Foreclosure rates rise in both Yuba-Sutter County

The number of notices of default, which is the first step in the foreclosures process, has fallen in both Yuba and Sutter County from a year ago.  However, the number of defaults recorded from the previous quarter of 2010 is up 38% and 15% for Yuba and Sutter County, respectively.

Homes lost to foreclosure in Yuba and Sutter County was down 3.6% in Yuba County, but up 7.2% in Sutter from a year ago.    Homes lost to foreclosure rose in both counties from the previous 2010 quarter.

Notices of Default (first step in foreclosure process)
County	2009 Q3	2010 Q3	Yr/Yr %	2010 Q2	Qr/Qr %
Yuba	312	282	-9.6%	173	38%
Sutter	403	282	-30.0%	239	15%
Trustees Deeds Recorded ( homes lost to foreclosure)
Yuba	196	189	-3.6%	181	4.2%
Sutter	152	163	7.2%	154	5.5%
Statewide	111,689	83,261	-25.4%	70,051	19%

What does this mean?  Here is my breakdown of the data.

First, the number of distressed homeowners in Yuba and Sutter County continues to rise.  It also appears that the rate at which banks are foreclosing is increasing.  Those homes that do go all the way to foreclosure are probably homeowners that were not able to work out a loan modification or short sale.   

We could see the number of foreclosed homes on the market rise over the next few quarters bringing home prices down further.  However, the faster we can work through the inventory of distressed homes the sooner we can return to some normalcy in the housing market and possibly return to the days of rising homes values.  

Source: DataQuick Infomation Systems.

10 Reasons to Buy a Home

Why is now a great time to buy?

 Here are 10 reasons:

1. You can get a good deal. Prices are down 30 percent on average. They’re at a level that makes sense for people’s income.

2. Mortgages are cheap. At 4.3 percent on average for a 30-year fixed-rate mortgage, your costs to own are down by a fifth from two years ago.

3. You can save on taxes. When you add up the deductions for mortgage interest and others, the cost of owning can drop below renting for a comparable place.

4. It’ll be yours. The one benefit to owning that never changes is that you can paint your walls orange if you want (generally speaking; there might be some community restrictions). How many landlords will let you do that?

5. You can get a better home. In some markets, it’s simply the case that the nicest places are for-sale homes and condos.

6. It offers some inflation protection. Historically, appreciation over time outpaces inflation.

7. It’s risk capital. If the economy picks up, you stand to benefit from that, even if you’re goal is just to have a nice place to live.

8. It’s forced savings. A part of your payment each month goes to equity.

9. There is a lot to choose from. There are some 4 million homes available today, about a year’s supply. Now’s the time to find something you like and get it.

10. Sooner or later the market will clear. The U.S. is expected to grow by another 100 million people in 40 years. They have to live somewhere. Demand will eventually outpace supply.

Source: Wall Street Journal, Brett Arends (9/16/10)

The Good News About Rising Mortgage Rates

Rising mortgage rates may seem like the last thing the economy needs right now. Then again, they may prove a tonic.

One indication of whether that may be the case will be the coming weekly tallies of mortgage-application activity from the Mortgage Bankers Association. While Wednesday’s release might not yet reflect the sudden, recent turn in bond yields, the data could soon show if the prospect of higher mortgage rates spurs consumers to buy homes.

So far, home buyers haven’t been that tempted by an average 30-year, fixed mortgage rate that hit 4.32% as of Thursday, according to Freddie Mac. Most of the action has been among existing homeowners looking to refinance their mortgages.

One reason buyers have possibly remained hesitant is that there is little reason to act if rates may fall even further, a classic deflationary mind-set.

That psychology may change. Bond yields have perked up after some mildly encouraging U.S. economic reports, notably Friday’s report that private-sector hiring continued its eighth consecutive month of gains in August. In response, prices for the benchmark 10-year Treasury note fell for a second straight week as investors regained a stomach for riskier assets. That sent the note’s yield, which moves inversely to its price, to about 2.7% on Friday from about 2.45% just days before.

That is a big move by Treasury-market standards. And its impact will be felt almost immediately in mortgage rates, which tend to move in lock-step. Mortgage rates have tumbled in recent months as fears of a “double-dip” recession have pushed Treasury yields down sharply.

An increase in mortgage rates now may worry Federal Reserve policy makers, who are trying to push rates lower in an effort to stimulate economic and housing activity. Some Fed watchers, including IHS Global Insight economist Brian Bethune, expect Fed policy makers will unveil more policy-easing measures at their next meeting on Sept. 21, since their target lending rate is already near zero. “They can’t afford to take the risk that home prices start to fall again,” says Mr. Bethune.

But the Fed is unlikely to be so hasty. And if the possibility of higher rates starts pushing more people to buy homes, that risk may be something the Fed can live with.

From Wall Street Journal

Plumbing Questions and Answers

California 2010 Tax Credit for New Home / First-Time Buyer Still Available!

IMPORTANT UPDATE!  http://www.ftb.ca.gov/individuals/new_home_credit.shtml

The government has received First-Time Buyer applications totaling more than $100 million and will be accepting at  least 28,000 applications since many we have received are duplicate, revised, or invalid applications. Since that time, we are noticing more and more duplicate and invalid applications in our sampling. Because our computer system is expected to be released by the end of next week, we will soon be able to better estimate the number of possible duplicates. So that we do not risk cutting off the program too soon, we will wait for the computer system to be released before we determine when to stop accepting First-Time Buyer applications. We will continue to update the estimated total number of First-Time Buyer applications each business day. We will announce the cut-off date on this webpage at least one full day before we stop accepting First-Time Buyer applications. The additional applications will be subject to the availability of remaining credits. We will only issue approved certificates of allocation until the $100 million is exhausted. (Updated 07/13/10)

We have not processed any applications yet as our computer system is still being developed. Once our computer system is completed, we will provide weekly updates on the number of certificates that have been mailed and the amount of credits that have been allocated. (Updated 06/17/10)

Fax delays

Due to the high volume of faxes we are receiving, you may experience some delays or difficulties in connecting to our fax number during normal business hours. It can take several minutes or possibly up to an hour to connect and transmit the fax. If you receive a busy signal, try again later. Check your fax confirmation to make sure all pages were transmitted successfully and keep a copy of the fax confirmation. Our fax number is open 24 hours a day so you may fax your application to us during non-business hours when the line is not so busy.

Applying for the 2010 New Home/First-Time Buyer tax credits: Applications must be faxed after escrow closes. We will deny the application if the 2009 form is used, we receive the 2010 application before May 1, 2010, or we receive the application before escrow closes. (Updated 04/28/10).

General Information: These tax credits are available for taxpayers who purchase a qualified principal residence on or after May 1, 2010, and before January 1, 2011. Additionally, these tax credits are available for taxpayers who purchase a qualified principal residence on or after December 31, 2010, and before August 1, 2011, pursuant to an enforceable contract executed on or before December 31, 2010. The purchase date is defined as the date escrow closes. Taxpayers may apply for the tax credits if they have entered into a contract before May 1, 2010, as long as escrow closes on or after May 1, 2010. However, taxpayers may not request a New Home Credit reservation if they have entered into the contract before May 1, 2010. (Updated 04/28/10)

These tax credits are limited to the lesser of 5 percent of the purchase price or $10,000 for a qualified principal residence. Taxpayers must apply the total tax credit in equal amounts over 3 successive tax years (maximum of $3,333 per year) beginning with the tax year in which the home is purchased. The tax credits cannot reduce regular tax below tentative minimum tax (TMT). The tax credits are 0 and unused credits cannot be carried over.

The total amount of allocated tax credit for all taxpayers may not exceed $100 million for the New Home Credit and $100 million for the First-Time Buyer Credit. However, since many taxpayers will not be able to utilize the entire tax credit, the legislation specifies that the $100 million cap for the New Home Credit will be reduced by 70 percent of the tax credit allocated to each buyer and the $100 million cap for the First-Time Buyer Credit will be reduced by 57 percent of the tax credit allocated to each buyer. For example, if a taxpayer is allocated $10,000 for the New Home Credit, the $100 million cap for the New Home Credit will only be reduced by $7,000. If a taxpayer is allocated $10,000 for the First-Time Buyer Credit, the $100 million cap for the First-Time Buyer Credit will only be reduced by $5,700. The 70 and 57 percent reductions do not impact the amount that can be claimed by the taxpayer.

We will allocate the tax credits on a first-come, first-served basis. We expect it to take 3-6 months to notify taxpayers after an application or reservation is received. We need to develop a computer system to capture, verify, reserve or allocate, issue letters, and track the credits. Please be patient and do not fax an application more than once. Since the First-Time Buyer Credit is expected to be used up very quickly, we will provide estimates, based on sampling, of the number of First-Time Buyer applications and the related credit amounts that we have received beginning May 6, 2010. This will allow First-Time Buyers to estimate whether they will be able to apply for the credit and allow us to determine when we have received enough applications to fully allocate the $100 million and stop accepting First-Time Buyer applications. Since the New Home Credit is not expected to be used up as quickly, we will wait until approximately mid-July after our computer system is available to post information about the New Home Credit usage. (Updated 04/28/10)

Only one tax credit is allowed per taxpayer. If a taxpayer qualifies for both tax credits, the law specifies that we will allocate the amount under the New Home Credit.

Taxpayers will not be eligible for either tax credit if any of the following apply:

• The taxpayer was allowed a 2009 New Home Credit.
• The taxpayer is under 18 years old. (A taxpayer who is married as of the date of purchase will be considered to be 18 if the spouse/registered domestic partner (RDP) of the taxpayer is 18 or older on the date of purchase.)
• The taxpayer or the taxpayer’s spouse/RDP is related to the seller.
• The taxpayer qualifies as a dependent of any other taxpayer for the tax year of the purchase.

New Home Credit: A qualified principal residence, for purposes of the New Home Credit, must:

• Be a single family residence, either detached or attached. This can be a single family residence, a condominium, a unit in a cooperative project, a house boat, a manufactured home, or a mobile home. A home constructed by the taxpayer is not eligible since the home has not been “purchased.”
• Have never been occupied. Sellers must certify that the home has never been occupied in order for a taxpayer to receive an allocation of the credit.
• Be eligible for the California property tax homeowner’s exemption.
• Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.

Tax credit allocation:

• A Certificate of Allocation will not be issued if:
  • The seller does not certify the home has never been occupied.
  • We do not receive the application and a copy of the properly executed settlement statement within 2 weeks (14 calendar days) after the close of escrow, regardless of whether a reservation request was submitted.
  • We receive the application or reservation request after the total tax credits available have been allocated.
• FTB’s determination may not be protested or appealed.

Reserving a New Home Credit Before Escrow Closes: Taxpayers who qualify for the New Home Credit may, but are not required to, request a reservation prior to the close of escrow. Reservations will become important as we near the $100 million cap for homes that may not close escrow before the cap is reached, as a reservation will “hold the taxpayer’s place in line” until 2 weeks after escrow closes. Taxpayers may only request a reservation if they have entered into an enforceable contract on or after May 1, 2010, and on or before December 31, 2010. Taxpayers may not reserve a credit if the contract was entered into before May 1, 2010. Taxpayers who only qualify for the First-Time Buyer Credit may not request a reservation.

Requesting or receiving a reservation does not guarantee the credit. An application must still be completed and faxed to FTB along with the final settlement statement within two weeks after the close of escrow. If a buyer requests a reservation and the purchase is cancelled, the buyer must notify FTB. (Updated 04/28/10)

First-Time Buyer Credit: A qualified principal residence, for purposes of the First-Time Buyer Credit, must:

• Be a single family residence, either detached or attached. This can be a single family residence, a condominium, a unit in a cooperative project, a house boat, a manufactured home, or a mobile home. A home constructed by the taxpayer is not eligible since the home has not been “purchased.”
• Be eligible for the California property tax homeowner’s exemption.
• Be occupied by the taxpayer as their principal residence for a minimum of 2 years immediately following the purchase.

A first-time buyer is any individual (and the individual’s spouse/RDP, if married on the date of purchase) who did not have an ownership interest in a principal residence, either in or out of California, during the preceding 3 year period ending on the date of the purchase of the qualified principal residence. If the buyer is married on the date of purchase and either the buyer or the buyer’s spouse/RDP had an ownership interest in a principal residence during the preceding 3 year period, the buyer does not qualify for the First-Time Buyer Credit even if the spouse/RDP is not going to be on title.

Tax credit allocation:

• A Certificate of Allocation will not be issued if:
  • We do not receive the application and a copy of the properly executed settlement statement within 2 weeks (14 calendar days) after the close of escrow.
  • We receive the application after the total tax credits available have been allocated.
• FTB’s determination may not be protested or appealed.

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