The California Association of Realtors reported yesterday that home values fell 41% from February of 2007 to February of 2008. During this time period, the median price of a single-family detached home fell from $418,260 to $247,590.

The 41% collapse is more than twice the national average of 16%. California was particularly hard hit due to the number of foreclosure sales, which push down property values.

What This Means For You

If you didn’t know it already, your home value dropped last year. The national decline was the second highest decline on record. If you own in California, then you were harder hit.

The good news is that home sales are up. First time home buyers and investors have come back into the market to snap up depressed properties. As the glut of foreclosed homes on the market is reduced, prices will eventually stabilize.

Hopefully, we are near the bottom.

Christian Follard

Folland & Assoc./South Pointe Title Co.
429 Lenox Ave., Ste. 4w4
Miami, FL 33139

www.southptc.com
Telephone: 786-276-9900

Home Loan Rates decreased this last week from last week:

* Loan fees are referred to as points. This chart represents the average national points charged according to Freddie Mac. For example, if you are paying .7 points on a $100,000 loan your fees will be $700.

Freddie Mack, which was seized last year by federal regulators, is going back to Uncle Sam for a $30 billion infusion after announcing a staggering loss of $50 billion. This is on top of the $15 billion requested by Fannie Mae a few weeks ago after announcing a loss of more than $60 billion last year.

The two companies combined own or guarantee more than 30 million home loans with an aggregate value north of $5.5 trillion – more than half of all home loans.

LESS THAN ZERO

Freddie was forced to make the request because the company is now worth less than zero.

WHAT DOES THIS MEAN FOR YOU

There’s good news, moderately good news, and some bad news.

First, the good news. My kids’ hamster, which they name “Gerbil,” is now worth more than Freddie Mack because he (or she, we’re not sure) doesn’t own anything, and doesn’t owe anything. As result, Gerbil is worth zero, which is more than we can say for Freddie. Chances are, you too are worth more than Freddie.

Now, the moderately good news. Since Freddie and Fannie are both government owned, the cash infusions will keep them afloat while they attempt to repair the mortgage crisis, and they will be more aggressive about helping homeowners with short sales, forbearance agreements, and loan modifications.

Now, the bad news. First, despite the fact that you are probably more financially stable than Freddie and Fannie combined, you won’t be getting a $30 billion bailout. On top of that, some of your hard earned tax dollars will be going to bailout the ailing giants.

Home Loan Rates increased this last week from last week:

* Loan fees are referred to as points. This chart represents the average national points charged according to Freddie Mac. For example, if you are paying .7 points on a $100,000 loan your fees will be $700.

Citigroup announced a new test plan to help homeowners who have lost their jobs. Under the plan, mortgage payments will be reduced to $500 for up to three months while the homeowners search for new jobs. During the three month period, Citi will refrain from foreclosing on the homes. If a homeowner lands another job, Citi will then consider a permanent loan modification.

HOW DOES THIS PLAN AFFECT YOU?

It probably doesn’t, even if you have a loan with Citi. Sanjiv Das, chief executive of subsidiary CitiMortgage, only estimates that this plan will affect thousands of homeowners during the next two years.

Why not tens of thousands? Or hundreds of thousands?

Well, because the plan only applies to a small pool, a very small pool, of homeowners who have home loans with Citi.

• The program does not apply to subprime subsidiary CitiFinancial (which is where a higher percentage of loans are in default)
• The program does not apply to loans sold by Citi to investors even when the loans are still serviced by Citi
• The loan must be less than $417,000
• You must live in the home
• You must be at least 60 days past due on your mortgage
• You must prove that you have registered for unemployment
• If your taxes and insurance exceed $500, you must pay all of your insurance and taxes
• You must pledge that you are looking for a job

This isn’t as sweeping of a change as we’d like to see, but it is creative, practical and a step in the right direction. If the plan works, over time it could be adopted by investors and other lenders.