Santa Maria, CA

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.

Looking for fresh, local products? Look for a farmers market in your area.

Sunday

• Nipomo, 11:30AM to 2:30PM across from the post office on Tefft Street. also potted herbs, home-baked breads and weekly barbecue.
  

Tuesday

• Old Town Santa Barbara, 4 to 7:30 PM, 500 to 600 blocks of State St, also small plants, specialty items and street musicians.

• Orcutt - Central City Farmers Market, 10AM to 1PM, Oak Knoll South, corner of Bradley Road and Clark Avenue; also fresh honey and eggs.

Wednesday

• Arroyo Grande, 8:30AM to 11:30AM, Spencer's Fresh Market, 1454 E. Grand Ave.
• Santa Barbara, 2PM to 6PM, 110 S. Hope(in La Cumbre Plaze).
• Santa Maria - Central City Farmers Market, 12PM to 4PM Town Center West(in the Mervyn's parking lot).
• Solvang - 4PM to 7PM, Copenhagen Dr. and 1st St, marketing with a Danish ambiance.

Thursday

• San Luis Obispo, 6PM to 9PM, 700 to 900 blocks of Higuera Street. One of the largest and oldest in the state, with entertainment.

• Santa Maria - Noon to 5PM. 812 W Foster Rd.

Friday

• Avila Beach, 4PM to 8PM, Front St Promenade.
• Lompoc, 2 PM to 6PM, Ocean Avenue and I Street. food and entertainment.
  

Is the cost of gasoline getting you down? Are you worried about rising food prices? If you find these things disturbing, then you're going to be real upset about the potential increase in home insurance cost due to the decertification of the Santa Maria River Levee. How much can flood insurance cost? Some Santa Maria residents face a potential increase of $5,481.00 per year!

HISTORY: The city of Santa Maria has a history of flooding. To address this problem, the Feds had the US Army Corps of Engineers build the Santa Maria River Levee. The Levee was completed in 1963. The Levee was suppose to be able to control a flow of 150,000 cubic feet per second. That is almost double the anticipated flow from the predicted 100 year flood. In 1969, the levee almost breached. In 1998 the levee suffered a breach. The water flow was less than 30,000 cfs, way below the anticipated 78,000 cfs of the 100 year flood! The Corps of Engineers decertified the levee during their last inspection.

FEMA is preparing to release new flood maps because of the decertification. It is anticipated that the new maps will be released around September of this year. It will take about 6 months for the new maps to be approved. Almost all of the homes north of Betteravia will now be in an "A" flood zone. All lenders with homes in an "A Zone" must require flood insurance due to the "Flood Disaster Protection Act of 1973". Almost all of the homes in Santa Maria, with outstanding mortgages, will be required to have flood insurance.

If you currently have a home in an "X" zone, you can purchase a flood policy with $250,000 building coverage and $100,000 contents coverage for only $348 per year. When the new maps are approved, your "X Zone" would be grandfathered in but your rates would still go up because the whole community is loosing the "Preferred Flood Zone". Your rates would then go up to $1,385 (as a cost cutting measure, you could remove the contents coverage and only pay $849).

If you don't have a grandfathered "X Zone" and you purchased your flood insurance after the map's approval date, the same coverages could go up to $5,481 ($4,379 if you remove the contents coverage).

If your home was built after the "Pre Firm" date (05/15/1974) or before the "Post Firm" date (tentatively April of 2009) then your designated zone will be grandfathered in. If your home was built during this time period, and is currently an "X Zone", then there isn't any urgency to buy insurance to save premium.

WORD TO THE WISE: If your home was built before 05/15/1974 ("Pre Firm") and is currently in an "X Zone", the prudent thing to do is to purchase flood insurance before the new maps are approved. This guarantees you a perpetual "X Zone" and will facilitate the future sale of your home since flood insurance is transferable.

Side note: The Army Corps of Engineers have established a preliminary estimate of $48,000,000 to fix the levee. Our mayor, city council and congresswoman are actively seeking ways to fund this repair. After all public funding sources are exhausted, I anticipate we will have a bond measure on the ballot.

Feel free to call John Everett, Allstate Insurance, if you have any questions at: 349-9141 COMPLIMENTS OF...Pam Adkisson Fidelity Title and Escrow, Santa Maria.

Writer's Bio: John Everett. Allstate Insurance Agent since 1982. 4 year member of the City of Santa Maria Planning Commission. Past Chairman of the Chamber of Commerce. Current member of the City of Santa Maria Economic Development Commission.

From reality shows about flipping homes to infomercials that promise you’ll get rich quick, the message is the same: Buying a home that is facing foreclosure (also know as a "short sale") is a sure way to financial security. However, considering all the hype surrounding short sales, it’s important to separate the facts from the fairy tales. There are some important points to consider before you waste alot of time chasing after these deals.

What Exactly is a "Short Sale"?

It’s when the bank agrees to accept a discounted payoff when a property sells for less than what is owed on it. Here’s how a home usually ends up in this category:

• When a homeowner stops making the mortgage payment, he eventually receives a notice of default from the bank that threatens foreclosure proceedings if the debt is not cured.
• In an effort to avoid foreclosure and any more damage to the homeowner’s credit, they try to sell the home to pay off the loan.
• Most of the time, what the homeowner owes on the home is more than the value of the home. This is due to the dramatic drop in home values over the last two years. The amount owed will be even greater if the homeowner took out a second loan based upon the equity that used to be in the property when values were high.
• The bank agrees to accept the amount and consider the loan paid in full, even though it is less than what is owed.

Based upon what you read or hear, you may believe that banks are willing to take fifty cents on the dollar just to unload these distressed properties, making the houses real bargains just waiting to be purchased. Unfortunately, the reality is quite a different story. In fact, in Santa Maria, California, where about 70 percent of all listings are in some stage of foreclosure, you can’t be in a hurry if you are considering buying a short sale home. You may find that you’ll pay less for the home if you wait until the bank has taken ownership of the property.

Why Does the Short Sale Process Take So Long?

The homeowner who is facing foreclosure decides what the selling price should be for the home without knowing what the lender and loan servicer will accept. As a result, what might sound like a great price could end up being rejected by the parties who provided the loan. When a buyer makes an offer on a home that is facing foreclosure, most of the time the bank is not the one that holds the note. The offer has to be presented to the investor who bought the mortgage-backed security for approval. According to one manager from a large, national loan servicer, the lender needs to present the loan investor with a short sale package that includes:

• A Broker Price Opinion: the lender hires a real estate agent to provide them with a detailed market analysis to determine the current market value of the home. Current Appraisal: provided by a licensed appraiser.
• Proof that the property is listed on Multiple Listing Service.
• Documents that prove hardship for the seller such as current bank statements, pay stubs and copies of tax return.

All of this takes time to accumulate and verify. Sometimes the seller slows down the selling process because the paperwork is not turned in on time. It is an emotional time for these homeowners, and they may be distracted due to the situation. In most of these cases, the lender does not make the decision—it’s up to the loan investor, who is going to lose money and wants to know why. Decisions are made based upon the facts presented. In addition, the lender needs to verify facts about the homeowner and provide these facts to the loan servicer. They need to see documents that support the current financial situation and the seller must prove hardship. In the Santa Maria, California area, it’s typical for a buyer who has made an offer on a pre-foreclosure to wait for several weeks (or months) before getting a response from the lender because of the steps described above. Typically, the buyer will receive a higher counter offer.

Short Sales Aren't Alway A Great Deal

What is really noteworthy is that it is not unusual for the lender to reject an offer for a short sale, only to list the property at a lower price once it has gone through foreclosure. This is occurring much more frequently in the Santa Maria area, and as a result, buyers are advised to shop for a bank-owned home instead of a short sale. Not only is a short sale a long process, but it may not be the great deal you’ve been lead to believe.