Kirk Mulhearn

Long Beach, Ca. When buying or selling an REO property, it is much better to go with a direct lender; especially, here is Southern California in that there's quite a bit of doubt about the viability and truthfulness for the pre-qualifications offered by mortgage brokers at the receiving end of a sales contract. In addition, CNN is reporting more large banks are cutting ties to mortgage brokers, insisting that direct contact with an internal mortgage officer who can explain various products and help borrowers choose one that best meets their needs is essential. Brokers counter that they help consumers by monitoring products and costs of various lenders and that lenders --not brokers-- have the final say when it comes to writing the loan. Perhaps that is why we are seeing a number of former broker shops wanting to become a mortgage banker. In fact, partly because of this reason, this writer has associated with GEM Mortgage, a direct lender headquartered in Bakersfield, Ca. From a seasoned mortgage broker's perspective, it is definitely an edge right now to be associated with a direct bank over brokering loans and I feel that if you are an active real estate agent, then you should stick with a direct lender that you trust and has the experience to ride out this market. Likewise, if you are a buyer, make sure that you wisely shop your new home loan to several lenders so at to get a feel for the available interest rates.

As you probably are aware, the Stimulus Package is being fast tracked, however one key provision for housing, the $15,000 tax credit will not be a lucrative as we originally thought. Senate lawmakers have agreed on a nearly $790 billion stimulus package, with the House expected to vote on the plan by the weekend and the legislation to arrive on the president's desk by Feb. 16. The bill comprises four main categories: investments in health care and alternative energy; funding for "shovel-ready" infrastructure projects; tax breaks for people and businesses; and aid to state and local governments. Initial reports showed that the bill includes $282 billion in tax breaks. However, the final package will substantially reduce the Senate's proposed $15,000 tax credit for home buyers, placing income limits on who could benefit and reducing the overall cost from $35 billion to about $5 billion. Not what we would have hoped for, but perhaps better than a poke in the eye as they say.

Equity market off to an unpleasant start this AM as skepticism is creeping in on the impact of the stimulus package and jobless claims climbed to a new record. "The market is deeply cynical of what's going on and no one in Washington has any more idea than a goat what they're doing," said Peter Sorrentino, who helps manage $15.5 billion at Huntington Asset Management in Cincinnati. "Unemployment numbers are going to be bad for a while. Wall street seems to be saying " President Barack Obama's stimulus plan will be insufficient to avert the biggest U.S. economic decline since 1946 as consumer spending posts its longest slide on record, according to a monthly Bloomberg News survey. The world's largest economy will contract 2 percent this year, half a percentage point more than last month's forecast, according to the survey.

With this concern in the equity market it has curtailed the increase in pricing from the last several weeks. Treasurys remained higher Thursday, pushing yields down, after a report showed continuing stress in the employment market amid rising concern that lawmakers' plan to stimulate the economy will not be effective. Yet on a positive side, retail sales were surprising improved in January. "U.S. Treasurys are lower in yield on concerns that the U.S. stimulus package will not be sufficient enough," said Thomas di Galoma, head of U.S. government bond trading at Jefferies & Co. Investors often seek the relative reliability of U.S. government debt as an alternative to riskier assets, including stocks, when the economy declines. So where does that leave us this morning. I still think rates will relax after the huge government auctions are over with and while investors remain in a skeptical mood, we should see rates moving back from our current highs in the next few weeks. So says the great "Oracle" of Bakersfield. For now your pricing for 30 year fixed rate loans is about the same as yesterday. Currently, the Ten Year yield is at 2.79% (2.82% yesterday) Remember tomorrow is a short lock day and with the long President's weekend, make your lock decisions early.

According to "The Wall Street Journal," the city of Las Vegas wants to use two million dollars of the economic stimulus for new neon signs. City officials are concerned, since they don't want to make the city look tacky. Appearances are everything. If you want to lighten your day, you can see some humorous looks at the so called Stimulus package. Enjoy. http://caps.fool.com/Blogs/ViewPost.aspx?bpid=144711&t=01001019292467236494

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

Long Beach, Ca. FHA loans may net you more when refinancing your home. Wherein, conventional Fannie and Freddie are limiting cash out refinances to 75% of a property's value. FHA loans may go as high at 95% of the homes value; however, if you cash out more then 85% of the homes value, you will definitely have to do a second appraisal. This can add a lot of costs to the regular refinance. For example, a typical FHA appraisal costs between $350-$400 and this must be paid up front. If you double that, you are expending between $700-$800 upfront before the loan closes. This is a considerable sum which is really only going to protect the bank by doing an extra certification of value on a home.

As an illustration, let's say you own a property that today appraises for $300000.00, pretty much the maximum you can get out of the property utilizing conventional financing is $225000.00; however, if you were to opt for an FHA loan should be able to cash out up to $285,000.00. This is a difference of netting $60,000.00 after the loan records.

Stock markets fell yesterday and Treasuries rallied after Treasury Secretary Geithner did not address the specific concerns on the minds of traders: what banks will do with toxic assets, how illiquid assets will be removed from balance sheets, and how to stem the decline in home prices. Currently, the Ten Year yield is at 2.82% (2.94% yesterday). 30 year fixed rate mortgages are about the same on where the market closed yesterday.

Yesterday was a "traditional" day where stocks went down and bonds went up. There's only so much money in the world, right? Locks volumes were heavy, but apparently the Fed buying mortgage-backed securities helped prices, and mortgage rates did well. A lot may happen in the next 3 business days, especially with an early bond market close Friday ahead of the President's Day Monday holiday.

Only economic news is the trade deficit. The U.S. trade deficit narrowed in December to the smallest in almost six years, with both exports and imports declining for the fifth straight month as consumers worldwide pulled back their spending. The gap between imports and exports shrank 4 percent to $39.9 billion, from a revised $41.6 billion deficit in November that was wider than previously estimated, the Commerce Department said today in Washington. "Trade is collapsing globally; whether it's imports or exports, there's a net benefit from trade that lifts all economies, and we're losing that now," said Christopher Low, chief economist at FTN Financial in New York. "We'll see a rise in protectionist sentiments."

As you know, the Senate passed the Stimulus bill yesterday. And now it goes to the conference committee to work out the differences between the House and Senate version. Assuming they are successful, the final bill is hammered out, and voted on by both the House and Senate and is then presented to the President to sign. And the President has asked for a final bill to be on his desk by this Monday. Here is a link for the summary of the bill.

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

You may subscribe to this blog at: www.longbeachrealestateandloans.com

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. Now is the time to embrace all the programs that are available in the local markets to finance real estate. With over 50% of properties being distressed, it is absolutely necessary that your real estate agent is familiar with the type of financing that can help move REO and short sale properties. Consider the 203-K Steam line FHA loan. This loan can not only be used to finance the purchase of your new property, but all the repairs can be financed into the transaction above the sales price and it can close escrow before the repairs are finished!

GM and Chrysler may be in BK

Treasury Secretary Timothy Geithner delayed the announcement on the details of the financial-recovery plan until at least tomorrow. Officials are still debating what to do with toxic assets on bank balance sheets. GM and Chrysler may be forced into bankruptcy by the US government to ensure the repayment of $17.4B in federal bailout loans. There is $67B in treasury supply scheduled to hit the market between Tuesday and Thursday. Right now, the futures market is pricing in a 66% chance that the Fed keeps rates somewhere between 0 and .25% until at least June 24th, 2009. Currently, the Ten Year yield is at 3.01% (2.93% on Friday)

Stimulus Plan Drives Mortgage Rates

News regarding the Senate's fiscal stimulus proposal and the Treasury's financial institution cleanup plan may be the biggest drivers of mortgage rates this week. Bond markets will close early on Friday in observance of Presidents Day. We do, however, have a $32 billion 3-yr auction tomorrow, $21 billion 10-yr on Wednesday, and $14 billion of 30-yr on Thursday, which will also be guiding the market – and this news has not been kind to interest rates. In other news, Nissan is cutting jobs after a forecast of a $2.9B loss, the five banks that financed the Lyondell Chemical (Goldman, Citi, UBS, ML, and ABN Amro) deal have already lost $3.7 billion and it could climb to $8 billion. With all of this, the 10-yr has moved up to 3.02% and mortgages are roughly unchanged from Friday afternoon.

$15000 in a tax credit if you buy a home!!!

The real estate industry hopes a tax credit proposed by the Senate in its version of the stimulus bill would bolster the housing market by encouraging fence-sitters to make a home purchase. The Senate is calling for a tax credit equivalent to 10 percent of the purchase price up to $15,000, versus House legislation that repeals the repayment obligation on the $7,500 tax credit available to certain first-time buyers.

Fannie to allow more loans per “professional borrower”

Fannie Mae has issued Announcement 09-02, “Updates to Multiple Mortgages to the Same Borrower Policy, Reserve Requirements, Reserves Definition, and Form 3170.” In what is good news for “professional borrowers” with multiple investment properties, Fannie Mae is changing their current limit of four financed properties per borrower when the mortgage being delivered to Fannie Mae is secured by an investment property or second home. They will allow “five to ten financed properties per borrower, with certain eligibility and underwriting requirements, including a 720 minimum credit score and 70–75% maximum LTV/CLTV/HCLTV (depending on the transaction and property type). The requirements apply to any investment property or second home loan being delivered to Fannie Mae, regardless of whether Fannie Mae is the investor on the borrower’s other mortgages. Second home and investment property loans to borrowers with five to ten financed properties will be accepted for whole loan purchase or delivery into MBS with purchase dates on or after March 1, 2009, and new Special Feature Code 150 will be required at delivery.” We will have to wait until the large sellers make changes to their guides before this change can be implemented.

Kirk Mulhearn, a Long Beach real estate Broker and professional mortgage planner may be contacted at: 562-989-4608 ext. 110

Subscribe to this site at: www.longbeachrealestateandloans.com

Long Beach, Ca. Well, I guess when it rains, it pours. Unemployment figures not withstanding, see below. I still believe that during such interesting times that there are always opportunities that arise for both first time home buyers and investors alike. Imagine a 4 bedroom, 3 bath home selling for $275000.00 in Anaheim. How about newer 6 bedroom homes in Corona selling in the mid $300000.00 range. Lucrative opportunities are everywhere to be found. Lets be realistic, home buyers concerned about their jobs are taking a lets wait and see attitude; that is healthy. However, remember that with the government selling so many bonds to stimulate the economy that the interest for mortgages has begun to move up. This is going against the trend the government would like to see, it shows that the Fed can only really influence short term rates.

The unemployment rate reached the highest level since 1992 and payrolls tumbled in January, with millions more likely to lose their jobs before a stimulus and emergency-lending programs temper the U.S. economys freefall. The jobless rate rose to 7.6 percent from 7.2 percent in December, the Labor Department said today in Washington. Payrolls fell by 598,000, the biggest monthly decline since December 1974. Losses spanned almost all industries, from construction and manufacturing to retailing, trucking, media and finance. "We are in the middle of a very severe, a violent, collapse in activity and it could go on for months," James Galbraith, an economics professor at the University of Texas in Austin, said in an interview with Bloomberg Television. The report will likely diminish objections "that somehow the presidents recovery plan is too large and should be trimmed back."

The market is currently digesting the Unemployment data, which (this should be no surprise) points to a grim economy. January's sharp drop in employment brings job losses to 3.6 million since the start of the recession in December 2007," Commissioner of Labor Statistics Keith Hall said in a statement, and "about half the decline occurred in the last three months." Manufacturing was down 207,000, the worst since October 1982, construction industries were down 111,000 jobs, and retail businesses cut another 45,000. Normally, an economy as bad as this would push rates lower, but instead, due to the supply and demand concerns, we find the 10-yr back up 2.95% and 30-yr mortgages either unchanged or worse by .25. We have to pay for the debt and people who buy it are demanding a higher rate of return.

Kirk Mulhearn is a Long Beach Real Estate Broker and professional mortgage planner and can be reached at: 562/965-0054

You may Subscribe to this blog at www.longbeachrealestateandloans.com