Loan requests pick up as rates hit new lows.
Rates on 30-year fixed-rate mortgages flirting with 4%
By Inman News
Inman News™
Share ThisMortgage rates continued to inch downward into new record territory this week as worries about the European debt crisis continued to make Treasuries and mortgage-backed securities that fund most home loans look like safe bets to investors.
Borrowers finally seem to be responding to lower rates, with demand for purchase mortgages and refinancing picking up last week.
Rates on 30-year fixed-rate mortgages averaged 4.09 percent with an average 0.7 point for the week ending Sept. 15, a new low in records dating to 1971, Freddie Mac said in releasing the results of its latest Primary Mortgage Market Survey. That’s down from last week’s record low of 4.12 percent, and a 2011 high of 5.05 percent seen in February.
Rates on 15-year fixed-rate mortgages averaged 3.3 percent with an average 0.6 point, down from 3.33 percent last week and a 2011 high of 4.29 percent in February. That’s a new low in records dating to 1991.
For five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) loans, rates averaged 2.99 percent with an average 0.6 point, up from last week’s record low of 2.96 percent but down from a 2011 high of 3.92 percent in February.
Freddie Mac’s survey showed rates on one-year Treasury-indexed ARMs averaged 2.81 percent this week with an average 0.6 point, down from 2.84 percent last week and a 2011 high of 3.4 percent in February.
Another weekly survey by the Mortgage Bankers Association showed demand for purchase loans was up a seasonally adjusted 7 percent during the week ending Sept. 9, compared to the week before. Demand for purchase loans was still 7.2 percent lower than the same week a year ago.
The survey, which included an adjustment to account for the Sept. 5 Labor Day holiday, also showed requests for refinancings were up 6 percent compared to the week before — the first increase after three consecutive weeks of falling demand. Requests for refinancings were still down 23.5 percent from a year ago.
The average interest rate of mortgages outstanding in the second quarter was 5.28 percent, Freddie Mac chief economist Frank Nothaft said in noting that refinancing into a 30-year fixed mortgage at today’s rates could save homeowners $1,715 a year in interest payments on a $200,000 loan.
Real estate information and analytics provider CoreLogic estimated this week that about 28 million homeowners have mortgages with above-market rates, but many may not be eligible to refinance. About 8 million of those borrowers are “underwater,” meaning they owe more than their homes are worth.
The Obama administration has said it’s studying ways the government could use Fannie Mae, Freddie Mac and the Federal Housing Administration (FHA) to help more homeowners refinance.
The Congressional Budget Office has estimated that a hypothetical program that generated 2.9 million refinancings might prevent 111,000 defaults at a cost of $600 million to taxpayers and $13 billion to $15 billion to private investors. Boosters of such a plan say much of that money would end up back in the pockets of homeowners who would spend some of it, boosting the economy.
In a Sept. 12 forecast, MBA economists predicted rates on 30-year fixed-rate mortgages will rise to an average of 4.5 percent during the final three months of this year, and continue a gradual rise next year to an average of 5 percent during the fourth quarter of 2012
New law in effect today in South Lake Tahoe and all of California!
The new law requiring all homes to install carbon monoxide detectors is effective July 1, 2011. The Carbon Monoxide Poisoning Prevention Act of 2010 (Cal. Health & Safety Code §§13260 et seq.)
Q 1. What is carbon monoxide?
A Carbon monoxide is a gas produced whenever any fuel, such as gas, oil, kerosene, wood, or charcoal, is burned. A person cannot see or smell carbon monoxide. However, at high levels carbon monoxide can kill a person in minutes.
In addition, there are well-documented chronic health effects of acute carbon monoxide poisoning from exposure to carbon monoxide, such as lethargy, headaches, concentration problems, amnesia, psychosis, Parkinson’s disease, memory impairment, and personality alterations.
(Cal. Health & Safety Code § 13261.)
Q 2. Is there a new California law dealing with the issue of carbon monoxide poisoning?
A Yes. The Carbon Monoxide Poisoning Prevention Act of 2010 (Cal. Health & Safety Code §§ 13260 et seq.) was signed into law this year. It requires carbon monoxide detectors to be installed in every “dwelling unit intended for human occupancy.” The California legislature also modified both the TDS (for residential one-to-four unit real property) and MHTDS (for manufactured homes and mobilehomes) to include a reference to carbon monoxide detector devices. See below for more details.
Q 3. What is a carbon monoxide detector?
A It is a relatively inexpensive device similar to a smoke detector that signals detection of carbon monoxide in the air. Under the law, a carbon monoxide device is “designed to detect carbon monoxide and produce a distinct audible alarm.” It can be battery powered, a plug-in device with battery backup, or a device installed as recommended by Standard 720 of the National Fire Protection Association that is either wired into the alternating current power line of the dwelling unit with a secondary battery backup or connected to a system via a panel.
If the carbon monoxide device is combined with a smoke detector, it must emit an alarm or voice warning in a manner that clearly differentiates between a carbon monoxide alarm warning and a smoke detector warning.
The carbon monoxide device must have been tested and certified pursuant to the requirements of the American National standards Institute (ANSI) and Underwriters Laboratories Inc. (UL) as set forth in either ANSI/UL 2034 or ANSI/UL 2075, or successor standards, by a nationally recognized testing laboratory listed in the directory of approved testing laboratories established by the Building Materials Listing Program of the Fire Engineering Division of the Office of the State Fire Marshal of the Department of Forestry and Fire Protection.
(Cal. Health & Safety Code § 13262.)
Q 4. How does a homeowner comply with this law?
A Every owner of a “dwelling unit intended for human occupancy” must install an approved carbon monoxide device in each existing dwelling unit having a fossil fuel burning heater or appliance, fireplace, or an attached garage.
The applicable time periods are as follows:
(1) For all existing single-family dwelling units on or before July 1, 2011.
(2) For all other existing dwelling units on or before Jan. 1, 2013.
(Cal. Health & Safety Code § 17926(a).)
Q 5. How many devices and where do I place them in the home?
A This new law requires the owner “to install the devices in a manner consistent with building standards applicable to new construction for the relevant type of occupancy or with the manufacturer’s instructions, if it is technically feasible to do so” (Cal. Health & Safety Code § 17926(b)).
The following language comes packaged with carbon monoxide (CO) detectors:
For minimum security, a CO Alarm should be centrally located outside of each separate sleeping area in the immediate vicinity of the bedrooms. The Alarm should be located at least 6 inches (152mm) from all exterior walls and at least 3 feet (0.9 meters) from supply or return vents.
Building standards applicable to new construction are as follows (overview summary only):
• Section R315 et seq. of the 2010 edition California Residential Code (CRC) [effective Jan. 1, 2011] (applicable to new one-to-two family dwellings and townhouses not more than 3 stories and also where work requiring a permit for alterations, repairs or additions exceeding one thousand dollars in existing dwellings units):
Installed outside of each separate sleeping area in the immediate vicinity of the bedroom(s) in dwelling units and on every level including basements within which fuel-fired appliances are installed and in dwelling units that have attached garages.
• Section 420 et seq of the 2010 edition California Building Code (CBC) [effective Jan. 1, 2011] (applicable to other new dwelling units and also where a permit is required for alterations, repairs or additions exceeding $1,000 in existing dwelling units):
Installed outside of each separate sleeping area in the immediate vicinity of the bedroom(s) in dwelling units and on every level including basements within which fuel-fired appliances are installed and in dwelling units that have attached garages.
Q 6. Are there any penalties for noncompliance with this law regarding installation of carbon monoxide detector devices?
A Yes. A violation is an infraction punishable by a maximum fine of $200 for each offense. However, a property owner must receive a 30-day notice to correct first. If an owner who receives such a notice fails to correct the problem within the 30-day period, then the owner may be assessed the fine. (Cal. Health & Safety Code § 17926(c).)
Q 7. Can a buyer of a “dwelling unit intended for human occupancy” rescind the sale if the dwelling doesn’t have the necessary carbon monoxide detectors?
A No. However, the buyer may be entitled to an award of actual damages not to exceed $100 plus court costs and attorney’s fees. (Cal. Health & Safety Code § 17926(d).)
Note the following language in the TDS and MHTDS:
Installation of a listed appliance, device, or amenity is not a precondition of sale or transfer of the dwelling. The carbon monoxide device, garage door opener, or child-resistant pool barrier may not be in compliance with the safety standards relating to, respectively, carbon monoxide device standards of Chapter 8 (commencing with Section 13260) of Part 2 of Division 12 of, automatic reversing device standards of Chapter 12.5 (commencing with Section 19890) of Part 3 of Division 13 of, or the pool safety standards of Article 2.5 (commencing with Section 115920) of Chapter 5 of Part 10 of Division 104 of, the Health and Safety Code. Window security bars may not have quick-release mechanisms in compliance with the 1995 edition of the California Building Standards Code.
Q 8. Does a seller have any special carbon monoxide disclosure obligations?
A No. The only disclosure obligations are satisfied when providing a buyer with the TDS or the MHTDS. If the seller is exempt from giving a TDS, the law doesn’t require any specific disclosures regarding carbon monoxide detector devices. (See Cal. Civ. Code §§ 1102.6, 1102.6d.)
The Homeowners’ Guide to Environmental Hazards also will include information regarding carbon monoxide.
Q 9. May local municipalities require more stringent standards for carbon monoxide detectors?
A Yes (Cal. Health & Safety Code § 17926(e)).
Q 10. Do landlords have any special obligations regarding carbon monoxide detectors?
A Yes. All landlords of dwelling units must install carbon monoxide detectors as indicated in Question 4. The law gives a landlord authority to enter the dwelling unit for the purpose of installing, repairing, testing, and maintaining carbon monoxide devices “pursuant to the authority and requirements of Section 1954 of the Civil Code [entry by landlord].”
The carbon monoxide device must be operable at the time that a tenant takes possession. However, the tenant has the responsibility of notifying the owner or owner’s agent if the tenant becomes aware of an inoperable or deficient carbon monoxide device. The landlord is not in violation of the law for a deficient or inoperable carbon monoxide device if he or she has not received notice of the problem from the tenant.
(Cal. Health & Safety Code § 17926.1.)
Q 11. If the California Building Standards Commission adopts or updates building standards relating to carbon monoxide devices in the future, is the owner required to install the newer device?
A It depends. Yes, when the owner makes an application for a permit for alterations, repairs, or additions to that dwelling unit with the cost exceeding $1,000. (Cal. Health & Safety Code § 17926.2(b).)
Q 12. Where can I obtain additional information?
A This legal article is just one of the many legal publications and services offered by C.A.R. to its members. For a complete listing of C.A.R.’s legal products and services, please visit car.org.
Readers who require specific advice should consult an attorney. C.A.R. members requiring legal assistance may contact C.A.R.’s Member Legal Hotline at (213) 739-8282, Monday through Friday, 9 a.m. to 6 p.m, and Saturday, 10 a.m. to 2 p.m. C.A.R. members who are broker-owners, office managers or Designated REALTORS may contact the Member Legal Hotline at (213) 739-8350 to receive expedited service. Members may also fax or e-mail inquiries to the Member Legal Hotline at (213) 480-7724 or legal_hotline@car.org. Written correspondence should be addressed to:
California Association of REALTORS®Member Legal Services
525 South Virgil Ave.
Los Angeles, CA 90020
