New Law Extendeds California Home Foreclosures (again)
Though not widely publicized, the California state legislature passed a new bill which was signed by Gov. Schwarzenegger on February 20. It's titled the “California foreclosure prevention act, assembly Bill 7” and is designed to address the foreclosure problems in California.
Once again, it seems our elected lawmakers are totally misguided. All this bill does is extend the normal California foreclosure by an additional 90 days. Let me clarify this a little. Back in July of 2008, the California legislature passed a bill that requires lenders, prior to filing a notice of default, to make diligent efforts to contact the homeowner to see if something can be worked out prior to the notice of actual filing of default. This provision has added at least 30 days to the typical foreclosure process in California. Normally, in California, the foreclosure process is 90 days, plus 21 days for advertising. Add the thirty days from the July 2008 provision and we now have a four month process for foreclosure, not counting the required advertising. The newest law will add an additional 90 days on top of that, so what we're talking about now is a seven month foreclosure process in California, not counting the required 21 day advertising period.
I believe this well-intentioned law will just exasperate and extend the California real estate malaise. Plus, it seems to me that our lawmakers didn't consider any of the negative aspects of extending the foreclosure process.
First of all, the last four months of sales in California have been picking up, and quite dramatically in some areas. Of course, the majority of the sales have been foreclosed properties or short sales, but the fact remains that the free market seems to be working quite well without intervention. Before extending the foreclosure process no one asked “who pays for the additional 90 days?” If the average monthly mortgage payment was $2000, who is paying for the additional $6000 in missed payments that this extension will possibly generate? Yes, it's the taxpayers who will be paying as the government buys these toxic loans.
Plus, many distressed properties in California are governed by community association groups, condos, planned unit developments and planned residential developments. All of these homeowner associations have monthly dues, which are assessed for maintenance, and in many cases, utilities. Most distressed homeowners who stop paying their mortgage stop paying their HOA at the same time as, or prior to, their nonpayment of their monthly mortgage. Typically, monthly HOA dues can range anywhere from about $80 per month to $1000 per month for a high rise condominium in downtown San Diego. With this new extension of the time to foreclose, homeowners associations are looking to be out a minimum of three months worth of dues. Because of this new bill many of these associations, already in poor financial shape due to the number of lost payments and normal foreclosures, are worse off. In many cases the only recourse these associations have is to raise the monthly dues for existing membership, to cover the loss of non-paying members.
Also, how many California mortgage lenders will want to keep issuing new loans in the state when the ability to cut their losses when things go south is now hindered by the state? At the very least, additional fees will need to be added to all California mortgage loans to compensate lenders for this un-called for interference in the free market process by the California State Legislature.
San Diego downtown condominiums
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Are our Californian politicians screwed up or what? Can you believe that just days after passing a budget, the California legislature passed and Gov. Schwarzenegger signed, on February 20, 2009, a tax credit bill (Senate Bill 15) for taxpayers who purchase a principal residence any time after March 1, 2009, and before March 1, 2010. The allowed credit is for 5% of the purchase price or $10,000, whichever is less. The state of California allocated $100 million for this credit.
Although obviously well-intentioned, personally I cannot see how after raising the sales tax for the entire state, the state income tax, and the car registration fees, the state can turn around in just a few days and give away $100 million. In San Diego alone, $100 million had to be cut from the City school budget. Perhaps not giving away this new home buyer’s credit could have avoided any city school cuts!
As a Realtor, I am happy with any program that will increase sales,. As a California taxpayer I think it's unconscionable that at a time of fiscal deficits throughout the state, that this program is being instituted.
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Stock Market Rally … A Real Bottom?
At last!! It only took a few dew drops of good news for the Dow to recover from its near death experience and rocket 350 points. The “I love America trades” of long bonds and Treasuries came back with a vengeance. The “short America trades” were last seen running down the street with their tails between their legs, and gold breaking key support at $900. News that Citigroup was profitable in 2008, rumors of the suspension of the uptick rule and mark-to-market accounting were enough to do the trick. It also helped that every technical analyst on the planet was screaming “Buy!” Although this may not last, even a single day of fresh air is welcome.
Is this stock market rally just a one day 5% dead-cat bounce? The basic fundamentals of Citi has not changed. Of course the banks will all be profitable if Uncle Sam removes any and all losses. A one-way street upward as long as the taxpayers pay the losses… a market rally based on these fundamentals does not prove to be a true bottom. San Diego Realtors
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Jack Welch was Chairman and CEO of General Electric between 1981 and 2001. Welch gained a solid reputation for uncanny business acumen and unique leadership strategies at GE. He remains a highly-regarded figure in business circles due to his innovative management strategies and leadership style.
Welch's net worth is estimated at $720 million.
Jack Welch says Obama needs to focus. Everything else is not only a distraction but is hurting the economy. Good analysis from a man who knows business.
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For the week of March 9, 2009 – Vol. 7, Issue 10>> Home Base
INFO THAT HITS US WHERE WE LIVE Last Tuesday, the National Association of Realtors said their Pending Home Sales Index for January dropped 7.7% from December and was down 6.4% year-over-year. But an NAR index that tracks housing affordability rose to a record level in January. This was because the combination of mortgage rates, family income and home prices in January were "the most favorable since tracking began in 1970," according to the group.
The NAR also forecasted that existing home sales would rise 0.3% this year, then 5.8% in 2010. The median price would fall 4.9% this year, but rise 3.9% in 2010. New home sales would be down over 39%, with the slowdown in building and the need to trim inventory. But the median price for new homes would drop only 3% this year, then rise 4.2% in 2010. All these facts, figures and forecasts point to one thing. If people find good value and a good mortgage rate on a home they love, this is the year to buy.
Wednesday, the US Treasury released the guidelines f or its Making Home Affordable programs. The Home Affordable Refinance program will help 4 to 5 million homeowners get into a fixed rate mortgage at today's lower rates, even though their homes have lost value. The Home Affordable Modification program will help 3 to 4 million at-risk homeowners avoid foreclosure by reducing their monthly mortgage payments. Both programs will help keep people in their homes and stabilize prices. I have a summary of the guidelines and I'm happy to help people through them.
>> Review of Last Week
ROUGH RIDE… It was another week when all the major stock market indexes took a bumpy trip down, with the S&P500 at its lowest level in 12 years. The reasons were familiar…concern about the financials and uncertainty about when things will turn around for the credit markets and the economy.
The week got started with big financial player AIG owning up to a big $61 billion Q4 loss. The US Treasury responded by saying it will provide another $30 billion if needed. We also had a couple of big banks cutting dividends to save capital (actually a rather rational move in today's environment). A bunch of retailers reported declining same-store sales for February, but Wal-Mart's same-store sales rose 5.1% and they raised their dividend! We wound up the week on=2 0a disappointing February jobs report, with the unemployment rate now at 8.1%, a tad higher than expected.
It wasn't that hard to spot positive signs, although neither Wall Streeters nor the media seemed to pay much attention. Consumer spending rose in January, as did personal income. In fact, after-tax, inflation-adjusted income has now gone up three straight months. No one thinks consumer spending will explode, but the worst may be over in that department. Meanwhile, the personal savings rate increased to 5% in January, its highest level since 1995.
For the week, the Dow fell 6.2%, to 6626.94; the S&P 500 went down 7.0%, to 683.38; and the NASDAQ slid 6.1%, to 1293.85.
This time around, the bad week in stocks gave us a good week in bonds, so the benchmark 10-year Treasury's price went up. Its yield, which runs counter to price, went back down below the 3% threshold, settling at 2.823%. The mortgage rate situation continues to be very very appealing.
>> This Week’s Forecast
ALL EYES ON WASHINGTON… This Thursday the House Financial Services Committee will meet on mark-to-market accounting. Many analysts and industry groups feel that suspending mark-to-market accounting could ease capital concerns at banks. This would give them increased capacity to lend, which economists feel is key to our recovery. The cost to taxpayers? Nothing. The government suspended mark-to-market accounting in 1938 and did not reinstate it until right when this crisis began in late 2007. Hmmmmm…
Not much in the way of corporate earnings and just one significant economic report – Retail Sales on Thursday.
>> The Week’s Economic Indicator Calendar
Economic Calendar for the Week of Mar 9 – Mar 13
|
Date |
Time (ET) |
Release |
For |
Consensus |
Prior |
Impact |
|
W |
10:30 |
Crude Inventories |
3/6 |
NA |
NA |
Moderate |
|
Th |
08:30 |
Initial Jobless Claims |
3/7 |
NA |
639K |
Moderate |
|
Th |
08:30 |
Retail Sales |
Feb |
–0.4% |
1.0% |
HIGH |
|
Th |
08:30 |
Retail Sales ex-auto |
Feb |
–0.2% |
0.9% |
HIGH |
|
Th |
10:00 |
Business Inventories |
Jan |
–1.1% |
–1.3% |
Moderate |
|
F |
08:30 |
Trade Balance |
Jan |
–$38.2B |
–$39.9B |
Moderate |
|
F |
10:00 |
U of Mich Consumer Sentiment-Prelim |
Mar |
56.3 |
56.3 |
Moderate |
This post information was provided by: Greg Brooks southwest area manager San Diego Mortgage Network (800) 287-8292 x 225 San Diego homes for sale
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Is it time to require the taxpayer to bailout city and state pension funds across the country?
Poor management, the stock market drop and worst of all built growth projections that were not only unrealistic but pure fantisty, should more than qualify these funds for prudent taxpayer money!
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