2121 E 1st Street #307 REDUCED to $412,000

The Rescue of Fannie Mae & Freddie Mac

Hi Neighbors,

I know everyone is wondering what effect this Fannie & Freddie take over by our administration will take on our market and all in all what it means? Well Pete Mitchell sent me this letter today explaining this federal takeover very matter of factly and in terms we all can understand...

Enjoy and get informed!

THE RESCUE OF FANNIE & FREDDIE

What does the federal takeover ultimately mean?

Monday, the Dow Jones Industrial Average leapt north nearly 290 points as investors cheered the Treasury Department's weekend takeover of mortgage giants Fannie Mae and Freddie Mac.

This decisive move immediately boosted the morale of stock market investors and real estate investors. In fact, you may feel the same way Treasury Secretary Henry Paulson does: on CNBC Monday, he expressed his belief that the takeover, "more than any other action that I've seen done here, has advanced the ball" in leading the real estate sector toward recovery.1
You could almost hear Wall Street wiping its brow and exhaling: "Whewwwww." As Moody's.com chief economist Mark Zandi put it, "This takes a major financial threat off the table."2

What might this mean for the housing market? Well, mortgage rates fell half a percentage point Monday =- and they could fall further in coming weeks.3 Zandi, in fact, thinks rates on 30-year FRMs could dive to around 5.5% (they were averaging about 6.35% nationwide on the morning of September 8th).2

While the takeover isn't exactly a "magic wand" that will reduce the glut of unsold homes or erase America's foreclosure problem, it will restore a great deal of confidence in the housing and credit markets.

The reasons for the takeover. Fannie Mae and Freddie Mac, respectively created by the federal government in 1938 and 1970, buy mortgages from banks and other lenders. They convert and resell bundled loans as mortgage-backed securities, generating money enabling banks to make new loans. Fannie and Freddie own or guarantee about half the home loans in the United States. If they had collapsed, the U.S. housing market would have faced an unprecedented catastrophe =- and stock markets around the globe would have taken a painful plunge. Fannie and Freddie absorbed $14 billion in losses within the last year, and battled rumors of insolvency all summer.1

Both mortgage giants will now be placed into conservatorship =- a move akin to a Chapter 11 bankruptcy, in which they will be permitted to restructure their operations.

Fannie and Freddie will keep doing business as usual, but they will now operate directly under the authority of the Federal Housing Finance Agency (which was created this spring to regulate them). David Moffett, the former CFO of U.S. Bancorp, will become the new head of Freddie Mac. Fannie Mae will now be run by Herb Allison, former CEO of retirement plan administrator TIAA-CREF.4

The near-term plan. At Sunday's press conference, Treasury Secretary Henry Paulson cited the three goals of the takeover: "market stability, mortgage availability and taxpayer protection."5 He presented a plan with the following short-term objectives:
- The Treasury Department will make a major stock purchase in both firms, buying as much as $100 billion in senior preferred shares in each company so that Fannie and Freddie can stay solvent.4

- The Treasury will also buy new mortgage-backed securities issued by Fannie and Freddie, in order to help keep
mortgage rates low.6

- In addition, the Treasury Department will also provide Fannie, Freddie and a dozen other federal home loan banks with secured forms of short-term financing.4

- Fannie and Freddie will continue to make loans "without limits".6

- Both companies will quit paying dividends to shareholders, thereby saving up to $2 billion per year.6

Paulson told reporters Sunday that buying up both firms' debt would cost taxpayers nothing, and possibly even result in a profit for taxpayers. The long-term cost of this rescue, he noted, would depend on forthcoming business conditions.6 (For the record, the New York Times estimates the bailout could require tens of billions of dollars.7)

Permission to grow =- and an order to shrink. Paulson commented that the size, structure and governmental relationship of Fannie Mae and Freddie Mac need to be determined by the next U.S. President and Congress, noting that "government support needs to be either explicit or nonexistent." They are currently GSEs (government-sponsored enterprises), privately owned but publicly chartered.

Paulson said that both firms will be permitted to "modestly increase" their investment portfolios until the end of 2009 ? but starting in 2010, both Fannie and Freddie will be asked to reduce their investment portfolios by 10% each year. Both companies' portfolios currently total above $1.4 trillion; the goal is to shrink them to a total of $500 billion. Additionally, Fannie and Freddie will have to pay quarterly fees to the Treasury Department beginning in 2010 for the financial support they received under the bailout plan.7

So a severe restructuring and reduction is in store for these quasi-public mortgage firms, which must now be held responsible for questionable accounting methods, relaxed standards, and a blind eye to a bursting U.S. housing bubble.

Sincerely,


Pete Mitchell, AAMS, AWMA, CFIS

Pete Mitchell is a member of the American Bar Association and National Ethics Bureau
Citations.
1 articles.moneycentral.msn.com/Investing/Dispatch/market-dispatches-090808.aspx [9/8/08]
2 money.aol.com/news/articles/_a/bbdp/can-fannie-freddie-deal-fix-housing/162786 [9/8/08]
3 news.moneycentral.msn.com/provider/providerarticle.aspx?feed=OBR&date=20080908&id=9109753 [9/8/08]
4 bloomberg.com/apps/news?pid=20601103&sid=ajcw4yxxPGJ8&refer=news [9/7/08]
5 mcclatchydc.com/251/story/51965.html [8/22/08]
6 csmonitor.com/2008/0908/p01s01-usec.html [9/7/08]
7 nytimes.com/2008/09/08/business/08fannie.html?_r=1&hp&oref=slogin [9/7/08]


If you have any questions please contact me! Have you seen the prices today here in out fair city? Don't get left behind, the time to buy is NOW!!!

See you around the neighborhood!

President Signs Historic Housing Bill!!

Thank You to Everyone Who Has Worked So Hard to Increase Loan Limits!

This morning President Bush signed the "Housing and Economic Recovery Act of 2008." For the past several years, C.A.R. and the NATIONAL ASSOCIATION OF REALTORS® have aggressively lobbied for Congress to pass numerous provisions found in this historic bill. Many of you participated in these efforts by communicating with your Members of Congress.

Thank you to all of you who responded to these Calls-for-Action. Your efforts have made a difference. This federal housing bill is a significant move in the right direction for California homeowners. It will aid in stabilizing our economy and help stem foreclosures, while also providing support to first-time homeowners.

The legislation will assist an estimated 400,000 homeowners facing foreclosure, many of whom reside in California, by allowing them to refinance their current mortgages with a Federal Housing Administration (FHA)-backed loan. The bill also will permanently increase FHA, Fannie Mae, and Freddie Mac loan limits in high-cost areas.

The bill permanently increases the conforming loan limit to $625,500. C.A.R. has long advocated for higher conforming loan limits. In February, the Economic Stimulus Act of 2008 was signed, temporarily raising the conforming loan limit in high-cost areas to $729,750 from $417,000 until December 31, 2008.

Although we would have liked Congress to make permanent the current $729,750 loan limit, C.A.R. is pleased with the new permanent loan limit of $625,500. It will allow California homeowners to refinance their loans into safe affordable loan products and allow first-time home buyers to enter the market.

The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500. Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008.

C.A.R. also supports the following bill provisions:
A temporary increase in mortgage revenue bonds to refinance subprime mortgages.
New regulator for Government Sponsored Enterprises to restore investor confidence in GSE loans and help the market and economy stabilize.
First-time home buyer tax credit, which allows first-time home buyers to receive a tax refund worth up to 10 percent of a home’s purchase price, up to a maximum of $7,500. The refund serves as an interest-free loan and the homeowner is required to repay it in equal installments over 15 years.
Temporary raise in the loan limit for the Veterans Affairs home loan guarantee program to the same level as the economic stimulus limits until the end of 2008.
Adjustment to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA), allowing sellers to provide the non-foreign affidavit to a qualified closing entity and not just the buyer.
The setting of minimum requirements for mortgage originators, which mandates fingerprinting of loan originators and establishes a nationwide loan originator licensing and registration system. The requirements do not apply to those only performing real estate brokerage activities unless they are compensated by a lender, mortgage broker, or other loan originator. States will have the ability to implement more stringent laws.
The creation of a National Affordable Housing Trust Fund to help cover the cost of the FHA rescue plan for the first five years and develop affordable housing in subsequent years.

Other provisions in the legislation:
The Treasury Department’s proposal to create a federal backstop program to insure the financial well-being of Fannie Mae and Freddie Mac.
The FHA’s inability to insure loans that utilize a seller-funded down-payment assistance program. Down-payment assistance from family, employers and other nonprofits is still allowed.
The Community Development Block Grant Programs’ $4 billion allotment for communities to purchase and refurbish foreclosed homes.

C.A.R. wishes to thank those California Members of Congress who supported the bill:

Senator Barbara Boxer, Senator Diane Feinstein, and Representatives Joe Baca, Xavier Becerra, Howard Berman, Mary Bono Mack, Ken Calvert, John Campbell, Lois Capps, Dennis Cardoza, Jim Costa, Susan Davis, David Dreier, Anna Esho, Sam Farr, Bob Filner, Elton Gallegly, Jane Harman, Mike Honda, Duncan Hunter, Barbara Lee, Jerry Lewis, Zoe Lofgren, Dan Lungren, Doris Matsui, Howard "Buck" McKeon, Jerry McNerney, Gary Miller, George Miller, Grace Napolitano, Nancy Pelosi, Laura Richardson, Lucille Roybal-Allard, Linda Sanchez, Loretta Sanchez, Adam Schiff, Brad Sherman, Hilda Solis, Jackie Speier, Pete Stark, Ellen Tausher, Mike Thompson, Maxine Waters, Diane Watson, Henry Waxman and Lynn Woolsey.

Thank you everyone for your efforts in support of this bill!

REALTORS® Hail Housing Bill

Washington, July 24, 2008

Today's passage of The Housing and Economic Recovery Act of 2008 by the House of Representatives will help bring stability to the housing market and stem the rising rate of foreclosures, according to the National Association of Realtors®.

NAR thanked Chairman Barney Frank, D-Mass., and the House of Representatives for their bipartisan efforts in getting H.R. 3221 passed.

“Realtors® are in the business of building communities, and our 1.2 million members understand that this legislation will go a long way in helping people buy and keep their homes,” said NAR President Dick Gaylord, a broker with RE/MAX Real Estate Specialists in Long Beach, Calif. “We look forward to prompt Senate action to finalize this bill, helping ensure that every American who can afford to own a home and wants to do so will have the opportunity and that everyone who responsibly owns a home is able to keep it. This bill must get to the president quickly, and we urge him to act immediately to sign it into law.”

NAR has expressed ongoing support for the major features in the housing package. The legislation includes Federal Housing Administration Modernization that will simplify and make FHA-backed mortgages more available while helping thousands of families refinance existing mortgages and keep their homes. Other important components of the bill that NAR supports are reform of the government-sponsored enterprises (Fannie Mae and Freddie Mac), permanent increases to both GSE and FHA loan limits, a first-time home buyer tax credit and a program to expand FHA that would allow more homeowners to refinance their mortgages.

“The $7,500 tax credit for first-time home buyers is a needed stimulus for a weak housing market,” said Gaylord. “This bill would extend the tax credit availability through June 2009, which would have a further positive effect on the housing market.”

Mary Trupo 202/383-1007 mtrupo@realtors.org

Well things ARE looking more and more positive and the great news is Washington is getting on the band wagon. FHA is here to stay!!!

See you around the neighborhood!

What You Should Know About A Buyer's Market

This is a MUST read by a informative journalist Broderick Perkins, click here

Be sure to check out his blog

See you around the neighborhood!

Why Buy a Home in Today's Market?

Buying a home in today’s market may be challenging, particularly for those with credit problems or little saved to put toward a down payment. But there are many factors impacting the current housing market that make buying a home today a viable option.

Here are five reasons for buying a home today:

1 Interest rates on long-term, fixed, and adjustable mortgages are at historically low levels. The rate on a 30-year, fixed mortgage is hovering just below 6 percent, while, by comparison, interest rates were hitting 8 percent and higher during the last market downturn in the late 1990s, and were between 10 and 12 percent at the height of the last housing boom in the 1980s. Lower interest rates make it easier to qualify for a loan, and your monthly payments are more affordable.

2 No one can put a price on the intrinsic value of homeownership. Home prices also reflect financial worth and, the good news is, across California the median sales price for a single-family home has been consistently rising for several decades. In short, housing remains a solid, long-term financial investment. While the pace of home appreciation has slowed over the last year, historical data suggest home prices will continue to appreciate over time. The projected median home price for a single-family home in California in 2008, for example, is $553,000. By comparison, the median price in 2000 was $241,350; $193,770 in 1990, and $99,550 in 1980. (source: C.A.R.)

3 The length of time a home remains on the market before it is sold has increased from
roughly two weeks in 2004 to between eight and nine weeks in 2007. According to the
unsold inventory index provided by the CALIFORNIA ASSOCIATION OF REALTORS®, it would take 16.3 months to sell all the homes on the market at the current sales pace, compared with 6.4 months in 2006. With more homes on the market for longer periods of time, you have more choices when it comes to selecting a home today.

4 The multiple-offer frenzy that dominated the latest housing boom has subsided, and there is
less pressure on today’s home buyers to outbid one another. REALTORS® in California reported that in 2007 only 28 percent of homes sold had multiple offers, compared with 57 percent in 2004. (source: C.A.R.)

5 The credit industry crisis that has made securing a home loan difficult for many has led to
heightened scrutiny of mortgage lenders. As a result, state and federal agencies have created
protections for home buyers that were not in place a year ago. The U.S. Federal Reserve, for example, has proposed a plan to require lenders to confirm a borrower’s ability to afford a mortgage before making a loan and establishing guidelines for explaining subprime loan terms in order to better educate buyers. Many new public education and awareness campaigns, such as Freddie Mac’s “Don’t Borrow Trouble®” campaign, have been developed to help you achieve the dream of homeownership without the financial risks that led so many borrowers into trouble in recent years.
http://www.yourpieceofcalifornia.com/

Need I say more.... This is the time to buy folks, so let's get the ball rolling. I have just been certified as a DOWN PAYMENT ASSISTANCE SPECIALIST and know many programs that you may qualify for that work with low interest FHA loans. Interest rates ARE going up, so don't miss the boat!!!

See you around the neighborhood!

The Skinny on Short Sales

• In a short sale, homesellers ask their lender to accept a buyer’s offer that is less than the amount needed to pay off the balance of the mortgage. Lenders who agree to a short sale also typically agree to forgive the remaining debt.
  
  


• Many call short sales a win-win for lenders and homeowners. The homeowner avoids foreclosure and banks avoid the cost of carrying the property through the lengthy foreclosure process, not to mention the hassles of selling an empty property in a market saturated with other foreclosures.
  
  


• On average, lenders lose approximately 19 percent of a mortgage’s value with a short sale but lose an average of 40 percent on mortgages that proceed to foreclosure, according to one source.
  
  


• The problem with short sales? Like other foreclosure mitigation efforts, the challenge is in determining which financial entity “owns” the loan and, thus, has the final say on a short sale offer. Banks also have been slow to ramp up internal processes needed to review and approve short sale packages. Delays and last-minute dickering often prolong or even derail transaction closings and creates frustration for potential homebuyers and their real estate agents.

To read more on short sales check out this great article:

Banks Miss an Easy Housing Fix

See you around the neighborhood!

First-time buyers find silver lining in foreclosure cloud

More than one-third of Los Angeles County families could afford to buy an entry-level home in the first quarter - 66 percent more than a year earlier - thanks to an epidemic of foreclosures that depressed prices, a trade group said Tuesday.

During the first three months of 2008, 35 percent of county households could afford to buy their first home, the California Association of Realtors said. That compares with 21 percent a year earlier and 28 percent during the last quarter of 2007.

The latest figures are the highest since the association began tracking housing affordability in 2003 - another hopeful sign for Southern California's troubled real-estate market, analysts say.

"I would personally wait a year, but if you are a buyer, this would be a good time to buy a home," said Dennis Torres, director of real estate operations for Pepperdine University's Graziadio School of Business and Management.

Tuesday's report came a day after Data Quick Information Systems reported that house and condo sales were 22 percent higher in April than in March. Most of the sales were in areas hard hit by foreclosures, with homes less than $500,000 accounting for 66 percent of sales.

Torres predicted that prices will continue to fall, putting houses within reach of more potential buyers but also causing anguish for homeowners watching their equity evaporate.

He cautioned, however, that worries about inflation could result in higher interest rates that would again put a drag on affordability.

"We haven't been visited by our old friend rapid inflation, but he's out there and coming to dinner," Torres said.

The association's First-time Buyer Housing Affordability Index reflects the percentage of households that can afford to buy an entry-level home - one priced at 85percent of the median price in their area.

That factored out to a $390,450 home in Los Angeles County in the first quarter. A family would have had to earn $74,320 a year to qualify for it.

A year earlier, before the credit crisis took hold and the real-estate market tumbled, an entry-level home would have cost $496,120. That meant the qualifying income level was $100,000 then.

The index assumes a 10 percent down payment and an interest rate of 5.65 percent.

The association index also demonstrates how the current market conditions vary from community to community.

For example, affordability ranged from a high of 64 percent in the High Desert, which includes the Antelope Valley, to a low of 29 percent in Monterey.

"Essentially we're working our way out of the downturn and coming back up," said Leslie Appleton-Young, vice president and chief economist of the Los Angeles-based association.

"The moderate to low part of the market - under $500,000 - is where you are seeing the activity. People are responding to lower prices," she said.

And mortgage rates are helping, too. The rate for a 30-year fixed-rate loan averaged 5.65 percent in this year's first quarter, compared with 6.3 percent a year earlier.

The association report also showed that:

The monthly mortgage payment for an entry-level home in Los Angeles County, including taxes and insurance, was $2,480.

Statewide, 44 percent of households could afford an entry-level home in the first quarter, compared with 33 percent during the last quarter of 2007. The increase was attributed to a 1percentage-point decrease in interest rates and a 14.3 percent drop in the entry-level median home price.

Statewide, the minimum household income needed to buy an entry-level home costing $356,350 was $67,830. The monthly payment would be $2,260.

In Ventura County, 43 percent of households earned the $86,400 a year needed to buy an entry-level home costing $453,890. The monthly mortgage payment would be $2,880.

In the Inland Empire, hard hit by foreclosures and price declines, 57 percent of households earned the $46,450 needed to buy an entry-level house costing $244,000. The payment would be $1,550.

Appleton-Young expects affordability to continue improving as more foreclosed homes come on the market and drive prices down further.

And that's good news for someone looking for a first home.

"I think they are going to make a dent in the supply. Is it going to evaporate overnight? Absolutely not. It will be a slow workout," she said. "We're still into the wave of foreclosures."

By Gregory J. Wilcox, Staff Writer
greg.wilcox@dailynews.com 818-713-3743

Ok first timers, what are you waiting for? Don't miss out on an excellent opportunity.

Start looking NOW!

Call me and I will help you get started!

See you around the neighborhood!

Home Buyers, Start Your Engines

If you were thinking of buying a home, start looking.

The latest data from the housing market shows that sellers, after months and years in denial, are finally giving in to reality and slashing prices.

There is a distance still to go. There may even be a lot to go. But the process, long delayed, is now well underway.

The National Association of Realtors on Tuesday released its long-awaited report on prices from the first quarter. The price drops were startling.

In many of the former hot spots, from Florida to Nevada to the Californian "Inland Empire," single-family home prices plunged by 20% to nearly 30% in a year.

Even more remarkable was how far prices had fallen just from the previous three months. In greater Las Vegas, for example, single-family home prices are down about 20% compared to the first quarter of 2007… and about 9% compared to last fall. In certain parts of California, the quarter-on-quarter declines are more than 10%. And there are similar pictures from Boston, Mass., to Tucson, Ariz., to, well, lots of places in Florida.

Nationwide, the decline from the previous quarter was about 5%, says the NAR. And this, ultimately, is good news. We know prices have to fall. The sooner it happens, the quicker the market can clear. We may not be at that stage known on Wall Street as "capitulation," but there is more than a whiff of it in the air.

Far too many people in the real estate market have spent far too long insisting that denial is just a river in Egypt. They refused to accept there was a bubble on the way up, and refused to admit it even on the way back down. (There's a few still out there: Last week I got an angry email from a broker who blamed the whole slump on "the media".)

It is simply remarkable how slow this bubble has been to deflate. That, bluntly, is part of the problem.

In the Las Vegas area, for example, NAR data shows single home prices peaked in early 2006. Yet by the middle of last year, when everyone and their Aunt Sally already knew we were deep into the biggest housing bust since the Great Depression, prices had only been cut by around 4%.
No wonder sales volumes collapsed and the number of unsold homes skyrocketed.
You can imagine what fantasies the sellers were clinging to. "Well, two years ago this home was worth half a million bucks."

The problem: So what? It doesn't matter what prices were three or two years ago. We were in a bubble. Market psychologists call this "anchoring", because people anchor their expectations to the past, and it's a fallacy.

Just five years ago, the same home sold for $270,000 and 10 years ago just $200,000. Are those relevant anchor points too?

Fact: Even though Las Vegas single family home prices are down about a quarter from their peak, NAR data shows they are still nearly 45% above their levels in early 2003.
The picture is similar in other former hot spots.

It remains to be seen how much further prices have to fall.
As always, quality and scarcity command a premium. But remember that a burst bubble is still a burst bubble and everything is affected.

Cisco Systems is a top quality technology company with real profits, but its shares still fell about 80% in the dotcom crash.

There is no desperate rush to buy real estate. (The best way to play the real estate crash was to buy the homebuilding stocks when they bottomed out in January, as written in this column at the time.)
But sellers have at least returned to the bargaining table. If you are in the market for a home, it is time, cautiously, to take a look and, maybe, see if you can play, "Let's Make A Deal."

Copyright: By Brett Arends, The Wall Street Journal

Buyers it's time to start shopping around, especially you first timers!!! As I mentioned before inventory is high, interest rates are low and FHA is going STRONG... Don't miss out on a great opportunity, FIND YOUR NEW HOME!!!

This Sunday, May 25, I will be holding an OPEN HOUSE at 800 Pacific Ave #305 between 12 - 4pm. Great buy @ $179,500! Scroll down to view slideshow of property.

See you around the neighborhood

Long Beach Pride 2008