August 8, 2013

Borrowers Are Getting Some Cash Out Again

KGO TV reports from California. “Despite rising interest rates, there’s been a frenzy of home buying activity in San Francisco. That has some real estate experts concerned the market could be overheated. Brian Miller saw first hand how frantic the housing market in San Francisco can be right now. ‘I found myself being constantly outbid, putting in offers of 20 percent over asking, getting outbid at 50 percent over asking in cash,’ Miller said.”

“‘Today I received probably my eighth denial of a modification,’ San Francisco resident Gale Rosboro said. Rosboro wrote President Barack Obama and the White House forwarded her case to the Treasury Department to assist her in getting a modification from Wells Fargo. So far, even that hasn’t helped. ‘They’ve made no move towards working with me to get a modification,’ Rosboro said.”

“In an email, Wells Fargo told 7 On Your Side, ‘We have worked with Ms. Rosboro for nearly three years and will continue to try to identify options that are appropriate for her individual financial circumstances.’”

“The VP of RealtyTrac Daren Blomquist says we’re still 21 percentage points below the peak of the housing bubble in the Bay Area. ‘But then if you focus in on the city, that’s where we’re very close actually to the peak of the housing bubble in San Francisco,’ he said. Blomquist says San Francisco is just 6 percentage points from reaching that bubble stage. Blomquist predicts another round of foreclosures in San Francisco in the coming months. ‘Four of the last five months in San Francisco foreclosure starts have increased from the previous month,’ he said.”

“Blomquist advises home buyers to be patient and not feel you have to buy right now. Miller waited and found something he could afford. ‘It feels great, I mean I’m very excited,’ he said.”

The Los Angeles Times. “Los Angeles builder KB Home said Friday that it would open new developments in Chino, Ontario, Temecula and Perris. It has more than a dozen developments already selling homes in Riverside and San Bernardino counties. The region east of Los Angeles and Orange counties still sees foreclosures and suffers from high unemployment compared with the rest of the nation. But housing has rebounded significantly in the area as investors have emerged in force to scoop up the most cheaply priced homes.”

“The Parkside Community in Ontario will range in size from 1,865 to 2,965 square feet. The homes are to be priced from $415,000 to $523,880. The Cantata at the Preserve in Chino will range in size from 2,880 to 3,097 square feet and are to be priced from $424,880 to $523,880. The Pinnacle at Roripaugh Ranch in Temecula will be priced from $404,000 to $497,990. The fourth home community, in Perris, will be priced from $284,990 to $312,990. The company will also open its Gibraltar development in the city of Lancaster, where homes are to be priced between $274,990 to $327,990.”

“‘There isn’t much resale for people to get interested in,’ said Steve Ruffner, KB Home Southern California division president. ‘New housing has definitely picked up in all of these markets, and that is why we are really excited.’”

The Press Enterprise. “Riverside officials have vowed to address problem home renters by stepping up code enforcement and police patrols, after complaints about rowdy, inconsiderate neighbors from residents near UC Riverside. But there’s one aspect of the issue they and other cities can do little about. In the past few years, many houses have been sold to investors who want to rent or flip them rather than families who plan to live in them, housing experts say.”

“Some experts said rising home prices are starting to drive investors away, but no one was sure how long investors would hang on to houses they’re renting out now. Attempts this week to reach three companies that own multiple rental homes in Riverside for comment were unsuccessful. A real estate trust with a large pool of funding typically can make a more attractive offer than an individual buyer who needs to wait for financing, said Laura Peng, a realtor with Tarbell who has lived in Riverside’s University neighborhood for 11 years.”

“At an open house in her neighborhood, as many as 30 prospective buyers may show up, many of them investors. ‘Some of them just literally carry cash in a suitcase,’ Peng said.”

“‘The upside is that is has caused those neighborhoods to go up in value,’ said Paul Herrera, governmental affairs director for the Inland Valleys Association of Realtors. With home prices rising and rents lagging behind, it’s getting harder to make a profit on rental properties. ‘What I’m starting to see now is that the numbers aren’t penciling out for investors,’ Lee said.”

The Union Tribune. “If owning a home in San Diego is one’s goal, the time to pursue that dream is sooner rather than later. The increased price for housing comes at a time when interest rates are also climbing. This combination means buyers will pay more for their dream home as time passes. In July, Michael Deery, mortgage broker with Citywide Financial Corp wrote: ‘In just the past two months, the cost of a mortgage has climbed 14 percent, and a buyer has lost 14 percent in purchasing power.’”

“Last year, the average interest rate on home loans was 3.5 percent. The average recently rose to 4.5 percent. ‘By waiting a year to buy, a buyer today will pay an additional $387 a month and $139,320 ($387 x 360 mortgage payments) over the life of the loan to buy a $400,000 home today at a rate of 4.5 percent, that they could have bought last year for $365k at a rate of 3.5 percent.’”

“Homebuyers should remember, however, that mortgage rates are still at a 40-year low. That makes now the perfect time buy a home. ‘For any buyers still on the fence looking at buying a home, a 4.5 percent rate is still a terrific rate,’ said Deery.”

The Los Feliz Ledger. “Consider this scenario. You wish to stay in your home as long as possible. You need to modify your house to fit your situation as you age, or you have medical or other emergency needs. But your income is limited. If you no longer have a mortgage, or there isn’t much left to pay off, you can use your equity in your home with a loan called Reverse Mortgage or Home Equity Conversion Mortgage (HECM).”

“To qualify for this type of loan, no underwriting or credit scores are necessary. These loans are made through the Dept. of Housing and Urban Development whose Federal Housing Administration division insures them. However, these types of loans may become more restrictive according to a New York Times July 13, 2013 story due to the recent recession and a drop in housing prices.”

“Last year, fees on such loans were raised. Additionally, there are plans for financial review of a borrower—such as the use of credit scores—and more rules to avoid borrowers defaulting. If it takes too long to change the rules as it goes through the congressional approval process, the agency will be forced to make larger cuts in the program, thereby reducing the number of people who could benefit from the option.”

The Contra Costa Times. “An Alameda County real estate agent has been charged with seven felonies after authorities said she used a sophisticated scheme to defraud a Lafayette couple out of $270,000. Judy T. Gong was arrested without incident at her home Tuesday morning, said Ken McCormick, Deputy District Attorney for Contra Costa County. Gong is accused of convincing the unidentified couple to set up a home equity line of credit, then forging her name on documents to access the accounts, McCormick said. She allegedly then convinced the couple to open a second account, from which she also took money, McCormick said.”

“The District Attorney’s Office began investigating after a complaint by the couple, and requested the Franchise Tax Board to open a separate investigation. The latter investigation determined that Gong failed to report $418,000 worth of deposits to her account in 2009 and underreported her income by more than $500,000 in 2008, McCormick said.”

The Tracy Press. “Motivated by recent increases in property values, some borrowers are refinancing and may even be getting some cash out again. Though some are eager to move forward, the shaky housing market of recent years and the general state of the economy have left many with credit issues that need to be addressed. Credit issues plague many homeowners and aspiring homeowners of all income levels, from low to high.”

“Most banks want to see at least a 620-640 middle Fico score. A 680 score is decent, above 720 is good and higher than 750 is excellent.”

From Fox & Hounds. “The Legislature may not be able to agree on much but it seems they can agree we must do everything possible to encourage California’s housing recovery. That is why during the break Governor Jerry Brown signed a California Building Industry Association-sponsored measure authored by Assemblyman Raul Bocanegra that will fuel California’s housing recovery. The measure, which received only ‘yes’ votes through every step of the legislative process, builds on previous bills and will allow local governments to extend the life of approximately 3,500 subdivision maps representing 400,000 housing units for 24 months.”

“Put simply, this bill will help housing supply keep pace with demand, preventing another bubble that artificially drives up prices. While the recent uptick in most markets is encouraging, it’s critical builders keep pace with supply in order to avoid prices that are artificially high.”

“The 3,500 tentative tract and parcel maps extended by this bill are the housing supply pipeline that will drive the recovery. Without these hard-earned land use entitlements, builders would have to spend years redoing the process that would certainly delay much-needed projects. Housing and construction jobs are the foundation for our economic upturn.”

The Pasadena Star News. “Protesters angered over home foreclosures gathered to picket in front of the San Marino home of a Wells Fargo executive Saturday, testing a recently adopted city ordinance banning such demonstrations. The protest, organized by the activist group Alliance of Californians for Community Empowerment in partnership with other nonprofit organizations, took place in front of the home of Wells Fargo Chief Financial Officer Timothy Sloan. The home has been picketed twice before, in October 2011 and in April 2012.”

“‘Predatory lender, criminal offender,’ shouted the protesters as they stood in the street holding signs and banners. ‘Wells Fargo, shame on you.’”

“Columbine High School mass shooting survivor Richard Castaldo of Los Angeles, who is paralyzed below the waist due to injuries suffered in the infamous attack, said his condominium is due to be auctioned off Aug. 12. Initially financed through Wells Fargo, Castaldo said he fell behind in his mortgage due to a skyrocketing adjustable interest rate at the time his home went underwater in the housing market crash. The loan was then transferred to a third party lender, and attempts to modify the loan have been unsuccessful.”

“‘I just want to know why Wells Fargo is not helping disabled people, when they received generous government bailouts,’ Castaldo said.”

“Demonstrators such as ACE Community Organizer Peggy Means of Fontana called the Wells Fargo ns. ‘I don’t think they’re patriotic, because they’re doing everything they can to kill the American Dream,’ she said.”

Bits Bucket for August 8, 2013

Post off-topic ideas, links, and Craigslist finds here.