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This morning President Bush signed the "Housing and Economic Recovery Act of 2008" that was passed by the House and Senate last week. This Act will provide relief for homeowners facing foreclosure as well as temporarily increase the GSE loan limits. A few other provisions of the bill are listed below: 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.
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San Elijo Hills, San Marcos - We invite everyone to visit our open house at 1488 Sandbar Drive on July 27 from 1:00 PM to 4:00 PM. Property information
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The California State Legislature enacted foreclosure reform law to address the adverse effects of high foreclosure rates in California.
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.
- Maintenance of Vacant Properties: Effective July 8, 2008, anyone who acquires property through foreclosure must maintain the exterior of vacant residential property. A civil fine up to $1,000 per day for any violation may be imposed by a governmental entity, as long as the owner has been given notice and an opportunity to remedy the violation.
- 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.
These requirements will remain in effect until January 1, 2013. Read the full text of Senate Bill 1137 (Perata) at www.leginfo.ca.gov
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On Wednesday July 23, 2008 the house passed the Housing Rescue Bill that will inject $300 billion dollars into distressed homeowner loans and bailing out Fannie Mae and Freddie Mac. The bill must now get past the Senate and be signed by President Bush who, until recently, was threatening to veto the bill. Should the bill pass and be signed into law thousands of homeowners who are at risk could be eligible to refinance their precarious unaffordable loans into new FHA low cost loans. Here are the highlights for homeowners… To be eligible for assistance borrowers must live in their homes as a primary residence and have loans that originated between January 2005 and June 2007; and they must be spending at least 31% of their monthly gross income on mortgage debt. Homeowners may be up to date or in default on their existing loan. Either way they will have to prove financial hardship and their inability to keep paying their existing loan payments; in addition to attesting that defaulting is not a deliberate attempt to obtain lower payments. The obstacle for many homeowners in CA will be this: Prior to approval for an FHA backed loan the homeowner will have to payoff any other debt on the home i.e. home equity loans or home equity lines of credit. They will not be allowed to take out another home equity loan for at least five years. The exception to the five year rule is if the money is required for maintenance of the home. Borrowers will have to gain approval from the FHA to get a new home equity loan and the total debt cannot exceed 95% loan to value at the time the loan is granted. Since this is a voluntary program for lenders holding the original note, they must agree to rework the loan before the process can proceed. The decision point for these lenders is if they will lose less money on a workout than they would by allowing the home to foreclose. This is because they will be asked to write down the value of the loan to 90% of current property value. To qualify the borrower and property an FHA approved lender will have to underwrite each loan. This will require the FHA lender to do an appraisal on the property to assess current market value so they can determine the amount the “old lender” will have to write down to bring the new loan amount to 90% of the property’s current value. The FHA lender will also complete a new loan application on the borrower and verify income, reserves, job history, and credit history/scores. Once the analysis is complete the original lender will make a determination of whether or not to accept the write down. If they do accept the write down the FHA lender purchases the original “reworked” loan. In addition to writing down the loan to 90% of the property’s current market value and accepting the proceeds from the new loan as “paid in full” for the original loan, the original lender writes off all penalties/fees including any pre-payment penalties. The original lender is also required to pay the FHA an upfront fee equal to 3% of the newly originated loan amount. So, what does the upfront cost the consumer? Not much, as with all FHA loans, the loan origination fees can usually be paid for over the life of the loan, just be aware that origination fees vary lender to lender and you may have a slightly higher interest rate. There is also a mortgage insurance premium associated with FHA loans since the FHA is guaranteeing the loan. This premium is 1.5% of the principal annually and factored into monthly payments. What is the catch you ask? Borrowers will be entering into a profit sharing agreement with the FHA. Here’s how it works; upon selling or refinancing the home after getting an FHA backed “reworked” loan the borrower will pay the FHA an exit fee equal to 3% of the loan principal. Additionally, borrowers agree to pay 100% of any profits realized from the sale or refinance of the home within the 1st year to the FHA. This amount is incrementally reduced by 10% per year for 5 years where it freezes at 50%. This bill could provide substantial savings to consumers who meet the guidelines for qualifying and whose original lien holder will accept a short payoff. Not only will those consumers see a financial benefit, they will gain the emotional benefit of knowing their loan is set at a fixed rate of interest over the life of the loan. The bill also contains provisions for a first time homebuyer tax credit, authorizes states to issue an additional $11 billion of tax-exempt bonds to refinance subprime loans, provide loans to first-time home buyers and fund the construction of low-income rental housing, and permanently raise the limit to $625,000 for mortgages that Fannie Mae and Freddie Mac could purchase.
What is unclear to me is if the amount of forgiveness, the difference between the original loan amount and new loan amount, is covered under the Mortgage Forgiveness Debt Relief Act of 2007. That certainly needs to be made clear to consumers…
Now we wait to see what the Senate has to say!
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San Elijo Hills, San Marcos - Announcing a price reduction on 1488 Sandbar Drive, a 3,276 sq. ft., 5 bath, 5 bdrm 2 story "Cape Cod". Now  MLS® $665,000 - New Pricing!. Property information
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The plan will freeze certain subprime mortgages for 5 years, a compromise hammered out with mortgage lenders and banking regulators. December 6, 2007: 10:32 AM EST WASHINGTON (AP) -- The Bush administration has come up with a plan to help strapped homeowners facing a daunting jump in their monthly mortgage payments. The proposal, reached in negotiations led by Treasury Secretary Henry Paulson with the mortgage industry, would freeze introductory "teaser" rates on subprime mortgages, preventing them from resetting to higher rates for five years. President Bush, who is scheduled to announce the agreement after a meeting with industry leaders at the White House on Thursday, has stressed that the deal is not a bailout because no government money is involved. The effort is aimed at stemming a threatened wave of foreclosures in coming years as 2 million subprime mortgages - home loans provided to borrowers with spotty credit histories - reset from their introductory rates of around 7 to 8 percent to levels as high as 11 percent, adding hundreds of dollars to the typical monthly payment. The mortgage companies will offer to freeze the loans at the lower introductory rates as long as the borrowers did not miss any payments at the lower rate. The program is the biggest effort yet to deal with a tidal wave of mortgage defaults, which have piled up billions of dollars in losses for big banks, hedge funds and other investors as well as roiled financial markets around the globe. The defaults are the latest economic blow from the worst housing slump in more than two decades. Some economists believe the housing bust could become severe enough to push the country into a recession. Two Democratic presidential contenders, Hillary Rodham Clinton and John Edwards, said Wednesday that Bush's proposal did not go far enough. They put forward their own plans that would not only freeze mortgage payments but also declare moratoriums on further foreclosures for a period of time as a way of adding pressure on lenders to reach at-risk homeowners. The financial services industry applauded the administration for negotiating a plan that will allow free-market forces to operate. The hope is that the five-year freeze will buy time for the housing industry to work down record levels of unsold homes and for sales and prices to start rising again. A housing rebound would allow homeowners to refinance their current adjustable rate mortgages into fixed-rate loans with more affordable monthly payments. The big sticking point in the lengthy negotiations was getting investors who have purchased the mortgages after they have been bundled into mortgage-backed securities to agree to accept lower interest payments. Critics have said even with a deal, there are likely to be lawsuits. "The $64,000 question remains: will investors who might balk at going along with this be able to maintain legal roadblocks and prevent the plan from going into effect?" said Sen. Charles Schumer, D-N.Y. But officials representing major players in the mortgage industry said they believed the plan would withstand any legal challenges and would help at-risk homeowners avoid defaulting on their mortgages. Steve Bartlett, president of the Financial Services Roundtable, a trade group representing the country's largest financial service firms, said the deal would benefit banks, investors and homeowners since there is a significant cost when a mortgage is foreclosed. Under the administration plan, the rate freeze will apply to loans made at the start of 2005 through July 30 of this year and will cover loans that had been scheduled to rise to higher rates between Jan. 1, 2008, and July 31, 2010. The plan represents an about-face for Paulson, who until recently had insisted the mortgage crisis could be handled on a case-by-case basis. However, he and other administration officials became convinced the tide of foreclosures threatened by the mortgage resets represented such a severe threat that a more sweeping approach was needed.
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Old Town San Diego, San Diego - Announcing a price reduction on 3961 Hortensia Street,unit H2 an 830 sq. ft., 2 bath, 2 bdrm condo. Now MLS® #071062399 $310,000 - Walk to Old Town. Property information
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 San Elijo Hills, San Marcos - We invite everyone to visit our open house at 1489 Glencrest Drive on November 18 from 1:00 PM to 4:00 PM.
Property information
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Great value
• 3,535 sq. ft., 4 bath, 5 bdrm 2 story "Bed and bath downstairs" - MLS® #071071966 $685,000 - Gated Community San Elijo Hills, San Marcos - Situated at the highest area of the desirable gated community of Promontory Ridge built by Pulte Homes in the master planned community of San Elijo Hills. Located on a double cul-de-sac street, this home has the largest floor plan in this community boasting approx. 3,535 sq ft, 5 bedrooms, 4.5 baths, with one full bedroom & bathroom downstairs, a 3 car garage with epoxy flooring, 2 balconies with views, and 3 fireplaces. As you enter the front door you'll immediately be greeted by the grand foyer and a dramatic wrought iron chandelier. The spacious formal living room has a fireplace and lots of windows. The formal dining room includes a buffet niche and a butler s pantry which leads to the kitchen. The large kitchen features GE double ovens, a 5-burner gas stove, built-in microwave, wood cabinetry, generous counter space to include a center island, and a breakfast nook overlooking the backyard. Adjacent is the family room with a fireplace, a built-in media niche and ceiling fan. The professionally landscaped backyard comes with stamped concrete, fruit trees, flowering vines and shrubs, and a grassy area. An elegant, dramatic staircase with wrought iron balusters and wood hand railing takes you to the second level of the house. Double doors await you to enter the huge master suite which comes with a sitting area with a fireplace and a view balcony perfect for watching the sunset or catching coastal breezes. The luxurious master bath has a Roman style oval soaking tub, his and hers vanity, a separate shower and a walk-in closet. The 2nd and 3rd bedrooms come with a Jack and Jill style bathroom and bedroom #4 is a suite. A nicely sized front balcony perfect for relaxing or reading a book completes the upstairs area. The 5th bedroom is located downstairs with its own bathroom; use it as a guest room, office etc. San Elijo Hills is located behind the La Costa Resort and Spa and it s just minutes to the beach. Enjoy an active lifestyle and small town community feel. Property information
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On September 25, 2007 Chairman of the House Ways & Means Committee, Rep. Rangel (D-NY) introduced his own mortgage cancellation relief bill, H.R. 3648, the Mortgage Forgiveness Debt Relief Act of 2007. H.R. 3648 would remove taxes from mortgage cancellation relief provided on a mortgage on a primary residence. The tax relief would apply to the original purchase price, plus personal improvements of a primary residence and would not cover any amount over the original purchase price if a loan has been refinanced with a “cash out” option. The relief would also only apply to first mortgages, not second mortgages or home equity lines of credit. The relief would apply to any forgiveness given on or after January 1, 2007. H.R. 3648 passed the House on October 4th by a vote of 386-27. This provision will help cover many struggling homeowners. This isn’t only about those who are suffering through subprime or predatory loans. This helps the homeowner who is struggling because of health issues, loss of a job, or another traumatic event which forces them to have to sell their house for less then they purchased it for. Since Congress is under PAYGO rules, to offset the loss in revenue they modified the rules concerning the conversion of a second home to a primary residence. The capital gains exemption of $250,000/$500,000 is still allowed, but under H.R. 3648 the exemption only qualifies for the time when the house was a primary residence, which was the original intent of Congress. This rule will not be retroactive and will not count against any gain prior to January 1, 2008. - Provided by the California Association of Realtors -
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