February 2009

Thanks for tuning in, once again, to the StreetsofM. Well it seems as if every major periodical is pointing out the obvious...it's time for first time home buyer's to get into the market, and it's beyond a buyers' market now. As the higher end market takes a hit the only price range we've seen an increase in number of sales was the under $500k market. Check out the articles below regarding current news in San Francisco's real estate market, and feel free to contact me regarding specific statistics and information within your neighborhood.

HOW MUCH HAVE SF HOME VALUES DECLINED?

Below is an analysis of San Francisco neighborhoods comparing dollar per square foot ($/sq.ft.) at what is estimated to be the time when peak value was reached, to what the $/sq.ft. was for sales occurring 10/15/08 – 1/30/09. (Sales occurring after 10/15/08 reflect the impact of the 9/15/08 financial meltdown on the SF market.)

Also important to note is the fact that different areas reached peak values at different times – in 2006, 2007 or 2008 – and the asterisked notes denote the estimated peak value period that pertains. The price ranges of the sales were chosen because we felt them to be in a standard range of value for the area and property type specified – thus attempting to eliminate both the ultra high and the ultra low end, which often distort averages.

Click here to view the analysis

CONDO-CONVERSION LINE

Waiting to go condo is San Francisco's version of waiting for Godot.

Building owners can spend years vying for one of 200 condo conversions slots awarded annually via a lottery. But this year San Francisco is considering letting people skip the line, offering a one-time chance to the hundreds of folks on the lottery list to go condo now- for an extra fee. The goal is to generate more revenue for the cash-strapped city and to create building-industry jobs, because condo conversions generally require some construction work to bring buildings up to code.

Click here to read the full article

IS A MORTGAGE MODIFICATION FOR YOU?

Home loan modifications are designed to save homeownership, but they've also created a new mortgage maze pitted with "buyer bewares."

Both government-sanctioned counseling agencies and local community service agencies concede they have been swamped recently by demand for loan modifications.

The demand stems from a proliferation of federal, state and local level foreclosure relief and bailout efforts from both government and the private lending industry.

Mortgage modifications have been around for years, but those recent relief efforts have raised the profile of the mortgage workouts as an alternative to foreclosures, short sales, auctions, and bankruptcy.

The demand has opened the floodgates of loan modification services now offered by real estate agents, mortgage brokers, attorneys, government agencies, lenders, and other professionals.

No matter where they start, homeowners seeking mortgage modifications are at the mercy of lenders. The workouts are often voluntary and, completed on a case-by-case basis, they frequently come without standardized procedures.

Caught in the lurch, homeowners are finding it tough to know when a modification will work and how to best obtain one. This story and a follow-up next week will shed some light on the subject.

What is a mortgage modification?

A home loan modification, granted only upon the existing lender's approval, permanently reworks some of the terms of an existing mortgage in order to make the loan more affordable to the homeowner.

The strategy is typically designed for homeowners struggling to pay their mortgage, not for those who can pay their mortgage or are eligible for a refinanced loan.

Modifications are generally lender fee-free and involve the lender or loan holder lowering the interest rate and or changing an adjustable-rate mortgage (ARM) to a fixed rate mortgage (FRM) with a 30-year term. Some form of mandated homeownership counseling generally comes with the deal.

Less common loan modifications include adding missed payments to the loan balance and extending the term of the loan. Least common is getting the lender to reduce the principal or wipe out any second mortgages.

A mortgage modification is not a refinanced mortgage — a brand new loan written to pay off the old home loan.

"A mortgage is one of the most complex transactions there is. A loan modification is also a gray area for a lot of people. So of course people need someone to walk them through the process to tell them this is what you need and this is what you don't need," said Ginna Green, spokeswoman for the California office of the Center for Responsible Lending in Oakland.

Is a loan modification for you?

Greg Pennington, a San Francisco-based mortgage banking consultant and counselor with Parker-Pennington Enterprises, says a loan modification isn't for everyone.

A loan modification may not be viable if:

• The modified loan comes with payments you still can't afford.
• Your current interest rate is already low and there's no room for the lender to lower it further.
• You can make the new payments, but the mortgage balance is greater than the value of your home and you don't plan on staying put long enough to reverse the loan-to-value imbalance.
• You have not already missed payments on your mortgage or can't show financial hardship due, say, to job loss, pay decrease, illness or interest rate increase.
• You have other properties, investments or assets that could be liquidated to cover your mortgage debt. A short sale (The lender forgives a portion of the debt owed if you can find a buyer), bankruptcy, auction sale, refinance or other approach, short of a foreclosure, is a better option.

"You can do a loan modification and not be aware of where you stand. You can get a loan modification for a home you don't want to be in," said Pennington.

A financial, housing or credit counselor can help you determine your best option. Just be prepared to hold down the fort for the 60 to 90 days or more it could take to complete the modification, due to potential complications and document processing times.

Written by Broderick Perkins