Long Beach California Real Estate Loans

Long Beach, Ca.   After an exceptionally inspiring and charismatic speech,  our National Leader gave some of the best sound bites I have ever heard last night in an extremely populist speech.  Indeed, to watch many of the star struck senators and congressmen anxiously line up to have their programs autographed by Obama makes one wonder about the head rush of euphoria going through the law makers of our country as they prepare trillions of more in spending bills.   However, the real problem with all of the bail out and stimulus projects with the government pumping trillions of even more money into our economy is that it is going to all have to be paid back with interest by the next several generations of Americans at  a very heavy economic cost to the economy.

Federal Reserve Chairman Ben Bernanke expects the country's down cycle to continue through at least June but believes growth could resume later this year if "actions taken by the [Obama] administration, the Congress and the Federal Reserve are successful in restoring some measure of financial stability."   Wow, he is dumping the responsibility of the economic future of America on to the backs of Congress after the FED had a virtual Monopoly on money making and fiscal decisions for almost a century, nice spin.

So far, it is being reported that 90,000 borrowers are at least three months behind in their mortgage payments have been invited to take part in Fannie Mae and Freddie Mac's streamlined modification program, which seeks to lower monthly payments to 38 percent of a borrower's income via interest-rate reductions, longer terms and principal reductions. However, Federal Housing Finance Agency chief economist Patrick Lawler says, "Early indications are that several of the program guidelines should be liberalized to reach a broader population and to create a lower, more affordable payment." Joseph Evers, deputy comptroller at the Office of the Comptroller of the Currency, told lawmakers yesterday that roughly 57 percent of Fannie and Freddie's loan modifications made in the first quarter of last year defaulted again within six months of the modification when the borrower fails to pay their taxes.

The cram down provision we have talked about before is now under consideration by the U.S. House that would let bankruptcy judges reduce principal owed on mortgages and make other changes, insisting that the proposal would boost mortgage rates and lenders' losses. The proposed legislation could help more than 1 million struggling homeowners, says the Congressional Budget Office, which estimates that 350,000 of them likely will file for bankruptcy during the next decade. In a letter to administration officials, the Mortgage Bankers Association said, "Judicial modification should be a last resort and only available where other non-judicial options have been exhausted or are not available."  As we have said this will only increase the cost of future home loans, but we will have to see how this works.

How confident are you about the economy?   Yesterday it was reported thatConsumer Confidence fell to its lowest level since 1967, which is when the survey began. We did see a little price improvement yesterday due to Ben Bernanke's remarks, along with a decent 2-yr auction, but then prices sank somewhat. Bernanke conjectured that the recession could last into 2010, along with assuring the market that the government does not desire to nationalize the big banks, most notably Citi and BofA. The Treasury Department sold$40 billion in two-year notes at a yield of .961% ($32 billion in 5-year notes today and $22 billion in 7-year notes tomorrow) As everyone in mortgage banking knows, the Fed is focusing on purchases of agency debt and mortgage-backed securities as well as extending loans to the private sector to jump-start business and consumer lending - some dealers report that they are the ONLY buyer.   You heard correctly, the FED is the only buyer.  It is a very serious situation when only the FED shows up to buy.   That is why we have kept saying to you about the pricing, it is in a artificial bubble.  For the marketplace to work, we need to see other people develop the confidence to become buyers

Kirk Mulhearn, a Long Beach real estate Broker is the Manager for Prudential California Realty, "The Bixby Knolls Office," and Co-Manager for a net branch of GEM Mortgage, a direct lender that originates FHA, VA, and Conventional Loans.

He may be contacted at:  562-989-4608 ext. 110 

Subscribe to this blog at:      www.longbeachrealestateandloans.com

Long Beach, CA.  Notice to all school teachers:  Take advantage of the 80/17/3 CalSTRS lending program as soon as you can.  This is no doubt the easiest way to purchase a home if you are a school teacher.  The way it works is like this:  The investor will make a first trust deed at 80% of the sales price.  There will also be a silent second trust deed behind the first trust deed at the same interest rate as the first for five years.  Today's rate is 5.5% for both the first and silent second for a 30 year fixed loan.  The only down payment required from the teacher is 3% of the sales price!  Note this is .5% less then what HUD is requiring through an FHA loan and better pricing, too!  If you are a school teacher, contact Kirk Mulhearn at 562-989-4608  ext. 110 and get pre-qualified and your DU Certificate today.

Surprise, nationwide  new homes sales fell to an annualized rate of 324000 units, that means that less then 27000 new homes are moving a month.  It is very evident that some of the best buying opportunities are in the existing homes inventory on the multiple listing services.  We need to absorb the available housing that we have rather then continue to build.  Although, builders are trying to be very creative in giving bonuses, free kitchen appliances, and upgrades the sales will still be sluggish until the credit markets ease up. 

Last week the equity market continued in negative territory waiting for  the government to decide to nationalize or provide more capital to the Banks.   Bank regulators said they stand "firmly" behind the nation's banks and will begin examining this week whether they have enough capital to survive if the downturn in the economy becomes any sharper. Banks that are not able to raise money privately will have access to government funds. Treasuries have fallen this morning, especially on the long end of the curve, on speculation that the government may purchase up to a 40% stake in Citi, leading to more treasury auctions to fund this transaction.  Stock market is currently down 80 plus points. Gold is $989, oil is $40.00 a barrel  and the Ten Year yield is at 2.85% (2.76% on Friday).  The 30 year fixed MBS market is current off .125% from the close on Friday.

Part of this bank examination is where the regulators will conduct "stress tests" on the financial condition of the nation's 20 largest banks in an effort to determine how they will fare if the ongoing economic slump deepens. The tests come as concerns mount among analysts and investors regarding the Treasury Department's broad plan to shore up America's banking system, details of which may not be available for weeks. As further proof of the distress banks are under, Citigroup reportedly was in active negotiations with regulators this past week concerning plans for the federal government to take a larger ownership interest in the bank.

Meanwhile several Republican governors are debating President Obama's economic stimulus package and how to address budget shortfalls at the state level. At the annual winter meeting of the National Governors Association, some governors said the GOP should compromise with Democrats, but their more conservative colleagues said they should reject new spending and taxes to regain the trust of the party's base. And in the case of upmanship, the California Governor said he will accept any bailout money other states would not accept.  Those of you in California, now know the State budget passed, get ready for some added serious money to come from your wallet for taxes and when you register your vehicle

It is truly insane to raise taxes during an economic downturn; nevertheless, our politicos in Sacramento did just that!  Look, the State of California has over 200000 employees, and they have hired over 70 people a day, either directly or indirectly for the last 10 years.  No wonder, we are sinking into the Pacific. 

And last week, Secretary of State Hillary Clinton urged China to continue buying U.S. Treasury bonds to help finance President Barack Obama's stimulus plan, saying "we are truly going to rise or fall together." Do you think she could have told them to buy Mortgaged Backed Bonds as well?  If you think we have it bad, consider being one of the over 25 milllion Chinese that have been recently terminated.  Reason?  Lack of export demand; especially from the USA.

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

Subscribe to the blog at:  www.longbeachrealestateandloans.com

Watch this video here:  www.youtube.com/watch?v=fhCDRnaLXAY&feature=channel_page

Long Beach, Ca.  Hello everyone, we are trying hard to modernize ourselves here, we are dedicated to reach as many people as we can with all the avalilable medias.  Stay tuned for our weekly video real estate and mortgage update reports, commentary on the local and national real estate news, economic trends, and market updates.

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

Subscribe to this blog at:  www.longbeachrealestateandloans.com

Long Beach, Ca.  Southern California medium sales price is down to $250,000.00(see the front page of the Los Angeles) which is causing a flurry of buying activity.  No shortage of loan applications!  Ironically, there does not seem to be enough REO inventory available!  That is; the good stuff gets sold fast and is rapidly bid up.  Banks are listing their properties artificially low and then entertaining multiple offers.

CPI came out and the cost of living in the U.S. rose in January for the first time in six months after gasoline prices stabilized and loss-ridden retailers pushed through increases. The consumer price index rose 0.3 percent, as forecast, Labor Department data showed today in Washington. Excluding food and fuel, the so-called core rate, prices advanced 0.2 percent, due to autos, clothing, and medical care. The CPI was unchanged on an annual basis -- the first time it hasn't risen since 1955.

Equity market continues under great uncertainty and concern about the foreclosure prevention act.  Rick Santelli, a reporter for CNBC had his own meltdown reaction with other traders on the floor about provisions of the plan. Quite entertaining if you have not seen the entire clip and for your enjoyment here is the link which is five minutes long, but pretty entertaining.

http://www.cnbc.com/id/15840232?video=1039849853

THE RISE OF THE GOLD BUGS
Added to this in the market today is the concern that major portions of the existing financial sector will involve nationalizing the banks.   Gold and government bonds are predictably the safe harbor.  Gold has touched $1,000 dollars and anxiety circled eyes are filling the trading floor as jittery investors turned to the yellow metal to preserve wealth amid a tumbling stock market.  The metal is poised to rise further, possibly targeting last March's all-time high of $1,030.80 an ounce, analysts said.

Most of the equity market is on edge because of three things.  

• 1. Concerns over a bankrupt Detroit and requests for more taxpayer money,
• 2. Bank Nationalization, a number of rumors are building about Citicorp and Bank of America.
• 3. And major concerns about the foreclosure prevention plans announced by the Administration. Follow this Link: http://www.cnbc.com/id/29299209

This morning the bond market was actually happy to see some signs of inflation - go figure. U.S. consumer prices were up in January .3%.   After this we find mortgages better by about .250 in price and the 10-yr at 2.75 with yesterday's yield at 2.82%.  Pricing has continued to improve so I would wait a little while check Loan Solutions for new locks.

Kirk Mulhearn is a Long Beach real estate broker and professional mortgage planner, you may contact him at:  866-961-8042 ext. 110

Subscribe to this blog at:  www.longbeachrealestateandloans.com

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

Subscribe to this blog at:  www.longbeachrealestateandloans.com