Fed Trims Rate to 2%

(Bloomberg) -- The Federal Reserve lowered the main U.S. interest rate by a quarter of a percentage point to 2 percent and indicated it's ready to take a break after seven cuts since September.

``The substantial easing of monetary policy to date, combined with ongoing measures to foster market liquidity, should help to promote moderate growth over time,'' the Federal Open Market Committee said in a statement after meeting today in Washington.

``The committee will continue to monitor economic and financial developments and will act as needed to promote sustainable economic growth and price stability.''

While a nine-month contraction in credit and soaring fuel prices have pushed the economy to the edge of a recession, confidence has begun to return to financial markets. Inflation expectations are also picking up, driven by near record prices for oil and higher food expenses. Stocks pared gains after the decision, while the dollar and Treasury notes were little changed.

``The Fed is buying extra insurance against a deeper recession,'' said Arun Raha, vice president and senior economist at Swiss Re. ``The Fed will be reluctant to cut any further.''

The central bank added that ``financial markets remain under considerable stress, and tight credit conditions and the deepening housing contraction are likely to weigh on economic growth over the next few quarters.''

For the remainder of this story, visit Bloomberg News.

THE FACTS!

Considering all of the negative press the housing market received in late 2007, it's more important than ever for buyers to separate fact from fiction when deciding on a time to buy a home. This is intended to help home buyers assess the facts of the real estate market objectively.


FACT: The housing market is undergoing a natural cyclical correction. It's impossible to ignore the ongoing news surround the downturn of the housing cycle.
The recent "housing boom", which lasted from 2001 to 2005, was caused by low interest rates and a rapid increase in property valuations, resulting in high numbers of renters opting to buy. Three factors caused this decade's housing boom to spiral upward:

1) A run up in home-price valuations that spurred a high sense of urgency in home buying and selling


2) Poor lending practices, which caused many home buyers to secure loans that they ultimately couldn't afford over the long term.


3) Speculative purchases of homes also increased, with buyers investing in real estate with the hope of a quick return on investment.


Like the dot-com bust, the housing market has begun to correct itself after a number of years of unwise purchasing, but unlike what the media would have us believe, a correction in the housing market doesn't equate to a crash. Unfortunately, the ongoing negative news about the troubled areas in the U.S. has caused a ripple effect, with home buyers and sellers on a national level exercising caution before making a decision. This has caused an overall slowdown in the marketplace.
With homes taking longer to sell, the number of homes on the market has grown. In markets like California and Arizona where homes are taking much longer to sell than the national average, this has caused a glut in the marketplace. This equates good news for buyers who have more homes at more prices ranges from which to choose.

FACT: Low mortgage rates give buyers more house for their dollar.
With the 30-year fixed rate hovering between 6-7% - a 45-year low - qualified buyers continue to have access to incredibly low interest rates. This means that although housing prices have risen, monthly mortgage payments remain reasonable for those who look at real estate as a long-term investment. For example, today if a buyer secured a 6.5% interest rate on a 30-year fixed loan for a $300,000 home (with no money down), the monthly mortgage payment would be $1,896.20. In 1991, the same monthly mortgage payment would have bought a house worth only $230, 492 when mortgage rates were 9.25%. In 1982, when the 30-year fixed rate was 14.6%, the same payment would have bought a house worth only $151,657.

FACT: Heavy speculation and overbuilding result in an increase in foreclosures when prices go down.
The media has been focusing on the hardest-hit areas of the country that have seen a dramatic downturn in the market: California, Nevada, Florida, and Arizona. Over the past five years, these markets have experienced an abundance of new housing, a rise in investment properties and a rise in prices that was high above the national average.
Now that home prices are starting to drop and stabilize, the areas that went through a building frenzy and experienced the largest price increase are suffering a heavy devaluation in home prices, which in turn has caused homeowners to foreclose on loans.
Those suffering the most in California, Nevada and Florida are far above the national average of foreclosure with one out of every 325, 152 and 282 homes in foreclosure, respectively. Washington, Oregon, and Idaho are well below the national average of one in very 617 homes in foreclosures because fewer home buyers in the Pacific Northwest opted for subprime mortgages and because home values have continued to steadily appreciate. Washington has seen one in 1,072 homes in foreclosure, and Oregon and Idaho have one in 1,275 and 893, respectively.

FACT: Subprime borrowers get a reality check.
Then there are the problems that are affecting subprime borrowers: those who are considered at a high mortgage risk due to a past history of bankruptcy, delinquent loan payments and low credit scores. During the last number of years, some buyers n the U.S. qualified only for these riskier subprime loans to fund the American dream.
But, again, unlike the media's portrayal, the reality is that subprime loans comprise of only 9% of total loan nationwide and of those 9%, less than 11% of those subprime ARM and fixed borrowers have defaulted on their loans. The Pacific Northwest stands apart as its own micro-market, with more home buyers qualifying for prime loans. Homeowners in the Northwest have been able to successfully sell their homes for a profit or refinance to pay off their subprime loans.

FACT: Over the long-term, real estate has always appreciated in value.
The continuing appreciation of homes in the Northwest is not an anomaly. Real estate has always been on of the most solid investments in the U.S., because, after all, people always need a place to live. Real estate has less volatility than the stock market and over the historical long-term it remains a guaranteed return-on-investment. Take this example form NAR's Yun: If a buyer were to put down $10,000 for a down payment on a "typically priced home in a the United States at a typical appreciation rate of 5%...(he/she) would see a return of $110,300 after 10 years. The same $10,000 invested in the stock market appreciating 10% annually will result in $23,600."
As history has shown, for those who choose to keep their home for six to 10 years (and not flip for a quick profit) real estate investments do pay off, and pay off well. In fact, what we're seeing now is a repeat of a housing cycle we've seen before. In the early 1980s and 1990s, some areas of the country experienced the worst downturn they had seen in the last 25 years, which were caused by localized economic weaknesses and loss of jobs while on a nationwide average, others, including the Pacific Northwest were barely affected at all. But even those areas that were hit the hardest in the past experienced a historic uptick in prices, and then a continuing long-term appreciation.





Taken from RISMedia REAL ESTATE March 2008 pg 79-81

8 IMPORTANT QUESTIONS TO ASK IF YOU ARE PURCHASING PROPERTY

This morning on the Today Show, there was a segment on buying real estate. The guest's topic focused on important questions to ask when purchasing property. I took notes and want to share with you......


1) Why is the seller moving?

2) How long has property been on the market and how many price reductions have there been?

3) Please provide me a list of similar houses that have sold in the area.

4) What is the price per square foot for the neighborhood?

5) Are the owners behind on their property taxes?

6) Is this the most expensive house in the neighborhood?

7) What is the 3-5 year outlook for the neighborhood?

8) Ask about school test scores and proximity to transportation.

Know what you're getting yourself into!!! Due your due diligence!!!
And don't forget to call or e-mail us with questions, concerns and if you are ready to purchase or refinance.
(310) 649-2221 or nancy@harnanloans.com

NEW AND EXISTING HOME SALES DROP TO RECORD LOWS

Let's just get the uncomfortable news out of the way.....the sale of new homes dropped by 8.5% nationwide last month. The slowest sales pace since October 1991. Existing home sales fell by 2%. The median price of a home dropped by 13.3% compared to March 2007. the biggest year over year decline since July 1970!!!

All regions were down in March with the Northeast down 19.4%. Sales fell in the West 12.9%, 12.5% in the Midwest and 4.6% in the South.

Yes I know, this makes you want to go get in the bed and assume the fetal position, but we are SAVVY!!! OPPORTUNITY IS UPON US. Review your personal situations, make the neccessary adjustments and let's buy some property!!! Call us......we'll help you make it possible.

Spotlight on Los Angeles

Those who've gained the most often have the most to lose. Nowhere is that more clear than Los Angeles' housing market.

The price of the average L.A. home appreciated by more than 140 percent between 2000 and 2007, the nation's largest gain in that time.
Echoing their rise, however, home values in the city dropped more than in any other U.S. market between 2006 and '07.
Although prices are making their way back to earth, market stability might be a ways off. L.A. remains the least-affordable housing market in an English-speaking country, according to research firm Demographia. L.A. County also has seen a striking slide in home sales -- a decrease of about 50 percent between January '07 and '08.
At the end of 2007, lender apprehension toward jumbo loans also hurt selling chances for the city's midrange homes, which are priced similarly to high-end properties in other markets. A bill passed in February, however, temporarily increased the conforming limit for loans purchased by Fannie Mae and Freddie Mac and could aid this Southern California market in coming months.

Vitals
↑ Population: 3.85 million

• Population in 2000: 3.69 million


• Rank (U.S.): 2nd-largest


• Metropolitan-area population: 13 million


• Metropolitan-area rank: 2nd-largest

↓ Average commute: 29.2 minutes

• Average commute in 2000: 29.6 minutes


• U.S: 25 minutes

↑ Median household income: $44,445

• Median household income in 2000: $36,687


• U.S.: $48,451

↑ Median age: 33.4 years

• Median age in 2000: 31.6 years


• U.S.: 36.4 years

↑ Inflation (Consumer Price Index): 3.9 percent

• Inflation (January 2007): 3.2 percent


• U.S.: 0.4 percent

↑ Unemployment: 5.6 percent

• Unemployment in December 2006: 4.5 percent


• U.S.: 4.7 percent

Market

↑ National foreclosure-volume rank (state): 1st (out of 51)

• Rank in 2006: 2nd

↑ Foreclosure volume (state): 53,292

• Foreclosure volume in December 2006: 12,623

↓ Median Los Angeles County home price: $458,000

• Median home price in January 2007: $520,000


• U.S.: $222,000

↑ Median monthly housing costs: $2,313

• Median monthly housing costs in 2000: $1,598


• U.S.: $1,295

↑ Housing inventory: 22,165

• Housing inventory (January 2007): 16,155

↓ Homeowner-vacancy rate: 1.4 percent

• Vacancy rate in 2000: 1.8 percent


• U.S.: 2.7 percent

↓ Total home sales: 3,379

• Total home sales (January 2007): 6,805

↓ Single-family-residential building permits (December): 123

• Permits in December 2006: 159

↑ Housing units (including one-unit, two or more units, and mobile homes): 1.36 million

• Housing units in 2000: 1.34 million

Industry

Licensing: Brokers are regulated by either the California Department of Corporations, under the California Finance Lenders Law, or the California Department of Real Estate (DRE).

• The Department of Corporations says brokers can negotiate loans in connection with loans made by a licensed lender but cannot negotiate, broker or make any direct loans to banks.


• Through the DRE, a person with a real estate license can broker loans.

Résumé

• Demographics: 73.9 percent white, 12.4 percent black,4.4 percent Asian; 14.8 percent identify as Hispanic or Latino


• Top private employers in area: Kaiser Permanente, Northrop Grumman Corp., The Boeing Co., Kroger Co., Vons


• Largest U.S. manufacturing center

*Article taken from Scotsmanguide.com by Kristen Terry

Banks See A Bright Side In Dour Numbers

When JPMorgan Chase and Wells Fargo announced first-quarter profit declines of 49% and 11% today, executives from both banks tried to emphasize that the bad news was masking the good. To hear them tell it, the lingering credit crisis and the harsh toll it has exacted on U.S. banks are the very scenario these two companies have been waiting for.
Sure, losses from business and consumer loans, including prime mortgages, are accelerating and only expected to worsen as the year goes on. Not much of a surprise, of course, but the numbers are stunning. At JPMorgan, credit costs rose 61% from the same period last year, to $5.1 billion. At Wells Fargo, a $2 billion provision was three times greater than last year.
JPMorgan, which in addition to being a big mortgage and credit card lender, is the top arranger of leveraged loans, wrote down $1.6 billion worth of exposure, mostly to leveraged loans it still hadn't sold off its books. Exposure was $22.5 billion at the end of March, down just $3 billion from the end of last year.
But while rivals, including Citigroup, are courting private equity investors and others to buy bundles of leveraged loans at a discount, just to move them off their books, JPMorgan, which suffered less because it didn't have the massive exposures to credit derivatives holdings other banks had, views the market disruption as an opportunity.
During the quarter it added $3 billion in new leveraged loan commitments in markets that are otherwise crippled with uncertainty. "We're still open for business," JPMorgan Chief Executive James Dimon said on a conference call Wednesday.
The upbeat tone of the earnings reports Wednesday contrasts with the gloomy mood set Monday, when Wachovia surprised the market with a $393 million loss owing to $2 billion in market-related losses. The Charlotte, N.C., firm is feeling the heat of its ill-timed move into the California mortgage market through its acquisition of adjustable rate lender Golden West Financial in 2006.
Citigroup and Merrill Lynch are also set to report disappointing results this week, with some predicting another round of massive write-downs.
JPMorgan, meanwhile, is in the process of taking over Bear Stearns after its collapse last month, but that doesn't rule out other acquisition possibilities. It is said to have looked at acquiring Washington Mutual, the faltering Seattle thrift that recently arranged a $7 billion capital infusion from Texas Pacific Group. "You should assume we look at everything," Dimon said without commenting specifically on talks with Wamu.
Wells Fargo, based in San Francisco, has also seen its share of challenges and opportunities. It is massively exposed to the California real estate market, writing off $1.5 billion in loan losses, up from $715 million in the first quarter last year. It has $84 billion in home equity loans looming, more than one-third extended to Californians, and is trying to sell off some of that exposure.
But its revenues rose 12% during the quarter, to $10.6 billion. Ironically, mortgage refinancing activity is driving its business. Wells took in $132 billion in mortgage applications in the quarter, the most since the refinancing boom of fall 2003.
"We're very excited about our opportunities to continue to gain market share," said Chief Executive John Stumpf in a statement, "at a time when many of our competitors are struggling." Take that Wachovia.


Article by Liz Moyer Taken from Forbes.com

THE U.S. HOUSING MARKET & THE LIGHT AT THE END OF THE TUNNEL

NEW YORK, NY--(Marketwire - April 3, 2008) - Despite the influx of bad news about the U.S. housing markets, segments of the U.S. residential market are showing signs of stability and improvement. As the data are from January, the low point in the seasonal cycle, we could continue to see improvement in the coming months, according to the January 2008 RPX™ Monthly Housing Market Report released today by Radar Logic Incorporated.

"While we see similar pressures as have been reported by others, these may be the result of a specific confluence of factors which we believe need to be watched closely," said Michael Feder, Chief Executive Officer of Radar Logic Incorporated. "The spring is when most markets show seasonal rebounds and there is some evidence that we could observe this phenomenon in the next several months."

For more information visit MarketWire.com and RadarLogic.com.

CA PROFESSIONAL MORTGAGE SALESPERSON ASSOCIATION LAUNCHES MEMBERSHIP DRIVE AND CONSUMER INITIATIVE

Camariloo, CA - April 2, 2008 - The CA Association of Professional Loan Officers (CAPLO), a non-profit association, announced the launch of their 2008 membership drive and Consumer Initiative will begin mid April 2008.

Natalia Rudiak, membership marketing coordinator indicated that membership in the association is restricted to licensed Department of Real Estate (DRE) salespersons. Rudiak explained the association's position regarding restricted membership stems from an overwhelming degree of fraud and mistrust in the mortgage industry. Rudiak went on to explain the associations position that licensed, professionally affiliated loan salespersons are the safer, smarter choice for California consumers looking for real estate financing.

The Association's position is to support licensed DRE salesperson in their role as independent business persons who adhere to strict licensing and continuing education guidelines and regulations. Those salespersons that qualify for membership will enjoy full access to association benefits and resources including the association consumer marketing initiative.

Rudiak explained the association will be partnering with consumer groups and associations that agree with CAPLO safe lending objectives under its Responsible Lending initiative and will open a portal on the Association website where consumers can locate and contact DRE licensed loan salespersons directly from the site at no charge. "We want to provide a vehicle where consumers have trust in and are comfortable finding a professional loan salesperson". Rudiak explained further that consumers can check license status of any mortgage salesperson from the association's site, even non-member loan salespersons. Rudiak also added that statewide escrow, title, appraisal and notary companies have agreed to provide services under contract for association members.

For more information about CAPLO email info@caplo.org, or contact Robert Sofsky (888) 685-9476. The associations website can be accessed at www.caplo.org.

FED CHAIR BEN BERNANKE DEFENDS BEAR STERNS RESCUE

U.S. Senators Aiming for Quick Vote on Housing Aid

WASHINGTON (MarketWatch) -- Senators focused their attention Wednesday on how to help the troubled U.S. housing market, beginning legislative debate after Republican and Democratic leaders agreed to come up with a bill to aid homeowners and the market.

Senate Majority Leader Harry Reid and Sen. Mitch McConnell, the Republican leader, said they're hoping to come to a consensus "quickly" to vote on the bill on the Senate floor.

A statement from Reid and McConnell said the housing package aims to help head off foreclosures, boost mortgage counseling, revamp the Federal Housing Administration and extend tax credits to homeowners.

"This is a solid, bipartisan start to keeping families facing foreclosure in their homes, helping other families avoid foreclosures in the future, and helping communities already harmed by foreclosure to recover," the senators said.

Sens. Christopher Dodd, D-Conn., and Richard Shelby, R-Ala., are working together to come up with a bill, a Senate Banking Committee spokeswoman said.

Analysts and reports said that the bill could include a $15,000 tax credit for those who buy foreclosed homes, a $10 billion increase in the amount of mortgage-revenue bonds that states may issue for refinancing, $200 million for housing counseling and new consumer-disclosure requirements.

Meanwhile, Treasury Secretary Henry Paulson indicated that the Bush administration is willing to consider congressional plans to stem foreclosures by expanding government guarantees for mortgages, Bloomberg reported.

"I think you will continue to see flexibility as we learn and go forward," Paulson said in a Bloomberg Television interview in Beijing.

Analyst Jaret Seiberg of the Stanford Group Co. said both Democrats and Republicans saw political reasons to act.

"We believe rank-and-file Republicans feared a constituent backlash if they opposed legislation to help troubled homeowners just days after the Bush administration rescued Bear Stearns," he said in a research note.

"Democrats also realize that they need to enact legislation to help troubled borrowers or voters will hold them responsible in November," Seiberg wrote. "So we have a case where both parties need to get something done."

Meanwhile, a move to let bankruptcy judges alter the terms of some mortgages may not make the final version of the bill, reports said.

On Wednesday, a housing group called for more money from the bill to be directed to low-income people.

For more information, visit MarketWatch.com.