Will the government save our beleaguered homeowners *thisclose* to losing their homes? I’m not banking on it, but maybe you all have more faith than I do in the federal government. Read on:

 WASHINGTON — The Bush administration and major financial institutions are close to agreeing on a plan that would temporarily freeze interest rates on certain troubled subprime home loans, according to people familiar with the negotiations. …

The plan is being negotiated between regulators including the Treasury Department and a coalition of mortgage-related companies including Citigroup Inc., Wells Fargo & Co., Washington Mutual Inc. and Countrywide Financial Corp. People familiar with the talks say the individual members have agreed to follow any agreement reached by the coalition, which is called the Hope Now Alliance.

Many subprime loans carry a low “teaser” interest rate for the first two or three years, then reset to a higher rate for the remainder of the term, which is typically 30 years in total. In a typical case, the rate would rise to around 9.5% to 11% from 7% or 8%. That would boost an average borrower’s payment by several hundred dollars a month.

Exactly which borrowers will qualify for the freeze and how long the freeze would last are yet to be determined. Under one scenario, the freeze could run as long as seven years. The parties are developing standard criteria that would determine eligibility. The criteria should be finalized by the end of year.

So you saw the part I bolded, right? Yet to be determined. That means “No one’s really thought about implementing anything, but we’re leaking it to the press because it makes us look good/like we’re doing something,” a typical political motivation.  And “end of the year,” means before New Year’s Eve.

 Are you betting our members of our illustrious government will forego their three weeks of vacation to work on this deal? I have my doubts, too.

Have a million bucks? Then I have a condo in Walnut Creek I’d like to sell you. Really.

Prometheus Development Group created the Mercer, a 181-condo development with condos selling for $475,000 to $1.25 million. You can read the story by George Avalos here.

Marketing executives say 18 of the 23 condos costing $1 million or more have closed sales or are in contract for sale. About 60 percent of the 181 units have been sold.

“We are not unaffected by the housing market problems, but we’re insulated relative to the majority of the new home developments,” said Jon Moss, a principal executive with
Prometheus. “The location is unique. There really isn’t any other new product of this type in this area.”

I’m wary of “marketing executives say” anything but at least a few of the home buyers expressed their satisfaction, even if the condos stll need “minor construction work” and parts of development are still being built.

It’s huge, it’s shiny, it’s full of the faithful in our heathen East Bay — it’s Cathedral of Christ the Light! It’s the Oakland Diocese’s new $190 million cathedral. (Real all about it here.)

Yes, it could be the Great, Shiny Hope of downtown Oakland/Lake Merritt, since city leaders believe development ramped up recently because of the project.

While the cathedral has gone up, Essex Property Trust Inc. has been building a 238-unit housing structure nearby. Signature Properties, a complex on Grand, blends condominiums with ground-floor eateries. Office space will open up as well: Brandywine Realty Trust is expanding its 20-floor tower at 2101 Webster St. by nine stories.

Forty-five days ago, a Whole Foods market opened nearby. With the church and its public spaces, new housing and the store, some say the district is beginning to feel more like a neighborhood.

Like every great downtown building, it will have a cafe and bookstore, public garden and administrative offices. Better yet, in the basement, the cathedral will also have something new — a mausoleum!

Is it the lone bathroom or the lack of airconditioning? That it’s less than 900 square feet? Wall-to-wall carpet? Is it the split-level construction or the formal dining room that doesn’t speak to the modern seller?

According to the Post, it could be all those things.

Other things the Post’s Elizabeth Razzi sees as relics:

• A house with only one bathroom. Even a house with one full bath and a toilet/sink powder room is going to turn buyers off.

• A house without some form of air conditioning. In the hot, humid Washington summer, air conditioning is a must.

• Electrical systems protected by a fuse box instead of a circuit breaker. That’s not going to do the job for a plasma TV and computer.

• Spiral staircases. They’re relatively rare, and for good reason. The tight spiral and wedge-shaped stairs make it next to impossible to safely carry a laundry basket, not to mention a baby.

• Basements with only an outside entrance. When that space was strictly a cellar housing a coal bin or an oil tank, outside access was all you needed. Today, homeowners expect convenient access to that valuable space.

The one thing I think they’re wrong on? Saying that most people would rather buy a condo than a house less than 900 square feet. I think we in the West appreciate our land more so than in the industrial East. ( I know, I know, wait until you see our story tomorrow on $1 million condos in Walnut Creek!)

I don’t know how much you or anyone follows the Consumer Confidence Index, but they survey 5,000 households about attitudes and interpret that data every month. Here’s what they said today:

Consumers’ assessment of present conditions waned further in November. Those claiming conditions are “good” decreased to 22.3 percent from 23.2 percent. Those saying conditions are “bad” increased to 19.1 percent from 16.6 percent. Consumers’ assessment of the job market was mixed. Those saying jobs are “hard to get” edged down to 21.3 percent from 22.8 percent, while those claiming jobs are “plentiful” decreased to 23.2 percent from 24.1 percent in October.

Consumers’ expectations for the next six months plummeted in November. Those expecting business conditions to worsen increased to 16.7 percent from 13.9 percent. Those anticipating business conditions to improve declined to 12.4 percent from 14.0 percent.

So, if you felt you were the only one not feeling great about the economy, you are not alone!

Oh, man, I saw this “SNL” snippet  [that has been taken off this blog by WordPress, so you will have to hit the link. Sorry!] and laughed. It’s what we all think, but never say. Maybe consumers this holiday have learned lessons from excessive debt, maybe from real estate, and are staying away from it. At least the U.S. Department of Commerce reported that personal savings went up this last quarter for the fourth time. Isn’t that a good sign?

Also, CNN has these tips to staying debt-free for the holidays. My favorite is:

1: Get Organized
Two-thirds of Americans didn’t bother with a holiday budget last year and almost three in five don’t plan one this year, according to Consumer Reports. Don’t fall into the trap.

First you’ll need to figure out how much you should spend on gifts. Don’t spend more than you can pay off in one or two months. Some financial planners recommend you don’t spend more than 1.5% of your annual income on gifts.

Hat tip to Peter Viles for the YouTube video!

I’m sure you read my story today real estate in Solano County,

It was extremely hard to find anyone who was in default who wanted to talk. It’s kind of difficult when people are facing an extremely stressful time– like possibly losing their home, to talk about it to a stranger/reporter who will then publicize it across a few counties. I found a couple of them, but it took a while.

So I decided to look at Solano County real estate and how all of the market was affecting it, from Rio Vista to Vallejo, all with examples but not necessarily with anyone in default. I hope I was able to help the readers understand how these things happen and will continue to happen.

What I learned most of all was the complete chaos of having a short sale (when a homeowner sells the house for less than is owed with the lender’s permission.) Although lenders say they’re OK and they will do them, they frequently aren’t accommodating. And the person who loses most is the homeowner, who loses buyers who aren’t willing to wait months for the lender to make up its mind.

It’s a tough market out there. Take care!

So, if you saw my story today, you may think, “Yay, now I can afford a house in the East Bay!”

Problem is that financing isn’t what it used to be, according to various folks from around the state.

Jumbo loans, those over $417,000, have higher rates and higher prices than loans that aren’t federally-insured by Freddie Mac and Fannie Mae and without that protection, most banks want more money because they feel they are assuming more risk.

But just when you thought loans $417,000 and under were safe, government-sponsored mortgage finance giants Fannie Mae and Freddie Mac are introducing or raising fees to reflect their higher risk of default.

From the LA Times via Bloomberg:

Freddie Mac is primarily setting new fees for mortgages made to people who borrow more than 70% of their property’s value and have credit scores below 680.

The new charges range from 0.75% to 2% depending on credit scores, according to a bulletin by the company. The changes take effect March 1.

Good luck, home buyers!

I was cruising Craigslist looking for something of interest, perhaps a FSBO (for sale by owner) house I haven’t seen on the MLS when I saw this, although its since been reposted, about a house in Glen Cove:

I will admit it; we got caught by the insanity.

One moment our house is worth $625,000. Then we spend over six months and over $60,000 updating it, not because we were going to sell it, but because we loved the street, our neighbors, the location, and were going to stay. …

A certain job offer, a surprising acceptance into a particular school for my son, a decision to increase our family… so about a month after we finished working on the house, we put it on the market, figuring it would sell even with the apparent slump that was starting because it was so darn pretty. Heck, we were so confident we bought another one, and moved. We had an offer and it fell through. We had one afterwards that fell through practically before we even had a chance to consider it. Then the next moment, suddenly our beautiful home was worth quite a bit less, and we find ourselves paying too many mortgages.

So here is the deal. We owe $495,000 on this house. We are not greedy. I just want to stop paying so much every month on both houses.

So, of course, I had to contact Mr. Barak Engel who now lives in Contra Costa County and nearer his work. Turns out he is serious and wants to sell his house but hasn’t been having much luck. A) Because of the saturation of listings in Vallejo (over 1,700 by my last count) and B) the number of foreclosures and short sales; Mr. Engel feels that his well-priced house got lost in the shuffle.

Perhaps he’s right.

Either way, Mr. Engel felt like his Craigslist plea was a last resort before the “nuclear option” of walking away from the house [foreclosure.]

While other people handle it differently, like offering to pay the buyer $1,000 a month for a year or buy down mortgages, Mr. Engel said he was relying on the eloquence of his words and his honesty (as well as a good price.)

And before the snarky comments, he’s actually stirred up some interest. Good luck, Mr. Engel!

In a report today, the National Association of Realtors said homes sales would continue to worsen in 2008. It’s a far cry from their bullish stance of the last year or so.

The ninth straight downwardly revised monthly forecast from the National Association of Realtors calls for U.S. existing home sales to fall 12.7 percent this year to 5.66 million, down from 6.48 million last year and the lowest level since 2002.

Last month, the association predicted a 10.8 percent drop from a year ago, signaling a growing realization that the housing market problems are deeper than originally feared.

Yet, the NAR did have their stereotypical spin that it will probably be better than that. It sounded a bit schizophrenic, though, in such a negative report.

The trade group’s chief economist, Lawrence Yun, said the housing market is likely to experience a “modest” recovery next year as mortgage markets stabilize.

“It is possible for even higher home sales activity than we’re forecasting if buyers regain their confidence,” he said in a statement.

Chances are if the real estate industry’s biggest cheerleader is saying it’s not going to be good, it’s probably not going to be good.