Archive for April, 2009

Watching Grass Grow!

April 26th, 2009 Categories: Weekly Real Estate Activity In Ventura County

The real estate market is just meandering; setting its base for the next cycle upward.

Much has been written over the last week of mortgage help.  It appears that banks are just starting to get into the mortgage business however it appears that only 1 in 11 will be able to get help.

That means the other 10 people will probably go into foreclosure.

So be ready for another round of foreclosures will be coming to fruition in the next several weeks.

The financial sector is still trying to find its legs.  Business is not creating new jobs at this time but it appears that government jobs are increasing significantly. 

Unemployment is hovering around 11% but surprisingly not many government jobs at any level has been impacted.  The stimulus money that States want appears to be a justification of increasing their payroll base.

There is a lot of BS going on in government with deflective stories being written to turn people’s attention away from our economic problems and creating bigger government. 

Words uttered by any Federal or State representative should put one on guard.

What is being said is to make people feel good; what is being done will make people sorry and at a point they think there isn’t anything they can do.  

An example is the “rainy day set aside” proposal that California will vote on this May.  Sounds good to set something aside.  It makes one think that someone is taking steps to do something right.  But politicians being politicians when they see ”rainy day” funds they will justify taking of these funds for some other cause.  There goes ”rainy day” funds.

So like Social Security which was set up as a set aside fund, later when monies were needed, its money was used, replaced by notes.  I suspect this “rainy day” proposal is of the same vintage.  As stated earlier, politicians say things that sound good; but later is when you really recognize what they really wanted to do.

We can start by removing those in office now and replacing them with new blood that understand and can manage the needs of the Country.  We have too much “good ole boy” goings on throughout the Country.  It is time to change to something better.  As a first step maybe we should start “recalls” now, replacing Federal and State representatives.  That clean house each two years. 

As mentioned last week if you don’t like them remove them.  Recalls is a start.

I found it interesting that the Congress had sessions relating to earth warming.  The interesting part was they would not allow any rebuttal or opposite views to be heard at these sessions.  Meaning:  our minds are made up and this is the way it is going to go.

That will be a healthy tax for America.  Who controls this.  Our friends overseas.  We pay and they make the rules.  Seems only fair???? 

Ventura County

The County real estate is continuing its base building.  Listings continue downward; discounts continue and it appears that the County inventory is neutral will a bias towards becoming a sellers market.

Santa Rosa Valley, Ventura and Oxnard Beaches and the Ojai/Oak View areas are still buyer’s markets.

Simi Valley/Moorpark, Oxnard, Santa Paula and Fillmore appear to be sellers marketswith the Conejo Valley and Camarillo currently being neutral.

Overall there has been a 35% increase in sales in 2009 compared to the same period of 2008.  Areas showing significantly higher sales this year is Oxnard (114% increase); followed by Santa Paula, Fillmore and the Ojai/Oak View area.

The areas lagging 2008 residential sales are Santa Rosa and Conejo Valley.

The County real estate appreciation for the next 12 months will be 8.7% growth; we will witness a 17.9% growth over the next 24 months; and a 25.6% growth over the next 36 months.

Increase in unemployement and lagging job creation can dampened these growth rates slightly but overall it appears these appreciation rates that can be expected. 

Your comments are welcomed.

Posted by John Duffner | Currently 7 Comments »

Home Valuation Code of Conduct….More Government Interferance. Just What We Need!

April 24th, 2009 Categories: Real Estate News

Home Valuation Code of Conduct:

Action Needed!
 

Our friends in Congress are at it again.

Background:


1) The HVCC negatively affects consumers and the already fragile economy.

As it stands today, the HVCC will take effect on May 1, 2009, and this rule states that GSEs will no longer purchase loans from lenders “accepting appraisal reports completed by an appraiser selected, retained, or compensated in any manner by any third party.” It overwhelmingly impacts small lending institutions and independent appraisers to the  detriment of consumers.

a)  Consumers will have to pay more for their appraisals to have them completed by AMCs.
 

b)  The exclusive use of AMCs limits competition in the marketplace, leaving the consumer and independent appraisers at a disadvantage.
 

c)  The AMC model is flawed and will produce poor quality work that will create a continuation of the declining housing market.
 

2) The manner in which lenders will collect fees in compliance with the HVCC is a potential violation of RESPA.

a)  Lenders may be in direct violation of section 8(b) of RESPA due to possible up-charging and fee-splitting. Every lender will be at risk of HUD action on every brokered loan they underwrite.

b)  Lenders will not utilize brokers for fear of potential RESPA violations. In addition, those lenders who only do brokered loans will go out of business all together, and competition within the marketplace will cease to exist-again at the detriment of consumers.
 

3) There already exists pervasive federal regulation of the mortgage lending industry’s acquisition of real estate appraisals. 

a)  FIRREA – In 1989, following the savings and loan crisis, Congress passed the Financial Institutions Reform, Recovery and Enforcement Act (”FIRREA”), which established a multi-faceted real estate appraisal regulatory system involving the federal government, the states, and The Appraisal Foundation. Since 1989, the federal agencies responsible for regulating financial institutions have promulgated regulations under FIRREA that set forth “generally acceptable appraisal standards,” and have issued guidance relating to real estate appraisals, which, among other things, set forth standards for selecting qualified appraisers. These regulations and appraisal guidelines both prohibit improper influence on appraisers and work to ensure appraisal independence.
b)  FRB Final Rule – In July 2008, the Federal Reserve Board (”Board”) issued a final rule prohibiting all mortgage brokers, mortgage lenders and their affiliates “from coercing, influencing, or otherwise encouraging appraisers to misstate or misrepresent the value of a consumer’s principal dwelling.” In issuing this final rule, the Board concluded that “[no] particular procedure for ordering an appraisal necessarily promotes” fraudulent appraisals. Rather, the Board determined that the “coercion of appraisers,” whether by lenders or mortgage brokers, “is an unfair practice” and the final rule should apply to lenders and mortgage brokers alike. NAMB fully supported the Board’s final rule because it targets problematic practices, rather than business relationships that present no inherent problems.
c)  FFIEC Interagency Guidance – On November 19, 2008, the FFIEC regulatory agencies issued proposed revisions to the “Appraisal and Evaluation Guidelines,” and requests for comment. The FFIEC regulatory agencies are currently reviewing the submitted comments and plan to issue a final rule this year.
d)  H.R. 1728 – “The Mortgage and Anti-Predatory Lending Act of 2009″ was introduced on March 26, 2009. TITLE VI of the bill – APPRAISAL ACTIVITIES – deals with every facet of the appraisal process that will ensure true appraisal independence and protect consumers.
4) The HVCC fails to comply with the Administrative Procedures Act.
The HVCC is a substantive rule that created de facto regulation of the entire mortgage industry in violation of the Administrative Procedure Act (”APA”).
a)  The FHFA is an agency and the HVCC falls within the definition of a rule under the APA. As such, the FHFA was required to utilize notice and comment rulemaking proceedings under the APA, but the agency failed to do so.

b)  Because this ruleregulates the entire mortgage industry and the FHFA failed to follow proper rulemaking procedures, we believe the HVCC is void, invalid, and unenforceable.

Impact on Consumers:

A.  The HVCC negatively affects consumers by increasing the costs to consumers for an appraisal, reducing consumer choice and adversely impacting a consumer’s ability to obtain a reliable and quality appraisal.

B.  The HVCC creates a heightened risk for consumers by requiring the use of unregulated Appraisal Management Companies (AMCs) for appraisals. The original investigation that prompted the HVCC’s creation was of an AMC and WAMU alleging that they engaged in practices of pressuring appraisers on behalf of WAMU.
C.  It increases the time to fund loans for consumers which necessitates longer rate locks or extensions of existing locks thereby increasing costs to consumers. In the case that a new lender or broker is chosen, a new appraisal will be necessitated, increasing the time to fund.

D.  It restricts the portability of an appraisal since each lender, in effect, will require a new appraisal.

Impact on Small Business:

E.  The HVCC squeezes out small business professionals that are striving to survive and have been working with consumers in the very neighborhoods where they are looking to purchase homes.

F.  The HVCC affects small business appraisers, mortgage brokers, Realtors and lenders in all 50 states without having been reviewed by ANY state or federal legislature or agency.

G.  Small business professionals who have indepth knowledge of local market conditions are being sacrificed for large AMCs who operate on a national scale to distribute orders through a primary processing hub or hubs which can be located up to thousands of miles away from the property being appraised.

Fails to comply with procedural law:

H.  Although the HVCC is broad regulation having a significant impact on small businesses and consumers, it did not go through the Administrative Procedures Act, the Regulatory Flexibility Act or other procedural laws as required by any regulation issued by a federal agency.

I.  FHFA claims that as Conservator of the GSEs, its actions are not “agency actions” under the APA and that its actions are “expressly precluded from judicial review” as a result of the Housing and Economic Recovery Act.

Appraisal standards exist:

J.  The Federal Reserve issued appraisal independence standards through Regulation Z being implemented this October which applies to every industry participant.

K.  The banking regulators issued interagency guidance on appraisal standards which are expected to become final this year.

Your comments are welcomed.  Note:  Most of this information was provided for by Connie Wright of Wright Mortgage Company, Chico, CA.

Posted by John Duffner | Currently 4 Comments »

Back In The Saddle

April 19th, 2009 Categories: Weekly Real Estate Activity In Ventura County

Mother Nature and I have had some disagreements over the last several months and things have sorted themselves out.  Now Mother Nature tells me (as she did before)what to do and now I do it.  Strange how that works out.

Surprisingly dispite the down time nothing has changed.  Things may have gotten worse.

Caps.  I loved hearing about this while sick.  Cap CEO pay.  That’s great except it did not go far enough.  I would add to the cap list:

All federal government workers should be capped at $ 75,000 annual salary; State workers should be capped at $ 70,000 per year; and Local government employees caps should be at $ 65,000.  All members of Congress and the President should be capped at $ 80,000 per year including the justices throughout the Federal and State Judiciary.  If I missed any one they should be capped at $ 60,000.

All union executives and private company executives should be capped at $ 100,000 per year.  If we do not like who is in charge they should be immediately replaced. 

(Sideline:  My dad was a local union President for many years.  He lived union.  While he felt the need for unions he also noted that the rank and file were hurt more by union  leadership and their political gyrations and hostile attitudes towards employers.  It was a war.  “This is what we want or we shut you down”.  He also noted that when the rank and file had a strike they never, ever were ahead.  Each strike made them poorer.  End of story.) 

Continuing with who should be capped.  All movie stars, television host and newscasters and baseball/football/basketball players should be capped at $ 100,000 annual salary.  Anybody working in the financial arena including Wall Street should be capped at $ 100,000.

Fisherman should not be capped (I like fishing).

All other workers should be capped at $ 150,000 per year except real estate brokers and agents…..they should make as much as they can…..no cap.  That’s fair and that is my contribution to the cap situation!

Immigration.  While sick I was listening to the many discussions about resolving the illegal immigration problem and a solution was devised to penalize employers monetarily and maybe sentenced them to jail.

I agree with this position but again those in power did not go far enough.  I would add to the list the fining and possibly jailing of activists who push illegals to break the law.  I would also include in the mix the politicians who intercede on behalf of their constituents and force Border and other agencies from doing their job.  These folks too should face a penalty, jail time if required and removal from office.

I recall in the 1960’s and 1970’s when those responsible to protect our borders would be retired, demoted or re-assigned because politicians did not want these people to do their job in the area they represented.  Nothing has changed much.

Why people from South America think they can ignore immigration laws is beyond me.  The Europeans followed the rules to get into this Country.

But we have to give a pass to the folks from the South….Why?  And those from South American countries who are now standing in line waiting to get in the right way, well it appears that you are doing a stupid thing.  Why go through the hassle.  Break the law. 

Come in and in 10 years you will get your citizenship.  That is what has happened over last 20 or more years.  10-15 years from now we will have the same situation and our politicians will find it necessary to legalize ’illegals” once again.

It’s a revolving door.  Maybe we should have an open border from the North Pole/Canada to the very tip of South America.  All of the people in the Americas can move as they want from one area (location) to another and would automatically be a citizen in the area they lived or settled.  We would be called citizens of the Americas. That would solve the problem. 

I think shortly there will be a meeting of the minds and people are going to see that there has been good from the past and this good can be used effectively in the future.  People are going to do it and it will take time but it will be people solving the problem, not politicians.

Oh.  One more thing that was big news and that had to do with taxes.  Heck the cure for this is simple.  Have a flat tax. 

Everyone pays and the federal rate should not exceed 10% of one’s gross wages (including companies gross sales).  States should be limited to 5% of either gross wages or sales.  There should be NO deductions of any kind.  At no time can the Federal/State tax rate exceed 20% combined.  All other taxes for gasoline, sales taxes, and any other tax, fee or whatever it is called is to be eliminated.  OK, that takes care of the tax issue.  If anyone disagrees with this replace them. 

Real estate on the National scale is holding its own especially in the Mid-States. 

Unemployment appears to be going up along both coast lines faster than the Mid-States but job creation is down Nationally.

This will temper the upward movement for real estate for a period however the truth of the matter is that in another year real estate will be stronger and move higher and then watch out.  Politicians will once again interfere with the free market because there will be a division between who has a home and there will be many without.

Ventura County.

The unemployment rate is near 10% in Ventura County.  Job creation is nil.  But the real estate market is putting is a solid base for its pending thrust upward which should start around September/October, 2009.

This basing will be significant for the BIG thrust that one can expect to see starting in 2010.  The high prices witnessed in 2004-2006 will pale to what they will be in 2013-2027.  I suspect that the upper limits of the new up trend will be about 50% or more higher than 2004-2006.

There has been a change to the weekly table.  Eliminated was ”days on the market”, replaced with ”estimated inventory and designation specific areas as being either a buyers/sellers market”.

The formla used to calculate inventory was simply to take current listings and divide this by the number of sales over the last 3 months.  This result was then multiplied by three to get the number of months inventory for a specific area. 

True I could have used 6 months or 12 months sales but using three was closer to current market conditions.  I am sure many will correct me but that is OK, I look forward to the coments.

Happily real estate is starting to get some good press.  As one can see from the table above a number of areas have had significant sales since the beginning of the year. 

Oxnard and Santa Paula have had 100% sales increase.  But these sales were due to deep discounts of property values.  So it should not be surprising to see Santa Paula, Fillmore, Oxnard and parts of Ventura showing up as seller markets.

Santa Rosa Valley, the Beaches (Ventura and Oxnard) and Ojai/Oak View continue to have large inventories BUT these have lessen substantially over the last several months and it is expected that these areas will turn the corner and show up as seller markets. 

Your comments are welcomed. 

Posted by John Duffner | Currently 16 Comments »