Long Beach California Real Estate Loans

What is FHA 203(k) Financing?

This US Governments housing program has been in existence since the 1990s.  Is purpose allows a home buyer the opportunity to finance into a 30 year fixed mortgage upgrades and repairs they want up to $35000 above and beyond the sales price.  Below outlines how these funds may be utilized.

• Finance your kitchen appliances such as refrigerator, stove built in microwave, dishwasher, hot water heater, built in trash compactor as part of your 30 year fixed FHA loan.  Energy efficient appliances may be eligible for additional rebates from the local utility company.  As just signed by rebates from the local utility company.  As just signed by President Obama, buyers may qualify for up to a $1500 tax credit for energy efficient upgrades too!
• Repairs financed may include: new carpeting, install or refinish hardwood floors, install energy efficient windows, replace a worn leaky roof, replace damaged or worn out kitchen and bathroom fixtures; termite clearance !!!
• Get the electrical and plumbing updated and upgraded.
• Mixed use properties eligible
• Subject to maximum percentage of commercial use.
• 1-4 unit owner occupied homes
• Single family residences, condos and townhomes allowed.
• Licensed general contractor generally needed and required.
• Close escrow in  60 days

Today, we will see three homes with 30 year fixed payments of $1288, $1304 and $2214 respectively!

$289,000 List Price for
9209 Laurel Street Bellflower, Ca 90706

$289,000 list price
$10,115 3.5% FHA down payment
$278,885 base loan amount
$20,000 FHA 203(k) added for upgrades
$298,885 base loan amount

$1,004.00 per month 1st mortgage 5.5% 30 year fixed FHA 203(k)
$50.00 per month estimated home owners insurance
$301.04 per month estimated property taxes
$136.99 per estimated private mortgage insurance
$2,214.76 per month PITI

Estimated closing costs based on a 640 credit score is 4% to 4.5% of the sales price. If the seller pays all closing costs, cash needed is:

$10,115 down payment
$425 FHA 203(k) appraisal
$275 inspection
$10,815 total estimate cash needed

Proposed items to upgrade:

Replace Roof
Energy efficient water heater/dishwasher
Paint interior

$149,000 List Price for
5545 Lime Avenue Long Beach, Ca 90805

$149,000 list price
$5,215 3.5% FHA down payment
$143,785 base loan amount
$30,000 FHA 203(k) added for upgrades
$173,785 base loan amount

$1,004.00 per month 1st mortgage 5.5% 30 year fixed FHA 203(k)
$50.00 per month estimated home owners insurance
$155.21 per month estimated property taxes
$79.65 per estimated private mortgage insurance
$1,288.86 per month PITI

Estimated closing costs based on a 640 credit score is 4% to 4.5% of the sales price. If the seller pays all closing costs, cash needed is:

$5,215 down payment
$425 FHA 203(k) appraisal
$275 inspection
$5,915 total estimate cash needed

Proposed items to upgrade:

All new energy efficient windows and exterior doors
Flooring
All light fixtures
Energy efficient water heater
Wall furnace heater
Paint interior and exterior

$160,000 List Price for
38 East Platt Street Avenue Long Beach, Ca 90805

$160,000 list price
$5,600 3.5% FHA down payment
$154,400 base loan amount
$20,000 FHA 203(k) added for upgrades
$174,400 base loan amount

$1,007.55 per month 1st mortgage 5.5% 30 year fixed FHA 203(k)
$50.00 per month estimated home owners insurance
$166.67 per month estimated property taxes
$79.93 per estimated private mortgage insurance
$1,304.15 per month PITI

Estimated closing costs based on a 640 credit score is 4% to 4.5% of the sales price. If the seller pays all closing costs, cash needed is:

$5,600 down payment
$425 FHA 203(k) appraisal
$275 inspection
$6,300 total estimate cash needed

Proposed items to upgrade:

All new energy efficient windows and exterior doors
Flooring
All light fixtures
Energy efficient water heater
Wall furnace heater
Paint interior and exterior
Repair kitchen cabinets/install new sink

Kirk Mulhearn, a Long Beach Real Estate Broker,manages Prudential California Realty. "The Bixby Knolls Office," he also co-manages net branch of GEM Mortgage, a direct lender specializing in the FHA, VA, and conventional financing.  You may contact him at 562-989-4608  ext. 110 

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Long Beach, Ca.  Housing starts shrank to the lowest levels on record due to lack of credit and declining prices. Today, President Obama announced a plan to stem foreclosures by subsidizing mortgage payments for millions of homeowners. The plan will cost $50B. GM is seeking another $16.6B in new US aid. One trader from Cantor Fitz mentioned that, "GM seems like a pension plan that occasionally makes a car somebody occasionally buys." Currently, the Ten Year yield is at 2.66% (2.73% yesterday).  30 year mortgage backed bonds are down slightly.  We had some late price changes from a few investors yesterday, even though the MBS market opened up nearly .50% better.  Many of you wondered why did we not see improved pricing.  There a number of answers, but bottom line, MBS pricing is determined by when the treasury and FED buy

Big news today is the announcements by the White House for a foreclosure prevention and major housing plan. CNBC headline and the article attached states 275 billion to help 9 million families. The plan and the official name of Homeowners Affordability and Stability Plan is supposed to include rescuing families who played by the rules and acted responsibly.  I also establishes a 75 billion fund to reduce monthly payments for another 3 to 4 million people in sub prime mortgages due to skyrocketing interest rates or personal misfortune. A quote from the President.  Hey, I did not write the speech. The Treasury Department will double its financial support for housing finance giants Fannie Mae and Freddie Mac to allow them to play a bigger role supporting housing. Meaning the government plans on keeping them around. The Treasury said it was increasing its preferred stock purchase agreements with the two government-controlled companies to $200 billion each from $100 billion.  Here is the link:  http://www.cnbc.com/id/29256424

The second part of this program is supposed to allow for a refinance as long as the borrowers mortgage is owned by Freddie or Fannie and their mortgage is not more than 105%.  The homeowner can then apply for a refinance and lock in a lower rate. We just are unsure how this will be implemented.  When we have more details, we will see how this can benefit our originations. http://www.cnbc.com/id/29257409

Coupled with this information, the President will support revamping U.S. bankruptcy rules to let judges reduce mortgages on primary residences to fair- market value as long as borrowers pay their debts under a court- ordered plan.  The Obama plan will use $75 billion from the $700 billion financial bailout fund to match reductions lenders make in interest payments that lower borrowers' payments to 31 percent of their monthly income. Under the program, a lender would be responsible for reducing monthly payments to no more than 38 percent of a borrower's income, with government sharing the cost to further cut the rate to 31 percent.  Treasury will share the cost when lenders reduce monthly payments by forgiving a portion of the borrower's mortgage balance, the government said. The program may help as many as 4 million borrowers, the administration said. The average borrower's home value could be stabilized against a price decline by up to $6,000, the White House fact sheet said.

Kirk Mulhearn, a Long Beach Real Estate Broker and Professional Mortgage Planner can be reached at 562-989-4608 ext. 110

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Long Beach, Ca.   A friend of mine recently attempted to do a loan modification with Washington Mutual because of a pending divorce and hardship.  Because he was not late in mortgage payments, he was refused by the bank.  This seems to be a common trend with banks these days; for whatever reason, either they are overwhelmed with modifications, foreclosures and short sales or they are are just understaffed, they are refusing to make offers with borrowers who are not behind in payments. 

The question for a homeowners in this situation is whether or not to pay their mortgage in order to position themselves to just get to the negotiation table?   I will say this for sure, that if you do not pay your mortgage, it will affect you credit scores, negatively.  Remember, that even though you may have a legitimate hardship, that it is often the bank's position that they will offer terms to you only at their pleasure.  One mistake that homeowners make is that they accept the first offer that banks make to them.  Nationwide, almost 50% of all loan modifications are turning back into foreclosures because homeowners are not properly negotiating affordable terms with their bank. 

President Obama signaled at last night's press conference that he would be open to expanding the $700B stimulus plan.  CNBC is carrying the speech live by the Secretary of Treasury Bank bail out plan and as he is speaking I am watching the equity market drop 200 points which is not encouraging.  The new plan will most likely include more capital for banks, financing for as much as $1T of consumer spending and business loans, and public funding for investors willing to buy certain distressed assets. There is a $32B 3yr note auction today. Right now, the futures market is pricing in a 68% chance that the Fed keeps rates somewhere between 0 and .25% until at least June 24th, 2009. Currently, the Ten Year yield is at 2.94% (3.01% yesterday)

Fortunately we are seeing some buying in the fixed-income markets, and rates have crept back down. Yesterday, in a speech, FHFA Director Lockhart said Fannie/Freddie may need more than the $200 billion already pledged by the US Government if the housing market continues to deteriorate. Once again there is no scheduled economic news, but rates have dropped and 30 year fixed mortgage prices are better by .250 or more.

Now we turn our attention to ensure you are using the proper language and new name when referring to the TARP program.  The Obama administration plans to revamp the Troubled Assets Relief Program under its new name, the Financial Stability Plan, Treasury Secretary Timothy Geithner will announce criteria for stress tests that banks must undergo before receiving federal funds to ensure they have the ability to lend. Among other requirements, banks will be forced to disclose how the money is spent and how many assets are purchased, show that the money is funding new loans, limit executive compensation, wait until the funds are repaid before buying healthy banks and adopt programs to curtail foreclosures.   What is in a name, everything

Kirk Mulhearn, a Long Beach Real Estate Broker, and Professional Mortgage Planner, can be reached at 562-989-4091 ext. 110  Subscribe to the blog at:  www.longbeachrealestateandloans.com

Long Beach, Ca.  A few reflections on the current real estate market place, while awaiting Super Bowl 2009 and the Cardinals inevitable doom by being sucked up into the engines of the Steelers' finely machined aircraft; hey, didn't that cause a plane crash last week?

There are a couple  new trends in the universe of Foreclosures and REO properties.  Where, the unemployed and employed alike have begun to re-group and look at more options then just, "letting the house go back to the bank."  Where in the past a property may be foreclosed on without much of a fight from the financially  fatigued  and down trodden home owners; now, potentially hapless and homeless occupants are beginning to organize and take up the fight against the banks with a renewed gusto, frankly not seen since the stampede was on to buy the properties in the first place.

The sort of industry standards of dealing with the foreclosure problem, in recent history, can be reduced to the same old usual suspects:  allowing the foreclosure to go through, taking cash for keys, negotiating a loan modification, granting the property back to the bank with a deed in lieu of foreclosure, implementing a short sale, and utilizing special refinancing offered by banks for those in need, not to mention the bankruptcy options.  Now; however, resourceful attorneys finding weakness in the armor of the lenders have found a new type of law to practice.

You gotta fight for your rights!

One method that current home owners have adapted is to simply litigate against the lenders.  By fighting it out with the banks, home owners are finding that they can maintain more leverage against the lenders by both continuing to occupy the property; thus, saving on the monthly mortgage payment, while simultaneously retaining attorneys to represent them in court to prevent the entire process from consummating.  There have been cases wherein, the hard up lenders have not been able to procure the necessary note against the property; thus, allowing the homeowners to maintain ownership, permanently....debt free.

While driving by a client's home today,  I saw what first appeared to be a for sale by owner (F.S.B.O.) sign in the front yard of a neighbors home.  Upon calling the number on the posted sign, I met a certain gentleman who represents a company called, United First, who immediately invited me to a, "How to avoid being  foreclosed on seminar," and legal workshop.  The basic program offered by this group is that in lieu of the distressed home buyer paying the bank it monthly mortgage payments; that, they should pay an Attorney service instead!  Grant you, the price quoted to me over the phone was $1450.00/m (every month). Here, I would say that the jury is still out, I personally need to do so more due-diligence before recommending such a program, but I do not doubt that it is always better to have some type of legal representation.  

What does this money buy you?  According to, Sherman Lim, a representative of United First Foreclosure Relief (press link to watch 7 minute video),  it may  buy you up to two years of time in which you don't have to worry about having to move out of your home.  In other words, you can stay put in your own home buy retaining an army of litigators and financing them on a monthly basis. 

Damn the Torpedos, don't give up the ship (even though it is sinking rapidly)

Yet another method being utilized by the new homeless generation of Americans is simply to squat on the foreclosed home.  This method is actually being encouraged by certain members of Congress.   Remembering, that if not properly served, that it could take months or even years to evict a past home owner.  Especially, considering that many judges are ruling in favor of homeless families considering the whole big picture of America seeming like one big distressed property, these days. 

Foreclosure Suicides on the Rise

Definitely, committing suicide will not prevent foreclosure.   This just shows how stressful the whole process is and how difficult it is for some people to handle the crisis. As in this sad case; what the home owner did not know, is that it normally takes up to two years for an insurance Company to pay out on a policy wherein there has been a suicide by the insured.

 Kirk Mulhearn, a real estate broker and professional mortgage planner, can be contacted at 562-989-4608  ext. 110. 

Long Beach, Ca.   With all the news about the recent layoffs, there is no holding back by home buyers in the local Long Beach real estate markets if the price on a listing is reasonable.   Inventories for certain areas of REOs on the market have diminished.  The current trend is Short Sale listings.  Remember that there are approximately 50 million mortgages outstanding and a full 10% of them are in default.  That means that one out of every 10 neighbors is probably feeling the stress of the new economy.  There are lots of short sale properties avialable at more affordable prices; but, not not as many agents that understand how the process of getting the property accepted by the lenders. 

Yesterday we had some interesting economic news. The Conference Board's Leading Economic Index rose .3%, which is the first gain in six months. Four of the 10 indicators the report were positive, unfortunately led by a 0.99 percent increase in the money supply adjusted for inflation, which is due to increased lending and purchases of securities by the Federal Reserve to unclog credit markets and ease borrowing costs. We also had Existing Home Sales unexpectedly rise 6.5% in December, mostly attributed to prices being down and a brisk market in foreclosures.

What is weighing our mortgage prices down, and keeping rates relatively high given the current state of the economy, is the supply coming on to the market. On top of the $2-3 billion or so of daily mortgage origination, we have a record $40 billion 2-yr note auction today and a record 5-yr note auction Thursday. There are always worries about who will soak up the supply, and the holiday in Asia tends to add to this consternation. The Fed's meeting today and tomorrow is expected to result in no change to their 0-.25% overnight rates, but analysts will be watching for any change to their language in the post-meeting wrap up. They are exploring the purchase of longer-dated Treasury securities in an effort to push up their price and bring down their yield in order to reduce long-term borrowing costs at a time when the Fed can't lower short-term interest rates any further because they are effectively at zero. Currently, the Ten Year yield is at 2.62% (2.64% yesterday).  30 year fixed rate mortgages are holding flat to rates that closed yesterday.

First Federal of California is the latest lender to close their wholesale channel to brokers. I imagine the following announcement prompted yet another round of rumors and calls to the remaining wholesalers who offer their loans to brokers.

Mortgage giant Fannie Mae is looking to tap government rescue money. Fannie said Monday that it expects to request up to $16 billion from the Treasury Department, marking the first time the federally run mortgage giant will hit the government's taxpayer piggybank. Rival Freddie Mac has already received $13.8 billion from the government and said Friday that it expected to request up to $35 billion more when it reports earnings next month. If Fannie Mae and Freddie Mac both ask for the maximum they've indicated, the price tag for the government takeover of the companies in its first five months would be $64.8 billion. That money is separate from the $700 billion that the government is using to bail out the financial and auto sectors.  How high will this go?

Finally, on the interest rate forecast for the foreseeable future, interest rates are not likely to rise materially any time soon. Recessions are almost by definition deflationary. We had two massive bubbles bursting: the very visible housing bubble, and the less visible but even more powerful bursting of the credit bubble. It would be a strange, strange world indeed if inflation could get any real traction in such an environment. So deflation is our immediate problem; inflation will dominate headlines once the excess supply of everything from autos to durables to housing is wrung out of the global economy. And with GDP falling like a rock, excess supply is growing larger.

Kirk Mulhearn, a professional mortgage planner and real estate broker, can be contacted at: 

562-989-4608  ext. 110