Autumn Yard Care Assures a Springtime Garden

WIN Home Inspectors had great suggestions for homeowners.
After a flurry of work managing yards and gardens during the summer growing season, many homeowners and home shoppers are ready to take a break from outdoor activities. Unfortunately, handling autumn lawn care tasks is necessary to assure that the lawn, trees, and plants are healthy come springtime. Fortunately, the fall to-do list is easy—and will vary somewhat by climate. But in general, here’s what clients can expect to find on their outdoor chore list:
Mow and kill weeds as usual.
Rake and manage leaves.
It may sound simple and obvious, but letting leaves pile up for too long, especially in a moist environment, can choke the grass beneath, leading to “dirt patches” where formerly living grass used to be. You need not run out and rake every day, but keep an eye on accumulating leaves and consider raking every three days or so. When raking, rake deeply rather than just skimming the surface to remove leave, which can help remove “thatch”—a dying layer between the soil and grass. As the season progresses, double-check that leaves aren’t clogging outdoor drains or gutters.
Water, but time watering carefully.
Water trees and shrubs in early fall (if you’re not getting normal rainfall), and water both evergreen and deciduous plants in early fall. However, once leaves begin falling wait until the plants are bare before giving them a major watering. The reason for this is to prevent the plants from launching new growths that won’t be hardy enough to withstand the coming winter.

Get Those Loans in Soon!

If you've been thinking of buying a home, refinancing, or are buying, but haven't locked in the rate yet because of market uncertainty...this is something you should know.
Sue Baker, our in-house lender, notified us this morning that the $729,000 conforming loans now available here in California must close by December 1, 2008. The law implies that the new maximum ($625,500) doesn't take effect until the new year, but this new time limit adds additional pressure on borrowers.

The Five Top Credit Mistakes

With the recent tightening of credit requirements by lenders, these pointers from Credit CRM might be helpful:

Credit Mistake #1: Closing Credit Cards Accounts
This is probably THE biggest credit mistake that consumers make. What you may find surprising is that closing credit card accounts can hurt your credit score almost as badly as missing a payment. Consumers make this mistake based on poor advice from a mortgage lender as a strategy for improving their credit scores.
In most cases, credit information will remain in your credit reports for seven years from the account's date of last activity, but you never want to get rid of old, positive information in your credit reports. This information actually helps your credit scores. So, what should you do with old credit cards that you don't use any longer? What you don't want to do is to let the account become inactive. Use the card every few months for low dollar purchases like dinner or a tank of gas....then pay the bill in full.
Credit Mistake #2: Missing Payments
This one's a no-brainer. Your FICO score evaluates previous late payments in three different layers: How severe, How recent, and How frequent
Credit Mistake #3: Settling Accounts
"Settling" is a term used in the consumer credit industry that means accepting less than the amount you owe on an account. A Short Sale, when the lender accepts less than the full amount due on a mortgage is an example of this. The only way to avoid the damage to your credit scores is to arrange a deal with the lender to report the account as 'paid in full' as opposed to 'settled'.
Credit Mistake #4: High Revolving Utilization on Your Credit Cards
Most consumers believe that making your payments on time is all it takes to have good credit and earn great credit scores. What they don't realize is that almost a third of your score is determined by how much you owe on your credit card accounts. In order to score the most possible points in this category, they advise keeping your revolving utilization at 10% or less.
Credit Mistake #5: Excessively Applying for Credit
Whenever you apply for credit your application gives the lender permission to access your credit reports. Statistics show that consumers who have more inquiries are higher credit risks than those with fewer inquiries. It is for this reason that the more inquiries you have, the more points you lose in the credit score calculation.
Only apply for credit when you absolutely need to, and avoid those in store offers of "10% off" in exchange for applying for a store credit card. This may sound like a great idea but the reality is that while you may save a few dollars on your purchase, those inquiries could end up costing you a lower credit score which could result in higher interest rates on auto or mortgage loans in the future.

The Problems With FHA

Ever since the mortgage industry stopped making loans for anyone with less than a 20%down payment and nearly perfect credit, "the only game in town" for first time buyers has been FHA. What we in the industry are seeing is a 45 to 60 day backup on processing as these loans are becoming more popular. And why not? 3% down, a fixed rate thirty year mortgage, with a current maximum loan amount of around $729,000...at least in California. Sounds pretty good.
Their loan volume has tripled in the last year alone, and now Congress wants to have them handle almost all the loans about to be foreclosed upon, refinancing these unaffordable loans.
The difficulty is that they have neither the funds nor the staff to handle this amount of new business, and these will both be slow in coming.
Right now, they are trying to insure 140,000 new loans every month, with a staff of under a thousand people nationally.
If this situation is not remedied soon, we may be reading about an FHA bailout next year.

The Bill Has Passed...or Have They Passed on the Bill to Us?

Second time was certainly a charm! With a vote of 263 to 171, the House passed the $700 billion Emergency Economic Stabilization Act of 2008 today. The Senate approved the same bill Wednesday night by a vote of 74-25. Soon after, the President signed the bill, officially passing the legislation.
I know the question we are all asking ourselves right now is how is this going to affect all of us. How will it affect our retirements? How will it affect the mortgage crisis? How will it affect our portfolios? The answers to these and other questions will only be answered over time but at least it's a step toward stabilizing our markets.
The government’s resolve to take action that is focused on fixing the credit crisis should add greater liquidity to the market and have a beneficial effect on homebuyers/sellers and the real estate industry as well. Keep in mind housing represents 20 percent of the GDP so it remains an important part of our national economy. Let’s watch as the details unfold over the next few weeks and we’ll wait to see whether the $700 billion in aid is our nation’s answer to prosperity.

One Man's Take on The Economic Crisis

Attached is an article written by Barry Habib of the Mortgage Market Guide
The Chinese have a proverb: “May you live in interesting times.” And we are living through interesting times indeed.

Whatever the political posturing regarding the current rescue plan, a plan needs to be passed. Credit markets are frozen and banks are going bust every day. This is not totally because of "toxic" mortgages. This has a lot to do with FASB 157, also known as "mark to market".
Each day lenders must mark their assets to the marketplace. It's like you having to appraise your home everyday and if your neighbor was under duress because they got very ill, divorced, lost their job and was forced to sell their home quickly they may have sold it super cheap. Now, does that mean your house is worth that super cheap price? Clearly not. Why? Because you are not under duress. You have the time to sell your home and get a more normal price, which more accurately reflects true market conditions. But "mark to market" does not allow for this, which creates a vicious cycle.

Why is this so bad? Because as lenders mark down their assets, the amount that they have loaned previously becomes much riskier in relation to their assets. For example, say a bank has $1 million in assets and say they have $15 million in loans outstanding. Their ratio is an acceptable 15 to 1. But should they take a paper write down of $500 thousand due to "mark to market" requirements, their ratio suddenly changes to 30 to 1. This is because their assets are now only $500 thousand after taking the paper loss, while their loans outstanding are $15 million. And at 30 to 1 this bank is viewed as a risky investment. So the stock price starts to get hit, it becomes harder to borrow, and most importantly harder to make money. The bank is then forced to sell some of its loans to reduce its ratio...at cheap prices. And this makes the vicious cycle continue.
And a quick look at the holdings of these loans show that 95% are problem free. Additionally, the Credit Default Swaps (CDS) that are used with the pools of mortgages are relatively safe. But this requires a bit of understanding. You see, when a pool of mortgage loans is put together, it isn't just A paper or B paper etc….it's everything. It’s got some A paper, B paper, C paper…and even what looks like toilet paper. An "A" investor buys the whole pool but because they are an "A" investor their safety is greater because they can avoid the first 20% (an example) of defaults. So they own the whole pool but are sheltered from the first batch of defaults, and for this they get the lowest rate of return. As you can figure from here the more risk investors want to take, the higher the return. So the investments are relatively safe, but the accounting rules currently place undue pressure on the banking institutions.
Now add to all this, the opportunistic “shorting” done on the financial stocks, much of it illegal because those shorts did not legitimately borrow shares (called naked shorting), and you exacerbate this whole problem. Thank goodness for the recent temporary ban on shorting in the financial sector. As for the plan the government is the only one who can step in to do this. And they have to do this. And they will do this. The nauseating political posturing from both sides is just part of the process.
This is not easy to understand for the general public. In fact most politicians don't get this either. That's why it is a difficult yet critical bill for them to vote on. Once this is done it will take some time but the markets will stabilize. As for the real estate and mortgage industries, it will take a bit of time but we will make it through this. Rates will remain attractive and the influx of credit availability will help the housing market gradually improve. This ultimately will be the medicine needed to improve the situation overall.

It's Time to Stop Pointing Fingers and Do Something

My son and his wife own a fledgling firm that tests saliva for drug use. It has been growing quickly...but so quickly that new testing machinery is needed. Their success comes at a time when money is frozen.
C.A.R. and NAR (the state and national associations of Realtors) strongly support Congress’s efforts to craft and quickly pass a recovery plan in order to calm the nation’s financial markets and make credit attainable again for families and businesses.
U.S. financial institutions have been unable to raise any capital because of illiquidity of suspect or poorly performing mortgage backed assets on their books. With no way to remove these assets, which may put the institution at risk, investors have refused to invest or extend new capital to financial institutions. The result has been a near collapse of the U.S. financial market and a spike in the cost of credit that makes it nearly impossible for even qualified people and businesses to obtain or expand a line of credit. Under these circumstances, Californians will find it very difficult to obtain home loans, student loans, and other financing for the foreseeable future.