1. Tax credits. First-time homebuyers who purchase their primary residence on or after April 9, 2008 and before July 1, 2009 are eligible for up to $7,500 in tax credit, provided they haven’t owned a home in the last three years and fit certain income parameters. The credit is generous, but it is actually an interest free loan, paid back over 15 years at $500 per year when taxes are filed.

Special note: Some types of seller-paid down payment assistance programs are being eliminated as of October 1st as well - so purchasing a home before then may gain you a double benefit of tax credits AND seller-paid down payment assistance while it is still available.

2. Larger loans at lower rates. There have recently been provisions in place that have allowed loans larger than $417,000 to qualify for better financing rates than normally would be available for “jumbo” loan amounts of that size, thanks to Fannie Mae and Freddie Mac. Although these provisions were set to expire, they are being extended…however, the top end of the loan size that will be allowed under these programs will be dropping down from $729,750 to $625,500 as of January 1, 2009.

3. FHA Hope for Homeowners. This provision is designed to help homeowners who are “upside down” on their mortgages–that is, they owe more on their house than they can sell it for in today’s market. Essentially, this plan allows homeowners who meet the requirements and are upside down to refinance their mortgage to a new 30-year Fixed FHA mortgage. There are a number of qualifying details that must be met and requirements to be agreed to — including agreeing to split the equity in your home with the government in the future. Still, if you’re upside down on your mortgage and struggling in today’s economy, this is an option worth exploring in more detail.

These are just a few of the provisions that may benefit you, and there are a number of other items that impact the housing and mortgage industry as whole. But the bottom line is, home prices are extremely reasonable right now, home loan rates are low, and new incentives are in place that may help make the decision to buy even more appealing than before. If you’re in the market for a new home or need to make some changes with your current mortgage…there’s never been a better time to act. Just get in touch so we can start the planning process together.

What types of accounts are covered?

The FDIC protects checking and savings accounts, certificates of deposits (CDs), Christmas club accounts, and money-market savings accounts. However, Stocks, Bonds, and mutual fund shares…even those purchased through an FDIC bank…are not protected.

What are the limits of FDIC insurance?

Bank accounts that have less than $100,000 in them and certain retirement accounts (IRAs held in CDs and money market accounts) that have less than $250,000 are fully protected by the FDIC even if the bank fails. If you want to exceed these account limits, you can keep your deposits fully protected by:

1. Dividing your money among several different bank companies. Note that dividing your money among several different branches of the same bank does not guarantee full protection.
2. If you prefer to keep your money in the same bank company, you can still be fully protected if you divide your money among various “ownership categories”. Ownership categories include a personal account in your name, a personal account in your spouse’s name, a joint account co-owned by you and someone else, and a trust account that names someone other than you as a beneficiary.

What are some common ways customers end up with uncovered deposits?

If you purchase a CD through an investment broker, this CD will often be placed with a bank at which you already have an account. If the CD and your other accounts exceed the $100,000 limit, you may not be full protected. Before purchasing CD’s through a broker, ask where they will be placed. In addition, keep track of the interest your accounts earn so you don’t exceed the limits this way.

What will happen if your bank fails?

In most cases, depositors can fully access their funds by the next business day. Typically, failed banks are closed on Fridays, and funds are available by the following Monday. People can also usually use their ATM cards and write checks over that weekend as well. And for customers whose accounts exceeded the FDIC limit, all hope is not lost. Though this amount has varied, they can generally expect to recover 70 cents on the dollar of their uncovered funds after the bank’s assets are sold.The good news is that the vast majority of US banks are secure, but the above information will help you stay fully protected.For more information, visit www.fdic.gov.

LOS ANGELES (July 25) – Home sales increased 17.5 percent in June in California compared with the same period a year ago, while the median price of an existing home fell 37.7 percent, the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) reported today.

“Statewide home sales remained above the 400,000 level for the second month in a row, and up nearly 18 percent from a year ago,” said C.A.R. President William E. Brown. “Following a 30-month string of year-to-year percentage decreases that began in October 2005, sales last month also posted their third consecutive year-to-year gain.

“Sales were driven in part by large shares of deeply discounted distressed sales in many parts of the state,” he said. “With lower prices and favorable interest rates, affordability also has improved significantly in recent months, paving the way for many buyers to purchase their first home.”

Closed escrow sales of existing, single-family detached homes in California totaled 420,550 in June at a seasonally adjusted annualized rate, according to information collected by C.A.R. from more than 90 local REALTOR® associations statewide. Statewide home resale activity increased 17.5 percent from the revised 357,890 sales pace recorded in June 2007.

The statewide sales figure represents what the total number of homes sold during 2008 would be if sales maintained the June pace throughout the year. It is adjusted to account for seasonal factors that typically influence home sales.

The median price of an existing, single-family detached home in California during June 2008 was $368,250, a 37.7 percent decrease from the revised $591,280 median for June 2007, C.A.R. reported. The June 2008 median price fell 4.3 percent compared with May’s $384,840 median price.

“The significant declines in the median price over the past several months are largely due to a dramatic shift in the sales mix since the onset of the credit crunch and the increase in the share of distressed sales,” said C.A.R. Chief Economist Leslie Appleton-Young. “A year ago, the under $500,000 price range accounted for 40 percent of sales, the middle segment made up about 45 percent, and the over $1 million segment captured 15 percent of the market. As of June 2008, the shares had shifted to 67 percent, 24 percent, and 9 percent, respectively.”

Highlights of C.A.R.’s resale housing figures for June 2008:

. C.A.R.’s Unsold Inventory Index for existing, single-family detached homes in June 2008 was 7.7 months, compared with 10.2 months (revised) for the same period a year ago. The index indicates the number of months needed to deplete the supply of homes on the market at the current sales rate.

. Thirty-year fixed-mortgage interest rates averaged 6.32 percent during June 2008, compared with 6.66 percent in June 2007, according to Freddie Mac. Adjustable-mortgage interest rates averaged 5.15 percent in June 2008, compared with 5.68 percent in June 2007.

. The median number of days it took to sell a single-family home was 49.1 days in June 2008, compared with 51.5 days (revised) for the same period a year ago.

Regional MLS sales and price information are contained in the tables that accompany this press release. Regional sales data are not adjusted to account for seasonal factors that can influence home sales. The MLS median price and sales data for detached homes are generated from a survey of more than 90 associations of REALTORS® throughout the state. MLS median price and sales data for condominiums are based on a survey of more than 60 associations. The median price for both detached homes and condominiums represents closed escrow sales.

In a separate report covering more localized statistics generated by C.A.R. and DataQuick Information Systems, 2.9 percent, or 11 out of 385 cities and communities, showed an increase in their respective median home prices from a year ago. DataQuick statistics are based on county records data rather than MLS information. DataQuick Information Systems is a subsidiary of Vancouver-based MacDonald Dettwiler and Associates. (The top 10 lists are generated for incorporated cities with a minimum of 30 recorded sales in the month.)

Note: Large changes in local median home prices typically indicate both local home price appreciation, and often, large shifts in the composition of housing market activity. Some of the variations in median home prices for June may be exaggerated due to compositional changes in housing demand. The DataQuick tables listing median home prices in California cities and counties are accessible through C.A.R. Online at http://new.car.org/economics/historicalprices/2008medianprices/june2008medianprices/.

. Statewide, the 10 cities with the highest median home prices in California during June 2008 were: Manhattan Beach, $1,942,500; Los Altos, $1,595,000; Burlingame, $1,575,000; Newport Beach, $1,325,000; Mill Valley, $1,150,000; Los Gatos, $1,143,000; Cupertino, $1,072,500; San Carlos, $1,022,500; Danville, $965,000; Santa Barbara, $950,000.

. Statewide, the 10 cities with the greatest median home price increases in June 2008 compared with the same period a year ago were: Manhattan Beach, 49.4 percent; Cupertino, 33.3 percent; San Luis Obispo, 11.4 percent; Los Gatos, 3 percent; San Carlos, 1.5 percent; Sunnyvale, 1.4 percent; Ridgecrest, 1.4 percent; Campbell, 1.3 percent; Temple City, 0.9 percent; San Rafael, 0.8 percent.

LOS ANGELES (July 30) – The CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.) applauds President Bush’s decision to sign H.R. 3221 into law. For the past several years, C.A.R. and the NATIONAL ASSOCIATION OF REALTORS® have aggressively lobbied for Congress to pass numerous provisions found in this historic bill.

The legislation, called the Housing and Economic Recovery Act of 2008, will assist an estimated 400,000 homeowners facing foreclosure, many of whom reside in California, by allowing them to refinance their current mortgages with a Federal Housing Administration (FHA)-backed loan. The bill also will permanently increase FHA, Fannie Mae, and Freddie Mac loan limits in high-cost areas.

“This federal housing bill is a significant move in the right direction for California homeowners,” said C.A.R. President William E. Brown. “It will aid in stabilizing our economy and help stem foreclosures, while also providing support to first-time homeowners.”

The bill permanently increases the conforming loan limit to $625,500. C.A.R. has long advocated for higher conforming loan limits. In February, the Economic Stimulus Act of 2008 was signed, temporarily raising the conforming loan limit in high-cost areas to $729,750 from $417,000 until December 31, 2008.

“Although we would have liked Congress to make permanent the current $729,750 loan limit, C.A.R. is pleased with the new permanent loan limit of $625,500. It will allow California homeowners to refinance their loans into safe affordable loan products and allow first-time home buyers to enter the market,” said Brown.

The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500. Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008.

C.A.R. also supports the following bill provisions:

. A temporary increase in mortgage revenue bonds to refinance subprime mortgages.

. New regulator for Government Sponsored Enterprises to restore investor confidence in GSE loans and help the market and economy stabilize.

. First-time home buyer tax credit, which allows first-time home buyers to receive a tax refund worth up to 10 percent of a home’s purchase price, up to a maximum of $7,500. The refund serves as an interest-free loan and the homeowner is required to repay it in equal installments over 15 years.

. Temporary raise in the loan limit for the Veterans Affairs home loan guarantee program to the same level as the economic stimulus limits until the end of 2008.

. Adjustment to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), allowing sellers to provide the non-foreign affidavit to a qualified closing entity and not just the buyer.

. The setting of minimum requirements for mortgage originators, which mandates fingerprinting of loan originators and establishes a nationwide loan originator licensing and registration system. The requirements do not apply to those only performing real estate brokerage activities unless they are compensated by a lender, mortgage broker, or other loan originator. States will have the ability to implement more stringent laws.

. The creation of a National Affordable Housing Trust Fund to help cover the cost of the FHA rescue plan for the first five years and develop affordable housing in subsequent years.

Other provisions in the legislation include:

. The Treasury Department’s proposal to create a federal backstop program to ensure the financial well-being of Fannie Mae and Freddie Mac.

. The FHA’s inability to insure loans that utilize a seller-funded down-payment assistance program. Down-payment assistance from family, employers and other nonprofits is still allowed.

. The Community Development Block Grant Programs’ $4 billion allotment for communities to purchase and refurbish foreclosed homes.

1. Tax credits. First-time homebuyers who purchase their primary residence on or after April 9, 2008 and before July 1, 2009 are eligible for up to $7,500 in tax credit, provided they haven’t owned a home in the last three years and fit certain income parameters. The credit is generous, but it is actually an interest free loan, paid back over 15 years at $500 per year when taxes are filed.

Special note: Some types of seller-paid down payment assistance programs are being eliminated as of October 1st as well - so purchasing a home before then may gain you a double benefit of tax credits AND seller-paid down payment assistance while it is still available.

2. Larger loans at lower rates. There have recently been provisions in place that have allowed loans larger than $417,000 to qualify for better financing rates than normally would be available for “jumbo” loan amounts of that size, thanks to Fannie Mae and Freddie Mac. Although these provisions were set to expire, they are being extended…however, the top end of the loan size that will be allowed under these programs will be dropping down from $729,750 to $625,500 as of January 1, 2009.

3. FHA Hope for Homeowners. This provision is designed to help homeowners who are “upside down” on their mortgages–that is, they owe more on their house than they can sell it for in today’s market. Essentially, this plan allows homeowners who meet the requirements and are upside down to refinance their mortgage to a new 30-year Fixed FHA mortgage. There are a number of qualifying details that must be met and requirements to be agreed to — including agreeing to split the equity in your home with the government in the future. Still, if you’re upside down on your mortgage and struggling in today’s economy, this is an option worth exploring in more detail.

These are just a few of the provisions that may benefit you, and there are a number of other items that impact the housing and mortgage industry as whole. But the bottom line is, home prices are extremely reasonable right now, home loan rates are low, and new incentives are in place that may help make the decision to buy even more appealing than before. If you’re in the market for a new home or need to make some changes with your current mortgage…there’s never been a better time to act. Just get in touch so we can start the planning process together.

Well there I was yesterday afternoon ten years later standing with Elaine and Michael (not his real name) in a vacant home. When I last saw Michael he was tall viral athletic man from hi former days of sports and someone who always came with a positive and fun personality. If it hadn’t been for that same Great Spirit I would have barely recognized him. He was of course older but he had lost 70 pounds and clearly due to a health issue not by choice. I commented “wow” Michael you really lost some weight. Well it’s not hard he said when your fighting a disease but all is good now. What a spirit and after some small talk I ask him to tell me how we can help. He told me how he is living in an apartment now since his divorce two years ago, we were not even aware of that. After 32 years of marriage they decided it was over and they went there separate ways. He wasn’t sad really, at least not anymore and told me how he was proud to have raised a great family and marriage for those years and this is just part of life. Each day you just work with what life deals you and he said. He said between the divorce and his health they had to refinance the home several times and they eventually couldn’t afford the payments. His wife had a home business that never fully got off the ground so he supported for a long time but with having to miss so much work when he got sick it just snow balled on them. Michael was a top salesman in his field but when he finally was able to get back to work he was just in time for the crash in the economy as it heads into this serious recession were all in. He needs to sell the house but owes way more than the current value and has heard about short sales and wants to know if that is a way out for him. He has received his notice of default and if possible he wants to avoid a foreclosure to protect his credit score. In his sales business he deals with buyers credit daily so he knows how important and valuable of a good credit score. He takes for a walk thru his home tells me of all the things they did to improve over the last fifteen years of ownership and does so with pride yet with a sense of acceptance that that was then and this is now. After the tour I begin to explain to him the pros and cons of a short sale and how many times from a financial perspective it is almost better sometimes to just let the house go to foreclosure. I have had dozens of conversations with lenders and not one of them can tell me whether a having a short sale versus a foreclosure on your credit report is better or worse. Mostly because this is first time in history that we have ever had this many foreclosures and short sales. Not even in the depression even by percentage has there been this many. Like all my clients I explain how serious of an issue as to which way to go. On short or foreclosure depending on condition the will or has the right to come back to former borrower/owner and file a Deficiency Judgment which is a Court order authorizing a lender to collect part of an outstanding debt from foreclosure and sale of the borrower’s mortgaged. This can be huge; in most cases lenders are loosing at least $100,000 per foreclosure. Many I have closed this past exceeded $150,000 in loan loss to the bank. In the event of a former borrower/owner getting a judgment this could mean having being sent a 1099 from the IRS for the year of sale for $100,000. At that point the owner could be liable for taxes due on that amount as if it was earned income or capital gains tax. Now this is where I am out of my expertise and I require all my sellers who want or need to attempt a short sale or foreclosure to meet with an attorney who understands the laws. And depending on the type of loans they have on their home and if they refinanced makes a big difference. The second meeting they must have after the attorney is a C.P.A. Depending on the situation Elaine and I have paid on behalf of our clients so the client is fully aware of the consequences. I can tell you for sure that over the next few years there will be some horror stories coupled with lawsuits regarding short sales and foreclosures that will arise. And if the real estate broker and or agents did not guide their clients properly they will be named in the lawsuits. Well we ended our meeting with a set time for us to meet further and schedule the legal counsel appointment and CPA to determine what will be our game plan, short sale or foreclosure. Sad to only have only these two options but in this case that is all there is.

..Too be continued.

“IT’S A BEAUTIFUL THING, DIVING INTO THE COOL CRISP WATER.” Olympic Gold Medalist Dawn Fraser. Diving may be a beautiful sport at the Olympics, but it’s not a beautiful thing to watch in the Bond market. And that’s exactly what happened last week, as Bonds dove to their worst levels so far this year.So what caused this belly flop to occur? Once again, inflation was the big culprit. While Bonds and home loan rates did begin the week in rally mode after the Federal Reserve announced that it authorized Fannie Mae and Freddie Mac to borrow directly from the Central Bank if they need additional capital, this confidence boost in the markets was short lived on the heels of important inflation reports.On Tuesday, the Producer Price Index (PPI) report, which measures prices of goods at the wholesale level, revealed that the year-over-year PPI soared in June, marking the highest year-over-year rate since 1981. Also on Tuesday, the Retail Sales report, which measures the total receipts of retail stores, showed that retail sales increased much less than forecast. This may mean that the boost in sales received from the tax rebates may already be fading as consumers are focusing on paying for essentials…something that Wednesday’s news seemed to confirm.What was Wednesday’s news? The important Consumer Price Index (CPI) report, which measures prices paid by consumers like us. It showed that prices overall are up 5% from a year ago, the biggest year-over-year rise since 1991. This probably comes as no surprise as you look at your own monthly expenses, particularly the amount you’re likely spending these days on groceries and at the gas pump.Bond prices and home loan rates continued to worsen through the week as no other news or reports could help them shift course. With inflation and tough overhead technical resistance proving to be strong competitors against any improvement, home loan rates generally ended the week around .375 percent worse than where they began.

FORECAST FOR THE WEEK 

Inflation was the big newsmaker last week, and the news this coming week will be focused on the housing market, as both New and Existing Home Sales Reports will be released. It won’t be much of a surprise to see some continued sluggishness in the nation’s overall housing market.Also this week will come a look at Durable Goods Orders, which is simply a measure of how many “durable” or non-disposable goods have been purchased during the previous month. Durable goods are those products which are expected to last longer than three years, such as televisions, golf clubs, furniture, office equipment, and cars. With consumables like food and energy taking such a bite out of most people’s budget, it will be interesting to see the level of buying for these types of items…it wouldn’t be surprising to see it at somewhat low levels. Additionally, a look at Consumer Sentiment will arrive, with a read on how positive - or not - consumers are feeling about their current and future economic conditions.Remember when Bond prices move higher, home loan rates move lower…and vice versa. And this week, Bond prices took a very steep dive indeed, causing home loan rates to worsen. The chart below shows how Bonds were pushed sharply lower by the news of the week, and an inability to defeat a strong overhead ceiling of resistance at the 200-day Moving Average. If this week’s news isn’t Bond friendly, Bond prices could continue their dive lower, and cause home loan rates to worsen further still…but some negative economic news could pull money out of Stocks and into Bonds, give Bonds a boost higher, and help home loan rates regain some lost ground. 

We could be in for another explosive week, as several reports will show the impact inflation continues to have on the economy. Tuesday will bring the wholesale inflation measuring Producer Price Index as well as the Retail Sales Report, which measures the total receipts of retail stores. Since these numbers reflect consumer spending patterns, this report will show how much of an impact inflation and high oil prices are having on consumer pocketbooks.On Wednesday, the Consumer Price Index report will be released, and this widely-watched report will reveal the level of inflation at the consumer level since it shows how much more expensive goods and services are this month over last month. Also, on Wednesday, we’ll get to see the minutes of the Fed’s last Federal Open Market Committee meeting. These minutes could cause some sizzle in the markets especially if they give any indication of what the Fed will do about its benchmark rate, the Fed Funds Rate, at the next meeting.Thursday we will see a read on the housing market via the Housing Starts and Building Permits Report. We’ll also learn how much of an impact inflation has had on manufacturing via the Philadelphia Fed Report, which is a monthly survey of manufacturing purchasing managers conducting business around the tri-state area of Pennsylvania, New Jersey, and Delaware.Remember when Bond prices move higher, home loan rates move lower…and vice versa. The chart below shows how the rally for Bonds and home loan rates fizzled late last week. And since inflation also tends to stop rallies for both Stocks and Bonds, I’ll be watching closely as always. If this week’s reports indicate inflation is heating up, this could cause Bond pricing and home loan rates to worsen in response.

FORECAST FOR THE WEEK

And speaking of explosions, some explosions in the Middle East helped douse the rallying flames mid-week after Iran test fired nine medium- to long-range missiles, one of which has the range to reach Israel. The instability of that situation…and new testimony by Treasury Secretary Henry Paulson and Fed Chairman Ben Bernanke before the House Financial Services Committee regarding ways Congress can overhaul the financial regulatory system to prevent future crises (the first hearing of its kind)…caused the improvements in the market to fizzle as Traders watched and waited for the finale these events would cause.As it turned out, last week’s finale was a bit of an implosion. Despite Paulson’s encouraging words about Fannie Mae and Freddie Mac, Bonds and home loan rates worsened after reports on Friday that the government is considering a plan to take control of both companies if financial problems threaten their collapse. Stock prices of Fannie and Freddie would essentially become worthless if this happens, and Stocks and Bonds both reacted poorly to this news as investor confidence plunged.Also, another record high for oil (remember higher oil prices means higher inflation, which is the arch enemy of Bonds and home loan rates) added to the implosion and worsening of Bonds and home loan rates on Friday. However, when all the smoke cleared, Bonds and home loan rates still managed to end the week slightly better than where they began.

The coming week is chock full of economic reports that will likely have a big influence on the financial markets. We start off on Tuesday with a report on Consumer Confidence, and also the beginning of Fed meetings which will culminate in a Rate Decision and Policy Statement on Wednesday afternoon at 2:15pm ET. It is widely believed that the Fed will keep the Fed Funds Rate at 2%…but what will be most interesting is the wording of their carefully crafted Policy Statement. If it gives hints of their intent to hike rates in the near future to help fight inflation, it could actually be good news for Bonds and home loan rates.A look at sales numbers in the new and existing housing markets will come Wednesday and Thursday, and Friday will wrap up the week with a bang as the Fed’s favorite gauge of inflation, the Core PCE (Personal Consumption Expenditure) data will be released. Since this will be following the Fed’s announcement on Wednesday – will the Fed look smart if they’ve held rates steady, or perhaps come under criticism if the inflation numbers are super-heated? Could be a greasy few days for the Fed, so stay tuned.Remember that when Bond pricing moves higher, home loan rates move lower – and then take a look at the chart below. You can see how in recent days, Bonds have moved higher, but are now battling an overhead “ceiling” of technical resistance. If Bonds and home loan rates are to improve in the near future, it will take some very Bond-friendly news to help crash through the ceiling that has stopped progress in its tracks for the time being