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U.S. homebuyers are less likely to purchase a foreclosed property today than they were a year ago, according to a new survey conducted by Trulia and RealtyTrac. Some 45 percent of U.S. homebuyers say they are at least somewhat likely to purchase a foreclosure today compared with 55 percent who said the same a year ago.

Only 1 percent of homeowners with a mortgage say walking away from their home would be their first option if they are unable to pay their mortgage, while 59 percent say they would not consider walking away no matter how much their mortgage was underwater. More than two-thirds of homeowners (69 percent) say modifying their loan terms is their first choice if they aren’t able to pay their mortgage.

The survey also finds that fewer homeowners have a negative view toward foreclosure properties this year (78 percent) compared to last year (85 percent). Homeowners who believe there are negative aspects to purchasing a foreclosed home say they are most concerned that there will be hidden costs (68 percent), that the process is risky (49 percent) and that the home could lose value (35 percent).

Facing the possibility of foreclosure, California homeowners may be hit with more than just losing their homes. Due to a loophole in state law, they also can be sued by their lender. To prevent this, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) is sponsoring Senate Bill 1178 by State Sen. Ellen Corbett (D-San Leandro), which will extend anti-deficiency protection for consumers who have refinanced their original mortgage loans and now are facing foreclosure.

KEEP THIS IN MIND

• Currently, if a homeowner defaults on a mortgage used to purchase his or her home — known as a “purchase money mortgage” — the homeowner’s liability on the mortgage is limited to the property itself. Unfortunately, the original law did not extend the purchase money protection to loans that refinance the original purchase debt, even if the refinance only was to obtain a lower interest rate.

• Californians who refinance a property currently do not have protection if they default on a mortgage greater than the property’s value. Called a “deficiency” liability, under current California law, the lender can sue the former homeowner for the amount of the deficiency even after taking back the property.

• Recent years of low interest rates and aggressive marketing campaigns by lenders have induced tens of thousands to refinance mortgages. Few homeowners realized that by refinancing their mortgage, they were forfeiting their protections and now are personally liable.

• C.A.R. created a video detailing Senate Bill 1178. The video can be viewed here.

To read the full story, please click here:

http://losangeles.bizjournals.com/losangeles/stories/2010/05/17/daily8.html

Mega-investor Warren Buffett and a group of top corporate leaders are weighing in on a key issue that’s crucial to a sustained real estate recovery: How long will the good economic news we’ve been getting lately continue? Are we going to be let down later in the second half of the year, or is the current, slow-moving national economic growth pattern a long term trend?  Buffet told his annual stockholders gathering in Omaha that, the economy is showing “significant” and persistent improvement for the first time since the financial crisis broke in 2008.

Other top business leaders polled by the Conference Board — and quoted last week by the Wall Street Journal – said they are now “confident that the U.S. will see sustained growth through 2010″ – with moderate gains in employment, consumer spending and consumer confidence.

That’s hugely important for housing of course – and offers a strong answer to economic doomsayers who predict a sharp drop in home sales and real estate activity following the expiration of the tax credits. The latest housing and mortgage numbers certainly look encouraging:

Pending home sales jumped by more than five percent in March and another 10 percent in April, according to the National Association of Realtors. That’s 21 percent higher than the previous year for the same months.

New applications for loans to purchase houses took another big jump — up 13 percent over the previous week, according to the Mortgage Bankers Association. MBA vice president for research, Michael Fratantoni, said that last week’s FHA and VA share of home purchase applications soared above 50 percent — the highest it’s been in more than two decades.

The U.S. economy is likely to recover more quickly after this recession than it did after the previous two recessions, predicts researchers for the Federal Reserve Bank of San Francisco.

“I see no signs of a double dip,” said John C. Williams, director of research at the San Francisco Fed. “The economy continues to gain momentum, and consumer spending and business investment continue to improve.”

The prediction goes counter to what many analysts believe, but Williams pointed to surveys that show home, car, and retail sales are up. “It’s kind of a natural part of the process — you cut back for a couple of years, and then you need to replace things eventually,” Williams said.

Source: Los Angeles Times, Alana Semuels (05/18/2010)

Great analysis, provided by our  good  friend and economic advisor for the  Placerville, California area;  Steve Cockerell, President of Western Foothill Mortgage, Inc.

As the Federal $8,000 tax credit ends, it would seem that here, nothing is lost as the first time buyer can trade that credit for a $10,000 State tax credit.  However, they are far from similar. 

The key differences between the two credits are…

1. The Federal credit comes in one chunk $8,000 if you qualify – and relatively soon after which helps the home buyer recoup perhaps up to 100% of his move-in on the deal.
2. The Federal tax credit was not conditioned on a tax liability, thus even if you did not owe once cent in taxes, you could still receive the $8k – SWEEEEET! 

The State credit is paid out in 3 increments of maximum $3,333 each over tax years 2010, 2011 & 2012.  This is a lot less up front.  Secondly, and more important is this…you can only get the credit against actual state income taxes owed in those tax years.  

Here is a typical example on a first time buyer purchasing an average home at $275,000. 

On a USDA 100% loan (or FHA 96.5%) the payments (PITI) are about $2,000.  If the borrower meets guideline ratios of 31/41 for this purchase (assuming about 10% of income goes to other debts like auto, credit cards, etc) Annual income to qualify is $77,400. 

The tax writeoff for owning this home is about $11,000 so this tax payer itemizing his deductions will take off about $15,000 for taxable calculations.  A family of 4 on this income will have a State tax liability of $1,640 so that is the maximum tax benefit he car reap from the State credit.  Multiply this by 3 years and his $10,000 is diminished to actual credit benefit of $4,920 or less than ½ of the limit. 

What happens to the other $5,080?  Absolutely nothing!  The State of California is off the hook.  This means that the $100 Million designated to the first time buyer program is likely diminished to about $50 Million – pretty clever of your lawmakers.  This extra money will not be designated to go out to more first time buyers unless they re-write the law.  And they cannot compute the leftovers until 2013! 

Many buyers, especially first-timers, hope to purchase a foreclosed property at a bargain price. While purchasing a foreclosed home can be a wise choice for some buyers, it is important that buyers understand the differences in buying at different stages of foreclosure and be prepared to take on the challenges typically associated with each.

KEEP THIS IN MIND

• There are three basic stages of foreclosure in California: Pre-foreclosure, trustee’s sale, and repossession, often called an REO or real estate owned by the bank.

• Pre-foreclosure homes are in the foreclosure process, but have not yet been auctioned. Owners of pre-foreclosed homes often try to sell the properties because they are “underwater,” meaning they owe more on the mortgage than the home currently is worth. Many homeowners attempt to sell via short sale, where the lender must agree to accept less than the amount owed on the mortgage. Buying at this stage of foreclosure often is a complicated and slow process. However, buyers of pre-foreclosed properties often are given the opportunity to inspect the home prior to purchasing, whereas this is not always the case when buying at other stages of foreclosures.

• The second basic stage of foreclosure is the public auction at a trustee’s or foreclosure sale. Homes in this stage often are well priced, but also come with challenges to buy. These homes may not be available for inspection and buyers may later discover the property needs numerous repairs. As a result, many of the homes at auction are purchased by investors and contractors who have experience working with homes needing numerous repairs, or taken back as REO by the foreclosing lenders.

• If a home does not sell to a third party at the trustee’s auction, the bank takes the property–the final stage of the foreclosure process. Although homes in this stage typically do not offer buyers the best prices, buyers generally can perform a thorough inspection of the property prior to closing.

To read the full story, please click here:

http://money.cnn.com/2010/05/04/real_estate/how_to_buy_a_foreclosure/index.htm?source=cnn_bin&hpt=Sbin

Great information in this Article,  By Emily Brenner

Have you found yourself in too much debt and feel there is no way out other than to file for bankruptcy? It may seem that there are no other answers, but please, don’t file bankruptcy! The new bankruptcy laws do not provide the kind of protection that the older laws provided, and the new bankruptcy laws make debt settlement a better option. Many people have never even heard of debt settlement, and many attorneys who specialize in bankruptcy won’t even tell you about this option, but there are definitely some good reasons to give it a try. I must reiterate – take a deep breath and don’t file bankruptcy.

So what is debt settlement? Well, for years now, the legal world has been participating in all types of settlements. A settlement is simply an agreement between two parties; there are property loss settlements between two parties when one of them destroys the property of another (as in a car crash, for example), divorce settlements between a husband and wife when the marriage ends, and so on. Well, there can also be debt settlements.

This is basically an agreement between you and your lender – your credit card company – or whoever it may be. Most banks and other lenders realize that once you start having these financial difficulties, they run the risk of never getting any money at all, so many are willing to negotiate new terms. There are even reputable professionals who specialize in taking on this burdensome task for you, and some will even serve as trustee and make the payments on your behalf each month after you send them an agreed-upon amount of money.

Debt settlements usually include a clause about not destroying your credit rating, but even if they don’t, the process doesn’t hurt your credit nearly as much as a bankruptcy. The new bankruptcy laws make debt settlement a better option for most people.