Two weeks after writing Loan Modification is Big Business Govenor Arnold Schwarzenegger signed Senate Bill 94 into law.

It is now illegal for loan modification servicers to charge fees in advance.  The legislation took effect immediately.  California law now prohibits any person, including real estate licensees and attorneys, from demanding or collecting an advance fee from a consumer for loan modification.

Fees collected prior to October 11, 2009 are not affected. Advance fees collected after October 11, 2009 must be fully refunded.

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Vicki Moore, Realtor
Alain Pinel Realtors, specializing in San Mateo, CA Real Estate.
Need real estate help?
Contact me at 650.888.9268 or Vicki[@]CallVicki.com.
Pictures of San Mateo County

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282 Amesport Landing, Half Moon Bay

High-Cost Areas

The long awaited new conforming loan limits for San Mateo County and other high-cost areas are now available to home buyers, Wells Fargo announced this week, with other banks to follow in the coming days.

Jumbo vs Conforming

There are two types of loans:  conforming and jumbo.   The difference is cost.  Remember, the higher the risk, the higher the cost in interest rates to you.  The interest rates on jumbo loans is higher – more risk.

With the new conforming loan limit of $729,750, more buyers will be able to afford a higher loan amount, making homes more affordable.

For A Limited Time

This new program has restrictions and it’s only available until the 1st of December of this year.  So be sure to talk with your mortgage broker to find out if you qualify.

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Interest rates depend on a lot of factors.  It’s not like shopping for a vacuum cleaner.  Basically the bigger the risk for the bank, the higher your interest rate.  In other words:  got a high credit score?  That means big risk for the bank and a high rate for you.

I’ve been hearing for a while now that buyers are waiting for the bottom of the real estate market before they buy.  IMO – not smart.  I watch the market every day.  I couldn’t tell you when we’ll hit bottom – we might have already, which is my opinion as of today.  But I’ve thought that before.

So you wait until you think it’s the bottom of the market before you buy.  That only takes into consideration the price of the house.  What about interest rates?

I don’t know if you’re listening to the rumbling out there but the next thing to hit this country is going to be inflation.  What does that mean to home buyers?  Higher interest rates =  More expensive houses.

Think of this way:  You’re not buying a house; you’re buying a loan.

For the sake of this conversations, I’m going to use a median.  Uh-oh.

The current median home price in San Mateo County is $580,000.  Make it easy on me – forget the down payment for these examples.

See what I mean?  The difference between 5.83 and 5.84% is a cup of Starbucks.  But the difference between 8.05 of 2000 and the 6.97 rate of 2001 might be a car payment.

Got a San Mateo County real estate question?   Ask it here!  If you’re wondering, somebody else probably is too.

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San Mateo County is a high-cost area?  Surprised?  Me either.  Fannie Mae gets it too.

High-cost is a technical term <smirk> that’s been calculated based on the median price of homes in a given Metropolitan Statistical Area (MSA).

Last year a temporary high-limit loan called the jumbo-conforming was implemented.  We were hoping that the product would become permanent and off to lobby Realtors went.  It was not to be – it expired.

Then The Housing and Economic Recovery Act of 2008 brought the high-loan limit back to life.  We’ve been waiting for months for it to actually become available to buyers.  We thought March was the magic month but…

We had to wait for Fannie to give the green light – which they just did.  Now word is that Wells Fargo is “retooling” their computers to roll it out.  No date has been given but we’re closer.

There are restrictions so be sure to talk with your mortgage broker to see if you qualify.

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Recently I’ve been hearing that many people are waiting to buy homes or refinance until the market stabilizes and interest rates drop further. Below are a few reasons why we don’t expect rates to get much lower.

Last week the Federal Reserve announced that it would invest 300 billion in long-term Treasuries and purchase an additional 750 billion of Mortgage Backed Securities (MBS). This infusion of additional funds is aimed at stimulating economic growth, stabilizing the housing market and keeping interest rates low. It also has the potential to eventually create more inflation.

Here’s how it works:

The Federal Reserve is buying Treasury Notes with maturities between 2 year and 10 years while also purchasing MBS. Both are efforts to keep interest rates low to stimulate our weak economy. In particular, the Fed wants to keep mortgage rates low in order to support nationwide demand for housing and provide an opportunity for existing homeowners to refinance, lower their monthly payments, and increase their spendable cash flow. Lower interest rate yields on Treasuries and MBS reduce borrowing costs for consumers and businesses.

What about mortgage rates?

Rates have come back down to where they were earlier in the year, but we don’t anticipate rates going much lower. Rates wouldn’t be as low as they already are without the huge amount of Federal money that is supporting the market.

Other considerations:

Through the bail outs, stimulus packages and this recent announcement, the government continues to amass more debt. And, with that debt is the potential of inflation. In fact, this announcement saw Oil rise by $5 and Gold by $60 (Gold is often purchased as a hedge against inflation). If and when inflation becomes a factor it will quickly force interest rates higher. When the economy begins to stop its decline and move closer to coming out of this recession, the Fed will move to raise interest rates to try and moderate the inflationary push.

The best hedge for inflation is to fix as many costs at today’s prices as you can. A home purchase today with record low mortgage rate allows buyers to fix the price of the home and the associated financing costs.

Please contact me with any questions you may have.

Janice Reisman Fincher
OPES Advisors
400 So El Camino Real, Suite 200
San Mateo CA 94402

(650) 931-0608

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I’ve got some exciting news to share… The Federal Reserve announced yesterday that it will pump $1 trillion into the U.S. economy to try to pull it out of deep recession, in part by buying long-term government debt for the first time in more than 40 years.

This is POSITIVE NEWS for it will help reduce interest rates.  Currently, the traditional Agency conforming 30-year fixed (< or = $417K) is available for 4.50% and the Agency high balance conforming is at 4.75%.

It is time to step-up to the plate and refinance or purchase!  Let me know if I can help.

My best,
Pete

Peter James Guichard, MBA
The Guichard Report
Bridgeline Capital Group
330 Townsend Street, Suite 114
San Francisco, CA 94109
Office: (415) 512-7536

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The Federal Reserve cut the federal funds rate by 50-basis points today, joining in on a new round of rate cuts made – or to be made – by central banks around the world.

Joining the display of “we’re all in this together,” both Norway and China – the last source of economic strength in the global economy – cut rates.  The Bank of Japan will likely make a rate cut at its meeting this Friday.  The European Central Bank along with the Bank of England will take similar action at their respective meetings on November 6th.

The Fed justified the cut by saying that the pace of the U.S. economic activity had slowed markedly and it expected inflation to moderate due to lower energy and commodity prices.

But cutting the federal funds rates – the interest rate that banks charge to each other for overnight loans made to fulfill reserve funding requirements – the Fed hopes to stimulate economic activity and build investor and consumer confidence.  As a result, the prime rate has dropped to 4.0% from 4.5% – good news for homeowners with equity lines of credit, second loans and credit card holders whose rates are tied to the prime rate.

Peter Guichard is a senior associate at Bridgeline Capital and a new contributor to San Mateo Real Estate Blog.  He secures financing for residential and commercial real estate transactions.  Peter has a MBA in Finance from the Wharton Business School at the University of Pennsylvania and BS in Chemical Engineering from U.C. Berkeley.

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