Oct. 1, 2009 Page 1 of 5

C.A.R. Mortgage Update

New rules coming soon

Beginning Oct. 1, new rules adopted by the Federal Reserve will go into effect, requiring greater diligence on

the part of mortgage lenders and brokers who issue high-cost loans for borrowers with less than favorable

credit. The interest rates on these loans are at least 1.5 percentage points greater than the average prime

mortgage rate. The regulations, which were finalized in July 2008, prohibit lenders from making a high-cost

mortgage without verifying that a borrower could repay the loan in the conventional way, and not through a

Foreclosure sale.

During the height of the market, subprime lenders often would offer loans without requiring borrowers to

provide proof that they could make the monthly payments. In some cases, borrowers used stated income

loans, which allowed some borrowers to fabricate annual income figures and buy homes without down

payments.

Although many believe the Federal Reserve’s new rules represent one of the more substantial efforts on the

part of the federal government to combat such lending practices, some consumer advocates are concerned.

According to a policy associate at the Center for Responsible Lending, the new regulations do not cover

option ARMs, which enable borrowers to choose from several monthly payment options during the loan’s

early years.

To read the full story, please click here:

http://www.nytimes.com/2009/09/27/realestate/27mort.html?ref=realestate

Oct. 1, 2009 Page 2 of 5

The Wall Street Journal

Seeking real estate bargains? Try looking at the high end

Buyers hoping to purchase deeply discounted homes may want to consider purchasing homes in the high

end—especially those priced $2 million or more. In some cases, buyers may be able to command even

lower prices on these homes, as financing continues to be a challenge for buyers of luxury homes.

KEEP THIS IN MIND

• While data from the Federal Housing Finance Agency (FHFA) showed that average home prices

rose 0.3 percent nationwide between June and July, including a 1.6 percent increase on the west

coast, the data only relate to homes purchased with conforming loans guaranteed by the FHFA.

These loans are mortgages of up to $417,000 or up to $713,000 in the country’s most expensive

regions. The outlook for homes priced above that amount remains bleak.

• In many areas across the country there is a new level of value being established. According to one

broker, homes that used to sell for $8 million now are selling for $6 million, while homes previously

priced in the $10 millions are selling for $8 million. The price adjustment in the high end appears to

be about 20- to 30 percent lower.

• A recent survey by Trulia.com showed that sellers listing homes for more than $2 million have

reduced their asking prices by a total of $7 billion, with an average price reduction of 14 percent.

• Chip Case, economics professor at Wellesley College and coauthor of the Case-Shiller index, says

that some of the markets finally may be catching up to the wider housing market downturn. “That

level was more in the hold-out category,” he says. “Up until recently, the foreclosures weren’t

hitting that level. But they are now. There’s no question about that. You’re seeing some contagion

from the prime level to the luxury end.”

• Sooner or later, even high-end homeowners need to sell. And, when they get tired of waiting, they

reduce their asking prices. Factoring in taxes, upkeep and the opportunity cost of keeping money

in a non-performing asset, an empty luxury home may be costing owners a lot just by sitting there,

giving them a powerful incentive to make a deal.

To read the full story, please click here:

http://online.wsj.com/article/SB10001424052970204488304574429311693264646.html

Oct. 1, 2009 Page 3 of 5

In Other News…

Los Angeles Times

First-time buyers, it’s time to take advantage of housing tax credit

If ever there was a great time buy a first home, it’s now. Interest rates and housing prices are low, and the

federal government is giving money to buyers in the form of an $8,000 tax credit.

To read the full story, please click here:

http://www.latimes.com/business/la-fi-perfin27-2009sep27,0,2876588.column

Sacramento Bee

Index shows home prices rose for 3rd month in July

Home prices rose for the third month in a row in July, new data showed, more proof a fragile housing

recovery is underway.

To read the full story, please click here:

http://www.sacbee.com/business/nation/story/2217216.html

CNN

New home sales rise for 5th straight month

Sales of newly constructed homes rose for the fifth straight month in August, a government report said

Wednesday.

To read the full story, please click here:

http://money.cnn.com/2009/09/25/real_estate/new_home_sales_august/index.htm?postversion=200909251

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Oct. 1, 2009 Page 4 of 5

Los Angeles Times

Home buyer tax credit might be extended for service members

Will Congress extend the wildly popular $8,000 home buyer tax credit beyond its Dec. 1 expiration date?

That’s a question generating huge pressure on Capitol Hill from would-be buyers who haven’t found the right

house as well as from realty agents, builders, lenders, and squads of lobbyists working on their behalf.

To read the full story, please click here:

http://www.latimes.com/classified/realestate/news/la-fi-harney27-2009sep27,0,65703.story

Sacramento Bee

Study: Housing more affordable for “move up” buyer

According to a study by Coldwell Banker, 2,200 square-foot-homes with four bedrooms, 2 ½ baths and

attached garages are becoming more affordable. About a third of the markets in the survey boast an

average price below $200,000, the highest number in the past five years.

To read the full story, please click here:

http://www.sacbee.com/308/story/2203345.html

Oct. 1, 2009 Page 5 of 5

What you should know about the market

• The U.S. Dept. of Housing and Urban Development (HUD) offers an online guide to preventing

Foreclosure. The guide provides consumers with information such as how to contact a housing

counselor; when and how to talk to their lender, how to find Foreclosure resources, tips on avoiding

Foreclosure and foreclosure scams, as well as information for consumers who cannot keep their

home. The guide to preventing Foreclosure can be accessed by visiting

http://www.hud.gov/Foreclosure/.

• First-time home buyers can easily become overwhelmed with the various loan choices available.

Experts recommend first-time home buyers apply for a loan with an interest rate fixed for the

duration of time the buyer plans to live in the home. Hybrid loans may be an option worth

considering, as they are fixed for a certain period and later change to an adjustable-rate mortgage.

This may be a viable option for a buyer planning to stay in the home for just a few years. However,

most buyers should consider a 30-year fixed-rate loan.