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WASHINGTON — The Federal Reserve signaled Wednesday that a full economic recovery could take nearly three more years, and it went further than ever to assure consumers and businesses that they will be able to borrow cheaply well into the future.
The central bank said it would probably not increase its benchmark interest rate until late 2014 at the earliest — a year and a half later than it had previously said.
The new timetable showed the Fed is concerned that the recovery remains stubbornly slow. But it also thinks inflation will stay tame enough for rates to remain at record lows without igniting price increases.
Chairman Ben Bernanke cautioned that late 2014 is merely its “best guess.” The Fed can shift that plan if the economic picture changes. But he cast doubt on whether that would be necessary.
“Unless there is a substantial strengthening of the economy in the near term, it’s a pretty good guess we will be keeping rates low for some time,” he said.
The Fed has kept its key rate at a record low near zero for about three years. Its new time frame suggests the rate will stay there for roughly an additional three years.
The bank’s tepid outlook also suggests it’s prepared to do more to help the economy. One possibility is a third bond-buying program that would seek to further drive down rates on mortgages and other loans to embolden consumers and businesses to borrow and spend more.
Information obtained from the Calif. Asso. of Realtors with permission.
Article printed in the Mercury News and A.P.  Jan. 25,  2012.
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Last year, more than two million people were turned down for home loans, according to federal data, often because the applicants didn’t meet certain lender requirements or because their applications were incomplete or otherwise problematic. With lenders’ underwriting criteria becoming more strict in recent years, it’s important buyers know the most common triggers for mortgage-loan rejection. 

Insufficient income: Lenders want to be sure borrowers can afford to make the mortgage payments. Lenders typically look for at least a two-year track record of income, which could hurt those who have changed jobs recently.
Cloudy financial picture: Generally, total debt payments, including the mortgage, cannot exceed 45 to 50 percent of a borrower’s adjusted gross monthly income. Overtime and bonuses are included only if the borrower has worked for the same employer at least two years, and has a history of receiving them.
Poor credit: Lenders typically reject applicants with FICO scores below 620.
Low appraisal: One of the predominant reasons buyers are turned down for home loans is because the appraisal on the property is too low.
Property problems: Sometimes issues turn up within a house, like a major repair or safety issue that needs to be addressed, before an application can be approved.
Information mix-ups: Approximately 12 percent of new mortgage applications were denied because of unverifiable information or incomplete credit applications, according to the Federal Financial Institutions Examination Council.

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Housing affordability increased in California in the second quarter as prices dropped from the same period a year earlier, according to the Calif. Assoc of Realtors.
Fifty-one percent of California households could afford a single-family home priced at the median, according to the CAR. That was an increase from 46% during the same period last year, when buyer tax credits fueled the market and pushed up prices. Affordability decreased from the prior quarter, but that was due to seasonal variations that pushed up prices.
Potential buyers needed to earn a minimum annual income of $63,080 to qualify for the purchase of a home priced at the state’s median, $293,580, which is the price at which half the homes sold for more and half for less. The house payment on that purchase, including taxes and insurance, would be $1,580, the group reported, assuming a down payment of 20% and an effective composite interest rate of 4.85%.
During the second quarter, affordability fell in the priciest parts of the state. San Bernardino County was the most affordable in the state, with a rate of 77%, while San Mateo County was the least affordable, with only 21% of households in the state able to afford that county’s median-priced home, the group reported.
That’s great news, so it’s now time we all buy instead of rent. Call me if you need help.
This information was obtained by permission from the Calif Assoc of Realtors.

We are now in the fifth year of a housing crisis in which more than 3 million Americans have lost their homes to foreclosure, with millions more still at risk.
Every initiative to stem the tide of misery has fallen short in the face of continued economic gloom.
Over the next few weeks, several initiatives aimed at reforming the foreclosure process, holding mortgage lenders and services accountable for their past abuses, and creating more effective mortgage workouts are coming to a head.
Typically, banks and other lenders retained almost no financial interest in the mortgages they originated, other than the duty to service them — collect payments and pursue delinquent borrowers, say — for which they received a fee.
Several drawbacks to that system emerged when the housing economy crashed. Because the loans weren’t going to stay on their books, the lenders hadn’t been too careful about whom they lent to and on what terms.
Perhaps the biggest problem is that although the servicers, which include huge banks such as Bank of America and Wells Fargo, are burdened with the responsibility to renegotiate mortgages to keep borrowers out of foreclosure, their authority to do so on behalf of investors is murky.
As a result, though the investor, the borrower and the economy in general benefit if a home is kept out of foreclosure, even if that means its owner makes lower payments than were required by the original mortgage, the servicing banks are leery of renegotiating too aggressively.
The most closely followed remedial effort involves the 50 state attorneys general under the leadership of Iowa Atty. Gen. Tom Miller.
Last March, the group produced propsal for foreclosure reforms that drew fire from some consumer advocates for being too lenient — its provisions include mandates that banks comply with state law in dealing with borrowers, as if that’s a novel concept — and from business interests for putting too much pressure on banks to reduce principal balances for homeowners having trouble keeping up payments on homes with values that have fallen below the mortgage balance.
Information obtained by the Calif. Asso of Realtors & the L.A. Times. For the whole story: http://articles.latimes.com/2011/aug/14/business/la-fi-hiltzik-20110814
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Trying to decide how to get to your next vacation?  Should you fly, drive, take a train etc.?  Which one will be more cost effective.  which mode of transportation will leave a bigger carbon footprint?  Now you can go to www.cost2drive.com to find out!  First, you enter where you are leaving from and where you will be going.  Then you put in the year make and model of your car it will calculate  the cost.  You can even compare it to the cost of flying if your vacation trip is far away.
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The number of residential properties with mortgages that were in negative equity at the end of the third quarter declined compared to the end of the second quarter, CoreLogic reports. The Q3 Negative Equity Report finds that 10.8 million, or 22.5 percent, of all mortgaged residential properties were in negative equity at the end of the third quarter, compared to 11.0 million, or 23 percent, at the end of the second quarter.
The number of borrowers who are underwater on their mortgages has declined by more than 500,000 to date in 2010, but an additional 2.4 million borrowers were near negative equity (within 5 percent) in the third quarter. Negative equity and near-negative equity mortgages accounted for 27.5 percent of all mortgaged residential properties at the end of the third quarter.
Negative equity was most prevalent in five states: Nevada, Arizona, Florida, Michigan and California.
 
 
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1. INFLATE YOUR TIRES.   Under inflated tires can lower gas mileage by 0.4% for every pound of drop in pressure of all four tires.  So keep ‘em pumped!!  Difficulty: l
2. GET RID OF THE LEAD FOOT.  According to the U.S. Department of Energy (DOE), quick acceleration and heavy braking reduce fuel economy by as much as 33% on the highway and 5%around town.  Give the lead foot a rest to improve your fuel efficiency and your passengers ride.  Difficulty: l
3. STOP IDLING.  Although most of us grew up needing to let the car “warm up” any car built after 1990 doesn’t need the warm-up, so go ahead and get a move on.   Difficulty: l
4.GIVE YOUR CAR A BREAK.   You may n0t be able to retire your car completely, but try to opt for public transportation, carpooling, walking or biking when you can, and you’ll save both money and carbon emissions.  For each gallon of gas you save, you keep 20 pounds of carbon dioxide out of the environment and nearly $5.00 in your wallet!  Difficulty: l
5. BE REASONABLE WITH THE THERMOSTAT.  You don’t have to be uncomfortable in your home to save energy or reduce emissions, but try to keep it as warm as you can stand it in the summer, and turn it down to 68 or below in the winter.  Difficulty: l
6, CAULKING AND STORM PANELS.  Double-paned wondows are are good fix but, a least expensive way to improve insulation, is to seal and leaks or gaps around doors and windows with caulking and weather stripping.  You can then add a storm panel to your single-pane window to increase energy efficiency for less money than double paned windows.  Difficulty: ll
7.SWAP YOUR A/C FOR A CEILING FAN.  Ceiling fans are remarkably effective in cooling and use far less energy (or chemicals!) than air conditioning.  If you still need a A/C, consider running it on low and using ceiling fans to circulate the cool air.   Difficulty ll
8. PLANT TREES.  On top of soaking up carbon dioxide, trees that surround your home can provide shading in the summertime, keeping your house cool and requiring less energy-intensive air conditioning.  Difficulty: ll
9.  GET YOUR DUCTS IN A ROW.  In addition to increasing your electricity bills and and your carbon foot print, faulty duct work can cause serious, life-threatening carbon monoxide problems in the home.  Check your ducts for air leaks.  First, look for sections that should be joined but have separated, and then look for obvious holes.  If you use tape,  to seal your ducts, use mastic, butyl tape, foil tape,or other heat-approved tapes (look for tape with the Underwriters Laboratories logo.)  Be sure a well-sealed vapor barrier exists on the outside of the insulation on cooling ducts to prevent moisture buildup.  Difficulty: lll
10. GO FOR DOUBLE-PANED WINDOWS.  According to the DOE, the typical family spends $1,300 a year on home energy bills.  If your windows are letting air in or out, some of that money is being wasted, as is the energy its paying for.  Double-paned windows are up to 40% more energy-efficient than standard windows, and could shave 10% to 25% off youe heating or cooling bill, on top of saving five tons of carbon dioxide emissions per household per year.  Difficulty: lll
DIFFICULTY SCALE:                                                  
l= No Pain, but Lots of Gain.
ll= Commitment and Consciousness Required Daily.
lll= You Will Soon Reap the Financial Rewards of your Herculean Efforts.
TO BE CONTINUED NEXT WEEK!