November 8th, 2008 categories: Community Happenings, Our Market
Stephanie Armour, USA TODAY
Nearly 400,000 homeowners will be able to get more affordable loans after Bank of America (BAC) agreed Monday to modify mortgages that originated with its Countrywide Financial unit. The move could be worth more than $8.6 billion and mark the largest predatory lending settlement in history.
Monday’s deal settles claims brought by attorneys general in 11 states that accused Countrywide — acquired in July by BofA — of misrepresenting loan terms, loan payment increases and borrowers’ ability to afford loans.
Bank of America says it will restructure loans for Countrywide customers holding subprime mortgages and option adjustable-rate loans that permit borrowers to pay only a small portion of interest and principal owed each month. Some might wind up in new fixed-rate loans; others might not.
But the Bank of America deal represents only a fraction of the future defaults and foreclosures facing homeowners. There were more than 2.2 million foreclosure filings in the USA in 2007.
EVEN MORE DETAILS: Read Bank of American’s press release
“There could be a couple million more (foreclosures to come), so it begins to put a price tag on the problem and how expensive it is,” says economist Joel Naroff at Naroff Economic Advisors.
Pat Lashinsky, CEO of ZipRealty, says as many as 6 million homes will have gone through a short-sale or foreclosure before this housing slump is finished.
Expect more states to file claims against predatory lenders, predicts Roger Cominsky of Buffalo, a lawyer at Hiscock & Barclay who specializes in financial institutions and lending issues.
Under the terms of the agreement with Bank of America, eligible homeowners must occupy the home as their primary residence. Their mortgages must be seriously delinquent — or likely to become so. Loans must have been serviced by Countrywide and originated prior to Dec. 31, 2007. Modifications will include lower interest rates and principal reductions.
How borrowers will be helped:
•First-year payments of principal, interest, taxes and insurance will be restructured to equal 34% of borrower’s income.
•Effective immediately, no foreclosure sales can be initiated or proceed against borrowers who are likely to qualify for loan modification until a final decision is made on eligibility.
•No restructuring fees will be charged. Prepayment penalties will be waived.
“We will be proactive,” says Bank of America’s Daniel Frahm. “Effective Dec. 1, we’ll start reaching out to homeowners.”
Some $150 million has been set aside for borrowers in certain states who suffered foreclosure or are at serious risk of foreclosure, and another $70 million is earmarked for relocation assistance to borrowers unable to keep their homes.
The attorneys general in West Virginia, California, Connecticut and Illinois had sued Countrywide over its business practices.
“Countrywide’s lending practices turned the American dream into a nightmare for tens of thousands of families by putting them into loans they couldn’t understand and ultimately couldn’t afford,” California Attorney General Edmund Brown said Monday in a statement.
Spoken by Jennifer Bonasia |
November 5th, 2008 categories: Community Happenings, Featured Events, Glimpse of the Day, Lifestyle, Our Market
Change Happens when you need it the most. All across America last night, citizens watched history unfold as Barack Obama became the President Elect, on his path to becoming the 44th President of the United States of America. For some, today is a day of rejoicing, for others, an opportunity to look ahead with optimism even though their candidate wasn’t victorious.
I think the victory belongs to every American regardless of ideology simply due to the overwhelming involvement of the American people in directing the path of our government. I fear we had become a society that took it’s liberty for granted and just assumed others who were in positions of power and authority would do right by us and our country. It’s a shame we had to hit such a low to wake us all up to the fact that it’s our responsibility, my responsibility, to lead government and if we blindly follow those who are in a position to make or break our success as a nation, we deserve what we get. Unfortunately, the typical outcome is less than we expect and that has never been more obvious than today and this mess we find ourselves mired in.
So whether or not your candidate won the election, YOU won by taking charge of your destiny and being a part of the American process.
Please enjoy these photos of Celebration around our nation and our world.
Spoken by Jennifer Bonasia |
November 3rd, 2008 categories: Our Market
A reader is tempted to enter a model lease-back deal, but wonders about the builders’ financial volatility.
Q: I keep seeing model lease-back offers from builders. Most of them pay enough rent to more than cover the monthly cost, but my biggest concern is about the builder’s financial viability, since so many of them have gone bankrupt. Are there any particular things one should watch out for?
A: Builder lease-backs, in which the buyer rents a home to the builder who uses it as a model home, are generally great deals for all concerned. Builders get an early sale. Buyers get an upgraded home at a discount price, and a tenant who won’t be calling in the middle of the night to complain about a clogged toilet.
But in these uncertain times, I can understand your caution. Since last year, an .estimated 20% of builders went out of business, according to Gopal Ahluwalia, director of research for the National Association of Home Builders. Most were small or mid-sized builders who didn’t have enough cash in reserve to cushion them through a downturn.
![[builder]](http://s.wsj.net/public/resources/images/OB-CP419_re_bui_D_20081103092052.jpg)
Associated Press
You can analyze the earnings, debt and cash flow of a public company to determine its long-term financial health, but you can’t do that with a small, privately-held one. You can talk to suppliers and subcontractors to see if they’re being paid promptly, to recent buyers to see if they are satisfied and to local regulatory and consumer agencies to see if any complaints have been filed against the company. If you’re still concerned, you can try to negotiate a lump-sum rather than a month-to-month lease payment, payable at closing.
Keep in mind that when the lease is up, you won’t be getting a brand-new home. Although builders usually make an effort to keep models looking fresh, as they cut back on expenses they may cut down on the number of times carpets are shampooed and paint scuffs are touched up. In downturns, builders also sometimes make one model home complex serve several different communities, which means more wear and tear on each unit. I recently visited a model home in Prince William County, Virginia that was being used this way. It was only one year old, but felt much older. Visitors had slammed a kitchen drawer so often that the front was coming loose and had broken a closet light switch. The gray, opaque stain on the deck had worn through in spots.
A builder will often promise to repair and repaint a model at the end of the lease, to convert the sales office to a garage and to re-route sidewalks and fences running through the model-home complex. If you’re worried that the builder will go belly-up before all this happens, get an estimate from an independent contractor of what it could cost to perform these necessary fixes. Have the builder deposit the funds to cover them in an escrow account. It’s smart to hire an experienced real estate attorney to represent you during all these discussions.
Finally, don’t just consider the builder’s financial staying power — think about your own. If home prices fall while the project is being built out, are you prepared to hold on until the market recovers? What if there’s a delay in building planned community amenities like pools and clubhouses, a situation that’s sure to hurt your ability to attract buyers or renters? As scary as it may be to think about these possibilities, planning for worst-case scenarios is the best way to avoid being overcome by them.
Write to June Fletcher at fletcher.june@gmail.com
Spoken by Jennifer Bonasia |
October 29th, 2008 categories: Our Market
Release Date: October 29, 2008
For immediate release
The Federal Open Market Committee decided today to lower its target for the federal funds rate 50 basis points to 1 percent.
The pace of economic activity appears to have slowed markedly, owing importantly to a decline in consumer expenditures. Business equipment spending and industrial production have weakened in recent months, and slowing economic activity in many foreign economies is damping the prospects for U.S. exports. Moreover, the intensification of financial market turmoil is likely to exert additional restraint on spending, partly by further reducing the ability of households and businesses to obtain credit.
In light of the declines in the prices of energy and other commodities and the weaker prospects for economic activity, the Committee expects inflation to moderate in coming quarters to levels consistent with price stability.
Recent policy actions, including today’s rate reduction, coordinated interest rate cuts by central banks, extraordinary liquidity measures, and official steps to strengthen financial systems, should help over time to improve credit conditions and promote a return to moderate economic growth. Nevertheless, downside risks to growth remain. The Committee will monitor economic and financial developments carefully and will act as needed to promote sustainable economic growth and price stability.
Voting for the FOMC monetary policy action were: Ben S. Bernanke, Chairman; Timothy F. Geithner, Vice Chairman; Elizabeth A. Duke; Richard W. Fisher; Donald L. Kohn; Randall S. Kroszner; Sandra Pianalto; Charles I. Plosser; Gary H. Stern; and Kevin M. Warsh.
In a related action, the Board of Governors unanimously approved a 50-basis-point decrease in the discount rate to 1-1/4 percent. In taking this action, the Board approved the requests submitted by the Boards of Directors of the Federal Reserve Banks of Boston, New York, Cleveland, and San Francisco.
Spoken by Jennifer Bonasia |
October 23rd, 2008 categories: Our Market
2008 Forecast Now Just 66,000 Units in 2008; 67,000 units in 2009
October 21, 2008
SACRAMENTO – Analysts further reduced home building projections amid new housing statistics showing a continued decrease in production levels across the board in September, the California Building Industry Association reported today.
According to statistics compiled by the Construction Industry Research Board, 4,364 permits were pulled throughout California during the month, down 32 percent when compared to the same month a year ago and down 6 percent from August. Single-family permits totaled 2,326, down 35 percent from September 2007 but up 4 percent from August, while multifamily permits totaled 2,038, down 29 percent when compared to September 2007 and down 14 percent from the previous month.
During the first nine months of 2008, permits were pulled for 51,378 units, down 44 percent from the same period last year when 91,877 permits had been issued. Single-family permits were down 53 percent while multifamily permits dropped 29 percent.
“We are not surprised, but disheartened by the building permit statistics for the first nine months of the year,” said CBIA Chief Economist Alan Nevin. “Compared to the first nine months of 2007, single-family permits have declined by more than 50 percent and can be anticipated to end the year with under 40,000 units, a modern low for the state.”
Nevin attributed the smaller decrease in multifamily units to apartment construction.
“Although condominium construction has virtually halted throughout the state, apartment construction continues to expand, thereby bolstering the multifamily permit rate,” he said. “In total, for the year 2008, we project that permits will decline to a low of fewer than 70,000 and see little change in the velocity of ‘for sale’ construction as foreclosure resales continue to create a situation where the cost of building a new home is far higher than the prices of the resale market.”
CIRB is now projecting a total of 66,000 units for 2008, down from the 70,000 units projected last month, and next year doesn’t look any better with only 67,000 units projected for the year.
Robert Rivinius, CBIA’s President and CEO, said it’s hard to imagine an economic recovery in California without doing something to bolster the home building industry.
“The housing industry contributed nearly $40 billion to the California economy last year, and that was in a down year,” Rivinius said. “In 2005, the home building industry contributed $68 billion to the California economy and accounted for nearly 500,000 jobs. The housing industry is clearly an economic engine for the state of California and policy makers should be doing everything they can to get the industry back on track, which will help the entire economy.”
Rivinius said that policy makers need to look at ways to stimulate home building while also making sure any new legislation doesn’t further impact the home building industry.
“We need to find ways to lower impact fees, which make it very difficult to deliver housing today, come up with actions that will stimulate the housing market, and make sure not to do anything which will impede the housing delivery process.”
~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~~
What does this mean to you? With fewer and fewer new homes added to our market, supply will continue to diminish as resale inventory is absorbed. Right now, newly foreclosed properties are virtually flooding our market adding more inventory than can be effectively purchased but this will come to an end. As this inventory is absorbed, without new home starts, we will find ourselves with a dramatic shortage of housing, particularly in areas such as San Diego County. When demand exceeds supply, prices will again climb and affordability levels enjoyed today will seem nostalgic.
Until home prices stabilize there is little possibility for new home builders to begin to plan for the recovery of their sector. The costs of building, including land, remain an obstacle to profitability and combined with plummeting home prices, are creating an impossible situation for home builders to continue building.
Once building does resume, we believe the face of the new home industry will have changed considerably and permanently. We believe the days of the large, public home builders are over in places like San Diego County where there are no master planned communities left to develop. Small, infill home builders will take over our local industry and that may not be a bad thing at all. We believe it will lead to a more diverse selection of architecture and less ‘cookie cutter’ tract housing- more customization by home buyers and less unilateral stylizing (sometimes considered sterilizing) by builders that base their decisions on cost effectiveness rather than reacting to what the market wants in a home.
Times change and the outlook for home building in San Diego is changing. Ultimately San Diego will have a vibrant, tending toward exclusive Real Estate market as supply is curtailed and demand continues to grow. It should make one serious about getting a piece of paradise while it’s a great deal. It won’t always be this way. Remember, LOVE Where You Live~ JB Home Sellers will help you get there.
Spoken by Jennifer Bonasia |
October 22nd, 2008 categories: Community Happenings
Business in the North County - Ted Owen
Since my last column, a bunch of stuff has happened in the financial markets across the globe.
The stock market continues to boil like a pot of pasta. I think the infusion of capital, interest rate cuts and just about anything else someone comes up with will help guide us to a better comfort zone, but it will not happen overnight.
In the last two weeks, many experts have started to sound like they have been reading this column. The headline in an Oct. 3 daily newspaper read, “The financial crisis: It’s about fear, not greed!”
The headline in the Oct. 8 business section of a daily paper said, “Fear appears to have upper hand.” My sentiments exactly.
The question most of us would ask Warren Buffett, if we had a chance, is probably, “What should I do with my investments?”
He was asked that in a KPBS interview last week and he said this is the best time to buy stock because the prices are so low.
Most financial planners and brokers will tell you to sit tight and wait it out.
In most cases, the losses are only paper losses at this point, unless the company went out of business, so the real drop in your portfolio doesn’t occur until you sell the investment.
You probably should do as the experts are lamenting and just sit tight.
A recent “Fear not Greed” editorial stated: “It is true what is done is done. So why waste our time making esoteric arguments about the psychology of what went wrong? Whether it is Greed or Fear, who cares?”
Picking Up Speed
I do because the FEAR (False Evidence Appearing Real) is like a restrictor plate on a car engine. The market can only get revved up if it is allowed to pick up speed.
The article goes on to say, “We are not out of the woods yet. What went wrong is still going wrong. The most dangerous part of a bursting bubble is the impulsive aftermath.
As the housing bubble bursts, dysfunctional impulsive behavior climaxes because of the fear of losing compounds.
Typically, cautious people make mad dashes for the exits and trample good judgment on the way out. Until we address the root of the problem — fear not greed — we will continue shooting ourselves in the collective foot wondering why poor impulsive choices persist long after greed has disappeared from the equation.”
My last comment is taken from a quote in the lead story in the business section of an Oct. 8 newspaper with the headline, “Fear appears to have the upper hand.” The article states:
“Anybody searching for cause-and-effect logic in the daily gyrations of the market will be disappointed — even if the overarching problem of a crisis in confidence in the global economy is now becoming clear. Instead, the market has become a case study in the psychology of crowds, many experts say. In normal times, it runs on a healthy mix of fear and greed. But fear now seems to rule, with investors often exhibiting a Wall Street version of the fight-or-flight mechanism — they are selling first, and asking questions later.”
Other News
In other North County news:
• While the credit market is upside down just about everywhere, that is not the case in San Diego County. The Board of Supervisors just announced Sept. 29 that national rating agency Standard & Poor’s has awarded the county administration its highest rating, making San Diego the only county in the state with a AAA rating. Supervisor Bill Horn said it best: “The upgraded credit rating is the result of the unwavering fiscal management of the Board of Supervisors and their county management team.” According to the report, “the stable outlook reflects the county’s deep and diverse economic base, strong reserve levels, formalized policies, manageable dept burden and long track record of conservative budgeting where actual results typically exceed initial projections.” I give them an A-plus.
• Many of us are concerned about the ability of charities and nonprofits to get funding during the crisis. One North County merchant has a program that meets the continuing need for charitable donations in a unique way. Gems of La Costa owner Dale Condy started his program in the ’60s. Jewelry stores historically provide services such as inspection, cleaning and minor adjustments. They don’t charge for those services traditionally, but Condy had an idea. Sometimes his customers would leave a small sum of money on the counter as a tip for the free service. He realized that most of his customers appreciated the care and at the same time put a small value on it. So he placed a jar on the counter with “Charity Charges” on an engraved plate. When someone wants to leave a tip, the money goes in the jar and its contents are donated to local nonprofit groups. During the last 30 years, Condy and his family business can proudly declare thousands of dollars of badly needed money has gone to organizations in the area. Well done!
• The green movement is catching on all over the North County area. In that regard, most of the major auto manufacturers are selling alternative fuel vehicles. One of the limitations on the part of some buyers is the availability of special fuel. In Carlsbad, the first public fuel station for ethanol-fueled cars and trucks has opened at the Bressi Ranch Fuel Mart. Two E85 ethanol pumps began service Oct. 7. The Shell gasoline station and Circle K market are owned by Fred Reed, who owns ADC Asset Management. Several multifuel vehicles already are regular customers.
Ted Owen is president and CEO of the Carlsbad Chamber of Commerce.
Spoken by Jennifer Bonasia |
October 21st, 2008 categories: Community Happenings
Habitat for Humanity is underway with a new project in downtown Carlsbad. In conjunction with the City of Carlsbad, they are building 12 affordable condominiums for low income families. These homes are one and two bedroom homes and as of now, only five of the twelve homes are spoken for. The income requirement for eligibility to own is an approximate range between $25,000 and $35,000 per year and the new owner must have a good credit and work history. The homes are located on Roosevelt Street, walking distance from dining, shopping and the Coaster rail system for easy commuting.
JB Home Sellers along with the North San Diego County Association of Realtors is participating in building the homes and spent last Friday contributing their time and energy (lots of energy) in framing the structures. Jan Westman and Jennifer Bonasia got plenty dirty back-filling a utility trench (with a shovel- just like the olden days), cutting lumber to size and even nailing shear panel. It was a great day and a great feeling contributing to the home-ownership dream of some lucky families right here in our home town.
If you ever have a chance to participate in a Habitat for Humanity build, it is highly recommended. Over the years, we have had several experiences participating in Habitat builds, sometimes using the special talents of Special Olympians. Each experience has been well organized and a very rewarding experience. Habitat for Humanity does an amazing job and is a terrific organization. To learn more about them, visit their website at www.habitat.org and see how you too can get involved in helping to eliminate poverty housing.
Spoken by Jennifer Bonasia |
October 16th, 2008 categories: Our Market
Home prices throughout most areas of California will post declines next year, while sales of existing homes will continue to rise in 2009, according to C.A.R.’s “2009 California Housing Market Forecast,” released today during CALIFORNIA REALTOR® EXPO 2008 (www.realtorexpo.org), running through Thursday, Oct. 16 at the Long Beach Convention Center in Long Beach.”The current uncertainty about the financial system and economy is likely to persist over the next several weeks, and could extend into next year,” said C.A.R. President William E. Brown. “Our forecast assumes that the financial system will begin to show signs of stabilization late in 2008 and into early 2009.”The median home price in California will decline 6 percent to $358,000 in 2009 compared with a projected median of $381,000 this year, according to the forecast. Sales for 2009 are projected to increase 12.5 percent to 445,000 units, compared with 395,600 units (projected) in 2008.
“Sales in 2008 will be ahead of last year by 12 percent, with a further increase of 12.5 percent expected in 2009,” said C.A.R. Chief Economist Leslie Appleton-Young. “However, the next couple of quarters in late 2008 and early 2009 will be marked by seasonal decreases in activity, with a pickup expected by the second quarter of next year.”
Those who are in the market currently in Southern California are finding it’s not easy to land a deal today as there is a lot of competition, particularly for homes priced at or below median values. Demand is quietly ramping up and we expect to see a slow migration into the higher price ranges so long as deals still represent a good value for the buyer.
California Real Estate has long been a high priced and valuable commodity. Today it very well may represent a golden investment opportunity for those looking to own property in the Golden State. International investors have an even better opportunity to maximize their investment dollars with the current exchange rates in our currency. As the dollar strengthens this anomaly will disappear but for those who are ready to take advantage of todays market, timing is good indeed.
Spoken by Jennifer Bonasia |
October 13th, 2008 categories: Community Happenings
Central Banks Coordinate Global Cut in Interest Rates
Published: October 8, 2008
In a move of unprecedented scope, the world’s major central banks lowered their benchmark interest rates Wednesday, a coordinated effort to halt a collapse of share prices and a freeze in credit markets that threatens to set off the first global recession since the early 1970s.
Emmanuel Dunand/Agence France-Presse — Getty Images
A ticker outside the NBC studios in New York emphasized the falling financial markets.
The New York Times
The action failed to calm gyrating markets, however, amid the growing realization that a serious and prolonged recession may be difficult to avoid.
The Federal Reserve, the European Central Bank, the Bank of England and the central banks of Canada and Sweden all reduced primary lending rates by a half percentage point. Switzerland also cut its benchmark rate, while the Bank of Japan endorsed the moves without changing its rates.
In another monetary first, the Chinese central bank joined the effort — without explicitly saying it was doing so — by reducing its key interest rate and lowering bank reserve requirements to free up cash for lending.
The Fed’s benchmark short-term rate now stands at 1.5 percent. The European Central Bank’s is 3.75 percent.
Taken together with other moves in the United States, Britain and Continental Europe in the last few days, the rate cuts look like part of a broader, global strategy that embraces aggressive use of monetary policy and taxpayer recapitalization of ailing banks, generating cautious optimism among crisis-weary analysts.
“The gravity of the times requires out-of-the box responses,” said Jim O’Neill, the chief global economist at Goldman Sachs. “Atop of all the other things we have seen this week, it gives me great confidence.”
The efforts led to a brief rally on European stock markets, but it quickly fizzled. Benchmark indexes were off by 5 percent to 6 percent in Germany, Britain and France. Markets in New York were trading in a 400-point range, swinging between positive and negative.
Credit market conditions remained extremely tight, with the gap between yields on safe, three-month government securities and the rate that banks charge one another for loans of the same duration rising to more than 4 percentage points not long after the central banks acted — showing financial institutions remained deeply concerned about lending to one another.
Federal Reserve officials said Wednesday’s action was the first time ever that the Fed had coordinated a reduction in interest rates with other central banks, though the United States has periodically joined with other countries to intervene in currency markets to stabilize foreign exchange rates.
The closest thing to a precedent came in November 2001, when the Fed and the European Central Bank announced a rate reduction on the same day. But those actions were nominally independent, and they did not involve any additional foreign central banks.
The cut came despite what had been a divergence of views between the United States and Europe ever since the financial crisis erupted in August 2007. The European Central Bank had been much more reluctant to lower interest rates, because policy makers there tended to see the mortgage meltdown primarily as an American problem with secondary ripple effects in Europe.
But any lingering comfort outside the United States evaporated in the last week, as money markets froze up around the world and major corporations and banks across Europe began suffocating from their inability to do even routine financial transactions.
Making matters worse, none of the epic emergency measures taken in the United States — the passage of a $700 billion bailout plan to buy up distressed securities; a doubling and redoubling of emergency loan facilities at the Fed to $900 billion on Monday; and the Fed’s unprecedented decision on Tuesday to start buying up short-term commercial debt for businesses of all types — had prevented the stock markets from plunging at vertigo-inducing amounts day after day.
Some analysts responded positively to the news.
“At last, a coordinated show of force,” Ian Shepherdson, chief United States economist at High Frequency Economics, wrote in a note. “The move is to be applauded but there is more to come. The playbook to avoid depressions says rates need to be as close to zero as possible.”
Other economists were cautious about whether the various measures would be successful, after previous plans like the United States’ economic bailout have not halted steep declines in share prices. Read the rest of this entry »
Spoken by Jennifer Bonasia |
October 8th, 2008 categories: Our Market
The National Association of Realtors says pending home sales increased 7.4% from July to August; highest since June 2007.
October 8, 2008: 10:40 AM ET
| Type |
Overnight avgs |
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WASHINGTON (AP) — The National Association of Realtors says pending home rose 7.4% from July to August, an unexpected piece of positive news for the battered U.S. housing market.
The group said Wednesday its seasonally adjusted index of pending sales for existing homes rose to 93.4 from an upwardly revised July reading of 87. The reading was the highest since June 2007.
Wall Street economists surveyed by Thomson/IFR had predicted the index would fall to 84.9.
The index, which sunk to a record low of 83 in March, stood at 85.8 in August 2007. Majority of gains were in the West. August sales in the Western United States were up approximately 18% and prices down 24%. Sales rates were up 9% over August 2007. So there… 
Spoken by Jennifer Bonasia |
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