Economists call rising delinquencies and foreclosures among prime borrowers the third wave foreclosures. The first two waves were do to housing speculation and subprime borrowers -- borrowers that had taken out some sort of short term, stated income, or adjustable rate mortgage with lower credit scores.

In the housing market, a lot of prime mortgages are becoming subprime as a new wave of foreclosures begins to hit. Mainstream homeowners -- those previously "safe" borrowers with sound credit who have conservative, fixed rate mortgages are getting into trouble at an alarming rate.

In the first quarter, the percentage of these borrowers who were behind on their mortgages or in foreclosure had doubled from a year earlier, to nearly 6%. For the first time in the housing crisis, these homeowners accounted for the largest share of new foreclosures.

With the current unemployment rates nationwide rising and California leading the way, it only stands to reason that we better know how to surf or swim, the wave is coming.     

I know many people are confused about the new Fannie Mae and Freddie Mac Home Valuation Code of Conduct.  This is the worst measure that I have seen since I have been in the industry.  This is not a regulator measure it is only the Fannie and Freddie's response to a legal threat from Mario Cuomo in response to unethical business dealings on the part of big banks (WAMU). The effect of this measure will be the rising cost of lending for borrowers and longer turn times.

The code only applies to Fannie and Freddie loans.  FHA loans do not apply to the code, though some of the lenders I have talked with are going to apply the code to all loans.  Only a few lenders have their policies in place.  Some lenders are requiring that all appraisals are ordered thru their website.  While others don't know what to do about this.

The code basically says that anyone involved in the transaction can not directly order or have contact with the appraiser.  This will cause many unforeseen problems in all of our future deals.

I believe we will see many changes in the code once Fannie and Freddie realize what a mess they have created.  There will be lot of problems after implementation (May 1st, 2009) and it will undoubtedly increases overall costs of borrowing.   

Stay tuned I am sure there will be more changes in the future.

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Sacramento police are looking for leads in a high-profile caper: The case of Lance Armstrong's missing $10,000-plus time trial bike.

Early in the morning of Sunday Feb. 15th, officials from Armstrong's Team Astana and Armstrong himself reported on their twitter feeds that the one-of-a-kind black and gold bike that he used Saturday in the Sacramento prologue and three other teammates' bikes were stolen from a team truck.

"Bad way to start the morning ... Bikes stolen from the truck last night," reads the Team Astana feed.

As the police began their investigation, the race rolled on. It started at noon in Davis, and was to end 108 miles later in Santa Rosa. The race has most of the greatest riders in the world, but Armstrong, a seven time Tour de France winner just returning to competitive cycling, is the largest star that people braved the weather to see.

The bikes were stolen from an unmarked moving truck parked behind the Residence Inn on L Street in Sacramento between 10 p.m. Saturday and 6:45 a.m. Sunday morning when the theft was discovered.

Armstrong, posted a picture of the bike on his twitter feed writing: "There is only one like it in the world therefore hard to pawn it off."

The police were contacting local pawn shops just in case.

Welcome to Northern California Mr. Armstrong, unfortunately for you and the reputation of our region you will be leaving a little lighter.

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I recently emailed Congressman George Miller 7th District to voice my opinion on bringing back seller paid down payment assistance programs.  This was his response on Feb. 3rd, 2009

Dear Mr. Phillips: 

Thank you for contacting me regarding the recent changes to the Federal Housing Authority's (FHA) Downpayment Assistance Programs. 

Downpayment Assistance Programs are intended to assist families who are unable to make a downpayment obligation themselves when purchasing a home. These programs have helped many people start on the path to homeownership and have helped millions of families over the years.

 As you probably understand, Downpayment Assistance Programs (DPA) have not been eliminated by Congress. However, some changes were made to the Downpayment assistance rules when Congress passed the Housing and Economic Recovery Act of 2008. DPA programs work in conjunction with the Federal Housing Authority (FHA) insured home loans. If you are using an FHA insured home loan as a buyer, you are required to contribute a small amount of the downpayment amount - 3.5% of the total purchase price. Contributions from sellers can still help buyers with their down payment, just not that first 3.5%.

 I understand that you have concerns about some of these recent changes to the DPA program. HR 6694, the FHA Seller-Financed Downpayment Reform and Risk-Based Pricing Authorization Act of 2008, would make some exceptions to the rules above, including allowing some buyers to accept downpayment contributions from the seller. This legislation recently was considered, and passed, by the Financial Services Committee and is now awaiting consideration by the full House of Representatives. It is unlikely, however, that there will be sufficient time to consider this bill before the end of the current legislative session.

 Although the current legislative session will soon come to an end, it is possible the new Congress will look at this issue again next year. I will certainly consider your views should the issue come before the full House for consideration.

 Sincerely,

 GEORGE MILLER

Member Of Congress, 7^th District

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 announces changes of multiple mortgages to the same borrower.

Calling all investors.  For loans delivered after March 1, 2009 FNMA is relaxing the 4 properties maximum rule, to a total for ten properties. 

The guidelines will be that a 720 fico score is required and the combined loan to value will be 70 to 75 percent, depending on the type of property.  They are also changing the total house costs from principal, interest, taxes and insurance (PITI) to principal, interest, taxes, insurance, plus home owners association dues, special assessments, ect. (PITIA)

Is this the thing that the market has been waiting for?  Increasing the number of properties for qualified investors is a big step in the right direction.  Fannie Mae has finally recognized the realities of the market place.  By allowing qualified investors to take advantage of the low interest rates, it can only help to locate a bottom of the market.  This is a bold move by FNMA to open up the restrictive lending practices we have seen over the last couple of years.  Lets hope this will lead to a few more changes in the future.

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Seeking to jump-start the housing market, the Senate added new tax relief for homebuyers to its $900 billion economic stimulus bill yesterday as the legislation moved toward a final vote. 

The amendment represents a significant victory for Republicans. GOP lawmakers have complained that the package includes few of their priorities for easing the economic crisis, including more help for the housing sector, which has been devastated by foreclosures and the frozen credit market.

The provision would offer a tax credit of up to $15,000 or 10% of the purchase price, for any home bought as a primary residence, for one year after the stimulus bill is signed into law. It would add $19 billion to the plan.

The housing amendment, accepted unanimously by a voice vote, also represents an effort by Democratic leaders to make the stimulus bill more appealing to Republicans -- a necessity in the Senate, where Democrats lack the 60 votes needed for final passage.

A bipartisan group of moderate senators is expected to announce an amendment today that would remove tens of billions of dollars in spending provisions that have been criticized as not being able to immediately stimulate the economy.

A final vote on the Senate package could come as early as tonight. But compromise negotiations with the House are likely to extend through next week and could prove contentious, as the Senate bill grows in some areas and contracts in others, compared with the $819 billion House package.

I have not found anything that states whether or not the tax credit will have to be paid back, like the current tax credit.  I will update this information when it is definite.

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Pray for rain.

Calling all Solano County boaters .  Has anyone been to the lake lately.  If there is not rain soon, and I mean a lot of rain, it is going to be a short boating year.

I have been on the list for a houseboat slip for several years. Now that I am getting close to getting the call with good news, it looks like if we don't get some rain all the boats on the lake are going to be pulled off the water by mid summer.  All boats were pulled off of Folsom Lake by the beginning of July in 2008.

Does anyone find it interesting that during the great depression there was also a drought. This drought caused winds to pick up top soil throughout the Midwest taking it 1000's of feet into the air and blacking out the entire east coast.  Many people thought it was the end of the world.

Lets hope things don't get that bad.

Have to go, I need to google rain dance.

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A college house-party snapshot of Michael Phelps inhaling from a marijuana pipe is the latest evidence of how a single cellphone or video image can suddenly compromise -- or destroy -- a celebrity's carefully crafted public image.

 Since the British tabloid News of the World published a photograph of Phelps on its cover in which the Olympic swimming star is shown smoking from a bong during a visit to the University of South Carolina, the story has dominated sports and celebrity blogs, attracted global newspaper and TV coverage, and provided rich material for late-night comics.

The latest fallout came yesterday, when a spokesman for Richland County Sheriff Leon Lott said police in South Carolina were reviewing the incident to determine whether to file criminal charges against Phelps.

Phelps, who apologized for what he called his "regrettable" behavior and "bad judgment" shortly after the photo appeared, has received the support of several of his corporate sponsors, including Speedo, Omega and Visa. But the publicity surrounding the picture underscored the fact that athletes are now being subjected to the same technology-fueled scrutiny that has been cast on celebrities for years -- and how sports stars with squeaky-clean images are the most vulnerable and have the most to lose.

In the past, most legally public information from a house party or nightclub was not disseminated. Now, virtually everyone carries cellphones that can take photos or video, and nothing stands in the way of them snapping drunken pictures or otherwise embarrassing footage and distributing them on YouTube or blogs that specialize in images and stories of people behaving badly.

Moral of the story, you never know when someone can be taking a picture of you and where it might be posted.  It's no longer just big brother watching you it is your friends and family. 

Be careful at the Christmas party this year.  The past of having one to many, may keep you from being elected to city council. 

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1. A well-groomed neighborhood:Well-maintained homes and landscaping have a positive effect on property values in that community. By caring for the appearance of their homes, residents help to create a more aesthetically pleasing environment that future real-estate hunters will want to buy into. So when you're eyeing a home, make sure to take a drive through the entire neighborhood. Take note of how the neighbors care for their homes, lawns and gardens. 

2. Good schools:Given the importance of education, communities located within strong school districts tend to support higher home prices. Parents, after all, will want to move into the communities with the best educational opportunities. The school district is important in terms of increasing demand for that particular area. Would-be homebuyers can determine the strength of a local school system by accessing online information from local governments or community Web sites.

3. Low crime: Low crime rates also support strong home values. Since nobody wants to live in a neighborhood where they feel unsafe, crime limits housing demand in a given community. As a result, it's important to obtain crime statistics for the neighborhood you're considering moving into. The best way to do that is to contact the local police department. The police department is a public utility take advantage of its information. Most communities have a public information officer that is dedicated to interacting with the public. By contacting this office, home shoppers can get their hands on all the information they'll need to determine a community's level of safety.

4. Close to public transportation:Proximity to public transportation or commuter rail can also help boost home values. In large cities, Americans are increasingly willing to pay a premium for properties that allow them to be less dependent on cars. Access to bus lines and commuter rail lines are of huge value. 

5. Favorable population trends:It's also important to look at the population trends in the city you're considering moving to. You want to see a track record of steady population growth, which supports growing demand for housing, which will in turn support rising home values. Such data can be found online at the U.S. Census Bureau, or through local county or township Web sites.

6. Healthy employment landscape:Employment plays a key role in population trends, as workers migrate to locations where they can find jobs. Thus, a healthy employment outlook is a key component of a strong housing market. Home shoppers can obtain economic data from the local government or chamber of commerce. Pay special attention to the unemployment trends and find out if any new companies are slated to move into - or out of - the area. A lot of communities have been trying to attract the sort of economically insensitive industries like biotech and pharmaceutical companies. If you've got an area where that kind of business is being brought in - through tax incentives or other efforts - that would be a positive for your local area.

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The Obama administration outlined plans today to tighten restrictions on executive compensation for future recipients of federal aid under the government's financial rescue program, but the vast majority of firms would be able to opt out of most of the limits.

Companies that need special assistance from the government to survive would face mandatory restrictions on compensation for their senior executives: no more than $500,000 in salary and no additional compensation other than shares of the company's stock that can only be redeemed after the government investment is repaid.

So far the government has provided that kind of extraordinary aid to American International Group, Citigroup and Bank of America. However, the rules do not apply retroactively to any of the 359 banks that have received government aid already, so these three firms are not subject to the new restrictions. But administration officials said they expect the government will need to stage more massive rescues as the financial system continues to deteriorate.

President Obama said the new rules were needed to curb Wall Street excesses that continued even after top companies accepted taxpayer help. Last week he criticized the billions of dollars in bonuses paid on Wall Street after a year of collapse and record-setting losses.

While overspending and outrageous compensation must come to an end, will these regutlations send the countries top executives to work in forein countries (Dubai) and companies that have not accepted tarp funds.  Will the executives be outsourced.

What about the smaller regional banks that are doing well.  The executives can leave these major companies in financial ruin and run the smaller cash rich regional banks and still make more.

Goodby Wallstreet and hello Sacramento, Omaha, Cedar Rapids, ect.  

Mark my words, some regional bank will be on the cover of Business Weekly or Forbes with in five years.    

Click Here to see a funny video about a broke CEO.

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