New Listing! 933 Goldenrod, SLO


Spacious living at its best. Formal living and dining areas with sliders to
patio areas. A wonderful family room with fireplace is just off of the bright
and spacious kitchen. Where there is generous storage and granite work surfaces. Located on an oversized lot this yard offers terrific privacy with mature landscaping to a view of wooded open space. 5 full bedrooms with an added office. The single bedroom downstairs is ideal for guests autonomy with access to a full bathroom a step away. The master suite is a fabulous retreat with a slider to a Juliette balcony. Two master closets, private water closet, double sinks, deep soaking tub and separate shower. Spacious two car garage and separate laundry room round out a very thoughtful design. This home has it all!

New Listing! 855 Via Las Aguilas, AG


This classy custom one story home within the desirable neighborhood of Rancho Grande features all new interior paint and carpet, vaulted ceilings, an
entertainer’s kitchen with a center island and gas cook-top, formal dining room, jetted tub in the master bath, a large trex deck with partial ocean views, and 3-car finished garage just to name a few. This superb home is move-in ready and has an extremely large sub-area for all of your storage needs. Close distance to an abundance of shopping choices such as Trader Joe’s, local restaurants, and easy access to HWY 101 for commuters. Come see it before its gone!

New Mortgage Rules in 2014: Will Fees Cap, Qualified Mortgage Rule Make Mortgages More Expensive?

The Mortgage Bankers Association is having its 100th annual convention this week.  The guest speaker list is headlined by George W. Bush, and includes an impressive set of politicians (senators, governors, etc), policy setters (top officials at CFPB, HUD, FHFA, Fannie Mae, Freddie Mac), and private sector representatives.

If these acronyms and names don’t mean much to you, don’t worry too much about it. The takeaway here is that for the MBA’s big anniversary, we have a “who’s who” list within the housing industry. And what does this gathering want to talk about? We have been following along on twitter (follow us!) and the word on the street is “regulation, regulation, regulation.” How much is necessary? Where should it be applied? And, will borrowers end up paying more?

The topic of regulation comes as a handful of new loan rules go into effect to begin 2014. These changes were designed to “protect” consumers from lender abuses and implement industry safeguards to avoid another crippling crash.

The two things you will hear most about are as follows:


1. Qualified Mortgage (QM) Rule

The qualified mortgage rule attempts to define “safe” lending standard. The general number to remember here is 43%, which is the minimum debt-to-income ratio to qualify for a loan.

As with anything in the mortgage industry, the small text is a bit more complicated.

“The 43% debt ratio is what everybody has latched onto,” said Central Coast Lending owner Daniel Podesto. “There is a big ‘or’ that goes into that statement as well.”

“The loan has to be ‘qualified’, or meet Fannie, Freddie, or FHA standards.”

As Podesto goes on to explain, Fannie and Freddie qualifying loans can go up to a 50% DTI (with approval), FHA will go up to 57%, and VA will go to 60%. HARP loans go even higher.

Lenders that fail to meet these threshold will be subject to a 5% stake in the loan before selling it on the secondary market, which gives them incentive to manage risk effectively.

The Effect:

Minimal. The lending industry had already tightened up after the crash and borrowing standards are much, much higher than before. In 2012, just 12.8 percent of mortgages wouldn’t have qualified, according to Core Logic.

“The only thing it might impact is jumbo loans, portfolio loans, or interest only-type products,” said Podesto, pointing out that over 90% of loans are already underwritten by FHA, Fannie, and Freddie.

We have also seen the question posed: will tighter standards hurt working class borrowers? Podesto sees the effect as minimal, pointing out that the industry has already tightened lending practices over the past five years and that new rules will do little to tighten conditions further.

In some ways, the rules clarification will benefit the industry, giving much-needed stability so that lenders can appropriately plan for the future instead of having unclear future regulation held over their heads.


2. Fees rule

This is a bit more on the “industry mumbo-jumbo” side of things. Lenders will have the fee that they are able to charge for a loan capped at 3% of the total loan amount.

The Effect

“I have run so many scenarios,” said Podesto. “And any way you put it, we are well under the 3% cap.”

“These rules don’t really have a big impact on us. We operate the right way, doing safe loans at a good price with proper underwriting. These rules don’t factor into my thought process for the most part.”

Podesto said that he expected that most lenders will easily come in below the 3% threshold.


When asked if he thought that the rules are a good thing for the industry, Podesto listed a few points.

1. Competition usually does a good job of regulation. “There are usually enough honest people out there that will charge a fair fee and not make dangerous loans. Consumers are usually pretty good about finding deals.”

2. Risk management. On the other hand, adding a bit of risk into the equation can help competitive markets make better long-term decisions. In the real estate bubble, lenders could make sub-prime loans and quickly sell them to the secondary market, making a quick profit with little risk.

Now, lenders that want to offer specialized products beyond the industry standard will need to absorb some of that risk (maintaining a stake in the loan), instead of passing it down the line.

“I do think there is a place in the market for riskier loans, but we have seen it can be dangerous if used too liberally,” said Podesto.

The regulations could have been much tighter. An earlier draft of the Consumer Finance Protection Bureau (CFPB) rules mulled requiring a 36% minimum DTI and a 20% down payment. The CFPB took input and relaxed the rule proposal so as not to tighten credit further.

New Listing! 424 Orchard St., Arroyo Grande


Warmth and charm are through out this beautiful 4 bedroom, 3 bath home near Historic Arroyo Grande. Upon entry, notice the beveled dining room windows and fireplace. Follow the rich hardware floors to the stunning grand room featuring wood beam ceilings and Pella French doors. Walk out to the entertainer’s backyard featuring a waterfall and pond, abundant grass, and the perfect patio highlighting a European style wall mural.

Trends in the housing market: where we are, where we are going

Let’s talk about trends. In fashion, a popular style might spark a seasonal buying frenzy, and on Twitter, a notable event might induce a #trending topic of discussion. Socially, the term “trend” seems to imply a grouping that has a bit of gravity to it – that popular actions can induce similar behavior in others.

To visualize the adoption of a trend, check out this fascinating map of popular girl names in the United States, broken down by state, from 1960 through 2012.

Lisa controlled the 1960s and Jennifer dominated the 1970s, with a few regional challenges from Amanda and Jessica. Through the 1980s, Jessica rose to prominence, only to give way to Ashley in the early 1990s. Emily, Hannah, Madison, Emma, Isabella and Sophia made widespread appearances. You can see where certain names gained a regional foothold before trending to national prominence.

On the economics side, we hear about trends in reference to specific sets of data. Analysts attempt to scoop “trends” from the numbers in an effort to give us a better fundamental view of where the economy is and where it is going.

Waiting in LineHere is a trend. The majority of job grown in the post-recession U.S. economy has been low-wage and part-time. One possible take: disposable income has rebounded as the recovery moves forward, bringing American consumers back to retail counters, vacation destinations, and restaurants. This is where demand for work exists right now.

In the housing market, we have moved through several specific stages of recovery. As we wrote about last week, the popped real estate bubble gave way to free fall, as home sales dipped and home values plummeted.

The turnaround coalesced in 2012, with an ideal set of affordability conditions injecting demand into the market like wildfire.

Real estate for saleAs demand burned its course, the available inventory of homes for sale shrunk and homes sold for more. Today, the combination of reduced inventory and lower affordability conditions could combine to slow home value appreciation, home sales, and new home construction.

The National Association of Realtors showed a 1.9% drop of existing home sales in September (seasonally adjusted), citing fewer homes on the market and lower affordability as potential reasons. It takes awhile for something as large as a market to react – and even longer to receive the date describing that reaction.

To make up the gap, we like to hear from people on the ground that get a sense of market conditions on a day-to-day basis. We interviewed local realtor Gena Isaacson for a recent article about the Nipomo real estate market.

800px-Capt_Dana_Tree_NipomoIsaacson reinforced what we have discussed: the Nipomo market exploded in 2012, as low prices, abundant inventory, and low mortgage rates induced a buying frenzy. Just a year later, the market has swung to the other end of the spectrum. Fewer houses are on the market, and what few houses remain are less affordable. The Nipomo housing market looks to be slowing down.

Here we have a market in transition, swinging back and forth in search for balance. Moving forward, this is what we expect to see:

1) Mortgage rates won’t return to record lows. Rates were juiced by Federal Reserve activity and the specific economic climates of the day. For the near future, however, we do expect to continue to see mid-4%, which is at the historically low end of the spectrum. This will ultimately rise as the Federal Reserve eases its stimulus program – likely in 2014 – when we will see more market corrections.

[Rates spiked prior to the debt ceiling deadline, and dropped Congress passed a bill to temporarily raise the limit. See current rate levels here].

2) Sellers will return to the market, thus easing the supply crunch. Many sellers are on the sidelines, waiting either to come out from underwater, or to see higher prices appreciate further.

3) First-time buyers will benefit with more supply on the market. Just 28% of September purchases were made by first-timers, well below the typical level of 40%. These new buyers are getting outbid in the challenging marketplace. More supply will make it easier on buyers that use low-down payment mortgage programs like FHA and USDA (which are very popular for first-time buyers).

All of this brings us to the trending discussion at Central Coast Lending. We see the ongoing market movement as a trend in the right direction: the housing market regaining its natural footing.

Give us a call at 805.543.LOAN and we will give you an honest, confidential assessment about your finances and the possibility off mortgage financing.

New LIsting! 11614 Cardelina Lane, Atascadero


Just listed in beautiful Dove Creek. This upgraded condo features a private
fenced rear yard over looking open space and mature landscaping, including a
large picturesque oak tree. The unit is located on a Premium Lot for privacy and
convenience. Upgraded tile flooring, custom blinds, finished backyard! Upgraded
tile flooring in bathrooms, custom paint, new soft water system and newer carpet
throughout. Large kitchen for entertaining including granite counter tops and a
formal living room. Large master suite with soaking tub, double vanity sinks,
shower, and large walk in closet make this the perfect home.

New Listing! 200 Cyclone, Nipomo


This beautiful 5 bedroom 3 bath home was just built in 2012. It includes a separate mother-in-law quarters downstairs with endless possibilities! Because of the unique elevation of the lot, the main floor plan is on street level and there are no stairs to contend with. The home has two fireplaces, a great room and a game room. The gourmet kitchen boasts granite counters, with a walk-in pantry. The luxurious master bedroom suite is large enough for your oversized furniture, with walk-in closets, a soaking tub, and separate shower. Burnished bronze colored fixtures accent the baths. The downstairs has a separate entrance and also stairs going up to the main floor with its own locking door. The front and rear yards are landscaped with sprinkler systems. There is an oversized 3 car garage and a patio at the entrance. This is the perfect home for a large family or a family in need of a separate living space.