Relief for Countrywide Borrowers and Santa Clarita Give-aways! - Sunday, October 12, 2008

BOA to modify Countrywide Loans - Bank of America will modify 400,000 mortgages with up to $8.4 billion in interest rate and principal reductions for customers in 11 states, including California with $3.4 billion. Some borrowers may qualify to pay nothing but interest for a decade. Bank of America will launch the program in December. (AP, California Attorney General, 10/6)

City of Santa Clarita Giveaways - In celebration of oak trees and to promote their protection, the City of Santa Clarita's Urban Forestry division is giving away FREE 15-gallon oak trees as part of their "Oaktober" program. The trees will be given away:

• Friday, October 17th, 8:00 a.m. to 10:00 a.m. at the Central Park Nursery
• Friday, October 24th, 8:00 a.m. to 10:00 a.m. at the Central Park Nursery
• Saturday, October 25th, begins at 9:00 a.m. at Todd Longshore Park. (City of Santa Clarita email, 10/10)

Wells Fargo gets Wachovia - The Federal Reserve on Sunday approved Wells Fargo & Co.'s $11.7 billion acquisition of Wachovia Corp., removing the deal's last major regulatory hurdle. Citigroup Inc. on Thursday walked away from its own efforts to buy Wachovia. (CNNMoney, 10/12)

Central Banks Coordinate Global Cut in Interest Rates - Hoping to thaw the current credit freeze, the Federal Reserve, the European Central Bank, the Bank of England, and the central banks of Canada and Sweden reduced their primary lending rates by a half percentage point Wednesday. The Chinese central bank also reduced its key interest rate and lowered bank reserve requirements, while the Bank of Japan’s rates remained unchanged. (NY Times, 10/9)

· The purpose of the rate cut is to increase consumer confidence, which in turn should help stimulate the economy. When consumers and businesses have more confidence in the economy, they usually spend more money, which bolsters the economy by enabling retailers to increase sales and prevent future layoffs.

· The Federal Reserve controls the interest rate that banks charge each other for short-term loans. Usually this leads to banks lowering the rates they charge consumers and businesses. The short-term loan-rate reduction, from 2 percent to 1.5 percent, should have an almost immediate effect on credit-card rates, according to financial analysts. Interest rates on automobile and business loans also should decline. Generally, the short-term loan-rate reduction also leads to a reduction in mortgage rates; however, it is too soon to predict if that will happen in this case given the way the market has reacted to recent economic news.

· Some credit card companies already have reduced their credit card rates. Although there may be room for further reductions for some consumers, many experts believe that only consumers with the best credit scores and payment history will benefit from the rate reduction. Most credit card companies deem consumers with high credit scores as providing the least amount of risk.

· Consumers with fixed-rate mortgages will not benefit from the rate cut; however, those with adjustable-rate mortgages (ARMs) may. When banks receive an interest rate cut, they may pass along the savings to consumers. Homeowners with ARMs could receive a payment reduction. (CAR 10/9)

Sell your home fast in any market - Due to the large number of available homes on the market, and the fact that the traditional home-buying season is coming to a close, sellers need to be aware of key factors that can determine whether their home sells quickly or lingers on the market. (MSN, n.d.)

· Accurately pricing a home continues to be the number one factor to conclude a successful sale. Most REALTORS® guide sellers in determining an accurate listing price for their home by tracking comparable properties in their neighborhood that have sold within the previous three to four months. Since the market can greatly fluctuate from one neighborhood to another, some REALTORS® believe that setting a price based on comps older than three to four months will not accurately reflect the current market and could result in pricing a home at odds with current market conditions.

· Even in today’s market, sellers do have some control over many contingencies. Some buyers may request that their contracts include contingencies based on their ability to obtain financing. To avoid risks associated with this contingency, some REALTORS® advise their clients to request buyers to provide a pre-approval letter from a well-established lender; a financial information sheet outlining the buyer’s employment history, income, assets and liabilities; and a recent bank statement showing that the buyer has enough funding reserves for the required down payment. This ensures that the buyer is likely to be approved for a mortgage loan, and reduces the risk to the seller.

· Some buyers may use a home’s inspection report as a bargaining chip to negotiate a lower price. When this occurs, some sellers offer buyers a lump sum of money so the buyer can make the repairs, rather than the seller repairing each item listed on the report. Sellers may be able to avoid paying a lump sum to the buyer by having the home pre-inspected prior to listing. This enables the seller to obtain accurate estimates for the cost of repairs ahead of time and provides the seller with the option of making the repairs before listing the home. (CAR, 10/9)

PENDING HOME SALES UP 7.4 PERCENT IN AUGUST - Pending home sales based on signed contracts rose 7.4 percent from July to August, the highest reading since June 2007, according to NAR's Pending Home Sales Index released today. The Index jumped to 93.4 from an upwardly revised reading of 87 in July, an 8.8 percent increase from August 2007 when it stood at 85.8. (CAR, 10/8)

MORTGAGE COMPANY PRODUCTION PROFITS DECLINE - Mortgage companies lost an average of $560 on every loan they originated in 2007, a sharp decline from the $50 per loan they are reported to have lost in 2006, according to the Mortgage Bankers Association's annual cost study released Tuesday. While loan origination and other fees did increase on a per-loan basis, they were outpaced by hikes in production and operating expenses, which increased 7 percent to $3,663 per loan, the study shows. (CAR, 10/8)

Fast Facts

• Calif. median home price - August 08: $350,140(Source: C.A.R.)
• Calif. highest median home price by C.A.R. region August 08: Santa Barbara So. Coast $930,000 (Source: C.A.R.)
• Calif. lowest median home price by C.A.R. region August 08: High Desert $169,200 (Source: C.A.R.)
• Calif. First-time Buyer Affordability Index - Second Quarter 08: 48 percent (Source: C.A.R.)
• Mortgage rates - week ending 10/2/08 30-yr. fixed: 6.10% Fees/points: 0.6% 15-yr. fixed: 5.78% Fees/points: 0.6% 1-yr. adjustable: 5.12% Fees/points: 0.5%(Source: Freddie Mac)

Sources: Associated Press, MSNBC, State of California Office of the Attorney General, City of Santa Clarita, California Association of REALTORS, New York Times, CNNMoney, Freddie Mac.