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The proposed bill, Neighborhood Preservation Act of 2011 (H.R. 2636), calls on banks and the government-sponsored enterprises–Fannie Mae and Freddie Mac–to start renting out some of their foreclosed properties to and “stabilize home values and restore confidence in the housing markets.” 

The bill would authorize federally-chartered institutions to enter into a long-term lease — for up to five years — with the occupant of the property or with another person, and then at the end of the agreement provide an option to buy the home to the tenant. 

The bill could allow delinquent borrowers to remain in their homes but they would have to agree to pay rent and still sign over the deed to the bank or GSE, National Mortgage News reports.

According to the bill, this would allow the foreclosed property to remain occupied during the still-sluggish housing market and “preserve the property itself as well as the aesthetic and economic values of neighboring homes and even whole neighborhoods.”  

“As Americans across the country are affected by this unrelenting foreclosure crisis, it is imperative that Congress address this issue,”Congressman Gary Miller, R-Calif., who introduced the bill, said in a statement.

Source: “Bipartisan Bill Encourages GSEs to Rent Foreclosed Properties,” National Mortgage News (July 27, 2011) and “U.S. Lawmakers Back Bipartisan Foreclosure Aid Bill,” Reuters News (July 28, 2011)

Some of us in the Placerville, California region for over 3 years have wondered when the Fed’s would consider multiple options similar to this especially to the owners in foreclosure?

Although the Consumer Financial Protection Bureau, the federal agency created to oversee mortgage lending, only recently opened, the Bureau started looking at ways to protect consumers during the loan-shopping period long before it’s official start date.

Making sense of the story:

1) The bureau is exploring avenues for combining the two forms that borrowers currently receive – the three-page Good Faith Estimate and the two-page Truth in Lending Act form. These forms tell would-be borrowers the terms of their loan – for instance, how payments on an adjustable-rate mortgage change. They also lay out fees.

2) Fees can make a big difference when comparison shopping. The simplest way to compare loans is by looking at the Annual Percentage Rate, or A.P.R. That calculation rolls in fees as well as the stated interest rate. Because lenders are required to follow the same formula, useful comparisons can be made.

3) Borrowers are advised to request a Good Faith Estimate from every lender they approach. While the Good Faith Estimate is in place to help borrowers, according to one lender, some lenders may provide interest-rate quotations that expire almost instantaneously, making it difficult for buyers to comparison shop.

4) Borrowers should be wary if they receive two or three different Good Faith Estimates and there is a difference of several thousand dollars.

Read the full story at: http://nyti.ms/oYblab

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Nearly 60 percent of real estate professionals say they believe REO-related disputes will increase over the next two years. What’s more, 76 percent said they believe it will be among the top three issues they will face in real estate, according to the National Association of REALTORS®‘ newly released 2011 Legal Scan: Legal Issues Facing Real-Estate Professional.

In the survey of real estate agents, brokers, attorneys, and educators, survey respondents said disclosure in these transactions remain a main culprit to problems, pointing to banks and listing brokers who sometimes fail to disclose known material defects about a property.  

Overall, according to the 2011 Legal Scan, the top three issues that cause the most disputes in a real estate transaction are dual agency, disclosure, and breach of fiduciary duty. 

Short sales, in particular, are causing more disputes in some of these areas, the survey found. Short sales are more commonly being listed in “as-is” condition, which has “resulted in a decline of quality of seller disclosures,” the survey notes. Another disclosure problem reported is the failure of listing agents to report that the property is or will soon be in a short sale situation.   

Source: “Brokers Foresee an Increasing Number of Lawsuits Related to Short Sales,” Realty Times (July 26, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

The recession is being blamed for widening the wealth gap between whites and minorities to its largest level in 25 years on record, according to a study by the Pew Foundation that used Census Bureau data. And of all races, Hispanic families appear to have lost the most: Hispanic families were found to have the largest decline in wealth of any minority group during the recession.

From 2005 to 2009, the median wealth of Hispanic households dropped by 66 percent. Other minority groups also faced big drops: Asian household wealth fell 54 percent while African Americans saw their wealth drop by 53 percent during that time period. On the other hand, the median wealth of whites fell only by 16 percent in comparison. Household wealth is made up of assets, such as a home, car, savings and stocks — minus debts — such as mortgages and car loans.

The disparity is even more obvious when looking at median wealth in dollars: The median wealth of white households in 2009 was $113,149 compared to $6,325 for Hispanics and $5,677 for blacks, according to the study. Asians, which once held the top ranking over whites, dropped from $168,103 in 2005 to $78,066 in 2009 (partially due to a large percentage of Asians living in hard-hit housing market areas, such as California).

The study found that the median wealth of whites now stands at 20 times that of black households and 18 times that of Hispanic households–double the disparity of what it was in the decades before the recession, according to the study.

More at Sources: “Census Data Show Wealth of Whites is 20 Times That of Blacks, Widest U.S. Gap in Quarter-Century,” Associated Press (July 26, 2011) and “Recession Study Finds Hispanics Are Hit Hardest,” The New York Times (July 26, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

The deadline for applying to a program that provides mortgage relief to unemployed and medically challenged home owners has been extended to July 27.

The Emergency Homeowner Loan Program originally had a deadline slated for July 22, but the federal government extended the program, which started in June, to give home owners more time to apply.

Home owners eligible for the program will be able to qualify for up to $50,000 in interest-free loans for up to two years. Home owners who have had a drop in income of at least 15 percent from involuntary unemployment or underemployment due to economic conditions or a medical emergency are eligible for the program. (Learn more about eligibility requirements and the participating states at the Department of Housing and Urban Development’s Web site.) 

Source: “HUD Extends Unemployment Aid Deadline,” HousingWire (July 22, 2011) 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

In just three weeks since its launch, Google+ has boasted 20 million unique visitors worldwide–more than 5 million in the United States alone–which has many saying that it’s poised to be Facebook’s biggest competitor. Google Inc.’s new social networking site has particularly impressed observers since access to it is still by invitation only, which means a current member has to send you an invitation in order for you to join. Google hasn’t yet unleashed Google+ to its more than 1 billion monthly visitors who use its search engine, Gmail, and other services.

Still, analysts acknowledge that Google+ has a long way to go before reaching Facebook’s 750 million users and even Twitter’s 200 million, but many are expecting it to give steep competition to both.

Google+ allows you to build a social “circle” of friends, easily separating out family and friends from work contacts, and then lets you share comments, articles, photos, and videos with your designated “circle” of friends or even the public. Google+ also boasts a “hangout” feature that lets you do video chats to several contacts simultaneously.

Google+ features will eventually be incorporated into services like YouTube and in Google’s suite of online software for businesses.

 Source: “Google+ Pulls in 20 Million in 3 Weeks,” The Wall Street Journal (July 22, 2011)

 Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Pending home sales in California rose in June, according to C.A.R.’s Pending Home Sales Index (PHSI)*.  The index was 119.0 in June, an increase of 1.9 percent from May’s revised index of 116.8, based on contracts signed in June.  The index also was up 4.4 percent from June 2010.  Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

“Pending home sales have improved in the last couple of months and the next few months should bring continued gains,” said C.A.R. President Beth L. Peerce.  “So much depends on the direction of the economy going forward. As for the makeup of the market, distressed sales continue to be a significant part of the market with the split between short sales and REO sales varying greatly across the state.”

The total share of all distressed property types sold statewide was unchanged in June from May’s revised 47 percent.  The share also was unchanged from a year prior.  Of the distressed properties sold statewide, 19 percent were short sales, a decline from last month’s share of 20 percent and last year’s share of 21 percent.  At 27 percent, the share of REO (real estate-owned) sales was unchanged compared with May, but was up from 25 percent reported in June 2010.  Non-distressed sales made up the remaining share of home sales in June at 53 percent, unchanged from both previous month and year.

More information at: http://www.car.org/newsstand/newsreleases/junephsi/ 

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Watch out for Generation Y: This large, diverse, well-educated generation will drive the housing market recovery over the next 10 years, according to economists with the University of Southern California Lusk Center for Real Estate.

Gen Y (15-32 year olds) boasts about 77.4 million members, which is about equal in size to the baby boomers (46-64 years old). Yet, Gen Y is much more diverse and educated (60 percent of Gen Y goes to college), according to the center, which recently presented its findings at the USC Lusk Center Orange County Executive Briefing.

Stan Ross, Lusk Center Chairman of the Board, says that “baby boomers and Gen Y comprise 50 percent of the population and will soon be part of the largest U.S. wealth transfer ever.”

As more of this age group joins the work force, “they will produce a massive increase in housing demand,” forecasts the USC’s Lusk Center.

However, Ross points out “these kids are concerned. They have watched the stock market, financial markets, and economy wipe out their parents’ retirement plans. As a result, they will choose lower-risk investment strategies.”

Source: “USC Lusk Center Says More Educated, Diverse Generation to Drive Real Estate Recovery,” The Hoyt Organization (July 19, 2011) [No Link]

Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com

Freddie Mac continues to sound optimism about the housing market for the second half of 2011. In its latest economic and housing market outlook report, Freddie Mac says that the housing market is unlikely to experience a “double dip” and home sales are projected to reach above last year’s pace by 3 percent to 5 percent. 

Despite an unemployment rate that sits at 9.2 percent, Freddie Mac says the gloomy job picture reflects a temporary “soft patch” in the economy and “does not foreshadow an inflection point in gross domestic product growth.”

Freddie Mac forecasts that the housing market “will likely follow the performance of the overall economy for the remainder of 2011.”

Rental housing will likely see the largest growth. Freddie Mac’s first-quarter apartment property price index rose 15.2 percent compared to last year.

While home buyer affordability is at record levels and mortgage rates are at historical lows, households are still putting off major purchases like buying a home, according to the report. In our Placerville, California region we are seeing more positive activities. 

More at: “Freddie Mac Says Housing Sector Unlikely to See Double Dip,” HousingWire (July 18, 2011) and “July 2011 U.S. Economic and Housing Market Outlook,” Freddie Mac (July 18, 2011)

A new study by the American Economic Review (AER) identifies a correlation between lower divorce rates and home price declines. According to Census data, the divorce rate fell to 46 percent in 2009 from 50 percent in 1996.

Essentially, AER says couples are more likely to divorce when equity gains make it possible for them to put money down on separate homes. But a decrease in residential values and the high cost of divorce proceedings have prompted some couples to stay together.

AER says these findings should be taken into consideration as lawmakers push changes in housing policy. “Given the high level of current interest in policy to shore up housing markets, it is worth better understanding the broader consequences of such policy,” the report concluded.

Source: “Divorce Rates Decline Alongside Home Prices,” Realty Times, Carla Hill (July 15, 2011)

 Other articles relating to the Sacramento and Placerville, California regions at: www.sierraproperties.com