Long Beach California Real Estate Loans

Long Beach, Ca.  Twenty thousand State employees will receive their termination notices this week.  Considering there are over 200,000 State employees, that may not be a bad thing.  There is a great brouhaha in Sacramento as State Senators fight it out over the new fiscal budget, which will have over a 40 billion dollar deficit by next June.  Unthinkable as it seems in a recession, the State politicos want to raise taxes by 14 billion.  There is rebellion amongst certain California Counties who do not want to send the State anymore money until they get their act together.  It is like watching frustrated passengers argue over who gets which deck chair on the Titanic.   Although it has never happened, murmurs of a State bankruptcy can be heard.  This type of volatile market is forcing people to reconsider the real estate markets over the equity markets considering the safe harbor of real property.  I'm receiving many investor calls who want to purchase property for cash in lieu of having any debt.  The key there is cashflow.  Indeed, cashflow is king, not cash these days.

The Obama administration is expected to unveil a foreclosure-prevention initiative on Feb. 18 that includes carrots and sticks to encourage lenders to lower monthly payments for struggling borrowers. For example, Obama is likely to offer government subsidies for reducing a borrower's interest rate; but he also could push for legislation that would allow bankruptcy judges to restructure mortgages. If so we are concerned this will increase future costs of mortgages.  It will also encourage people to consider bankruptcy when perhaps that is not the only alternative.  The plan to subsidize lower interest rates for distressed homeowners would involve the government and the lender each contributing matching amounts to reduce a person's monthly payment, possibly by several hundred dollars a month. Supporters contend that the measure will be comparatively simple to execute and less expensive than many other options that have been considered. Mr. Obama's top advisers have vowed to spend at least $50 billion to help homeowners keep their houses, and they already have the authority to tap the remaining $350 billion in the Treasury Department's financial industry bailout fund.  Now, not sure how this is going to be decided, but my guess is those people that have paid on time, might start feeling a bit of resentment.  Isn't government intervention grand? 

While waiting for the Obama administration to announce plans to curtail foreclosures--which may include possible assistance to borrowers who are not yet delinquent--temporary foreclosure bans lasting a few weeks have been put in place by JPMorgan, Bank of America, Citi and Morgan Stanley. Meanwhile, Fannie Mae and Freddie Mac continue to delay foreclosures.   So we are wondering, perhaps we will declare a foreclosure holiday.  That will probably bring the housing crisis to a quick halt.  No one loses their house. Wonder why they have not come up with that one yet.

The new Stimulus Bill includes an expansion of the first-time homebuyer tax credit ($8k, no pay-back) and restores to $729,750 (in the 2008 Stimulus Act) the upper loan limit in high-cost areas for Fannie Mae, Freddie Mac and FHA loan guarantee programs. For HECM (reverse mortgages) the Act allows for an increase in the current loan limits. The bill has over $50 billion in it for foreclosure mitigation.

Stocks tumbled on Tuesday as investors confronted fresh signs that the recession is worsening and worried that efforts to stabilize the beleaguered financial system may not prove sufficient. The slide took the benchmark S&P 500 below the 800 level for the first time since the bear market low of November 21, weighed by financials, energy companies and big manufacturers.

President Obama signs the $787B stimulus package today. With little economic data this morning Treasuries are rallying as investors are seeking safer assets as the equity market seems to be concerned about the lack of details from the treasury and continued bailout money need for the domestic car manufactures.  Currently, the Ten Year yield is at 2.73% (2.78% Friday).  Our 30 year fixed rate mortgage pricing should be better dependent upon how aggressive our investors choose to reflect the improved pricing which at the moment are better by .375%.

Kirk Mulhearn, a Long Beach real estate broker and Professional Mortgage Planner, may be contacted at:  562-989-4608  ext. 110

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