President Signs Historic Housing Bill!!

President Signs Historic Housing Bill!!

Thank You to Everyone Who Has Worked So Hard to Increase Loan Limits!

This morning President Bush signed the "Housing and Economic Recovery Act of 2008." For the past several years, C.A.R. and the NATIONAL ASSOCIATION OF REALTORS® have aggressively lobbied for Congress to pass numerous provisions found in this historic bill. Many of you participated in these efforts by communicating with your Members of Congress.

Thank you to all of you who responded to these Calls-for-Action. Your efforts have made a difference. This federal housing bill is a significant move in the right direction for California homeowners. It will aid in stabilizing our economy and help stem foreclosures, while also providing support to first-time homeowners.

The legislation will assist an estimated 400,000 homeowners facing foreclosure, many of whom reside in California, by allowing them to refinance their current mortgages with a Federal Housing Administration (FHA)-backed loan. The bill also will permanently increase FHA, Fannie Mae, and Freddie Mac loan limits in high-cost areas.

The bill permanently increases the conforming loan limit to $625,500. C.A.R. has long advocated for higher conforming loan limits. In February, the Economic Stimulus Act of 2008 was signed, temporarily raising the conforming loan limit in high-cost areas to $729,750 from $417,000 until December 31, 2008.

Although we would have liked Congress to make permanent the current $729,750 loan limit, C.A.R. is pleased with the new permanent loan limit of $625,500. It will allow California homeowners to refinance their loans into safe affordable loan products and allow first-time home buyers to enter the market.

The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500. Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008.

C.A.R. also supports the following bill provisions:

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A temporary increase in mortgage revenue bonds to refinance subprime mortgages.
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New regulator for Government Sponsored Enterprises to restore investor confidence in GSE loans and help the market and economy stabilize.
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First-time home buyer tax credit, which allows first-time home buyers to receive a tax refund worth up to 10 percent of a home’s purchase price, up to a maximum of $7,500. The refund serves as an interest-free loan and the homeowner is required to repay it in equal installments over 15 years.
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Temporary raise in the loan limit for the Veterans Affairs home loan guarantee program to the same level as the economic stimulus limits until the end of 2008.
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Adjustment to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), allowing sellers to provide the non-foreign affidavit to a qualified closing entity and not just the buyer.
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The setting of minimum requirements for mortgage originators, which mandates fingerprinting of loan originators and establishes a nationwide loan originator licensing and registration system. The requirements do not apply to those only performing real estate brokerage activities unless they are compensated by a lender, mortgage broker, or other loan originator. States will have the ability to implement more stringent laws.
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The creation of a National Affordable Housing Trust Fund to help cover the cost of the FHA rescue plan for the first five years and develop affordable housing in subsequent years.

Other provisions in the legislation:

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The Treasury Department’s proposal to create a federal backstop program to insure the financial well-being of Fannie Mae and Freddie Mac.
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The FHA’s inability to insure loans that utilize a seller-funded down-payment assistance program. Down-payment assistance from family, employers and other nonprofits is still allowed.
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The Community Development Block Grant Programs’ $4 billion allotment for communities to purchase and refurbish foreclosed homes.

C.A.R. wishes to thank those California Members of Congress who supported the bill:

Senator Barbara Boxer, Senator Diane Feinstein, and Representatives Joe Baca, Xavier Becerra, Howard Berman, Mary Bono Mack, Ken Calvert, John Campbell, Lois Capps, Dennis Cardoza, Jim Costa, Susan Davis, David Dreier, Anna Esho, Sam Farr, Bob Filner, Elton Gallegly, Jane Harman, Mike Honda, Duncan Hunter, Barbara Lee, Jerry Lewis, Zoe Lofgren, Dan Lungren, Doris Matsui, Howard "Buck" McKeon, Jerry McNerney, Gary Miller, George Miller, Grace Napolitano, Nancy Pelosi, Laura Richardson, Lucille Roybal-Allard, Linda Sanchez, Loretta Sanchez, Adam Schiff, Brad Sherman, Hilda Solis, Jackie Speier, Pete Stark, Ellen Tausher, Mike Thompson, Maxine Waters, Diane Watson, Henry Waxman and Lynn Woolsey.

Thank you everyone for your efforts in support of this bill!

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Menlo Park real estate doing well

By Katie Hammer

MENLO PARK, CA (KGO) -- There are places in the Bay Area where real estate remains strong, and Menlo Park is one of them.

A house in Menlo Park was just on the market for $1.9 million. It actually closed escrow on Friday for $2.2 million, $300,000 more than the actual price. This is actually just one example of what's in this protected real-estate market.

In many parts of the Bay Area and the country, 'foreclosure signs' are more common than 'sold' signs.
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That is except in a few Peninsula towns like Menlo Park and Palo Alto.

"We continue to have more demand for homes than there are homes available for sale," said realtor Carol Carnevale.

That means many listings are still getting multiple offers and selling for more than the asking price.

A home in Menlo Park was recently listed for $1,249,000. It sold in a week for $1,405,000 with six offers.

While Menlo Park may be insulated from the foreclosure crisis, just across the freeway in East Menlo Park it's a totally different picture.

According to the Multiple Listing Service, the average sales price in east Menlo Park has dropped 34 percent since the first half of last year until now.

The average sales price is now just $414,000. Last year it was $629,000 and overall sales there are down 72 percent.

But in Menlo Park the average sales price has increased from $1.6 million to $1.8 million. That's the 15 percent jump although the number of foreclosed sales has decreased 28 percent.

"Real estate is still a very local market, a very local business. If you have a stable economy in an area where you have people that didn't get into homes that were over-priced by using high risk loans, there is lower foreclosure activity," said RealtyTrac Senior Vice President Rick Sharga.

Carnevale says the biggest difficulty some buyers are facing is the rigorous process to get pre-approved for a loan. But even that in her area is sometimes not an issue.

"Many of the buyers today do present all cash offers and actually close the escrow," said Carnevale.

RealtyTrac says most of the homes that are in foreclosure now, were built and bought since 2004. That's why Menlo Park and some of these older neighborhoods seem to be well protected.

Real Estate's Google Effect

The Google Effect: How the company's shuttle line affects San Francisco real estate

By Carol Lloyd, Special to SF Gate

Friday, July 25, 2008
At a time when so many San Francisco neighborhoods are experiencing a certain sagging in the market — the inevitable aging of the eternal boom — it's interesting to note that a few places have proved themselves strangely resilient. Why some neighborhood markets remain lively while others go into hibernation or fall ill is a matter of constant deconstruction for real estate analysts. Whether they focus on supply vs. demand, industry hype vs. media horror stories, a revitalized shopping area or a new transit hub, it's often difficult to disentangle the myriad factors that influence the worth of a given neighborhood.

So when at a recent brunch I heard some Noe Valley residents discussing what was bolstering the value of their homes, I was particularly fascinated by a single factor they had all settled on: the proximity of the Google Shuttle stop. None of the group was employed by Google, but that didn't seem to matter. "I know some people are mad about the noise," one of them told me. "But we're not complaining."

Could it be that a few private bus lines would actually affect the real estate and residential rental markets of a big city like San Francisco? At first, it seemed like a bit of a stretch. I mean, how big could the phenomenon be? Google does not release specific data about routes, number of trips and passengers, but company spokesperson Sunny Gettinger told me the company shuttles 1,200 employees daily from around the Bay Area to its Mountain View campus.

Yet according to some real estate experts, the shuttle service exudes a powerful force field over the micro markets on its most popular routes like the Valencia Corridor, Dolores Heights and Noe Valley.

J.J. Panzer, a property manager with Real Management Company, based in Noe Valley, said that again and again he's gotten requests for rental apartments or homes near the 24th and Castro Street stop. "I always have fantastic, qualified tenants for any of our units near the shuttle stops," he told me. "I think it's really propping up the market."

Panzer characterizes his Google tenants as young professionals between 21 and 35 who have the money to buy homes but are renting at a high price because they are in no hurry to settle down or buy homes that aren't exactly what they want. "They're selective, but they will pay a premium for quality," he said.

One client he recalled told him he wanted to live within 100 yards of the stop. "We worked with him for three months, but never found something that fit his precise criteria," he told me.

Indeed, all the real estate agents who responded to my inquiries about the Google Shuttle effect offered anecdotes about Google employees who were looking for homes to buy within spitting distance of a shuttle stop.

"I'm working with a couple that is specifically looking for a home/condo near the Google line. They have made several offers but were outbid every single time," Zephyr Real Estate's Tanja Beck told me in typical response.

Michael Ackerman, also of Zephyr, recently helped a Google employee find his home sweet home after analyzing all the available properties near the city's shuttle stops. Noe Valley real estate agent Lamisse Droubi also has had numerous clients from Google who have put the shuttle on their must-have list.

Although Droubi wouldn't pin all of Noe Valley's famed real estate resilience on a handful of buses, she did confirm it was an important factor for some of her clients. In general she's noticed that the core of any given neighborhood (usually where the stops are) seem to be retaining their value more than the edges of those same desirable neighborhoods.

"Last week I had two properties open in Noe Valley and both had about 50 groups go through them, so there's still a lot of traffic," she said, adding that although there are no longer 12 offers per home, homes in her neighborhood rarely go below the asking price unless there's something wrong with them. She characterizes the current buyers (like Panzer's tenants) as "a lot more selective" and not terribly affected by the current mortgage morass.

What does the Google Shuttle effect teach us about waxing and wanings of real estate demand? That the eligible buyers may be changing — gradually reshaping the relationship between the suburbs and the city. "It's fascinating how things have changed," observed Panzer. "It used to be you got a job in the city and commuted to the suburbs with a yard. But Google really predicted the spirit of this generation. They want to live in the city and they don't want to drive their cars."

It also may herald a new era of transit related micro markets — not based on public transit lines but private ones. With Apple, Yahoo, eBay and VMware also starting employee shuttle services in the Bay Area (and Microsoft recently launching one in Seattle), there may soon be more transit-specific real estate formulations to measure. Perhaps it simply confirms a belief dear to urban planners: that in an era of high oil prices and global warming consciousness, good transit plus good jobs really does equal a strong housing market — even when all else in the economy seems to be going all higgledy-piggeldy.

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Home Buyer Tax Credit & Housing Finance Reform

Home Buyer Tax Credit and Housing Finance Reform Legislation Approved by Senate

The U.S. Senate voted 63 – 5 Friday to pass H.R. 3221, the Housing Stimulus Package. Included in the bill is language to permanently increase the Fannie Mae, Freddie Mac, and Federal Housing Administration (FHA) loan limits to $625,500 for high-cost areas and an $8,000 homebuyer tax credit. The Senate version now goes back to the House for what legislators hope will be a binding revision that can pass the House and Senate before the end of July. This "ping pong" effect arises because some Senate Republicans have lodged formal objections to the usual process of taking two differing versions of the bill to a House-Senate conference.

The House and Senate versions of the housing bill are now in very close alignment, with only a few issues to be resolved. Many of the issues revolve around the question of whether the bill will be "paid for." The major focus of the pay-for problem is the provision in the Senate package that would authorize $4 billion for grants to local governments where communities have been particularly hard-hit by foreclosures.

The grants would be made under the Community Block Development Grant program (CDBG). These CDBG provisions are not "paid for." House Blue Dogs (fiscally conservative Democrats) insist that it be paid for. House Republicans, including President Bush, oppose the CDBG provision altogether. President Bush has threatened to veto the bill, in part because of the CDBG provision. Accordingly, the House has the choice of deleting the grant provisions, or finding other offsetting spending cuts.

Speaker Pelosi (D-CA) also hopes to maintain the 2008 high cost limits of $729,000 (125% of an area’s median home price), while the Senate has agreed to limits up to $625,500 (110% of an area’s median home price) for both the GSEs and FHA. The Senate version also includes authorizations for FHA to refinance troubled mortgages – even those that are under water – as long as banks agree to take a loss. The program would allow the FHA to help as many as 400,000 homeowners.

Additional tax revenues are needed to close a gap on the tax package. A non-real estate provision has been identified and will likely be added in this final House package, as well. The tax provisions themselves are not likely to be modified in the House.

House Financial Services Committee Chairman Frank (D-MA), the architect of the housing and financial reforms, anticipates that the House can finish its work by today, July 18. If the bill does pass the House by then, the Senate should have adequate time to cast the final vote and send the package to the President for signature by the end of July.

REALTOR® response to the recent call-to-action was critical to the proposed loan limit increase and the Senate passage of this legislation.

Foreclosure Relief Bill Becomes Law - July 2008

FORECLOSURE RELIEF BILL BECOMES LAW This week, the State Legislature enacted foreclosure reform law to address the adverse effects of high foreclosure rates in California. The new law requires lenders to contact homeowners to explore options for avoiding foreclosure at least 30 days before filing a notice of default. It also requires owners acquiring property through foreclosure to maintain the exterior of vacant residential properties. The new law also extends from 30 to 60 days the time for residential tenants to move out of properties that have been foreclosed upon, unless other laws apply. These requirements will remain in effect until January 1, 2013. The full text of Senate Bill 1137 (Perata) is available at www.leginfo.ca.gov. Highlights of the new law are as follows: - Contact Between Lender and Borrower: Effective on or about September 8, 2008, a lender, trustee, or authorized agent may not file a notice of default until 30 days after contacting a borrower to assess the borrower's financial situation and explore options for avoiding foreclosure. A lender must generally contact the borrower in person or by telephone, or satisfy due diligence requirements for contacting a borrower. During the initial contact, the lender must inform the borrower of the right to request a meeting with the lender within 14 days. The lender must also give the borrower the toll-free number for finding a HUD-certified housing counseling agency. A subsequent notice of default must include the lender's declaration that it has contacted the borrower, tried with due diligence to contact the borrower, or the borrower has surrendered the property. A lender who had already filed a notice of default before the enactment of this law must include a similar declaration in the notice of sale. This requirement to contact borrowers applies to loans secured by owner-occupied residences made from 2003 to 2007. Certain exemptions apply if the borrower has filed for bankruptcy, surrendered the property, or contracted with a person or entity whose primary business is advising people, who have decided to leave their homes, on how to extend the foreclosure process and avoid their contractual obligations. - Maintenance of Vacant Properties: Effective July 8, 2008, anyone who acquires property through foreclosure must maintain the exterior of vacant residential property. Violations of this law include permitting excessive foliage growth that diminishes the value of surrounding properties, failing to take action against trespassers or squatters, failing to take action to prevent mosquitoes from breeding in standing water, or other public nuisances. This law authorizes a governmental entity to impose a civil fine up to $1,000 per day for any violation, as long as the owner has been given notice and an opportunity to remedy the violation. A violator must be given at least 14 days to begin, and 30 days to complete, such remediation before a fine can be assessed. - 60-Day Notice to Terminate Tenants: Effective July 8, 2008, a tenant or subtenant in possession of a rental housing unit that has been sold through foreclosure is generally entitled to a 60-day written notice to quit, not just 30 days. However, a borrower who remains on the property after foreclosure may be served a three-day notice to terminate. This law does not affect, among other things, rent-controlled properties with just-cause evictions. Effective on or about September 8, 2008, the lender, trustee, or authorized agent posting a notice of sale must also post and mail a specified notice of a tenant's right to a 60-day eviction notice from the new owner, unless other laws apply. This requirement to notify tenants of their rights applies to loans secured by residential real property where the borrower has a different billing address than the property address. C.A.R. provides REALTORS® with many legal articles covering a wide range of topics of interest. Some of the new or newly revised legal articles available at http://qa.car.org are as follows: - REO Disclosure Chart. - MLS Short Sale and REO Issues. - Contingencies and Contingency Removal.

Calif. Assoc. of Realtors - Fast Facts June 2008

Fast Facts
Calif. median home price - May 08: $384.840(Source: C.A.R.)
Calif. highest median home price by C.A.R. region May 08: Santa Barbara So. Coast $1,199.000(Source: C.A.R.)
Calif. lowest median home price by C.A.R. region May 08: High Desert $200,740(Source: C.A.R.)
Calif. First-time Buyer Affordability Index - First Quarter 08: 44 percent (Source: C.A.R.)
Mortgage rates - week ending 07/10/08 30-yr. fixed: 6.37 Fees/points: 0.6% 15-yr. fixed: 5.91 Fees/points: 0.6% 1-yr. adjustable: 5.17 % Fees/points: 0.5% (Source: Freddie Mac)

Charts Needed to Explain ARM Loans, Says Fed

Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
Office of Thrift Supervision
National Credit Union Administration

For immediate release

May 22, 2008

Federal Financial Regulators Issue Final Illustrations of Consumer Information for Hybrid Adjustable-Rate Mortgage Products

The federal financial regulatory agencies today issued final illustrations for helping consumers understand certain hybrid adjustable-rate mortgage (ARM) products.

The agencies' Statement on Subprime Mortgage Lending (Subprime Statement), which became effective July 10, 2007, recommended that institutions provide clear, balanced, and timely information to consumers about the relative benefits and risks of hybrid ARM products. The illustrations are intended to assist institutions in providing this information.

The illustrations consist of (1) an explanation of some key features of products covered by the Subprime Statement; and (2) three charts with examples of the potential payment shock accompanying these types of loans.

Institutions are not required to use the illustrations. They may use them, provide information based on them, or provide consumers with information described in the guidance in an alternate format.

The agencies will be posting the illustrations on their websites for downloading and printing. In particular, versions of the illustrations will be posted in English and in Spanish together with a template of the illustrations that institutions can modify to reflect the latest market conditions.

The final document, Illustrations of Consumer Information for Hybrid Adjustable Rate Mortgage Products, is attached.

Federal Register Notice: 760 KB PDF | TEXT

Media Contacts:
Federal Reserve	Susan Stawick	202-452-2955
FDIC	David Barr	202-898-6992
OCC	Dean DeBuck	202-874-5770
OTS	William Ruberry	202-906-6677
NCUA	John McKechnie	703-518-6331

2008 Banking and Consumer Regulatory Policy