Greg Knowles Santa Barbara Ca.

Today Mr. Schwarzenegger signed in to law Senate Bill 133. This is the new reformed legislation that the California Dept. of Insurance and the California Land Title Association worked on together to help reform the title insurance industry in California

This new law was a long time in the making. The previous Commissioner of Insurance, John Geramendi really began this attack on the way title companies did business and the present one (Steve Poizner) kept pressing forward to have some reform take place.

The originally proposed law certainly received it's share of critiquing from the Title industry and what was settled on is going to certainly change some things. Let me outline a few highlights;

• Marketing Representatives will now be registered by the Dept. of Insurance
• A person representing a title company can no longer take someone to lunch who can refer them business.
• No more entertainment expenses either. (Golf, Sporting Events...)
• Promotional items are allowable as long as their value does not exceed $10 and they have the title company logo permanently affixed.
• Educational material can be provided as long as it is specific to the title and escrow business

So no more free lunches for clients. That is a huge change in our business. I am having a hard time thinking I can't take a good customer to lunch. I can't take one of them to a baseball game or local sporting event.

After this sinks in I may end up liking what I'm hearing. Competing specifically on the quality of the work we do and the price we charge probably isn't the worst outcome in the world. I do have many close friends in this business that my wife and I may invite over for dinner, is that illegal as well?

There are certainly some unanswered questions that I look forward to hearing the answers to. If your State currently has some of these laws on the books, I would like to hear how they work. If you are in California I would like to hear you thoughts on this new law and how it might affect you and your relationship with your title company.

Many of the sellers again are banks and that is more terrific news. As the inventories of foreclosed properties continue to be sold off there will be less of those properties competing with other home sellers.

The lenders that appear to be active in this area selling off their properties are Bank of New York, HSBC Bank, Indymac, US Bank Nat Assoc, Wachovia, Washington Mutual, Wells Fargo, and the big winner with 22 properties sold was Deutsche Bank.

There were a couple of properties that sold for over 1 million, and a handful of properties that actually sold for less than $100,000. The median price was right around $250,000. I have to think buying a home in the Santa Maria area for that price is a bargain.

The conforming loan products that are out there as well as the lower price point are what is fueling this recovery. Personally, I'm glad to see it. This area got hit very hard, and it isn't completely over yet, but it does appear that the prices aren't going any lower.

I am not quite sure how to interpret the fact that in July the number of Purchase Loans recorded in Santa Maria outnumbered the Refinance Loans.

Let me compose myself and think this through. Here are some of the facts.

• The purchase market in Santa Maria has been going gangbusters
• The median home price has been declining
• Lending standards have increased significantly
• Interest rates remain low

O.K. I think I've come to my senses. Refinancing is hard to accomplish in this area for a number of reasons. A couple of the biggest reasons are that there is no equity in their homes and documenting of income has made it more difficult to qualify.

With respects to the purchase market, I don't think I'm saying anything too awfully revealing when I say "The market is back!". Even though many of the sales are properties that are bank owned, the buyers have figured out that they are a bargain. I know investors are stepping in and buying property in Santa Maria as well as folks who are looking for a roof over their heads.

Will we see refinancing come back? I think it will pick up some, but it won't be the boom we saw a couple of years ago. Lenders just aren't going to allow people to qualify as easily as they once did. This is good for everyone, especially those folks that are buying properties now. It protects their investment from the huge swing in prices we have experienced recently.

Refinancing your home was definetely at the center of the economic party a couple of years ago. Not any more, the number of refinances in the Santa Barbara area has slowed to a trickle.

I am going to have to change the way I format my chart pretty soon, because in some areas the number of purchase loans is outnumbering the amount of refinance loans being done in a given month.

The Santa Barbara, Goleta, Carpinteria, Montecito areas haven't quite seen the number drop that far yet, but it is the lowest it has been in years.

A year ago, all I kept hearing was that this year could possibly end up being one of the biggest refinance markets we would ever see. The folks predicting this were seeing the huge number of loans that were going to be adjusting and determining that they would all refinance.

Many borrowers were opting for programs like a fixed for 5 year loan and those loans are all about to adjust, if they aren't already. I guess the borrowers are just not being hit with the large adjustments up in their payments and or they are stuck with the loan they have since lending standards have tightened.

Whatever the reason, the refinance party is over. Someone turn out the lights.

Following all the related foreclosure numbers like I have been for the last 2 years certainly doesn't make me any expert. Charting that information is helpful. It allows me to see what is happening when I can view a chart that can illustrate trends.

The numbers for July in Santa Barbara County are intriguing to say the least.

I know real estate is a very local commodity when all I read in the headlines these days is how Notice of Defaults are continuing to rise and Santa Barbara appears to be bucking the trend.

Santa Barbara County had a significant drop in the number of Notice of Defaults the County Recorder reported for July.

An 18% drop causes me to think that if that keeps up this will be fantastic for the Santa Barbara Real Estate Market. So, will it?

That is the 64 million dollar question!

Here are the facts, the number of Trustees Deeds have been on the rise, the number of REO's selling have been on the rise, and the number of loans adjusting have also been on the rise.

I believe the leading indicator has to be The Notice of Defaults recording. That starts the entire process of foreclosure. If they continue to decrease then so will everything else mentioned above.

I know this may be an optimistic viewpoint, but maybe just maybe all the effort being put in to keeping people out of foreclosure is beginning to work. I can tell you that the number of loans adjusting in November and December of this year is 160 and 123 respectively. That is a lot lower number than in 2007.

That would appear to bode well when it comes to seeing the Notice of Default number declining.

The more I look at this chart and the numbers I've been tracking, the more I am beginning to believe the claims that we are seeing or have seen the worst of the foreclosures in Santa Barbara County.

I did hear a report today that the number of homes sold across the country increased over 3% from June. Maybe this is the start of some positive news on the real estate front.