Getting Safely Out Of ARMs Way

Here’s another great way to protect yourself from the current meltdown in the housing market. If you own a home and have an adjustable rate mortgage (ARM) set to adjust higher you need to:

• Know your credit score.
• Know the contents of your credit report.
• Clean up your credit report and remove inaccuracies to maximize your credit score.

With the recent changes to the housing market the lenders have made changes to underwriting guidelines. Underwriting guidelines are based on your credit. When underwriting guidelines get more stringent it is the people with the better credit that continue to qualify for good home loans.

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Are We On The Rebound?

While the housing market continues to decline, there is a broad consensus among economists that a rebound will occur in 2008.

According to the ECONOMIC FOCUS, Volume 11, Issue 24 for the week of June 22nd, inorder for a rebound in 2008 the housing market must first bottom out. So, simple logic dictates that if we are a few months away from the rebound then we must be even fewer months away from the bottom.

“I still think we’re not at the bottom in terms of housing construction,” says Mark Vitner, a senior economist at Wachovia Corp. “Sales have to bottom out first. …We haven’t seen that yet. And then construction starts will probably bottom out nine months after that.”

If this holds true, a decline in new home construction should indicate that we are months closer to a bottoming out moving us closer to a recovery. Further, if there is a nine month lag in construction starts and if the industry will start its recovery in 2008 then simple math would place the bottom sometime prior to 2nd Quarter 08.

• May’s numbers were mixed, but in line with expectations, and reflected weakness in the South and West, offsetting construction gains in the Northeast and Midwest. The positive message is that numbers are mixed and not down across the board.
• Construction of single-family homes dropped 3.3 percent in May while apartment construction rose by 3.1 percent, another mixed signal. Historically, a hot housing market draws buyers from the rental rolls and causes a decline in apartment starts. This reversal indicates market corrections at the beginning of the manufacturing process, and as new home inventories shrink, demand will build in the coming months.
• Finally, interest rates remain flat. The Fed has held their rates steady for nearly a year with no indication of sharp rises in the near future. The last thing the Fed wants to do is take the remaining breath out of housing with higher mortgage rates.

Perhaps the soothsayers are correct and we are nearing the bottom and a recovery in the housing market is near.

Seniors in Rancho Cucamonga – Catch a Fox!

Since February of 1999 seniors have had the blessing of transportation to the grocery store and to the James L. Brulte Senior Center for the many health, wellness and recreational offerings. This transportation has been provided by the City of Rancho Cucamonga and Rancho Cucamonga & Fontana Family YMCA and it’s just getting better!

A door-to-door service, as of this summer it has been enhanced with added route services and dedicated Grocery Store and Medical Visit stops Monday – Friday. It’s even been given a whole new name and look – Silver Fox Express!

Seniors ages 60+ can take advantage of this service for an annual fee of $25*. Quite a bargain when you think of all of the traffic, parking, and expensive trips to the gas station you can avoid! “Fox Funds” are available to assist those seniors that qualify. The Silver Fox Express operates within the City limits of the City of Rancho Cucamonga and, for routine medical visits, certain destinations in Upland and Fontana as well.

Contact the James L. Brulte Senior Center for more information (909) 477-2780, or you can go into the Center – 11200 Base Line Road – to complete an application. Once you you’re signed up, call the Reservation Line (909) 987-0777 to schedule your pick-up! The Senior Center has an entire Resource Guide of additional transportation resources available, so make sure to get one next time you drop by.

4th of July Spectacular!

The City of Rancho Cucamonga Presents:

8th Annual Fireworks Spectacular

at the

Rancho Cucimonga Epicenter & Adult Sports Park

(8408 Rochester Avenue)

Featured Performers:

Surf City All Stars

Tickets on sale NOW!

Tickets $7* purchased BEFORE July 4th

Children age 2 and under are free (lap seating only)

ALL Tickets – $10* purchased ON july 4th (if available)

*Ticket surcharges apply

BUY TICKETS EARLY – show has SOLD OUT the last 3 years

Tickets available:

• Walk-up or via phone order at the Lewis Family Playhouse Box Office (909) 477-2752

• Or online here!

PARKING INFORMATION

Parking Lots Open at 5 pm * Stadium opens at 5:30 pm

For safety reasons, Rochester Ave.
(South of Foothill and North of Jack Benny Drive)
will CLOSE to PEDESTRIAN and VEHICLE traffic from 8:40 – 9:45 pm. If arriving AFTER 8:30 pm please use Arrow Route entrance (West of Rochester) to avoid delays due to Rochester closure.

Click HERE for area map and additional parking information.

Fireworks are illegal in the City of Rancho Cucamonga and the law will be strictly enforced. As an alternative, please visit our professional firework display.

Spider-Man Maguire Sells Hollywood Hills Home For 11.5 Million

Spiderman star Tobey Maguire sold his 3 bedroom Hollywood Hills home for an estimated 11.5 million dollars. The actor had previously purchased the 5,000 square foot home in Hollywood Hills in 2002 for 3.7 million.

Maguire, who was born in Santa Monica, Calif., spent a lot of time growing up in Oregon, and admits he’d like his daughter to spend her childhood well away from the madness of Hollywood. The little girl was born five months ago and the actor is already thinking about where he wants to school his child.

Top 10 Markets With Highest Mortgage Risk, Summer 2007

The PMI Group has come out with their summer analysis of the metropolitan regions that have the highest risk of housing losing it’s value in the next two years. The Inland Empire region of Southern California is leading the way followed closely by Phoenix and Las Vegas. All 3 of these regions experienced huge housing gains during 2004 – 2005 so expectations of a flat or negative period are not expected.

PMI Group is one of the largest underwriters of Private Mortgage Insurance so it is in their best interest to know and understand markets and calibrate their PMI rates to counter the risk that is faced.

Top 10 Markets With Highest Mortgage Risk, Summer 2007

1. Riverside-San Bernardino-Ontario, CA (652)
2. Phoenix-Mesa-Scottsdale, AZ (646)
3. Las Vegas-Paradise, NV (614)
4. West Palm Beach-Boca Raton-Boynton Beach, FL (607)
5. Los Angeles-Long Beach-Glendale, CA (586)
6. Santa Ana-Anaheim-Irvine, CA (577)
7. Oakland-Fremont-Hayward, CA (572)
8. Orlando-Kissimee, FL (563)
9. Sacramento-Arden-Arcade-Roseville, CA (560)
10. San Diego-Carslbad-San Marcos, CA (555)

Subprime Lending Fallout Goes Upstream to Take Down Two Major Hedge Funds: What does this Mean To Real Estate Investors?

By: Michael Cook

Two major Bear Stearns Hedge Funds face foreclosure due to their significant exposure to the subprime lending market. While this does not fall under the category of real estate investor, I spent last summer working for Bear Stearns and interacting with many of their hedge funds. Based on the very limited details of the stories out now, I cannot be certain if I have worked with these two particular funds. I can be certain; however, that it would not be a good time to be in the mortgage space at Bear Stearns.

In my three months at Bear Stearns, I met some of the smartest people in the businiess. While this is not an advertisement to work at Bear Stearns, I think they are a very well run organization with smart people. This of course begs the question, how could something like this happen to such smart people? Furthermore, with all of the subprime lending issues out there, what does this mean for borrowers who are less creditworthy?

Simply put, in my humble opinion, the subprime market will be doomed for some years (at least five or more). Since I know this site is filled with a ton of very smart mortgage brokers, I will outline my reasoning.

Consider the following information:

1. Many subprime lenders have filed for bankruptcy
2. Major buyers of Mortgage Backed Securities (like Bear Stearns) are having issues with subprime mortgages
3. Despite what the National Association of Realtors says, the housing market seems to be taking a slow and steady turn for the worse
4. Major Banks have tightened their lending policies

Let’s take an example of a typical transaction before the subprime fallout. A low creditworthy borrower applies for a subprime loan. Some intermediary or mortgage broker, supplies them with the best loan for them from either a bank or a conduit lender. The bank/conduit lender then sells the loan to an investment bank (like a Bear Stearns or Goldman Sachs) to free up more money to lend and to remove the risk off their books. Finally, the investment bank packages this loan in the form of bonds that investors looking for high rates of return are eager to purchase. While this seems like a complicated cycle, it actually works quite smoothly as long as there are investors looking to buy these loans.

Now reflecting today’s market conditions, the picture has a lot more holes. When the low creditworthy borrower applies for a subprime loan, many of the intermediaries no longer exist. Even if they try to go to a mortgage broker, they will be hard pressed to find a lender. If they do find a lender, this lender will have trouble moving the loan to an investment bank. Investors, who have been burned by heavy defaults ( i.e. Bear Stearns Hedge Funds), will not be looking to buy high yield bonds backed by subprime loans. Additionally, those who are looking will expect to pay deep discounts.

To put the final nail in the coffin, consider areas like California where subprime lending was a driver of the housing market. With very few alternatives, a lot of buyers will be sucked out of the market. Additionally, these buyers will probably not be back for a while. For those buyers expecting a quick rebound, think again. Until prices get to levels buyers deem affordable (meaning they can afford the down payment), a recovery simply cannot happen. I would love to hear from others who have different opinion, but as an investor, I am looking into apartments more now then ever. If buyers cannot afford to buy, they will have to rent.

Courtney Cox, Realtor?

It’s official. Courtney Cox has applied to get her Real Estate License in California. She is best known as Monica on friends, but she’s a pretty amazing Real Estate Flipper in Los Angeles. She recently sold her blockbusting Malibu estate around 30 million…she paid around 10 million for it a few years back. I suppose Cox decided to apply for a real-estate license so that she can get more of the commission on properties that she buys and sells. Shrewd, indeed! I wish her the best of luck…


How Would You Describe Courteney’s Efforts to Get a Real-Estate License?

Greedy

Smart

The Credit Card Companies Strike Again!

Hitting Consumers Where It Hurts

When it comes to developing innovative ways of burying consumers in debt, the credit card companies take the cake. According to MSNBC, credit card fees alone have skyrocketed from $2.6 billion to $21.5 billion since 1980. Plus, in addition to late charges, some credit card lenders add insult to injury by applying interest rates, in some cases as high as 31.99%, to an existing balance!

But, of all of the credit card companies’ sneaky tricks, the most egregious by far has to be the “universal default clause”, a provision that allows lenders to tack on an exorbitant “penalty” interest rate even when the borrower’s account is paid on time. That’s right. The default clause, a common practice among lenders today, allows for an increase to the ridiculous penalty interest rate if a consumer is late on any of his or her bills, including things like utilities. According to the advocacy group Consumer Action, while most default interest rates hover around 30%, it’s not uncommon to see a penalty rate of up to 35%. Some analysts have even reported rates in excess of 40%!

Buried in the fine print, the default clause and other terms and conditions of a credit card account can be easily amended by the lender with a simple written notification that usually accompanies the monthly statement. Some reports suggest that many consumers end up trashing the notification, along with the usual pile of unwanted marketing material enclosed in the envelopes, without ever reading it.

If you have large credit card balances and don’t think you can handle your monthly credit card payments doubling overnight, a Home Equity Line of Credit (HELOC) could be less expensive than credit financing, depending on your situation, and it may even be tax deductible.

If you or someone you know has an Adjustable Rate Mortgage (ARM) or Hybrid ARM that’s about to adjust to a higher rate, the universal default may be the last of your worries right now.

Did you know:

• Many ARMs holders are facing 50% or even 100% increases in their monthly mortgage payments once their ARMs reset?
• There is no cap on the first adjustment of most subprime loans?
• Credit standards are tightening and, with each passing day, you may no longer qualify to refinance?

Please call us right away for a free consultation. Together, we’ll sit down, analyze your debt, and make sure you’re taking full advantage of every opportunity available to you.

Time To Vacation . . .

But Where Does Your Mail Go When You Want To Get Away?

Think about what lands in your mailbox…bank statements, credit card bills, and maybe even DVD’s. Where do they all go when you’re gone? If you’ve been asking a nosy neighbor to pick up your mail – or worse, letting your mail pile up in the box-there’s a better option and it’s easier than ever!

Whether you’re on vacation or an unexpected business trip, you can rest easy knowing your mail is safe and sound by asking the Post Office to suspend delivery while you’re gone. They’ll hold your mail from 3 to 30 days, and then resume normal delivery on the date you specify. It’s convenient, easy to do, and most of all it’s SAFE!

Make It Even Easier with the Internet

Now you can notify the Post Office to hold your mail in two minutes flat without even leaving your house. Just hit this link, and you can quickly fill out the form online: USPS Mail Hold. If your area isn’t served online, simply call 1 800 ASK USPS (1 800 275 8777) and a representative can assist you.

Then, have the time of your life…without worrying about your mail while you’re gone!