Archive for September, 2008

How will Schwarzenegger’s new Transparency Standards change Sacramento Real Estate?

Friday, Governor Arnold Schwarzenegger signed legislation designed to protect homeowners and homebuyers in California…

Highlights of the bills the Governor signed Friday:

This one will answer a lot of questions my shortsale clients have; We all hoped this would be enacted:

-SB 1055 by Senator Michael Machado (D-Linden) allows taxpayers to exclude the forgiven mortgage debt from their incomes for state income tax purposes which brings the state in compliance with federal law passed last December 27.


We should see an increase of Mortgage Modifications and a resulting decline in foreclosures in our area because of these four:

-SB 870 by Senator Mark Ridley-Thomas (D-Los Angeles) this will allow the California Housing Finance Agency to quickly establish a mortgage refinance program.

-AB 69 by Assembly member Ted Lieu (D-Torrance) requires that all mortgage loan servicers report specific, detailed data to their licensing agency concerning loan modifications.

-SB 1065 by Senator Lou Correa (D-Santa Ana)  includes the refinancing of home mortgages in the criteria for a city or county-administered home financing program.

-SB 1675 by Senator Dave Cox (R-Fair Oaks) allows the California Department of Veterans Affairs to refinance existing home loans for veterans.

This one will be good for local printers and sign shops: (all those new business card orders and real estate sign changes…)

-SB 1461 by Senator Gloria Negrete McLeod (D-Montclair) says real estate agents will be required to disclose their license number on all first point of contact marketing materials and property purchases beginning July 1, 2009.

Other real estate laws passed:

-SB 1737 by Senator Michael Machado (D-Linden) authorizes the Department of Real Estate (DRE) to suspend (or bar) a person who has committed a violation of the Real Estate Law.

-AB 180 by Assembly Speaker Karen Bass (D-Los Angeles) provides for a registration and bonding process for foreclosure consultants; it also prohibits a foreclosure consultant from entering into an agreement to assist a homeowner in arranging for the release of surplus funds after the trustee’s sale is conducted.

-AB 2454 by Assemblymember Bill Emmerson (R-Redlands) would increase potential recovery for harmed consumers applying for Recovery Account payments filed on or after January 1, 2009, to $50,000 for any one transaction and $250,000 for any one licensee.

In the meantime;

Sept. 25 (Bloomberg) — California home prices tumbled a record 41 percent in August from a year earlier as foreclosure sales pushed down values in the most populous U.S. state.

More than 101,000 California households received a default notice, were warned of a pending auction or foreclosed on last month, RealtyTrac Inc., a seller of default data, said on Sept. 12. That was a third of the nation’s total and represented one in 130 homes in the state. Prices fell in all 20 of the state’s regions surveyed by the Realtors.

It may be a long winter…


By Forth Hoyt


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Folsom real estate shows stability in a storm…

So even though all we hear in the media is the bad news about the housing and equity markets, life here in Folsom goes on! We are still writing contracts and closing escrows! Active, Stable, Predictable is how you can describe real estate here in Folsom. My team and I have eleven active escrows and at least that many offers out on homes with buyers who have heard all the bad news, all the negativity and still want to buy the house of their dreams! Folsom is still adding jobs and office space!

Elliott Homes has been selling an average of 9 lots per month all year up on their custom home site neighborhood of Terrazzo Estates.  Jim Greer, of Elliott, told me that probably eighty percent of the lots go to cash buyers, many who have no immediate plans of building.  He said that many of his buyers are in the medical profession and understand what Kaiser coming to our community will mean for the demand of those lots!  Think about that; these are smart people (you would call this smart money), betting that we are close enough to the bottom, and that they will definately make more money on Folsom dirt than the Stock Market!!

Jim also told me, with some prodding, where he is finding these buyers; he told me “Forth, all my buyers come from the same place… Heaven!”


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Our Brisk Real Estate Turnover: Sacramento’s new “Bank-Owned Sellers Market”- Will it Continue?

What a difference we have seen in our market compared to last summer…  multiple offers, over-priced offers, market stability and finally some predictability; Can it continue with all the bad news?

For the first time in fifteen months, our Sacramento, Placer and El Dorado County Median prices held mostly stable month-to-month.

And instead of a years worth of unsold inventory sitting on the market; there is less than 4 months!

Can it continue? I guess we’ll see… This time of year usually sees swelling inventories anyway and with the mess that the stock market is  in…. They are calling it the  “Worst Crisis Since ’30s, With No End Yet In Sight.”

I really think our under 200k market has found a price level that will hold, unless, of course, rates start moving.  However; those jumbo-homes still have a long way to go.  You know what they say; the bigger they are the harder they fall…

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Stability and continued liquidity; what does it mean to sacramento?

Fannie Mae and Freddie Mac, the largest buyers of mortgages in the secondary market have been placed in a government conservatorship; the Treasury Department and new leaders have replaced prior leadership at the two mortgage giants.  The government is taking as much as an 80 percent ownership of the two over the next 18 months.

How will it  affect our market here at home?

Well, anything that will add strength, liquidity and confidence to the secondary market is a good thing and will add to available programs and $ for mortgages…

I just wonder, though, how long has this been in the works; in July, Congress passed legislation granting the government the authority to bail out the government-sponsored enterprises (GSEs). 


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Freddie Mac and Fannie Mae: Crumbling Cornerstones

The federal government is poised to take over the two largest Mortgage Giants.  Between the two of them they own or guarantee almost half the home loans in the country’s roughly $12 trillion mortgage market. Over the past year, the companies have recorded combined losses of around $14 billion.

Chart of FRE

Fannie and Freddie were created in the 30’s and 70’s; respectively, to create a secondary mortgage market. Banks and thrifts hold more than $1 trillion in Fannie and Freddie bonds because they are considered as good as cash.

Without the bailout, the Credit Crunch would only get worse, as the mortgage market would have huge liquidity problems; Without buyers like Fannie and Freddie, big mortgage lenders have nowhere to go to sell packaged loans in order to continue to write new loans.



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