Economic Stimulus Bill Signed: Week in Review, February 11-17

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Quick Bullets:
• It is more important than ever for potential home buyers to have a good credit score. Consumers should obtain a credit report and take care of any outstanding issues that can be fixed or improved prior to applying for a loan. According to a recent Federal Reserve survey, some 53 percent of lenders tightened requirements for prime-quality borrowers, 72 percent for sub-prime borrowers, and 85 percent for non-traditional mortgage borrowers, including PayOption ARMs, loans with interest-only payment structures, and other such products.
• Whether or not they have children, consumers may want to consider a home in a neighborhood with excellent schools. Homes in good school districts typically are a bit more "recession proof" and appreciate faster than homes near weaker schools, according to MSN Money. (CAR, 2/14)

Bush signs Economic Stimulus Plan – raises conforming loan limits and puts rebate checks in Americans’ hands. For details on this legislation, see http://changhomesnews.blogspot.com/2008/02/special-economic-stimulus-bill-awaits.html (AP, 2/13)

Project Lifeline offers 30-day foreclosure reprieve – Six lenders joined the Treasury Department and the Department of Housing and Urban Development to offer seriously-overdue homeowners to suspend foreclosures for 30 days while lenders try to work out more affordable loans. The lenders are Bank of America, Citigroup, Countrywide, JPMorgan Chase, Washington Mutual, and Wells Fargo. All are involved in Hope Now, an effort to freeze rates on some high-cost subprime mortgages for 5 years to aid borrowers whose teaser rates are jumping sharply higher. More details below in Perspectives. (CNNMoney, AP, 2/11)

Home Buyer Fair - C.A.R., in participation with the Los Angeles Times, will present the Southern California Home Buyer's Fair for consumers Saturday, April 12, and Sunday, April 13 at the Los Angeles Convention Center in downtown Los Angeles. The Southern California Home Buyer's Fair will feature more than two dozen educational seminars presented in English and Spanish for consumers, designed to address many of the concerns of first-time home buyers and arm them with all of the practical information they need to know as they begin the road to homeownership. (CAR, 2/11)

Bush Budget seeks $38.5 Billion for HUD - The Bush Administration's FY 2009 budget seeks $38.5 billion for the U.S. Dept. of Housing and Urban Development, a boost of $1 billion more than HUD's current budget. The budget package includes "significant increases for housing counseling, homeless assistance and affordable housing programs," according to HUD Secretary Alphonso Jackson. (NAR, 2/13)

Beginning this week and continuing through September, HUD's Federal Housing Administration (FHA) is mailing 850,000 letters to at-risk borrowers who have already faced or are experiencing the first reset of their adjustable rate mortgages, and live within geographic locations that are currently subject to FHA loan limits nationwide. If this has the intended effect of keeping those at risk out of foreclosure, it could help shore up the housing market and the state’s economy. (CAR, 2/14)

Perspectives: New program aims to forestall foreclosures – Washington Post
Homeowners threatened with foreclosure would in some instances get a 30-day reprieve under “Project Lifeline,” an initiative the Bush administration announced Tuesday.
· The attempt to diminish the number of homes repossessed could have a broad impact since six of the nation’s largest financial institutions are participating. Together they service almost half of the nation’s mortgages. Fewer foreclosures improves the strength of the housing market.
· The program will be available to borrowers of all types of mortgages, not just the high-cost subprime loans that previous relief efforts targeted.

Perspectives: Southern California home sales drop to a 20-year low – LA Times
Fewer than 10,000 homes were sold in the six-county Southern California region in January, DataQuick Information Systems said Wednesday. That's the first time sales have been at this level since DataQuick began keeping records in 1988.
· The newly passed economic stimulus package could aid sales of more expensive homes previously encumbered by the higher interest rates of non-conforming jumbo loans.
· Repeated Federal Reserve interest rate cuts continue to put downward pressure on mortgage rates, which are at about 5.6 percent.
· Lower interest rates might boost sales and prevent foreclosures by allowing more homeowners to refinance.
· Declining home sales have contributed to lower prices, making homes more affordable.

Latest Pending Home Sales Index and Forecast – Soft market conditions continue for existing home sales in the months ahead, with notable improvement expected by the 2nd half of this year as loan limits increase. (NAR, 2/14)

Metro Areas Home Prices Mixed, Half Show Gains - Roughly half of metropolitan areas continued to show rising home prices in the fourth quarter of 2007, according to the National Association of REALTORS. (2/14)

Home prices fell faster nationally in more places over the last part of 2007. (CNNMoney, 2/14)

The real-estate auction market rose 5.3 percent in 2007, generating $58.4 billion in revenues 39 percent more than it did in 2003, according to the National Auctioneers Association. (NAR, 2/13)

Greenspan says no recession yet – Former Federal Reserve Chairman said the American economy is on the “edge” of a recession, pointing to the slump in the country’s housing market as the primary cause. (CNNMoney, 2/15)

Bernanke optimistic for late 2008 – Current Federal Reserve chairman says the central bank is likely to slash rates further in the coming months, with the benefits of the rate cuts likely appearing in the second half of the year. (NAR, 2/14)

Job losses point to recession – California’s Index of Leading Employment Indicator decreased in the fourth quarter of 2007, marking the seventh consecutive quarterly drop and indicating further declines over the next six months, according to a report released Monday by the A. Gary Anderson Center for Economic Research. The primary factor feeding the decline, according to the report, is the slump in California's construction spending. (CAR, 2/11)

The Consumer Confidence Index fell nearly three points in January. While consumers were more positive about job prospects in January, the sampling from the January household survey of those who view business conditions as "bad" rose to 20 percent from 18.8 percent in December. (CAR, 2/11)

Mortgage Rates Rise to Highest Level in 5 Weeks - 30-year fixed-rate mortgages averaged 5.72% this week, up from 5.67% last week. Rates on 15-year fixed edged up to 5.25% versus 5.15% last week. 5-year adjustable-rate mortgages (ARMs) dipped to 5.19% from 5.21% while 1-year ARMs remained unchanged at 5.03%. One year ago, 30-year mortgages stood at 6.30%, while 15-year were at 6.03%, 5-year ARMs at 6.01% and 1-year ARMS were at 5.52%. Mortgage applications fell during the last week. (AP, 2/14; Mortgage Bankers Association via CNNMoney, 2/16)

Countrywide's Overdue Mortgages Increase to 7.47%; Highest in Six Years Countrywide Financial Corp., the biggest U.S. mortgage lender, said late loans were at their highest level in at least six years during January, adding to evidence that the U.S. housing slump is getting deeper. (Bloomberg, 2/15)

Fast Facts:
* Calif. median home price - December 07: $475,460(Source: C.A.R.)
* Calif. highest median home price by C.A.R. region December 07: Santa Barbara So. Coast $925,000 (Source: C.A.R.)
* Calif. lowest median home price by C.A.R. region December 07: High Desert $244,330 (Source: C.A.R.)
* Calif. First-time Buyer Affordability Index - Third Quarter 07: 24 percent (Source: C.A.R.)

Web Spotlight:
CrimeReports.com posts crimes from police departments in 16 states, including California. You can join to receive free regularly-scheduled crime reports via email. You can also choose to receive time sensitive crime alerts, neighborhood and community policing program bulletins and other crime awareness and prevention information as they become available. (Charlie Turner, MarketWatch, KFWB-AM, 2/16; AP, 2/4)

Sources: California Association of REALTORS, Bloomberg, National Association of REALTORS, CNNMoney, Washington Post, Associated Press, MarketWatch, KFWB-AM, Los Angeles Times.