10. March 2009 by Burbank Real Estate.

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The Obama administration has given us some new details on its $275 billion plan to help stem the tide of foreclosures nationwide.  It’s offering many incentives to investors, lenders etc. to entice them into modifying distressed mortgages to keep Americans in their homes. The steep fall in home prices is the main reason we’ve had a global financial meltdown, so the administration’s housing plan is vital to ending the deepening economic recession.

The plan is called the “Making Home Affordable program”, which the administration thinks can help up to 9 million homeowners.

There are two primary goals of this plan:

·        First, it offers $200 billion to provide refinancing for some homeowners who owe more than their homes are worth-also referred to as being “underwater” on their mortgages. To qualify, these homeowners-5 million of them by administration estimates-must have their mortgages in the hands of Fannie Mae or Freddie Mac, the mortgage finance giants that the government seized last September.

This plan will help, but it won’t reach homeowners in places like California and Florida where homes are now worth substantially less than their mortgages.

Because most mortgages are bundled into securities and sold into a secondary market, it’s not easy for homeowners to find out whether Fannie or Freddie owns their loans or whether they’ve been pooled with other loans and sold by an investment bank to other investors.

·        The other part of Obama’s plan attacks the problem of affordability. The administration provides another $75 billion in incentives to help prevent foreclosures in cases in which the homeowners, up to 4 million of them, are about to lose their homes. The money comes from the $700 billion bailout fund approved last October.

This part of the plan is extremely complex as it offers many financial incentives to mortgage servicers, who are essentially bill collectors for private investors who own pools of U.S. mortgages. Some incentives stay with the servicers while others flow through to investors.

In exchange for the incentives, a servicer would modify a mortgage so that no more than 38% of a homeowner’s monthly after-tax income was taken by the monthly mortgage payment. The government then would step in and share the cost of reworking that mortgage so that no more than 31% of the borrower’s monthly income was tied up in the payment.

·        Any lender that takes new taxpayer bailout money under the administration’s Financial Stability Plan will be required to participate.

·        The Obama plan got a strong endorsement Wednesday from the Financial Services Roundtable, which represents many of the largest mortgage lenders.  This first step will go far in adopting consistent guidelines for everyone.  But,  officials confirmed that there’s no standard procedure for lenders under the Fannie and Freddie portion of the plan. It will be up to each lender to determine whether the refinances go through them or whether mortgage brokers and other intermediaries can help homeowners seek refinanced loans under the program.

·        Officials were also careful to note that mortgage servicers won’t be able to modify mortgages if the terms of their contracts with the investors who own the pools of mortgages don’t allow it.  There is no reliable data on how many of these investors are on the other ends of contracts that prohibit mortgage modifications. That question is important, since many of the weakest loans underwritten during the height of the housing boom, from 2004 to 2006, were sold by now-defunct investment banks to investors abroad, many in Europe.

So who qualifies?

·        Your mortgage must predate the start of 2009, you must live in the home and you’ll have to provide proof of income.

·        First, are you already behind on payments or even in the foreclosure process? If the answer is no, then ask yourself whether your current mortgage rate is high enough to make it worth your while to refinance to take advantage of today’s low rates for 15-year and 30-year fixed-rate mortgages.

·        You must find out who owns your loan. Most mortgages are bundled together and sold into a secondary market, where investors technically own them. If Fannie Mae or Freddie Mac placed your loan into the secondary market, you can contact the company that sends your monthly mortgage statement to discuss the new program. If your mortgage is in the portion of the secondary market where the private sector issued the mortgage-backed securities, you don’t qualify.

·        To qualify under the refinance portion of the Obama plan, you can owe up to 5% more than your home is now worth. Thus, many homeowners in California, Florida, Arizona and Nevada, where home prices have plunged, won’t qualify.

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6. March 2009 by Burbank Real Estate.

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I get many questions from home buyers asking me if we are at the real estate bottom here in Burbank and the San Fernando Valley and the honest answer is, I don’t know.  But I will tell you that looking at the unemployment numbers that came out today, I would guess the answer is probably, no.  Keep in mind, however, that we won’t be able to confirm a bottom until things start to improve, so we could be there now, but have no way of knowing knowing how long it will last.

Unemployment hit at 25 year high for February coming in at 8.1% and to make matters worse the numbers from December were revised…..for a total loss of 681,000.  The December revision makes that the worse figure in 59 years.   If you look at the numbers more closely you’ll find that the average wage has been trending up slightly indicating that more lower paying jobs were cut.  But the cuts have been widespread canvasing a wide range of industries.

The other statistic that we should all be looking at is the number of delinquent mortgages.

More homeowners are struggling to pay their mortgages, according to the latest study.   More than a tenth of households were behind on payments, 7.9% of the loans are overdue and 3.3% are in the foreclosure process.

We’ll have to see how effective the new stimulus package is as far as helping homeowners avoid foreclosure, but even with that help be prepared to see short sales and foreclosures for some time to come.  On the glass is half full front I will say that there are some great deals out there!

Search for homes for sale in Burbank, Toluca Lake, Studio City, Valley Village and surroundings!

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4. March 2009 by Burbank Real Estate.

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As a licensed Burbank Realtor I have never seen a better time for anyone interested in purchasing Burbank Real Estate.

Let’s look at 3 very compelling reasons I see for buying Burbank Real Estate as soon as you can:

• Interest rates are near historic lows
• Many homes are selling for significantly lower prices compared to a few years ago!
• You can take advantage of a tax credit of up to $8,000 for qualified first-time home buyers

Interest rates

Good mortgage loans are out there and rates have been extremely attractive!  When you look at the history of mortgage rates you can clearly see that mortgage rates have rarely been this attractive. When the economy starts to improve and real estate values increase, chances are interest rates will increase as well.  Current mortgage rates are extremely attractive!

Home prices are falling

Many homes listed for sale in the Burbank, Toluca Lake and Studio City areas are now selling for 30-40% less than a few years ago. There are many aggressively priced REO’s (Real Estate Owned)/ bank foreclosures which have driven home values down all across the San Fernando Valley.

A tax credit gift from Uncle Sam

Remember the faux credit of $7500 for first time home buyers?  I call it “faux” because it was not a credit, as it did have to be repaid.  Well, some good news here, under the recently approved First-Time Home Buyer Tax Credit in the “American Recovery and Reinvestment Act of 2009“, there is an actual credit(does not need to be repaid if you live in the home for 3 or more years) of up to $8,000.  As long as you have not owned a home in the last 3 years, this will be your primary residence and your income meets the appropriate criteria, you can qualify for the credi.

Make sure you talk to your CPA if you have any questions regarding these credits and how it will impact your situation.

Don’t forget to get pre-approved for a mortgage loan which will give you bargaining power when you find the home of your dreams and then start the search for your Burbank home.

Call me with any questions at 818-795-8474 or email me at ana@anaconnell.com

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3. March 2009 by Burbank Real Estate.

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First, what is the pending home sales index? 

The NAR (National Association of Realtors) developed the pending home sales index as an indicator of housing activity. It tends to be a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed and it usually takes four to six weeks to close a contracted sale.

Until housing data improves, the economy as a whole won’t show significant signs of life.  The numbers that came out today offered little hope. While the pending home sales index jumped up in December, 6.3 percent to 87.7 the pending home sales index fell a very steep 7.7 percent in January.  This data indicates that we’ll probably have weak home sales data for February and March. The year-on-year rate is still contracting at -6.4 percent.

Sales showed continued weakness in the Northeast, South, and Midwest but, did show a gain in the West, a region worth special attention given that the general real estate collapse has been centered here.

Bottom line is that with the labor market still in major turmoil, we probably won’t see a significant rebound until later this year or beginning of next year.  If you are in the market to buy a home, now is a great time with low interest rates and reduced prices!

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