The City of San Jose Housing Department And  Housing Trust of Santa Clara County are in the final stretch to use up all of the 23 Million award given through the National Stabilization Program part two. The second round of these dollar have been earmarked for revitalization of communities affected by foreclosures and to assist homebuyers purchase a home.

Who is Involved?

The Housing Trust of Santa Clara County is responsible for the distribution and education of these funds along with the Housing department for the City of San Jose. Although the City of San Jose is driving this opportunity to targeted areas the Santa Clara County Housing Trust is charged with educating the community. Other organizations involved in this effort are Neighborhood Housing Services, www.recovery.gov and NHORA(The National Hispanic Organization of Real Estate Associates).

Whats in it For the Public?

Opportunity to not only become a homeowner but also to begin the recovery of the housing market in Santa Clara County. Economists do tend to agree that the recover of the housing market will start in the Silicon Valley primarily because of Facebook and Google’s continued growth. In fact most of Santa Clara County is dealing with a housing shortage and multiple offers for home buyers.

Who Can Qualify?

There are income  limitations to qualifying for these programs among them is the Purchase Assistance Loan(PAL).

How To Get More Information?

Contact the Housing Trust Of Santa Clara County for more information http://www.housingtrustscc.org/

Class registration contact: jeanette@housingtrustscc.org

06085 – Foreclosure Inventories

Foreclosure inventories stayed steady with little change to the amount of people who defaulted on their loans(green) and even less sale activity(blue). This is the first month that showed 0% activity in REO inventory levels(red).

06085 – Foreclosure Filings

Notice of sales increased(blue) while people who received a notice of default fell slightly(green).

06085 – Foreclosure Outcomes

Cancellations fell last month reducing the amount of foreclosure postponements for people currently in default(grey). Postponements(cancellations) are a good indicator of modification and short sale activity. The number of properties going back to the banks as a result of a sale increased slightly(red).

06085 – Time to Foreclose

The average time a homeowner had before losing their home to foreclosure has continued its steady climb and is close to one year(green). Bank are taking an average of 200 days to sell properties(red).

• In Santa Clara County only 37% of the population can afford to buy a home at the $545,000 median range.
• The required take home to purchase is $117,630.
• Your monthly payment will be around $2,940.

The Chart below shows the cost of home ownership in California.

Related articles

• C.A.R. releases Q1 2011 Housing Affordability Index (car.org)

Pilot could open the door for more

The thought of a bank or investor willing to write off a portion of your mortgage can be very attractive but it does come with it’s challenges. Over the past four years there have been attempts to have principal reduction included in modifications and up to now there have been a few clients that I am aware of to have received this opportunity.

Most have had loan amounts under the conforming amount of $417,000. My concern with this decision by Bank of America is for homeowners who have made payments on time. How are they going to feel knowing their neighbor received a principal write down? The taxpayer is most likely going to carry the burden of this move towards principal reduction. This may also be the beginning for future programs but will they make a significant impact in our community?

Santa Clara County may not have an opportunity

The conforming loan amount makes it easy for Fannie Mae or Freddy Mac to offer this in most cases.  Bank of America is a servicer, they don’t own the paper on the loans they service. Fannie and Freddy inventory is primarily located in areas where homes sold under the conforming loan amount. Santa Clara County would most likely not see much activity from this pilot program.

“The program will be funded from the $699.6 million the California Housing Finance Agency received from Treasury Department‘s Hardest Hit Fund last year. A spokesperson for the CalHFA said there is no set amount of loans BofA is targeting, but the bank will be soliciting eligible homeowners soon.”

Related Article: Bank of America set to write down principal on California mortgages (Housingwire)

The General Plan over the next 30 years

On Friday March 25th I attended the 2011 Industry Summit given by the Santa Clara County Association of REALTORS. Among the presenters was Sam Liccardo, San Jose Councilman and Co-Chair for the General Plan Task Force in the City of San Jose. Mr. Liccardo gave a preview of the tentative plan for San Jose that will be presented in 2012 for approval by the city.

Envision San Jose 2040 details the plans San Jose is working towards over the next 30 years and there are substantial changes that will affect the way we live in the Silicon Valley.

General Plan Projections

The plan for San Jose primarily focuses on real estate, jobs, transportation, schools, and retail. The following list highlights some of the specifics in the general plan.

• Adding 400,000 people to the current million plus population
• Planning for a 120,000 new hosing units(4,000 per year)
• Target green tech jobs
• Rail – San Jose Dirdon Station will be a major artery for BART, The Bullet train, and connection for light rail.
• Improve transportation methods – Express Lanes for busses in key areas

Major Attractions

Attracting jobs and professionals to San Jose especially when there is competition from San Francisco. San Jose will create a competitive advantage in the following ways;

• Create urban environments for a professional work force that creates an urban experience (Downtown high rise lifestyle)
• Diversity – San Jose is a melting pot of cultural backgrounds attracting international appeal
• Our neighborhoods – Families can live in a suburban environment yet be close to high tech jobs and access to entertainment
• Developing more charter schools and embracing the success of local school districts
• Low crime rate – Traditionally San Jose has always enjoyed being one of the safest places to live

Challenges

Of course there are always challenges in developing a plan of this magnitude.

• Cost to build housing in San Jose is too expensive at this time and can create a housing shortage once we work though the current surplus
• New rental housing is currently being built with rents in the mid $2,000 range creating an affordable housing shortage
• Opposition to urban high rise construction and the need to educate the community about high density housing

Village Concept

San Jose would like to create more retail/housing areas known as Village concepts similar to Santana Row. Santana Row has indeed created a prime example of how you can mix housing and entertainment in one location. Advantages include;

• Mixed use with ground floor retail
• Access to restaurants and entertainment
• Village concepts also reduce the need to get into your car and drive to to these locations

Development Over the Next 2-3 Years

Some of the immediate changes we can expect in the near future include;

• Construction of more downtown high-rises for high density housing
• Bus Express lanes in 2012-2013
• Construction and Expansion of San Jose Dirdon station

06085 – Foreclosure Filings

Foreclosure is a Reality in 2011

The federal government has provided relief programs to help those who would like to modify their loan and the Obama administration efforts continue but there have been recent attempts by federal legislators to kill HAMP. As you see in this chart investors are also throwing in the towel and my sense is that those people who haven’t made a mortgage payment in 18+ months are now going to have to come to grips with the reality that foreclosure is on the near horizon.

Cancellations have dropped indicating that modifications and/or a short sales continue to be a challenge for some homeowners. REO numbers also indicate that banks are steadily foreclosing in Santa Clara County.

06085 – Foreclosure Outcomes

Affordable Market Hit Hardest

The chart below shows the $300,000 to $500,000 real estate market has been impacted the most in February.

06085 – By Est. Market Value

Related articles

• Santa Clara County February Home Sales Surpass Same Month Last Year (prnewswire.com)
• Realtor group seeks to ease short-sale process (sfgate.com)

As we wind down the 2010 “Year of the Short Sale” the one area that continues to challenge sellers are second lien holders who ask sellers to commit to repayment of  the deficiency(Balance of unpaid loan).

Legal Warnings

The California Association of REALTORS attorneys continue to caution sellers who are being asked to wave their legal rights as a condition of second lien holders acceptance. Second lien holders may not have the ability to obtain a legal judgement against a seller who opts for foreclosure rather than moving forward with a short sale. The concern is that while there is currently no legal precedence in a non-recourse state like california for some of these second lien holders there is a concern that over time we will see a surge in collection efforts by attornies who buy these non performing notes.

Buy Your Freedom

Second lien holders are now asking for a 10% to 20% contribution from sellers who in most cases do not have the ability to pay their way out of this responsibility. Some of you may be thinking that you will just avoid paying and wait for the negative credit to fall off. The bad news is that a collection attorney has the ability to obtain a legal judgment against you and peruse you for fourteen years. Pay now or pay later.

Lesser of two Evils

Who would you rather negotiate with? The lender/servicer of your loan or a collection company. The answer is a no brainer, your servicer/lender will work with you. Collection companies add additional fees and penalties that can make any reasonable agreement difficult to negotiate. My recommendation is that you avoid letting your loan fall ninety days past due. Lenders/servicers are now closing loans and deferring them to collection companies. You may have to continue making payments on your second until you have a short sale approval in hand to prevent your loan from going to a collection company.

The Department of Real Estate has made a shift in their staff workload from licensing to fraud prevention and protection of the pubic. One of the areas that has become a priority has become short sales and how licensees are offering services to the public to deal with short sales.

Flipping Short Sales

A trend that has become an issue has been buyers who entice listing agents to submit their offers only to the lenders for approval.  The issue is with regard to agency(who the agent represents in the transaction) and it can create a legal problem with the listing agent and the homeowner. The banks want the best offer the market supports. Flippers are more likely to make an offer lower than a competing offer. This presents a problem for the homeowner and the listing agent. Homeowners must submit highest and best to protect themselves.

Negotiators must be licensed

The primary requirement for negotiating a short sale is that the individual performing the negotiation must be a licenced real estate Broker or a salesperson supervised by a broker. Sellers must verify the negotiators licence status on the DRE website dre.ca.gov.

Paying a Short Sale negotiation fee

A listing agent that requires the buyer or buyers agent to agree to pay a short Sale negotiation fee on behalf of the seller is in violation of real estate law. An update published in September goes into detail regarding this issue. ConsumerAlert_ShortSalesUpdate

The DRE has recently issued a consumer alert with the intent to assist homeowners navigate through the short process.

DRE_ConsumerAlert_ShortSales

The California Association of REALTORS latest report tracks entry level housing requirements for the state of California over the second quarter of 2010. Santa Clara County has slipped slightly in the affordability index from 55% in Q1 2010 to 51% in Q2 2010.

The report also tracks income requirements for entry level housing and monthly  principal, interest, taxes, and insurance (PITI) payments a buyer should budget towards housing. A first time home buyer would need to make a PITI payment of $2,940. This is taking into account a Santa Clara County median purchase price of $535,500.

Read report here

January 2010 sales data for Santa Clara County.