Dennis' Mortgage Blog

For 11-14-08:  estate planning, taxes, etc.

IMPORTANT NOTICE:  The new loan limits for LA and Orange County will be $625,500; San Bernadino and Riverside will be $417,000.  The temporary loan limits of $729,750 for “conforming-jumbo” loans will no longer be available and all loans above $417,000 and below the new area limits must be funded by early to middle December depending on the lender. 

Question of the week:  If we don’t have kids do we need an estate plan?  Answer:  YES!  Well unless you want the State to determine how your assets are distributed should you have and accident and pass away or become completely incapacitated without an estate plan.  Family trusts and estate plans are musts for anyone who owns real property, or has any significant amount of assets.  If you do not have one and would like information or who to contact please call or email me. 

If you have a question you would like me to answer send it to me!

With the election over the front pages and nightly news leads have been taken over by the economy once again.  This week new big news is that U.S. automakers, having seen the $700 billion bail out package for banks and credit market participants, have their hands out for some of that government money.  While an important piece of the economy, the automakers are not the foundation of our economy like the credit markets are so their pressure for more money from Washington (they have received over $20 billion already this year) rings hollow with me; but I do not have a vote in Congress or a veto stamp on Pennsylvania Avenue.   Of more importance to our industry this week is news from Sacramento and more news from Washington.

First, the California legislature is working on a bill that would put a 120 day pause in the foreclosure process in California; when a buyer goes into default, the new legislation would add 120 days to the process for the lender before they can issue a notice of sale.  What this bill assumes is that lenders file their notices of defaults, notices of intent to sell and notices of sale within the proscribed timelines now on the books.  In the current environment almost every foreclosure situation already extends beyond the new time frames being set by the new legislation, but it allows them time in front of the cameras and the appearance they are engaged in doing something. 

If the California legislature really wants to make a difference they will pressure Washington to keep the loan limits where they are ($729,750) instead of a reduction to $417,000 in much of California and to $625,500 for the high cost areas such as LA and Orange Counties.  This will do more to stabilize our housing markets than delaying someone’s foreclosure by four months.

In Washington Treasury Secretary Paulson announced that the Treasure will not be using some of the $700 billion bailout package money to purchase defaulting assets from banks.  Instead funds will be used to purchase equity in banks and others in the credit industries.  This will keep the U.S. taxpayer from owning billions of dollars in bad mortgage debt and instead will give the U.S. taxpayer stock in companies that own billions of dollars of bad debt.  One effect of this is that the U.S. government will not become the owner of thousands of foreclosed properties, other than those they would otherwise own through HUD foreclosures.  Banks and lenders will continue to have control of their own foreclosed properties through their REO (Real Estate Owned) divisions.  Key to this transaction from the taxpayers standpoint is the ownership of stock and equity in the companies.  Many are screaming “socialism” at the transactions, but there is a huge difference between government stock ownership and socialism, primarily is that the stock ownership can mean influence but not total control.  As the companies become healthy and begin to regain profits and growth, the government can start to sell off the equity they own to the private markets and divest itself, and the taxpayer, of ownership---hopefully at a profit.

Looking forward we had horrible retail sales for October reported today.  While WalMart issued a statement this week that they are somewhat optimistic about the holiday retail season; while not saying they will break records they are saying they do not expect their sales to be as bad as many are predicting---a somewhat positive voice howling in the wind!  Because of the bleak retail sales there is some positive momentum for bonds and mortgage rates, but week over week we have not seen a drop in our rates.  There is more downward pressure on rates than upward pressure however.

A slight loss on FHA rates but otherwise despite another week of jerks and jumps in the markets we are flat for the week.

NOTE PRICING BELOW IS BASED ON 20% DOWN FOR CONFORMING, 3% FOR FHA, FULL DOC, AND FICOS OF 740 AND ABOVE (change from last Friday):

30 year conventional at 1 point 5.875%            ó 0.00%

30 year conforming-jumbo at 1 point 6.00%              ó 0.00%

30 year FHA at 1 point6.00%                                     é 0.125%

30 year jumbo at         NO PRICE CALL FOR INFORMATION  

Remember in the coming few weeks we have some turmoil built into the markets with the expiration of the conforming-jumbo loan limits and the introduction of the new limits in some markets.  If you have any questions on how you or your clients may be affected please contact me.

I will have limited ability to communicate on Saturday as I will be assisting in setting up for the Condit Spirit Awards Gala benefiting the Community Hospital of Long Beach Foundation and attending the event later in the evening.  It should be a fun evening and raise some funds for the “Community Dreams Fund” used to purchase equipment for Community Hospital.  If you would like to make a donation please contact me!

Have a great weekend,

Dennis

Remember this update is posted weekly on My Blog at www.DennisCSmith.com , feel free to forward the link to family and friends who may be interested in past commentaries.