Archive for February, 2009
California Issues Foreclosure Moratorium
CA Gov. Arnold Schwarzenegger approved a bill appended to the state’s budget package last week that institutes a 90-day foreclosure moratorium throughout the Golden State. The moratorium applies to first mortgages recorded between January 1, 2003 and January 1, 2008.
State regulators, however, can deem loan servicers and lenders exempt from the new law if they have a mortgage modification program already in place that includes principal deferral, interest rate reductions for five years or more, or extended loan terms. The lender’s loan restructuring program also has to ensure new monthly payments are no more than 38 percent of the borrower’s income. The state’s stipulated debt-to-income ratio is significantly lower than the 31 percent target called for in the Obama Administration’s Homeowner Affordability and Stability Plan.
TheCalifornia Bankers Association and the California Mortgage Bankers Association, have written strong oppositions to the bill, arguing the moratorium will negatively impact home sales and further delay recovery.
CA housing starts plunge to record lows
- Down 57 percent from year-ago levels
- ‘Until the homebuilding industry gets back on its feet, the entire economy will be affected’
Housing production in California last month posted the lowest annual rate on record- the California Building Industry Association . Just 2,007 permits were pulled throughout California during the month of January, down 57 percent when compared to the same month a year ago and also down 57 percent from December 2008.
On a seasonally adjusted basis, the annual rate of production for total new units during the month was just 27,800, the lowest on record.
In January, single-family permits totaled just 1,283, down 52 percent from January 2008 and down 33 percent from December, while multifamily permits totaled 724, down 64 percent when compared to January 2008 and down 73 percent from the previous month. The seasonally adjusted multifamily rate was the lowest since February 1994.
Based on these numbers, CIRB is now forecasting production of 56,600 total units for 2009, down 13 percent from the record-low 64,756 produced in 2008.
California sales tax increases April 1
State rate goes up 1 percent - Local taxes may increase overall rate
California retailers will start charging a new sales tax rate beginning April 1 that is 1 percent higher than the current rate. The increase is part of the $42 billion state budget fix approved by lawmakers last week.
There are also a number of voter-approved new local district sales and use tax increases – designed to provide revenue for local purposes – that will take effect April 1.
Sales and use tax rates in California beginning April 1 will range from 8.25 percent to 10.25 percent, says the California State Board of Equalization.
The provisions of the 1 percent statewide sales and use tax increase take effect April 1 and sunset on either July 1, 2011, or July 1, 2012, the latter if voters approve the proposed Proposition 1A, the “Budget Stabilization Act,” in a statewide election to be held May 19.
Delinquency Rates Expected To Rise
Delinquency Rates Expected To Rise
Homeowner delinquency rates are expected to be higher than they’ve been in the past 17 years, according to TransUnion Trend Data.
TransUnion estimates a 54 percent increase in mortgages that are 60 or more days delinquent, from 4.66 percent at the end of 2008 to a projected 7.17 percent at the end of 2009. Prior to the housing and credit crisis, delinquencies have been around 2 percent for most of the decade.
U.S. Homes Lose $3.3 Trillion in Value
U.S. Homes Lose $3.3 Trillion in Value in Q4 of 2008
Fourth quarter 2008 home prices declined for the eighth consecutive quarter, and according to a Zillow Home Value Index, the 11.6 percent decline cost American homeowners a total of $1.4 trillion in home value, bringing the total drop in value for 2008 to $3.3 trillion.
The fourth quarter loss is greater than the entire loss of 2007, when cumulative home prices dropped $1.3 trillion during 2007. Since the housing market’s peak in 2006, Zillow said $6.1 trillion in home values have been lost across the 161 markets it tracks.
Stan Humphries, Zillow VP said, “The fourth quarter is the first in which we were able to see the effects of the mounting economic insecurity that picked up steam in the fall of last year. People without jobs, or fearing job loss, typically don’t buy homes, no matter how low prices or mortgage rates might be.”Foreclosures comprised nearly 20 percent of all real estate transactions in 2008, data compiled by Zillow showed. Zillow also recorded short sale data, and found they made up 10.9 percent of real estate transactions nationwide.
Banks to unleash flood of REOs
Inventories of unsold homes are likely to swell in coming months as lenders begin to push a growing backlog of repossessed homes up for sale — often in areas with already high numbers distressed properties.
While builders have cut back drastically on the production of new homes , it’s likely lenders will soon be putting pressure on inventories even if they succeed in efforts to keep more troubled borrowers in their homes rather than foreclosing on them.
