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.

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.

 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)

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

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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.

Last week, rates for 30-year fixed-rate loans dropped to 4.57 percent, the lowest level on records dating back to 1971, Freddie Mac said.

And for some who missed out on the government’s home buying tax credit, the rates may more than make up for that lost $8,000.

“A tax credit is immediate gratification,” said Leonard Baron, a professor of finance at San Diego State University, “but long-term, with rates this low, you can get much more value.”

But which loan is right for you? The mortgage game has changed since the housing bust and more rules have been and are being added. One factor is for sure now: Your credit score should be at least 620 or you’ll have a hard time finding a loan. What varies is how much you have for a down payment.

Buyer No. 1: You have a 20-percent down payment and expect to retire in the house.

— Take out a 30-year fixed-rate loan, the most popular type of mortgage. The interest rate stays the same over the life of the loan and right now, that rate is at historical lows. “This loan is for someone interested in stability and security,” said John Stearns, mortgage banker at American Fidelity Mortgage Services Inc. in Mequon, WC.

Buyer No. 2: You have a 20-percent down payment, but plan to move into another home down the road.

— Consider a five-, seven- or 10-year adjustable-rate loan, which has a fixed rate for a set period and then adjusts higher after that time. These loans carry a lower initial interest rate than the 30-year fixed-rate, so you save money over the fixed-rate period. After the fixed-rate period ends, borrowers typically refinance into another loan to avoid the adjustable rate.

Rates on five-year adjustable-rate mortgages averaged 3.75 percent this week. That was the lowest on Freddie Mac’s records, which date back to January 2005.

ARMs got a bad rap during the housing bust because most people who took out two- or three-year ARMs got caught with an unaffordable payment when their rates reset. They couldn’t refinance into a fixed-rate loan because home prices had tanked and credit tightened up.

That risk still exists, but starting in September, lenders will have to evaluate whether borrowers can make payments after the rate reset on adjustable-rate loans backed by Fannie Mae.

Buyer No. 3: You have at least a 20-percent down payment for a house worth more than $729,500.

— You need a so-called jumbo loan which is not backed by Fannie Mae and Freddie Mac. That means any lender who makes a mortgage above that amount will have to keep the loan on its books.

To compensate for that risk, lenders charge higher interest rates than a conventional mortgage. The average rate for a 30-year fixed-rate jumbo loan fell to 5.48 percent this week, the lowest level ever in Bankrate.com’s survey.

 Buyer No. 4: You have more than a 20-percent down payment.

— Depending on how much you’re putting down, you might consider a 20-year fixed-rate mortgage. Rates are sometimes, but not always, lower than a 30-year fixed-rate by about a quarter-point. However, because the loan term is shorter on the 20-year loan, the monthly payment will be higher than a 30-year mortgage.

For example, the monthly payment for a 20-year fixed-rate loan for $300,000 is $1,898. It’s only $1,565 a month if the loan is 30 years. But over the life of the loan, you’ll save about $108,000 in interest.

“Most people are interested in a lower monthly payment,” Stearns said.

Buyer No. 5: You have less than a 20-percent down payment.

— Consider a mortgage insured by the Federal Housing Administration, or FHA. A borrower needs to put down only 3.5 percent of the purchase price.

After the housing market slumped, the FHA became the major source of funding for first-time homebuyers. It insured about 24 percent of new loans in the first quarter, according to Inside Mortgage Finance, a trade publication.

Or, consider a mortgage loan that isn’t backed by the FHA, which only requires 5 percent down. However, you will pay mortgage insurance each month, which can add an extra $25 to $50 to your monthly payment depending on your credit score. Private mortgage insurance protects a lender against losses when a borrower defaults. If you have very good credit, this option may be cheaper.

Buyer No. 6: You have a gift down payment.

— While one in five first-time homebuyers used a gift from a relative or friend for a down payment last year, there are some rules to navigate.

Gift money can be used for a down payment on a conventional loan only after the borrowers use their own money to make the 5-percent minimum. Gift money can pay for closing costs or prepaid expenses like property taxes and insurance that are put into an escrow account. Banks typically check two months’ worth of bank statements for unusually odd deposits that could be considered gifts. However, if the gift was deposited six months before, a bank might not notice.

However, FHA mortgages allow borrowers to use a gift to make the 3.5-percent minimum down payment. The gift must be documented in writing and the lender may ask for proof of deposit.

Buyer No. 7: You don’t have a down payment.

— Your options are limited. 

If you are a veteran or the surviving spouse of one, consider a mortgage backed by the Department of Veteran Affairs. These loans offer 100 percent financing without private mortgage insurance at competitive mortgage rates.

If the home you’re buying is in a rural area as defined by the U.S. Department of Agriculture, you may qualify for a USDA home loan, which offers 100 percent financing without adding on private mortgage insurance. The USDA aims to help lower-income households get home loans at reasonable rates.

The declines come as the Treasurys market has seen continued strength, pushing yields down. Mortgage rates, all of which have at least touched multi-year lows recently, generally track yields.

The 30-year fixed-rate mortgage averaged 4.57% for the week ended Thursday, down slightly from the prior week’s 4.58% average and 5.2% a year ago. It is at the lowest point in Freddie’s 39-year survey.

Rates on 15-year fixed-rate mortgages were 4.07%, up from 4.04% a week earlier—the lowest since Freddie began tracking in 1991—but down from 4.69% a year earlier.

Five-year Treasury-indexed hybrid adjustable-rate mortgages averaged 3.75%—the lowest level since Freddie started keeping score in 2005—down from 3.79% and 4.82%, respectively. One-year Treasury-indexed ARMs were 3.75%, yet another fresh six-year low, dropping from 3.8% and 4.82%.

To obtain the rates, the mortgages required payment of an average 0.7 point. One point is 1% of the mortgage amount, charged as prepaid interest.

From Nathan Becker WSJ

Keys to FHA loans

FHA Pros, LLC, a national FHA condo approval service, has developed a list of facts speaking to the top misconceptions associated with FHA loans in order to help home buyers better navigate an already confusing market. FHA loans are mortgages issued by qualified lenders and insured by the Federal Housing Administration (FHA).

President Obama is expected to sign the bill, which was overwhelmingly approved by the House on Tuesday. The deadline had been June 30.

Click to read full article.  Homebuyer credit extension heads to Obama.