By Lawrence Yun // | February 2011

However, the most effective solution for promoting growth and getting the housing market moving may rest with banks.

Residential mortgage loans that were originated in the last two years are among the best performing ever. Data from Fannie Mae and Freddie Mac show that 2009 mortgage originations have the lowest default rates in decades, with 1.2 defaults per 100 loans backed by Fannie Mae and 1.1 defaults per 100 backed by Freddie Mac. As recently as 2007 those figures were 28.7 and 22.3, respectively. 

Given the strength of recent loan vintages, you’d think lenders would be jumping back into the business of making mortgage loans. But in fact they’re holding back. At a time when home sales should be around 5.5 million units, based on the country’s population, we’re forecasting only 5.2 million sales for 2011, about the same as in 2000—when the U.S. population was smaller by 27 million people. 

Full article, at source:  http://www.realtor.org/rmonews_and_commentary/economy/1102_economy_lenders

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

The California Association of Realtors, sponsored SB 1178 to better protect homeowners going through foreclosure. SB 1178 would have ensured that homeowners keep the same “anti-deficiency” protections they have in the original loan after the loan has been refinanced.

California’s anti-deficiency protection for “purchase money” mortgages says that if a homeowner defaults on a mortgage used to purchase his or her home, the homeowner’s liability on the mortgage is limited to the property itself. The law has worked well since the 1930s to protect borrowers, ensure the quality of loan underwriting and allow borrowers brought down by financial crisis to get back on their feet.

Unfortunately, the 1930s law hasn’t kept up with current times. Current law doesn’t apply to loans used to refinance the original purchase debt, even if the refinance was only to gain a lower interest rate. Recent years of low interest rates have induced tens of thousands of homeowners to refinance their mortgages. During those years, almost no one realized that refinancing their mortgage to obtain a lower rate, they were forfeiting their protections and were becoming personally liable on the new note.

SB 1178 would have corrected this injustice by extending anti-deficiency protections to those who have refinanced their loans.

The company reported that 70,051 notices of default were filed at county recorder offices in California during the second quarter, down 13.6 percent from the first quarter and down 43.8 percent compared to second-quarter 2009.

Also, the share of resale, foreclosed homes sold in the state dropped to 36 percent in the second quarter, down from 49.9 percent in second-quarter 2009 and 42.5 percent in first-quarter 2010. NODs, which mark the formal entry of a home into the foreclosure process in California, peaked at 135,431 in first-quarter 2009.

The share of foreclosure resales ranged from 9.5 percent in the San Francisco area to 61.7 percent in the Imperial Valley area during the second quarter, DataQuick reported.

“Obviously, motivated sellers and accommodating lenders have played a part in bringing the default filings down, especially when it comes to short sales,” said John Walsh, DataQuick president, in a statement. “Public policy has also been a factor. We also need to remember that prices have come up off bottom over the past year. If they continue to rise, fewer homeowners will find themselves underwater, which is a significant factor in letting a home go.”

     How long do you plan to live in your existing home? If for a short time, focus on what changes or upgrades can benefit you and improve value plus buyers’ appeal. If you’re undecided or thinking it may be a few years, plan your changes yearly based on a 2, 4 or 6-year schedule. Be flexible and ask experts for advice.

     Sell now considerations may also allow opportunities. Everyone’s scenario is different, so really seek knowledgeable assistance and advice from professionals in your area. Perhaps it is better to rent the current home and go to another rental or buy at today’s low prices. Obviously, financing and equity positions need to be carefully analyzed.

     So, plan your work and work your plan!