Good News: Stated Income Loans to Return in 2010

There's good news in the lending arena. House and Senate Leaders have introduced an amendment to the newly passed 
Financial Reform Legislation to bring back stated income loans for residential lending with the following conditions:

1) The loans will only be used for foreclosed properties
2) They will first be offered to liquidate Fannie Mae and Freddie Mac inventory 

3) They will be available with 30% down payment

4) The borrower must have a minimum credit score of 740

5) The property must be an owner occupied residence 

6) The borrower must be self-employed and in their field for five years 

7) Personal bank statements for the most recent 6 months will be used to cash flow income

So it seems the data shows that when it comes to stated income loans, the baby was thrown out with the bathwater in 2008. Many of the stated income loans were terribly designed loan programs during the Sub-Prime heyday but didn't start that way. After looking at the historical data they found that when the down payments were kept high as in the early years of these stated income programs, along with higher credit scores, stated income loans were very well performing loans.

In the early 2000's these well performing stated income programs were undermined when many Sub-prime lenders entered the market. These Sub-Prime mortgage companies lowered the down payment requirements to zero and lowered the credit score requirement into the mid to high 500's. At this point, many mortgage analysts knew it was only a matter of time before the market would implode due to its own greed.

Once the implosion occurred, the bank regulators, Congress and various state entities rushed in with draconian efforts to do away with all stated income programs -- good or bad. And with a series of unwise measures, 35% of the home buyers in the nation -- self-employed borrowers, were pushed or locked out of the housing market at a time when the market needed them most.

So there you have it, another indication that the real estate market is slowly shifting back to “normal."

This week's Best Picks by Patty:

26225 ATHERTON PL, Carmel 93923 (Carmel)
$1,300,000 Beds: 4 beds Baths: 4|0 baths DOM: 7   MLS: 81029734
Large Lot, almost one acre, distant pt lobos views, located on great street private and Cul-du-sac, lots of water credits too, 2 wood burning fireplaces, Almost 2700 sq ft of living spaceplus bonus private rental unit, great investment potential in more ways than one. 3010 sf .92 acre

1 DEER STALKER PH, Monterey 93940 (Monterey)
$935,000 Beds: 5 beds Baths: 3|0 baths DOM: 4   MLS: 81030469
Beautiful home in Deer Flats Park, a solarium, full attic with pull-down stairs as bonus area plus full attic storage over 3-car garage. 2 fireplaces, large wet bar, separate family room, dining room, and breakfast room. Downstairs 5th bedroom or office/den. Hardwood floors in entry, kitchen, breakfast area. 3150sf 9710 lot

21 CUESTA VISTA DR, Monterey 93940 (Monterey)
$950,000 Beds: 3 beds Baths: 1|0 baths DOM: 6   MLS: 81029954
The view is "drop-dead" gorgeous--the whole curvature of the bay & downtown Monterey. The house could use some updating. Very private setting. 1244 sf 11,800 lot

307 DEL ROBLES AV, Monterey 93940 (Monterey)
$550,000 Beds: 3 beds Baths: 2|0 baths DOM: 5   MLS: 81030226
 Newly redone home near Del Monte Beach & NPS. Carmel stone on exterior, updated kitchen with granite counters, distressed hardwood floors throughout. Travertine stone in bathrooms. Low maintenance yard. Conveniently located to beach, rec trails and shopping. 1320 sf 4200 lot short sale

Patty Ross
236-4513

pattyross@kw.com

www.pattyrosscarmel.com
KRXA Radio Show June 25, 2010

The Not-So-Clear Crystal Ball...When will the Maket "Come Back?"

Probably the most asked question I get is, "When will the market “come back”?"

First of all, I’m not sure we want it to come back as it was, as it was so fraught with fraud and problems which led to the crash. And I’ve mentioned many times before that real estate is a local issue and needs to be evaluated based on local stats and considerations. We’re already seeing prices ease back up in Seaside, Salinas Monterey Highway, and Monterey.

But to give you an idea of what the experts are saying. According to the consensus of 92 economists and other housing prognosticators recently surveyed by MacroMarkets LLC, home prices will rise about 12% in the five years ending December 31, 2014. At the end of 2009 the index was down nearly 28% from its peak.

The predictions among the 92 participants swung the full spectrum of economic opinion. Joseph LaVorgan of Deutsche Bank projects home prices rising 37% by the end of 2014 while others including Anthony Sanders of George Mason University and Gary Shilling of A. Gary Shilling & Co., see declines of nearly 18%. That is a 55 point spread!

Forces that will influence the direction of housing prices include these economic considerations:

- The post-tax credit environment

- Working through the nearly 4.5 million distressed residences

- The Fed's budget deficit going forward.
The latter has international implications as the European Union rustles with the credit woes of Greece, Portugal, Ireland and others.
Who would have figured that Greece could affect the value of US homes? But, in this global economic environment you know that the US is being called upon to help bail out governments that haven’t disciplined their own economies. The more the US Treasury is called on, the more taxing it will be on the US economy and its taxpayers. The greater the economic drag, the greater its impact on housing.


My Picks for the Week...

23800 FAIRFIELD PL, Carmel 93923 (Carmel)
$1,325,000 Beds: 4 beds Baths: 2|1 baths DOM: 6   MLS: 81028105 
Views abound in this home above Monterey Bay. Peaks to the south and views of Monterey, Seaside, and across to Santa Cruz on clear days. Spacious master, separate living, family and dining. 3 separate decks all at the end of a quiet cul de sac. 3195 sf 1 acre check out photos on www.pattyrosscarmel.com

489 TOYON DR, Monterey 93940 (Monterey)
$689,000 Beds: 4 beds Baths: 3|0 baths DOM: 3   MLS: 81028892
 Very spacious Toyon Heights home with separate living unit and 3 car garage. Features include new windows, hardwood floors, paver driveway, updated kitchen & baths, bonus workshop and/or office space. Very well maintained. 2275 sf 16,800 lot call for private showing 236-4513

38350 LAUREL SPRINGS RD, Carmel Valley 93924 (Carmel Valley)
$645,000 Beds: 1 beds Baths: 1|0 baths DOM: 12   MLS: 81027147
 The Magic Kingdom - 40 acres of complete privacy, mature oaks & madrones, open meadows. Wonderful mountain views, well-built cabin in like-new condition. Energy self-sufficient property. Gently rolling meadow - ideal for construction of new home, horse barn, and paddocks. Locked security gate, video camera system on property. Located about 50 minutes' drive from Carmel. Live close to nature. 840 sf

1077 AMADOR AV, Seaside/Former Fort Ord/Sand City 93955 (Seaside/Former Fort Ord/Sand City)
$198,888 Beds: 2 beds Baths: 1|0 baths DOM: 4   MLS: 81028692
864 sf 5000 lot short sale

Source: Copyright Patty Ross, KRXA Radio Show 163 June 18, 2010

Celebrate National Homeownership Month -- Get the Information You Need to Become a Well-Informed HomeBuyer

June is National Homeownership Month and consumers need to get informed as they prepare to buy a home. Today, there are a growing number of obstacles for home buyers, including a higher credit score standard and more restrictions on credit. Despite current challenges in the secondary mortgage market, home loans are available to credit-worthy buyers and banks stand ready to help prospective home buyers.
It’s crucial that you have a thorough understanding of the changing market when shopping for a mortgage. Here are seven tips to help you do exactly that:
1. Learn about first-time home buyer programs. Consider taking a first-time home buyers course or visit with your local banker to find out about programs available to you.

2. Get pre-approved. Know the difference between “pre-qualified” and “pre-approved.” Getting pre-qualified is a casual process where the lender tells you how much you should be able to borrow based on how much money you make, how much debt you have and how much you have to put down on a house. Pre-approval occurs only after you actually apply for the loan and the lender gives you in writing the amount you can borrow. A buyer who is pre-approved is more attractive to sellers and their agents than one who is only pre-qualified. Once you find a mortgage that is best for you, get pre-approved before you start making offers on a home.

3. Be honest with the lender and yourself. You don’t want to borrow more than you can afford. Your bank can provide a calculator to determine if you can afford to borrow and if so, how much.

4. Look at the basics of the loan. Don’t get distracted by all the bells and whistles. Choose the type of loan that makes the most sense for you.

5. Know your credit situation. Obtain a copy of your credit report and FICO score or VantageScore at least six months before you apply for a mortgage. This should give you enough time to challenge and remove any errors on your credit report and take care of anything that’s hurting your credit score. To obtain a free copy of your credit report, visit www.annualcreditreport.com.

6. Consider all the costs. A lender will review costs like fees, closing costs, points, homeowner insurance, and taxes. But consumers should also consider repairs and maintenance costs. As a homeowner, you are responsible for those additional costs - there won’t be a landlord to call.

7. Organize your finances before you go to the bank. While each bank may require different documentation, at a minimum you will need:
- Pay stubs.
- Tax returns.
- Financial statements (one that is less than 60 days old).
- Copies of additional monthly payments such as car loans, credit cards, student loans, etc.
- Any additional information (such as proof of additional income) that you think will help your banker to positively evaluate your credit request.

Home ownership is still an integral part of the American Dream...get the information you need to unlock the door to your next home!