Archives for 2008

Redding Electric Utility Wants To Raise Rates

In a story from today’s Record Searchlight, Redding Electric Utility is proposing a rate increase and will be meeting with the Redding City Council December 16 to consider this proposal.

It looks like our utility bills will be increasing next year. This should help our local economy!

The average Redding household will pay $6.95 more each month for electricity starting in January, should the City Council approve a proposed rate increase.

The council on Tuesday will set a hearing for Dec. 16 to consider what could be the largest Redding Electric Utility rate increase in at least 10 years.

REU had planned to seek annual 5.85 percent increases through 2012 to cover business costs, budget documents show.

But the drought and a slumping economy mean REU will ask for a 7.84 percent increase for 2009 and an identical increase for 2010, said Paul Hauser, utility director.

The council will be given rate increase options ranging from 6.35 percent to 11.57 percent, Hauser said. The 11.57 percent option would raise the average monthly household electric bill by $9.69.

“Hydro is the biggest driver,” Hauser said. “Anybody who has been out to Lake Shasta recognizes that.”

REU gets roughly 22 percent of its electricity from Shasta Dam and other federal hydroelectric projects in average rainfall years. At less than 3 cents per kilowatt hour, hydropower is by far Redding’s least-expensive electricity source.

But no one can predict how much rain will fall each year, Hauser said. That’s one reason why REU keeps a cash reserve, currently at $42 million. The utility would be seeking a much higher rate increase were that reserve not there, he said.

The hydropower supply looked decent when REU last looked at rates in February, after a couple of months of healthy rain and snowfall, Hauser said.

But this past spring was the driest on record in Northern California. REU has had to spend $8 million more than expected buying more expensive electricity to replace the lost hydropower.

The contracting economy has meant an additional $3 million hit for REU in unrealized wholesale and retail revenue it had expected, Hauser said. The utility’s customer base hasn’t grown as quickly as expected, and that means REU has to spread costs for power plants, debt service and other hard fixed expenses over a smaller base, he said.

“The council is extremely sympathetic to the current economy and the pressures people are facing,” Hauser said. “But there’s just no way around this, with the low lake level and the poor economy.”

Shasta County Down Payment Assistance Program

What is the Shasta County Down Payment Assistance Program?

Shasta County Housing and Community Action Programs provides 0% interest loans to qualified low-income, first-time home buyers to help with their down payment and closing costs. The program is available in the unincorporated area of Shasta County and inside the City of Anderson.

How much can you borrow?

The loan amount can be up to 40% of the purchase price, not to exceed $80,000.00. The maximum purchase price of the home is $225,000.00. The borrower must contribute at least 3% of the purchase price to the sale transaction. This may be a gift.

Who is eligible?

The program is available to first-time home buyers, who qualify under the following income guidelines. Gross household income must be below these limits.

A first-time home buyer is someone who has not owned a home in the last 3 years, or who qualifies as a “displaced home-maker”

More information can be found in the Shasta County DAP Brochure click here

Shasta County Sees A Slight Increase In Foreclosure Filings For The Month Of October

Foreclosure filings in Shasta County increased 32% over the previous month. There were 78 notices of default filed with the Shasta County Recorder’s office in the month of October, compared to September’s low of 59.

When we compared this month last year we saw 22% fewer filings. In October 2007 there were 95 notices of default filed and we only had 78 in October of 2008.

Last month we speculated that the cause for the major drop from Augusts high of 206 foreclosure notices was due to State Senate Bill 1137. SB 1137 forces banks to take certain steps before filing foreclosure. We expected a bigger jump in default notices this month as lenders get back on track from the delays caused by SB 1137, but it appears the bill is having a lasting effect and is working.

Earlier this month Countrywide, Bank of America, JPMorgan Chase, and now Citi, revealed plans to keep homeowners in their homes by doing major loan modifications, these programs are scheduled to start in December. Loan modifications in the past have not been that effective; however the banks are starting to realize this and are making significant drops in principal and interest for qualified homeowners. We feel this will have an effect and the foreclosure filings will flatten out over the next few months and start to decline in the first quarter of next year.

Governor Schwarzenegger Proposes a 90 Freeze on Foreclosures In California

California Governor Arnold Schwarzenegger unveiled an aggressive proposal yesterday that he says will bring down foreclosure rates in the state by helping both borrowers and lenders modify existing home loans in ways that benefit both parties, and at the heart of his plan is a state-wide 90-day halt on foreclosure proceedings. Earlier today, Schwarzenegger called a special session of the state legislature to immediately address his foreclosure relief plan, as well as other economy and budget issues.

“The single most powerful action our state can take to shore up its economy is to help Californians stay in their homes – and I am presenting a plan to do just that,” said Governor Schwarzenegger. “Curtailing foreclosures will stop the downward spiral of home prices, free up needed cash for homeowners, help save jobs and make an immediate positive impact on our economy.”

Schwarzenegger’s plan encourages loan modifications with incentives for lenders and servicers. Initially, the program calls for a 90-day stay of foreclosure for each owner-occupied home subject to a first mortgage on which a Notice of Default (NOD) has already been filed. But, it also provides for a “Safe Harbor” under which lenders will be exempt from the 90-day moratorium if they provide evidence to the state’s head banking official that they have an aggressive modification program already in place. The Governor’s office defines an “aggressive modification program” as one “designed to keep borrowers in their homes where doing so will ultimately bring investors a better return than simply foreclosing and selling at a loss.”

Time To Sell, NOW!

My sister asked my opinion of home values in Redding about three years ago. At that time I suggested, “sell your home now and rent before the financial markets crash”. Needless to say, no one in my family followed my advice. The subject has come up again and I just sent my sister an email with my thoughts, see below.

Hello Sue and Uncle Tom,

Well, actually this is your second chance to sell your home (if you have equity). There will be a window of opportunity between now and when Obama’s plans go into play. We are already headed down a perilous financial path and the election of Obama pretty much guarantees financial suicide. However, his plan could possibly work out, more on that in a minute.

If you have equity in your home, sell now and find a nice rental. If you don’t have much equity in your home and the economy gets worse, as I expect, stay put as I can show you how to stay in your house without paying the mortgage for at least 9 – 10 months. I’m currently averaging 9 – 10 months with my clients now. The time span could be greater in the future. When I do a short sale for my clients we can often times keep them in their home for a year, MORTGAGE FREE.

Now here’s the best part. After my clients have lived in their house mortgage free, the lender offers them cash to move out. When the lender forecloses on the house they typically offer a certain dollar amount to the previous homeowner in exchange for the house keys. In the trade, this is known as “cash for keys” or CFK. If the previous homeowner moves out and hands over the keys, they receive a check from the lender. The dollar amount of the check is typically $3,500.00 or more! There’s your first month’s rent for your new place.

Another strategy involves skipping a few house payments and then have us contact your lender to do a “loan modification”. Right now we are negotiating loan modifications with APR rates between 2-4%. Don’t try to obtain these rates if you are a customer in good standing, it won’t happen. The lowest mortgage rates are strictly reserved for only the worst customers!

You will get the best loan modification if I do the negotiating for you. Most homeowners don’t stand a chance dealing with ruthless loss mitigators. I guarantee they’ll trick you into singing unsecured notes or modify your loan from bad to toxic. When they are done with you, bankruptcy will begin to look attractive (providing you qualify). They will take advantage of you in a heartbeat! But wait, there’s more! For a limited time if you act fast (within the next 10 months or so) we’ll throw in a principal reduction too. Really, I’m not kidding. With some good negotiating, I have been very successful in getting the lender to lop off an additional $30-$50 thousand dollars or more. This is a principal reduction, you never have to pay it back, it’ yours to keep just for trying my services.

Your credit rating will suffer using these techniques but we are finding credit card companies and even lenders are becoming understanding of these unfortunate circumstances. They’re already explaining the situation away by saying “oh, that was late 2007 or early ’08 when the mortgage meltdown occurred, it’s really not your fault.”

By now I suspect you think I am being facetious. Well, I’m not. I’m dead serious. This is how I have earned my living the last three years. I’m having my best year ever at the expense of the lenders and the tax payers bailout money! Oh, thank you GOD!

Now here’s why Obama’s plan could work. Things are already pretty bad and we could be facing a full-on depression, even without Obama’s help. If Obama is successful in crashing the economy (and I think he will be) the destruction will happen very fast. Just like tearing a bandage off a wound. It’s very painful but it’s over fast.

By crashing the economy, everything will become more affordable. As an example, I’m already able to sell homes to first time homebuyers again. Prices will fall across the board including health care. Thus, the burden on Social Security and Medicare etc. could actually become affordable again. And, if you sold your house, you’ll have cash to pick-up most anything you want for pennies on the dollar. Remember, cash is king during recessions or even survival in a great depression.

By collapsing the economy we will effectively “spread the wealth” by making affordable the things that only the middle class and wealthy could afford in the past. And…the economic cycle starts over again. Typically, the biggest hoarders of wealth are older individuals and they will be too old to do anything about it and will be dead in 15 years or less anyway. Problem solved!

Well, maybe. There are many things I can’t foresee and the plan could definitely backfire. Such as; the biggest contributors to today’s society, the top 3 percent of the population are rich enough to take a financial hit and still continue their comfortable lifestyle. However, when you do this to the top producers of the economy you also take away their incentive to do anything more. Therefore, since they are typically older individuals anyway, they could simply take their bat and ball and go home. And…enjoy the rest of their life while the masses fight over the diminishing handouts. If this scenario actually happens, you and I have little to worry about because it won’t get real bad until you and I are pushing up daisies.

In my opinion, the real losers will be the people that are currently under 48 years old while the young people, those under 23 years old will possibly end up with the best deal. That is…if the plan works. Unfortunately, it’s my opinion the plan will experience a wholesale failure for at least a generation or more. To guess what this scenario would look like you have to look no further than any third world country of your choice.

-Bill

Bank of America Announces Nationwide Homeownership Retention Program For Countrywide Customers

Nearly 400,000 Countrywide borrowers could benefit after program launches January 1st.

CALABASAS, CA – Bank of America today announced the creation of a proactive home retention program that will systematically modify troubled mortgages with up to $8.4 billion in interest rate and principal reductions for nearly 400,000 Countrywide Financial Corporation customers nationwide.

The program was developed together with state Attorneys General and is designed to achieve affordable and sustainable mortgage payments for borrowers who financed their homes with subprime loans or pay option adjustable rate mortgages serviced by Countrywide and originated prior to December 31, 2007. Bank of America acquired Countrywide July 1, 2008.

"We are confident that together with the Attorneys General we have developed a comprehensive program that provides more solutions than ever before to assist troubled borrowers and put them back on the path to sustained home ownership," said Barbara Desoer, president, Bank of America Mortgage, Home Equity and Insurance Services. "Since acquiring Countrywide in July, we have committed significant resources and developed innovative programs to help as many Countrywide customers as possible stay in their homes."

Countrywide mortgage servicing personnel will be equipped to serve eligible borrowers with new program elements by December 1, 2008 and will then begin proactive outreach to eligible customers. Foreclosure sales will not be initiated or advanced for borrowers likely to qualify until Countrywide has made an affirmative decision on the borrower’s eligibility.

The centerpiece of the program is a proactive loan modification process to provide relief to eligible borrowers who are seriously delinquent or are likely to become seriously delinquent as a result of loan features, such as rate resets or payment recasts.

Various options will be considered for eligible customers to ensure modifications are affordable and sustainable. First-year payments of principal, interest, taxes and insurance will be targeted to equate to 34 percent of the borrower’s income. Modified loans feature limited step-rate interest rate adjustments to ensure annual principal and interest payments increase at levels with minimal risk of payment shock. Modification options include, among others:

FHA refinancing under the HOPE for Homeowners Program;
Interest rate reductions, which may be granted automatically through streamlined processing; and
Principal reductions on Pay Option adjustable rate mortgages that restore lost equity for certain borrowers.

The program applies to eligible mortgage loan customers serviced by Countrywide and who occupy the home as their primary residence. Under the national program, Countrywide will not charge eligible borrowers loan modification fees, and Countrywide will waive prepayment penalties for subprime and pay option ARM loans that it or its affiliates own. Some loan modifications will be subject to compliance with servicing contracts and some will require investor approval.

"Now more than ever homeowners and home buyers are looking to Bank of America as the lender they trust and as a leader that can renew America’s confidence in home ownership," said Desoer. "Combined with our strong track record in responsible lending and previously announced lending practices commitments, this bold new program makes it clear that Bank of America is committed to be the leader in responsible mortgage lending practices."

As part of agreements to resolve outstanding claims against Countrywide by certain states, borrowers in participating states will additionally be eligible to access their share of:

A Foreclosure Relief Program of $150 million on a nationwide basis for payment to eligible Countrywide servicing customers who suffered foreclosure or are currently at serious risk of foreclosure having made only minimal payments since the time their mortgages were originated by Countrywide; and
An additional program, projected to make payments up to $70 million to support customers with loans serviced by Countrywide who face imminent foreclosure, providing financial assistance with their transition from home ownership.

As part of the state agreements, Countrywide is further committing to eligible borrowers in participating states that it will waive late fees associated with a borrower’s default in finalizing modifications under the program.

In addition, states that have not yet become participants in Bank of America’s program will be provided an opportunity to do so, which would enable their residents to become eligible for these benefits.

"Our program represents principal and interest reductions over time to borrowers on loans Countrywide owns and on loans Countrywide services on behalf of investors," said Joe Price, Bank of America Chief Financial Officer. "By taking projected foreclosure losses and instead directing those funds into these proactive foreclosure prevention efforts, we create a solution in the best interests of both our customers and the investors whose loans and securities we service. Of the eligible loans, about 12 percent are now held by Bank of America. The cost of restructuring these loans is within the range of losses we estimated when we acquired Countrywide."

More information can be found on Countrywide’s website

Archives for 2008

Redding Electric Utility Wants To Raise Rates

Shasta County Down Payment Assistance Program

Shasta County Sees A Slight Increase In Foreclosure Filings For The Month Of October

Governor Schwarzenegger Proposes a 90 Freeze on Foreclosures In California

Time To Sell, NOW!

Bank of America Announces Nationwide Homeownership Retention Program For Countrywide Customers

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