Mortgage rates dropped sharply this week, possibly improving the purchasing power of many home buyers. The 30-year fixed-rate mortgage, the most popular choice among buyers, averaged 4.39 percent this week, its lowest average for 2011, Freddie Mac reported in its weekly mortgage market survey. The 15-year fixed-rate mortgage and the 5-year adjustable rate-mortgage also both reached new historical record lows.

Rates mostly dropped across the board amid signs of a weakening economy, Freddie Mac says.

"Treasury bond yields fell markedly after signs the economy was weaker than what markets had previously thought allowing fixed mortgage rates to follow this week with the 15-year fixed and 5-year ARM setting new historical lows,” says Frank Nothaft, chief economist at Freddie Mac.

Nothaft also noted some improvement in the housing market, however. "There were indications that the housing market is firming,” he says. Here’s a closer look at rates for the week ending Aug. 4:

30-year fixed-rate mortgages: averaged 4.39 percent, downfrom last week’s 4.55 percent average. A year ago at this time, 30-year rates averaged 4.49 percent.

15-year fixed-rate mortgages: averaged 3.54 percent, dropping from last week’s 3.66 percent average.Last year at this time, 15-year rates averaged 3.95 percent.

5-year adjustable-rate mortgages: averaged 3.18 percent this week, falling from last week’s 3.25 percent average. Last year at this time, 5-year ARMs averaged 3.63 percent.

1-year adjustable-rate mortgages: were the only ones on the rise last week, averaging 3.02 percent this week, which is up from last week’s 2.95 percent average. Last year at the time, 1-year ARMs averaged 3.55 percent.

Foreclosure Auction Bid Rigging

Long read but really good to know about these scam artists that got caught!

WASHINGTON - Eight California real estate investors have agreed to plead guilty for their roles in two separate conspiracies to rig bids and commit mail fraud at public real estate foreclosure auctions in Northern California, the Department of Justice announced.

Charges were filed today in U.S. District Court for the Northern District of California in Oakland, Calif., against Thomas Franciose of San Francisco; William Freeborn of Alamo, Calif.; Robert Kramer of Oakland, Calif.; Thomas Legault of Clayton, Calif.; David Margen of Berkeley, Calif.; Brian McKinzie of Hayward, Calif.; Jaime Wong of Dublin, Calif.; and Jorge Wong of San Leandro, Calif.

According to the felony charges, the real estate investors participated in a conspiracy to rig bids by agreeing to refrain from bidding against one another at public real estate foreclosure auctions in Contra Costa County and Alameda County, Calif. While some of the conspirators participated in the conspiracies in both Alameda and Contra Costa Counties, the collusive activity occurred independently in each county, and some individuals only participated in the conspiracy in one county.

"While the country faces unprecedented home foreclosure rates, the collusion taking place at these auctions is artificially driving down foreclosed home prices and is lining the pockets of the colluding real estate investors," said Christine Varney, Assistant Attorney General in charge of the Department of Justice's Antitrust Division. "The Antitrust Division will vigorously pursue these kinds of collusive schemes that eliminate competition from the marketplace."

The department said that the primary purpose of the conspiracies was to suppress and restrain competition to obtain selected real estate offered at Alameda and Contra Costa County public foreclosure auctions at noncompetitive prices. When real estate properties are sold at these auctions, the proceeds are used to pay off the mortgage and other debt attached to the property, with remaining proceeds, if any, paid to the homeowner.

"Through the hard work and partnership between the FBI and the Antitrust Division, we have been able to secure a victory in our fight against bid-rigging and anticompetitive practices in foreclosure auctions," said FBI Special Agent in Charge Stephanie Douglas of the San Francisco Field Office. "We continue to ask for the public's assistance in identifying and reporting those engaged in this type of activity."

According to the court documents, the real estate investors conspired with others not to bid against one another at public real estate foreclosure auctions in Northern California, participating in a conspiracy in various lengths of time between May 2008 and January 2011. After the conspirators' designated bidder bought a property, the conspirators would hold a secret, private auction at which each participant would bid the amount above the public auction price he was willing to pay. The department said that the secret, private auctions took place at or near the courthouse steps where the public auctions were held. The highest bidder at the private auction won the property. According to the court documents, the difference between the public auction price and that at the second auction was the group's illicit profit, and it was divided among the conspirators, often in cash.

In addition, the eight conspirators were charged with using the U.S. mail in carrying out their conspiracy to defraud financial institutions by paying potential competitors not to bid competitively in the public auctions for foreclosed properties, according to court filings.

Franciose, Jaime Wong and Jorge Wong were charged with one count each of bid rigging to obtain selected real estate at foreclosure auctions in Alameda County and one count each of conspiracy to commit mail fraud. Freeborn and Legault were charged with one count each of bid rigging to obtain selected real estate at foreclosure auctions in Contra Costa County and one count each of conspiracy to commit mail fraud. Kramer, Margen and McKinzie were each charged with two counts of bid rigging to obtain selected real estate at foreclosure auctions in Alameda and Contra Costa Counties and two counts each of conspiracy to commit mail fraud.

Each violation of the Sherman Act carries a maximum penalty of 10 years in prison and a $1 million fine for individuals. Each count of conspiracy to commit mail fraud carries a maximum sentence of 30 years in prison and a $1 million fine. The maximum fine for the Sherman Act charges may be increased to twice the gain derived from the crime or twice the loss suffered by the victim if either amount is greater than the $1 million statutory maximum.

The Antitrust Division and the FBI have identified a pattern of collusive schemes among real estate investors aimed at eliminating competition at real estate foreclosure auctions, and today's charges are part of the department's ongoing effort to combat this conduct and restore competition to public auctions. The investigation into fraud and bid rigging at certain real estate foreclosure auctions in Northern California is being conducted by the Antitrust Division's San Francisco Office and the FBI's San Francisco office. Anyone with information concerning bid rigging or fraud related to public real estate foreclosure auctions should contact the Antitrust Division's San Francisco Office at 415-436-6660, visit www.justice.gov/atr/contact/newcase.htm or call the FBI tip line at 415-553-7400.

Today's charges are part of efforts underway by President Barack Obama's Financial Fraud Enforcement Task Force (FFETF). President Obama established the interagency Financial Fraud Enforcement Task Force to wage an aggressive, coordinated, and proactive effort to investigate and prosecute financial crimes. The task force includes representatives from a broad range of federal agencies, regulatory authorities, inspectors general, and state and local law enforcement who, working together, bring to bear a powerful array of criminal and civil enforcement resources. The task force is working to improve efforts across the federal executive branch, and with state and local partners, to investigate and prosecute significant financial crimes, ensure just and effective punishment for those who perpetrate financial crimes, combat discrimination in the lending and financial markets, and recover proceeds for victims of financial crimes. For more information on the task force, visit www.StopFraud.gov.

I want to share with you the latest about Vacation Rental Ordinace.

Santa Cruz County has curbed the right of homeowners to use their homes for economic benefit as they see fit. This is so screwed up as we now have more government interference and regulation.

So if you are considering buying a vacation rental, you might want to check and see if you are adversely affect by this Santa Cruz County Vacation rental ordinance.

Santa Cruz County limits the rights of property owners in the Live Oak and Rio Del Mar Beach and Seacliff Beach areas, as those areas have the best and most beaches, which attract vacationers here to enjoy our community and spend their dollars here. Locally Capitola has a very narrow vacation rental zone in the village proper for rentals of less than one month.

Monterey and Carmel limit those less than one month vacation times as well. I guess this plays into the hotels well, which the county gets their TOT (transient occupancy tax) with ease and regularity. Just another way for the government to dip into homeowners pockets in my opinion.

Santa Cruz County Board of Supervisors voted 4-1 with Pirie (Rio Del Mar and Seacliff-La Selva) and Leopold ( Live Oak) voting in favor of this. The lone abstention was Supervisor Greg Caput.

Since there seem to be more of the surf crowd, i.e younger vacationers in Live Oak, they have a short leash in many categories, whereas Rio Del Mar has more latitude, as it is a more mature area.

Outside of the Live Oak area get their vacation license in perpetuity, under the new law, whereas Live Oak residents will have to apply every 5 years and have severe restrictions, in my opinion.

Live Oak, vacation rentals are limited to 15 percent for the area and 20 percent for any one block, which when you have 10 homes on the water means only 2 can be rentals. Licenses would have to be renewed every five years. As it is now, if there was a problem you called the police and if quite problematic took the owner to small claims court for nuisance.

I think Supervisor Caput has it right "excessive noise, litter and public intoxication, among the most frequent complaints - all can be handled under existing laws, and did not want to add new layers of rules for homeowners. "Caput said. "If we can't catch the ones that are abusing something, we're going to round up everybody." Government using the m-80 to solve a problem, not a fly swatter for individual pests is how I see it.

Santa Cruz County third most expensive in nation: Renters waiting for economic recovery

The median sales price for a home has plummeted 40 percent in four years, but rents have not.

In Santa Cruz County, a full-time worker must earn $33.27 per hour to afford a modest two-bedroom rental, according to the National Low Income Housing Coalition, which released its "Out of Reach 2011" Monday detailing the impact of the recession on renters. As a whole in California, a worker needs $26.17 an hour for a two-bedroom rental. In Arizona, you'd need just $17.45.

Santa Cruz was rated the third most expensive place to rent in the nation, after San Francisco and Stamford-Norwalk, Conn., according to the coalition, which favors ending or amending the income tax deduction for home mortgage interest to shift that money into affordable housing programs.

Once-secure working and middle-class renters are feeling squeezed.

Half of America's renters are paying more than 30 percent of their income for rent and utilities, and renters with very low incomes have little left after paying for food and gasoline to save or invest in education to move out of poverty.

In Santa Cruz County, about 70 percent of Latinos and 44 percent of white renters spend that much on rent and utilities.

Newcomers are surprised to find small, rundown cottages in the Seabright area of Santa Cruz with landlords asking more than $1,600 per month.

It's hard to find a single statistic to portray the local rental market because no company or agency tracks all the rental units.

RealFacts, a research company in Novato, reports first-quarter asking rents in Santa Cruz County averaged $1,522 per month, down from $1,628 per month in 2008 but up 1.4 percent from a year ago.

The rate is higher for a two-bedroom, one-bath unit, $1,664 per month, and a three-bedroom, two-bath unit, $2,188 per month.

However, these numbers represent only 1,610 apartments in complexes with 100 or more units, a tiny sliver of the county's rental market.

The federal Housing and Urban Development Department tracks "fair market rent," which covers rent plus utilities. Fair market rent in Santa Cruz County has risen from $1,334 per month in 2006 to $1,583 in 2008 per month and $1,768 per month in 2010.

Another factor is asking rents in Santa Cruz are influenced by the presence of a university with enrollment of more than 16,000, while those in Watsonville are influenced by the agriculture sector and its lower-paying jobs.

There is a huge difference, of a three-bedroom, two-bath house in the Watsonville countryside available for $1,800 per month compared to the same size house on the Santa Cruz Westside offered for $2,400-$2,500 per month.

Proximity to the university is what's driving the price, noting the Westside house was rented to a UC Santa Cruz student who is about to graduate and his friends.

Demand for Watsonville rentals is slow from December through February, when there are few jobs for farmworkers, then picks up in March.

All you have to do is put a (for rent) sign up and within hours you'll have two or three candidates," Mello said.

In Santa Cruz, demand is high year-round because of proximity to the beach, so renters must be ready when an opportunity arises.

A two-bedroom house on the Westside listed on craigslist for $1,600 per month resulted in 25 calls in an hour and the listing quickly disappeared, according to a family who didn't call soon enough to see the house.

Most Property Management offices only have 3-4 vacancies now, but expects more as departing college students give notice.

A two-bedroom house in Scotts Valley is going for $1,450 to $1,500 a month, with homes in Boulder Creek a couple of hundred dollars less, she said.

We've rented to people who have lost their homes, she said, noting renters can qualify if they have a steady history of employment and are current on credit card bills.

Santa Cruz County Housing Authority has seen more families with rental voucher subsidies moving because their landlord is in foreclosure.

Since the first of this calendar year, we have seen five or six per month, he said. "It's extremely disruptive for the family. They're not told by the landlord its happening."

Housing Authority, which receives $46 million in federal funds for 3,800 rental vouchers for low-income households, has a waiting list with more than 15,000 families on it, with typical wait times three to five years.

The authority's fees to administer the programs will be cut because of congressional efforts to reduce the federal deficit but the amount of rental subsidies is expected to remain the same for next year.

We're the perfect storm for high rents. We're small urban county, almost completely built out from a zoning standpoint, and locked up by mountains, oceans and agriculture. It's an extremely difficult market."