U.S. sales fall for the third consecutive month to the lowest rate since 1999, pushing down stocks and fueling fears of a ‘double dip’ in the housing market.

The end of a popular government stimulus program drove home sales in July to their lowest levels in more than a decade, fueling fresh concerns about the economic recovery.

Home sales fell 27.2% nationwide from a month earlier, the National Assn. of Realtors reported. That was a much bigger drop than expected, as the boost evaporated from a now-expired federal tax credit that had been driving sales this spring. The plunge came despite rock-bottom rates on home loans.

Concern over the summer swoon reverberated from Wall Street to the White House. The Dow Jones industrial average briefly slid below the 10,000 benchmark and was down 1.3% on the day.

“You are seeing the sales drop off a cliff again, and that is really starting to scare people,” C.J. Jones, head of institutional trading at Nollenberger Capital Markets, said Tuesday. “Are we going to have a double dip? Nobody knows.”

White House Deputy Press Secretary Bill Burton acknowledged that the drop-off probably was largely due to the expiration of the home-buyer tax credit and called the 27.2% decline a “tough number.”

“There’s a lot more work yet to do,” Burton said.

Randi Young didn’t need to see the latest sales figures to know the market has cooled.

Young, 63, listed her three-bedroom, two-bathroom house in Woodland Hills for $719,000 last month because she plans to take a new job as a hospital administrator in Tennessee.

She has yet to receive one offer on her property, she said, even though she and her agent believe the price is in line with recent sales.

“I may have to take a loss on the property in order not to be supporting two households,” she said, adding that she was fearful of having to rent it. “I don’t want to be in a situation where I get the renter from hell; then I have the expense of having to repair the damage.”

The Realtors association said the seasonally adjusted annual rate of sales was 3.83 million units in July, not only a big drop from June but also a 25.5% plunge from July 2009.

That was the lowest sales level since 1999. The sales rate for single-family homes, which accounts for the bulk of sales, was at its lowest level since May 1995, the group said.

Dan Greenhaus, chief economic strategist for New York brokerage Miller Tabak & Co., called the July downturn “a near, if not outright, collapse in housing.”

July was the third consecutive monthly decline after the April 30 expiration of the federal tax credit, which offered up to $8,000 for certain buyers.

Many people who rushed to beat the April 30 deadline to sign a sales contract were closing their deals in May and June, helping to boost purchase figures. With many of those deals now apparently closed, the market is faced with standing on its own.

Real estate experts said the tax credits led many buyers to speed up their plans to buy houses — a welcome development over the spring, but one that is now sapping demand.

A few months ago “we were getting eight or nine offers on every property, and we knew that we would have a tremendous drop-off, because it was being artificially stimulated,” said Gary K. Kruger, a real estate agent with HomeStar Real Estate Services in Hemet.

“Buyers were borrowing the money from a family member and promising to pay it back when the tax credit came through,” he said. “People still do not have cash to make a down payment.”

The worst drop was in the Midwest, which recorded a 35% decrease in sales of previously owned homes in July from June. The West fared better with a 25% decline. Sales fell 29.5% in the Northeast and 22.6% in the South.

The one bright spot of the report was that the national median home price for all housing types was $182,600 in July, up 0.7% from a year ago. Sales of distressed homes — those sold out of a foreclosure or when the seller is in default — accounted for 32% of sales in July, unchanged from June.

Although housing has historically given the U.S. economy a boost out of prior recessions — as low interest rates spurred buyers and new home construction — that does not appear likely to be the case this time around.

With demand faltering, many economists now expect that home prices — generally on the rise for the last year — may retreat again.

“The tax credit pulled a lot of purchases forward, so people rushed to buy a home to qualify for the credit and it would have been a weak market otherwise,” said Dean Baker, co-director of the Center for Economic and Policy Research in Washington. “Now we are looking at a very weak market and, obviously, people have to sell so we are probably going to see a plunge in prices through 2010.”

The question for some is: Can the housing decline derail the fledgling economic recovery?

“I don’t think a double-dip in housing necessarily drags the rest of the economy with it,” said Nigel Gault, chief U.S. economist for consultant IHS Global Insight. “But clearly it doesn’t help.”

Making matters worse, there are many more homes than buyers right now. Total housing inventory jumped 2.5% at the end of July to 3.98 million homes available for sale, representing a troubling 12.5-month supply at the current pace, up from an 8.9-month supply in June.

The dismal sales figures follow a report last week by MDA DataQuick of San Diego that showed a 20.6% July sales drop in the Southland over the previous month, with sales falling hardest in the Inland Empire counties of Riverside and San Bernardino.

Sales of cheap, foreclosed homes in the Inland Empire had been fueled by an abundance of foreclosure properties being bought up by first-time home buyers.

With prices weakening, buyers have little incentive to jump into the market.

“It’s an absolute standoff,” said Glenn Kelman, chief executive of the online brokerage firm Redfin. “Buyers know that time is on their side and sellers are hard up against their mortgage; they just can’t lower their price any more, so it’s hard to put deals together.”

Times staff writer Jim Puzzanghera in Washington contributed to this report.

Adapting to Tighter Rules After Collapse, Scammers Turn to More Complex Plots – ROBBIE WHELAN of the Wall Street Journal

New data suggests that mortgage fraud—which got tougher to pull off after the collapse of the U.S. real estate market—is returning in a big way.

Data prepared for The Wall Street Journal by research firm CoreLogic, examining about seven million home loans made by hundreds of lenders, show that losses from mortgage fraud—ranging from falsified credit reports to identity theft—rose 17% last year after declining 57% in the two years after its 2006 peak.

In 2009, $14 billion in loans, or about 0.7% of all mortgage loans made in the U.S., were originated with fraudulent application data.

The figures are a fraction of the mortgage market, but the increase is sharp.

CoreLogic, which tracks fraud only by mortgage value, examines about 7 million loans each year using a proprietary computer program that detects discrepancies in loan documents and predicts the likelihood of fraud. The real losses to banks won’t be known for several years when banks are forced to write off the value of the loans’ value.

Bloomberg News - data suggest losses from mortgage fraud nationwide rose 17% last year. Above, a view of Las Vegas, where home prices have fallen.

Some of CoreLogic’s profits come from selling market research to lenders aiming to cut losses from mortgage fraud.

Investigators and lenders say they are seeing a similar upswing in fraud.

The Federal Bureau of Investigation in June indicted a Phoenix man for mail and wire fraud among other alleged crimes when the agency says he tried to steal a house from his landlord. Also in June, federal prosecutors in New Jersey charged 29 defendants—including 12 real-estate agents, four mortgage consultants, an appraiser, a bank employee and a mortgage broker—with wire fraud in an alleged scheme involving 17 properties in the state and losses of $5.5 million.

“Even though we have certain compliance measures in place, people will adapt whatever scheme,” said Sharon Ormsby, the FBI’s section chief for financial crimes. “It doesn’t matter if the market is going up or down.”

The kinds of fraud that contributed to the mortgage crisis and the collapse of the housing market were relatively simple. Crooks took advantage of the size of mortgage loans and the lax rules governing who qualified for them.

In one common con, they would recruit as accomplices “straw buyers” with good credit to apply for “no-doc” loans, which required no documentation or proof of income, to buy their house. Good credit was required because lenders generally did check a borrower’s credit score, even if they didn’t require pay stubs or bank statements.

When the bank sent funds, typically to make a down payment or for a home-equity loan, the schemers and the fake buyer would split the profits and walk away, leaving the house to fall into foreclosure and the bank stuck with the loss.

Since the mortgage crisis, banks and the government-sponsored entities that underwrite or insure mortgages, including Fannie Mae, Freddie Mac and the Federal Housing Administration, have tightened lending standards and closely scrutinize mortgage applications.

No-doc loans are a thing of the past, and many lenders now require borrowers to furnish proof of employment, tax forms, credit reports, bank statements and other documents.

Fraudsters have adapted to the new restrictions. With banks less apt to lend to borrowers with shaky finances, criminals rely more on falsifying documents, recruiting loan officers and other bank insiders to work for them, and stealing identities to get loans, federal investigators and mortgage industry research reports.

In the Phoenix case, prosecutors allege, Jose Victor Buencamino did all three. Some people who knew Mr. Buencamino describe him as a large, friendly man devoted to his children, the life of many a party and a passionate golfer. Gary Weaver, who rented a home to Mr. Buencamino last year, has a different impression. He said the Arizona businessman tried to snare him in an elaborate mortgage scheme.

According to a federal indictment unsealed in June, while Mr. Buencamino was renting Mr. Weaver’s house on the golf course at Moon Valley Country Club, he intercepted mail intended for Mr. Weaver and obtained his social security number, then applied for a driver’s license in Mr. Weaver’s name.

Then, the indictment alleges, with the help of a friend who worked as a loan officer at a local branch of Compass Bank, a unit of Spanish bank Banco Bilbao Vizcaya Argentaria SA, Mr. Buencamino obtained a $245,000 cash-out mortgage on the property. A homeowner using a cash-out mortgage refinances the home loan for more than the mortgage is currently worth and pockets the difference in cash.

A Compass Bank spokesman didn’t respond to requests for comment. Mr. Buencamino, who couldn’t be located for comment, has not responded to the charges.

A federal agent said he had been tracked to Vancouver, where the agent said he is applying for Canadian residency. Prosecutors involved in the case said he didn’t have an attorney on whom they could serve court papers. U.S. authorities said they were seeking his extradition.

“Fraud continues to be a pervasive issue, growing and escalating in complexity,” said an April report from LexisNexis’s Mortgage Asset Research Institute, which cited as reasons easy access to records via the Internet and, in many cases, though not Mr. Weaver’s, the vulnerability of cash-strapped homeowners.

MARI’s breakdown of the numbers reflects the shift in technique. Fraud related to falsified credit reports has declined each year since the boom years, MARI reports, while the share of mortgage fraud involving false appraisals jumped 50% between 2008 and 2009.

Application fraud—in which borrowers lie about their names, where they live, how much money they earn, their employment, their debt or their assets—remains high, accounting for 59% of all mortgage fraud.

One of the defendants in the New Jersey dragnet, a mortgage consultant with Newark-based Invest & Investors LLC named Viviane Bernardim, allegedly paid accomplices $15,000 apiece to steal the identities of several New Jersey residents who earned $90,000 or more and had good credit ratings. She used those identities to obtain second mortgages on a number of homes in the Newark area, according to U.S. Attorney Paul J. Fishman, head of the office prosecuting the case.

But since good credit ratings are no longer enough to get a mortgage, Ms. Bernardim also needed friends who worked for the lenders to pull off the caper.

“Having players at every level of a conspiracy makes it easier to carry out fraud,” said Mr. Fishman. “But each bad actor and criminal act is also another chance for law enforcement to find a way in.”

Maria Delgaizo Noto, an attorney for Ms. Bernardim, said that she had no comment until an indictment was unsealed, but that her client “maintains her innocence of any criminal activity.”

Associated Press
Beth Phillips, left, a U.S. Attorney in Missouri, announces a pair of indictments Aug. 4 in Kansas City in a $2.7 million mortgage-fraud case.

In Phoenix, Mr. Buencamino’s alleged fraud was assisted by an insider, but also by easy access to public documents on the Internet. After intercepting mail intended for Mr. Weaver and obtaining his Social Security number, Mr. Buencamino applied online for an Arizona driver’s license in Mr. Weaver’s name, according to the criminal complaint and law enforcement agents involved in the case.

When he received the permit, he submitted mortgage application documents by mail to Compass Bank and, with the help of co-conspirator William Baxaveneous, the Compass loan officer, obtained a second mortgage on Mr. Weaver’s home—which had no mortgage—without ever having to meet any bank officials face to face, Mr. Weaver said. He said he learned this from the federal agents investigating the case.

Mr. Baxaveneous’s attorney said he was trying to settle the case and declined to comment further.

This is a fantastic 4 plex located just minutes from the beach. All units have been redone within the last few years as it offers a newer roof, newer appliances, scraped ceilings, mirror wardrobe doors, cathedral ceilings in the front unit, a fireplace in the front unit, ceramic tile floors and counter tops, and frest exterior paint. Units consist of (3) 1 bedrooms – 1 bathroom and (1) 3 bedroom – 2 bathroom. All units have a rear patio and 1 car garage. The front unit offers an amazing deck with a peek a boo view! Property offers common laundry and collections from the laundry are in addition to the numbers listed below. This is an incredible value and a great property!

View more information at: www.146WestEscalones.com

The first of it’s kind… I’m loving the fact that this would be a great fit for our community here in Southern California. The challenge would be that we would need an increase in the credit amount to cover the necessary improvements. Read on and let me know your thoughts…

The Sacramento Association of Realtors, aiming to overcome consumer reluctance about buying older, energy-guzzling houses, has launched a program to give qualified buyers $2,000 to help make energy-efficiency improvements.

The grant program, funded by a $234,000 SAR fund, is believed to be the first of its kind in California. “We help buyers who need it the most, and improve houses that need it the most,” said SAR coordinator Charlene Singley, a Lyon Real Estate agent in Sacramento. “And we’re out there trying to help improve energy conservation in the area.”

To qualify, buyers must purchase a home built in 1978 or earlier. That covers about six in 10 Sacramento-area houses, said Comstock Mortgage Senior Loan Consultant Kevin Nunn, who created the grant program for SAR. It also covers many of the bank repos that have become a large share of the region’s for-sale listings.

Buyers must use a SAR Realtor or lender. The homes can be located anywhere that one of those members sell.

Buyers must also use a Federal Home Administration or Veterans Administration Energy Efficient Mortgage. Those mortgages, in use since the early 1990s, allow buyers to roll the costs of energy efficiency improvements into their home loans. The idea behind Energy Efficient Mortgages: they save buyers more in the long run than it costs for the financing.

Nunn said energy efficient mortgages allow buyers to borrow up to 5 percent of the sales price – $10,000 in the case of a $200,000 house – to install new air-conditioning, add dual-pane windows or extra insulation to the older house.

He said energy efficiency mortgages most commonly help buyers finance new air-conditioning systems, dual pane windows and insulation. The SAR program requires that a SMUD-certified contractor do the work.

© Copyright The Sacramento Bee. All rights reserved.

Read more: http://www.sacbee.com/2010/08/23/2977186/buying-an-older-home-realtors.html#ixzz0xvgkZ89U

Distressed homeowners no longer have to pay California state income tax on debt forgiven in a short sale, foreclosure, or loan modification. Enacted into law yesterday, Senate Bill 401 generally aligns California’s tax treatment of mortgage debt relief income with federal law. For debt forgiven on a loan secured by a “qualified principal residence,” borrowers will now be exempt from both federal and state income tax consequences. The existing federal exemption is for indebtedness up to $2 million, whereas the new California exemption is for indebtedness up to $800,000 and forgiven debt up to $500,000.

“Qualified principal residence” indebtedness is defined as debt incurred in acquiring, constructing, or substantially improving a principal residence. It includes both first and second trust deeds. It also includes a refinance loan to the extent the funds were used to payoff a previous loan that would have qualified.

The tax breaks apply to debts discharged from 2009 through 2012. Californians who have already filed their 2009 tax returns may claim the exemption by filing a Form 540X amendment.

Taxpayers who do not qualify for the above exemptions (e.g., second home or rental property) may nevertheless be exempt under other provisions. Most notably, taxpayers who are bankrupt are exempt from debt relief income tax. Also, taxpayers who are insolvent are exempt from debt relief income tax to the extent their current liabilities exceed current assets.

For more information about mortgage forgiveness tax consequences, go to California Franchise Tax Board’s Mortgage Forgiveness Debt Relief Extended webpage and the Internal Revenue Service’s Mortgage Forgiveness Debt Relief Act and Debt Cancellation webpage. The full text of Senate Bill 401 is available at www.leginfo.ca.gov.

C.A.R. provides REALTORS® with many legal articles covering a wide range of topics of interest. Some of the new or newly revised legal articles available at http://qa.car.org/ are as follows:

Homebuyer Tax Credit Chart 2010.

Willowbrook is an extraordinary 3 bedroom 2 ½ bathroom home nestled in the heart of Las Flores in the highly sought after community of “Avelino” which located just on the edge of Rancho Santa Margarita. This great home offers a free-flowing floor-plan with approximately 1383 sq. ft. of comfortable living space with a great family room, dining room and kitchen downstairs along with a direct access 2 car garage. This home is very nicely appointed with upgrades throughout – some of which include modern paint, custom tile entry, bathroom and kitchen flooring, ceiling fans and updated light fixtures , 2” blinds, recessed lighting throughout the downstairs, built in entertainment center in the family room, and much more. The rear yard offers brick accented concrete decking with built in planters and a small grassy patch.

View all the photos at www.23Willowbrooklane.com

This past Thursday was my last meeting as the President of the group for my 2nd term, and I must say that I’m going to miss leading the meeting! I love the thought that we have accomplished so much over the last year, and I believe that most of that is due to the support behind me. I have had great V.P’s, dynamite Secretary – Treasures and the best Visitor Hosts, Educational Coordinators and Membership team that a President could ask for!

I’m grateful for the opportunity to have served you in that capacity and I can’t wait to see what the next term holds for not only myself but for the new President Mr. Greg Levin! As you have probably heard me say… I’m glad to be a part of this group and this network, and I’m grateful for the opportunities and experience that it has given me. Thank you all!

Here’s a quick note to let you know how I can help you or anyone you feel comfortable introducing me to.

It may or may not be a sign of these economic times, but according to experts, home robberies are on the rise. Reading or hearing about these events on the news is almost a daily event, yet most of us think “That couldn’t happen to me,” and fail to take basic, preventive measures.

I’ve prepared a free report, Protect Your Home From Burglars, that I’d like to send to you to help keep you, your family, and your home safe. The report includes information about doors, windows and alarm systems, plus some general, common-sense tips. If you’d like a copy of this report for yourself, family members and friends, just take out your cell phone, look up my number (714.746.8103), call me, and I’ll mail or email the report to you and anyone else you request.

P.S. Renters are just as vulnerable to home robberies as homeowners. Who’s the next renter you know who could benefit from this free report? We can help them! Be sure to give me a call so I can send this report to you to pass along.

I’ve prepared a free report to explain the consequences of strategic defaults and foreclosure—and the benefits of a short sale—when underwater on your mortgage. You will learn the advantages and disadvantages to all your options. Simply click here: http://www.helpingochomeowners.com and download this report, email it or share it with someone you know and care about.

I sincerely hope you’ll take advantage of this information and feel free to pass it along to anyone you know in need. Getting the right information is the key to getting back on track. Please feel comfortable giving me a call or sending me an email any time with your questions or concerns.

I’m here to help you, your family and friends any way that I can.

Here’s a quick note to let you know how I can help you or anyone you feel comfortable introducing me to.

Every January, it seems like people make a New Year’s resolution to buy a home, and often they don’t know where to start. That’s why we’re offering our free report, How to Buy a House with Little (or No) Money Down, to educate first-time home buyers about the home buying process.

The next time you’re in a conversation with a friend, family member or neighbor and they mention they want to buy their first home, would you stop, take out your cell phone, look up my number 714.746.8103 and call me immediately? I’ll send you my free report so you can give it to them.

Jeffrey Simons, Your Personal Real Estate Consultant For Life
Prudential California Realty, 714.746.8103

P.S. This free report is perfect for people who have just started talking about buying, even if they’re buying several months from now.