed.

o There have been multiple offers, but they consistently have been significantly lower than the list price.
 

The New York Times
Reform bill retools lending
The Senate passed the financial regulation bill today, which will impact home buyers and lending guidelines. Chief among the changes impacting consumers is the creation a consumer bureau at the Federal Reserve and the requirement that lenders ensure a borrower is able to repay a home loan by verifying income, employment, and credit history.

Press Enterprise
Homebuilders buying up land, pushing up values Homebuilders have been buying read-to-build land in Riverside and San Bernardino counties at a fast clip, pushing land values sharply above what they were in 2009, according to a leading land brokerage firm. To read the full story, please click here.

CNN Money
Home-buying loan applications at 13-year low
Mortgage applications to buy a home plunged last week to the lowest level in more than 13 years as the housing recovery continued to struggle following the expiration of the home buyer tax credit, an industry group said Wednesday. To read the full story, please click here.

The Wall Street Journal
Homeowners vs. Home-loan buyers
Some borrowers are complaining that consumer-debt buyers have strong-armed them with threats, tried to collect the wrong amount, or sought money from the wrong person. To read the full story, please click here.

Sacramento Bee
California tax assessments of homes to go down
If you own a home in California, chances are the assessed value of your property just dropped. To read the full story, please click here.

Los Angeles Times
Credit scores sink to new lows
About 25.5 percent of Americans had credit scores below 500 in April, according to FICO Inc. Historically, only about 15 percent of consumers have had scores below that level. To read the full story, please click here. 

The New York Times
Biggest defaulters on mortgages are the rich
The housing bust that began among the working class in remote subdivisions and quickly progressed to the suburban middle class is striking the upper class in privileged enclaves. To read the full story, please click here.

  Wall Street Journal
A walker’s guide to home buying
Many home buyers today not only take into consideration the neighborhood and school in which a house is located, but also which amenities, such as stores and public transportation, are within walking distance.

MAKING SENSE OF THE STORY FOR CONSUMERS

• According to urban planners, changing demographics are driving this growing trend.  The baby boomer generation is approaching empty-nest retirement age, while their children are buying their first homes; neither group wants large lots in remote areas with little access to big-box stores, public transportation, and entertainment.  Concerns about future oil prices also are increasing the attractiveness of walkable communities, according to planners.
• Home buyers interested in finding homes in walkable communities can use myriad Web sites; one commonly used site is WalkScore.com.  The site enables users to enter an address and receive a score ranging from zero to 100 (“car dependent” to “walkers paradise”) indicating the walkability of the community.
• Housing prices also are reflecting the new interest in walking distances.  A study published by the nonprofit group CEOs for Cities found having more amenities in walking distance can boost home values.  As measured on Walk Score, walking-distance amenities raised values by as much as $3,000 for each one-point increase in rankings. To read the full story, please click here.

In Other News...

  San Francisco Chronicle
Low mortgage rates won’t make up for tax credit
Mortgage rates fell to record lows last week, but analysts say they won’t fill the void in the housing market left by the expired federal home-buyer tax credit, which is not likely to be revived. To read the full story, please click here.

  Los Angeles Times
Wells Fargo to shut subprime lending unit
Banking giant Wells Fargo & Co. is closing its 638 subprime lending offices that operated nationwide to supply higher-cost mortgages, auto loans, and credit cards to lower-income neighborhoods. To read the full story, please click here.

  Los Angeles Times
30-year mortgage rates down to new low
The average interest rate for a 30-year fixed loan in this week’s Freddie Mac survey was 4.57 percent, down from 4.58 percent a week earlier. To read the full story, please click here.

  New York Times
Changes in mobile-home lending
Mobile homes last year made up nearly a quarter of all new homes sold for less than $200,000, according to an industry trade group, making them an important component of the affordable-housing sector. To read the full story, please click here. 

  Los Angeles Times
Home-equity loan delinquencies fall for first time in two years
The delinquency rate on home-equity loans has fallen for the first time in two years, reflecting the slowly stabilizing housing market and consumers’ efforts to clean up personal balance sheets, the American Bankers Association said Wednesday. To read the full story, please click here.

  Los Angeles Times
PACE loan program makes solar energy more affordable for homeowners
For decades, the push for solar power has stalled not on public support but on cost.  That might be about to change with the launch of a tax program that’s exciting some industry veterans. To read the full story, please click here.  

   The Los Angeles Times
Lenders’ focus turns to strategic defaults
With tougher mortgage underwriting rules a virtual certainty under Congress’ new financial reform legislation, lenders have begun confronting still another vexing issue: Can home buyers who have high credit scores really be trusted not to pull the plug – strategically default – when the economy hits a rough patch and home values tank? To read the full story, please click here. 
 

  CNN Money
Home buyer credit extension heads to Obama
Congress passed a bill this week extending the deadline to close escrow and qualify for the federal home buyers tax credit.  President Obama is expected to sign the bill extending the deadline to Sept. 30, 2010, instead of its original June 30 deadline.

MAKING SENSE OF THE STORY FOR CONSUMERS 

• The bill extends the deadline to close escrow for home buyers who entered into a home purchase contract by the April 30 deadline.  First-time buyers may be eligible to receive up to $8,000 and qualified existing homeowners may receive up to $6,500 if the home buyer closes escrow by Sept. 30.
• Home buyers entering into sales contracts May 1 or later are not eligible for the federal tax credit, but they may qualify for the California home buyer tax credit.
• The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) and the NATIONAL ASSOCIATION OF REALTORS® worked closely with members of Congress to extend the deadline.  Estimates from NAR show nearly 180,000 home buyers nationwide would have missed out on the tax credit if the deadline was not extended, including nearly 17,700 home buyers in California.

• Many of the home buyers who would have missed out on the tax credit are in the midst of purchasing a short sale or foreclosure, which generally take longer to close due to the amount of paperwork involved in the transaction. To read the full story, please click here.

   The Los Angeles Times
Deeds-in-lieu gain favor with lenders as alternative to foreclosure
Short sales have been the hot solution for financially stressed homeowners and their lenders for the last year, but there’s another potent foreclosure alternative that’s about to take center stage: Deeds-in-lieu. To read the full story, please click here.

  Sacramento Bee
California to offer program to trim underwater mortgages
Lots of people will want to get in on this one: California is going to use federal money to pay down the mortgages of struggling homeowners. To read the full story, please click here.

  The New York Times
VA loans harder to get
Military veterans have long been accustomed to a relatively easy mortgage process.  Even borrowers with no down payment or a low credit score were usually granted VA loans, in large part because the Dept. of Veterans Affairs insures a quarter of the loan amount. To read the full story, please click here.

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Home Affordable Foreclosure Alternatives Program:
The Home Affordable Foreclosure Alternatives (HAFA) Program provides additional options to avoid costly foreclosures and offers incentives to borrowers, servicers and investors who utilize a short sale or deed-in-lieu (DIL) to avoid foreclosures. HAFA alternatives are available to all HAMP-eligible borrowers who: 1) do not qualify for a Trial Period Plan; 2) do not successfully complete a Trial Period Plan; 3) miss at least two consecutive payment during a HAMP modification; or, 4) request a short sale or deed-in-lieu.

Joseph Pierre Nguyen
Realtor®/Broker, ABR, SRES, HRC.
Office: 800-660-0747 Ext. 83 | Cell: 408-836-1828
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  Bloomberg News
IRS audits block 10 percent of first-time home buyer credits
The Internal Revenue Service blocked almost 10 percent of U.S. claims for the first-time home buyer tax credit after receiving erroneous or fraudulent filings, according to a report today. To read the full story, please click here.  

  The Wall Street Journal
How far underwater do borrowers sink before walking away?
At what point do borrowers who owe more than their homes are worth decide to stop paying the mortgage? To read the full story, please click here.

  CNN Money
Home prices up 3.8 percent in April – but don’t celebrate
Home prices rose 0.8 percent in April compared with March and were up 3.8 percent from a year ago, according to the S&P/Case-Shiller Home Price Index of 20 major housing markets. To read the full story, please click here.

  The Los Angeles Times
Consumer confidence tumbles in June
Americans, worried about jobs and the sluggish economic recovery, are having a relapse in confidence, causing a widely watched index to tumble in June and raising concerns about consumer spending in the critical months ahead. To read the full story, please click here.

   The Los Angeles Times
Fannie Mae gets tough on homeowners who walk away
Taking aim at homeowners who are able to pay their mortgage but decide it’s not worth it, Fannie Mae plans to go after them in court and to limit their access to home loans for seven years. To read the full story, please click here. 

Talking Points...

• Interest rates on mortgages are at their lowest levels in nearly 50 years.  Rates on 30-year fixed mortgages averaged 4.58 percent this week nationwide and 4.52 percent in the West, down from 4.69 percent nationwide the previous week, according to Freddie Mac.  Last year at this time, 30-year fixed-rate mortgages averaged 5.32 percent.  It is important to note that rates differ from lender to lender, day to day, and borrower to borrower.  Additionally, the rate does not include origination fees or points, which averaged 0.7 percent nationwide and 0.8 percent in the West this week.
• While the Federal Reserve has indicated it intends to maintain short-term rates at low levels for now, long-term rates can fluctuate with the market.  Since January, the weekly 30-year mortgage rate has ranged from a high of 5.21 percent in April to this week’s low.  Many economists believe the rate is more likely to increase going forward, particularly in the second half of this year and into 2011.  C.A.R. forecasts interest rates will average 5.6 percent this year.