241 Toll Road Extension Update...

If you live in Southern Orange County or are planning on moving into the area...this information is critical. If you would like to see the proposed map of the area, please email me directly and I will forward it to you. After hearing feedback from Board Members and the community, TCA staff performed additional technical analysis to determine the location of the southern terminus of the four‐mile 241 extension project, which was proposed in October and expected to travel from the road’s current terminus at Oso Parkway to the Ortega Highway area. The Foothill/Eastern Transportation Corridor Agency Board of Directors voted to continue the engineering, environmental, traffic and financial analysis of the extension and provide an interim terminus at a future road called Cow Camp Road near San Juan Capistrano. At a future date ‐‐ and when the adjacent local transportation system is complete in the unincorporated area north of Ortega Highway and east of Antonio Parkway ‐‐ a permanent SR 241 interchange will be built at future “G Street.” This segment is 4.8 miles long and will provide more direct access to Antonio Parkway and Ortega Highway than the plan presented in October. An important consideration in the analysis was how the SR 241 extension project will work with the roadway circulation system that is planned for this area of the county. Cow Camp Road is planned to run parallel to Ortega Highway, to the north of San Juan Creek. Cow Camp Road will be the area’s major east‐west arterial roadway with two to three lanes in each direction. It is projected to carry 30,000+ trips a day in 2035. Ortega Highway will become a secondary road with one lane in each direction through this area and is estimated to carry 6,000 trips a day in 2035. The engineering, environmental, traffic and financial analysis is scheduled to be complete in October 2012 and construction could begin shortly thereafter. The construction cost is estimated at $200 million. Environmental impacts of the project have been minimized through project design features and can be successfully mitigated. One of the design features included in the 4.8‐mile project is the construction of three wildlife crossings to insure continued wildlife movement through the area.

Financing A Home Is Easier Than You Think!

As an agent, I think this sort of information needs to get out to more consumers, so I am passing on this email I got yesterday to help put the word out... One thing that I honestly can say is holding back the housing market is the overwhelming belief that buyers cannot get financing. The consensus seems to be that only large down payments are required along with very high credit scores. Even then the belief is that the underwriting is so stringent that most buyers don’t want to apply for fear of having their loan rejected. What would really help and could make a difference is for agents to let their clients know that these misnomers could not be any father from the truth. Agents can post information on websites, send information to data bases and even blog to get the word out. The fact is, while lending is not the free-for-all it was five years ago, common sense has come back full swing. Meaning, down payments now are smaller on higher loan amounts than have been in place for years. The government agencies feel the worst of the home price decline is behind us allowing more leniencies. In addition, underwriting documentation requirements have eased because the economy has stabilized and shown signs of improvement so less risk is at stake. In Orange and Los Angeles Counties, borrowers are able to secure a home loan in the amount of $729,750 with only 3.5% down payment. That equates to buying a home for $756,250 and only needing a down payment of $26,500. The down payment can be a gift from family members as well. The credit score can be as low as 640. With 10% down payment, a borrower can obtain financing for their home with a maximum loan of $875,500. With 20% down payment the maximum loan is $2,000,000. From there the down payments increase the higher the loan amount requested. Please find attached additional programs that include Foreign National, Pledged Assets and Asset Depletion loans. Yes, there is now financing available other then Fannie Mae, Freddie Mac, FHA and VA. Please keep in mind it is best for buyers to be preapproved with a lender before shopping for a home so any specific nuances in their case can be worked out prior to entering escrow. However, there really isn’t any reason for buyers to be fearful when applying for a home loan. If they can really afford to make the payment, have reasonable credit and can substantiate their income then it is reasonable to expect they will be approved. PrimeLending is more than Fannie Mae, Freddie Mac, FHA and VA FOREIGN NATIONAL PROGRAM  Visa Not Required  FICO Not Required  U.S. Tax Returns Not Required  U.S. Bank Deposit Not Required  50% Loan to Value  Portfolio ARM Product PLEDGED ASSET PROGRAM  “Pledge” Assets in Lieu of Down Payment  90% Loan to Value to $5 Million  No Mortgage Insurance  No Liquidation of Assets  No Capital Gains Tax  Portfolio ARM Product ASSET DEPLETION PROGRAM  Debt to Income Problem Solver  Assets and age are used as income  Income added to application 90% FINANCING TO $875,500  $625,500 1st + $250,000 2nd  Required Mortgage Insurance  30 Year Fixed or ARM Products For more information, please contact a member of The Kevin Budde Team. Kevin Budde, Neal Pilon, Tiffany Garcia, Joelynn Warner, Katrina Hanshaw

What Will 2012 Bring For Southern California Real Estate?

Let's get out our crystal ball and take a look... That is about as much as anyone I have talked to knows. It is only a projection based upon trends, but really no one knows for sure. Everyone is guessing, but we can make some pretty good calculations, and estimations based on what’s actually happened and inventories. First of all, you must remember that home ownership is about a whole lot more than a cash investment. Yes, it’s a hedge against inflation (more on that below), and yes, it’s the only investment where you can leverage your cash on such a large transaction. Those points alone should make real estate attractive. But houses were never meant to be ATM’s, as many have sadly discovered, and they were not meant to be flipped as fluently as trading stocks, which still others have discovered. But for the long term buy and hold mentality, it’s hard to beat real estate. And, that philosophy was just discussed by 3 economists in the New York Times in the December 31st Business section. But home ownership is much, much, more. It is where you raise your family, it is your sanctuary, and it is a quality of life embedded in your investment. But maybe most importantly, it’s a way to protect your housing dollar from ever rising again...EVER. To find out what next year will look like? Read the whole newsletter, and you should get a pretty good idea. A summary statement might be, look for the beginnings of the turnaround, for prices to bottom out by 2nd quarter, interest rates to stay killer for at least 6 months, and the overall economy to do its part, as it’s projected to grow about 4% this year (last year was approximately 2.7%). WHERE WILL HOUSING PRICES GO THIS SPRING? There are some indicators worth noting. First of all,the slough off of foreclosures last year due to moratoriums and fraudulent robo signing issues should be off the radar and allow foreclosures to ramp back up. That should mean more competition with the short and equity seller, as well as some pent up listing activity of people who didn’t want to list during the holidays. The first and second quarter is always when you see the most listing activity. Following are 4 brief statements by various entities about spring pricing. Zillow believes we not see a bottom in prices until the first quarter of 2012. Standard and Poor thinks prices will drop 5% in the next few months. JP Morgan Chase believes prices will depreciate 6% to 7% over the next 6 months. Barclays says prices will fall 7% by the end of the first quarter of 2012. One thing everyone seems to be in agreement on: housing prices will bottom out by mid-2012 and then stay flat, bringing this down market to an end. A long recovery may be in the offing, but it will be hard for buyers to stay on the sidelines with current pricing and interest rates. Don’t be fooled by a house that MAY decline another 2%-3%, but be stuck with a higher interest rate on the loan that more than eradicates any savings on the housing price. WHAT WERE THE ACTUAL NUMBERS FOR NOVEMBER (THE LATEST MONTH AVAILABLE)? The total number of resale properties was 2,080 which broke down to 1,452 single-family and 628 condos. Looking closer at the sales, there were 974 single-family equity sales, 265 short sales, and 213 REO listings sold. All these numbers are closed sales. There were 292 equity condo sales, 187 short and 149 REO listing. (All numbers for Orange County. You may check other counties throughout the state by going to www.dataquick. com). There were a total of 1,643 Notices of Default filed, and 1,538 Notices of Trustee Sale recorded. There was a total of 535 trustee sale auctions held, with 172 being purchased by investors and 363 going back to the banks (those are the future REO or bank owned listings that will be coming out in future months).

Economic Week In Review

"Happy days are here again." Milton Ager and Jack Yellen. And while it seems that consumers are certainly feeling happier, not everything that happened last week was cause for song. There was good news last Friday, as the first look at Consumer Sentiment for January came in at 74.0, which is the highest level since May 2011. However, there was also news last week that the holiday shopping season may not have been as robust as previously thought. Retail Sales in December rose by a meager 0.1% from 0.4% in November, and when stripping out autos, sales actually fell 0.2%. Why did this happen? It seems that steep holiday discounting held down the value of goods sold, so sales were big, but only because of the heavy discounting. The news out of Europe last week also wasn't too happy. German Chancellor Angela Merkel and International Monetary Fund Managing Director Christine Lagarde met to discuss and finalize the debt restructuring deal for Greece. Back in October, a deal called for Bondholders to "accept" a 50% haircut on the face value of the Greek debt - but as creditors and authorities have started to forge a final deal, the actual haircut back to investors is looking quite likely to be larger than 50%. This is simply because worsening financial conditions in the Greek economy make paying the debt back with "just" a 50% haircut highly unlikely...maybe impossible. What's more, the next reasonable question to consider is will Ireland, Portugal and even Italy ask for a similar haircut or deal on what may be unsustainable debt in their countries? The happy news is that these problems are finally being addressed to make things better in the future. And in the short term, the uncertainty should keep money flowing into the relative safe haven of the US Dollar and US Bonds - including Mortgage Bonds, to which home loan rates are tied. In addition, Mortgage Bonds continue to be supported by the Fed's purchases, which are also helping to keep home loan rates at record low levels. All of this means that now continues to remain a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients. Forecast for the Week Despite the Bond Markets and all Capital Markets being closed on Monday in observance of Martin Luther King, Jr. Day, the rest of the week's economic calendar is full: • Manufacturing strong? The week's economic data kicks off on Tuesday with a manufacturing indicator from New York's Empire State Index for January. In addition, the Philadelphia Fed Index for January will be released on Thursday. Last month, both reports reached their highest levels in months. Remember: The Stock Market likes to see healthy economic growth because that translates to higher corporate profits. However, the Bond market prefers a moderate growth environment that won't generate inflationary pressures. • Speaking of inflation… We'll see inflation reports on the wholesale level in the Producer Price Index on Wednesday, followed by the Consumer Price Index on Thursday. Inflation has remained tame…and Bondholders will be closely watching these two indicators for any signs of an uptick. • Back on track this week? Initial Jobless Claims will be released as usual on Thursday. Last week's number showed an uptick in claims and broke the recent trend of decreasing claims. However, the rise could have been due in part to layoffs of seasonal holiday workers. So the markets will be watching to see if this report gets back on track with the recent positive trend. • No place like home! Housing data in the form of Housing Starts, Building Permits and Existing Home Sales will all be reported this week. Housing continues to troll around low levels despite record low home loan rates. Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result. As you can see in the chart below, Bonds and home loan rates are continuing their improving trend. I'll be watching this closely as we head further into the new year. Chart: Fannie Mae 3.5% Mortgage Bond (Friday Jan 13, 2012) The Mortgage Market Guide View... Housing News: 11 Trends from 2011 The National Association of Realtors® surveys homebuyers and sellers each year to uncover housing trends and monitor changes taking place in the industry. This year's report highlights a number of trends that haven't been seen in years. Here are just 11 highlights from the 2011 report. 1. In 2011, 37% of homebuyers were first-time buyers - which was down from 50% in 2010. 2. Last year, 88% of homebuyers used the Internet to search for a home. That number was down slightly from a high of 90% in 2009. 3. The typical homebuyer searched for 12 weeks and viewed 12 homes. 4. The number of buyers who purchased their home through a real estate agent or broker climbed to 89% - a share that has steadily increased from 69% in 2001. 5. Nearly 1 out of 4 buyers said the application and approval process was "somewhat more difficult" than expected…and 16% reported it was "much more difficult" than expected. 6. About half of home sellers traded up to a larger and more expensive home…and 60% traded up to a new home. 7. The top 3 factors influencing neighborhood choice were: the quality of the neighborhood, the convenience to job, and the overall affordability of homes. 8. The typical seller lived in their home for 9 years. That number has increased from 6 years in 2007. 9. Although 61% of sellers said they reduced their asking price at least once, the average home sold for 95% of the listing price. 10. Only 10% of sellers sold their homes without the assistance of a real estate agent. Of those people, 40% knew the buyer prior to the sale. 11. The typical "for sale by owner" home sold for $150,000 compared to $215,000 for the average agent-assisted home sale. All Contents ©2012 The National Association of Realtors®.

FHA Mortgages May Be the Best Choice

FHA Mortgages May Be the Best Choice

State Target Property Tax Payers

In a recent article in the Orange County Register, we learn that Mello-Roos tax assessments are NOT tax deductible and starting on our 2012 tax returns, the state will have the improved software to track the various portions of our tax bill and what is deductible and what isn't. For instance Vector Control is also, not tax deductible and I think most homeowners were not aware of this either. As many as 5 million California property-tax payers who have been taking the entire amount they pay off their state income taxes could see a major cut in their deductions when they file next year. Beginning with the 2012 tax bill (the one due in April 2013), the state Franchise Tax Board will require property owners to break down their property taxes into deductible and non-deductible portions. That means property owners who have been deducting their Mello-Roos fees — often running into thousands of dollars — will no longer be able to deduct those or any other special assessments like vector control or mosquito abatement. In Orange County, 181,550 of the county’s approximately 900,000 parcels were subject to Mello-Roos in the 2011-2012 tax year, according to the auditor-controller’s office. They were billed a total of $207.8 million. The difference between deductible and non-deductible property taxes is not a new rule. Mello-Roos fees, which pay for roads, schools, fire stations and other public facilities in new developments, have not been deductible from state income taxes since the legislature authorized the special assessments 30 years ago. Many property owners, however, routinely deduct the entire amount of their property tax bill from their state income taxes instead of only the parts that legally are deductible. Others just use the amount on the Form 1098 that their mortgage holder paid to the county tax collector on their behalf. Until now the Franchise Tax Board didn’t to go after them. A new computer system being installed this year, however, will allow the agency to distinguish the portions of property tax bills that are deductible and non-deductible, said Daniel Tahara, a FTB spokesman. He said the new scrutiny of property taxes is not due to any political pressure to increase tax revenues to close the state’s gaping budget deficit. “Every year we look at areas of non-compliance and this happened to be one that came up,” he said. Tahara said the agency is announcing the new rules now so taxpayers can make any adjustments this year for their 2012 state tax filing next year. He said the FTB had planned to impose the new rules on 2011 tax filings due this April, but held off after getting “negative feedback” from tax preparers and the public. Pat Yeckel, president of Canyon Tax and Bookkeeping Service Inc. in Rancho Santa Margarita, said that she and other tax preparers have known Mello-Roos and other fees weren’t deductible, but that clients usually don’t have the breakdown of their property tax bill. It will be a particularly big deal for property owners in South County and other new developments where many of the public amenities were paid through Mello-Roos districts. “This is going to be a big pain,” Yeckel said, noting that just getting the property tax paperwork can be a hassle. Taxpayers will need a copy of their tax bills whether or not they pay their own property taxes or have them paid through their mortgage payment because they will need their parcel number in addition to the deductible/non-deductible breakdown for their 2012 state income tax filing. Shari L. Freidenrich, the Orange County Treasurer-Tax Collector, said her office is just beginning to prepare for what is expected to be an onslaught of questions. She said taxpayers can now get property tax bills back two years online. You will need the property address or the assessor’s parcel number (APN). You can also get the bill emailed to you at ttcinfo@ttc.ocgov.com

Five Issues For Housing for 2012

By Nick Timiraos from the Wall Street Journal The Associated Press is trying to figure out where the housing market is headed in 2012 offers a strong sense of déjà vu: The market feels just as it did at the beginning of 2011, when many pundits optimistically predicted that housing would finally hit bottom. The housing market didn’t deteriorate in 2011, but it didn’t firm up either amid an economic recovery that struggled to find its footing. So what does 2012 hold? For one, the story will be local. While many housing markets rose together during the boom and fell together during the bust, they’re exiting the downturn at different speeds, and so it’s not very useful to talk about a “national” housing market. With that caveat in mind, here’s a look at five key issues that will help determine whether prices stabilize and sales improve in the coming year: 1. Confidence and jobs: The housing market badly needs the economy to add more jobs to stimulate demand for home purchases and to prevent mortgage delinquencies from rising. The good news is that with prices down by 30% from their peak and mortgage rates at their lowest recorded levels, housing is more affordable than it has been in decades. But many would-be buyers are worried about buying today if prices are going to be lower tomorrow. Others don’t want to buy a house until they have more evidence that they’re not going to get laid off or see their hours cut back. 2. Foreclosures: Whether home prices hit a floor this year also relies on how banks manage a huge overhang of foreclosed homes that they haven’t yet taken back and resold. Banks and other mortgage investors own around 440,000 foreclosed properties, but there’s another 3.4 million loans in foreclosure or serious delinquency, according to estimates by Barclays Capital. Because banks are faster to cut prices to unload inventory than are mom-and-pop sellers, home values can fall further as the share of distressed sales rises. This is one by reason why policymakers at the Federal Reserve and elsewhere are talking about converting some of those foreclosed homes into rental properties. Look for some pilot programs where government entities test the concept in 2012. 3. Rents: Apartment rents are rising as vacancy rates drop to levels that are already lower than the low point in 2006 during the previous economic cycle. If low mortgage rates aren’t enough to give urgency to would-be buyers, rent hikes could accelerate buyers’ decisions to take the plunge. 4. Mortgage credit and rates: Federal policymakers have taken extraordinary steps to keep mortgage rates low and federal-backed entities are responsible for backing nearly nine in 10 new mortgages. But it’s still hard for many buyers to get a loan because banks are demanding lots of documentation of borrowers’ incomes, and appraisals are tanking some deals. When appraisals come in below agreed upon sales prices, sellers must drop prices or buyers must put down more cash. Banks will need to put their legacy-loan problems behind them before there’s much easing in lending standards. Other wildcards remain on the lending and rates front: will the Federal Reserve initiate another round of buying mortgage-backed securities—a step known to some as “quantitative easing”—to lift the economy? Will continued litigation and demands that banks buy back defaulted loans from mortgage titans Fannie Mae and Freddie Mac lead them to be more stingy with mortgage credit? And will other lenders move in to fill that void? Will the government do more to juice up refinancing programs? Will rates rise as the government attempts to draw back private capital by raising the fees that Fannie and Freddie charge to lenders? 5. Regulation: Many analysts don’t expect Congress to make major changes to Fannie Mae and Freddie Mac during the election year, but several major regulatory changes could significantly reshape the future of the lending landscape in 2012. Dodd-Frank Act lending rules that have yet to be spelled out by regulators will influence how banks price loans that are bundled and sold into securities. Another set of rules will determine how banks must satisfy provisions for them to determine that a borrower has the ability to repay a mortgage. Meanwhile, the regulator that oversees Fannie and Freddie is revamping the way that mortgage companies are paid for collecting loan payments. This could lead to a broader shakeup in the mortgage industry that ultimately influences how much borrowers are charged for mortgages and how banks handle loans that fall into delinquency.