Fort Knox Bullion Depository

Why Mortage Lending is so tight in 2012.  This is a song that many realtors/loan officers and buyers are singing daily.  Sometimes the buyers state that getting a home mortgage is like taking a shopping spree at Fort Knox.

The housing market continues to struggle as Realtors report one in three contracts now fail, up nearly 10 percent from the year prior and now the top challenge of the housing industry. Failures are due to declined mortgage applications or failed underwriting as appraised values are coming in below the negotiated price, according to the National Association of Realtors.

But why is mortgage lending so tight? Why are banks making things so difficult? It seems that now, more than ever, contract failures is the last thing the housing sector needs.

In a recent unsolicited and unplanned letter from the Federal Reserve chairman to Congress suggested that the housing market has the potential to be fixed and while Republican Senator Hatch publicly asserted that Bernanke was stepping out of bounds by influencing policy, the letter explained in detail why lending is so tight.

In the letter, the Fed notes, “Other data show, for instance, that less than half of lenders are currently offering mortgages to borrowers with a FICO score above 620 and a down payment of 10 percent – even though these loans are within GSE parameters. This hesitancy on the part of lenders is due in part to concerns about the high cost of servicing in the event of loan delinquency and fear that the GSEs could force the lender to repurchase the loan if the borrower defaults in the future.”

The Texas Real Estate Center (RECON) explains that the Fed asserts concerns about the high cost of mortgage servicing stem from:

• the realization of how expensive it is to resolve a nonperforming loan,
• uncertainty about what it will cost to comply with new mortgage servicing-related regulations and
• the potential change in the way Mortgage Servicing Rights (MSRs) are treated for capital requirements under Basel III (new international banking regulations).

RECON analyst, Gerald Klassen writes, “The good news is that we can understand the reasons. The bad news is that self-preservation may prevent the problem from being fixed.”

Klassen notes recent reports that it costs a servicer 75 basis points or more to service a defaulted loan compared with the 25 basis point servicing fee it receives, making it a losing business.

FHA loans are also difficult to obtain, with various factions, including the Department of Housing and Urban Development calling for a loosening of credit score minimums. According to the Asset Securitization Report, “Lenders are telling HUD officials the agency must first change FHA’s lender/monitoring system known as Neighborhood Watch so they aren’t stigmatized for making loans to borrowers with lower credit scores.” Lenders with higher default rates will have higher Neighborhood Watch ratios than other which RECON says could lead to audits and indemnification demands.

“Don’t forget to add the risk of government and private lawsuits and judicial foreclosure proceedings to the list of concerns about making loans that are more likely to default,” Klassen says. “If you were a lender facing all these challenges, would you make the loan? Demonization of mortgage lenders and servicers makes for great political theatrics. But it doesn’t want them to lend more.

This article is a reprint from AG Beat. Author is Tara Steele.

San Diego Home on Fire

Notice of Fire Prevention Fee: The Governor signed AB 29 of the First Extraordinary Session (ABX1 29) into law on July 7, 2011. ABX1 29 imposes a $150 annual wildfire protection fee per habitable structure for property owners in the SRA. SRA lands cover about 31 million acres in 56 counties, and include an estimated 1.1 million to 1.5 million individual parcels, and approximately 800,000 habitable structures. Public Resources Code Section 4210 provides a legislative finding and declaration that the presence of structures within the SRA can pose an increased risk of fire ignition and an increased potential for fire damage within the state’s wildlands and watersheds and that the costs of fire prevention activities should be borne by the owners of these structures.

The State Board of Equalization (BOE) is required to annually assess and collect the fee from property owners on behalf of the California Department of Forestry and Fire Protection (CDF) in accordance with the Fee Collection Procedures Law. CDF is responsible for providing the BOE with a list of property owners who are liable for the fire prevention fee, and the amount to be assessed. However, the BOE is currently waiting to receive funding from the State of California in order to begin its collection duties, so the BOE has not yet finalized its method for the billing procedure of the Fire Prevention Fee.

There’s more to a mortgage refinance than lowering your monthly payments.

1. Change your mortgage term

If you decrease the term of your mortgage in a refinance by going from a 30-year to a 15-year, you’ll pay a lower interest rate and shorten your total interest costs. You’ll build home equity more quickly, and pay off your loan sooner, even though your monthly payments go up.

2. Move from an adjustable rate to a fixed rate

ARMs offer low introductory rates, but they also offer long periods of uncertainty that make it hard to budget. It makes sense in a mortgage refinance to go from an ARM to a fixed-rate loan during a low-interest rate environment. You’ll get emotional security and your rate won’t fluctuate with changing economic conditions.

3. Take out cash

With a cash-out mortgage refinance, you can turn an intangible asset—accumulated home equity—into a tangible one—cash. It makes sense for a project that will generate long-term benefits, like a home improvement or funding a child’s college education. However, don’t do it for frivolous reasons. Unless you’re extremely disciplined, you could find yourself in even deeper debt.

4. Consolidate two mortgages

When interest rates are low, a mortgage refinance lets you consolidate your main mortgage and an outstanding home equity loan to realize a lower overall monthly payment. Plus, you’ll have only one mortgage payment to make each month.

5. Recover from divorce

If your home is jointly owned with your soon-to-be ex-spouse, a mortgage refinance will turn a joint obligation into the responsibility of the person keeping the home. Nothing is more frustrating than tracking down a former spouse who doesn’t keep up with his or her end of the mortgage payment.

Lay the groundwork

If one of these reasons resonates with you, contact your current lender to see if it’ll offer you preferred rates or reduced closing costs on a mortgage refinance. But don’t assume the current lender is best: Leave no stone unturned by searching for lenders online and calling community banks and local credit unions.

No matter which lender you choose, a mortgage refinance for the right reasons can save you lots of money—and that’s the best reason of all.

By: Barbara Eisner Bayer Compliments of NAR

Lowering your Energy Bill as a San Diego Homeowner:

1.  How does a San Diego homeowner lower their energy bill and increase the homes sales appeal? 2.  How does a San Diego homeowner enjoy a safer and more comfortable and durable home? 3.  How does a San Diego homeowner reduce their impact on the enviroment? 4.  How does a San Diego homeowner increase the appriasal value of their investment? The answer to these questions and more can be found by investigation green living concepts on the web, installing solar, monitor your utility uses  and follow the suggestions contained within the revised HERS booklet.

The California Energy Commission just released an updated 2011 Home Energy Rating Services (HERS) booklet with the following changes for all San Diego Homeowners:

The 2011 updated edition of the HERS Booklet: What Is Your Home Energy Rating? is a colorful and informative publication created by the California Energy Commission to

• Describe Whole-House Home Energy Rating services and their benefits, and how to find a certified professional HERS Rater.
• Provide home buyers, sellers, brokers, and appraisers with information about the opportunity to invest in energy efficiency improvements at the time-of-sale.
• Explain the desirability of obtaining utility bills from the seller.
• Identify the potential of adding sales appeal and value to your home through energy efficiency upgrades.
• Offer options for financing energy efficiency improvements and explain where to find tax credit and rebate information.

Get your copy of the updated 2011 Home Energy Rating Services (HERS) booklet for all San Diego Homeowners by downloading the appropriate version below.

Click here to download and print the color version. Click here to download and print the black and white version.

All California and San Diego homeowners who are considering a short sale and wondering about the consequences of this decision can rest easier effective immediately.

Governor Jerry Brown just signed Senate Bill 458 into law. Senate Bill 458 expands upon previous short sale anti-deficiency laws.  The previous law (Senate Bill 931) allowed homeowners to sell their homes at a value less than their existing first mortgage value and the mortgage holder would accept the short sale as full payment of the obligation. That is, the first lien holder was required to waive the right to pursue a deficiency judgment against the seller.

The new law, Senate Bill 458, applies the same treatment to any secondary, or junior loans involved in the transaction. In other words, upon accepting the terms of the short sale, junior lien holders now agree to waive their right to pursue the deficiency judgment. The borrower cannot be required to owe or pay for a deficiency in a short sale.

Here’s what the California Association of Realtors® has to say on this late-breaking news:

Although a lender cannot require a borrower to pay any additional compensation in exchange for a short sale approval, the new law does not prohibit a borrower from voluntarily offering a monetary contribution to a lender in hopes of obtaining a short sale.  A lender is also permitted under the new law to negotiate for a contribution from someone other than the borrower, such as other lenders, agents, relatives, and the like.

Exceptions to the new law include a lender seeking damages for a borrower’s fraud or waste; a borrower that is a corporation, LLC, limited partnership, or political subdivision of the state; a lien secured by a bond as specified; a public utility lien; and additional rules apply if a note is cross-collateralized by more than one property.

This is a huge coup for the California short sale world. Not only will it make the decision to participate in a short sale a little easier for some California short sale sellers to stomach, it will definitely also impact the balance of power when considering which is better… short sale or foreclosure.

This article courtesy of Melissa Zavala of Short Sale Expeditor www.shortsaleexpeditor.com  Your source for complete, professional Short Sale negotiation services.