Scott Dovala Santa Rosa Mortgage and Home Loans

What? Haven’t you heard that the housing slump is over with? You must be seeing the same news reports I am. News reporters expounding that both the new and pending home sales are up. Come on everybody let’s jump in now before it is too late! For the past few months that’s all the news has been reporting; new home sales up over last month, pending sales up over this time last year. I think the news organizations need a realty check and should start reporting the figures as they really are. Although it is human nature to not want to hear bad or discouraging news, sometimes a dose of truth with a little common sense thrown in may help that first time buyer or current home owner decide when to purchase their first home, or move up to a new one.

The fact is that the housing slump is not over with. It won’t be for some time. To put it in perspective what is really going on, let’s take a look at the past few months numbers. Yes, in August pending home sales were up. As a matter of fact they were up 7.4% over July’s numbers. Alright, so far so good! Well, not exactly. Foreclosures in August were up 12% over July’s. As a matter of fact, anyone can go back over the past several months and see that foreclosures and defaults have been increasing each and every month. Every month they have been beating all increases in both new home and pending home sales.

So what do these numbers mean for California real estate? It means in August, 1 in every 224 households have gone into foreclosure or into default. That’s a 48% increase over July’s numbers. In fact for the 3^rd quarter of this year foreclosures have been up 71% over the same period in 2008 nationwide.

Now some one might say,” Just hold on here one darn minute. You need to take a look at September’s numbers. Even though pending home sales dropped 4.6% in September, foreclosures dropped a whopping 12% nationwide.” Well that’s true on the surface, but let’s take a look why foreclosures dropped so much.

The main reason is that several states including California have adopted a new law that slows down the pace at which lenders can foreclose on borrowers. This new law in California requires lenders to send a letter out to home owners that are behind on their monthly payments 30 days prior to issuing a notice of default. Now you might think that forcing lenders to wait 30 days to issue a notice wouldn’t have that much impact on the foreclosure statistics, but this one move by the state has caused foreclosure reporting to drop 51%. Although this may seem on the surface to help the psychology of the real estate market to see numbers like this, in fact it will be a detriment. Case in point is Massachusetts who adopted the same type of law. Once the law ended, Massachusetts saw foreclosure numbers jump 465% in the first month the law expired.

Are the above statistics and numbers disheartening? Well, yes in a way they are. However, as bad as it sounds, all is not lost. There are pockets of hope and a few signs of stabilizing home prices. The most important thing to remember is if you are looking to purchase your first home, or to move up to a bigger home, do your own research. Find out how many homes in the area you are interested in have had homes foreclosed on. Ask your realtor how many short sales have gone on in the neighborhood. Most of all don’t let the hype of the news media push you into something you may regret later when reality sets in.

I’m sure many of you have heard over the past few weeks, or maybe even saw some of the advertisements touting that FHA will now allow First-time Homebuyers to use the stimulus packages $8000 tax credit as a down payment for a home. As exciting as that may sound to a first-time homebuyer, it is not entirely true.

As you may remember, when the Bush administration came out with the original stimulus package, the amount was actually $7500 and in truth was not as much a tax credit, but a 15 year loan. With the Obama stimulus package the tax credit amount was raised to $8000 and did not have to be paid back. However, this money could not be used for the down payment mainly because the borrower would receive the tax credit after the close.

However, over the past weeks, HUD has come out with a new policy for FHA loans announcing that the stimulus tax credit can be used for down payment on an FHA loan. But can it? When you are approved for an FHA loan you are still required by current FHA guidelines to provide the 3.5% down payment as before. This still can be achieved by the same standard methods of either the borrower providing it in total, or from a relative or family member, Federal, State, and local government non-profit agencies, FHA approved non-profits or borrowing from your employer or 401 K. However, once you obtain the original 3.5% down-payment, you can then apply for the $8000 tax credit prior to close of escrow. All in all, what this means is you come up with the 3.5% down payment, then the $8000 tax credit can be used as an addition to your down payment. In essence, what this is normally classified as is a Bridge Loan. By definition, a Bridge Loan is a loan which enables buyers to get financing to make a down payment and pay closing costs on a new home. The question here is how many lenders or banks will be willing to secure a second loan against a tax credit?

As confusing as the above may be, there are additional items within the guidelines that many lenders are trying to sort through. When you combine the tax credit with the FHA first loan, cash back to the borrower is not allowed. The second lien may not exceed the total amount needed for the closing costs, down payment and prepaid expenses. In other words if your total costs are $6000, that’s all you can use out of the $8000. Secondary financing may be a silent or soft second. If payments are required, these must be included in the borrowers qualifying ratios, meaning your debt-to-income ratios will increase. I could go on and on. But you can see the confusion building. It may be a silent second, but then again maybe not. You could be asked for monthly payments, maybe not.

At this point, no one seems to know how this tax credit for FHA loans is going to be used, if it will be used at all. I already know of a few of the big retail banks who have decided not to participate at all. There are just too many legal consequences that could occur the way it is currently presented.

At Ascent Home Loans, we make the loan process easy and now more affordable by lowering our fees. Call today for a rate quote or if you have any questions.

If you one of the many who are eager to join the "Go Green" movement, what better way than go and check out the Solar Fair at the Finley Center in Santa Rosa on June 20th. The fair opens it's doors at 11am and closes at 6pm.

In partnership with PG&E, the fair will have many activitesd throughout the day. You will be able to learn about solar enerthy and energy efficiency. There will be speakers, panels and also several workshops.

You will also be able to learn how to finance your home energy projects, along with how to prepare to finance and install solar for your business and commercial properties.

Looking to take advantage of the growing employment opportunities within the green job zone? There will be information in regards to how and where to get training for the green jobs market

Classes and workshops will not be the only things offered at the fair. There will also be live music by John Allair, Fishbear, and the Taiko Drummers and more. There will also be activities for both kids and teens in the Fun Zone.

In regards to the panels and workshops, here are just somwe of the courses that will be offered.

Panel

• Sonoma County's Public Financing
• What is you government doing for solar?
• Training and opportunites fro green jobs

Workshops

• Make your home energy efficient
• How to go solar - PV and hot water
• Financing solar and energy efficiency
• Solar and efficiency for business

So come on down to the Solar Fair June 20th between 11am to 6pm. The Finley Center is located at 2060 West College Ave., Santa Rosa. For further information you can also go to the Solar Fair's website at Solar Fair.

Many potential borrowers have been hearing encouraging news lately in regards to the real estate market. In fact. today the numbers were released for construction spending and pending sales and they were both up. Other economic indicators over the past weeks have been improving also. But what does this all mean for the homeowner looking to refinance? All these improving numbers must be good for interest rates, right?

Not so. If you are one of the many waiting for rates to decline even further, you may be missing out on your opportunity to refinance at the current historic lows. With each improving economic number that is released, there is a greater chance of rates starting to go up.

Remember, the whole reason rates are where they are today is simply the fact that the Federal Reserve and the Treasury are pumping billions, even trillions of dollars into the economy to stabilize the free fall we were in. That infusion of money also included artificially lowering rates to their current levels. Once the government sees enough information that the economy is in fact stabilizing, that money being used to keep rates lower will stop being pumped into the system and rates will increase at a very rapid pace. Overnight borrowers may see rates jump 1 to 1 1/2 points back into the low to mid sixes. Also, if the Feds even sense that inflation is beginning to creep into the economy, they will tighten up on the Feds Fund rate even further, driving interest rates even higher.

Think this just might be hype? Even Treasury Secretary Geithner stated in front of the Oversight Committee that the process of the government buying mortgage backed securities will be coming to end sooner than later. Even Fed Chairman Bernake stated last week during testimony in front of the Joint Economic Committee as the economy continues to stabilize, he sees no problem with raising the Feds Funds rate to 2% to 2.5%.

The time is coming when those who waited for rates to fall even further and sat on the sidelines, just might be watching the train slowly leave the station leaving them behind.

If you need to refinance, call today and take advantage of our great rates.

Today the Senate defeated the anti-foreclosure bill 45-51/ The bill was intended to help homeowners keep their homes through the bankruptcy courts. In the bill was the so called cram down provision that allowed bankruptcy judges to reduce the principal on borrower's mortgages. This in turn would have put pressure on the loan servicers to modify the loans prior to borrower's filing for bankruptcy.

Although some analysts have been stating that foreclosure have been slowing, in fact today's report showed that servicers have begun 290,000 new foreclosure proceedings against borrowers. This is a record high in foreclosure filings since foreclosures had started to be tracked in 2007.

If your current situation may be causing you to think that down the road you too may be headed for foreclosure, refinance now. Rates are low compared to last year. If you feel your credit may be to low, you just may qualify for an FHA loan. Call today and let's see if there is something that can be done, before it's too late.