Real Estate Digest
A California Real Estate Newsletter
Edition 6, Febuary 2015
Reduced Lender Fees for FHA loans




Our Federal Housing Administration is starting to make changes to their fee structures by reducing the interest rate on the Mutual Mortgage Insurance (MMI), a fee charged by the FHA for loans with less than 80% equity. This rate was reduced by .5%, from $1.25% to .85%. Our government administration estimates that 2 million borrowers will be able to save an average of $900 annually over the next 3 years, and 250k first time home buyers will enter the market after the premium reductions.  


Let's all give gratitude for a beginning of changes in mortgage fees and hopes that this trend will continue. We hope to see the current upfront fee of 1.75% of the loan balance go through a similar procedure. We hope to see a return to the former practice of removing the MMI once the home has 20% equity. This burden should not be borne by our first time home buyers, let's continue to let the government know that it is not in the people's interest to burden them with this unreasonable fee structure and insurance premium.  



Rising home prices, restrictive underwriting guidelines, lack of savings, high unemployment are continuing fueling a downward trending home-ownership rate. The current rate of 63.9% is where we were in 1988. It was 65.1% a year ago, and 69.2% at its peak in 2005.  


In 1995 Bill Clinton introduced the "National Home ownership Strategy" which was then bolstered in 2004 by Mr. Bush's loosening of underwriting standards. This led to the housing bubble, which resulted in our housing crisis of the last 8-9 years. Our current situation has our government struggling with how to make housing more affordable through low down payment programs and effective underwriting standards that ensure healthy, long term home ownership and healthy real estate markets.


  • Fannie Mae forecasts a 5.8% increase in home sales this year.
  • Interest rates will likely remain steady through 2015.
  • The Millennials are still not in the market and until they decide to buy, we will likely be stagnant.
  • First time home buyers are at 27 year-low of 33%, below the long-term average of 40%.

Read more here and here.  


Be sure to take a look at this month's County Real Estate Report, See the links in column to the right at the top, as there is an added 2014 Annual report for each county.  

Thinking Big:

Housing in the United States and  

the Quality of Life Index



OECD's quality of life index ranks the United States as the #5 country on the planet in Quality of life based on 11 topics as seen here. And we are in the highest ranking for housing.  


Our fellow citizens, all 311.6 million of us, seem to be moving in the right direction. By continually  focusing on where we need to evolve and grow as a community, we can truly help those who are suffering. Within Santa Cruz, there are several organizations devoted to ending homelessness. One of our team members works with 180/2020: a multi-agency community that helps the most medically venerable homeless individuals in the country. Learn more about them here. Santa Clara and Monterey County both have a plan to end homelessness, which you can find here and here respectively.  


Gratitude to you for our connection and for allowing us to be a part of what you read and how you think about real estate, and for your business.




Christine's Corner

Housing: A Basic Human Right, or a Commodity? 


Our society is still in a housing crisis with millions of our fellow citizens still in mortgages that are inflated above the value of the home and increasing homelessness. Please consider the following facts from NESRI (National Economic and Social Rights Initiative:  

  • Since 2007 there have been 8 million families who have lost their homes to foreclosure.
  • It is estimated that 16 million people will lose their homes before this housing crisis is over.
  • 37.6 million households cannot afford basic housing and a conservative estimate of other basic, essentials.
  • There are 3.5 million homeless people in America
  • There are 18.5 million homes empty



Adequate housing was recognized as a part of the right to adequate standard of living in the 1948 Universal Declaration of Human Rights and in the 1966 International covenant on Economic, Social and Cultural Rights. And yet today, ownership has ceased to be about providing shelter and instead became a way of access to one of the worlds largest and most highly leveraged commodity markets: Residential real estate. Housing is now a commodity, should it stay as such or should it be a basic human right? 


One voice in this conversation is the National Economic and Social Rights Initiative (NESRI), and here is what they are proposing:


Universality: right to housing extends to everyone in society without exception.

: As a fundamental right and not a commodity, there must be equitable utilization of housing that ensures existing housing stock is used in a way to meet the needs of all the people, rather than fuel profit through market speculation.

: Residents and communities have a right to democratic control of local resources in an equitable manner that is inclusive of all members of the community, as well as enjoyment of the economic benefits of local development, including employment opportunities.

Peace and Dignity
: Every person has a right to occupy their home free form harassment, forced eviction, and other threats of displacement, including that driven by development and demolition projects.



For more information, click here and here.  


Schneider Estates
Christine Schneider, Broker
BRE# 01749537

Issue 6
February, 2015
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