Skip to content

Blog by the bay

Home loveMarin County, people, places, culture and real-estate

Fannie Mae Tightens Guidelines On ARMs And Interest Only Products

Posted on May 4, 2010 by Ginger Wilcox

Fannie Mae tightens its mortgage guidelinesFor the first time this year, Fannie Mae announced significant updates to its mortgage underwriting guidelines.

The changes include newer, harsher ARM qualification standards, the elimination of a once-popular loan product, and tighter rules for interest only mortgages.

Fannie Mae made its official announcement April 30, 2010.  The changes will roll out to home buyers and homeowners in Tiburon and everywhere else over the next 12 weeks.

The first guideline change is tied to ARMs of 5 years or less.

Mortgage applicants must now qualify based on a mortgage rate 2% higher than their note rate.  For example, if your mortgage rate is 5 percent, for qualification purposes, your rate would be 7 percent.

The elevated qualification payment will disqualify borrowers whose debt-to-income levels are borderline.

The second change is Fannie Mae’s elimination of the standard 7-year balloon mortgage.  Balloon mortgages were popular early last decade.  Lately, few borrowers have chosen them, though.  Mostly because rates have been relative high as compared to a comparable 7-year ARM.

And, lastly, Fannie Mae is changing its interest only mortgages guidelines.

Effective June 19, 2010, Fannie Mae interest only mortgages must meet the following criteria:

  1. The home must be a 1-unit property
  2. The home must be a primary residence, or vacation home
  3. The borrower’s FICO must be 720 or higher
  4. The mortgage must be a purchase, or rate-and-term refinance. No “cash out” allowed.

Furthermore, borrowers using interest only mortgages must show two full years of mortgage payments “in the bank” at the time of closing.

Earlier this year, Fannie Mae-sister Freddie Mac announced that as of September 2010, it will stop offering interest only loans altogether.

Between Fannie Mae, Freddie Mac, the FHA, and other government-supported entities, the U.S. government now backs 96.5% of the U.S. mortgage market.  So long as mortgage default rates are high, expect approvals for all borrower types to continue to toughen.

California Housing Update from Economist Leslie Appleton Young

Posted on May 3, 2010 by Ginger Wilcox

The California Association of REALTORS® released the California March housing update from CAR Chief Economist Leslie Appleton Young today. As to be expected, Young says there is a lot of differentiation by region.

Video highlights:

  • The number of California home sales is up slightly over February but down slightly from a year ago at 516,690 units.
  • March media home price is $301,790, up on a year over year basis by 20.8%.  This is the largest year over year gain since 2004.
  • There is a 5 months supply of home inventory statewide.  There is a  10.9 months supply in the one million plus home price range and a 3.2 months supply for homes $300,000 & below.

Ross Valley Garden Tour-Beyond the Garden Gate

Posted on April 30, 2010 by Ginger Wilcox

It is not often you get to peek into some of the nation’s most beautiful (and expensive!) gardens.  The residents of the Town of Ross will open its arms and gardens next weekend to benefit the Ross School.

Highlights of the tour include:

  • a remarkable and resplendent rose garden with over 400 rose bushes
  • a European inspired villa with an unparalleled bird’s eye view of the heart of Ross
  • a timeless garden that harkens back to an era of elegant garden parties
  • a romantic Victorian estate that is steeped in tradition yet updated with chic and sublime garden design.

Get a sneak preview here

This is one of my favorite local tours.  It is fun to be a voyeur for the day and look into the backyards of stunning Ross residences.  The gardens are always splendid and the weather is usually typical Marin bliss.  Make it a day and enjoy an alfresco lunch (available from 11am-2:30 pm, order ahead to guarantee availability and afternoon tea from 3-5pm.

An all new Marketplace will be featured this year with vendors and educators coming together to create a delightful outdoor destination. The Marketplace is open from 9am-5pm.

~Ginger

Art Houses of Marin to Aide Homeless

Posted on April 29, 2010 by Ginger Wilcox

By now you probably have seen these doll house sized homes scattered in public spots around Marin.  The homes were created as part of Ritter Center’s Art Houses of Marin project designed to channel the dedication of local arts and culture into an awareness of homelessness in Marin County.  The scale model homes were designed and decorated by local artists.  They have been displayed around Marin for the last two months and will be auctioned off on Saturday.

There are approximately 1770 homeless people living in Marin on any given day according to a 2009 Marin County Point-in-time count of homeless persons.  The homeless problem in Marin has increased because of the economic down turn in the last year.

The Art Houses will be auctioned off on Saturday night at the 2010 Art Houses of Marin Gala Auction taking place at Villa di Santa, the private hilltop residence of the Woodland Market owners.

  • What: 2010 Art Houses of Marin Gala Auction
  • When: Saturday, May 1, 2010
  • Where: Villa di Santa, Kent Woodlands
  • Purchase Tickets
  • More Info

Proceeds from the project will go to Ritter Center, a non-profit organization that has been providing free assistance to Marin’s low income and homeless population for 28 years.  How they plan to use the money:

  1. Expand basic services and support of food, clothing, financial assistance for housing and employment, including important case management.
  2. Increase current Health Clinic hours and capacity to provide better care and assistance for the under-served, under-insured or uninsured.
  3. Begin the process of finding the “Future Home” for Ritter Center when the lease ends in the next 5 years.
  4. Actively address fiscally responsible solutions and humanitarian outcomes by collaborating with community leaders and partners to end homelessness.

If you would like to donate directly to the project, click here.

~Ginger

Image courtesy of Andy Kaufman

Federal Reserve Statement Explained (April 28, 2010)

Posted on April 27, 2010 by Ginger Wilcox

Putting the FOMC statement in plain EnglishToday, the Federal Open Market Committee voted 9-to-1 to leave the Fed Funds Rate unchanged within in its current target range of 0.000-0.250 percent.

In its press release, the FOMC noted that, since March, the U.S. economy “has continued to strengthen” and that the jobs markets “is beginning to improve”.  This is a step up from the last meeting after which the Fed said jobs were “stabilizing”.

It also reiterated that business spending “has risen significantly”.

Today’s statement marks the 7th straight press release in which the Federal Reserve shows optimism for the U.S. economy. Furthermore, the Fed has now closed all but one of the programs it created to support markets during last year’s financial crisis.

Threats remain to growth, however. The Fed fingered a few:

  1. Employers are reluctant to hire new workers
  2. High unemployment threatens consumer spending
  3. Consumer credit (still) remains tight

Also in its statement, the Federal Reserve re-acknowledged its plan to hold the Fed Funds Rate near zero percent “for an extended period”.  This was expected.

Overall, the statement’s tone was positive and the Fed noted that inflation is within tolerance.

Mortgage market reaction has been muted thus far. Mortgage rates in Mill Valley are unchanged post-FOMC.

The FOMC’s next scheduled meeting is a 2-day affair, June 22-23, 2010.  The 55-day span between meetings will be the FOMC’s longest of 2010.

New Homes Sales Strong in March, But Not As Strong As News Would Have You Believe

Posted on by Ginger Wilcox

New Home Sales Mar 2009-Mar 2010The sales of newly-built homes soared in March. Even more than what was expected. But the news may not be as glowing as what the media is telling us.

Take a look at the headlines from last Friday:

  • Sales of new homes rocketed up 27 percent in March (WaPo)
  • New-home sales rise fastest in 47 years (CNNMoney)
  • Sales of New Homes Climb by Most Since 1963 (Business Week)

None of these statements is false, per se, but each is somewhat misleading.  The biggest reason why March’s New Home Sales was even able to rise 27 percent is because data from the month before it — February — was the worst in New Home Sales history.

In February, new homes sold posted its lowest level in recorded history.

A better comparison would be against March a year earlier; or October 2009, the month before the home buyer tax credit’s initial expiration date.

Against both of those time periods, March 2010 fared well.

Home buyers – first-timers and repeats alike — went under contract last month, taking advantage of the soon-to-expire federal home buyer tax credit program.  The credit gives up to $8,000 for first-time buyers and up to $6,500 for repeat ones.

Buyers must be in mutual contract on or before April 30, 2010 to be eligible for the credit, and must closed on or before June 30, 2010.

The New Home Sales data included other strong housing data, too. The current supply of new homes nationwide is at a multi-year low.  Along with stronger home demand, this should push home prices nationwide higher throughout the coming months.

New home sales don’t have a big impact on the local Marin real estate market but headlines and news do impact over all consumer confidence in the housing market.

Forgiven Debt Not Taxable in California

Posted on April 26, 2010 by Ginger Wilcox

California homeowners who have had debt forgiven via a short sale, foreclosure or loan modification won’t have to pay taxes on the forgiven debt.  SB 401 recently signed by Governor Schwarzenegger provides a state tax exemption to homeowners on debt forgiven in a short sale, foreclosure, or loan modification.  Federal laws already protect homeowners from owing federal taxes on forgiven debt.

The tax relief applies to forgiven debts in the tax years 2009-2012.  It applies to owner-occupants with a qualified principal resident.  The relief includes both first and second mortgages and includes refinance loans to the extent the funds were used to payoff a previous loan that would have qualified under these guidelines.  Second home owners or rental property owners do not qualify in most circumstances.

The California Tax Franchise Board expects the tax relief will impact nearly 100,000 California residents.

To find out if you qualify, contact your tax adviser.

Larkspur Library Foundation Wine Tasting & Auction

Posted on April 25, 2010 by Ginger Wilcox

Planning ahead for next weekend?  The Larkspur Library Foundation is hosting a Wine Tasting & Auction to benefit the Larkspur Library on Saturday, May 1st.  The event will feature tastings of fine wines and appetizers by Stacy Scott.  I have used Stacy Scott for my own events and she always does a stellar job. Some of the featured auction wines include including a magnum of 1976 Lafite Rochschild, Caymus Reserves, Duckhorn, Diamond Creek, Forman, and more. Sounds like a fun event to support a great local library!

  • What: Wine Tasting & Auction Benefiting the Larkspur Library Foundation
  • When: Saturday, May 5:30 to 8:30 pm
  • Where: American Legion Post 313, 12 Ward Street, in Larkspur
  • Admission: $50.  Tickets can be purchased in advance by mailing a check (yes, I said a check!) to The Larkspur Library Foundation, P O Box 5263, Larkspur CA 94977-5263
  • More Information: Larkspur Library Foundation

~Ginger

California’s First-Time Home Buyer Tax Credit May Not Last Long

Posted on April 24, 2010 by George Crowe

You’ve probably been hearing a lot about the tax credits Governor Schwarzenegger signed into law recently, but if you want to get in on the action you might have to move quickly.  According to C.A.R.’s Economics team, if sales forecasts are accurate the $100 Million the state has allocated for first-time buyers may be depleted within the first few weeks of the program. And that’s not taking into account the potential that some buyers scheduled to close escrow in April could attempt to delay closing until May to take advantage of the credit, using up the funds even more quickly.

The law says that buyers getting into contract by the end of the year are eligible, but since the program is first-come, first-served, it looks as though the money will dry up well before the deadline and a lot of people could be out of luck.

If you need more info, C.A.R. has prepared a handy chart summarizing both the state and federal tax credits, and the Franchise Tax Board will be updating their website with application info as it becomes available.

~George