Freddie Mac’s recent quarterly review shows that the dollar volume of equity cashed out during the first quarter of 2008 declined to $29 billion with only 56 percent of Freddie Mac-owned refinanced loans including a 5 percent increase above original mortgage balances, compared with the revised 77 percent in the fourth quarter of 2007, the smallest percent of cash-out refinancing activity since the second quarter of 2004.

Rental households increased by about 1 million last year and are likely to expand if the foreclosure trend continues, according to the Harvard University’s Joint Center for Housing Studies report. The debt burden of low-income renters has been growing, and the population of lowest-income renters in debt grew by 20 percent from 1995 to 2004, to 7.6 million.  Average outstanding debt for members of this lowest-income group rose 62 percent in inflation-adjusted terms, from $3,200 to $5,200.

A Federal Reserve survey showed that more than half of the banks surveyed said they have tightened lending policies during the past three months on a wide range of consumer and commercial loans, including residential mortgages.  Consumers have been most affected by stricter credit guidelines.  A record 62 percent of banks reported tighter standards for prime mortgages and 72 percent said they tightened subprime requirements.  However, the number of lenders offering subprime loans declined to only 17 percent from about 30 percent two years ago.  The majority of lenders tightened standards due to worries about risk, illiquid markets and their own deteriorating capital position.  Most said they were increasing spreads on interest rates, requiring more documentation, increasing collateral requirements, or requiring co-signers and/or covenants before approving a loan.

AB 2454 (Real Estate: Recovery Amount) This bill proposes to increase payout limits to victims of fraud by licensed members of the Department of Real Estate (DRE) to $50,000 for any one transaction and $250,000 per licensee, an increase from the current $20,000 and $100,000 respectively which was the amount established in 1980.  Currently under the real estate law, the DRE administers a recovery account from which the DRE can pay the victims of fraud their actual and direct losses, if the fraud was committed by a real estate licensee while performing acts for which a license is required.  Existing law allows 12% of real estate license fees to fund the recovery account.  In order to qualify for payment, the victim must have a final fraud judgment and the claimant must demonstrate the licensee has no attachable assets. (Assemblyman Bill Emmerson)

AB 3016 – California Military Family Relief Fund Expansion: This bill will expand the current California Military Family Relief Fund Expansion (CMFRF) program to include all reserve members of the Armed Forces, who have been called to active duty.  Currently, the CMFRF program provides one-time financial-aid grants only to members of the California National Guard who have been called to active duty.  These grants are used to address service-related economic hardship. At the present time, the CMFRF is underutilized.  (There are too few eligible families in the Guard.)  This new bill will likely expand the pool of money available (through increased contributions) and address the underutilization of the fund. This bill, with 26 co-authors, passed the Assembly Revenue and Taxation Committee and will be heard next in the Assembly Appropriations Committee. (Assemblyman Paul Cook)

AB 2678 (Nunez):  which among other things, will require that ALL homes and commercial property in California have an energy audit at point-of-sale and that mandatory energy efficiency investments be made.  AB 2678 was to have been voted on by the Assembly Appropriations committee last week but is now being held in that committee for at least a few days due to its potential cost.  The bill is expected to have a hearing sometime before May 23^rd.

Richard Tegley is a Broker/REALTOR®, a Director of the CALIFORNIA ASSOCIATION OF REALTORS® and the NATIONAL ASSOCIATION OF REALTORS®. Richard can be reached at (951) 533-9340 or email Tegley@surfcity.net