Robert & Christy’s Blog on the Heart of SoCal

Senate Passes Stimulus Package — Final Bill Includes Increased Loan Limits

Thanks in part to the lobbying by C.A.R. and NAR members; the Senate passed their version of an economic stimulus package on Thursday, February 07, 2008.  The Senate version expands rebate checks for seniors and disabled veterans and includes the same increases to the conforming loan limits for both GSE and FHA found in the House stimulus package.  The House has already announced that they plan to vote on the Senate version of the stimulus package and expect to quickly pass the stimulus package with a bipartisan vote.  The President is expected to sign the legislation early next week, ahead of the Congressional self-appointed deadline of February 15^th.   The increase in the conforming loan limits will last through 2008, but C.A.R. and NAR continue to lobby for FHA and GSE reform,  making these increases permanent.

 The U.S. House of Representatives passed a stimulus package last week that raised the FHA and conforming loan limits to as high as $729,750 in high-cost areas.  By increasing the loan limits, borrowers will see immediate relief with new liquidity in the mortgage market and the nation will see an additional 300,000 home sales.  Research shows that an increase in the FHA limit would enable an additional 138,000 Americans to purchase homes, and 200,000 families to refinance their homes safely and affordably.

 Increasing the FHA loan limits is critical to bolstering
California’s housing market.  Current law restricts FHA loans to levels well below the median home price in many areas of the country and caps loans in high cost states at $363,790. These limits are preventing many homebuyers from using FHA to purchase or refinance their loan.  The proposed provision will increase FHA loan limits nationwide by raising the floor to $271,050 and the limit to 125% of local median home prices. 

 Additionally, raising Fannie Mae and Freddie Mac’s (GSEs) conforming loan limit will provide immediate relief to borrowers and alleviate downward pressure on current housing markets.  For instance, increasing the GSE loan limit could result in more than 300,000 additional home sales and strengthen current home prices by 2-3%.

 The critical role that GSEs play in providing liquidity to the mortgage market has never been more evident than it is today.  The national subprime meltdown has had a dramatic impact on both the cost and availability of mortgages in many markets.  Since August 2007, the interest rates for jumbo borrowers have been more than 1 percentage point higher than conforming loans, which can cost homeowners up to $400 month in higher interest payments.

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This lovely 4 Bedroom home has New Carpet, New Paint, New Dishwasher, New Range/oven, and New Microwave. This home also contains and upgraded kitchen with Granite countertops and Tile floors. The family room contains a a fireplace. Formal Dining Room and Living Room with cathedral ceilings. Bedrooms have ceiling fans. The backyard has block wall, covered patio, relaxing above ground spa and no rear neighbors. Located in a low tax area and in a nice neighborhood this home contains a 3 car tandem garage with storage cabinets. The bank priced this one to sell!

Call 1-800-385-9140 ext 2096 for proper forms to make offer

POSSIBLE INCREASE TO THE CONFORMING LOAN LIMITS
On January 24, 2008 House Speaker Pelosi (D-CA), House Minority Leader Boehner (R-OH), and Treasury Secretary Paulson announced a bipartisan deal on an economic stimulus package. After heavy lobbying by C.A.R. and NAR, included in the House economic stimulus package is an increase in the loan limit for Fannie Mae, Freddie Mac, and FHA.

There is still not a clear consensus on how high the GSE conforming loan limit increase will be. There have been rival press releases, with Speaker Pelosi saying the cap would be at $729,750 and Minority Leader Boehner saying the cap would be at $625,000. Either way, the GSE loan limit would be increased to 125% of a Metropolitan Statistical Area (MSA), with the cap either at $625,000 or at $729,750. As of now, no legislative language has been formalized or released, so C.A.R. is unable to have a definitive GSE cap figure.

Additionally, the FHA reform included in the stimulus package is expected to be permanent, including an increase in the FHA loan limit to $729,750, and a decrease from the current 3% downpayment required; however, at this time we have not heard whether it will be reduced to 1.5% or 0%. The GSE loan limit increase would be temporary, most likely only until the end of 2008. In the meantime, C.A.R. will continue to lobby for permanent GSE reform which would include an increase in the conforming loan limit for high-cost areas, such as California.

The House is expected to vote on the economic stimulus package on January 29, 2008 and the Senate has expressed their interest to introduce and vote on their version of an economic stimulus package shortly thereafter.

President Bush signed into law a new measure giving tax breaks to homeowners who have mortgage debt forgiven. Under preexisting law, the debt forgiven by a lender, such as for short sales and refinances, was generally taxable to the borrower as debt discharge income.

With the passage of the Mortgage Forgiveness Debt Relief Act of 2007, a taxpayer does not have to pay federal income tax on debt forgiven for a loan secured by a qualified principal residence. This tax break applies to debts discharged from January 1, 2007 to December 31, 2009.

Qualified principal residence indebtedness is debt incurred in acquiring, constructing, or substantially improving the residence (up to $2 million for refinances). For purposes of calculating capital gains, any debts discharged excluded from income under the new law must be subtracted from the basis of the taxpayer’s principal residence (but not below zero). However, taxpayers may generally exclude from capital gains income up to $250,000 (or $500,000 for married couples filing jointly) for properties owned and used as their principal residence for at least two of the last five years.

This is great news for homeowners who have gone through either a short sale or deed-in-lieu of foreclosure. Prior to this act, not only did the homeowner not have enough equity to sell their home and took a big hit on their credit score, but they were taxed on the differential between what they owed on the house and what it sold for (because it was treated as income). Now they can at least know that Uncle Sam will not come after them to pay taxes on that differential.

For a copy of the Mortgage Forgiveness Debt Relief Act of 2007, go to http://www.govtrack.us/congress/bill.xpd?bill=h110-3648

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IFed Surprises with Deepest Cut since 1984

The Federal Reserve surprised everyone Tuesday with an emergency intersession rate cut of .75%, the deepest cut in the Fed Funds Rate since 1984. The Fed Governors are acting in direct response to recent reports that the country is on the brink of recession.

If you have credit cards, auto loans, HELOCs, or an Adjustable Rate Mortgage, the Fed’s decision to cut this key interest rate is great news. For long-term mortgage rates however, this could signal the beginning of the end for the lowest 30-year home loan rate borrowers have experienced since 2005.

Let’s look at the impact of a few recent Fed Funds Rate cuts and the corresponding impact to home loan rates to see what this could mean for you:

Rates are predicted to be cut again when the Federal Reserve meets at the end of this month. Many believe Tuesday’s action was taken because of a dramatic downturn in the stock market, where the Dow dropped 464 points, the worst single day drop since September 11, 2001. Since the Fed’s announcement, the Dow has recovered much of those losses but volatility is likely to remain a consistent theme throughout the week.

If you are waiting for long-term mortgage rates to fall further from here, don’t count on it. Your best chance to lock in the lowest mortgage rates since 2005 is now. Getting your application in process will allow you to capture a rate near all time lows and, with many experts predicting home values could continue to decline, waiting could kill your chance to capture a great rate if your home doesn’t appraise.

This is an unprecedented market and things are moving fast. Regardless of your current mortgage, please give me a call so that we can review your current financial situation in light of these market movements.

Ok. I am a little green and I guess that is my motivation for this post. However, it is a productive thing as well.

So there it is, I can not only be environmentally friendly but productive also. I am talking about eliminating all the junk catalogs we receive. I saw a simple post on a great environmental blog by Jennifer Bowles from the Press Enterprise. Her Blog http://www.beloblog.com/Pe_Blogs/environment/ had a recommendation for opting-out of paper heavy catalogs. What a great idea. Christy and I have this issue with catalogs and mail. It is a challenge for us to throw this stuff away. We want to read some of them, however they just keep stacking up and cluttering our desk.

What’s the saying with mail? “Touch it once…”. If I’d only learn…
Well, we’ll touch it numerous times before it ends in the wastebasket. So this idea works for me. If I can eliminate the source of the problem (the catalogs) then I can not only save a few trees, but be a little more productive and have a less messy desk.
There is a free online service called www.catalogchoice.org that will contact these companies that send the catalogs to you and have them stopped. I tried it and it only took a few minutes.
According to the groups that sponsor this project, 19 billion catalogs are mailed to American consumers each year. They said that translates into 53 million trees and 3.6 million tons of paper.

 
Robert

www.robertandchristy.com

Be Prepared with a Thorough Home Inventory
As we are reminded by the devastating fires in California, a disaster can strike at any time. Being prepared with a home inventory is an important step in preparing for the unexpected. Download this free software program…

Put yourself to the test. Could you make a list of everything in your home from memory, without going room by room? Most of us would answer no, which is why a Home Inventory is such a necessity. When a natural disaster or burglary occurs, your insurance company will require documented proof of possessions that are stolen, damaged or destroyed. They will want an itemized list which is not easily created, especially during a crisis.

As daunting as it may seem, preparing your home inventory can be quite simple with the right tools. Paper and pen is one option, but inventory software is an excellent alternative. The Insurance Information Institute offers home inventory software called Know Your Stuff (http://www.knowyourstuff.org/). This software is not complicated to use and even makes creating a home inventory enjoyable. It contains an inventory wizard along with the ability to store digital or scanned photographs and receipts. Once you have completed your inventory, it is easy to keep your information up-to-date and maintain an accurate record of all your possessions.

Keep in mind, after creating your home inventory you can store a copy of the file and all receipts at another location such as a relative or friend’s home or in your safe deposit box. An even better option is to store your information on a secure server at Secure Swiss Databank (http://www.vault24.com/public/product.php) where you can access it day or night. In the event your home is destroyed, you will have peace of mind knowing you can access your inventory list from a remote location and you’ll be sure to have something to give your insurance representative if your home is damaged or destroyed.

Robert & Christy Thompson

Realtors-GRI serving Corona and Surrounding Inland Empire Communities

http://www.robertandchristy.com/

This is from the City of Corona:

Santiago Fire Update

Updated: 10/26/2007 at 2:00 PM

The City of Corona is continuing in its efforts to keep the residents informed on the current situation of the Santiago Fire in Orange County. The Corona Fire Department is working closely with Regional Fire Officials to provide everyone with updated information as it becomes available. Today you may see a significant amount of firefighting resources moving towards the east side of the fire including firefighting aircraft in efforts to hold the fire at the County line. The Santiago Fire does not pose an immediate danger to Corona, specifically the resident’s of the Eagle Glen area. In the event that conditions change the fire department will inform citizens of the potential impacts and the appropriate actions to take. The Fire Department continues to remind our citizens that they should always have their own family emergency evacuation plan and preparedness kit for any emergency. For updated information throughout the weekend, the Hotline number will continue to be staffed by personnel to keep everyone in the City of Corona informed on any changes in the current status in the progress of the Santiago Fire. The number is (951) 817-5800. Additionally, anyone living outside the boundaries of the city, in the Riverside County area, may obtain information by calling (951) 940-6985 or 211 for Riverside County Residents. Both the Corona Fire and Police Department’s will be deploying additional staff over the weekend in the Eagle Glen area of Corona. A Town Hall Meeting will take place on October 26, 2007 at 4:00PM at the Temescal Valley Elementary School located at 22950 Claystone Ave., Corona 92883. This informational meeting is being held as a service to citizens living in the affected area of fire activity in Orange County.

We will keep this blog updated as things develop.

God Bless,

Robert &Christy

If you are debating if it is a good time to buy, consider your credit score. Guidelines have tightened up.

Personally, we are not big fans of FICO scores. Example, consider the person who has been paying their bills, maybe not always on time, but they eventually get paid. Then something tragic happens in their family. They maybe not able to make ends meet during the crisis but always come through. FICO will shred this person. Does this mean they will not pay their bills when they get over the crisis? No. Life just through a left hook and they are recovering. However FICO loves to throw salt in the wound. Makes them feel like a fish out of water.

All that aside, It is absolutely necessary to get your credit score up high to score a decent rate on your home.

Travis Black, our recommended lender gave us the following information on

Understanding Credit Scores

Credit scoring was developed in the 1960s as a means to determine whether or not consumers were likely to repay their loans. The score ranges from 350 to 850 with a higher score being extremely favorable. Essentially, a high credit score translates into lower interest rates for the borrower.

There are five factors that comprise the credit score. Payment history accounts for 35% of the score; outstanding credit balances have a 30% impact; credit history makes up 15%, type of credit factors at 10%; and inquiries influence the score by 10%. This gives the lender a snapshot of an individual’s sense of financial responsibility and ability to pay back loans.

There are many quick ways to improve your credit score, but it may not always be the way you think. Closing a rarely used credit card with a good pay history may actually lower you credit score.  Before making any changes, consult with a credit or lending professional. Travis BlackBroker/OwnerFirst Choice Mortgage

(909) 203-5900  http://www.yourfirstchoice.com/

www.robertandchristy.com

Please click on the link for Fire evacuation & Shelter Information.Courtesy KFI640am.  http://www.kfi640.com/cc-common/news/sections/newsarticle.html?feed=153218&article=2817933

Our son, got evacuated from his school, Cal State San Marcos, in North San Diego County. He also got evacuated from his house in Rancho Bernardo. Needless to say we are a little nervous…..

We hope the link will help any of you who need further information 

www.RobertandChristy.com