Fading American Dream
For many Americans the long-cherished dream of home ownership was dashed by the financial crisis, but upcoming government reforms may make it even more difficult to secure that picket-fenced home.
After overhauling Wall Street and the US health care system President Barack Obama’s administration will, by January 2011, tackle rules that have underpinned the housing industry for decades.
Obama’s main tool for change is a shift in the policies of huge government-backed lenders that have provided mortgages for millions of middle-class Americans since the 1930s, but which recently needed bailouts worth hundreds of billions of dollars to stay afloat.
How the Treasury Department intends to reform the housing market is unclear. But one thing is certain: the state will no longer sustain home ownership rates at levels seen before the crisis.
With the creation of lenders Fannie Mae and later Freddie Mac, as they are commonly known, successive governments have fostered home ownership.
Ownership rates saw almost constant growth between 1940 and 2004, with a blip in the 1980s when interest rates rose prohibitively.
According to the historian and sociologist Thomas Sugrue, “every generation has offered its own version of the claim that owner-occupied homes are the nation’s saving grace.
“During the Cold War, home ownership was moral armor, protecting America from dangerous outside influences.”
As William Levitt, the father of suburbia, once claimed: “no man who owns his own house and lot can be a Communist.”
Later, in the Bill Clinton era, home ownership was seen as an important element in achieving personal fulfillment, neighborhood stability and crime prevention.
But as millions of Americans struggle to pay monthly bills, the crisis has kicked up a painful realization that not every American might be qualified to own their own home.
That realization has forged Obama’s approach, which is likely to break with the notion of a “home ownership society” supported by successive presidents across party lines.
In 1994 Democratic president Bill Clinton set a target of having 67.5 percent of occupants own their homes by 2000.
The goal was reached and taken further by his Republican successor George W. Bush who vowed to expand “home ownership for all Americans.”
The ownership rate rose to a peak of 69.2 percent in late 2004, according to figures from the Census Bureau.
But that figure has retreated dramatically with the crisis.
According to a recent study by the Federal Reserve, the 67.2-percent-rate of home ownership seen at the end of 2009 may actually inflated by around 5.6 percent, as some homes are in reality owned by banks rather than their occupants.
That would make current home ownership levels the lowest since the 1960s.
And the writing may be on the wall for further declines.
A move to overhaul Fannie and Freddie could further reduce access to capital for the less well-off, dampening a dream which has been embossed on the American political and social landscape for decades.
“To be clear, the government’s footprint in the housing market needs to be smaller than it is today,” Shaun Donovan, Obama’s head of housing policy, recently remarked.
-by Marc Jourdier, WASHINGTON (AFP)
Urge Governor to Sign SB 1178!
California’s legislature has recently passed SB 1178 (Corbett), C.A.R.’s sponsored bill to extend anti-deficiency protection to homeowners who have refinanced. C.A.R. is asking all California REALTORS® to contact Governor Schwarzenegger to urge him to sign SB 1178.
Please Contact Governor Schwarzenegger TODAY to urge him to sign SB 1178! To send an automated message provided by C.A.R. Take Action, click here.
What’s At Stake:
C.A.R. is sponsoring SB 1178 (Corbett) to better protect homeowners going through foreclosure. SB 1178 will ensure that homeowners keep the same “anti-deficiency” protections they have in the original loan after the loan has been refinanced.
California’s anti-deficiency protection for “purchase money” mortgages says essentially that if a homeowner defaults on a mortgage used to purchase his or her home, the homeowner’s liability on the mortgage is limited to the property itself. The law has worked well since the 1930s to protect borrowers, ensure the quality of loan underwriting and allow borrowers brought down by financial crisis to get back on their feet.
Unfortunately, the 1930s law hasn’t kept up with current times. Current law doesn’t apply to loans used to refinance the original purchase debt, even if the refinance was only to gain a lower interest rate. Recent years of low interest rates have induced tens of thousands of homeowners to refinance their mortgages. During those years, almost no one realized that refinancing their mortgage to obtain a lower rate, they were forfeiting their protections and were becoming personally liable on the new note.
SB 1178 will correct this injustice by extending anti-deficiency protections to those who have refinanced their loans.
Campaign Expiration Date: October 1, 2010
Below is the sample letter:
Subject: SB 1178 (Corbett) — SUPPORT
Dear Governor Schwarzenegger,
As a California REALTOR®, I respectfully request that you sign SB 1178 (Corbett) to better protect homeowners going through foreclosure or short sales.
SB 1178 will extend existing anti-deficiency protections to those homeowners who have refinanced their home mortgage. When owners refinanced their home to get a better interest rate, lenders never told them that the protection is lost if they eventually lose their home to foreclosure — the lender can not only take their home, but also pursue them personally for the difference between the current value of the property and the new mortgage balance.
It is unfair to allow lenders to use this technicality, since most owners are unaware that they’ve lost their anti-deficiency protection when they refinanced.
I urge you to sign SB 1178.
Sincerely,
Your Name
To send an automated message provided by C.A.R. Take Action, click here.
FHA Premium Increases
FHA premium increases postponed to Oct. 4
The Federal Housing Administration (FHA) announced last week it is pushing back the implementation date for new premium structures on FHA-insured mortgages to Oct. 4 from the original date of Sept. 7.
Following FHA Commissioner David Stevens’ recent announcement that up-front premiums for FHA-insured mortgages would be reduced beginning Sept. 7 from 2.25 percent to 1 percent, lenders expressed concerns that they would need more than five weeks to update loan disclosures and computer systems.
FHA previously raised up-front premiums from 1.75 percent to 2.25 percent in April to cope with rising losses on FHA-guaranteed loans. The Obama administration promised to reduce up-front premiums if Congress gave it the authority to raise annual premiums beyond their statutory limit of 0.55 percent. HR 5981, legislation raising the statutory limit on annual premiums to 1.55 percent, was approved by lawmakers on Aug. 4 and has been signed by President Obama.
For more information, click here.
eKEY Adapter for iPhone
Use your iPhone as your lockbox key! The eKEY adapter for the iPhone is now availabe at the CCAR Realtor Shoppe for only $59.99, While supplies last.
With eKEY software, use your iPhone as your lockbox key. eKEY updates wirelessly so you can do business anywhere.
There are two service levels available: eKEY Basic which provides basic keybox functions. eKEY Professional (coming later this year)adds MLS data saved to your phone, links Google maps to the listings, and delivers showing details to your phone.
eKEY Basic Features
● Wireless Updates and Alerts
● Obtain Listing Keys
● Keep track of all your key boxes right from your phone
● Manage and Program your keyboxes
● Easily place and remove keyboxes from listings using your phone
● Change your own shackle codes
Supra eKEY Adapter
The Supra iPhone Adapter plugs into the 30 pin dock connector. It adds Infrared to the iPhone. It is designed to hang from a key chain when not in use. When you are ready to show a house, just slide it out of its cover, and plug it into your iPhone.
Paragon Maintenance
Paragon will be down for maintenance. On Tuesday, August 17th, this process will begin at 10:00pm (Pacific) and conclude no later than Wednesday, August 18th at 6:00am (Pacific). During this time the Paragon MLS system will be unavailable.
Tax Credit Deadline Aug. 15
State first-time buyers tax credit deadline Aug. 15
The Franchise Tax Board (FTB) recently announced it will accept applications for the California first-time home buyer tax credit through midnight on Sunday, Aug. 15, 2010. The FTB believes it will have received more than enough applications to cover the $100 million allocated for eligible first-time home buyers. It will continue to accept applications for the new-home portion of the state tax credit.
Due to the high volume of faxes, consumers may experience some delays and difficulties in connecting to the FTB fax number during normal business hours. It can take several minutes or possibly up to an hour to connect and transmit the fax. Buyers who receive a busy signal are advised to try again later. The fax number is open 24 hours a day, so consumers may fax applications during non-business hours when the line is not as busy.
For more information, click here.
Can’t Afford Your Mortgage?
New Fannie Mae website helps troubled borrowers with next step
Mortgage giant Fannie Mae has launched a website for distressed homeowners who need help figuring out what to do next.
Knowyouroptions.com, which went live Tuesday, offers information on refinancing, repayment plans, forbearance agreements, mortgage modifications and other possible solutions.
Homeowners who no longer can afford their mortgages but don’t want to get hit with a foreclosure can learn about graceful exits — short sales and deeds in lieu of foreclosure.
“We want to avoid foreclosure,” spokesman Jason Vasquez says. “That’s just not good for anybody.”
The website is interactive and available in English and Spanish. Borrowers don’t need Fannie Mae loans to take advantage of the site.
Share a Box
C.A.R. Green Tip of the Week: Share a box
If you are preparing to move, you need boxes. If you recently moved, then you need someone to haul those pesky boxes. Shareabox.com does both, connecting people and boxes. Share a Box was created by two green-minded REALTORS® who believe every box is begging to be used again, again, and again. Visit http://www.shareabox.com/ for more details.
CCAR RUN-OFF ELECTION HAS BEGUN!
RUN-OFF ELECTION BEGAN MONDAY AUGUST 2 at 9am. Click here to visit the election center.
We encourage you to change your membership password prior to the start of our election run-off.
CCAR Bylaws dictate that a simple majority vote is required to elect Officers. In this election we had three candidates vying for the position of 2011 President-Elect. No one candidate achieved the 50% plus 1 requirement; therefore, we are conducting a run-off election. For the benefit of the Association, in order to more easily accomplish the majority vote, candidate Scott Griffith has voluntarily withdrawn from the election.
In accordance with Article XI of the Corporation Bylaws, Marilyn Cunningham and Barbara Safran are the nominees hereby submitted for election to the position of 2011 President-Elect. The voting deadline is 9:00 AM, Monday, August 16, 2010.
In order for this election to be valid, the number of votes cast must equal or exceed the quorum requirement of 15% of the total CCAR REALTOR® membership. As of the record date for this election (June 4, 2010), the total CCAR REALTOR® membership is 3089, therefore, the minimum number of responses needed to meet quorum requirement is 463.
If you experience any problems during voting, please call 925-451-0622 or email michael@ccartoday.com. This applies regardless of CCAR business hours.
GreenFEST 2010

Contra Costa Association of REALTORS® and Sustainable Contra Costa invite you to GreenFEST 2010!
Saturday, August 14th
1870 Olympic Blvd.
Walnut Creek
CCAR and Sustainable Contra Costa have partnered on this annual event that brings together GREEN businesses offering resources and tools for “going green.” The free and fun event will feature food, music, and educational demos on recycling and composting, water conservation tips, as well as money-saving products for utilizing a healthier, green lifestyle. GreenFEST will accept food bank donations, provide cell phone recycling, e-waste recycling, paper shredding, TRADE a bag (receive a recycle bag for a plastic bag) and Green Travel tips. In addition there will be TEST rides on electric scooters, alternative fuel vehicles, demos, a kids’ zone, and GIVEAWAYS from the many sponsors like Renassaince Club Sport, Green Essence Cleaning Company, Whole Foods, and scrumptious food from Nature’s Bounty Café.
For the RAFFLE, the Walnut Creek Green Business, Green Wheelin’ Scooters, will provide a TEST ride on bikes and scooters like the RAFFLE PRIZE Sorrento electric transportation Scooter, and IZIP Electric Urban Cruiser Enlightened bike, each valued at $1899. Tickets are available for $10 each, three for $25, or 7 for $50.
Proceeds from GreenFEST 2010 will go to the Contra Costa Association of REALTORS® non-profit “Helping Hands Foundation” which funds educational scholarships and philanthropic endeavors that give back to the communities in which CCAR serves as well as benefitting Sustainable Contra Costa. For sponsorship opportunities and posters to display at your location, go to www.GreenFESTContraCosta.com.
We’ll see you at GreenFEST on August 14th!
Contact Terrylynn Fisher for more information at, info@GreenFESTContraCosta.com or 925.876.0966.
President-Elect Candidate Statements
RUN-OFF ELECTION BEGAN MONDAY AUGUST 2 at 9am. Click here to review candidate statements and vote!
We encourage you to change your membership password prior to the start of our election run-off.
CCAR Bylaws dictate that a simple majority vote is required to elect Officers. In this election we had three candidates vying for the position of 2011 President-Elect. No one candidate achieved the 50% plus 1 requirement; therefore, we are conducting a run-off election. For the benefit of the Association, in order to more easily accomplish the majority vote, candidate Scott Griffith has voluntarily withdrawn from the election.
In accordance with Article XI of the Corporation Bylaws, Marilyn Cunningham and Barbara Safran are the nominees hereby submitted for election to the position of 2011 President-Elect. The voting deadline is 9:00 AM, Monday, August 16, 2010.
In order for this election to be valid, the number of votes cast must equal or exceed the quorum requirement of 15% of the total CCAR REALTOR® membership. As of the record date for this election (June 4, 2010), the total CCAR REALTOR® membership is 3089, therefore, the minimum number of responses needed to meet quorum requirement is 463.
If you experience any problems during voting, please call 925-451-0622 or email michael@ccartoday.com. This applies regardless of CCAR business hours.
Free Book From NAR
NAR is offering CCAR Members the book, The National Association of REALTORS® 100 Years In Celebration of the American Dream for free, all you pay is the shipping cost. This book celebrates the rich history of REALTORS®’ as community builders, home ownership advocates, and standard-bearers for the profession. A $69.95 value! Limit one per customer.
Order your copy now for FREE by using promo code AUGF.
This special product price is exclusively available to REALTORS® and only while supplies last. Easily access the hundreds of FREE and AT-COST downloadable products – just use your REALTOR.org member login. If you’ve downloaded an e-product, new versions are automatically updated in your REALTOR.org “My Account”.
If you don’t know your login, use this link or call NAR’s Information Central at 1-800-874-6500.
If you haven’t downloaded an e-product before, use this link to find out how, or call NAR’s Information Central at 1-800-874-6500.
The time is now to maximize the over 400 FREE and AT-COST products and resources available through NAR’s Right Tools, Right Now initiative. These great offers are only available through the end of the year.
Visit www.REALTOR.org/RightTools and the online store as they are constantly adding new items and offers to the initiative.
ccarlive July Relaunch
The July edition of ccarlive, features information about:
● CCAR Scholarship Winners with Photos
● New 2011 CCAR Board of Directors
● REALTOR Safety: Fight or Flight?
● Industry News: How Inmates are Receiving the Homebuyer Tax Credit and Developing the Skill of Qualifying Buyer
● Navigating ccartoday.com
● A R.E.trospective by Jerry Kidd
● New Members from May-July 2010
● A Snapshot of Events from R.E. BarCamp 2010, CCAR Board Walk5k, A Taste of Nations, and the 43rd Annual Scholarship Awards Luncheon
● Eco-Friendly Home Improvement Tips
● and much, much more…
Hard copies are available at CCAR’s Real Estate Shoppe or call 925 295 9200 and request a copy to be mailed to you for a $5.00 shipping and handling charge.
Sincerely,
Your CCAR Team
Want DRE Credits?
Come to the Risk Management Back to Basics Seminar on Wednesday, August 18 at Shadelands Civic Arts Center in Walnut Creek.
Shannon Jones has been approved to offer three (3) DRE credits for this seminar at a cost of $25. If you would like DRE credits in lieu of payment, bring back to school items to the seminar (backpacks, pencil boxes, notebooks, markers, etc.) in support of the Bay Area Crisis Nursery www.bacn.info.
This week 7/18 – 7/24 Office Supply stores are having Giant Back to School sales!
Staples
$0.01 School Glue
$0.25 Pencil Cases
$0.25 Mechanical Pencils (5 pack)
$1.00 Scissors
$1.00 Markers (10 pack)
$3.00 Markers (30 pack)
Buy 3 get 1 free Binders
50% off Backpacks
OfficeMax
$0.20 Scissors
$0.25 Glue and Glue Stick Combo Pack
$0.25 Pencil Sharpener
$0.50 Pens (10 pack)
2 for $3.00 Notebooks (1 subject)
2 for $5.00 Notebooks (3 or 5 subject)
2 for $5.00 Crayola Art Supplies
Buy 3 get 1 free Binders
Office Depot
$0.05 Pocket Folders
$0.25 Notebook Paper (150 sheets)
Buy 2 get 1 free Scissors
25% off Backpacks
40% off Markers and Pens
FREE to CCAR members who do not want DRE Credits. Non-members $30 advance payment. Your name must be on the registration list to attend. For more information, contact Cherie Lilly at 925.295.9207 or cherie@ccartoday.com.
The mission of the Bay Area Crisis Nursery is to prevent abuse and neglect of children by providing support to families who are in stress or crisis.
CA Prop. 90 & 110
El Dorado County has implemented California Propositions 90 and 110, effective February 2010. There are just 7 other counties in California that offer there programs, which provides a property tax benefit to certain persons moving from one location in CA into one of eight others counties.
The adoption of proposition 90 in El Dorado County now enables sellers over the age of 55 from other California counties, to transfer their property tax base from the sale of their home in their county to a home purchased or built in El Dorado county, assuming the price does not exceed a specified percentage of the prior residence sale price. The adoption of Proposition 110 provides similar property tax transfers for persons that are severely or permanently disabled, regardless of their age.
Detailed information about the benefits and qualifications of Propositions 90 and 110 may be learned by calling the El Dorado County’s Assessor’s office at 530.621.5719, or visiting their website at, http://www.co.el-dorado.ca.us/assessor/index.html.
The El Dorado County Association of REALTORS® (EDCAR) and the El Dorado County Chamber of Commerce jointly requested their county’s participation in Propositions 90 and 110. El Dorado County is contiguous to and east of Sacramento and runs east to the Nevada State line.
GreenFEST 2010
Contra Costa Association of REALTORS® and Sustainable Contra Costa invite you to GreenFEST 2010!
Saturday, August 14th
1870 Olympic Blvd.
Walnut Creek
CCAR and Sustainable Contra Costa have partnered on this annual event that brings together GREEN businesses offering resources and tools for “going green.” The free and fun event will feature food, music, and educational demos on recycling and composting, water conservation tips, as well as money-saving products for utilizing a healthier, green lifestyle. GreenFEST will accept food bank donations, provide cell phone recycling, e-waste recycling, paper shredding, TRADE a bag (receive a recycle bag for a plastic bag) and Green Travel tips. In addition there will be TEST rides on electric scooters, alternative fuel vehicles, demos, a kids’ zone, and GIVEAWAYS from the many sponsors like Renassaince Club Sport, Green Essence Cleaning Company, Whole Foods, and scrumptious food from Nature’s Bounty Café.
For the RAFFLE, the Walnut Creek Green Business, Green Wheelin’ Scooters, will provide a TEST ride on bikes and scooters like the RAFFLE PRIZE Sorrento electric transportation Scooter, and IZIP Electric Urban Cruiser Enlightened bike, each valued at $1899. Tickets are available for $10 each, three for $25, or 7 for $50.
Proceeds from GreenFEST 2010 will go to the Contra Costa Association of REALTORS® non-profit “Helping Hands Foundation” which funds educational scholarships and philanthropic endeavors that give back to the communities in which CCAR serves as well as benefitting Sustainable Contra Costa. For sponsorship opportunities and posters to display at your location, go to www.GreenFESTContraCosta.com.
We’ll see you at GreenFEST on August 14th!
Contact Terrylynn Fisher for more information at, info@GreenFESTContraCosta.com or 925.876.0966.
Loan Apps. at 13-year Low
Home-buying loan applications at 13-year low
Mortgage applications to buy a home plunged last week, to the lowest level in more than 13 years, as the housing recovery continued to struggle following the expiration of the homebuyer tax credit, an industry group said Wednesday, July 14.
The Mortgage Bankers Association said application for mortgages to purchase a home sank a seasonally adjusted 3.1% for the week ended July 9 on a week-over-week basis, driving the volume to its lowest level since December 1996. On an annual basis, applications for the week were down 43%.
Much of the slowdown has come since the April 30 expiration of homebuyer tax credit. Homebuyers had until that deadline to sign contracts. Congress extended the deadline to close deals to Sept. 30.
The government’s latest reading on new home sales plummeted to a record low in May, thanks largely to the expiration of the tax credit.
For more information, click here.
Builders Buying Up Land
Home builders buying up land, pushing up values
The Press-Enterprise
Homebuilders have been buying ready-to-build land in Riverside and San Bernardino counties at a fast clip, pushing land values sharply above what they were in 2009, according to a leading land brokerage firm.
The Hoffman Co., which is based in Irvine but is an active player in many Inland Southern California real estate deals, said the most land purchases have been closest to major job centers, such as along the Interstate 15 corridor. More than a dozen markets there have seen a 50 to 85 percent increase in land values, which nonetheless remained significantly below their peak.
The most dramatic recovery in land values since the real estate bust, the company said, has been in Riverside County, “where public builders have been snatching finished lots by the hundreds.”
A report from the brokerage firm showed that a finished lot in Temescal Valley south of Corona now costs 137.5 percent more than it did in early 2009, while Wildomar and Moreno Valley have seen price increases of 84 percent since the market bottom.
However, prices continue to “spiral downward” in areas such as the High Desert communities of Adelanto and Victorville that are far from employment centers, the company said.
Tom Dellape, co-principal of The Hoffman Co., said that in the first six months of this year, the firm closed $300 million in sales of ready-to-build lots and raw land.
He said that was more than double the number of transactions the firm closed in the first half of 2009.
He also said this year more land is being sold directly to builders rather than to investors.
Because all the ready-to-build lots have been purchased in the most coveted Inland markets, Dellape said, in the past 90 days builders have started to buy land that comes with government-approved plans but still needs improvements such as streets, lights, and gutters before homes can be built.
The next stage, which Dellape said has just begun, is for developers to buy raw land without government entitlements that will take at least 36 months to get ready for home building.
He said developers are attracted by what they consider bargain prices on well-located real estate.
“There is quite a bit of bank-owned real estate out there and that is where people perceive the best deals to be had,” he said.
Dellape said after this initial splurge, he expects builders will slow land purchases until they are more certain about where the economy is headed.
“It hasn’t been a banner year for sales of new homes and there is caution out there because of that,” he said.
Green in the Kitchen
Between the refrigerator, oven, microwave, and lights, kitchens can consume a lot of energy, but here are some ways to reduce your kitchen’s energy usage and save some money:
“Right size” your appliances: The larger your appliances, the more energy they consume. And, large appliances take up more space, meaning you’ll need to heat and cool additional square footage to accommodate them. Finding the “right size” appliance to fit your needs—instead of just buying the largest one available—can help you to save energy.
Replace old refrigerators: If your refrigerator is more than 10 years old, it might be time to consider replacing it. Old refrigerators can account for up to 15 percent of a home’s energy consumption. Newer refrigerators, especially ENERGY STAR models, consume significantly less energy than older models, sometimes as little as one-quarter of the energy. Try not to be tempted to keep the old refrigerator running in the garage, running two refrigerators will just increase your energy costs! Many local utility companies offer rebates to pick up your old refrigerator if it’s still operational.
Use your dishwasher: Although dishwashers are energy intensive, they also use less water than hand-washing, so as long as you use your dishwasher wisely, running the dishwasher can be a good thing. Dishwashers today are built to handle food remnants, so resist the urge to pre-rinse before putting your dishes in the dishwasher, basically you are just doing double-duty (and increasing your water bill). Also, always make sure you run a full load. Dishwashers always use the same amount of water, so the more dishes you can fit in a load, the more energy efficient it will be. As with a refrigerator, if your dishwasher is old, consider replacing it. Replacing a pre-1994 dishwasher with an ENERGY STAR model can save $30 a year on utility costs.
Cook smart: Making small changes to the way you cook can definitely increase your energy efficiency. For example:
● Put a lid on pots and pans: it will decrease time on the burner.
● Unplug appliances: Even when not in use, some appliances may still be consuming standby energy.
● Size matters: If you are making a meal, think about using a toaster oven or the microwave, both consume significantly less energy than a regular oven.
Wells Fargo’s Subprime Unit
Wells Fargo to shut subprime lending unit, cut 3,800 jobs
by E. Scott Reckard and Kristena Hansen, Los Angeles Times
Banking giant Wells Fargo & Co. is closing its 638 subprime lending offices, of which 74 are in California. The subprime lending offices operated nationwide to supply higher-cost mortgages, auto loans, and credit cards in lower-income neighborhoods.
About 3,800 employees will lose their jobs as the company shutters its Wells Fargo Financial subsidiary.
Of the storefront offices to be closed, 74 are in California, said David Kvamme, president of the subprime unit. “We know that this decision will be extremely difficult for those dedicated team members and their families who will be affected,” Kvamme said.
HSBC, the British banking giant that surprised the industry by buying Household Finance Corp. in 2004, closed the last of its U.S. subprime finance offices last year.
The San Francisco company said that it would continue to supply auto loans and credit cards to those with poor or weak credit through its national network of Wells Fargo Bank branches and offices of Wachovia Bank, the North Carolina giant that Wells acquired in 2008.
“We’re not exiting those products, just relocating them,” said Alanson Van Fleet, a Wells Fargo Financial spokesman.
But Wells, the nation’s largest mortgage lender, said it would no longer offer subprime mortgages, which now make up less than a tenth of 1% of the home loans the company originates.
Wells Fargo Financial offices still originate 2% of all of Wells Fargo home loans, but those loans are nearly all mortgages insured by the Federal Housing Administration, a niche that the prime home loan business, Wells Fargo Home Mortgage, already is in.
Of Wells Fargo Financial’s 14,000 employees, 2,800 will receive pink slips within 60 days and an additional 1,000 during the coming year, the bank said Thursday. The rest will be reassigned to other Wells units.
The announcement is the latest in a long series of closures of subprime lending operations, including the shutdown of independent giants Ameriquest Mortgage and New Century Financial Corp. in Orange County and Full Spectrum Lending, a part of Countrywide Financial Corp., in Calabasas.
Nearly all current and former Wall Street firms had subprime arms that are now defunct.
While regional players still operate subprime finance networks, only Citigroup’s CitiFinancial unit remains as a national player, and it announced this year that it would close hundreds of offices.
Wells Fargo Financial’s shutdown seemed certain to reignite complaints from advocacy groups, which for decades have criticized mainstream banks for abandoning poor and minority communities.
They said the loss of the consumer finance unit, coupled with cuts at CitiFinancial and HSBC’s closure of the Household Finance operation, could create even more inequities.
“If banks are going to focus on making better products available, then that’s a positive thing. If they’re going to exclude people who otherwise might’ve gone to Wells Financial, then that’s a problem,” said Kevin Stein, associate director of the California Reinvestment Coalition in San Francisco.
“It’s really on Wells now to make sure that the better products they’re offering are equally available to everyone,” Stein said.
Robert Gnaizda, a 40-year advocate for better inner-city lending practices, said loan losses and a regulatory crackdown by the federal government “are forcing all the financial institutions to give up [on serving] the 70% of Americans who live from paycheck to paycheck.”
For more information, click here.
Within Walking Distance
Jennifer and Andrew Greenberg didn’t fall in love at first sight with the 1950s ranch house they just bought in Portland, Ore. But they did feel that way about the neighborhood. They saw people out walking and noticed how close the house was to coffee shops and wooded paths. So they chose the home that needed more work over a comparably priced but more upscale option in another area. “When it came down to it, we weren’t willing to compromise on walkability,” says Ms. Greenberg, a 37-year-old event planner.
Today’s home buyers aren’t just looking for good schools and low crime rates when they evaluate a neighborhood, many brokers say. They’re paying much more attention to what they can walk to.
“Everyone wants to know now how close they are to stores,” says Linda Duggan, an owner of The Duggan Group real-estate agency. She recently had clients who, given a choice between a house in Danville, Calif., and another that was bigger, newer, $300,000 cheaper—and 20 minutes farther from town—chose the first one. Earlier this year Scott Newman, of Newman Realty in Chicago, started highlighting how close his listings are to amenities. The number of amenities in walking distance can vary sharply from block to block, he adds.
“For a lot of Americans, the whole problem of traffic congestion and having to drive everywhere to do almost anything has made other choices more attractive,” says Kaid Benfield, director of the Washington-based Natural Resources Defense Council’s Smart Growth Program. Urban planners say it’s also a matter of demographics: Baby boomers are coming of empty-nest retirement age, and at the same time their children are buying their first homes, and neither group wants large lots in remote places where little is going on. Fear about future oil prices is also increasing the attractiveness of walkable neighborhoods.
In response, websites have sprung up to rank which homes have the most amenities within walking distance. The most commonly used one is WalkScore.com, started in 2007 by Seattle software company Front Seat. The site saw visits in May more than double from year-earlier levels, to 938,000, according to comScore Inc., which measures online audiences. Ads on real-estate websites now include Walk Scores, and some 4,000 websites now link to the site’s map, where users can input an address and get a score.
Real-estate prices are reflecting the new interest in walking distances. A study published in August of 90,000 homes across the country by nonprofit CEOs for Cities, a group of urban-redevelopment advocates, found that having more amenities in walking distance can boost home values. As measured by Walk Score, walking-distance amenities raised values by as much as $3,000 for a one-point increase in rankings. And a report released in January by the Natural Resources Defense Council found a neighborhood’s “location efficiency”—a measure of the transportation costs in a given area—affected the number of foreclosures in the area.
A walkable neighborhood doesn’t necessarily have to be in the city center. And it doesn’t have to be more expensive. Eric Fredericks decided in September that, with the housing tax credit, it made more sense to buy than to keep renting. Planning on kids, he and his wife wanted a three-bedroom house in Sacramento, Calif. “We never considered living in suburbia,” he says. But they found a new development in a suburb called Rancho Cordova organized around a main street, with stores and restaurants. Their 2009 house is six inches away from the house next door and a couple of blocks from the town center. It cost $240,000, half what he says he would have paid for a comparable place downtown.
Walk Score uses an algorithm to calculate the distance from any address to amenities like restaurants, grocery stores, movie theaters and public transportation. In a section on its website called “How It Doesn’t Work,” the site says it doesn’t factor in street design, safety, topography, weather, and sidewalks. The website uses “as the crow flies” to measure distance, ignoring enormous hills or big rivers, saying: “…if you live across the lake from a destination, we are assuming you will swim.”
But Billy Riggs, a city and regional planner at University of California, Berkeley, says, “Topography is the most important factor in determining people’s walking behavior.” Lewis Knight, a 45-year-old urban designer, was surprised to find his home in Oakland, Calif., scored 62, “somewhat walkable.” While there’s a Safeway supermarket and a CVS drugstore half a mile away, they’re at the bottom of a 700-foot hill with no sidewalks.
Recently, Missoula, Mont., city planner Lewis Kelley inserted his address on a tree-lined street with sidewalks and few cars that’s about half a mile from stores and restaurants and contrasted it with an address on a nearby four-lane arterial road with almost no pedestrians. That address got an 83 on Walk Score, beating Mr. Kelley’s address by 14 points. “I think it’s pretty intuitive which one is more friendly to pedestrians,” he says.
Walk Score’s chief executive, Josh Herst, says the site is working on the issues of traffic and topography. The site recently got a grant to improve how it calculates walking distances. The site uses information from Google that isn’t always updated: Sometimes, stores and restaurants don’t show up at all. (“Keeping Google Maps completely up-to-date is a challenge we’re always working on,” a Google spokeswoman says.)
Still, the more emphasis on walking distance, the better, say many home-buyers. Gary Howe, a photographer and writer in Traverse City, Mich., has been working with his city’s planning department to get, among other things, pedestrian-enhanced crosswalks at a busy intersection—a crossing so dangerous, he says, that many neighbors drive less than a block to a pharmacy just to avoid that street. “When I was looking for a house four years ago, lots of real-estate agents didn’t even mention walkability,” Mr. Howe says. “Now I see it everywhere, which is great.”
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Declining Home Size
Home Size Continues to Decline; Buyers Increasingly Opt for Single-Story Homes
The size of new single-family homes completed declined last year, dropping to a nationwide average of 2,438 square feet, according to detailed information about the characteristics of new homes completed in 2009 that was released recently by the Census Bureau.
After increasing continually for nearly three decades, the average size of single-family homes completed in the United States peaked at 2,521 square feet in 2007. It was essentially flat in 2008, then dropped in 2009, so that new single-family homes were almost 100 square feet smaller in 2009 than in 2007.
“We also saw a decline in the size of new homes when the economy lapsed into recession in the early 1980s,” said NAHB Chief Economist David Crowe. “The decline of the early 1980s turned out to be temporary, but this time the decline is related to phenomena such as an increased share of first-time home buyers, a desire to keep energy costs down, smaller amounts of equity in existing homes to roll into the next home, tighter credit standards and less focus on the investment component of buying a home. Many of these tendencies are likely to persist and continue affecting the new home market for an extended period.”
Crowe also pointed out that the average square footage of new single-family homes completed is only one measure of new home size. “The Census Bureau also reports average square footage in a quarterly release based on starts rather than completions, which is sometimes useful when market conditions are changing rapidly,” he said.
In keeping with their slightly smaller size, new single-family homes completed in 2009 had fewer bedrooms than previously. After increasing for almost 20 years, the proportion of single-family homes with four bedrooms or more topped out at 39 percent in 2005; it was 34 percent last year. The proportion of single-family homes with three bedrooms increased from 49 percent to 53 percent between 2005 and 2009.
New single-family homes completed last year also had fewer bathrooms than previously. The proportion of homes with three or more bathrooms was 24 percent last year, a decline from the peak of 28 percent in both 2007 and 2008. The percentage of single-family homes with two bathrooms increased from 35 to 37 last year, and the percentage with 2½ bathrooms was at 31 percent for the third consecutive year. The proportion of single-family homes with 1 or 1½ bathrooms has been below 10 percent for more than a decade.
In 1973, the first year for which the Census Bureau reports characteristics of single-family homes completed, most new single-family homes – 67 percent – had only one story. Twenty-three percent had two or more stories, and 10 percent were split levels.
The proportion of one-story homes declined steadily for more than three decades, dropping to a low of 43 percent in 2006 and 2007. At the same time, the proportion of single-family homes with two or more stories increased, rising from 23 percent in 1973 to a high of 57 percent in 2006 (split level homes currently account for less than one percent of all single-family homes). Since 2006 the trends have been reversed, as the share of single-family homes with one-story increased to 47 percent last year, while the share with two or more stories dropped to 53 percent.
Regional Differences in Completed Single-Family Homes
The Census Bureau’s data on characteristics of completed single-family homes also showed regional differences.
In 1973, less than half of all new single-family homes completed had air conditioning; in 2009, 88 percent were air conditioned nationwide. Regionally, the proportion ranged from a low of 69 percent in the West to a high of 99 percent in the South. The Northeast and Midwest were at 75 percent and 90 percent, respectively.
Nationwide, 62 percent of new single-family homes completed in 2009 had two-car garages, and 17 percent had garages for three or more cars. However, there were clear regional differences. Three-car garages were found in only about 11 percent of homes in the Northeast and the South. In the Midwest, 30 percent of all homes had three-car garages, and in the West, 26 percent.
Regional differences were especially pronounced in the selection of exterior wall material. Nationwide, 34 percent of all single-family homes completed in 2009 homes had vinyl siding, 23 percent were brick, 19 percent were stucco, and 13 percent had fiber cement siding.
Vinyl siding predominates in the Northeast, where it accounted for 74 percent of the market; wood was a distant second with a 12 percent market share. In the Midwest, vinyl siding accounted for 62 percent of the market while wood and brick were at 15 percent and 11 percent, respectively.
Brick was the leader in the South, where it was found in 40 percent of new single-family homes. Twenty-eight percent of new homes in the South had vinyl siding and 13 percent had stucco.
The Census Bureau began reporting statistics on fiber cement siding, which is relatively new to the market, in 2005. It already accounts for 24 percent of the market in the West. Stucco and wood account for 52 percent and 15 percent of the market, respectively, in that region.
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Home Tax Credit Extended
First-time homebuyers will have until Sept. 30 to close on their purchases and land an $8,000 tax credit under a bill passed by the Senate late Wednesday, June 30.
President Obama is expected to sign the bill, which was overwhelmingly approved by the House on Tuesday. The deadline had been June 30.
The bill doesn’t help anyone currently shopping for a home. Buyers must have signed a contract by April 30 to qualify for the tax break. At issue is when the deal must be finalized.
Qualified existing homeowners also have until Sept. 30 to close on new homes and receive a tax credit of up to $6,500.
Congress has been trying to pass the extension for the last month, but it got caught up in Washington politics. Only when it was separated from a larger jobs bill did deficit-wary lawmakers sign off on it. The extension will lower the deficit by $9 million over a decade since it is offset by certain other provisions.
An estimated 200,000 people have missed out on the tax credit because they wouldn’t have been able to close by the end of business Wednesday. Many are trying to take advantage of short sales, which are complicated deals to complete.
The Senate approved the stand-alone homebuyers tax credit shortly after a failed attempt to advance a bill that combined the credit with an unemployment benefits extension.
Senate Majority Leader Harry Reid, D-Nev., said the chamber will take up the benefits bill again once a replacement for the late Senator Robert Byrd, D-W.Va., is named. Byrd, the longest serving member of Congress in history, died Monday at age 92.
C.A.R. Member Benefits
MEMBER BENEFITS WEBINAR FOR REALTORS®
Learn more about your C.A.R. member benefits by participating in this webinar. This is your passport to growth, knowledge and professionalism within the real estate industry. We are committed to bringing you the very finest tools and information to help you succeed. The information allows you to access a variety of tools, services and products that your Association provides for your professional growth. We wish you the very best as a REALTOR®.
Title: Member Benefits
Date: Wednesday, July 14, 2010 https://www1.gotomeeting.com/register/335769768
Time: 9:30 AM – 10:30 AM PDT
Title: Member Benefits
Date: Wednesday, August 18, 2010 https://www1.gotomeeting.com/register/477550936
Time: 9:30 AM – 10:30 AM PDT
