Copy for Real Estate Guide Column for 7-18-08
REAL ESTATE PATTERNS
By Ken DuVall

WE’RE NOT ALONE!

The Governator did a superior thing last week: he OK’d Senate Bill 1137, which takes effect immediately and prohibits lenders from filing a loan default on borrowers until 30 days AFTER they’ve made a good faith attempt to try and work things out. Tenants also benefit in that they now get 60 days notice to vacate once a property has been foreclosed. It’s certainly no fault of theirs the landlord failed to make payments.

This is an excellent, common sense move- not a bailout- that will help stem the tide of California foreclosures. Banks are now forced to work with borrowers in trouble with their loan payments BEFORE they commence foreclosure. It encourages both parties to explore alternatives that could avoid a costly repossession. The Bill passed with bipartisan support.

California has recorded over 116,000 foreclosures already this year. Its major grim. The Bill’s goal is to encourage meaningful loan modifications between borrower and lender. It also enables cities to impose fines of $1000 a day on property owners who do not maintain homes acquired in foreclosure, aimed at preventing blight and worse in hard hit neighborhoods.

When you’re invited to a poker game and look around the table for the “pigeon”, and can’t spot him, YOU may be the pigeon! Maybe you shouldn’t have gone for that “trick” loan in the first place. Maybe the lender misled you. Either way, this new law provides parties the chance to work things out to avoid legal proceedings. I’m on our Chico Assn. of Realtors Professional Standards panel where we judge conflicts between parties. It’s ALWAYS wiser to settle than to go legal.

Even celebrities are affected as values fall. The meltdown is hitting every socio-economic class. We’ve all heard about poor Ed McMahon, Johnny Carson’s 85-year old sidekick’s troubles. Ed’s been unable to work since he fell and broke his neck in 2006. He’s $644,000 behind on his payments on his Beverly Hills home in the same gated community where Britney Spears (there went the ‘hood!) moved. Ed’s been trying to sell it for 2 years. It started at $7.6 mil and is now down to $6.5.

Angela Bassett and Courtney Vance’s home in the gated old-money enclave in L.A.’s Hancock Park off Wilshire Blvd has dropped more than $2 mil in the past year. It’s now down to $3.9 mil from $6 mil. Don’t feel too sorry for them. They bought it 17 years ago for $1.8 mil and own it free and clear. Baseball’s Jose Canseco stopped making payments earlier this year on his $2.5 mil home in Encino in the San Fernando Valley.

The good news is that Newbies are back! Entry level homes are again affordable. Builders have slashed prices and are building far smaller homes. For instance: KB Home’s average sales price east of L.A. has dropped to $248,000 from $267,000 a year ago. Their old basic 3800 SF model once sold for $328,000. Today it’s half the size and goes for $220,000. So for the first time in 10 years tenants can buy a new home for what they’re paying in rent. Hooray! Bear in mind the key player in any housing recovery scenario is the first time buyer. There’s always a flip side.

Ken owns Ken DuVall & Associates, REALTORS at 3rd Ave. & Mangrove in Chico. Ken was the 2001 President of the Chico Assn. of Realtors and the 1995 Chico Realtor of the Year. See Chico MLS listings at www.KenDuVall.com and call Ken at 345-3700 for all your real estate needs. Free consulting.