Existing home sales fell 27.2% in July to a seasonally adjusted annual rate of 3.83 million units from a downwardly revised 5.26 million units in June. The inventory of unsold homes on the market increased 2.5% to 3.98 million, a 12.5-month supply at the current sales pace, up from an 8.9-month supply in June.
The Mortgage Bankers Association said its seasonally adjusted composite index of mortgage applications for the week ending August 20 increased 4.9%. Refinancing applications rose 5.7%. Purchase volume rose 0.6%. Refinancing made up 82% of total applications.
Orders for durable goods — items expected to last three or more years — rose 0.3% in July after decreasing a revised 0.1% in June. The increase was largely due to improved demand for commercial aircraft. Excluding volatile transportation-related goods, orders posted a monthly decrease of 3.8%.
New home sales fell 12.4% in July to a seasonally adjusted annual rate of 276,000 units from a revised rate of 315,000 units in June. It was the lowest reading since recordkeeping began in 1963. Economists had expected a pace of 330,000 units.
In its second report, the Commerce Department announced that gross domestic product — the total output of goods and services produced in the U.S. — increased at an annual rate of 1.6% in the second quarter of 2010, rather than the 2.4% increase initially reported.
Initial claims for unemployment benefits fell by 31,000 to 473,000 for the week ending August 21. Economists had projected claims would fall to 490,000. Continuing claims for the week ending August 14 fell by 62,000 to 4.46 million.
Upcoming on the economic calendar are reports on the housing price index on August 31, construction spending on September 1 and pending home sales on September 2.
-Article courtesy of Marie Richarz, Prospect Mortgage
Tuesday, August 31, 2010
Thursday, June 3, 2010
Surge in Pending Home Sales Continues
Pending home sales have risen for three consecutive months, reflecting the broad impact of the home buyer tax credit and favorable housing affordability conditions, according to the NATIONAL ASSOCIATION OF REALTORS®.
The Pending Home Sales Index, a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February. Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.” NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.
“The home buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity; in turn, that is keeping additional households from going underwater and risking foreclosure,” Yun said.
Pending Home Sales Index by region:
Northeast: jumped 29.5 percent to 97.9 in April and is 24.5 percent above a year ago.
Midwest: rose 4.1 percent to 104.2 and is 17.9 percent above April 2009.
South: slipped 0.6 percent to an index of 123.9, but is 31.3 percent higher than a year ago.
West: increased 7.5 percent to 107.9 and is 12.0 percent higher than April 2009.
“A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract signing to settlement date,” Yun said. “However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues." He added that there could be a sizable number of home buyers who responded to tax credit incentives, but may encounter problems meeting the settlement deadline by June 30. Because of these market challenges, NAR has asked Congress to provide flexibility on the deadline for closing.
Source: NAR
The Pending Home Sales Index, a forward-looking indicator, rose 6.0 percent to 110.9 based on contracts signed in April, from an upwardly revised 104.6 in March, and is 22.4 percent higher than April 2009 when it was 90.6. That follows gains of 7.1 percent in March and 8.3 percent in February. Pending home sales are at the highest level since last October when the index reached 112.4 and first-time buyers were rushing to beat the initial deadline for the tax credit. The data reflects contracts and not closings, which usually occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said this second round of surging sales from the tax credit extension looks as strong as the original tax credit. “There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension. But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales,” he said. “The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs.” NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million in 2011.
“The home buyer tax credit brought close to 1 million additional buyers into the market, which is now helping the trade-up market and has significantly improved the inventory situation. This stabilized home prices more quickly and has preserved about $900 billion in home equity; in turn, that is keeping additional households from going underwater and risking foreclosure,” Yun said.
Pending Home Sales Index by region:
Northeast: jumped 29.5 percent to 97.9 in April and is 24.5 percent above a year ago.
Midwest: rose 4.1 percent to 104.2 and is 17.9 percent above April 2009.
South: slipped 0.6 percent to an index of 123.9, but is 31.3 percent higher than a year ago.
West: increased 7.5 percent to 107.9 and is 12.0 percent higher than April 2009.
“A big concern surfacing recently is insufficient time to close the deal at the settlement table. Under normal circumstances, two months would be enough time from contract signing to settlement date,” Yun said. “However, the recent housing cycle has brought long delays related to the short sales approval process by banks, and from ongoing appraisal issues." He added that there could be a sizable number of home buyers who responded to tax credit incentives, but may encounter problems meeting the settlement deadline by June 30. Because of these market challenges, NAR has asked Congress to provide flexibility on the deadline for closing.
Source: NAR
Wednesday, June 2, 2010
Economic and L.A. Real Estate Update
Existing home sales rose 7.6% in April to a seasonally adjusted annual rate of 5.77 million units from 5.36 million units in March. The inventory of unsold homes on the market rose 11.5% to 4.04 million, an 8.4-month supply at the current sales pace, up from an 8.1-month supply in March.
The Standard & Poor’s/Case-Shiller 20-city housing price index — on a seasonally adjusted basis — was unchanged in March after a 0.1% decline in February.
The consumer confidence index rose to 63.3 in May from a slightly revised 57.7 in April. Economists had anticipated a reading of 59. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending May 21 rose 11.3%. Refinancing applications jumped 17%. Purchase volume decreased 3.3%.
Orders for durable goods — items expected to last three or more years — rose 2.9% in April after falling a slightly revised 1.2% in March. The increase was largely due to a jump in demand for commercial aircraft. Excluding volatile transportation-related goods, orders posted a monthly decrease of 1%.
New home sales rose 14.8% in April to a seasonally adjusted annual rate of 504,000 units from an upwardly revised rate of 439,000 units in March. Economists had expected a pace of 425,000 units. The April reading was the highest level since May 2008.
Initial claims for unemployment benefits fell by 14,000 to 460,000 for the week ending May 22. Continuing claims for the week ending May 15 fell by 49,000 to 4.61 million.
Information provided courtesy of Marie Richarz, Prospect Mortgage.
The Standard & Poor’s/Case-Shiller 20-city housing price index — on a seasonally adjusted basis — was unchanged in March after a 0.1% decline in February.
The consumer confidence index rose to 63.3 in May from a slightly revised 57.7 in April. Economists had anticipated a reading of 59. The index was benchmarked at 100 in 1985, a year chosen because it was neither a peak nor a trough in consumer confidence.
The Mortgage Bankers Association said its seasonally adjusted index of mortgage applications for the week ending May 21 rose 11.3%. Refinancing applications jumped 17%. Purchase volume decreased 3.3%.
Orders for durable goods — items expected to last three or more years — rose 2.9% in April after falling a slightly revised 1.2% in March. The increase was largely due to a jump in demand for commercial aircraft. Excluding volatile transportation-related goods, orders posted a monthly decrease of 1%.
New home sales rose 14.8% in April to a seasonally adjusted annual rate of 504,000 units from an upwardly revised rate of 439,000 units in March. Economists had expected a pace of 425,000 units. The April reading was the highest level since May 2008.
Initial claims for unemployment benefits fell by 14,000 to 460,000 for the week ending May 22. Continuing claims for the week ending May 15 fell by 49,000 to 4.61 million.
Information provided courtesy of Marie Richarz, Prospect Mortgage.
Monday, April 12, 2010
2010 New Home Credit and First-Time Buyer Credit
The 2010 New Home Credit and First-Time Buyer Credit begins May 1, 2010.
The New Home / First-Time Buyer Credits are available only for purchases that close escrow on or after May 1, 2010.
Applying for the 2010 New Home/First-Time Buyer tax credits: Applications must be faxed after escrow closes. The new application will be available by May 1, 2010. We will deny the application if the 2009 form is used or if we receive the 2010 application before May 1, 2010.
Check this page often. We will add updates as they become available.
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.
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 nonrefundable 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.
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.
- 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.
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.
Applications: We will accept applications by fax only beginning May 1, 2010. Do not use the 2009 application. We will post more information by May 1, 2010.
Reservations: Taxpayers who qualify for the New Home Credit may, but are not required to, reserve a tax credit 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. To reserve a tax credit, the taxpayer and seller need to complete, sign, and fax to us a reservation request to certify that they have entered into an enforceable contract on or after May 1, 2010, and on or before December 31, 2010. A copy of the signed contract must be included with the reservation request. Taxpayers who reserve a tax credit still need to fax an application and a copy of the settlement statement within 2 weeks after the close of escrow. Taxpayers may not reserve a tax credit if the contract was entered into before May 1, 2010. We will post the reservation form and details about the process by May 1, 2010.
If you are only applying for the First-Time Buyer Credit, you will not be able to reserve the tax credit before escrow closes.
Claiming the tax credit:
- The taxpayer must receive a Certificate of Allocation from us to claim the tax credit on their California personal income tax return. The Certificate of Allocation will state the maximum amount the taxpayer can claim listed by tax year.
- The taxpayer should refer to the 2010 New Home / First-Time Buyer Credit Publication for instructions on claiming the tax credit (the publication will be available by December, 2010).
- Special rules apply to married/RDP taxpayers filing separately, in which case each spouse/RDP is entitled to one-half of the tax credit, even if their ownership percentages are not equal. For 2 or more taxpayers who are not married/RDP, the tax credit amount will have already been allocated to each taxpayer occupying the residence on their respective tax credit allocation letter.
- If the available tax credit exceeds the current year net tax, the unused tax credit may not be carried over to the following tax year.
- The tax credit may not reduce regular tax below TMT.
- The tax credit is not refundable.
- Any disallowance of the tax credit may not be protested or appealed.
L.A. County Rents Expected to Decrease
By Gregory J. Wilcox, Writer
Published: Apr 7, 2010
Published: Apr 7, 2010
Apartment dwellers in Los Angeles County will catch a break this year with rents expected to drop 3.5percent, according to a forecast released today.
Vacancy rates will also drop but that won't slow rent decreases, said the Casden Multifamily Market Forecast compiled for USC.
The forecast said that between the fourth quarter of 2009 and fourth quarter of 2011, average rents will drop by 5.2 percent.
"Overall, Southern California will not see sustained increases in rents until the greater economic health of the region improves," said Tracey Seslen, co-author of the forecast.
The apartment sector is still reeling from the 225,000 jobs lost in the county during the brutal recession, she said.
The future health of the Southern California apartment market continues to be shaped by jobs, housing prices, the "shadow" market of rental homes and condos, and new construction, Seslen explained.
Housing prices have been rising and unemployment in the county is currently at 12.3 percent and many luxury condos that didn't sell during the recession have been turned into rental units.
The forecast shows that:
Between the fourth quarters of 2008 and 2009, the county's vacancy rate fell from 7.8 percent to 6.1 percent. It is expected to reach 5.2 percent by the end of 2011.
During the same period, average rents in the county declined from $1.85 a square foot to $1.73 a square foot.
The overall economic outlook for the county is expected to improve this year, but it will take time for the apartment sector to catch up, Seslen said.
Jim Clarke, executive director of the Apartment Association of Greater Los Angeles, said that the city was especially hard hit, with vacancy rate exceeding 12 percent in on some places like West Los Angeles.
As the recession deepened, some renters either moved back home or doubled up with friends.
That's forced apartment owners to reduce rents not only to attract new tenants but to also hang onto the renters they have.
Clark senses things are starting to turn around but recovery for this sector won't be quick.
"We're probably not going to feel it for another year," he said of a market rebound.
Monday, November 23, 2009
October home sales rise 10.1 pct from September
Associated Press, Alan Zibel
WASHINGTON (AP) - Home sales surged for the second month in a row in October, climbing to the highest level in 2½ years as first-time buyers rushed to take advantage of an expiring tax credit.
Home sales nationwide are now up nearly 37 percent from their bottom in January, data Monday showed, though they are still 16 percent below the peak in autumn 2005. At the current sales pace, there is only a 7-month supply of homes on the market and in some areas there are bidding wars.
Joey Wilson, 53, and her husband made unsuccessful offers on 20 Las Vegas homes since midsummer before closing on a four-bedroom, $136,000 home this month.
"It's insane," said Wilson, who relocated from Kentucky. "I've never seen a market like this before."
The National Association of Realtors said home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September. It was the biggest monthly increase in a decade, and far above the 5.65 million pace expected by economists, according to Thomson Reuters.
The recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100, down 7 percent from a year earlier and off roughly 2 percent from September.
Many experts predict prices will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market. The government has tried to counter that trend by offering a tax incentive for first-time buyers and by keeping mortgage rates around 5 percent since the spring.
The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.
The Realtors' report on October home sales reflects offers made before buyers knew the tax credit would be extended. "The incentives really did get people to go out and buy," said Wells Fargo economist Adam York. "The question is: What does the trend look like when the credit is over with?"
Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.
The new deadline means "we're going to see some good activity coming out of the spring," said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc.
But the government support can't last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand. "When we do kick those crutches out from under the housing market, will it be able to stand on its own?" said Mark Fleming, chief economist with real estate information company First American CoreLogic. "It's really hard to tell."
WASHINGTON (AP) - Home sales surged for the second month in a row in October, climbing to the highest level in 2½ years as first-time buyers rushed to take advantage of an expiring tax credit.
Home sales nationwide are now up nearly 37 percent from their bottom in January, data Monday showed, though they are still 16 percent below the peak in autumn 2005. At the current sales pace, there is only a 7-month supply of homes on the market and in some areas there are bidding wars.
Joey Wilson, 53, and her husband made unsuccessful offers on 20 Las Vegas homes since midsummer before closing on a four-bedroom, $136,000 home this month.
"It's insane," said Wilson, who relocated from Kentucky. "I've never seen a market like this before."
The National Association of Realtors said home resales rose 10.1 percent to a seasonally adjusted annual rate of 6.1 million in October, from a downwardly revised pace of 5.54 million in September. It was the biggest monthly increase in a decade, and far above the 5.65 million pace expected by economists, according to Thomson Reuters.
The recovery is being driven by lower prices combined with federal programs to lower mortgage rates and bring more buyers into the market. The median sales price was $173,100, down 7 percent from a year earlier and off roughly 2 percent from September.
Many experts predict prices will hit a new low next spring, perhaps falling another 5 to 10 percent, as more foreclosures get pushed onto the market. The government has tried to counter that trend by offering a tax incentive for first-time buyers and by keeping mortgage rates around 5 percent since the spring.
The tax credit of up to $8,000 for first-time owners was originally set to run out on Nov. 30, but Congress renewed it earlier this month and broadened its reach. People who have owned their current homes for at least five years can now claim a tax credit of up to $6,500 for a home purchase. To qualify, buyers must sign a purchase agreement by April 30.
The Realtors' report on October home sales reflects offers made before buyers knew the tax credit would be extended. "The incentives really did get people to go out and buy," said Wells Fargo economist Adam York. "The question is: What does the trend look like when the credit is over with?"
Home sales are likely to drop over the winter as buyers hibernate for a few months without the looming tax credit deadline.
The new deadline means "we're going to see some good activity coming out of the spring," said Pat Lashinsky, chief executive of online real estate brokerage ZipRealty Inc.
But the government support can't last forever. For example, the Federal Reserve is likely to curtail its effort to push down mortgage rates next year. If rates then rise too high, it would make home purchases less affordable and dampen housing demand. "When we do kick those crutches out from under the housing market, will it be able to stand on its own?" said Mark Fleming, chief economist with real estate information company First American CoreLogic. "It's really hard to tell."
90 Day Foreclosure Moratorium
90 Day Foreclosure Moratorium
New law imposes a 90 foreclosure moratorium if lenders don’t modify loans
(SACRAMENTO) – Assemblymember Ted Lieu (D-Torrance) announced the California Foreclosure Prevention Act, ABX2 7 (Lieu), takes effect June 15, 2009. Beginning today, a foreclosure moratorium will give distressed homeowners an additional 90 days unless the lender implements a comprehensive and systematic loan modification program designed to keep people in their homes.
“We must put a stop to the unending tidal wave of foreclosures that has crippled our economy,” said Assemblymember Ted Lieu. “This law will help people stay in their homes by giving lenders a serious incentive to modify loans.”
“We’re seeing signs that the economy may be stabilizing and I’m hopeful AB X2 7 can get more homeowners to the light at the end of the tunnel,” said Speaker Karen Bass. “This important bill by Assemblymember Lieu will keep more Californians in their homes and stabilize neighborhoods, which is a necessary step for economic recovery.”
The California Foreclosure Prevention Act is designed to force Wall Street to help the citizens of “Main Street.” The Act will give lenders a choice: either enact a systematic and comprehensive loan modification program or face an additional 90 day foreclosure delay on all of your loans.
In order to avoid the foreclosure moratorium, a lender’s comprehensive loan modification program would have to be based, in part, on criteria set forth by the Federal Deposit Insurance Corporation. Additionally, loans could only be modified in a couple ways, including interest rate reductions, extension of the loan term, or principal reduction.
Homeowners in California continue to experience record foreclosures, a direct result of irresponsible lending. According to RealtyTrac, in April 2009, California posted the highest foreclosure rate in the nation, with one in every 138 housing units receiving a foreclosure filing during the month. Total foreclosure activity was up 42% from April of last year.
The California Foreclosure Prevention Act is the first law in the nation to impose a foreclosure moratorium and encourage quality loan modifications.
Assemblymember Ted W. Lieu is Chair of the California Assembly Rules Committee, the former Chair of the Banking and Finance Committee and represents the 53rd Assembly District.
New law imposes a 90 foreclosure moratorium if lenders don’t modify loans
(SACRAMENTO) – Assemblymember Ted Lieu (D-Torrance) announced the California Foreclosure Prevention Act, ABX2 7 (Lieu), takes effect June 15, 2009. Beginning today, a foreclosure moratorium will give distressed homeowners an additional 90 days unless the lender implements a comprehensive and systematic loan modification program designed to keep people in their homes.
“We must put a stop to the unending tidal wave of foreclosures that has crippled our economy,” said Assemblymember Ted Lieu. “This law will help people stay in their homes by giving lenders a serious incentive to modify loans.”
“We’re seeing signs that the economy may be stabilizing and I’m hopeful AB X2 7 can get more homeowners to the light at the end of the tunnel,” said Speaker Karen Bass. “This important bill by Assemblymember Lieu will keep more Californians in their homes and stabilize neighborhoods, which is a necessary step for economic recovery.”
The California Foreclosure Prevention Act is designed to force Wall Street to help the citizens of “Main Street.” The Act will give lenders a choice: either enact a systematic and comprehensive loan modification program or face an additional 90 day foreclosure delay on all of your loans.
In order to avoid the foreclosure moratorium, a lender’s comprehensive loan modification program would have to be based, in part, on criteria set forth by the Federal Deposit Insurance Corporation. Additionally, loans could only be modified in a couple ways, including interest rate reductions, extension of the loan term, or principal reduction.
Homeowners in California continue to experience record foreclosures, a direct result of irresponsible lending. According to RealtyTrac, in April 2009, California posted the highest foreclosure rate in the nation, with one in every 138 housing units receiving a foreclosure filing during the month. Total foreclosure activity was up 42% from April of last year.
The California Foreclosure Prevention Act is the first law in the nation to impose a foreclosure moratorium and encourage quality loan modifications.
Assemblymember Ted W. Lieu is Chair of the California Assembly Rules Committee, the former Chair of the Banking and Finance Committee and represents the 53rd Assembly District.
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