Silicon Valley Real Estate by Deniece Watkins

DSoldOurHome blog has moved to DSoldIt blog

2010-01-07T06:53:00.000-08:00

Thank you for any readers who followed this blog through 2008. I am excited to continue to bring great real estate news for the Silicon Valley area to you at dsoldit.blogspot.com.

As always, I enjoy helping you make the best decisions with your real estate investments. Please call me for all of your real estate needs today.

Deniece Watkins Smith

Realtor, ePro, SRES

650-483-2055 Direct

www.dsoldit.com

U.S. home foreclosures hit record level, boosted by California

2008-09-12T09:59:00.000-07:00

A sharp drop in prices is cited, along with the resetting of ARM loans in California and Florida.

By E. Scott Reckard, Los Angeles Times Staff Writer
September 6, 2008

The decline of housing markets in California and Florida has led to record numbers of foreclosures and is causing even good borrowers to pay more for loans, according to analysis and statistics released Friday.

To add to the bleak picture, the government Friday reported the eighth straight month of declining employment, increasing pressure on borrowers burdened by tumbling home prices and loans with rising interest rates. The U.S. jobless rate jumped in August to a nearly five-year high of 6.1%, with nonfarm payrolls down 84,000.

"It's really the very last thing the housing market needs right now -- unemployment going up and we're heading into a recession," said Richard K. Green, director of the USC Lusk Center for Real Estate.

Job losses in construction and lending in the hard-hit Inland Empire are spreading to manufacturing. "And that causes a spillover effect," Green said. "If manufacturers are laying off people this month, retailers are likely to be laying off people next month."

The Mortgage Bankers Assn. said Friday that the one-two punch of declining home prices and resetting adjustable-rate loans in California and Florida is largely responsible for unprecedented national foreclosure numbers.

"The worst states are continuing to get much worse," the MBA's chief economist, Jay Brinkmann, said during a conference call discussing the group's second-quarter report on mortgage delinquencies.

With a combined 18% of the population, "California and Florida accounted for 39% of all the foreclosures started in the country," Brinkmann said.

The national average for foreclosure starts -- a lender's turning over of a delinquent loan to lawyers -- was 1.09% during the quarter, up from 0.99% for the first quarter and 0.65% a year earlier, the MBA said. The latest figure was 1.82% in California, which has 12% of the nation's population, and 2.21% in Florida, which has 6% of the population.

Nationally, the percentage of loans at some stage in the foreclosure process was 2.75%, up from 2.47% in the first quarter and 1.4% in the second quarter of 2007. The California number was 3.86% and Florida was at an even 6%.

The figures are the highest since the MBA began publishing its survey 29 years ago, Brinkmann said.

Tricky pay-option adjustable-rate mortgages, which allow borrowers to pay so little that their loan balances rise, were more common in California and Florida, the MBA said. These "option ARMs" show up in MBA data as prime mortgages because they were made to borrowers with decent credit scores.

When these loans "recast" and require full payments, three to five years after they were made, borrowers are finding themselves with sharply higher payments on higher loan balances than they started with, at a time when their home values are sharply lower.

Seriously delinquent loans -- those with payments at least 90 days in arrears -- totaled 7.73% of all adjustable-rate prime loans in California in the second quarter. The Oregon percentage was 3.04% and in Washington state it was 2.41%, the MBA said.

Such figures have spooked lenders and investors in loans, driving rates higher for even the best California borrowers. Mortgage broker rate sheets show Californians are paying half a percentage point more than borrowers in Washington and Oregon for all prime loans except those eligible for purchase by Fannie Mae and Freddie Mac, the government-sponsored loan buyers, Green said.

Subprime adjustable-rate mortgages, those made to the highest-risk borrowers, were also at higher levels in California. The serious delinquency rate hit 32.33% on California subprime ARMs, compared with 14.26% in Oregon and 13.65% in Washington, the MBA reported.

scott.reckard@latimes.com

Loan woes sting more borrowers

2008-09-12T09:56:00.000-07:00

Loan woes sting more borrowers

MORTGAGES: Homeowners who took exotic packages feel pinch as late payments and foreclosures rise to a record.

09:04 PM PDT on Friday, September 5, 2008

By ALAN ZIBEL
The Associated Press

WASHINGTON - The source of trouble in the mortgage market has shifted from subprime loans made to borrowers with bad credit to homeowners who had solid credit but took out exotic loans with ballooning monthly payments.

The Mortgage Bankers Association said Friday that more than 4 million American homeowners with a mortgage -- a record 9 percent -- were either behind on their payments or in foreclosure at the end of June.

Second Wave

Story continues below

"The problem that policymakers and Wall Street once assured us was 'contained' to subprime mortgages has proven to be anything but," Mike Larson, a real estate analyst with Weiss Research, said in a research note.

As the economy falters and home prices keep falling, concern is building about a second wave of mortgage defaults flooding the market through 2010.

On Friday, the Labor Department said the nation's unemployment rate rose to a five-year high of 6.1 percent in August.

A drop in income -- whether through a lost job, divorce, death of a spouse, or health problems -- is the No. 1 reason people fall behind on their mortgages and lose their homes.

In California, 3.86 percent of home loans were in the foreclosure process at the end of the second quarter. Also in the second quarter, 1.82 percent of the state's outstanding mortgages entered the first stage of foreclosure, with lenders issuing notices of default. Comparable figures for the second quarter and a year ago were not available.

Lending Practices

But mortgage defaults and foreclosures in many areas, especially California and Florida, can also be blamed on egregious lending practices and rampant speculation by homebuilders and small investors alike.

"We are unlikely to see a national turnaround until we see a turnaround in the two largest states," with the most outstanding home loans, said Jay Brinkmann, the Mortgage Bankers Association's chief economist.

The latest quarterly figures broke records for late payments, homes entering the foreclosure process and for the inventory of loans in foreclosure. The trade group's records go back to 1979.

The percentage of loans at least one month past due or in foreclosure was up from 8.1 percent in the January-March quarter, and up from 6.5 percent a year ago, using figures that were not adjusted for seasonal factors.

New foreclosures rose from the first quarter in 35 states and Washington, D.C. The biggest increases were in Nevada, Florida, California, Arizona, Michigan, Rhode Island, Indiana and Ohio.

New foreclosures actually declined in Texas, Massachusetts and Maryland. Both Maryland and Massachusetts recently passed laws to slow the foreclosure process and give borrowers more time to catch up on their payments.

Almost 500,000 homeowners, or about 1 percent, entered the foreclosure process in the second quarter.

Subprime Delinquencies

But for the first time since the mortgage crisis started, delinquencies on subprime adjustable-rate loans declined. While more than one out of every five homeowners with a subprime ARM is still in default, that portion dipped 1 percentage point from the first quarter to 21 percent.

What's driving up the delinquency rate now is the number of homeowners with risky, adjustable-rate prime loans made with little or no proof of the borrowers' income or assets.

More than one out of 10 borrowers with a prime ARM is now delinquent or in foreclosure. That portion, 11.3 percent, was up from 9.7 percent in the first quarter, and is expected to rise as more homeowners see their monthly payments spike.

Many of these loans allowed the borrower to pay only the interest on the loan for a fixed period. Others gave the borrower the option to "pick-a-payment," adding any unpaid interest to the principal balance.

'Liar Loans'

Defaults on these mortgages, which earned the nickname "liar loans" because borrowers often did not document their incomes, are costing Fannie Mae and Freddie Mac billions of dollars.

With home prices plummeting, particularly in California, Nevada, Arizona and Florida, many borrowers with these exotic loans now owe more on their homes than they are worth.

Worse still, these loans reset to higher monthly payments when borrowers reach maximum debt limits -- typically around 10 to 25 percent more than the original loan.

Those resets can increase the borrower's monthly payment by more than $1,000 a month on average, Fitch Ratings said in a report this week.

And almost half of these pay-option loans are expected to reset to higher monthly payments by the end of 2010, Fitch said.

Staff writer Leslie Berkman contributed to this report.

House hunting with a mobile phone

2008-09-12T09:49:00.000-07:00

Ny Sue McAllister

Mercury News

Article Launched: 09/08/2008 01:19:05 AM PDT

If you ride around in the car on weekends trying to find open houses while balancing a newspaper and map on your lap, it may be time to use your mobile phone instead. A display of properties for sale — and even open houses — may be as close as the screen on your wireless device.

Despite the housing market slowdown, many Americans are still house hunting, and they helped send sales of smart phones and wireless devices to nearly 21 million units in North America last year, according to research firm Canalys. Big companies and start-ups alike are scrambling to provide what could be described as the ultimate tech novelty for home shoppers and looky-loos: searching for homes from a phone.

New mobile services allow users to search for homes for sale, see pictures and details about the properties, get driving directions and call or e-mail the real estate agents handling the sales.

Here are a few of the companies delivering real estate listings to mobile devices:

Trulia: The San Francisco company, a self-described listings "search engine," two weeks ago announced its new downloadable Trulia Mobile, an application for iPhones and other smart phones, including some BlackBerry, Ericsson, Motorola and Samsung models. Because the devices can pinpoint your location, you can search for open houses and listings nearby without typing in a city or street address.

You can see one picture and a few details about the listing, phone or e-mail the agent, and get driving directions. Listings come from Trulia's database, which is extensive but not as complete as most local multiple listing services' (MLS) data.

Terabitz: The Palo Alto company that builds Web sites an customer management systems for realty brokerages has also developed mobile listings search for some of its clients, including Intero Real Estate Services and Frontdoor.com, the listings site operated by Home and Garden Television (HGTV). So far available for iPhones only, the technology features listings straight from MLSs, including multiple photos and plentiful details about each property. An "explore neighborhood" feature lets you see recent sales as well as school and restaurant information.

Realtor.com: Released last year, the downloadable products for iPhones and some other smart phones let users search listings, and includes a "Homes Near By" feature that will search in a 10-mile radius based on where the user is at that moment. As the official Web site of the National Association of Realtors,Realtor.com features nearly 4 million listings nationwide.

Home Finder: This iPhone application from Alexander Mobile draws listings from the Google Base database, which incorporates some but not all of the nation's MLSs.

Experts say the above sites are only a beginning and that mobile phone real estate services are certain to develop and improve because customers are eager to use them.

Pete Flint, chief executive of Trulia, said more than 10,000 people downloaded versions of Trulia Mobile in the first few days after it was released Aug. 25.

"We've been genuinely staggered by the demand," he said.

One thing that prompted the development of the application was that analysis of traffic to Trulia showed that among visitors coming to the Web site via iPhones, the peak time was on Sunday afternoons — prime house-hunting hours. Flint said the company plans to improve Trulia Mobile by adding more photos and information about recent home sales.

Ash Munshi, president of Terabitz, also said his company will be adding new capabilities to its mobile search, and will expand to serve devices other than iPhones as phone manufacturers increase the size of video screens.

Surfing for listings on a small screen is not everyone's idea of fun. "Although I can do it, I don't find it enjoyable," said Mary Pope-Handy, an agent with Keller Williams who lives in Los Gatos. She's used a mobile listings-search product for Realtors called Pocket MLS on her Palm Treo 700, but only occasionally. "It's just too annoyingly small," she said.

But Robert Whitelaw of Whitelaw & Sons, a real estate broker in Morgan Hill, said he likes the Trulia mobile application. He described it as "prettier" than other such products, but thought some consumers would be frustrated by it because Trulia does not incorporate as many listings as MLS-based services do.

The iPhone-toting broker said home buyers he works with are gaining both the tech savvy and the proper devices to complete more of their real estate searches and from mobile devices. "We're in the infant stages" of the trend, he said.

Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.

Negotiating skills vital to home purchase

2008-09-12T09:40:00.000-07:00

With the high inventory of homes on the market, and an average time on the market of about 50 days for an existing single-family home in California, buyers have more room to negotiate. Although sale price is a large factor during the negotiation process, many REALTORS® are advising their clients that the motto of "it doesn’t hurt to ask" can be used to negotiate other contingencies, such as inspection reports, closing costs, and the like.

MAKING SENSE OF THE STORY FOR THE CONSUMER

· While there are many homes to choose from, buyers should understand that homes in many affluent neighborhoods are still selling quickly, and in some cases also are garnering multiple offers. Experts advise that a buyer work with their REALTOR® when negotiating the sale price, and also to ensure the offer is realistic when serious about purchasing a home in one of these communities.

· Buyers who are looking for the best-deal possible should consider homes that have been on the market for longer than is typical for their area and whose listing price has remained unchanged. Buyers also should consider making second offers on homes that the seller may have initally rejected. Due to seasonality and the length of time the home has been on the market, some sellers may accept a lower offer than they originally planned.

· In addition to the sale price, some REALTORS® are advising sellers to negotiate on inspection reports. In today’s market, some sellers may be more willing to pay to repair, or negotiate credit for repairs that arise during the home inspection.

To read the full story, please post this link into your address bar:
http://www.sfgate.com/cgi-bin/article.cgi?f=/c/a/2008/09/07/RE8812NL7U.DTL&hw=Marni+Kottle&sn=001&sc=1000

Entrepreneurs pay business debts before their mortgages

2008-09-11T15:40:00.000-07:00

From the Small Business section of Business Week Online
http://www.businessweek.com/smallbiz/running_small_business/archives/2008/09/entrepreneurs_p.html
Posted by: John Tozzi on September 08

Small business owners are more willing to default on their home mortgages than on their business debts, according to research out today from credit bureau Experian. Some 312,000 business owners were at least 90 days late on a mortgage payment at some point between April 2007 and April 2008. That’s 2 percent of all business owners with mortgages, a lower rate than the broader population of homeowners (almost 4 percent).

Business owners protect their companies even at the expense of their homes to keep their source of income intact, according to Experian. “Particularly for those who have had a severe mortgage delinquency, these people are seeing absolutely punishing equity reductions, they’re seeing refinancing options dry up, and they’re looking at their business as being a stable source of cash flow,” says Torsten Gerwien, Experian’s vp of decision sciences.

I also imagine many people in this situation may be non-employers or micro-business (fewer than 10 employees) owners whose personal finances are pretty much intertwined with their businesses. Their business debts may be smaller and easier to pay than their mortgages.

Some other surprises after the jump.

1) The rate of mortgage delinquency was about the same regardless of how old the homeowner's business was or how many employees it had.

2) Even after falling behind on mortgages, small business owners were able to access business credit, particularly trade credit from suppliers.

Experian is in the business of selling data to people trying to determine whether a potential borrower will pay them back. Their big-picture takeaway is that even small business owners severely behind on their personal mortgages may be good credit risks for business-related lending. But because small businesses are often evaluated based on the owner's consumer credit score, they may appear to be riskier borrowers than they actually are.

Says Gerwien: "For the business owner that’s got mortgage trouble, there’s still commercial funding available as long as you’re making your [business] payments properly." After a delinquency, the personal credit available to business owners declines, so they turn more to commercial financing, especially trade credit from suppliers, Gerwien says.

Experian also found that there was no peak in delinquencies in the April '07 to April '08 period -- the trendline just goes up. The problem disproportionately hit states like Nevada, Florida, and California where the housing bust was most severe.

Some caveats about the data: These numbers are culled from an Experian database that links consumer credit profiles with business credit profiles. The delinquencies include all types of mortgages, including primary, home equity loans, loans for second homes or investment properties, etc.

C.A.R. President gives opinion of Freddie Mac and Fannie Mae Changes, Sept. 8, 2008

2008-09-11T13:21:00.001-07:00

This weekend, the U.S. Dept. of the Treasury placed Fannie Mae and Freddie Mac, government sponsored enterprises (GSEs), into a conservatorship. The federal government is authorized to take up to an 80 percent stake in the companies, and, as part of its duties under the conservatorship, will review both Fannie’s and Freddie’s financial condition quarterly, as well as inject money into the operations as needed.

Under the conservatorship, both GSEs will be allowed to increase their mortgage funding over the next year and a half, then, beginning in 2010, the plan calls for a reduction in their portfolios of 10 per cent a year until they have been reduced to $250 billion. As part of this weekend’s action, both CEOs were relieved of their duties and Herbert Allison, former Merrill Lynch vice chairman, and David Moffett, former U.S. Bancorp CFO, were selected to lead Fannie Mae and Freddie Mac, respectively.

In light of the U.S. Dept. of the Treasury’s action, C.A.R. today reaffirmed its support for Fannie Mae and Freddie Mac and their countercyclical roles.

While the short-term impact of the Treasury’s actions over the weekend served to calm the markets and restore confidence, in the longer term these entities need to be able to fulfill their historic mission. A privatized Fannie and Freddie will short-circuit the countercyclical role the GSEs have played during precarious times in real estate markets.

Without an institutionalized mortgage-backed securities market, mortgage capital eventually will be less predictable and more expensive, and adjustable-rate mortgages could become the standard loan for home buyers, as could higher down payment requirements. The 30-year, fixed-rate mortgage as we know it will no longer be readily available for most home buyers and may effectively disappear. The result could be a dramatic decline in homeownership rates in California and across the nation.

C.A.R. is concerned that the Treasury, and Fannie Mae’s and Freddie Mac’s new CEOs, will overreact and change the mission and role of the GSEs. Wall Street and investors are understandably reluctant to buy mortgage backed securities (MBS) that are not either originated from or guaranteed by Fannie or Freddie.

The GSEs hold or have securitized nearly half -- roughly $5 trillion -- of all mortgages in the U.S., and in the current environment with private lender constraints, they account for the vast majority of all new mortgages in California.

We have just recently begun to see an increase in home sales, currently at nearly 490,000 units on an annualized basis, up from 284,000 in the fourth quarter of last year. The most significant, reliable source of home loans in California today are financed by either Fannie Mae or Freddie Mac. California’s and the nation’s housing markets simply cannot withstand the financial rug being pulled out from beneath them. Additionally, the repercussions this could have on the already weak economy could be devastating.

C.A.R. is urging lawmakers to support continued government involvement in supporting the institutional secondary market and its role in creating homeownership opportunities. While we applaud the U.S. Dept. of the Treasury for increasing the GSEs portfolio limits, we will be asking Congress to enact legislation to ensure the two companies continue to fulfill their mission.

To help your clients understand the role of the GSEs, please take a look at a new video featuring C.A.R. Executive Vice President Joel Singer at http://www.car.org/newsstand/video-js-gse. In “Fannie and Freddie: Why They Matter to You,” Joel explains the often confusing but critical role Fannie Mae and Freddie Mac play in the housing market in clear and concise terms. I’m also featured in a new video developed especially for our members about the GSEs. You can find "Understanding Fannie and Freddie” on the car.org home page at www.car.org. I hope you find them useful. We’ll also be tracking the story for you as it develops in Wednesday’s “C.A.R. Newsline,” and will have additional information to help you make sense of the story for consumers in this Thursday’s edition of “Market Matters.”

Sincerely,

William E. Brown
2008 President
CALIFORNIA ASSOCIATION OF REALTORS®

Delinquencies and Foreclosures Increase in Latest MBA National Delinquency

2008-09-11T11:59:00.000-07:00

Title: Delinquencies and Foreclosures Increase in Latest MBA National Delinquency Survey
Source: MBA
Date: 9/5/2008
Contacts:
Name: Phone: Email:
Carolyn Kemp (202) 557-2727 ckemp@mortgagebankers.org

WASHINGTON, D.C. (September 5, 2008) — The delinquency rate for mortgage loans on one-to-four-unit residential properties stood at 6.41 percent of all loans outstanding at the end of the second quarter of 2008, up six basis points from the first quarter of 2008, and up 129 basis points from one year ago on a seasonally adjusted basis, according to the Mortgage Bankers Association’s (MBA) National Delinquency Survey.
The delinquency rate includes loans that are at least one payment past due but does not include loans somewhere in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the second quarter was 2.75 percent, an increase of 28 basis points from the first quarter of 2008 and 135 basis points from one year ago.

The percentage of loans on which foreclosure actions were started during the second quarter was 1.08 percent, up 7 basis points from last quarter and up 49 basis points from one year ago on a non-seasonally adjusted basis.

The seasonally adjusted total delinquency rate continues to be the highest recorded in the MBA survey. The increase in the overall delinquency rate was driven by increases in the number of loans 90 or more days past due, primarily in California and Florida. The 30 day delinquency percentage remains below levels seen as recently as 2002.

Once again this quarter, the rate of foreclosure starts and the percentage of loans in the process of foreclosure set new records.
The foreclosure starts rate differed greatly by loan type. For prime loans, foreclosure starts on fixed rate loans were 0.34 percent, an increase of five basis points, while prime ARM foreclosure starts were 1.82 percent, a 26 basis point increase. For subprime loans, fixed rate foreclosure starts increased 27 basis points to 2.07 percent and subprime ARM foreclosure starts increased 31 basis points to 6.63 percent. FHA foreclosure starts decreased one basis point to 0.95 percent and VA foreclosure starts increased six basis points to 0.57 percent, all on a non-seasonally adjusted basis.
“The national foreclosure numbers continue to be driven by the hardest hit states continuing to get much worse. The increases in foreclosures in California and Florida overwhelmed improvements in states like Texas, Massachusetts and Maryland,” said Jay Brinkmann, MBA’s Chief Economist and Senior Vice President for Research and Economics. “For the quarter, a majority of the states saw relatively little change one way or the other. California and Florida alone accounted for 39 percent of all of the foreclosures started in the country during the second quarter and 73 percent of the increase in foreclosures between the first and second quarters.”

Only eight states had rates of foreclosure starts that were above the national average: Nevada, Florida, California, Arizona, Michigan, Rhode Island, Indiana, and Ohio. The remaining 42 states plus the District of Columbia were below the national average.

“The other factor that continues to drive foreclosure rates is loan type,” continued Brinkmann. “Subprime ARM loans accounted for 36 percent of all foreclosures started and prime ARMs, which include option ARMs, represented 23 percent. However, the increase in prime ARMs foreclosure starts was greater than the combined increase in fixed-rate and ARM subprime loans. Thus the foreclosure start numbers will likely be increasingly dominated increasingly by prime ARM loans.

California and Florida accounted for 58 percent of all prime ARM foreclosure starts in the second quarter and 78 percent of the increase in prime ARM foreclosure starts. The foreclosure starts rates on prime ARMs were 2.47 percent for California and 3.20 percent for Florida, versus the national median of 1.06 percent. The foreclosure starts rate for subprime ARM loans in California was 9.5 percent and in Florida 9.1 percent, about double the national median rate for subprime ARMs.

“Perhaps the question most asked these days is whether we are close to a bottom, in other words, when will delinquency and foreclosure rates begin to head down. The simple answer is that the idea of a national bottom is somewhat meaningless. Real estate markets are local and some markets are already improving. For example, even Michigan, one of the worst hit markets in the country, has now gone three quarters with little to no increase in its rate of foreclosures. Likewise, Massachusetts showed a very large drop in foreclosure starts, perhaps signaling a bottom. Because of the sheer size of California and Florida, an improvement in the national numbers, whether delinquencies, home prices or any other measure, is unlikely until we see some turnaround in those two states,” Brinkmann said.

MBA reports seasonally adjusted and unadjusted numbers for the major mortgage performance indices. 30-day delinquencies exhibit the strongest seasonality, followed by 60-day and 90-day delinquencies. For foreclosure starts, the difference between the seasonally adjusted and unadjusted numbers is normally only a few basis points (see chart at the end of the press release). For the first time this quarter, the difference jumped to 11 basis points. The reason is that with the fundamental changes in mortgage performance, seasonal adjustment models estimated in more benign environments can lead to questionable results and incorrect conclusions. Since the fundamental factors now driving foreclosures clearly overwhelm any seasonal factors, the seasonally adjusted results for foreclosure starts are most likely misleading unless there is a major increase in the third quarter.

Change from last quarter (first quarter of 2008)

The seasonally adjusted delinquency rate increased 22 basis points for prime loans to 3.93 percent. The delinquency rate decreased 12 basis points for subprime loans to 18.67 percent, decreased nine basis points for FHA loans to 12.63 percent, and decreased 40 basis points for VA loans to 6.82 percent.

The foreclosure inventory rate increased 20 basis points for prime loans to 1.42 percent, and increased 107 basis points for subprime loans to 11.81 percent. FHA loans saw a 16 basis point decrease in foreclosure inventory rate to 2.24 percent, while the foreclosure inventory rate for VA loans increased nine basis points to 1.33 percent.

The non-seasonally adjusted foreclosure starts rate increased six basis points for prime loans to 0.61 percent, increased 18 basis points for subprime loans to 4.26 percent, increased six basis points for VA loans to 0.57 percent, and declined one basis point for FHA loans to 0.95 percent.

The seriously delinquent rate, the non-seasonally adjusted percentage of loans that are 90 days or more delinquent, or in the process of foreclosure, was up from both last quarter and from last year. This measure is designed to account for inter-company differences on when a loan enters the foreclosure process.

Compared with last quarter, the seriously delinquent rate increased for all loan types, except FHA loans. The rate increased 36 basis points for prime loans to 2.35 percent, increased 143 basis points for subprime loans to 17.85 percent, increased 12 basis points for VA loans percent to 3 percent and decreased 16 basis points for FHA loans to 5.43 percent.

Change from last year (second quarter of 2007)

On a year-over-year basis, the seasonally adjusted delinquency rate increased for all loan types. The delinquency rate increased 120 basis points for prime loans, increased 385 basis points for subprime loans, increased five basis points for FHA loans, and increased 67 basis points for VA loans.

The percent of loans in the foreclosure process increased 83 basis points for prime loans and 629 basis points for subprime loans. The rate increased nine basis points for FHA loans and 31 basis points for VA loans.

The non-seasonally adjusted foreclosure starts rate increased 49 basis points overall, 36 basis points for prime loans, 181 basis points for subprime loans, 21 basis points for FHA loans, and 23 basis points for VA loans.

The seriously delinquent rate was 137 basis points higher for prime loans and 858 basis points higher for subprime loans. The rate also increased 25 basis points for FHA loans and 65 basis points for VA loans.

If you are a member of the media and would like a copy of the survey, please contact Carolyn Kemp at (202) 557-2727 or ckemp@mortgagebankers.org. If you are not a member of the media and would like to purchase the survey, please call (800) 348-8653.

Rates of foreclosures started – All Loans

Date Seasonally Adjusted Non-Seasonally Adjusted Difference
2000 - Q1 0.36 0.36 0.00
2000 - Q2 0.31 0.30 0.01
2000 - Q3 0.44 0.42 0.02
2000 - Q4 0.41 0.43 -0.02
2001 - Q1 0.39 0.40 -0.01
2001 - Q2 0.48 0.47 0.01
2001 - Q3 0.48 0.46 0.02
2001 - Q4 0.44 0.47 -0.03
2002 - Q1 0.44 0.45 -0.01
2002 - Q2 0.50 0.49 0.01
2002 - Q3 0.45 0.44 0.01
2002 - Q4 0.41 0.42 -0.01
2003 - Q1 0.41 0.41 0.00
2003 - Q2 0.36 0.36 0.00
2003 - Q3 0.44 0.43 0.01
2003 - Q4 0.45 0.46 -0.01
2004 - Q1 0.47 0.46 0.01
2004 - Q2 0.40 0.39 0.01
2004 - Q3 0.40 0.42 -0.02
2004 - Q4 0.46 0.46 0.00
2005 - Q1 0.42 0.42 0.00
2005 - Q2 0.39 0.38 0.01
2005 - Q3 0.41 0.41 0.00
2005 - Q4 0.42 0.42 0.00
2006 - Q1 0.41 0.42 -0.01
2006 - Q2 0.43 0.40 0.03
2006 - Q3 0.46 0.47 -0.01
2006 - Q4 0.54 0.57 -0.03
2007 - Q1 0.58 0.59 -0.01
2007 - Q2 0.65 0.59 0.06
2007 - Q3 0.78 0.78 0.00
2007 - Q4 0.83 0.88 -0.05
2008 - Q1 0.99 1.01 -0.02
2008 - Q2 1.19 1.08 0.11
Source: MBA NDS

###

The Mortgage Bankers Association (MBA) is the national association representing the real estate finance industry, an industry that employs more than 370,000 people in virtually every community in the country. Headquartered in Washington, D.C., the association works to ensure the continued strength of the nation's residential and commercial real estate markets; to expand homeownership and extend access to affordable housing to all Americans. MBA promotes fair and ethical lending practices and fosters professional excellence among real estate finance employees through a wide range of educational programs and a variety of publications. Its membership of over 2,400 companies includes all elements of real estate finance: mortgage companies, mortgage brokers, commercial banks, thrifts, Wall Street conduits, life insurance companies and others in the mortgage lending field. For additional information, visit MBA's Web site: www.mortgagebankers.org.

C.A.R. RELEASES NEW CONSUMER VIDEO ON FANNIE'S, FREDDIE'S ROLE IN HOMEOWNERSHIP

2008-09-11T11:57:00.001-07:00

C.A.R. RELEASES NEW CONSUMER VIDEO ON FANNIE'S, FREDDIE'S ROLE IN HOMEOWNERSHIP
C.A.R. on Thursday released "Fannie and Freddie: Why They Matter to You," a new video featuring C.A.R. Executive Vice President Joel Singer explaining the often confusing but critical role GSEs play in the housing market.

"California's housing and real estate market is currently in a precarious state," Singer said. "We have just recently begun to see an increase in home sales, and the most significant, reliable source of home loans in California today are either financed by Fannie Mae or Freddie Mac. Their role is to provide continuous and competitively priced capital to the mortgage markets in both up and down markets and to promote homeownership and affordability.

"When private lenders have not been able to participate in the market, Fannie and Freddie historically have been there," he said. "They've been there with affordable mortgages and they've also been there with innovative programs, particularly for low-income and first-time buyers."

To view the complete video interview with Joel Singer, go to http://www.car.org/newsstand/video-js-gse.

Fannie, Freddie Placed into Conservatorship

2008-09-11T11:54:00.000-07:00

FANNIE, FREDDIE PLACED INTO CONSERVATORSHIP
This past weekend, the U.S. Dept. of the Treasury placed Fannie Mae and Freddie Mac, government sponsored enterprises (GSEs), into a conservatorship. The federal government is authorized to take up to an 80 percent stake in the companies, and, as part of its duties under the conservatorship, will review both Fannie's and Freddie's financial condition quarterly, as well as inject money into the operations as needed.

Under the conservatorship, both GSEs will be allowed to increase their mortgage funding over the next year and a half, then, beginning in 2010, the plan calls for a reduction in their portfolios of 10 per cent a year until they have been reduced to $250 billion. As part of this weekend's action, both CEOs were relieved of their duties and Herbert Allison, former Merrill Lynch vice chairman, and David Moffett, former U.S. Bancorp CFO, were selected to lead Fannie Mae and Freddie Mac, respectively.

In light of the U.S. Dept. of the Treasury's action, C.A.R. this week reaffirmed its support for Fannie Mae and Freddie Mac and their countercyclical roles. While the short-term impact of the Treasury's actions over the weekend served to calm the markets and restore confidence, in the longer term these entities need to be able to fulfill their historic mission. A privatized Fannie and Freddie will short-circuit the countercyclical role the GSEs have played during precarious times in real estate markets.

C.A.R. is urging lawmakers to support continued government involvement in supporting the institutional secondary market and its role in creating homeownership opportunities. While C.A.R. applauds the U.S. Dept. of the Treasury for increasing the GSEs portfolio limits, the Association will be asking Congress to enact legislation to ensure the two companies continue to fulfill their mission.

To help your clients understand the role of the GSEs, please take a look at a new video featuring C.A.R. Executive Vice President Joel Singer at http://www.car.org/newsstand/video-js-gse. In "Fannie and Freddie: Why They Matter to You," Joel explains the often confusing but critical role Fannie Mae and Freddie Mac play in the housing market in clear and concise terms. C.A.R. President William E. Brown also is featured in a new video about the GSEs developed especially for our members. You can find "Understanding Fannie and Freddie" on the car.org home page at www.car.org.

The Endgame Nears For Fannie and Freddie

2008-09-06T10:53:00.000-07:00

By JONATHAN R. LAING
The almost inevitable government recapitalization of Fannie Mae and Freddie Mac will likely wipe out investors—and management.

IT MAY BE CURTAINS SOON FOR THE MANAGEMENTS and shareholders of beleaguered housing giants Fannie Mae and Freddie Mac . It is growing increasingly likely that the Treasury will recapitalize Fannie and Freddie in the months ahead on the taxpayer's dime, availing itself of powers granted it under the new housing bill signed into law last month. Such a move almost certainly would wipe out existing holders of the agencies' common stock, with preferred shareholders and even holders of the two entities' $19 billion of subordinated debt also suffering losses. Barron's first raised the possibility of a government takeover of Fannie and Freddie in a March 10 cover story, "Is Fannie Mae Toast?"

Martin Kozlowski
Many of Fannie's and Freddie's credit losses come from risky mortgages that the agencies bought or guaranteed in recent years to boost their market share.
Heaven knows, the two government-sponsored enterprises, or GSEs, both need resuscitation. Soaring mortgage delinquencies and foreclosures have led the companies to gush red ink for the past four quarters, and their managements concede the outlook is even grimmer well into next year. Shares of Fannie Mae (ticker: FNM) and Freddie Mac (FRE) have lost around 90% of their value in the past year, with Fannie now trading at $7.91, and Freddie at $5.88.

Similarly, the balance sheets of both companies have been destroyed. On a fair-value basis, in which the value of assets and liabilities is marked to immediate-liquidation value, Freddie would have had a negative net worth of $5.6 billion as of June 30, while Fannie's equity eroded to $12.5 billion from a fair value of $36 billion at the end of last year. That $12.5 billion isn't much of a cushion for a $2.8 trillion book of owned or guaranteed mortgage assets.

What's more, the fair-value figures reported by the companies may overstate the value of their assets significantly. By some calculations each company is around $50 billion in the hole. But more on that later.

Bringing Fannie and Freddie to heel will be difficult for the Bush administration, despite the GSEs' (Government-Sponsored Enterprises') parlous financial condition. Consider their history. In the early 1980s Fannie was effectively insolvent, but the government allowed it to continue operating. Eventually long-term interest rates dropped, bolstering the value of the company's mortgages and bringing it back from the brink. Earlier in the current decade Fannie and Freddie successfully fought a full-scale attempt by the White House and some brave Republican legislators to clamp down on their operations, after they were caught perpetrating accounting frauds.

Note, too, that Fannie and Freddie have nonpareil lobbying operations and formidable political strength, owing to their hefty donations and penchant for hiring former political operatives. Besides, the agencies claim they've landed in their current predicament through no fault of their own. As Freddie Mac Chairman and CEO Richard Syron recently put it, the GSEs have been hit by a "100-year storm" in the housing market, accentuated by some higher-risk mortgages that they were forced to buy to meet government affordable-housing targets.

MAKING SENSE OF THE STORY FOR THE CONSUMER

· According to the Barron's article, which states "should the agencies fail to raise fresh capital, the administration is likely to mount its own recapitalization, with Treasury infusing taxpayer money into the enterprises," consumers would be led to believe that a government bail out is the only option. Although a cash infusion may be needed, it is not likely that the Treasury would purchase an equity stake in either Fannie or Freddie. Additionally, the Treasury Dept. must negotiate an agreement with the GSEs. Fannie and Freddie continue to raise capital on their own and some reports show that the GSEs are looking for private-equity firms or outside investors to provide the financing, which would help raise capital and reassure Wall Street.

· The article also states, "In the early 1980s Fannie was effectively insolvent, but the government allowed it to continue operating." Many consumers are not aware of how the GSEs serve the market or what their roles are. Unlike banks, which lend directly to consumers, Fannie Mae and Freddie Mac operate in what is known as the "secondary mortgage market." They purchase or guarantee loans from direct lenders in the "primary mortgage market" and either hold onto them until they mature, or sell the loans in the form of mortgage-backed securities. By the GSEs guaranteeing or purchasing the loans from banks, Fannie and Freddie are able to fulfill their congressional mission and supply an affordable and stable source of capital to lenders, allowing them to offer more home loans.

· Due to tighter lending standards, it is becoming increasingly more difficult for borrowers to secure home loans. If Fannie Mae and Freddie Mac did not guarantee or purchase primary lenders' loans, the cost of homeownership would dramatically increase as lenders would experience an even greater capital shortage.

· Many financial institutions in the mortgage business are experiencing losses, and while the GSEs are no exception, their portfolios continue to outperform the majority of lenders in the market. Additionally, unlike private investors which seem to have abandoned the mortgage market, Fannie Mae and Freddie Mac are fulfilling their congressional mission to provide an affordable and stable flow of capital to home-loan lenders.

Housing slump means those who buy now could save on taxes

2008-09-06T10:46:00.000-07:00

05:36 PM PDT on Sunday, August 31, 2008
By DUANE W. GANG
The Press-Enterprise
If you hate paying taxes, now might be the time to buy a new home.

One benefit of the housing slump is residents who are able to purchase stand to reap major savings in property tax payments if they hold onto the house for years to come.

Under Prop. 13, the landmark 1978 measure limiting property tax increases, the sales price of a home is generally used to set a home's base value.

From there, the annual assessment, which determines how much is paid in taxes, can jump no more than 2 percent each year.

That means a better tax deal in today's climate of plummeting home values, local tax officials said.

"Their taxes will be lower than their neighbor who bought in 2006 -- forever," said Frit Swain, Riverside County's assistant assessor for valuation.

Here's how: If a person bought a home last year for $300,000, that price would establish the base-year value.

In 10 years, the assessment would jump to about $358,500.

A person buying an identical home this year at the Inland region's median home value of $261,000 would see their assessment increase to about $311,900 in 10 years.

Even if the first homebuyer received a temporary reduction because of the current housing slump, the home's value is likely to rebound over time. When values do come back, the person would be paying the same had the reduction never occurred.

If people can afford to buy, now is a good opportunity, Swain said.

"It's one of those self-adjusting type of things with the housing economy," he said. "It happens every so often."

Kris Vosburgh, executive director of the Howard Jarvis Taxpayers Association, said most would-be homebuyers probably aren't thinking about the best tax deal.

Rather, they will look at how much house they can get for their money, and the amount of their monthly payments, he said.

"If the tax is down a little bit, that means more money to put into the house," he said. "From a tax perspective, it is a bargain right now."

Vosburgh said the No. 1 virtue of Prop. 13 is making your tax bill predictable.

"Whether you buy this week or you bought 20 years ago, you as an owner know pretty nearly what you will pay this year or next year or in 20 years," he said.

"Because it is based on what you voluntarily agree to pay, you control your own tax destiny."

But before you rush out to buy a house out of foreclosure for dirt cheap in order to pay less in taxes, there is a possible catch. The price paid for a foreclosed home might not reflect the current value if it is heavily damaged, officials in Riverside and San Bernardino counties said.

Ted Lehrer, a spokesman for the San Bernardino County assessor's office, said appraisers determine the base-year value much the same as a normal property. The appraisers compare the sale to other comparable properties sold nearby, he said.

But a foreclosed home might not reflect the current market, he said.

"Oftentimes these properties are not in good condition and/or the lenders are in a hurry to get them sold," Lehrer said by e-mail. "In cases like these, the sales price will not be representative of the market, and the value that the appraiser determines to be the full cash value may be higher."

At some point, foreclosures could become the driving force in home sales, and appraisers might then have to recognize those sales as reflective of the current market value, Lehrer said.

Swain in Riverside County also said the price paid for a foreclosed home is not necessarily the value used to for tax purposes.

"Many times those properties have deferred maintenance on them. Things have been ripped out of the wall," Swain said.

"If we see something that is way out of the ballpark on a low purchase -- many times we will find the owner had to put in another $30,000 to $50,000 -- that would be added on," Swain said.

Reach Duane W. Gang at 951-368-9547 or dgang@PE.com

C.A.R. creates informative Fannie Mae and Freddie Mac video for consumers

2008-09-06T10:38:00.000-07:00

In response to numerous misleading and unbalanced news reports about Fannie Mae and Freddie Mac, C.A.R. created a new video to educate consumers about the importance of Fannie Mae and Freddie Mac, and how the Government Sponsored Enterprises operate in the market. The video, which features C.A.R.’s Executive Vice President Joel Singer, explains the crucial countercyclical role the GSEs serve, and the likely consequences should they be nationalized or eliminated.

The video is available on C.A.R.’s Web site or on YouTube at http://www.youtube.com/v/6LDnKk-ZSiA. C.A.R. also encourages REALTORS® to post the video on their Web sites and use it in other communication vehicles.

To view the consumer video, please click here:
http://www.car.org/newsstand/video-js-gse

Home loan troubles break records again

2008-09-06T10:35:00.000-07:00

By ALAN ZIBEL, AP Business Writer
Fri Sep 5, 10:56 AM ET
A record 9 percent of American homeowners with a mortgage were either behind on their payments or in foreclosure at the end of June, as damage from the housing crisis continues to mount, the Mortgage Bankers Association said Friday.

But the source of trouble in the mortgage market has shifted from subprime loans made to borrowers with poor credit to homeowners who had solid credit but took out exotic loans with ballooning monthly payments.

The problem is also concentrated in a handful of states, the worst being California and Florida. The real estate markets in those two states were fueled by some of the riskiest lending practices and rampant speculation during the housing boom that has turned into a devastating bust.

"That's clearly the problem," said Jay Brinkmann, the association's chief economist. "The national numbers are driven by the two largest states" with the most outstanding home loans.

The latest quarterly snapshot of the market broke records for late payments, homes entering the foreclosure process and for the inventory of loans in foreclosure. The trade group's records go back to 1979.

The percentage of loans at least 30 days past due or in foreclosure was up from 8.1 percent in the January-March quarter, using figures that were not adjusted for seasonal factors.

New foreclosures were concentrated in eight states: Nevada, Florida, California, Arizona, Michigan, Rhode Island, Indiana and Ohio.

But for the first time since the mortgage crisis started, delinquencies on subprime adjustable-rate loans declined. While more than one out of every five homeowners with a subprime ARM is still in default, that portion dipped 1 percentage point from the first quarter to 21 percent.

What's driving the delinquency rate up now is the number of homeowners with risky, adjustable-rate prime loans made with little or no proof of the borrowers' income or assets.

Many of these loans allowed the borrower to pay only the interest on the loan for a fixed period of time. Others gave borrower the option to "pick-a-payment," adding any unpaid interest to the principal balance.

More than one out of 10 borrowers with a prime adjustable-rate loan is now delinquent or in foreclosure. That portion, 11.3 percent, was up from 9.7 percent in the first quarter and is expected to continue to rise as more homeowners see their monthly payments spike.

Government Legislation Update Aug. 2008

2008-09-05T09:39:00.000-07:00

Only five months into 2007, we’ve
already seen a flurry of legislation pass
through Sacramento. Obviously the hottest
item on the agenda was SB670, the
Private Transfer Tax Prohibition bill.
Unfortunately, the bill was defeated in
the Senate Transportation and Housing
Committee even though C.A.R. added a
list of amendments to quell concerns of
some legislators. Another piece of legislation
that’s very important is SB464, which
is throwback to the Ellis Act. C.A.R.
strongly opposes it and urges all members
to call their senators and ask them to
oppose it.

For more information on legislative
issues, contact Anil Babbar, Government
Affairs Director, at anil@sccaor.com.

C.A.R. is the sponsor of AB
1356 (Houston) Agents of Equity
Purchasers, which was scheduled
to be heard by the Assembly Judiciary
Committee on April 24, and will be
rescheduled to be heard within the next
few weeks. Existing law effectively (and
inappropriately) precludes legitimate
agents from representing investor purchasers
of properties that are in foreclosure.
The prohibition is the inadvertent result
of requiring buyers’ agents to purchase
a bond for the sale of twice the value of
the property. These bonds are currently
not available. AB 1356 will allow agents
an alternative for demonstrating financial
responsibility through the proof of E&O
insurance, which is available. This measure
will make the financed responsibility
requirement of the Home Equity Sales Act
workable, and avoid artificial restrictions
on the ability of homeowners to salvage
their equity from foreclosure.

C.A.R. is the sponsor of
SB 226 (Negrete McLeod)
“Degree Broker” Education
Requirements, which was scheduled
to be heard by the Senate Appropriations
Committee on April 23, but was granted
passage without a hearing due to Senate
Joint Rule 28.8. SB 226 will next be eligible
to be heard on the Senate Floor.
Existing law requires most applicants for
a brokers license, in addition to exam passage,
to demonstrate a valid salespersons
license and two years experience in general
real estate. Current law also provides that
the Real Estate Commissioner may grant a
license to an applicant without real estate
experience who has a degree from a 4-year
college or university with a “specialization
in real estate.” SB 223 will clarify that rule
to require that the degree have a major or
minor in real estate before the applicant
could be granted an experience exemption.
This bill will not change the other mechanisms
for demonstrating equivalency such
as a petition by a licensee from another
state for recognition of his or her experience.

C.A.R. supports SB 303
(Ducheny) Housing Affordability
Act of 2007, which passed the Senate
Environmental Quality Committee on
April 23. SB 303 proposes to require each
city’s and county’s general plan to have a
planning period of at least 20 years, and
would require it to be updated every 10
years, with the exception of the housing
element portion which would continue to
be updated every 5 years. It also requires
local governments to zone enough land to
accommodate a 10-year housing need, and
to certify that the land zoned for housing
is actually suitable for housing. SB 303
further requires that adopted zoning ordinances
be consistent with the jurisdiction’s
general plan. If a proposed project is consistent
with the general plan, zoning would
be subject to the Permit Streamlining Act
and cannot be denied except by a 4/5 vote
of the local agency. C.A.R. supports SB
303 because it seeks to encourage the supply
of housing and fosters more certainty
in, and streamlining of, the local government
housing planning process.

C.A.R. oppose SB 464 (Kuehl)
Required Operating Time for
Privately Owned Rental Property,
which was scheduled to be heard by the
Senate Appropriations Committee on
April 23, but was granted passage without
a hearing due to Senate Joint Rule 28.8.
This bill has been eligible to be heard on
the Senate Floor since April 26. Existing
law prohibits any public entity from taking
any action that would force owners of
residential rental property to continue to
offer their property for rent or lease. SB
464 would grant local governments the
authority to require landlords of all rental
property, including single family dwellings,
to stay in the rental business for a
minimum of 5 years after the purchase of
that rental property. This bill, if passed,
will only apply to properties purchased on
or after March 27, 2007. Furthermore, SB
464 requires that landlords give all tenants
a one year notice of termination of tenancy
if a single disabled or senior citizen that
is 62 years of age or older resides within
their rental units. C.A.R. opposes SB 464
because it discourages investment in rental
housing by placing a substantial limitation
on a property owner’s right to legitimately
go out of business. If passed, this measure
will negatively impact property values,
selling prices and hinder investors’ ability
to obtain loans on rental property. Finally,
this measure creates a biased standard
against rental property owners because
the legislature does not demand any other
business to operate for 5 years when they
open for business.

C.A.R. supports SB 984
(Ashburn) Homeowners’ Property
Tax Exemption Increase, which was
heard by the Senate Revenue and Taxation
Committee on April 25, and was placed
on the committee’s suspense file. Existing
law allows a person who is over 55 years
of age or severely disabled to transfer
the base year value of their property to a
replacement dwelling of equal or lesser
value if that property is located within the
same county as the original property, and
is purchased or newly constructed within
2 years of the sale of the original property.
A replacement dwelling purchased under
this provision may not exceed 105% or
110% of the full cash value of the original
property during the first and second year,
respectively, after the sale of the original
property. SB 984 would instead give
counties the option of using changes in
the Housing Price Index for California to
determine if the replacement dwelling is
of equal or lesser value then the original
home. C.A.R. supports this bill because the
use of the Housing Price Index will more
accurately reflect the increased cost of
purchasing or constructing a replacement
dwelling.

C.A.R. opposes unless amended
AB 1574 (Houston) Real Estate
Transfer Fees, which is scheduled
to be heard in the Assembly Judiciary
Committee on May 1. AB 1574 provides
that all privately imposed transfer fee’s
imposed on real property after December
31, 2007, would be void unless the fee
satisfies one of the following requirements:
(1) that the fee serves a regional benefit;
(2) that the fee provides a benefit to the
real property where the fee is imposed; or
(3) the fee is a payment that is required
under conditions that serve to discourage
speculative purchases. The disclosure statement
required by this bill would identify
the amount of the fee or a description of
how the fee is calculated, the group to
which funds from the fee will be paid,
and the general purpose for the use of the
funds. C.A.R. will oppose AB 1574 unless
it is amended to reflect the principles and
concepts provided in SB 670, which is
sponsored by C.A.R.

Silicon Valley home sellers pin hopes on strong September, October

2008-09-04T11:40:00.000-07:00

Once the long Labor Day weekend is over, Silicon Valley residents who want to buy homes will start hitting the open-house circuit in earnest, real estate agents say, eager to make purchases before the holiday season begins.

"August is always the dog days of the stock market, but also the real estate market to a certain extent," said Fred Hibbert, manager of a Coldwell Banker office in Los Altos.

"September and October are really the more robust market for folks who want to get something done by the end of the year."

That's the conventional wisdom about autumn. But with local foreclosures at record highs, and mortgage availability continually changing, it's hardly been a conventional year for home buyers and sellers. What will happen this fall is still anyone's guess.

It's clear that with prices declining in many parts of Santa Clara County, sales generally accelerated this summer, especially among less expensive homes.

James Nichols, a manager with Prudential California realty brokerage firm in San Jose, thinks that momentum will continue. Many bank-owned foreclosures are selling quickly, and he's seen a small flurry of lower-priced condos sell lately.

"Some are under $250,000. There are great opportunities out there," he said.

Nichols said he thinks transactions will increase in September compared with August - if nothing drastic happens to upset buyers' ability to obtain mortgages.

"Is the financial sector going to be able to feed the demands of the home buyers, moving forward? That's really the big unknown right now," he said.

Interest in market

Jeffrey Lo and his wife, Patty, illustrate that the year-end market could go either way in Silicon Valley.

"We're still very interested in buying, but we're still also interested in waiting and seeing," Lo said. The 31-year-old software engineer has been actively looking for a home in Sunnyvale or Cupertino for about six months, recently making an offer on a townhouse and losing out to another bidder.

He knows a few people who have lost their jobs recently and wonders whether Silicon Valley can stay insulated from the faltering national economy much longer. Though he wants to buy, "I'm going to step back and not get overly emotional about the purchase."

Many real estate agents also point to the relatively high number of "pending" sales in Santa Clara County as evidence of a market that's rebounding after a slow first half of the year. More than twice as many home sales were pending this week than last year at this time, Hibbert said. "Pending" means sellers and buyers have signed a purchase contract; there are different categories of "pending," based on how close the sale is to being complete. For example, as of Friday there were 1,125 single-family houses in the county whose sales were at the brink of completion, said Audrey Sutton Shilling, president of Los Gatos-based Asante Real Estate.

"I really think that these next two months are going to be probably the best months of 2008" in terms of finalized sales, she said.

So far this year, June posted the year's best sales volume for single-family houses, with 966 changing hands in the county, according to multiple listing service data.

What's 'pending'?

But other agents, including Jason Chan Lee of brokerage Silicon Valley REO, said pending sales figures are unreliable. Lately, he said, many pending transactions fall apart, either because the buyers' loans don't come through, or because buyers who need bank approval for their "short sale" purchases get tired of waiting and move on to other properties.

Short sales occur when homeowners sell their property for less than they owe their mortgage lenders; lenders must approve the transaction, and the process can take months.

Despite what many in the real estate business perceive as a bustle of activity after school starts, sales don't actually spike in fall, said number-crunching broker Richard Calhoun of Creekside Realty in San Jose. Sales tend to decline from Memorial Day through Labor Day, and then merely flatten out in late September and October. The decline continues again in November, December and January.

Calhoun wouldn't make a prediction about this fall, saying only that as of August, "the market is following fairly normal seasonal trends."

Contact Sue McAllister at smcallister@mercurynews.com or (408) 920-5833.

Federal Housing Bill Details

2008-08-02T09:39:00.000-07:00

Friday, August 01, 2008
Brought to you by the CALIFORNIA ASSOCIATION OF REALTORS®

FEDERAL HOUSING BILL NOW LAW, INCLUDING FIRPTA FIX
This week, President Bush signed into law the Housing and Economic Recovery Act of 2008. This sweeping legislation primarily seeks to protect homeowners from foreclosure, stop declining home prices, and stabilize the mortgage industry. Major provisions of the new law affecting the real estate practice are as follows:

- SELLER NEED NOT REVEAL SSN TO BUYER UNDER FIRPTA: Effective immediately, sellers are no longer required to provide to their buyers the Seller's Affidavit of Nonforeign Status (C.A.R. Form AS), which includes the sellers' social security numbers, under the Foreign Investment in Real Property Tax Act (FIRPTA). Instead, as another option, no federal withholding is required if the seller furnishes the Seller's Affidavit with his or her social security number to escrow or other qualified substitute as defined, who in turn, furnishes a statement to the buyer stating, under penalty of perjury, that it has the Seller's Affidavit in its possession. A "qualified substitute" is a person responsible for closing the transaction, such as an escrow company, title company or the buyer's agent, but not the seller's agent. The federal withholding law is now similar to California's Franchise Tax Board (FTB) policy which allows the escrow officer to remove the seller's tax ID number from the buyer's copy of the California withholding tax statement, but not other copies.

- $300 BILLION IN FHA REFINANCING: Under the HOPE for Homeowners Program, 400,000 distressed homeowners can pay off their troubled mortgages and replace them with more affordable, FHA-insured loans. To qualify, a borrower's monthly payment on existing mortgage loans must be over 31% of his or her income as of March 1, 2008 (hence demonstrating the borrower's inability to afford the original loans). The original loans must have been originated before 2008, and secured by the borrower's principal residence (as well as only residence). Also to qualify, the borrower must satisfy FHA underwriting requirements for the new FHA-insured refinance loan.
The FHA refinance will be a fixed rate loan up to $550,400 for at least 30 years, and will include charges for FHA insurance premiums. The maximum loan-to-value ratio of the FHA refinance is 90% of the appraised value. If the refinance proceeds are insufficient to pay off the existing liens, the refinance will not go through unless the original lenders voluntarily agree to accept a short payoff as payment in full. Rules will be established to allow, among other things, equity sharing for the original junior lienholders.
Upon obtaining the FHA refinance, the borrower must share with the FHA at least 50% of any equity realized through a subsequent sale or refinance. The FHA's share in equity will be based on a sliding scale of 100% of any equity realized within the first year of the FHA loan, 90% the second year, and so on, but not less than 50%. The HOPE for Homeowners Program shall be in effect from October 1, 2008 to September 30, 2011.

- $7,500 TAX CREDIT FOR FIRST-TIME HOMEBUYERS: With certain exceptions, a first-time homebuyer will receive a tax credit of 10% of the purchase price up to $7,500 maximum, for the tax year in which the buyer purchases a principal residence. The tax credit, however, must be repaid like an interest-free loan in equal installments over the next 15 years or in full if the homebuyer sells the property for a gain. A buyer qualifies as a "first-time" homebuyer as long as the buyer (and spouse if any) has not owned a principal residence in the U.S. for the last three years. The tax credit phases out for a taxpayer with a modified adjusted gross income over $75,000 (or $150,000 for joint returns). This tax credit is available for qualifying homes purchased from April 9, 2008 through June 30, 2009.

- FANNIE MAE, FREDDIE MAC, AND FHA REFORM: The new law permanently sets the conforming loan limit for FHA and government-sponsored enterprises (GSE) Fannie Mae and Freddie Mac at 115% of an area's median home price, not to exceed $625,500. The new loan limits take effect after the current $729,750 loan limit expires on December 31, 2008.
The new law also authorizes the Treasury Department to bail out Fannie Mae and Freddie Mac if necessary by increasing their lines or credit or purchasing their stock. A new governmental agency, the Federal Housing Finance Agency, will be created to oversee GSE operations. Other FHA reform includes an increase in the minimum down payment requirement from 3% to 3.5%, and effective October 1, 2008, the elimination of seller-funded down payment assistance programs.

Some of the other provisions of the new Housing Act are, without limitation, $4 billion in assistance to stabilize neighborhoods hurt by the foreclosure crisis, $180 million for pre-foreclosure counseling, Home Equity Conversion Mortgage (HECM) reverse mortgage reform, assistance for veterans, and the creation of a nationwide loan originator licensing and registration system. The appropriate governmental agencies will establish new regulations as needed to carry out and enforce the new Housing Act.

President Signs Historic Housing Bill!!

2008-07-30T16:44:00.000-07:00

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:

*
A temporary increase in mortgage revenue bonds to refinance subprime mortgages.
*
New regulator for Government Sponsored Enterprises to restore investor confidence in GSE loans and help the market and economy stabilize.
*
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.
*
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.
*
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.
*
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.
*
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:

*
The Treasury Department’s proposal to create a federal backstop program to insure the financial well-being of Fannie Mae and Freddie Mac.
*
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.
*
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!

Visit the web address below to tell your friends about this.
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Menlo Park real estate doing well

2008-07-26T11:35:00.000-07:00

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

2008-07-26T11:33:00.001-07:00

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

2008-07-18T14:58:00.000-07:00

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

2008-07-17T15:48:00.000-07:00

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

2008-07-16T20:53:00.000-07:00

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

2008-07-16T20:47:00.001-07:00

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

Federal Reserve Bank of NY Granted Authority to Lend to Fannie Mae and Freddie Mac

2008-07-16T20:42:00.001-07:00

Press Release

Release Date: July 13, 2008

For immediate release

The Board of Governors of the Federal Reserve System announced Sunday that it has granted the Federal Reserve Bank of New York the authority to lend to Fannie Mae and Freddie Mac should such lending prove necessary. Any lending would be at the primary credit rate and collateralized by U.S. government and federal agency securities. This authorization is intended to supplement the Treasury's existing lending authority and to help ensure the ability of Fannie Mae and Freddie Mac to promote the availability of home mortgage credit during a period of stress in financial markets.

Mortgage Rules to Tighten...Say Fed

2008-07-16T20:31:00.001-07:00

Press Release

Release Date: July 14, 2008

For immediate release

The Federal Reserve Board on Monday approved a final rule for home mortgage loans to better protect consumers and facilitate responsible lending. The rule prohibits unfair, abusive or deceptive home mortgage lending practices and restricts certain other mortgage practices. The final rule also establishes advertising standards and requires certain mortgage disclosures to be given to consumers earlier in the transaction.

The final rule, which amends Regulation Z (Truth in Lending) and was adopted under the Home Ownership and Equity Protection Act (HOEPA), largely follows a proposal released by the Board in December 2007, with enhancements that address ensuing public comments, consumer testing, and further analysis.

"The proposed final rules are intended to protect consumers from unfair or deceptive acts and practices in mortgage lending, while keeping credit available to qualified borrowers and supporting sustainable homeownership," said Federal Reserve Chairman Ben S. Bernanke. "Importantly, the new rules will apply to all mortgage lenders, not just those supervised and examined by the Federal Reserve. Besides offering broader protection for consumers, a uniform set of rules will level the playing field for lenders and increase competition in the mortgage market, to the ultimate benefit of borrowers," the Chairman said.

The final rule adds four key protections for a newly defined category of "higher-priced mortgage loans" secured by a consumer's principal dwelling. For loans in this category, these protections will:

Prohibit a lender from making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value. A lender complies, in part, by assessing repayment ability based on the highest scheduled payment in the first seven years of the loan. To show that a lender violated this prohibition, a borrower does not need to demonstrate that it is part of a "pattern or practice."
Require creditors to verify the income and assets they rely upon to determine repayment ability.
Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years. This rule is substantially more restrictive than originally proposed.
Require creditors to establish escrow accounts for property taxes and homeowner's insurance for all first-lien mortgage loans.

"These changes have made for better rules that will go far in protecting consumers from unfair practices and restoring confidence in our mortgage system," said Governor Randall S. Kroszner.

In addition to the rules governing higher-priced loans, the rules adopt the following protections for loans secured by a consumer's principal dwelling, regardless of whether the loan is higher-priced:

Creditors and mortgage brokers are prohibited from coercing a real estate appraiser to misstate a home's value.
Companies that service mortgage loans are prohibited from engaging in certain practices, such as pyramiding late fees. In addition, servicers are required to credit consumers' loan payments as of the date of receipt and provide a payoff statement within a reasonable time of request.
Creditors must provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan secured by a consumer's principal dwelling, such as a home improvement loan or a loan to refinance an existing loan. Currently, early cost estimates are only required for home-purchase loans. Consumers cannot be charged any fee until after they receive the early disclosures, except a reasonable fee for obtaining the consumer's credit history.

For all mortgages, the rule also sets additional advertising standards. Advertising rules now require additional information about rates, monthly payments, and other loan features. The final rule bans seven deceptive or misleading advertising practices, including representing that a rate or payment is "fixed" when it can change.

The rule's definition of "higher-priced mortgage loans" will capture virtually all loans in the subprime market, but generally exclude loans in the prime market. To provide an index, the Federal Reserve Board will publish the "average prime offer rate," based on a survey currently published by Freddie Mac. A loan is higher-priced if it is a first-lien mortgage and has an annual percentage rate that is 1.5 percentage points or more above this index, or 3.5 percentage points if it is a subordinate-lien mortgage. This definition overcomes certain technical problems with the original proposal, but the expected market coverage is similar.

One element of the original proposal has been withdrawn. The Federal Reserve Board had proposed for public comment certain requirements pertaining to so-called "yield-spread premiums." During the intervening period, the Board engaged in consumer testing that cast significant doubt on the effectiveness of the proposed rule. As part of its ongoing review of closed-end loan rules under Regulation Z, however, the Board will consider alternative approaches.

In finalizing the rule, the Board carefully considered information obtained from testimony, public hearings, consumer testing, and over 4,500 comment letters submitted during the comment period. "Listening carefully to the commenters, collecting and analyzing data, and undertaking consumer testing, has led to more effective and improved final rules," Governor Kroszner said.

The new rules take effect on October 1, 2009. The single exception is the escrow requirement, which will be phased in during 2010 to allow lenders to establish new systems as needed.

In a related move, the Board is publishing for public comment a proposal to revise the definition of "higher-priced mortgage loan" under Regulation C (Home Mortgage Disclosure), which requires lenders to report price information for such loans, to conform to the definition the Board is adopting under Regulation Z.

The Federal Register notices are attached.

Statement of Chairman Ben S. Bernanke

Statement of Governor Randall S. Kroszner

Highlights of Final Rule Amending Home Mortgage Provisions of Regulation Z (Truth in Lending)

Federal Register Notice, Regulation Z (984 KB PDF)

Federal Register Notice, Regulation C (148 KB PDF)

Consumer Testing of Mortgage Broker Disclosures, Summary of Findings (510 KB PDF)

Open Board Meeting Materials

2008 Banking and Consumer Regulatory Policy

2008-05-23T13:34:00.000-07:00

Short sales are sometimes a wise adjustment to your business plan

2008-04-12T14:29:00.001-07:00

by Deniece Watkins, Realtor
650-483-2055
www.DSoldOurHome.com

The patience, guidance, and knowledge of paperwork in a short sale are tenfold to other real estate transactions. When doing a short sale hire a Realtor with experience and have them help you step by step through the tedious process.

Because of the decline in prices in many areas, sellers are trying to sell their homes now, albeit at a loss, to reduce the loss they may take in the future. When they are selling their home for less than what they owe the bank, it is called a short sale. This situation requires a bank to review an offer and determine whether it is better for the bank to accept the offer which is less than the outstanding loan, or not accept the offer and force the seller into foreclosure. The bank would then own the property and could rent, sell, or otherwise encumber it as the bank wishes. The bank’s decision is purely financial, and they have the control.

When you are in the business of money it is because you are good at money. That’s a positive way to consider a bank’s position. It doesn’t mean that you won’t have to adjust your business model periodically. It means that you will recognize when you must adjust your business model, and do it. So banks have done just that. No longer is money lent out liberally by banks. They lent all of the money they could lend liberally, and are now adjusting their business model.

So how do we deal with banks the most efficiently, you ask? The home seller must also adjust their business model when the market changes. If you bought your home because of appreciation factors that looked pretty consistent in your area, it would be likely that you depended on that appreciation as part of your financial plan. If you knew your net worth was increasing in your home, you probably felt like you could spend more elsewhere. You could eat more dinners out, see more movies, take more trips, etc. So in times when the appreciation was not so robust, wisely you would adjust your business plan and maybe take walks, ride bikes, go surfing, cook at home, and not go on extravagant vacations.

If you ended up in a market where the values unpredictably plummeted beyond what your day to day business plan adjustments could counter, you would consider a larger business plan adjustment, such as selling your home. If prices went down so far that you now owed more than your home is worth, selling your home would require permission from the bank.

Choosing to sell your home rather than foreclose should allow you to maintain a credit record that does not have a derogatory mark as impactful as a foreclosure. Typically, foreclosures stay on your credit record for seven years and greatly impede your ability to qualify for other types of credit, as well as another home loan. A short sale on your record should not be as detrimental.

There are a multitude of hoops that must be jumped through with certain precision to perform a successful short sale on your home. A Realtor can be the intermediary between you and the bank and make the process much less emotional and more streamlined. When you finish your short sale, having adjusted your business plan as necessary, you will walk away with your head up high because you took the necessary steps at the correct time to keep your “business” afloat.

Today's Loan Qualifying Criteria - April 2008

2008-04-12T10:24:00.000-07:00

by Deniece Watkins, Realtor
650-483-2055

Used to be that when someone wanted to buy a home, they spoke with lender, found out what they could buy, got a pre-approval letter, and then made an offer as a qualified buyer. Today that has changed. This doesn’t mean that they can’t qualify at all. It’s is just that the criteria has changed.

Thirty year veterans of lending are now saying, "It changes every single day and several times a day." How does a client go about making an offer that they can be sure they can afford? Write a financing contingency into everything and don’t make it a short one. Sellers understand that lending criteria has changed and they are willing to work with buyers to help them buy the home.

While lenders have these strict rules, you can prepare yourself to qualify with the following:
1) 20% down payment
2) Six months to one year reserves, not in stocks
3) Great credit scores
4) Provable gross income, typically 33% of which will be for a loan

An example for a $750,000 purchase price would mean:

1) 150,000 down payment
2) $25,484 to $50,968 was left in a bank (6 – 12 months reserves)
3) Credit scores above 730
4) $4,247 for monthly payments
5) Gross monthly income would be $12,741 or more

As mortgage backed loans begin to be traded more on Wall Street, we should be able to see lenders easing their requirements for pre-approval.

Bush Administration Expands Mortgage Help - April 9, 2008

2008-04-09T20:29:00.000-07:00

BUSH ADMINISTRATION TO EXPAND MORTGAGE HELP FOR STRUGGLING FAMILIES
Expanded FHASecure able to help half a million homeowners stay in their homes by cutting mortgage payments

WASHINGTON – The Bush Administration today announced additional mortgage assistance for subprime borrowers who are at risk of foreclosure. The plan, which is designed to help address the adverse economic conditions affecting many communities across America, will help break the cycle of house price depreciation that is being caused by an increasing number of foreclosures and the overall contraction in the credit market. Under the new plan, HUD's Federal Housing Administration (FHA) would have the added flexibility to insure more mortgages, including those for borrowers who were late on a few payments and/or received a voluntary mortgage principal write-down from their lender.

This FHASecure expansion will help more homeowners who are struggling to keep up with mortgage payments on their high-cost subprime loans. With this expansion of FHASecure, the Administration expects about 500,000 families to refinance into prime-rate FHA-insured mortgages in total by the end of this year.

"Our plan will help hundreds of thousands of desperate families who have no place else to turn for safer, lower cost ways to keep their homes," said Federal Housing Commissioner-Assistant Secretary for Housing Brian D. Montgomery at a hearing of the House Financial Services Committee. "We want to be able to help families who are in the right house, but the wrong mortgage."

In August 2007, FHA modified its refinancing program to help creditworthy homeowners who missed payments after their teaser rates reset. Now, FHASecure is expanding its eligibility standards. Homeowners who believe they meet this additional eligibility criteria must fall into one of the following categories:

Borrowers with adjustable rate mortgages who were late on two consecutive monthly mortgage payments or at two different times over the previous twelve months. FHA will require a 97 percent loan-to-value (LTV) ratio for these borrowers to refinance, the same LTV as FHA's current standard.

Borrowers with adjustable rate mortgages who were late on three consecutive monthly mortgage payments or at three different times over the past 12 months. FHA will require a 90 percent LTV ratio for these borrowers to refinance.

With these new criteria, the expanded FHASecure can help additional borrowers access a more viable refinancing option and will offer lenders an alternative to foreclosing on these individuals. Lenders may voluntarily write down the outstanding subprime mortgage principal balances to a 97 percent or 90 percent LTV ratio depending on the borrowers' circumstances. FHA will also encourage lenders to make other arrangements, such as subordinate financing, to "fill the gap" between the existing loan balances and the FHA-insurable loan amount. The refinanced loan amount backed by the FHA would be based upon a new appraisal, performed by an FHA-approved appraiser.

FHA will insure new, more affordable mortgages in exchange for this equity cushion, which will protect FHA's insurance fund, and thus the taxpayer, against risk. Currently, FHA's insurance fund is self-sustaining, meaning that it requires no appropriation of taxpayer dollars because homeowners pay for the product themselves. Further, any new FHASecure loans will continue to meet FHA's no-nonsense underwriting standards. Lenders will be required to ensure borrowers have the capacity to repay their mortgages; show a reasonable credit history; employment history; and fully document and verify their incomes.

Like all FHA-insured loans, borrowers will be required to pay upfront and annual premiums on their loans, which directly contribute to the soundness of FHA's insurance fund and protect taxpayers. FHA will also be simultaneously updating the pricing policy for these premiums. The new policy will base premiums on the individual borrower's credit risk profile. More than 90 percent of FHA-backed loans are 30-year fixed rate mortgages. Homeowners currently using FHASecure are saving $400 a month on average compared to their previous subprime loans.

"More homeowners continue to turn to FHA to find mortgage terms they can afford. We're keeping families in their homes while doing what's in the best interest of future generations who will rely on the safety and soundness of FHA to put a roof over their heads. The modifications to the existing FHASecure product offer a prudent, yet appropriate, way to help more families refinance without putting the government or taxpayers at risk. Consistent with FHA's historical mission, the changes are designed to help FHA provide additional liquidity and stabilize local real estate markets."

Since September 2007, FHA has helped pump nearly $68 billion of much-needed mortgage activity into the housing market, $28.5 billion of which was through FHASecure. FHASecure has helped more than 150,000 homeowners who are current or past due on their loans avoid foreclosure, and, with today's announcement, it is expected to assist 500,000 total families by December 31, 2008.

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HUD is the nation's housing agency committed to increasing homeownership, particularly among minorities; creating affordable housing opportunities for low-income Americans; and supporting the homeless, elderly, people with disabilities and people living with AIDS. The Department also promotes economic and community development, and enforces the nation's fair housing laws. More information about HUD and its programs is available on the Internet at www.hud.gov and espanol.hud.gov. For more information about FHA products, please visit www.fha.gov.

March 14, 2008 HUD Proposes Mortgage Reform Help

2008-03-20T09:47:00.000-07:00

HUD No. 08-033
Brian Sullivan
(202) 708-0685
www.hud.gov/news/

For Release
Friday
March 14, 2008

HUD PROPOSES MORTGAGE REFORM TO HELP CONSUMERS BETTER UNDERSTAND THEIR LOAN, SHOP FOR LOWER COSTS
Jackson: Need for reform is now; proposal to save consumers almost $700

WASHINGTON – In an effort to significantly improve the complicated, unclear and costly homebuying process, U.S. Housing and Urban Development Secretary Alphonso Jackson today proposed mortgage reform designed to help consumers better understand their loan terms so that they can shop more effectively for the largest purchase of their lives.

HUD's proposal reforms the more than 30-year old rules of the Real Estate Settlement Procedures Act (RESPA), and improves disclosure of the loan terms and closing costs consumers pay when they buy or refinance their home. For the first time ever, HUD is proposing that mortgage lenders and brokers provide consumers with a standard Good Faith Estimate. By more openly disclosing the key elements of the loan and by controlling fee inflation, the Department seeks to provide consumers with enough information to allow them to shop more effectively for the lowest cost loan. HUD's economic analysis finds that by offering consumers clearer, more certain cost estimates, the average borrower will save nearly $700.

"A lot of the mortgage problems we see today are directly related to the fact that few people fully understand this process," said Jackson. "Buying a home can be very intimidating. Consumers have had no assurance that the loan terms and closing costs they are offered will reflect what they confront at the settlement table, and that's been one of the factors driving the current housing downturn. Our proposal fixes that. We owe it to the American homebuyer to give them the information they need to make smart choices."

Brian Montgomery, HUD's Assistant Secretary for Housing, added, "It's not right that millions of consumers go to the settlement table without fully understanding the mountain of paperwork they're asked to sign and, on top of that, expected to pay thousands of dollars in closing costs for services they've never heard of. This new Good Faith Estimate will give families the tools they need to understand what they’re getting into before they sign on the dotted line."

In light of recent increases in loan defaults and foreclosures, the need for reform is imperative. When President Bush announced his comprehensive plan to address rising foreclosures last August, he pledged to offer new mortgage rules that would help families to avoid getting into trouble in the first place. This proposed RESPA rule makes good on that pledge.

HUD is proposing to offer consumers a standard Good Faith Estimate (GFE) that will substantially enhance disclosure of all important aspects of the loan, including:

The interest rate and monthly payment;

Whether the interest rate and principal balance can increase and by how much; and

Whether the loan has a prepayment penalty or balloon payment.

The proposed Good Faith Estimate would consolidate closing costs into major categories to prevent "junk fees" and display total estimated settlement charges prominently on the first page so the consumer can easily compare loan offers. In addition, HUD's new proposed rule would specify the charges that can and cannot change at settlement. If a fee changes, HUD proposes to limit the amount it can change. HUD also proposes to modify the HUD-1 settlement statement to help consumers compare the anticipated charges on the Good Faith Estimate and their actual charges.

The Good Faith Estimate would also require that lender payments to mortgage brokers (often called Yield Spread Premiums) be disclosed. It is HUD's belief that these payments are directly dependent on the interest rates that consumers agree to and therefore ought to be disclosed. To ensure that HUD's new proposal would not create a consumer bias against brokers, the Department did rigorous consumer testing and found the proposed Good Faith Estimate helped consumers to select the lowest cost loan more 90 percent of the time, regardless of whether the loan was originated by a lender or a broker.

Finally, HUD is proposing that settlement agents read a "closing script" to borrowers at the settlement table and that a copy be provided to the borrower. This closing script would ensure that the settlement agent not only compares the borrower's estimated and actual charges, but would detail the key terms of the loan. HUD's extensive consumer testing found borrowers appreciated the enhanced disclosures, believed the loan details on the closing scripts were clear and understandable, and reacted positively to having the scripts read out loud.

Legislative Changes to RESPA

To further bolster consumer protection and to ensure uniform and consistent enforcement of RESPA, HUD intends to seek legislative changes to the Act that will complement the regulatory improvements made by the rule. Currently, RESPA does not provide HUD with enforcement mechanisms for some of the most important consumer disclosures and protections. A lack of enforcement authority and clear remedies for violations of critical sections of RESPA negatively impact consumers and diminish the effectiveness of the statute.

HUD will seek the authority to impose penalties for violations of specific sections of RESPA, including Section 4 (provision of uniform settlement statement); Section 5 (GFE and settlement costs booklet); Section 6 (loan servicing); Section 8 (prohibition against kickbacks, referral fees, and unearned fees); Section 9 (title insurance); and portions of Section 10 (regarding escrow accounts). In addition, HUD proposes the authority for the Secretary and State regulators to seek injunctive and equitable relief for violations of RESPA; require delivery of the HUD-1 to the borrower three days prior to closing; and establish a uniform statute of limitations applicable to governmental and private actions under RESPA.

To Read the full text of HUD's proposed RESPA rule, visit HUD's website.

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Unless You're Paying All Cash, Call A Lender Before Looking for Your Home

2008-03-11T11:41:00.000-07:00

by Deniece Watkins, Realtor - Cashin Company, Los Altos
in cooperation with Alfredo Ramirez of United Home Loans
March 2008

When you begin thinking about buying a home or investment property, the prudent first step is to talk to a lender. It sets you, the buyer, up for a chronologically correct plan for success, especially in our area.

MONTHLY PAYMENTS
Your lender will let you know what to expect to pay monthly based on how much you can and want to pay for the price of the property. They will inform you of loan options available to you at the time of your purchase. Maybe you want to pay principal plus interest? Maybe you want to pay interest only? Maybe you want to pay your loan off in 15 years? Maybe you want to pay money up front (buy down points which are a tax write off on your initial purchase) to buy down the interest rate you will pay over time on the loan? Maybe if you put more or less money as a down payment on the property, you can benefit from a different monthly payment? These are only some of many choices available to you, the borrower.

DOWN PAYMENT
If you put 20% down on your principal residence, what will your monthly payments be? Will a lender allow you to make a 10% down payment? If you are considering an investment property in a county that has been subject to a lot of short-sales and foreclosures in the recent banking debacle, what down payment do they require for the county and city in which you are interested in buying? (Some lenders are requiring 35% down payment on investment properties right now. There are cases where 25% down payment is being required for a principal residence as well!)

CREDIT SCORE
So you think that "in general" you qualify for a $750,000 house. However, you haven't checked your credit score recently and seen that some credit card company made a mistake and recorded a late payment on your account that caused your 700 FICO score to drop to 645. Do you know that can affect the loan amount for which you qualify? It can affect the interest rate available to you, and it can also affect the amount that you need to put down on the home. The free credit report you can get online is not the same report used by a lender. The report you get when you buy a car is not the same either. (By the way, buy your car only AFTER you close escrow on your house to help your credit score for your home purchase.)

RESERVES
Based on your FICO score, based on your down payment, and based on your income, you may be required to have more savings "reserves" as part of your qualifying for the loan you want. These reserves range anywhere from two to twelve months of anticipated principal, interest, taxes and insurance (PITI).

PRICE RANGE
The lender will tell you the highest price you CAN pay for your home, based on the monthly payments you prefer, based on the down payment that works for you, based on your credit score, based on rents received (income property), based on you considering the property an investment property, an income property or second home. You get to conclude the price range you WANT to buy in from there.

GUIDELINES ARE CHANGING
Because there have been so many changes going on with banks lately, it is more important than ever to have a relationship with a lender. What was available to borrowers a month ago is not something a borrower can be certain of today. It is not exaggerating to say that guidelines are changing daily right now.

REQUIRED DOCUMENTATION
A lender needs certain documentation to approve your loan. This documentation is typically, two months pay stubs (to prove your income), two months of all asset statements (to prove your down payment and reserves), and it is possible that you will also be required to provide two years worth of tax returns. A loan application will also be required, along with your recent credit scores (specific report run by your lender).

ON TO STEP TWO
Once you have concluded all of your above choices, you can go out and look for a home to buy, knowing you can actually buy it. You will not be shocked or overwhelmed with all of these details after you have found a property you love.

99% of people instinctively look for a home, then talk with a lender, then the home is gone, or they don't like the payments, or they don't get a tax write off, and they change their mind and end up getting frustrated. That frustration frequently causes a buyer to give up their home purchase all together, sometimes missing a perfect time to buy.

Talk to a lender first, then find your home. When you have spoken with your lender, not only will the home you want just fall in place for you, but you will have more time when you enter into contract on that dream home to pay attention to all of the documentation your Realtor will be needing to go over with you.

Why Use a Buyer's Agent?

2008-02-18T18:46:00.000-08:00

By Deniece Watkins, Realtor, ePro

Buyers benefits greatly by having their own Realtor in a transaction. There are two main reasons why: A Listing agent owes a duty to the "Seller only". A Buyer's agent is free. However, as you will see below, it is not as simple as it sounds.

Real estate forms are infamous for their ambiguity. The confusing wording put in a form as simple as the Agency Disclosure can send anyone for a spin. Without knowing better, Buyers may give up their one way to their own representation.

An agency disclosure is signed by all clients and Realtors who have established a relationship. It is a state mandated law that it be signed. You will find quotes that are directly from the form below. They are not clear. The wording is very tricky.

The agency disclosure, under “Seller’s Agent”, states exactly this:
"A seller's agent under a listing agreement with the Seller acts as the agent for the Seller only."

Under the section called "Buyers Agent", the verbiage reads like this:
"A selling agent can, with a Buyer's consent, agree to act as agent for the Buyer only. In these situations, the agent is not the Seller's agent, even if by agreement the agent may receive compensation for services rendered, either in full or in part from the Seller."

A “selling agent” means Buyers agent, “listing agent” is the agent for the seller. For those more math minded:

Listing agent represents a Seller.
Selling agent represents a Buyer.

When an individual Buyer’s agent is hired, they do not have a special duty to “the Seller only”, as per the Agency Disclosure. As you read below, you will find that an agent that represents both sides of a transaction is still obligated to “the Seller only,” although the wording is very confusing.

The section "Agent Representing Both Seller and Buyer" states:

"A real estate agent, either acting directly or through one or more associate licensees, can legally be the agent of both the Seller and the Buyer in a transaction, but only with the knowledge and consent of both the Seller and Buyer."

This section goes on to explain that, "In a dual agency situation, the agent has the following affirmative obligations to both the Seller and the Buyer: '…Other duties to the Seller and the Buyer as stated above in their respective sections.'"

Therefore, as stated in the Agency Disclosure, the only way to have a Buyers' agent who works on behalf of a Buyer at all is to use an independent Buyer's agent who does not have a written allegiance to the “Seller only”.

The Buyers' agent, who is not representing the Seller also, can look diligently into the information and reports to find out what might adversely affect an owner of a property, and even delve deeper into the subject with the Buyer to understand the extent of the condition. It is not in the Listing agent's role to pay such attention to a negative matter that can affect the Buyer, since it is not representing the Seller’s best interest.

As stated above, another reason to hire a Buyer's agent, is that the Seller has already negotiated terms of commissions with the Listing agent. When a Seller meets with an agent and agrees to have representation on the sale of a home, the Seller agrees then what they will pay both the Listing agent and the Selling (Buyers) agent. You get your representation as a Buyer for free!

To understand all of the forms required for your sale or purchase, please give me acall. We can discuss what they really mean to you, then make sure that your interest is represented when you sell or buy your home.

Banks are Adjusting, and It's OK

2007-08-30T15:30:00.000-07:00

I'd like to take a minute to translate (in my words) what is happening with lenders right now. The long and the short of it is that there is a normal economic adjustment being made, which was predictable, and should lead to a more stable market for the near future's expectations. It is a great time to sell in our area. It is a great time to buy. Let me explain why. Please read on.

If you were someone who knew that you could lend someone $10.00 and get back $18.25 would you lend them the money? What if you did it 100 times? You would have lent out $1,000.00 and received $1,825.00 in return, right? That's a profit of $825.00 on a $1,000.00 investment.

Well, what if seven of the 100 loans did not pay you back? You would still receive $1,697.25 for putting out $1,000.00. So even if someone told you that seven out of 100 of your loans might not pay you back, would you make the loans anyway? I probably would. That's over 69% return on my money. I would especially do it if I could make money like that in a short period of time...like say 9 years. (Keep reading.)

Let's take the Los Altos homes market and do a little comparison to my above example, starting from the bottom with $10.00, and also with $750,000, which was very close to the average sale price of a home in 1997 in Los Altos ($743,358 actually).

Year Real Appreciation If were $10.00 If were $750,000
2006 2.97% $ 18.25 $ 1,368,694
2005 14.68% $ 17.73 $ 1,329,216
2004 13.71% $ 15.46 $ 1,159,066
2003 -0.64% $ 13.59 $ 1,019,317
2002 2.31% $ 13.68 $ 1,025,883
2001 -24.30% $ 13.37 $ 1,002,720
2000 34.24% $ 17.66 $ 1,324,597
1999 17.70% $ 13.56 $ 986,738
1998 11.78% $ 11.18 $ 838,350
1997 $ 10.00 $ 750,000

As you can see, $10.00 truly would become $18.25 in 9 years. $750,000 would truly become $1,398,000. The "Real Appreciation" column reflects the actual appreciation realized in Los Altos during those specific years.

Now, what if you knew that after a while, you would be getting back only $14.50 for the same $10.00 loan for which you used to get $18.25 back? Would you be willing to lose those seven out of 100? That would net you a total profit of $348.50, for which you were earning $697.25?

I'm thinking you may reconsider who those seven people are and try to weed them out of your loan making process.

That is my interpretation of what happened recently with lending. As prices were going up so consistently lately, banks loosened their loan qualification criteria so they could make more loans. They knew there was certain risk. They calculated the risk versus the return, and took the risk.

Because the market forecasts are more conservative than they have been over the past decade, banks are readjusting their qualification guidelines so they have to absorb less risk. Of course, this means they would then be able to forecast better profits.

Some of the little banks that came in as a temporary lender to capitalize on such sure profit, may not have had the experience that larger, more established banks have. Those banks are going away. Those banks are making lots of news.

It is fair to say that double digit percentage increases in price cannot be sustained over long periods of time. Five out of the last nine years in our example of Los Altos, showed growth of double digits. It is prudent that banks not expect that much longer.

Our county has sustained more like 7% per year average appreciation over the last 30 years. A 30 year sample is much safer to rely on than the shorter time period.

Remember LOCAL market information means more to us than any other news. Locally, here is a little more information to keep you in the know. These are for closed sales since August 1, 2007. "DOM" = Days on market. "% over ask" is percentage of homes listed that sold over asking price.

City Average DOM Homes sold over ask % over ask
Los Altos 25 17 out of 24 70.83%
Los Altos Hills 48 1 out of 7 14.29%
Menlo Park 34 14 out of 28 50.00%
Mountain View 20 17 out of 24 70.83%
Palo Alto 18 26 out of 36 72.22%
Portola Valley 68 0 out of 3 0.00%
Sunnyvale 32 38 out of 87 43.68%

As long as we continue to average around 7% appreciation in our area (which is fair to expect) while adding to it the tax benefits of homeownership, it is still a great place and time to own real estate.

How to Gauge Price for a Multiple Offer

2007-07-01T13:57:00.000-07:00

by Deniece Watkins

Often times I hear other agents asking me, "What do I tell my clients to offer? There are five other offers on the property they want!"

I even hear my own clients asking, "What do you think we should offer?"

Being a real estate buyer is not easy in our area (Silicon Valley). We have a huge demand for houses and not enough inventory. We have very qualified buyers. When a home is priced right, presented well (don't even think about not staging), and in a good location, you can almost guarantee there will be more than one offer on the home. So how does a buyer know what to offer?

Typically, a buyer has seen lots of property. Hopefully, his/her knowlegeable Realtor has informed the buyer of the closing price of most of those homes. Closing price means the price it actually sold for, never to be confused with asking price. After seeing enough homes and learning what they sold for, there is a definite pattern which will give the buyer a very good idea of a ballpark figure to pay. However, ballpark doesn't always mean an accepted contract.

There are two values for a property, 1) the logical value, and 2) the emotional value.

The logical value is a value that is clearly justifiable to a bank using other properties within a very close proximity that have comparable features as the one in which a buyer has interest. Meaning, if the home down the street with the same numbers of bedrooms and baths, close to the same square footage, and in the same general condition sold for $900,000, a clearly justifiable value of another just like it is $900,000. A good Realtor will take every property that is close to the one in which a buyer shows interest and research all of the closed sales, in a close vicinity, within a short time, and give those numbers to the buyer. The buyer then has the responsibility of studying those numbers as much or as little as s/he wants.

The emotional value is the value that only the buyer can put on a property. Is it a home they must have to put their parents in, who are not well, and happens to be around the corner from where they live? Is it a home that, if they can get for a certain price, makes sense to fix up? Is it a property when rented out will give just the right amount of return and tax write-off to be beneficial to that buyer for a tax circumstance? This value is not easy to quantify. A Realtor cannot do this for a client.

Take a good consideration of the logical value, balanced with the emotional value, and offer the price and terms that if you don't get, you won't lose sleep over.

Mountain View, The Job Hub!

2007-05-14T15:11:00.000-07:00

By Deniece Watkins, Realtor

Recently, I was on an airplane and met a woman who had moved to California from Ohio. She told me she was renting a condominium in Los Gatos with her husband. She was in property management; he was starting a web based company about personal health care. When I mentioned that I sold real estate in the Los Altos/Mountain View areas, her comment was very interesting. "Mountain View is awesome. Wish we could live there. What a job hub!"

“Job hub?,” I thought.

Having grown up in the Bay Area, I have seen close to 40 years of the South Peninsula's transformation into Silicon Valley. In choosing to make Los Altos my office location and Mountain View my home location, I have seen, for the last 10 years, the transformation of Mountain View from coal to diamond in the rough, and anticipate nothing less than further shine and sparkle of this terrific little city.

When I first decided to sell in the Mountain View area, I researched a bit of Mountain View’s history. I was happy to learn that, since inception, Mountain View was built on the principle of including everyone. This meant every economic class, every culture, every gender, and every religion. As I drive down the streets in downtown Mountain View, I see what Realtors refer to as “single family homes” (which soon enough will be inappropriate, if not already), duplexes, triplexes, various other small multi-unit properties, and apartment buildings all mixed together. When I go downtown to eat, I choose from an extensive array of cultural foods (read more in the restaurant section of this article). Consistently, I hear from neighbors of nearby cities saying they come to Mountain View for entertainment, night life, good food, and more and more..for business.I wanted to understand the perspective of the general public, not just my own. So as I have been working at open homes, or meeting people in general, I have asked what is it about Mountain View? The answers are consistently:
1) The downtown is exciting, with multi-cultural restaurants.
2) The weather is great.
3) The diversity is more desirable than other close by homogeneous cities.
4) Public transportation is easily accessible and takes you straight into San Francisco or San Jose.
5) They have a good nightlife.
6) Jobs, jobs, jobs!

So here are the details I learned after looking into this gem with a jeweler’s loupe.

Restaurants
There are 115 restaurants that are listed on Google Earth. They are American (Steak Houses and Seafood), Chinese, Coffee Houses, Fast Food, French, Greek, Indian, Irish, Italian, Japanese, Mediterranean, Mexican, Middle Eastern, Mongolian, Spanish, Thai, Vegetarian, Vietnamese and more. What a smorgasbord!!

Weather (from www.weather.com)
The local weather in Mountain View averages 79°F in the summer and 58°F in winter with approximately 16 inches of rain annually.

Demographics (from www.Wikipedia.com)
As of the census GR2 of 2000, there were 70,708 people, 31,242 households, and 15,902 families residing in the city. The population density was 2,263.7/km² (5,861.4/mi²). There were 32,432 housing units at an average density of 1,038.3/km² (2,688.5/mi²). The racial makeup of the city was 63.77% White, 2.53% African American, 0.39% Native American, 20.67% Asian, 0.26% Pacific Islander, 8.32% from other races, and 4.07% from two or more races. Hispanic or Latino of any race were 18.26% of the population.

There were 31,242 households out of which 23.3% had children under the age of 18 living with them, 40.0% were married couples living together, 7.3% had a female householder with no husband present, and 49.1% were non-families. 35.6% of all households were made up of individuals and 7.0% had someone living alone who was 65 years of age or older. The average household size was 2.25 and the average family size was 2.97.

In the city the population was spread out with 18.0% under the age of 18, 8.3% from 18 to 24, 43.4% from 25 to 44, 19.8% from 45 to 64, and 10.5% who were 65 years of age or older. The median age was 35 years. For every 100 females there were 106.8 males. For every 100 females age 18 and over, there were 106.9 males.

Location and Transportation (from Google Maps)
Mountain View is conveniently located 40 miles South of San Francisco (Go Giants!) and 12 miles North of San Jose (Go Sharks!). The beach in Half Moon Bay is 31 miles away. Santa Cruz Beach is 35 miles away. There are plenty of golf courses right by, including one in Mountain View. There is a 16 theatre movie complex and parks galore.

There are both a train station and a light rail station that stop in the heart of downtown Mountain View. Busses run conveniently up and down El Camino Real, again right at the heart of the city.

Night Life (from www.MetroActive.com)
Mountain View offers some fun night life, from coffee houses to breweries, to hole-in-the-wall bars, to swanky restaurants where you can sit outside and sip your mango mint margarita. There is dancing and billiards and people watching everywhere you look.

Alberto's Salsa Studio & Nightclub
736 W. Dana St 650.968.3007

Buddha Lounge
251 Castro St 650.965.7665

Cascal
400 Castro St 650.940.9500

Fred's Place
2534 Old Middlefield Way 650.940.9838

Kapp's Pizza Bar and Grill
191 Castro St 650.961.1491

King of Clubs
893 Leong Dr 650.968.6366

Molly Magee's Irish Pub
241 Castro St 650.961.0108

Monte Carlo
241 Castro St 650.998.1500

Office Bar
820 El Camino Real 650.969.2098

Shoreline Billiards
1400 N. Shoreline Blvd #C-1 650.964.0780

Sports Page
1431 Plymouth St 650.961.1992

St. Stephen's Green Irish Pub and Restaurant
223 Castro St 650.964.9151

Tied House Café and Brewery
954 Villa St 650.965.2739

Ugly's
1313 El Camino Real 650.965.8255

Zucca Ristorante
186 Castro St 650.864.9940

Jobs
I asked some locals who have grown up here their opinion of Mountain View as a job hub. Everyone refers back to the restaurants and thriving downtown, but more in a way of entertainment than jobs. They all mention Google.

Yes, we locals are very familiar with Google. However, even when you travel out of the city, out of the state, out of the country, people know that Google’s headquarters are in Mountain View and that the company has done extremely well. What surprised me when researching them on the internet today, was how many positions they are still hiring. My goodness! Can you say growth?!

Although Google is huge and dynamic and amazing, I have learned that there is so much more than Google in Mountain View. The detailed list below of other mentionable companies who have bases, if not headquarters, in Mountain View is astonishing! I have included a link to each company’s main page, a link to their “contact us” page, revenue information and employee information (from www.zoominfo.com) for each. The information is about the whole company, not just their Mountain View location.

Notice that if one were to total the revenues of these companies who have a large presence in Mountain View, it would be a whopping $63.7 Billion!!! In fact, when I search “Mountain View, 94043” on http://www.zoominfo.com/ without any revenue limit, 865 businesses are listed. When I change criteria to $5 Million or more in revenues, there are 94 companies. The outcome of companies when changing revenue criteria to $10 Million or more is below with some editing to make sure the company, in fact, is still in Mountain View. Behold!

(HQ Indicates the company has headquarters in Mountain View)

Major Business/Technology

Microsoft
Software, Services, Solutions
Revenues $44.3 Billion
Employees 71,000
1065 La Avenida
(650) 693-4000

Google (NASDAQ GOOG)
Innovative Search Technology
Revenues $6.1 Billion
Employees 5,696
Google Map HQ
1600 Amphitheatre Pkwy(650) 253-0000

KPMG
Accounting and Tax Consulting Services
Revenues $4.1 Billion
Employees 18,165
500 E Middlefield Rd
(888) 528-4222

Wipro Technologies
Software Services
Revenues $2.4 Billion
Employees 58,371
Wipro Technologies map
1300 Crittenden Ln(650) 316-1042

Intuit Inc.
Business Management Software
Revenues $2.3 Billion
Employees 7,500
2632 Marine Way HQ
(650) 944-6000

VeriSign (NASDAQ VRSN)
Voice and Data Networking
Revenues $1.6 Billion
Employees 4,076
Verisign Inc. HQ
487 E Middlefield Rd(650) 426-5555

Synopsys, Inc.
Semiconductor Design Software
Revenues $1.1 Billion
Employees 5,130
700 E Middlefield Rd HQ
(800) 843-5669

HP Mercury (NASDAQ MERQ)
Business Technology Software
Revenues $843 Million
Employees 2,659
379 North Whisman Road
(650) 603-5200

Netscape Communications
Software Development and Design
Revenues $244.7 Million
Employees 2,400
501 East Middlefield Road
(415) 528-2600

Alvarion Ltd. (NASDAQ ALVR)
Computer & Network Equipment
Revenues $191 Million
Employees 600
2495 Leghorn Street HQ
(650) 314-2500

Actel Corporation (NASDAQ ACTL)
Single Chip FGPA Solutions
Revenues $179.4 Million
Employees 565
2061 Stierlin Ct HQ(650) 318-4200

Optonics, Inc.
Semiconductor Products
Revenues $137.2 Million
Employees 1,631
2593 Coast Avenue, #100
(650) 605-0082

NetLogic Microsystems, Inc. NASDAQ NETL
Semiconductor Processors
Revenues $81.8 Million
Employees 110
1875 Charleston Road HQ
(650) 961-6676

Pinnacle Systems (A division of AVID Technology, Inc. (NASDAQ PCLE)
Digital Video Broadcast and Production
Revenues $72.6 Million
Employees 851
280 North Bernardo Avenue HQ
(650) 526-1600

MIPS Technologies, Inc. NASDAQ MIPS
Processor Architecture Provider
Revenues $61.2 Million
Employees 150
1225 Charleston Road HQ
(650) 567-5000

MMR Technologies
Micro Miniature Refrigerators
Revenues $51.8 Million
Employees 95
1400 N Shoreline Blvd, Suite A5 HQ
(650) 962-9620

CyberSource Corporation NASDAQ CYBS
Electronic Payment Processing
Revenues $50.5 Million
Employees 168
1295 Charleston Road HQ
(650) 965-6000

Elance, Inc
Business Marketing
Revenues $46.4 Million
Employees 100
510 Logue Avenue HQ
(650) 316-7500

KCE America, Inc.
Circuitboard Production
Revenues $41.7 Million
Employees n/a
954 San Rafael Avenue HQ
(650) 934-3700

HALO Electronics
Magnetic Components
Revenues $40 Million
Employees 11
1861 Landings Drive HQ
(650) 903-3800

LaserCard Corporation, Formerly Drexler Technology (NASDAQ LCRD)
Optical Security ID Cards
Revenues $39.9 Million
Employees 164
1875 N. Shoreline Blvd.
(650) 969-4428

Azul Systems, Inc.
Server Appliances
Revenues $23.4 Million
Employees 200
1600 Plymouth Street HQ
(650) 230-6500

Optibase, Ltd. (NASDAQ OBAS)
Video Server Upload and Streaming
Revenues $21.8 Million
Employees 170
880 Maude Avenue HQ
(650) 230-2400

Integral Development Corp
Software for Automated FX Trading
Revenues $19.3 Million
Employees 150
2027 Stierlin Court HQ
(650) 919-1000

Barracuda Networks
Spam Filters and Firewalls
Revenues $18.1 Million
Employees 200
385 Ravendale Drive HQ
(408) 342-5400

Xora, Inc.
Products to Improve Mobile Employees
Revenues $17.7 Million
Employees 50
501 Ellis Street HQ
(650) 314-6460

CSA Engineering, Inc.
Vibration Suppression
Revenues $14.9 Million
Employees 53
2565 Leghorn Street HQ
(650) 210-9000

Teledyne Microwave
DRO’s, Frequency Synthesizers, Transceivers
Revenues $14.5 Million
Employees 250
1274 Terra Bella Avenue
(650) 962-6944

Encover, Inc.
Service Contract Software
Revenues $12.7 Million
Employees 1001975 El Camino Real West, Suite 205 HQ(650) 417-9000

Narus, Inc.
Real-time Traffic IP Services
Revenues $11.5 Million
Employees 80
500 Logue Avenue HQ
(650) 230-9300

CustomerSat, Inc.
Customer Feedback Software
Revenues $10 Million
Employees 40
500 Ellis Street HQ
(650) 237-3300

Major Life Science Companies

ALZA Corporation/Johnson & Johnson (NYSE AZA)
Drug Delivery Solutions
Revenues $139.1 Million
Employees 1,845
1900 Charleston Road HQ
(800) 506-2826

Omni Cell (NASDAQ OMCL)
Revenues $121.5 Million
Employees 514
1201 Charleston Road HQ
(650) 251-6445

eHealth, Inc. (NASDAQ EHTH)
Individual Health Insurance
Revenues $41.8 Million
Employees 319
440 East Middlefield Road HQ
(877) 456-7180

Perlegen Sciences (NASDAQ AFFX)
Genetic scan for medical benefit
Revenues $40.5 Million
Employees 105
2021 Stierlin Court HQ
(650) 625-4500

Iridex Corporation
Medical lasers for eyes and aesthetics
Revenues $37 Million
Employees 114
1212 Terra Bella Ave
(650) 940-4700

Hitachi Chemical Diagnostics, Inc.
In Vitro Allergy Test
Revenues $21.5 Million
Employees 190
630 Clyde Court
(650) 961-5501

Medimmune Vaccines
Nasal Flu Vaccine
Revenues $20.6 Million
Employees 340
319 N. Bernardo Avenue
(650) 919-6500

Clontech Laboratories, Inc.
Biological products for life science
Revenues $17 Million
Employees 175
1290 Terra Bella Avenue
(800) 662-2566

Telecommunications

Tellme Networks, Inc.
Voice Query for Information
Revenues $100 Million
Employees 330
1310 Villa Street HQ
(650) 930-9000

OpenTV, Inc. (NASDAQ OPTV)
Delivery Solutions for Digital Interactive TV
Revenues $87.4 Million
Employees 325
1215 Terra Bella Avenue(650) 962-2100

Ditech Networks (NASDAQ DITC)
Telecom Equipment Supplier
Revenues $54.9 Million
Employees 216
Ditech Communications Corp. HQ
825 E. Middlefield Road
(650) 623-1300

Bytemobile, Inc.
Simplified Deployment of IP Services
Revenues $23.2 Million
Employees 145
2025 Stierlin Court HQ
(650) 641-7700

Trades

Caliper Technologies Corporation
Construction Consultants
Revenues $87 Million
Employees 443
665 Clyde Ave(650) 254-1909

Coulter Construction
Commercial and Residential Construction
Revenues $52.7 Million
Employees 527
1961 Old Middlefield Way HQ
(650) 964-8229

O’Grady Paving, Inc.
Asphalt and Paving
Revenues $14.8
Employees n/a
2513 Wyandotte Street
(650) 966-1926

Vivus, Inc. (NASDAQ VVUS)
Pharmaceutical focusing on obesity and sexual health
Revenues $14.7 Million
Employees 114
1172 Castro Street HQ
(650) 934-5200

Downer-Gruman Architects
Architects
Revenues $13.6 Million
Employees n/a
550 Ellis Street HQ
(650) 943-1600

When adding the number of employees working for only the companies with their (HQ) Headquarters in Mountain View, there are 25,283 positions. Remember, this is in companies with revenues of over $10 Million. So, taking into consideration the other companies with fewer revenues and the service jobs needed to support these employees in Mountain View, I think it is fair to say that there are plenty of jobs here.

Going back to the fact that I am a Realtor, let me show you a few more Mountain View pluses from the investment real estate side of things. It still costs a lot less to buy a home in Mountain View than the two nearest and most desirable cities, Los Altos, or Palo Alto. The average price of a single family home in Mountain View (from reil.com annual statistics for 2006) is $990,795. In Los Altos it is $1,782,975 and Palo Alto $1,516,037.

A huge factor for our local areas not losing home value as much as other markets locally and statewide is excellent schools. Below I have compared public school API scores (from http://www.greatschools.net/) in Mountain View with Palo Alto, and Los Altos. Mountain View has not been haled as the great schools city..yet. As you can see their high school scores are higher than nearby Los Altos High School. Huff Elementary ranked 911 on the API scores, making it one of the best elementary schools in all of California.

School Level
Mountain View
High School Avg. API 827 Highest 827
Middle School Avg. API 757 Highest 787
Elementary Avg. API 800 Highest 911

Palo Alto
High School Avg. API 886 Highest 887
Middle School Avg. API 924 Highest 935
Elementary School Avg. API 928 Highest 983

Los Altos
High School Avg. API 797 Highest 797
Middle School Avg. API 957 Highest 961
Elementary School Avg. API 962 Highest 982

In 2003, I happened upon residency in Mountain View more by taking advantage of an opportunity, than by choosing it as my most desirable place to purchase. However, day after day, I thank goodness that I did happen upon that opportunity.

Working here I meet dynamic people who consist of the twenty-five percent of folks in California who can afford a home. I show them what I believe to be the best buy for what they want. I prepare their homes for the best marketing they could ever have. I negotiate a purchase or sale for some of the most dynamic, savvy and intelligent people I've ever met.

I have a nice garden in my backyard that grows well because of the weather. I take the train into San Francisco now and then for a Giants game. When I want a little evening entertainment, I stroll downtown for an adult beverage with my sweater on, and can walk right back home. The only difficulty with living here is choosing which cuisine to eat when I’m hungry. Could be worse!

The Value of Being Prepared, By Deniece Watkins

2007-04-28T14:25:00.000-07:00

I once saw a book sitting on the passenger seat of a vehicle parked next to mine that was titled "Who You Are is Where You Were When." Although I have not read the book, the title was poignant enough to stay with me for over 20 years.

The "Where You Were When" part rings particularly clear over and over in my career, Residential Real Estate Sales in Silicon Valley.

Here locally, we have a market different than many others. We are in an area boasting the best public schools in all of California, with amazing weather, good job opportunities, excellent universities, and a pool of technological talent unparalleled anywhere in the world.

Our local real estate market has remained strong through national droughts. Even through the sub-prime loan implosion, we are experiencing a multiple offer market. For anyone reading this from Detroit, this means that when a home goes on the market prepared well, listed at the right price, more than one Buyer presents an offer on the home. The home frequently sells over the asking price.

I have seen Realtors be told that "offers are on Tuesday" and literally wait until Tuesday to do anything about contacting the listing agent to learn about the Sellers' situation and the home. I sold that home to my Buyers on Sunday evening.

I have watched Realtors, who know they are in a multiple offer situation, lose out on a transaction because their client was not available to them during the negotiations. One was actually at church praying while the competing client was there signing the final contract.

As I navigate the ever changing world of residential real estate sales in Silicon Valley, I realize that so many of my transactions have been successful because of an understanding of "Where You Were When." If my client is there when I am negotiating for them, I can make things happen. Better yet, if my client and their lender is there, the other Realtor knows I mean business.

By having a real estate license, you are NOT a true Real Estate Agent. By belonging to the California Association of Realtors or the National Association of Realtors, you have the title "Realtor". However, to be a true Real Estate Agent, you must know the contract inside and out. You must know your competition. You must know your clients. You must actually sell homes. Whoa! That's worth repeating, don't you think?! You must actually sell homes!

With statistics taken from 2006, something close to 50% of all Realtors in Silicon Valley had not sold one home in that year. Something like 25% more had only sold one home. So imagine that three out of four Realtors that you meet have virtually no experience actually BEING a Real Estate Agent.

How can they be current with the new Real Estate technology? How can they be up to date with the new Real Estate Laws? How can they make sure your foot gets in the door when it is barely open, but the time is right? They can't! They can hold you back from one of the greatest investments of your life.

Once recently, while helping an elderly couple interview a listing agent for their out of town home sale, I asked the other "licensed agent" who was on his team. He literally answered, "Susan, Monica, Rebbecca and Mary."

I had no choice but to ask, "Other than first names, who are those people to me, or your potential clients?"

If you would believe it, there are some homeowners out there who believe that first names without titles really mean that the "licensed agent" has a team.

Any good, licensed, practicing Realtor has a team that makes transactions go seamlessly over and over again. That team consists of a Title Company with a specific Escrow Officer, a reliable Termite Company who stands behind their work and has an individual high enough to be accountable for mistakes. The team consists of several licensed contractors to paint, landscape, fix plumbing, repair and replace a roof or chimney. It consists of window washers, house cleaners, and stagers to prepare the home. It consists of marketing experts who are extremely technologically savvy, who know how to expose a property to every market possible. Without an extremely knowledgeable lender who not only knows their loan products, but who can assure that lending is certain and will be delivered on time, your Buyer has half the chance of getting the home. There are insurance agents, financial consultants, accountants, real estate attorneys, and more. The team is huge! When they know you mean business, they mean business for you, always!

"Where You Are When", complimented by having support from an incredible team, lead by a competent Realtor who actually sells homes...it's like a dream!

Silicon Valley Real Estate by Deniece Watkins

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