Kirk Mulhearn

Long Beach, Ca. Wow, with more and more workers getting laid off (depending on your State, unemployment figures are shifting up between 8.25% -15%), we have to address the credit issue as both agents and home buyers. You see, the old models are quickly becoming archaic when you have a good family, suddenly late on payments, because of a lay off or less hours at work. This is transcending into the home buying and refinance markets in that more and more people’s credit scores are dropping below 620, which is an industry standard now for the minimum FICO required by HUD on FHA purchase money loans. There are a few lenders that go below that but charge a premium in points. Below is an open letter written by my friend Steve Manos describing how your credit scores are calculated. It is adviseable to retain someone like Steve, who can periodically review your credit, and for a nominal fee, keep your scores high.

A credit score is a number that lenders use to help them determine their creditworthiness. It is generated through statistical models using elements from your credit report; however, your score is NOT physically stored as part of your credit history on the credit file. Rather, it is typically generated at the time that a lender requests your credit report, and is then included as part of the report. That is because your credit score is a "fluid" number, and it changes as the elements on your credit report change. For example, payment updates or a new account could cause your scores to fluctuate. Designers of credit scoring models review a set of consumers, often over a million, who opened loans at the same time, and determine who paid their loans and who did not. The credit profiles of the consumers' who defaulted on the loans are examined to identify common traits they exhibited at the time they applied for the loan (such as number of open accounts ;amount of outstanding balances; number and severity of late payments;type, number and age of accounts ;recent credit inquiries, etc.) The designers then build statistical models that assign weights to each variable, and these variables are combined to create a credit score. Below is a pie chart breaking down the percentages of each considered category that is used to calculate your score:

Few consumers get a perfect FICO score, and nearly half get under 700. Here is a breakdown of the U.S. population :

Score of 800-850 : 13%

Score of 750-799 : 27%

Score of 700-749 : 18%

Score of 650-699 : 15%

Score of 600-649 : 12%

Score of 550-559 : 08%

Score of 500-549 : 05%

Score under 499 : 02%

For years I have been warning my clients to ignore all the fake credit score companies and fake credit score monitoring companies, and only purchase your credit scores from www.myfico.com/12, or get your free credit reports from www.annualcreditreport.com. Experian is making a killing promoting their fake report/report monitoring site to unsuspecting consumers who do not read the fine print when they obtain their "free" credit reports, and end up actually subscribing to a monthly credit report monitoring service. I recently watched a video countering Experian's profitable little scam...When I found out who made the video I was shocked ! It was made by the Federal Trade Commission (FTC). This new commercial is the FTC's latest attempt to warn the public about these catchy commercials featuring " singing pirates". Watch the video here:

http://www.youtube.com/watch?v=krG2d7OK8MM.

How are FICO credit scores calculated and what determines your FICO score? The formula for creating those scores works like this :

FICO first sorts each person into one of ten credit categories so that , for instance, people with " thin files " -not a lot of credit history-are compared only against other people with " thin files " .

The FICO formula then starts with a neutral score - about 600 points - and begins adding and subtracting points based on the activity shown in the consumer credit file, said Craig Watts, a Fair Isaac spokesperson.

FICO scores are based only on what is in the consumer's credit file - and that file can be different from one credit bureau to the next. So it's not uncommon for the same person to find that his or her FICO scores at Trans Union is different from that at Equifax or Experian.

That is why at Center for Better Credit we feel it is more important than ever to enter into any long term financing deal with as high a FICO credit score as possible from all 3 of the major credit bureaus. Not just to save a lot of money on interest over the life of the loan, but in todays lending "climate" it is important to have higher scores just to even be approved. Please contact us with any specific questions. All of our contact information is at bottom of e-mail.

Sincerely;

Steven J. Manos

President

Center For Better Credit

3857 Birch Street No.630

Newport Beach, CA 92660

A Non-Profit Corporation Dedicated To Informing And Helping Consumers

Deal With Their Credit Issues & Resolve Their Credit Problems.

(949) 200-7507 Phone

(949) 553-1746 Fax

(714) 277-8583 Cell

(800) 359-0455 Toll Free

www.centerforbettercredit.com Website

Long Beach, Ca. There has been a lot of confusion in the marketplace about what are the exact tax credits that a home buyer may receive from both the State of California and the Federal government. Chuck Barger, of Prudential California Realty, has prepared the simply summary below which makes is very easy to understand. If you are a homebuyer, this makes buying a property even more attractive this year! If you are an agent, you should be screaming this from the roof tops! Everyone benefits from tax credits, and you might just qualify for both of to $18,000.00 in credits.

I. Federal Tax Credit

1. Credit is 10% of Purchase Price, not to exceed $8,000.

2. Escrow must close between January 1, 2009 to November 30, 2009, inclusive.

3. Federal Credit is a “Refundable-Credit” earned whether or not taxpayer owes Federal Tax. Example, home-buyer owes zero Federal Tax, would receive a tax “refund” of $8,000.

4. Credit does not have to be repaid to Government, unless home-buyer sells or moves to another principle residence within THREE years of purchase.

5. Home-buyer is “First-Time” or has not owned a home from July 1, 2006 to June 30, 2009. Must be Owner Occupied as Principle Residence.

6. Income Levels: Tax Credit starts to phase out for an Individual Taxpayer with a modified adjusted gross income from $75,001 to $95,000 (or $150,001 to $170,000 for joint filers). The credit is eliminated entirely for an individual over $95,000; jointly $170,000.

7. Taxpayer can claim credit for either tax year 2008 or tax year 2009. If 2008 returns already filed, taxpayer can file an amended return and receive tax “refund”. Use IRS form 5405.

8. If Escrow closed from April 9, 2008 to December 31, 2008, would fall under 2008 law.

II. State of California Tax Credit

1. 5% of purchase price, not to exceed $10,000

2. Escrow must close between March 1, 2009 to February 28, 2010

3. Property must be “New Home”; that is, must be certified that the home has never been occupied; single family residence only.

4. Must be Owner Occupied as Principle Residence; must reside in home for TWO YEARS minimum to avoid paying back State Tax Credit.

5. Tax Credit is NON-REFUNDABLE; that is, it must be taken as an offset against State Taxes owing. It is taken over THREE successive taxable years. Starting in 2009 or 2010- maximum credit is $3,333 per year.

6. Home-buyer does not have to be a First-Time buyer to receive State Tax Credit.

7. Income Levels- no maximum income levels.

8. Tax Credit year begins in 2009 or 2010, depending on escrow closing date; use form FTB 3582A.

Summary: Credit may not be given if buying from relative or as gift. Home-buyer can receive BOTH credits. Time is of essence; must close within deadlines.

Kirk Mulhearn, a Long Beach Real Estate Broker co-manages Prudential California Realty, "The Bixby Knolls Office," and a Net Branch of, GEM Mortgage, a direct lender specializing in FHA, VA, and Conventional financing. Contact him at: 562-989-4608 ext. 110

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Long Beach, Ca. More good news on the loan origination front. We are seeing both more production in regard to loan applications, since February, the estimated US fundings this year have increased by $400 billion dollars. A lot of that is due to conventional refinancing. In the first quarter, we are expected to fund $.43 trillion that’s up from $.294 trillion in the fourth quarter of 2008.

Three Ways that FHA Underwriting is becoming tighter

Somethings to be aware about with FHA financing: Pretty much FHA financing is the only game in town right now for home purchases because there are no more 100% financing sub-prime loans. Understand that FHA is a full doc program that requires lenders to prove up that the borrowers are employed and have the funds to close. Nevertheless, what we are seeing is the FHA loan program morphing into a quasi-conventional type of product. This is not good for the borrowers or the real estate agents.

1. More and more banks are requiring a minimum FICO score of 620 wherein in the past you could fund a loan with a 580 score or less. The requirement has raised to 640 to 660 for jumbo FHA loans.
2. In addition, as of today, many lenders are no longer are accepting alternative lines of credits from home buyers that don’t have three lines of credit established on their credit reports.
3. You are currently required two FHA appraisals instead of one if you are funding an FHA Jumbo loan, this could cost a home buyer $700-$1000 up front for appraisals vs. the old

$350-$500 that we used to pay.

We are hearing more information on the 105% refinance program from the agencies. And it is not good if it is a Freddie Mac loan. The Wall Street Journal article reports that the new refinancing program doesn't allow borrowers to shop around for the lowest fees. “Brad German, a spokesman for the government-backed provider of funding for mortgages, said any borrower with a Freddie-backed loan who wants to refinance under the program needs to do so through the company that services his current loan. Borrowers with Fannie-backed loans will be able to seek refinancings under the program from more than 30,000 lenders nationwide. While Fannie is letting borrowers shop around, those deemed a higher risk are hit with fees that can total 3% or more of the loan balance, the WSJ reported. Freddie's maximum fee on these refinancings is 0.25%.

Kirk Mulhearn, a Long Beach Real Estate Broker co-manages Prudential California Realty, "The Bixby Knolls Office" and a Net Branch of GEM Mortgage, a direct lender specializing in FHA, VA, and Conventional financing. Contact him at: 562-989-4608 ext. 110

Subscribe to this site at: www.longbeachrealestateandloans.com

Long Beach, Ca. Since this is Friday the 13th, have you ever wondered the origin of fear for this date. It can be attributed to a number of past historical events. Something different then mortgage information that you can use at your next trivia get together.

One reference is to the Knights Templar rose to prominence in Europe between 1096 and 1307. Their downfall came on Friday 13th October 1307. This date saw the catastrophic destruction of the Knights Templar at the hands of King Philip of France and his puppet Pope Clement V. Some say this event, in which the Templar's were burnt at the stake, gave birth to the superstition associated with Friday 13th. Others have noted that you should be aware of naming your children with 13 letters in their name, they may be cursed for example, Jack the Ripper, Charles Manson. Ok, then back to some mortgage information.

More Mortgage News

CalHFA - Date for the return of this product is still undetermined. Calls to their office and staff still indicate they do not know when the program will begin accepting registrations, regardless that the State budget has been passed. And we want socialized medicine.

2008 FHA and Agency Conventional Loan Limits – although we had a major press announcement earlier about the new FHA Loan Limits, We have announcements from Countrywide aka Bank of America, and U. S. Bank for FHA 2008 loan limits only at this time. We are still waiting on others. Conventional is still on hold as people make adjustments to systems, and loan pooling to handle the higher loan amounts. Again, our best guess is early April.

CNBC published an interesting slideshow depicting the states with the highest foreclosure rates. Can you guess which state has the highest rate per number of existing households with impending foreclosures? You might find this interesting. Anyone for a second home in the state with the highest foreclosure rate? I am sure you will find a real bargain. I give you a hint, You can visit their recreational sites and come away a winner or a loser. http://www.cnbc.com/id/29655038

Kirk Mulhearn, a Long Beach Real Estate Broker co-manages Prudential California Realty, "The Bixby Knolls Office" and a Net Branch of GEM Mortgage, a direct lender specializing in FHA, VA, and Conventional financing. Contact him at: 562-989-4608 ext. 110

Subscribe to this site at: www.longbeachrealestateandloans.com

Long Beach, Ca. As the weather starts to warm a little, home buyers have come out in droves.

Some buyers are hesitating and watching the economic situation a little too closely in that some have decided to hold off. My cautions to all, we have to focus on the positive of our market place and look to the happy side of living in these opportunistic times. Don’t hesitate to purchase a home if you qualify, need a home, and have the ability to make the mortgage payments. Remember, there is a federal tax credit of $8000.00 for first time home buyers that does not have to be paid back!!!

Freddie Mac declared a 4Q net loss of $23.9B, which forced the value of assets below its liabilities. Freddie said that it will need an additional $30.8B in federal aid.

We have already seen Retail Sales and Jobless Claims bounce….just a little. Retails Sales, expected to drop .5%, were “only” down .1% after being up 1.8% last month. In addition, the number of U.S. workers filing new claims for jobless benefits rose 9,000 last week to 654,000, a shade higher than expected, and the four-week average of new jobless claims rose to 650,000 from 643,250 the week before. (This was the highest reading since October 1982.)

We have seen an up tick in your loan applications. Requests loans raised 11.3 percent in last week, driven by a 13.1 percent growth in refinancing demand, the Mortgage Bankers Association reported. Applications for purchases climbed 7.1 percent. GREAT long-term mortgage rates, which dropped to 4.96 percent, stimulated the market.

Finally, today Mr. Madoff, who made off - no pun intended for the victims, with billions of people's money from the largest ponzi investment scheme to date, said he was sorry and ashamed. Here is the story and link to CNBC article and a number of links of resources that are available for people who have been become victims of this sad situation. http://www.cnbc.com/id/29598454

Kirk Mulhearn, a Long Beach Real Estate Broker co-manages Prudential California Realty, “The Bixby Knolls Office” and a Net Branch of GEM Mortgage, a direct lender specializing in FHA, VA, and Conventional financing. Contact him at: 562-989-4608 ext. 110

Subscribe to this site at: www.longbeachrealestateandloans.com