5 Reasons to Buy a Home in 2011

Real estate is likely to improve in 2011. Here are five reasons consumers should consider a home purchase next year:

1. Mortgage rates will stay low. Even with rates climbing (maybe to as high as 6 percent by 2012) they are still well below where they have been historically.

2. Tax cuts could help. Extending the tax cuts could encourage a more rapid recovery for the economy.

3. Americans want to be home owners. A recent Fannie Mae survey showed that Americans still believe a home is a safe and desirable investment.

4. Builders are about to begin building. Home builders have been sitting on the sidelines. This year, they think pent-up demand will create an appetite for new homes.

5. Homes are shrinking. Homes are getting smaller, which has made them more affordable.

If you are thinking about buying a home in 2011, please contact our office at 619-993-0687 so we can help you start the home buying process.

December Housing Scorecard

The latest housing figures from the U.S. Dept. of Housing and Urban Development (HUD) and the U.S. Dept. of the Treasury show continued home affordability in the housing market, with interest rates near record lows, but the market remains fragile, as prices are unsettled.

Foreclosure starts and completions dropped significantly in November, as lenders review internal servicing procedures. The housing scorecard is a comprehensive report on the nation’s housing market.

The December Housing Scorecard features key data on the health of the housing market including:

Foreclosure starts and completions declined significantly in November. As lenders review internal procedures related to foreclosure processing, many foreclosure actions have been delayed leading to a 21 percent decrease in foreclosure activity in November. While this is the biggest month over month decrease since 2005, the decline is likely to be temporary as lenders eventually revise and resubmit foreclosure paperwork in the coming months.

As expected with the expiration of the home buyer tax credit, new and existing home sales have remained below levels seen in the first half of 2010. However, the December report also shows that home prices and home equity declined moderately, as prices remain unsettled at this fragile stage of the recovery.

More than 3.9 million mortgage aid offers were initiated between April 2009 and the end of October 2010 —more than double the number of foreclosure completions during that time. These actions included more than 1.4 million Home Affordable Modification Program (HAMP) trial modification starts, more than 600,000 Federal Housing Administration (FHA) loss mitigation and early delinquency interventions, and nearly 1.8 million proprietary modifications under HOPE Now.

San Diego Home Sales Down, but Prices Up

San Diego home sales dropped 11.4 percent from Nov 2009 levels.  On a somewhat positive note, it was the smallest downturn for single-family sales in 20 markets and much less than the 24.6 percent decline in the U.S.

San Diego's median price of $391,700 was up 4.1 percent from November 2009, the sixth largest year-over-year increase. Washington ranked first at 9.5 percent, reaching a median $336,100. San Diego's overall price ranked second behind New York City.

Economists point to the recent slow down in sales because many buyers purchased homes earlier in the year to take advantage of federal homebuyer tax credits.

Interest rates have been rising since the most recent low of 4.11 percent in early November to 4.83 percent as of  last week. The latest interest rate figures will be released by Freddie Mac on Dec. 23, 2010.

More Foreclosures Expected in 2011

Brace yourself for another rough year in housing. The number of foreclosures is expected to increase in 2011 as more troubled mortgages work their way through the pipeline.

Next year could very well be a peak year for foreclosures, as the market is expected to tally about 1.2 million bank repossessions in 2010, with expectations even higher in 2011.

The forecast is partially due to issues the industry has faced with the robo-signing controversy that began in the fall and delayed a large portion of foreclosures from being completed this year, when lenders discovered procedures might not be in accordance with the law.

Continued high unemployment also is expected to exacerbate the foreclosure problem in the year ahead, as will recasting interest rates on adjustable-rate mortgages, which will increase monthly payments for some homeowners.

Home construction up in November

Home construction nudged up in November after two months of declines.

Builders broke ground last month on a seasonally adjusted 555,000 units, a 3.9 percent rise from October, the Commerce Department reported Thursday.

Even with the gain, housing starts are just 16 percent above the 477,000 unit pace from April 2009 - the lowest point on records dating back to 1959.

They are down 76 percent from their peak in January 2006, and 45 percent below the 1 million annual rate that analysts say is consistent with a healthy housing market.

San Diego one of few metro areas to show higher home values

San Diego had the best home value improvement in 2010 out of large metro areas, according to Zillow.com.

The area's estimated year-end value for all homes was $378.5 billion, up $10.2 billion from 2009. 

At 2.8 percent, that was the biggest rise in the top 20 and 14th among all 129 markets.

While San Diego had the best upswing of the year among the biggest markets, recent sales figures indicate that prices have slid back below their recent peaks and some economists believe there will be little change next year.

Freddie Mac temporarily suspends foreclosure evictions

Freddie Mac says it has ordered all evictions involving foreclosed, occupied, single-family and 2- to 4-unit properties that had Freddie Mac mortgages to be suspended from Dec. 20, 2010 to Jan. 3, 2011.

"If the property is occupied, our foreclosure attorneys will suspend the eviction to provide a greater measure of certainty to families during the holidays," said Anthony Renzi, executive vice president of single family portfolio management at Freddie Mac.

Consumer survey indicates a housing recovery after 2012

Nearly 60 percent of Americans believe the housing market won’t recover until 2013 or later, according to a survey released by Trulia.com and RealtyTrac.

Conducted just before the midterm election, the survey found:

• 5 percent said the recovery has already taken place
• 10 percent expect it to occur next year
• 27 percent in 2012
• The post-2012 recovery is predicted by 58 percent:
• 24 percent in 2013
• 12 percent in 2014 
• 22 percent in 2015 or later

Half of adults surveyed said they have less faith in mortgage lenders, banks and the government.  Another 35 percent believe the “robo-signing” issue will delay the housing market’s recovery. Some lenders recently acknowledged that they had not followed proper paperwork procedures in handling foreclosures and were halting foreclosure proceedings temporarily. The problem was not as pronounced in California.

The survey revealed that 48 percent of homeowners would consider walking away from their mortgage if it was higher than their home value. If their mortgage becomes unaffordable, two-thirds said they would consider calling their lender to try and modify the loan. The next most popular action, held by 10 percent, would involve renting a room to a tenant to help cover the mortgage.

Mark Marquez, president of the San Diego Association of Governments, agreed that the recovery may be two or three years away, but that San Diego might recover six months to a year sooner.

“San Diego has a history of being first in and first out,” Marquez said. “That being the case, I anticipate our economy probably recovers quicker than the national pace.”

Deficit Plan Opposed by Realtors

In February, the White House created the National Commission on Fiscal Responsibility and Reform to examine how the country spends money and collects taxes.  The commission also was tasked with creating a proposal that would cut the federal budget deficit.

• The deficit commission’s proposal was released to the public this week and calls for cutting the federal debt by $4 trillion through 2020 by upending many tax and spending policies.
• Among the proposed changes include a recommendation to reduce the mortgage interest deduction (MID) currently offered to homeowners as an incentive to own a home. The ability of homeowners to deduct the interest paid on mortgages is a powerful incentive for home ownership and has been one of the simplest provisions in the federal tax code for more than 80 years.
• The commission’s proposal would change the MID to a 12 percent non-refundable tax credit, with no credit offered for mortgages higher than $500,000 nor for interest on a second residence or home equity.
• The CALIFORNIA ASSOCIATION OF REALTORS® and the NATIONAL ASSOCIATION OF REALTORS® are strongly opposed to the proposed changes to MID and are working vigilantly to ensure elected officials are aware of the opposition and that implications of the proposal are understood.
• As the housing market continues to recover from the worst financial crisis in recent history, any change that reduces the ability of the market to heal is misguided and must be rejected. The proposal from the commission will negatively impact the housing market, further erode opportunities for homeownership across the country, and will contribute to further price declines and diminished equity for homeowners.
• Although the proposal has been made public, the full 18-member panel still must vote on the proposals before a formal recommendation can be issued to Congress and the White House. A vote is expected to take place Friday.
• Homeowners and home buyers are encouraged to call their member of congress and urge him or her to preserve the MID.

Signs of a Double Dip?

U.S. home prices fell 2% in the third quarter and may continue down, after having gained steadily since early 2009 according to the S&P Case-Shiller Home Price Index.

That leaves national home prices down 1.5% year over year and off 2% compared to the second quarter, according to the information released on Tuesday.

Some factors attributed to the decline were the expiration of the homebuyer tax credit, an increased supply of foreclosures, and a high unemployment rate.

There is also the fear of a "shadow inventory" of homes repossessed by the banks but not yet listed for sale. Millions of these homes could be put on the market at distressed prices, which would force prices down even further.

There is a glimmer of hope with consumer confidence up, mortgage interest rates at near record lows, and reports of fewer jobless benefit claims.

FHA reports decline in insurance claims

The Federal Housing Administration (FHA) released its annual report to Congress last week on the financial status of its Mutual Mortgage Insurance (MMI) Fund -- FHA’s principal insurance account that includes all single-family and reverse mortgage activity.

FHA’s study finds that since last year, the capital reserve ratio held steady, insurance claims declined significantly, and the economic value of FHA’s single-family insurance program grew by more than $1 billion, from $3.6 billion in 2009 to $4.7 billion in 2010.

Like last year’s report to Congress, the report shows that FHA is sustaining significant losses from loans insured prior to 2009 and its capital reserve ratio remains below the congressionally mandated threshold of two percent of all insurance-in-force.

Over this past year, FHA:

• Served more than 1.75 million households by insuring $319 billion in single-family mortgages.
• Enabled one-third of all first-time buyers in the nation (882,000 families) to become homeowners for the first time.
• Helped more than 450,000 families avoid foreclosure through loss mitigation actions.
• Helped 556,000 families to refinance their mortgage at lower interest rates, saving households an average of more than $140 per month.
• Provided access to credit for close to 40 percent of purchase mortgages, including 60 percent of all African-American and Hispanic homebuyers.

To learn more about FHA financing, click here.

New Lending Guidelines Benefit Young Borrowers

Under Fannie Mae's new lending guidelines, which will take effect Dec. 13, 2010, securing a mortgage will become easier for some borrowers and more difficult for others.

These new rules will allow buyers to use gifts and grants from nonprofit groups for their minimum 5 percent down payment. Borrowers previously were required to contribute a minimum 5 percent down payment from their own funds, with additional down payment money permitted from a gift.

These new rules are going to help upgrade buyers and young couples who for whatever reason don’t have enough money and are getting some from their families. The gift rules apply only to single-family principal residences and cover mortgage amounts in excess of 80 percent of the property’s value. The loan balance also has a limit of $697,500 in high-cost areas like San Diego and $417,000 in other areas.

At the same time, Fannie Mae is cracking down on debt-to-income ratios, with the maximum ratio for those seeking a conventional mortgage set to drop from 55 percent to 45 percent under the new guidelines. Fannie Mae is also increasing its scrutiny of payment histories on revolving debt, and buyers who have missed a payment will have 5 percent of the total balance added to their ratios.

Under the new rules, borrowers who have gone through foreclosure will be excluded from obtaining a Fannie-backed loan for seven years, an increase from the previous limit of four years.

7 Trends That Will Drive the Future of Housing

Here are seven trends that may have the biggest impact on housing in 2011.

1. Big builders are wringing the extras out of construction costs and dropping the national average cost-to-build 36 percent to $52 per square foot.

2. Starting in 2011, Energy Star will ramp up its efficient design and quality installation standards. To get Energy Star certification, builders will have to install the right insulation, HVAC systems, and other features related to energy efficiency correctly every time.

3. Sheds are the next evolution. As homes get smaller, a separate shed will become a popular home addition.

4. There are 81 million 'Echo Boomers' who were born from 1981 to 1999, compared to just 78 million Baby Boomers born from 1946 to 1964. These children and grandchildren of Boomers will drive home-building for years.

5. By 2015, demographers say, more than two out of every five households occupied by Generation Y people born between 1981 and 1999 will be WINKs (women with incomes and no kids).

6. Make room for the 'Sandwich Generation' – Baby Boomers living with both their kids and their parents. These families like having two master suites, a second cooking area, and lots of storage.

7. Baby Boomers want to keep working and continue to live where they have always lived. They want a first-floor master bedroom near the washer and dryer and lots of convenient storage.

4 Ways to Get Your Offer Accepted

Home prices in San Diego have fallen along with mortgage interest rates, resulting in multiple offers and high competition.  Here are 4 great tips that our company utilizes to help our client's offer stand out from the crowd.

1. Always Provide a DU Underwriting approval with the offer

All of our offers are accompanied by Fannie Mae's or FHA's DU (Desktop Underwriter) underwriting approval. An offer letter accompanied by a DU underwriting approval will always carry more weight than a basic approval letter, as a DU underwriting approval shows the most important information needed on a buyers profile to give the seller a good idea of the strength of the buyer.

2. Make sure the loan approval is current

We constantly double check that the date on the buyers approval letter is current and the DU approval has an approval date from the past 30 days. Fannie Mae and FHA have been making changes to their DU underwriting guidelines very frequently recently, so the buyer may not qualify for the particular loan program that they got approved for a few months ago.  It is our job to make sure your offer is accepted, and our clients will qualify under current loan underwriting guidelines.

3. Provide proof of down payment funds

By providing proof of down payment funds, the buyer showing the seller that they are serious about their offer and they have the money to close the deal.  We usually will send over recent bank statements with the offer, or if the buyers are going FHA and are getting a gift from the parents, we will provide a copy of the gift letter from the parents.

4. Provide a copy of the buyers credit report (first page only)

Very few offers come across with proof of the buyers credit scores, so this is a great way to stand out. If our client's credit scores are high, we will list them on the pre-approval letter and point this out on the offer. We also provide a copy of the first page of the buyers credit report that lists the 3 credit bureaus and the 3 fico scores, and we make sure to black out their social security numbers for privacy issues. This is a great way to provide full transparency on your offer, so the seller can see the credit strength of our client's profile.

Beware of the "Mortgage Terminator"

With record numbers of foreclosures nationwide, homeowner associations are being forced to cut back on services. Banks have been dragging their feet to iniate the foreclosure process because they will be responsible for delinquent association dues and property taxes. This has left thousands of communities holding the bag, either putting the burden on other homeowners in the community or by cutting amenities.

To combat the banks, a Miami Beach law firm has come up with a strategy, called the Mortgage Terminator,  where homeowner associations can force nonpaying lender-owners to either take ownership and pay deliquencies or give up their ownership interest so the association can take title to the property and sell it. The ploy won't solve all an association's money woes, but it will at least force a lender's hands after an association forecloses on an owner to collect unpaid assessments.

In too many cases, lenders are failing to foreclose on troubled assets, regardless of whether the owner is a troubled borrower or a secondary lien holder. Banks are either waiting for the market to clear so they can sell the distressed assets at a better price, or they don't want to pay the dues and/or assessments required from owners.

Whatever the reason, lenders that are stalling are leaving associations in the lurch. But with the Mortgage Terminator maneuver, associations can take the title to the property and then force the primary lien holder to initiate its own foreclosure proceeding or release its mortgage so the association can sell the unit to cover what it is owed.

Three times now, Florida courts have upheld the tactic, which finanlly gives homeowner associations a strategy that finally gives banks a legal ultimatum. For the full article, click here.

The Jumbo-Mortgage Comeback

Smaller and regional lenders are issuing more new jumbo loans and doing more refinancings, which could help bolster home sales in some areas.

Jumbo mortgages are mortgages deemed “too big” to be sold by lenders to government-supported agencies such as Fannie Mae and Freddie Mac.

The loan limit of a jumbo mortgage varies depending on location. In high-cost areas, including many areas in California, jumbo loans are generally considered those that exceed $729,750. In San Diego, the jumbo loan limit is capped at $697,000.

Some borrowers applying for jumbo mortgages are finding the processing time at larger lenders can be as long as four months, while some smaller institutions can process a jumbo mortgage as quickly as 30 to 60 days.

Additionally, borrowers seeking jumbo mortgages for condos or vacation properties also may be better served using a local lender or contacting a mortgage specialist, as many large lenders have reduced their lending activity.

With jumbo mortgages, borrowers still need excellent credit profiles and must provide complete documentation and verification of income. Down payments of 20 percent to 40 percent also tend to be required for a jumbo mortgage.

Home Buying Trifecta: Right Home, Right Price, Right Rate

The months ahead offer a prime opportunity to seek the home buying trifecta: finding the right home at the right price for the right mortgage rate. Here’s why:

- First, there is a wider variety of homes on the market now, including a mix of REOs, short sales, and

conventional or non-distressed homes for sale. This means that buyers have more to choose from than in the past two years.

- Second, home prices have stabilized or risen in most California markets for at least a year, but still remain well below the peak levels of the last decade. There was a 10-to-1 ratio between the California median price and the California median household income during the last peak. That ratio has fallen to 5-to-1, a level that has not been seen in at least 10 years.
 
- Third, mortgage rates are at their lowest levels in over 50 years, pushing the monthly payment down dramatically.  For example, if one buys a home at the September median price of $309,900, puts 20 percent down and obtains a 30-year mortgage at 4 percent, the monthly mortgage payment would be $1,330. If rates climb to 5 percent, the payment increases to $1,500, or an additional $2,040 per year. If rates climb to 6 percent, the monthly payment would be $1,670, or an additional $4,080 per year. The savings in just two years would exceed the value of the $8,000 tax credit.

Rates are at or near their lowest levels now, but will eventually rise as the economy gains strength. The supply of homes is better than last year, but data points to stable or modestly rising home prices over the near term. In the end, if a home buyer is in a position to buy a home that will meet their needs at a monthly payment it can afford, then they cannot lose.

Loan Scams - 6 Things You Should Know

Scams aren't always easy to spot – but it helps if you know what to look for. Here are six warning signs of a Foreclosure Scam:

1.A company/person asks for a fee in advance to work with your lender to modify, refinance or reinstate your mortgage. They may pocket your money and do nothing to help you save your home from foreclosure.

2.A company/person guarantees they can stop a foreclosure or get your loan modified. NO ONE can make this guarantee to stop foreclosure or modify your loan. Legitimate, trustworthy HUD-approved counseling agencies can assist you with options and facilitate communication with your mortgage company.

3.A company/person advises you to stop paying your mortgage company and pay them instead. Despite what a scammer will tell you, you should never send a mortgage payment to anyone other than your mortgage lender.

4.A company pressures you to sign over the deed to your home or sign any paperwork that you haven't read or you don't fully understand. A legitimate housing counselor should not and will not pressure you to sign a document of any kind.

5.A company claims to offer "government-approved" or "official government" loan modifications. These may be scam artists pretending to be legitimate organizations approved by, or affiliated with the government.

6.A company/person you don’t know asks you to release personal financial information. Check to be sure you are speaking with a legitimate company/person by contacting your mortgage lender directly.

Energy Tax Credits Expiring Soon

There are many reasons for green living. Energy-efficient and renewable products help homeowners save both energy and the environment.  Homeowners can save up to $1,500 in tax credits and rebates, but these credits are set to expire on December 31, 2010.

What does the tax credit cover? 

According to the National Association of Home Builders (NAHB), the tax credit for efficiency upgrades in existing homes (Internal Revenue Code Section 25C) is available for 30 percent of the cost, up to a $1,500 limit in 2009 and 2010, for the installation of certain types of insulation, windows, roofs, water heaters, heat pumps, air conditioners and furnaces.

Additionally, if you purchase an Energy Star product for your home, you may be eligible for a federal tax credit. An energy star washing machine can cut your energy costs by one third and cut your water costs by half.

There's also a tax credit with no upper limit for geothermal heat pumps, small residential wind turbines, and solar energy systems. This credit is good until December 31, 2016, and can be used for existing homes and new construction. Both principal residences and second homes qualify, but rental properties do not.

You can read more details on the kinds of products that qualify and instructions for obtaining the tax credits and rebates at nahb.org and energystar.gov.

The Price of a “No-Cost” Loan

Some home buyers who may be concerned about paying high closing costs might be tempted by a “zero-cost” or “no-cost” loan option, which requires no cash outlay, but typically adds a half percentage point to the rate.  These loans tend to be most beneficial to buyers planning to have the loan for less than five years.

KEEP THIS IN MIND

• One of the primary differences between a no-cost loan and similar loans is that no-cost loans do not tack on closing costs to the balance, but instead increase the rate.

• With no-cost loans, third-party fees including the appraisal, credit report, title insurance, recording, and the use of a mortgage broker are paid by the lender. The fees, including the amount the broker is being paid, are disclosed on the closing statement.

• Home buyers who bypass a broker and work directly with a lender may encounter less transparency, as loan officers are not required to disclose the amount the bank is making on the loan.

• Borrowers weighing their loan options are advised to use a mortgage amortization calculator to compare the costs for a conventional loan compared with a no-cost loan. To compare costs using an amortization calculator, visit our web site at http://www.SDCoastProperties.com/MortgageCalculators.

San Diego's 15-month Price Increase Ends

San Diego County's housing market, which led the country in price increases for 15 straight months, has turned negative in August and the rest of the nation's housing markets also seemed to stumble.

The Case-Shiller Home Price Index for San Diego dropped a slight 0.6 percent from July to August, the first downturn since May 2009.

San Diego wasn't alone. Fourteen of the other 20 major markets also were down month over month. The overall index for the 20 metro areas was down 0.2 percent after four consecutive months of increased prices.

However, on a year-over-year basis, San Diego was up for the 10th straight month by 6.9 percent and the national index was up the seventh time by 1.7 percent. This was San Diego's smallest year-over-year change since January's 5.86 percent.

Where Do Most People Want to Live?

If you could live in any state, except the one you live in now, what state would you choose to live in?

The Harris Poll has asked this question every year since 1997. While California tops the list of most popular states to live in among Echo Boomers (now ages 18 to 33) and Gen Xers (ages 34 to 45), Hawaii is the top pick for Baby Boomers (ages 46 to 64) and Matures (ages 65 and over). Among Echo Boomers, Hawaii drops out of the top five.

Here are the top-10 states across the age groups:

1. California
2. Hawaii
3. Florida
4. Colorado
5. Arizona
6. North Carolina
7. Oregon
8. Texas
9. New York
10. Washington

Source: Harris Interactive (10/19/2010)

San Diego Housing Prices Down

San Diego County’s median home price slipped to $330,500 last month as demand cooled in the wake of the end to buyer rebates, MDA DataQuick reported Monday.

The median was 1.9 percent lower than August’s $337,000 but up 1.7 percent from year-ago levels.

It was the smallest year-over-year rise since October last year and confirmed what many economists have been saying — prices may soften in the next few months.

How Your FICO Score is Calculated

Here is a list of five factors that will explain how the credit bureaus calculate FICO scores and tips to help you improve your credit.





Payment History - How you pay your bills makes up 35 percent of your FICO score.  It goes without saying that paying your bills on time will have a positive impact on your credit score, while paying bills late or not at all will have a dramatically negative impact.  Even paying one bill late will cause your FICO score to take a hit, so make sure you're paying your bills on time.  If you've made mistakes in the past and haven't always paid your bills on time, don't worry.  If you change your ways and pay on time, your FICO score will eventually reflect that. 

Debt to Income Ratio - The amount of debt you have versus the amount of money you earn makes up another 30 percent of your FICO score. Your debt-to-income ratio (DTI) shouldn't exceed 36 percent. This means that your debt load should not be more than 36 percent of your monthly gross income.  If you're looking to improve your credit score, you should work on reducing your debt as much as possible.

Credit History - The length of your credit history makes up 15 percent of your overall FICO score. The credit score formula calculated by FICO will reward a history of using credit wisely. That's why older adults generally have higher credit scores than people in their twenties because they have had credit lines open for a longer period of time.

Credit Applications - The number of credit accounts you apply for has an impact on your credit score as well. This factor makes up 10 percent of your credit score.  Applying for many credit cards at one time signals that you are trying to get access to a lot of credit that you may not be able to pay back. You will help improve your credit score by applying for credit only when it's appropriate.

Types of Credit - The types of credit accounts makes up the final 10 percent of your credit score. The FICO credit formula weighs your credit accounts differently. For instance, a revolving credit account is weighed differently than an installment loan like a mortgage. Having diverse credit accounts, while maintaining good payment histories, will help increase your credit score in the long run.

Most- and Least-Promising Metros for Investors

Local Market Monitor, a North Carolina firm that measures the potential for price appreciation in real estate markets with more than 200,000 residents, recently evaluated markets for conservative investors. It identified the best metros as those with signs that prices are stabilizing. It also named markets where prices are still falling as “dangerous.”

Here are the 10 most-promising areas for conservative investors:

1. Tulsa, Okla.

2. Oklahoma City, Okla.

3. San Diego-Carlsbad-San Marcos, Calif.

4. Albany-Schenectady-Troy, N.Y.

5. Indianapolis-Carmel, Ind.

6. El Paso, Texas

7. Winston-Salem, N.C.

8. Cincinnati-Middletown, Ohio-Ky.-Ind.

9. Worcester, Mass.

10. Louisville-Jefferson County, Ky.-Ind.

The top 10 most “dangerous” areas are:

1. Ocala, Fla.
2. Lakeland-Winter Haven, Fla.
3. Reno-Sparks, Nev.
4. Orlando-Kissimmee, Fla.
5. Deltona-Daytona Beach-Ormond Beach, Fla.
6. Port St. Lucie, Fla.
7. Las Vegas-Paradise, Nev.
8. Boise City-Nampa, Ind.
9. Prescott, Ariz.
10. Cape Coral-Fort Myers, Fla.

Mortgage Rates Fall to 4.27 Percent

Rates on 30-year mortgages fell to the lowest level in decades for the ninth time in 12 weeks, pushed down by traders anticipating a move by the Federal Reserve to pump more money into the economy.

The average rate for 30-year fixed loans dropped to 4.27 percent, mortgage buyer Freddie Mac said Thursday. That's the lowest on records dating back to 1971, and down from 4.32 percent the previous week.

The average rate on 15-year fixed loans, a popular choice for refinancing, dropped to 3.72 percent from 3.75 percent. That was lowest on records dating back to 1991.

How to buy a home at a $100,000 discount

With nearly 150,000 foreclosed homes on their books, Fannie Mae and Freddie Mac are trying to reduce their growing inventory of repossessed properties, offering home buyers tremendous purchasing opportunities.

An analysis by SmartMoney magazine found that home buyers could save $100,000 on the price of a home by purchasing a foreclosed home owned by Fannie Mae or Freddie Mac as opposed to a similar fair-market property just a few blocks away.

Fannie Mae’s homebuying program, which requires down payments as low as 3 percent on 30-year mortgages also can help buyers save money. However, buyers should note, smaller down payments generally translate into higher monthly mortgage payments.

Another bonus to purchasing a Fannie Mae-owned home, the company doesn’t require private mortgage insurance, which most lenders require for buyers who put down less than 20 percent.

Unlike many foreclosed properties, which usually require many repairs, Fannie and Freddie generally repair items such as leaky roofs and damaged electrical work, and often handle small projects like replacing appliances that are broken or missing, replacing old carpet, or fixing damages left by the former owners or vandals. Additionally, Fannie Mae’s properties come with an optional mortgage that includes extra financing up to $30,000 for repairs and improvements.

Buyers of Freddie Mac homes who plan to be owner-occupants –those who plan to live in the home and not use it as an investment property—have the advantage of viewing properties 15 days earlier than investors who often pay all cash and buy up foreclosed properties before owner-occupants have a chance to view them.

JPMorgan Chase Stops Foreclosures

A second major mortgage lender, JPMorgan Chase, has stopped foreclosures so it can review the loan documents for errors.

These moves are likely to slow the foreclosure crisis even more, making long-drawn out process drag on for several more years, several foreclosure analysts are saying.

In any case, an increased number of lawsuits are likely. Many foreclosed home owners will be looking to sue their lenders alleging errors in documents.

GMAC Mortgage was the first big lender to pause foreclosures while it reviews past files.

There have been several suits agains mortgage lenders based on whether the MERS clearing house actually transferred the note with the mortgage. A judge in California and another judge in Kansas held that the transfer was invalid and reversed the foreclosures in favor of the homeowners.

Fraud Alert: Forensic Loan Audits

A new type of foreclosure-rescue scam has come to light in recent months – Forensic Loan Audits.

In exchange for an upfront fee of several hundred dollars, so-called forensic loan auditors, mortgage loan auditors, or foreclosure-prevention auditors backed by forensic attorneys offer to review a troubled homeowner’s mortgage loan documents to determine whether their lender complied with state and federal mortgage lending laws.

The “auditors” claim the homeowner can use the audit report to avoid foreclosure, accelerate the loan modification process, reduce their loan principal, or even cancel the home loan.

Freddie Mac Expands First Look Initiative

Freddie Mac announced it is expanding its First Look Initiative, effective on September 17, 2010, so any home shopper can buy a HomeSteps® home as their primary residence during the first 15 days of the property's listing without competition from investors.

Nonprofit organizations may also buy during the 15-day window. The Freddie Mac First Look Initiative supports Freddie Mac's mission to stabilize communities and foster affordable homeownership opportunities.

Home shoppers should contact their local real estate broker or visit Freddie Mac's website for more information about the Freddie Mac First Look Initiative. Information on Fannie Mae's similar 15-day First Look policy for home buyers and nonprofits is available on Fannie Mae's website.

Multi-family Property Market is on the Mend

Sales of multifamily housing is picking up nationwide. Buyers believe the sector is a sound bet because current prices are below construction costs in many cases and rental business is improving. Plus, there has been little additional development in the past couple of years and some industry analysts believe that shortly there will be a shortage in some markets.

Financing for apartment buildings is at a 50-year low, with seven- to 10-year mortgages available for as little as 4 percent.

Even with the positive news, the sector could still face some pain. Yields are about 5 percent while a year ago investors were getting close to 6 percent with about a quarter of the transactions involving distressed sales.

Consumers see Mixed Outlook for Housing

A recent survey by Fannie Mae found that 70 percent of Americans think it is a good time to buy a house, with 47 percent of responsdents saying they believe home prices will hold steady over the next year.

A majority of Americans (67 percent) continue to believe that housing is a safe investment; however, that number is down 16 percentage points from a similar survey conducted in 2003, according to Fannie Mae.

Delinquent borrowers and renters are notably more discouraged than mortgage borrowers and underwater borrowers about a home's safety as an investment and the appeal of buying versus renting. More than 70 percent of all respondents believe it will be harder for the next generation to buy a home, an increase of three percentage points compared with the beginning of the year.

Other key findings in the survey include:

Seventy percent of Americans said it is a good time to buy a house, up six percentage points from January.

More than half of respondents think it would be very difficult or somewhat difficult to get a home loan today, down six percentage points since January.

Nearly one quarter of mortgage borrowers said they have reduced their mortgage debt significantly in the last year, and 27 percent of mortgage borrowers say they have reduced their non-mortgage debt significantly.

Have existing-home sales hit bottom?

According to a new economic study, the housing market may have hit bottom this summer and may be finally heading back into positive territory.  Two leading indicators, applications for purchase money mortgages and the number of homebuyers entering into contracts to purchase homes, suggest sales of resale homes hit bottom in July and will rebound this fall.

After hitting a low in the first half of July, purchase mortgage applications have edged up slightly, according to statistics gathered by the Mortgage Bankers Association. Because of the time it takes to approve a loan and close a home sale, loan applications submitted in August might not show up in statistics on existing-home sales until October.

Another leading indicator, which counts the number of homebuyers who have entered into purchase contracts was up 5.2 percent in July, according to the National Association of Realtors' pending sales index.

The improvement in purchase mortgage applications combined with the increase in pending home sales strongly suggest that sales have bottomed out, at least for now.

California Housing Comeback

The national housing market is full of uncertainty. But in California, the markets are stabilizing.

Home prices are rising in virtually every corner of the Golden State. Prices have climbed for nine consecutive months, and in July posted a 10.4% gain year-over-year. That puts the state's median price at $315,000 -- nearly twice the national median of $183,000.

And the news is even better in coastal cities.

San Francisco posted the biggest gain of any U.S. metro over the past year, rising 14.3%. The median price there is now more than $607,000. Meanwhile, San Diego has climbed 11.2% (median price: $389,000) and Los Angeles jumped 9.2% (median price: $345,000).

For more info on San Diego's housing market, click here.

Near-Record Affordability in Real Estate

The share of homes that families making the national median income could afford to buy remained above 70 percent for the sixth quarter in a row, according to the latest National Association of Home Builders/Wells Fargo Housing Opportunity Index (HOI).

Nationally, the HOI was at 72.3 percent in the second quarter, unchanged from the same time period last year and close to the index's record-high 72.5 percent, set in first-quarter 2009.

The HOI tracks the share of homes sold in a particular area that would have been affordable to a family earning the local median income. The index assumes a family can afford to spend 28 percent of its gross monthly income on housing, according to NAHB's website.

CalHFA introduces First-time Buyer 30-year fixed loan at 4%

The California Housing Finance Agency announced this morning that it's making new, less expensive 30-year fixed-rate loans for-first time homebuyers who meet low- and moderate income guidelines.

CalHFA Executive Director Steven Spears says the option helps qualified first-time buyers get around the some of today's extremely tight rules set by conventional lenders.

Spears said: 'Housing finance agencies around the country have historically played an important role in each state's housing market. With the disruption in the credit markets over the last two years, we have been limited in our ability to help finance home purchases. This new program offers California families another way to purchase their first home with reliable, fixed rate financing.'

Those interested can contact our office to learn more about this program at (619) 993-0687 or www.SDCoastProperties.com/contactus.

Three Reasons to Buy a Home Now

Stocks are up 50 percent from the March 2009 bottom. Some commodities have risen dramatically. The only asset class left in the cellar is real estate.

As a result, investors should buy now for these three reasons:

(1) Desperate sellers. Both home owners and lenders are eager to unload a flood of foreclosed and underwater properties.

Buyers with the patience to push through these complex deals can save a bundle.

(2) Little competition. Because most people don’t have what it takes to negotiate their way through short sales and REOs, patient investors are winners.

(3) Low rates. Mortgage rates are at their lowest level in 40 years. If you believe inflation is inevitable, lock in now.

To search homes on San Diego MLS, click the link: www.SDCoastProperties.com/MLS
or call us at (619) 993-0687 to start looking for your next home.

Good-faith estimates get real

Good-faith estimates on mortgage closing costs are more accurate, but at a higher cost. Mortgage lenders must now pay the difference if a loan's closing costs come in higher than they estimated, which means no more lowballing to lure customers.

Lenders face new penalties if they lowball estimates of upfront mortgage costs, which has resulted in lenders and brokers coming clean about how much borrowers will pay.

As a result, the so-called good-faith estimates that mortgage providers must give to prospective customers show closing costs soaring 36% this year.

The main reason for the increase: Lenders are giving more accurate estimates because they now must pay to cover the difference if they underestimate the costs.

The Worst Is Over, Some Experts Conclude

With housing recovering slowly, most economists predicted in a recent survey that it will take at least five years for average home prices to climb back to the levels they commanded in 2006.

This year, some hard-hit areas may see another dip, but properties values will most likely rise.

"Softness in the summer months will be followed by firming conditions and momentum as the year unfolds and the economy strengthens," says Robert Denk, an economist for the National Association of Home Builders.

Mission Valley House for sale in Escala

Call for more details at (619) 993-0687 or email at info@SDCoastProperties.com

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For more info email us at info@SDCoastProperties.com

For Sale in Kensington

Ocean Front Walk for Sale in Mission Beach

Green Building to Balloon to $173.5 Billion

The most recent issue of EL Insights reports that the U.S. green building market value will jump from $71.1 billion now to $173 billion by 2015. Commercial green building is expected to grow by 18.1 percent annually during the same time period, from $35.6 billion to $81.8 billion.

In the report, green building is defined as development with resource use and employee productivity in mind. The high project growth is attributed to a growing recognition of green building's potential cost savings and incentives from the government, like the multi-million dollar Sustainable Communities Challenge Planning Grant program and the Sustainable Communities Regional Planning Grant program.

Green renovation is also expected to be a major part of future green building, largely due to government projects like the Recovery through Retrofit initiative, which offers $80 billion in energy and environmental retrofits for federal buildings.

Green building growth will create many changes in the greater building market. For example, construction workers will increasingly pursue green training programs, companies will spend more money on green building technology, and homes with green features will do better on the real estate market. These changes will lead to cost savings for building and home owners, who will benefit from lower energy and heating bills.

Mortgage Applications Up, Purchase Demand Jumps

U.S. mortgage applications jumped last week as demand for loans to purchase homes rose for the first time in five weeks, the Mortgage Bankers Association said on Wednesday.

The Mortgage Bankers Associations said its seasonally adjusted index of mortgage applications, which includes both purchase and refinance loans, increased 7.6 percent for the week ended July 16.

In addition, demand for home refinancing loans hit the highest level in 14 months as interest rates reached their lowest in at least 20 years.

The data provided a glimmer of hope for a housing market that has been struggling since the expiration of popular homebuyer tax credits.

FHA raising FICO floor, Reducing Seller Concessions

FHA borrowers will soon need a 580 FICO score in order purchase a home with the minimum 3.5 percent downpayment, and won't qualify for the program at all if they have a score below 500.

Federal housing officials are moving closer to implementing several policy changes announced in January that will also reduce the maximum allowable seller concession on FHA-backed loans from 6 percent to 3 percent and tighten underwriting standards for manually underwritten loans.

FHA will soon require 10 percent downpayments for borrowers with FICO scores between 500-579, instead of the 3.5 percent minimum. Borrowers with credit scores under 500 would be excluded from the program altogether.

HUD is currently reviewing public comments on this issue. These changes are aimed at curbing losses to FHA's capital ratio that fell below the Congressionally mandated minimum levels and to maintain FHA lending as a viable resource for existing and future homeowners.

Reform Bill Retools Lending Industry

The Senate passed the Financial Reform Bill, which will impact home buyers and mortgage lenders. One of the biggest changes is the creation of a consumer bureau at the Federal Reserve and the requirement that the lenders ensure that a borrower is able to repay a home loan by verifying income, employment, and credit history.

Under the financial regulation bill, at least two categories of mortgages likely will see a dramatic decrease in their availability: interest-only loans and stated-income loans. Both loan types likely would fall short of the government’s definition of “qualified” mortgages and therefore be avoided by many in the lending community.

Many real estate analysts credit interest-only loans and stated-income loans as contributing factors to the decline of the housing market. With interest-only loans, borrowers pay none of the loan principal for a fixed period, typically 10 years, after which time they must make higher payments for the remaining 20 years of the loan. Unlike other loan products, stated-income loans do not require borrowers to verify their actual income. Only a few lenders continue to offer these loans, and typically only to borrowers with deep cash reserves and large down payments.

The bill also severely limits the industry practice known as “yield spread premiums,” which in many cases incentivized mortgage brokers and loan officers to sell higher-interest loans to borrowers. The reform bill will no longer allow commissions earned by mortgage brokers and loan officers to be linked to the interest rate, but rather the loan amount. Once the bill takes effect, the total commission and additional fees charged by lenders and others in the mortgage process will be limited to a maximum of 3 percent of the loan amount, not including the real estate commission.

Mortgage applications to buy home fall to 13-year low

Mortgage applications to buy a home plunged last week - to the lowest level in more than 13 years - as the housing recovery continued to struggle following the expiration of the homebuyer tax credit, an industry group said Wednesday.

The Mortgage Bankers Association said application for mortgages to purchase a home sank a seasonally adjusted 3.1% for the week ended July 9 on a week-over-week basis, driving the volume to its lowest level since December 1996. On an annual basis, applications for the week were down 43%.

Much of the slowdown has come since the April 30 expiration of homebuyer tax credit. Homebuyers had until that deadline to sign contracts. Congress extended the deadline to close deals to Sept. 30.

The government's latest reading on new home sales plummeted to a record low in May, thanks largely to the expiration of the tax credit.

New guidelines for appraisers

Fannie Mae has put lenders on official notice that they can only use appraisers who are knowledgeable about the area in which they are being asked to value property, and who have the ability to access records on recent sales in those markets.

In a June 30 notice updating several policies related to appraisals, Fannie Mae also fleshed out previous guidance to lenders on the selection and use of comparable sales, saying appraisers must consider a property's condition when choosing to use foreclosure sales or short sales as comps.

Fannie Mae is also barring lenders from making unilateral changes to appraisal reports, including the appraised value, saying only the appraiser who completed the original report is authorized to change it.

Anti-deficiency bill passes California Assembly Judiciary Committee

The Assembly Judiciary Committee passed SB 1178 yesterday with a bipartisan vote of 7-1. The bill, which will extend anti-deficiency protections to homeowners who have refinanced “purchase money” loans and now are facing foreclosure, now must pass the Assembly before going to the governor for his signature. SB 1178 passed the Senate earlier this month.

This bill will close a loophole in the law that allows California homeowners, already facing the possibility of foreclosure, to be sued by their lender for the difference between the value of the foreclosed property and the outstanding balance on the mortgage loan.

People optimistic about economy

Californians are feeling better about the economy than they were a few months ago, but they continue to hold back on big-ticket spending, according to a recent survey by Chapman University.

Road to Recovery: Local Housing Market Shows Signs of Strength

The median price of existing single-family homes in California in May was $324,430, a 23.2 percent increase compared with a median price of $263,440 in May 2009. The May 2010 median price increased 5.9 percent compared with April’s $306,230 median price.

While home prices are rising month-over-month and year-over-year, affordability continues to remain at near-record highs. In the first quarter of 2010, 66 percent of first-time home buyers in California could afford to purchase an entry-level home in the state.

Many first-time home buyers in California timed the opening and closing of escrow to capitalize on both the federal and state tax credits, helping propel home sales in May.

Percentage of homes with price reductions declines in June

A new report found 22 percent of homes listed for sale nationwide experienced at least one price reduction as of June 1 compared with 23.6 percent in June 2009, according to Trulia.com. The average discount for price-reduced homes remained unchanged at 10 percent of the listing price.

Cities in the Western U.S. experienced the largest decreases in price reductions compared with the previous year. Las Vegas led the way with a 67 percent decrease and six California cities (Oakland, San Jose, Los Angeles, Sacramento, San Francisco, and San Diego) experienced a price reduction of 24 percent or more, according to the report.

Price reduction levels for luxury homes--those listed at $2 million and higher--continued to hold steady with 21 percent of homes experiencing a price reduction and an average reduction of 14 percent off the listing price.

Senate Extends Tax Credit Closing Deadline

The U.S. Senate voted Wednesday to extend the home buyer tax credit closing deadline to Sept. 30, giving an estimated 180,000 buyers who met the contract deadline of April 30 extra time to close the transaction.

The extension was added to a bill to pay for jobless benefits.

The NATIONAL ASSOCIATION OF REALTORS® estimates that one-third of qualified applicants have been notified that they will be unable to close by the deadline. The Mortgage Bankers Association says delays are caused largely by the volume of transactions.

The measure still must be approved by the House.

Foreclosure activity continues to decline in May

Foreclosure filings – notices of default, scheduled auctions, and bank repossessions – declined 3 percent in May compared with April, but increased less than 1 percent compared with the same period a year ago, RealtyTrac reported.

Properties receiving a notice of default declined 7 percent in May compared with April and 22 percent compared with May 2009.

Foreclosure auctions decreased 4 percent in May compared with the prior month, while bank repossessions increased 1 percent during the same period, according to the report.

California accounted for more than 22 percent of the total number of properties receiving a foreclosure notice in May, an increase of 3 percent from April, but a decrease of nearly 22 percent compared with a year ago.

Harvard study finds job growth key to housing recovery

Improved affordability for first-time buyers and government incentives led to increases in sales of existing homes last year, according to Harvard University.

The study also found a record number of foreclosures continue to add pressure to the housing market and millions of homeowners.

Despite some positive signs early in the spring-buying season this year, housing continues to face significant challenges.

California consumer confidence rises in May

The California Composite Index of Consumer Confidence increased to 82.7 in May, slightly higher than February.

An index level lower than 100 reflects a higher percentage of pessimistic consumers compared with those who are optimistic.

The index measuring consumers’ planned spending on big-ticket items decreased to 71.4 percent, the lowest reading since the first quarter of 2009.

GSEs release HAFA guidelines

Government Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac last week released guidelines for implementing the Treasury Dept.’s Home Affordable Foreclosure Alternatives Program (HAFA). The new guidelines apply to loans owned or guaranteed by the GSEs; servicers are required to implement the new policies no later than Aug. 1.

While largely consistent with the HAFA guidelines for non-GSE mortgages, both Fannie and Freddie have implemented changes. To qualify for the Freddie Mac HAFA program, borrowers must be more than 60 days delinquent and have cash reserves of less than $5,000 or three times the current monthly mortgage payment, whichever is greater.

Similar to the non-GSE HAFA program, Fannie Mae allows borrowers to qualify if they are at imminent risk of default. However, Fannie prohibits borrowers from participating in HAFA if the borrower: Has the ability to continue making mortgage payment, but chooses not to do so; has substantial encumbered assets of significant cash reserves equal to or exceeding three times the borrower’s total monthly mortgage payment or $5,000, whichever is greater; or has high surplus income.

Fannie and Freddie both allow the real estate commission in the listing agreement, but not more than 6 percent. Consistent with the non-GSE HAFA program, Fannie and Freddie guidelines do not permit subordinate lien holders to require contributions from the real estate agent or borrower as a condition for releasing its lien and releasing the borrower from personal liability.

More info on Fannie Mae guidelines

More info on Freddie Mac guidelines

Fears rise U.S. rebound slowing

The U.S. economy may be headed for a slowdown reminiscent of the one it suffered in 2002 as the debt crisis in Europe, fading government support and persistently high joblessness weigh on expansion in the second half of the year.

The economy expanded at a 3.6 percent pace in the nine months through the first quarter, the latest data available from the government. Growth in the second quarter may be even faster. However, economists have begun to lower their forecasts for the first time since the recovery began in the middle of 2009.

While there have been good signs in the last four months, there's some fragility based on Europe's debt problems and U.S. state-government budget cuts as among the forces restraining growth and endangering the economic rebound.

FHA Seeks Comments on Flipping Waiver Conditions

On January 15, 2010, the US Department of Housing and Urban Development (HUD) announced that it is temporarily expanding the property flipping waiver to include investors and entities that purchase foreclosures either singly or in bulk for resale. FHA is now seeking comments on the 90-day flipping waiver.

Under the waiver, homes that were foreclosed on and are being sold by the mortgagee or on its behalf may be purchased by Federal Housing Administration (FHA) borrowers without regard to the 90-day seasoning period.

To be eligible for the waiver, approved mortgagees must meet two conditions: 1) all transactions must be arms-length; and 2) when the sale of the property is greater than 20 percent above the seller's acquisition cost the lender must justify the increased value with supporting documentation or an appraisal and a property inspection must be ordered and provided to the purchaser before closing.

Mortgage Rates Might Not Be Low for Long

The near-record low mortgage rates seen during the past few weeks may not be around much longer.

Signs of improving economic conditions could lead Federal Reserve Chair Ben Bernanke to raise key interest rates, driving up mortgage rates.

Fewer banks have reported tightening their lending standards in the past quarter. If lending standards start to stabilize, the Fed may remove emergency lending procedures, including the zero rate.

This means that consumers will start to see interest rates climbing back up in the months ahead.

10.8 percent annual growth in San Diego home prices

San Diego County home values rose 10.8 percent in March compared to 12 months earlier, as a smaller number of buyers chased deals on the most expensive homes, according to the latest update of Standard & Poor's Case-Shiller Home Price Index.

For months, the momentum behind San Diego home prices has been a frenzied market of investors and first-time homebuyers looking to score a deal on a house.

But March saw that trend flipped on its head: Homes priced under $311,200 fell 0.5 percent, the first monthly drop since May, though still up 11.3 percent since the previous March. Meanwhile, homes prices above $465,686 rose 2.9 percent in March from February, and were up 7.7 percent from the previous year.

The index, a widely respected measure of the resale value of houses, shows that San Diego is still 36 percent off its November 2005 high.

Existing-Home Sales Continue to Improve in April

Existing-home sales rose again in April with buyers motivated by the tax credit, improving consumer confidence and favorable affordability conditions, according to the National Association of Realtors®.

Existing-home sales, which are completed transactions that include single-family, townhomes, condominiums and co-ops, increased 7.6 percent to a seasonally adjusted annual rate of 5.77 million units in April from an upwardly revised 5.36 million in March, and are 22.8 percent higher than the 4.70 million-unit pace in April 2009. Monthly sales rose 7.0 percent in March.

Loan demand to buy homes sinks to 13-year low

Demand for loans to buy U.S. homes shriveled to a 13-year low last week, following the expiration of federal tax credits, while near-record low mortgage rates stoked refinancing, the Mortgage Bankers Association said on Wednesday.

Mortgage purchase applications sank 27.1 percent to the lowest level since May 1997 in the absence of the popular government support, the group said. U.S. housing groped for footing after more than a year of homebuyer tax credits worth up to $8,000 expired on April 30.

Requests for home purchase loans have fallen almost 20 percent over the past month despite low borrowing costs.

Overall loan requests were down 1.5 percent, on a seasonally adjusted basis, in the week ended May 14, cushioned by a 14.5 percent jump in mortgage refinancing applications as home loan rates neared historic lows.

Average 30-year mortgage rates fell 0.13 percentage point last week to 4.83 percent, the lowest since last November, the MBA said. The record low was 4.61 percent in March 2009, based on the group's survey, which has been conducted since 1990.

Mortgage rates drop to lowest level this year

Mortgage rates fell this week to the lowest level of the year, as rates fell on U.S. government securities. Fixed mortgage rates closely track interest rates paid on long-term Treasury bonds.

The average rate on a 30-year fixed rate mortgage dipped to 4.93 percent this week from 5 percent a week earlier, Freddie Mac said Thursday. It was the lowest level since mid-December, when rates averaged 4.81 percent.

The drop came as investors shifted money from risky European debt to safer U.S. securities. Bond yields fell as a result, and that lowered mortgage rates.

Calif. bill seeks to close property tax loopholes

Democratic lawmakers are determined to close tax loopholes they say cost state and local governments hundreds of millions of dollars each year, as they search for ways to trim California's enormous deficit.

A report by the union-funded California Tax Reform Association found that the share of property tax paid on residential property has increased since two-thirds of voters approved California's landmark Proposition 13 tax law in 1978, while the share paid on commercial property has decreased.

Under the current system, when property changes owners, its land value is reassessed and the new owner pays taxes based on the new value, which is often higher.

But it only applies when a person or legal entity obtains more than 50 percent of the property, allowing corporations to structure sales to avoid a reassessment. AB 2492, would redifine an ownership change to 100 percent of a property being sold, regardless of the number of new owners.

Republicans whose votes are needed to reach the two-thirds legislative approval to pass any tax increase are opposed, along with the California Taxpayers Association. The group said a switch would increase taxes on business owners.

Poway is "best value" in San Diego

Looking for the most house for your money? Think about buying in North County, particularly in Poway. Not only does Poway have a top-ranked school district, it recently was recognized nationally as the top value in San Diego County.

The area around Poway Road and Highway 67, commonly referred to as the Garden Road-Sycamore Creek area, was nominated as San Diego's "best-value" neighborhood, or the one that offers the best quality of living for the money.

The neighborhood is one of 20 nationwide that made the list compiled by Location Inc.

Fannie Tightens Interest-Only Requirements

Fannie Mae announced today that it plans to require borrowers using interest-only mortgages to put down 30 percent of the sale price.

Fannie Mae also said it will only buy adjustable-rate mortgages underwritten to require that borrowers could afford the loans even if interest rates reset to the higher of either:

1. The loan’s initial interest rate plus two percentage points.
2. The cap, the maximum the interest rate can rise.

"Our goal is to make sure consumers can sustain their mortgages and remain in their homes over the long-term, while helping our lender partners offer a range of mortgage products for qualified borrowers," says Marianne Sullivan, senior vice president of Single Family Credit Policy and Risk Management at Fannie Mae, in a prepared release.