Town homes & Retail Space

Back in November of 2006, Danny Bakewell Jr. of KB Bakewell Seaside Venture signed an exclusive negotiating agreement with the city of Seaside. Yes, this is the same Bakewell that built the Seaside Highlands project.

Tentatively, the plan is to build 61 town homes and approximately 3,500 square feet of retail space. The 5-acre building site is at Coe Avenue and Monterey Road in Seaside where a convenience store and gas station once was in operation. Additional details about the plan will be made available either at the Seaside Council meeting in September or early October.

Exclusive Negotiating Agreement for Reggie Jackson

Reggie Jackson made a $50,000 deposit for an exclusive negotiating agreement. This agreement allows Jackson’s development team “Amador Hotel 44” to begin plans for the 5.7 acres located at Del Rey and Del Monte boulevards. The deposit will cover legal and consulting costs, which are connected to finalizing the right to develop the property.

The agreement allows for the development team to obtain environmental studies and submit a project proposal to the city of Seaside. If the environmental report isn’t completed within a 12-month period, the exclusive negotiating agreement allows an extension of 9 months.

The development will consist of a 252-room hotel and conference center. There are approximately two-dozen properties on the 5.7 acres with four major property holders. The city would only get involved in helping to obtain the properties if Jackson’s team needed assistance. The city help would come in the form of a “resolution of necessity”, which could lead to acquiring the property using eminent domain.

Sprekels Development

Standard Pacific Homes is the developer for 73 homes being built on 16 acres west of the historic town--Spreckels. The project will include single and two-story homes ranging in size from 1,298 to 2,845 square feet. The expected costs for the homes will be $600,000 to $800,000. The houses will be constructed so as to keep with the town’s architectural style.

Late in the game there seemed to be some confusion as to whether the developer would have to pay for “inclusionary housing”. At the county Board of Supervisors meeting last Tuesday it was decided that the developer will have to pay more that $500,000 in fees to support affordable housing in Monterey County.

Standard Pacific Homes had argued that because the building site was set aside for housing in 1907, the county has little legal basis to impose such a fee. The County planning staff and lawyers disagreed. The determining factor may have been the 2003 county law, which requires developments that do not include affordable housing to pay an “inclusinary fee” to support construction of such homes as these.

Work has begun on the project and the county has already issued 20 building permits for the 73 home subdivision. Supervisors said they would not issue any more permits until the developer pays the fee.

Mortgage Troubles

American Home Mortgage, once the nation’s 10th largest mortgage lender, filed Chapter 11 of U.S. bankruptcy law yesterday to protect themselves from creditors. While their actions will have an affect on those trying to obtain a loan, it won’t affect current mortgage loans. What caused American Home Mortgage to take such a drastic measure as filing for bankruptcy?

While American Home Mortgage did very little sub prime loans last year, when its lenders decided they wanted their money back, they (American Home Mortgage) said it was unable to deliver $800 million in promised loans. Sub prime loans are loans that accommodated buyers with not so perfect a credit score. The next step American Home Mortgage took was to lay off almost 90 percent of their 7,000 employees.

According to an article today by James R. Hagerty in the Wall Street Journal,even borrowers with good credit records who can afford a large down payment are finding rates surprisingly steep if they can’t qualify for a loan that can be sold to Fannie or Freddie. Rates on prime jumbo loans have risen so fast that "nobody in their right mind would pull the trigger" and accept one now, unless they couldn't delay a home purchase, said Darren Weisberg, president of PFG Mortgage Services Inc., a mortgage broker in Lake Forest, Ill.

Today there is a huge gap between non-conforming and conforming loans. A definition of a non-conforming loan is one that does not meet the standard established by the lender. This may sometimes be referred to as a jumbo loan, which exceeds the conforming loan limit. The conforming loan limit this year was set at $417,000 by Fannie Mae and Freddie Mac. Many rate sheets this morning showed a gap greater than 1% between these two types of loans.

As Mr. Hagerty continued to say in his article today, some lenders are pulling the plug on whole categories of loans. Yesterday, National City Corp., a Cleveland banking company, said it has suspended its offerings of home-equity loans or lines of credit made through brokers rather than the bank's branches. The company cited market conditions.

If you are considering a home purchase or are in the process of obtaining one, I strongly urge you to get to know your lender. Ask a lot of questions. With the huge changes taking place in the mortgage industry, I encourage you to take the time to understand what is happening and how it relates to your current or future home purchase.