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SD Housing Market Giving Mixed Signals

Audio

Aired 7/26/10

If interest rates are low and local homes are becoming more "affordable," why is the number of home sales declining? We speak to a pair of real estate experts about the latest trends in the San Diego housing market.

MAUREEN CAVANAUGH (Host): I'm Maureen Cavanaugh. You're listening to These Days on KPBS. There are hopeful signs in San Diego's real estate market. Housing prices seem to be trending upward and until recently, home sales had a big boost. But, as we've seen frequently in these recession years, the market is really a mixed bag of both good and bad news. Spring and summer are usually the boom time in real estate, so we thought it would be a good idea to check in on the local market. Is the inventory of houses starting to increase, are buyers able to find loans, and what about those short sales and foreclosures? I’d like to introduce my guests. Mark Goldman is professor at the Corky McMillin Center for Real Estate at SDSU, and a mortgage broker for Cobalt Financial Corporation. Mark, welcome back.

MARK GOLDMAN (Professor, Corky McMillin Center for Real Estate, San Diego State University): Nice to be back.

CAVANAUGH: Jim Klinge is local real estate broker. He is also the author of the bubbleinfo.com blog, which covers real estate issues in north San Diego County. Jim, good morning. Thanks for being here.

JIM KLINGE (Real Estate Broker): Good morning, Maureen. Thanks for having me.

CAVANAUGH: Now we’d like to invite our listeners to join this conversation. Have you tried to buy or sell a house in this market? Tell us your story. Are you thinking of trying to qualify for a home loan or about refinancing? Call us with your questions and your comments. The number is 1-888-895-5727, that’s 1-888-895-KPBS. Mark, it seems like home prices are continuing to stabilize. Interest rates are at a 40- year low, so why is the number of local home sales in decline?

GOLDMAN: Well, one thing is access to capital. I mean, even though prices are really, really low, I think borrowers a lot of time are having a very difficult time getting their loans closed. They might get an approval but I think that’s probably part of the problem. There’s a lot of cash out there, too. It’s amazing how many cash transactions there are these days. So, somebody’s trying to purchase their first home, for example, with three and a half percent down for a FHA loan or it may be a veteran who’s trying to buy a home with nothing down in competition with a cash buyer in homes priced under, say, 350 are also challenged because that seller might prefer to sell to a cash buyer instead of confront all the challenges that closing a loan with a mortgage would have.

CAVANAUGH: Is that because people are taking their money out of stocks and putting it in real estate?

GOLDMAN: A lot of the investors are, yeah, out of their pension funds. Yeah, there’s a lot of uncertainty about the stock market, a lot of concern about the integrity of the stock market.

CAVANAUGH: And, Jim, I’d like to get your take on this. Why do you think the number of home sales is declining?

KLINGE: I think there’s a lot of people want to buy houses and they’re finding just enough sellers who get the price right that the inventory has been pretty fluid. I think lately we’re seeing more and more that the sellers are getting – are reluctant to get their price right and it might be that it’s taking a lower and lower price to satisfy the buyers. The inventory’s been rising over the last 30 days and I think you’re probably going to see that continue.

CAVANAUGH: Now we talked – we’ve talked a lot about – on this show about inventory and how it relates to the number of sales and the pricing on the homes and we’ve been talking about for the longest time that people will not be selling their homes in this climate unless they’re forced to for one reason or another. Mark, do you think that’s still the case?

GOLDMAN: Great question. I saw an article just this week about how some people who have been in that circumstance are starting to come to market. I think there’s a perception that the market is stabilizing, maybe not where we want it to in terms of pricing but people who’ve been hanging on might be taking the attitude that this may be as good as it’s going to be for awhile.

CAVANAUGH: And, Jim, with the idea that people have been waiting and waiting and waiting and maybe at this point deciding, well, you know, if we want to move between the next five years, we might as well put the house on the market now.

KLINGE: Yeah, I think there’s enough people that are motivated by age, too, that really need to do something before it’s too late. If they’re going to move, let’s get it going. If that means having to sell at a lower price today, you can make it up on the other end, especially if you’re moving up. You can buy the next one at a reduced price also.

CAVANAUGH: I’m speaking with Mark Goldman and Jim Klinge, and we’re talking about local real estate. And we’re inviting you to join the conversation. Tell us your story about buying or selling a house in this market or qualifying for a home loan or whatever real estate story you have for us. 1-888-895-5727. Joanna is on the line from San Diego. Good morning, Joanna. Welcome to These Days.

JOANNA (Caller, San Diego): Good morning. Hi.

CAVANAUGH: Hi.

JOANNA: Hi.

CAVANAUGH: Hi. You have a question for us, Joanna?

JOANNA: Oh, well, I am trying to – I was trying to refinance it and I contacted two banks and I live in a unit – I have a unit in 41 – There’s 41 units in the complex and my credit’s good. Everything’s good on my end but they won’t refinance me because there’s a percentage of condos in my complex that are delinquent in their fees, in their HO fees. And it’s frustrating to be clean on my end, clean’s not the word, but I’m current, my payments are current.

CAVANAUGH: Right.

JOANNA: I mean, what can I do? What – How do I refinance and then I just thought of this while I was on hold, the purpose for my refinance would have saved me a hundred dollars a month and I would’ve wanted to purchase something else in Palm Springs where I can have another home and I can’t do that without the refinance to save me those extra fees every month.

CAVANAUGH: Joanna, thank you so much for the question. Let me go to you, Mark. Refinancing a condo when there are some condos in the unit that are in distress in one way or another.

GOLDMAN: Condos are very difficult right now, and the problem that Joanna mentioned about having more than 15% of the homeowners delinquent is a big problem. It makes the loans – it makes the property unwarrantable. In other words, the lender’s not willing to make a loan secured by that kind of condo. People in Joanna’s situation, I would recommend that they contact their current lender because there may be some programs with the current lender, might be able to refinance the loan. If they’re already on that property then they might be willing to stay on it, especially if it’s – if that loan is owned by Fannie Mae or Freddie Mac.

CAVANAUGH: So the lender that already holds the mortgage.

GOLDMAN: Yes.

CAVANAUGH: Yes.

GOLDMAN: Call the servicing…

CAVANAUGH: Okay.

GOLDMAN: …agent. In other words, where does she send her payment. Contact them.

CAVANAUGH: Right.

GOLDMAN: I’ve heard a lot of frustration from borrowers who are in this situation even when they do call but there’s been more encouragement from the government for lenders to consider these kinds of loans.

CAVANAUGH: Is there anything a homeowner’s association can do about this?

GOLDMAN: Certainly beef up their collection activities and mitigate whatever is causing the property to not be financeable.

CAVANAUGH: Umm-hmm.

GOLDMAN: You know, there’s a couple of issues, the number of non-owner occupants can make a condominium nonfinanceable with conventional financing or FHA or VA, and also the delinquencies. So the homeowners association or, more, the board, who are the owners and the neighbors, can try to, you know, beef up their collection efforts.

CAVANAUGH: That’s interesting. We’re taking your calls at 1-888-895-5727. You know, Jim Klinge, I know that you’re an expert on real estate issues in north San Diego County. What are you seeing in the neighborhoods that you cover now? What’s the activity level like?

KLINGE: I think it’s very active. I think the number of buyers that are ready, willing and able to purchase a home is still at a very high level. They’re being very picky about what they’re going to buy and have really no – nothing pushing them to hurry that up. The rates have been going down, prices have been going down. They’re very comfortable staying on the fence, and they’re waiting until the perfect house at the perfect price comes up.

CAVANAUGH: I see.

KLINGE: And yet sellers think they can tack on extra – an extra 5 or 10% onto the list price because, allegedly, the market’s better and buyers will just have to pay. Well, they’re not buying it and that’s why the inventory’s going up. And I – Well, I ran numbers before I came today to, I think, really show what the problem is. The market is very healthy. When you look at there being – it’s less than two to one ratio of active listings compared to pendings right now, including the contingent listings, which are the ones that are mostly short sales in process.

CAVANAUGH: Umm-hmm.

KLINGE: That’s pretty good. But when you look at the ratio of the short sales and REOs I think people’d be impressed to see that those are the ones that are really selling because those are the ones that are priced right.

CAVANAUGH: Right, the REOs are foreclosures, right?

KLINGE: REOs, bank owned properties…

CAVANAUGH: Right, right.

KLINGE: …that are now relisted.

CAVANAUGH: Umm-hmm.

KLINGE: And the short sales make up 42% of those that are pending and then the contingents are on top of that. Well, if you look at the active inventory, there’s currently just over 12,000 properties for sale between detached and attached listings. And only 26% of those are bank-owned or short sales. So it’s mostly the regular sellers that are lingering in the active bin, not getting their price right, holding out for that magical buyer that’s going to overpay for their house, and they’re not coming.

CAVANAUGH: Because the buyers are looking for sales and the sales are in the bank-owned properties and the short sales.

KLINGE: And I think most buyers would much rather buy a regular sale.

CAVANAUGH: Because it’s easier.

KLINGE: It’s easier. You know what you’re dealing with. You get a disclosure from the seller. You get a house that’s usually in better condition. Yet they’re not going to buy it unless the price is right.

CAVANAUGH: Now do you have any North County neighborhoods that are doing great as opposed to some areas that are struggling?

KLINGE: Carmel Valley, 92130, has been on fire straight through. There’s hardly any deals. In fact, I could not name a house that has sold recently that you’d say, wow, that guy got a great deal on it. They’re all going out at retail and yet prices aren’t going up. It’s in a real specific trading range at about $330.00 a square foot. But when you look at other areas around North County coastal, that’s exceedingly high comparatively. You look in Carlsbad and you should be able to find a newer house, a newer tract house in Carlsbad for $250 and in some places even lower. You can buy a brand new house in Carlsbad for $225.00 a square foot.

CAVANAUGH: That’s interesting. We’re taking your calls at 1-888-895-5727. We’re talking San Diego real estate. Let’s hear from Joyce. She’s calling us from La Jolla. Good morning, Joyce, and welcome to These Days.

JOYCE (Caller, La Jolla): Good morning. In January I put an offer on a short sale house and by the beginning of June there was still no movement on it. I had all of my paperwork done. My real estate agent was calling the sellers and the real estate agent for the sellers and trying to get everything pushed through and we finally had to withdraw our offer on the house because there was just no movement. And I’m – I’ve heard that this is fairly common now but we missed out on that great bonus which would’ve, you know, bought new appliances and helped that first year transition into mortgage phase. And what can be done about this? Because there are a lot of people out there, you know, they’ve got their paperwork, they’ve found a house. They’re a short sale house but no one seems to want to move that short sale from the offer to the actual purchase. And I’ll take my answer off the air.

CAVANAUGH: Thank you, Joyce. And, Mark, you seem to have heard this before.

GOLDMAN: Yeah, I’ve been on the other side of that actually…

CAVANAUGH: Uh-huh.

GOLDMAN: …trying to sell a short sale, and it’s very, very frustrating. Part of the problem is the paperwork goes into a black hole at the bank, and some banks are better than others—and in a moment I’d like to pass this off to Jim for his comments because he handles a lot of these—but there are some banks that are – There’s actually a couple of lawsuits against a very – the largest servicer in America right now in Texas and in Washington because they’re just messing up so badly. You know, the sellers can’t get an answer. There’s no process of getting the paperwork pushed through. And the poor buyers have nothing to do. We just closed one a few months ago where the buyer had made an offer more than a year and it was such a perfect deal they stuck around for it. But it’s very, very frustrating. My advice to buyers is work with a competent real estate agent who knows the short sale banks because some banks are more effective than others. And if you’re making an own – making a purchase, a short sale offer with a bank that is not processing the short sales, either you better love the house and be willing to wait for it or move on like this poor lady lost out on the first-time homebuyer tax credit. Well, my advice would be don’t wait. Find another suitable property that can close in time. But I’d also be interested in Jim’s comments on this.

CAVANAUGH: Yeah, Jim, and let me add to that, too, to what – what is the benefit of having these short sales just linger in limbo for month upon month? Does anyone benefit from that?

KLINGE: I think the banks are trying to extend this out as long as they can. They have lots of people in default and they’re, at this point, looks like they’ve turned off the foreclosure machine. They’ve stopped foreclosing, and trying to push everybody into the short sale category which is going to make it worse and worse. You don’t hear about any of them hiring additional staff to keep up with it. And I think it’s just the extend and pretend program and it’s going to go on for years and years.

CAVANAUGH: And what does that do for the banks? Why would they want to do this? Does it look better on their books or why?

KLINGE: Well, I think most of the loans are owned by separate investors. They’re not owned by the banks, they’re just the servicers so they’re just making a boatload of money on the servicing fees and that goes on for months and years and they come out with million dollar bonuses every year and everyone else is wondering what happened.

CAVANAUGH: And you wanted to comment?

GOLDMAN: Yeah, I wanted to mention that one of the statistics that’s noteworthy these days is the number of foreclosure cancellations. We’re seeing here in San Diego just the number of foreclosures are going – the trustee sales, that’s where the property’s actually sold at the courthouse steps, are declining even though the notices of default are increasing. But the cancellations are huge, the number of foreclosure sales that are being cancelled by the lenders. And there doesn’t seem to be a clear answer as to why this is going on but some of it is hope that they’re going to pursue more effective short sale or other foreclosure options. So, you know, it’s…

CAVANAUGH: We’re up against a break but I do want to take – Oh, there was a question on the – on my board here about ghost inventory. Do we – this ghost inventory, this idea that there are a lot of houses that are going to come on the market because they’re – the foreclosures have basically been stalled. What is your take on that, Mark? Does that exist?

GOLDMAN: Yeah, they’re out there. The number of delinquencies and defaults continue to increase. Actually, I was looking at Fannie Mae’s statistics in preparation for this show and their sub-prime actually was the first month – The last reporting month is April.

CAVANAUGH: Umm-hmm.

GOLDMAN: April was the last – was the first time that their credit challenge loans, the rate of delinquency did not increase. It actually went down a tiny, tiny little bit. But the rate of default on their prime loans, the regular conventional loans, continues to increase, and it’s been going up and up every month. REO inventory in the last two years for California banks, according to FDIC, has almost tripled so this inventory’s out there. And, you know, not – and add on top of that the banks’ inability to process this inventory, you know, they’re just not working this stuff. You know, it’s like the egg and the snake. It’s just not…

CAVANAUGH: It’s not going through.

GOLDMAN: And it’s going to happen. It’s going to hit the market.

CAVANAUGH: We are talking about San Diego real estate, the incredible complexities in this recession market. My guests are Mark Goldman and Jim Klinge. And we have to take a short break. We’re taking you calls at 1-888-895-5727. We’ll be back in just a few moments. You’re listening to These Days on KPBS.

CAVANAUGH: I'm Maureen Cavanaugh. You're listening to These Days on KPBS. My guests are Mark Goldman. He is professor at the Corky McMillin Center for Real Estate at SDSU, and a mortgage broker for Cobalt Financial Corporation. And Jim Klinge is a local real estate broker and the author of the bubbleinfo.com blog, which covers real estate issues in north San Diego County. We are talking about real estate in San Diego and we’re asking you to join the conversation at 1-888-895-5727. Let’s go right to the phones and hear from Shad in San Diego. Good morning, Shad. Welcome to These Days.

SHAD (Caller, San Diego): Good morning.

CAVANAUGH: Hi.

SHAD: My question is, I – my wife and I have been looking for a house for a long time and it’s very frustrating when we go out and see all these houses and I think a couple of other people had said before, you see houses where people are living there, there’s no incentive for them to leave. You try and offer them money. I offered them some kind of an offer on the house and it just keeps going, and these are mostly the REO and then also the foreclosures, there’s just nothing available to buy. I mean, it’s very difficult for people like myself and my wife.

CAVANAUGH: Well, Shad, thank you. And so when – when do you, Mark and Jim, think that more houses will come on the market? Jim.

KLINGE: Well, the banks have turned off the foreclosure machine at this point. They’re not foreclosing on hardly anybody anymore and trying to push everybody into short sales. I checked last week. Fannie Mae owns 901 properties in San Diego County. That is a very small amount of actual bank-owned property when we’re selling 3000 a month. All the other banks, I checked, own less than that. I don’t think they’re holding back. Many of those, they’re just slow in getting them to market and I think if they are holding them back they’re doing themself a disservice because the market’s hot. People want to buy when rates are four and a half percent and prices are off like they are. And why would you hold back inventory when you have those kind of conditions? But if they are, they are. If they are, there’s not that many of them and when you look at the shadow inventory and the number of people in default, I think you’ve really got to try to factor in that you have to be in default to get a short sale or a loan modification either way, and how many of those people who are in default are going to end up getting foreclosed? Everyone says defaults equal foreclosures, and I’m not so sure that’s the case. I think the shadow inventory number based on defaulters is really – it’s not that accurate. And as a result, there’s probably going to be fewer of the actual defaulters hitting the market, too. It’s just a tight inventory right now. And then if you’re kind of picky about what kind of house you want, that really narrows it down. And what that end result is, is there is a feeding frenzy for the – it’s about one out of ten houses that come on the market that are a good-looking house with the right price on them that everyone could buy today.

CAVANAUGH: Right.

KLINGE: And you see bidding wars breaking out on those and then you see 9 out of 10 sitting around and not getting any attention, no one wants to buy those, and people like Shad very frustrated, trying to find something to actually get his hands on…

CAVANAUGH: Right.

KLINGE: …because you’re looking at all the 9 out of 10 that either are too high priced or people who don’t really want to sell like short sales who are just working the free rent program.

CAVANAUGH: So when will more houses get on the market? When the house – the prices of those houses go up?

GOLDMAN: You know, going back to shadow a little bit, there are a lot of houses on the market.

CAVANAUGH: Umm-hmm.

GOLDMAN: The current MLS inventory in San Diego is as high as it’s been since 2008. So there’s a lot of property out there. I think Jim commented earlier about how the buyers and the sellers can’t get together on a price. There’s a spread between what a buyer’s willing to pay and what a seller’s willing to sell for. When that spread is closed and the buyer’s willing to pay what the seller wants, the deal occurs. What I would recommend for Shad is look at a lot of properties. Be sure your financing is in place so your strong offer you present strongly to a seller, and just keep going. If you can’t – If the seller of house A isn’t going to be able to put a deal or willing to put a deal together for you, go to house B, C, D, and you might end up at, you know, double-A, double-Z or something but it – We’re finding for our buyers who are pre-approved, they’re looking at a lot of property before they get into escrow on one that they like at a price that’s satisfactory.

CAVANAUGH: I see. Okay, Kelly’s calling us from San Diego. Good morning, Kelly. Welcome to These Days.

KELLY (Caller, San Diego): Hi. I’m calling because I have a condo in downtown San Diego and we’ve been trying to refinance and the owner-occupancy is too low so they won’t refinance. I don’t understand. We can’t – I mean, we even want to buy another one in our unit but we can’t even buy one because the owner-occupancy is too low, like I don’t understand how to get around that.

CAVANAUGH: We’ll try to figure it out, Kelly. How do you – Can you get around that, Mark?

GOLDMAN: She’s in the same problem as that other lady that called earlier.

CAVANAUGH: You’re right, exactly.

GOLDMAN: It’s the collateral issue and what I would recommend is to really work and she might have to call a lot of different people at the same lender but contact a lender where she’s at. That’s going to be really her only bet at this time. If there’s a high investor occupancy in your condominium, Fannie Mae, Freddie Mac and maybe even FHA won’t take the property as collateral, so you have to work with the lender that you have. And a lot of times they’ll put you off. They won’t talk to you. You know, you’ve got to get into the home – into whatever department. There is a tiny, tiny bit of incentive from the government now to encourage banks to do that but the banks don’t seem to respond very well to any of that stuff.

CAVANAUGH: We’re taking you calls at 1-888-895-5727. Craig is calling us from North County. Good morning, Craig. Welcome to These Days.

CRAIG (Caller, North County): Are you there?

CAVANAUGH: Yes, indeed.

CRAIG: Okay. I just have a question about those who’ve been foreclosed on and how that demand now is not going to be in the market for some time, maybe three to seven years. And I’m wondering how that’s affecting the market right now and whether those people, once they become eligible to purchase again, that’s going to affect the market sometime down in the future.

CAVANAUGH: Thank you, Craig. And since this call’s from the North County, let me direct that to you, Jim.

KLINGE: Well, the Fannie and Freddie guidelines do allow for people to get back in line for financing after I think it’s five years after a foreclosure now. So there should be at least the possibility for those people to get financed again. I think it’ll probably be before that that you’ll see, hopefully, some additional financing come into the marketplace from banks, private mortgage companies, somebody who might be able to tackle that. There’s a real need for financing alternatives to be created. They’re talking about how they’re going to change Fannie and Freddie right now to some other kind of vehicle. If they can come up with ideas that the private market can handle financing instead of having to sell everything to the government, it would at least present some opportunities for people.

CAVANAUGH: Mark, let me ask you a question. One caller on the line who couldn’t stay on the line asked about rent-to-own. What do you think about that idea? Is it becoming more common? Sellers who are not going to get the price that they want putting out their properties in a rent-to-own kind of situation. Do you see that happening?

GOLDMAN: Well, I see it as a really good opportunity as a path to home ownership, especially if there’s some interruptions in income that could cause temporary credit problems or other reasons why somebody aren’t able to – maybe they don’t have a down payment. And so the rent-to-own is a path to home ownership where a lot of times they can accumulate money by paying extra rent that’s used to accumulate a down payment. Depending on how the transaction is structured, I’ve seen them where the lender will sometimes treat it as – treat the financing when they exercise their option to purchase as a refinance. In other words, if somebody buys today and they rent to own and they pay the rent on time, let’s say, for two or three years and the house value goes up and they can prove that the deal was made two or three years ago, the lenders might even finance it – if the house has gone up, they’ll treat the loan to value at the current value of the property. So there – there’s a lot of positives about it for a buyer if they can get into it and it is a path to home ownership.

CAVANAUGH: Let’s take another call. Ross is calling us from El Cajon. Good morning, Ross, and welcome to These Days.

ROSS (Caller, El Cajon): Good morning. My question is this, we purchased our house about two or three years ago and we never got our loan documentation and we went to go try to refinance and found out my loan has been sold like five or six times. The current bank is OneWest who bought out IndyMac and we requested formally our loan documentations or certified copies of our loan documentation. They sent me an incomplete first. They didn’t send me a second. And a friend of mine who’s a real estate lawyer that I can’t get ahold of right now told me that if they cannot prove – if all they have is PDF or computerized files and they don’t have the original wet copies, the ones we signed, that we can – the loan’s not worth an – I mean, not the loan but the docu – they can’t prove that they own it and I can’t prove that I own it or I – since I’m registered on the tax assessor’s I own it outright and I don’t have to pay anymore. And I’m just trying to figure out what the heck because I cannot refinance – or they will not refinance me even though the house is still worth some money and everything else. So I’ll take my question off the air.

CAVANAUGH: That is quite a situation, Ross. What can you tell Ross, Mark?

GOLDMAN: I would be very guarded in assuming that you don’t owe the money for the mortgage on your house. He – Ross brings an issue that the proof of loan has been an issue in many states, including California, but it’s not clearly resolved and I think it would be ill advised to just assume you – oh, you can’t produce the note and then I don’t owe you the money. I would consult legal counsel very carefully on that.

CAVANAUGH: Even if he can’t get in touch with him right now.

GOLDMAN: Yeah. Yeah.

CAVANAUGH: Jim – Yeah.

GOLDMAN: And I think, as I recall, IndyMac might have the documents – Some lenders make the documents available online so the customer can create a log-in at their mortgage company’s website and – I’m trying to recall because I had a loan with IndyMac and I think I might’ve been able to see a copy of it online.

CAVANAUGH: Just generally speaking, though, Jim, refinancing with interest rates so low, is there a lot of activity towards that and should people really consider that right now? Homeowners?

KLINGE: They should but I don’t know how many people still have enough equity and have a high enough rate that it makes it worth it. I think anybody who’s been a contender has probably had a refinance within the last year because it’s been going down and been very low for quite a while so I’m sure there’s people who probably refinanced at five and a quarter who now can benefit at four and a half but if you’re planning on staying there a long time, you’re always tacking on extra years to your loan every time you refinance and if you’re going to be there for the duration does it pay off in the long run? I’m not sure.

CAVANAUGH: Let’s take another call. Ken is calling from Iowa. Good morning, Ken. Welcome to These Days.

KEN (Caller, Iowa): Yes, indeed. We are going to retire in two years back in San Diego, my hometown.

CAVANAUGH: Uh-huh.

KEN: And in June we came out there to buy a home. And we had already found a topnotch realtor when we were on vacation earlier in the spring and so we told him we have two weeks to buy a home. And so we found a home. We looked at countless homes. The couple of things – We did everything right. We were preapproved…

CAVANAUGH: Right.

KEN: …for a loan. We were ready to do a 25% down. He was able to get us 4.625 loan. We found a home in the Fletcher Hills part of La Mesa. And we signed the papers and everything just went smoothly. The lady who was selling it wanted to remain in the home, so she is renting it for the two years before we get there. Now we also had absolutely sparkling credit, and so all of that came together and with the conventional loan, even though I’m eligible for a VA loan, everything just went click, click, click, click, click.

CAVANAUGH: Ken, I gotta…

KEN: And…

CAVANAUGH: …say, you had a wonderful real estate experience.

KEN: Yes, indeed. And we get to come back to San Diego, too.

CAVANAUGH: Well, we will welcome you back when you arrive in two years. Thank you for the call, Ken. So somebody’s having a really, really good time with this market. That’s always very good to know. You know, I have to – I’m afraid we’re completely out of time and I suppose that’s a nice way to end. I want to thank you so much, Mark, for speaking with us today, Mark Goldman.

GOLDMAN: Pleasure to be here.

CAVANAUGH: Jim Klinge, thank you for being here.

KLINGE: My pleasure, Maureen.

CAVANAUGH: And if you would like to comment on anything that you’ve heard in this segment, please go online, KPBS.org/thesedays. You’re been listening to These Days on KPBS. Stay with us for hour two coming up in just a few minutes right here on KPBS.

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Avatar for user 'rickrvh'

rickrvh | July 26, 2010 at 9:56 a.m. ― 4 years, 10 months ago

Our house is worth 520k according to Zillow, primary loan against it is 509k, second (home equity) for 86k; we have probably enough cash from another sale to pay off the 86k. if we were to do that, where can we find a refi and/or is it feasible with the balance due? Is there a better site than Zillow for consumers to estimate value? Or would we be better to pay off approx.72K in credit card/car loan debt and throw that against second? Thanks in advance.

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Avatar for user 'JimKlinge'

JimKlinge | July 26, 2010 at 1:15 p.m. ― 4 years, 10 months ago

I think it is admirable for people to pay off their debts in full - there was a story in today's WSJ that put the spotlight on folks who are paying down their mortgage in order to refi, or buy another. But the amounts were fairly small.

For those who want/need some breathing room, I think there will come a day that the second mortgage holders will negotiate a lower-than-full payoff (if it's not here already). On the short sales they are taking 10% to 20% of the balances owed, and in some cases much less, so your second mortgage holder might do something for you.

Contact them while you still have the large CC balances - they'll run your credit, and maybe they can do something for you.

<p>www.cyberhomes.com is another home-valuation website, similar to zillow and a little more accurate from what I've seen.

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Avatar for user 'chrisanthemama'

chrisanthemama | July 26, 2010 at 9:34 p.m. ― 4 years, 10 months ago

@rickrvh: check with your first lender: if your loan is a Fannie/Freddie loan, then the Home Affordable Refi Program will allow you to refi your first loan's balance (not the second, though) and closing costs up to 125% loan-to-value. Meaning your current second loan would have to agree to stay in second place--or you could pay off/pay down your second from your cash.

I'd be pretty eager to pay off/pay down that revolving debt--no tax benefit to that interest (unless you're paying zero-or-close-to-it interest).

As far as accurate home valuations, neither zillow nor cyberhomes is as reliable as a good Realtor who knows the market, your neighborhood, and your home (maybe the broker who sold you the home).

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