March 2009 Orange County Homes Sales Report

The March 2009 Orange County Home Sales Report is out and sales have dramatically increased! In the zip code 92672 (San Clemente), sales have increased by 39% from last year with a medium price of $546,00. For a free copy of this report, please click here and will email you a free copy.

Sales Activity Has Greatly Increased

Courtesy of Kevin Budde, of Bank of America Home Loans. "As a local lender in the south Orange County market, we have see recently a tremendous increase of offers being made on properties. The strongest market is the sale prices under $500,000. Obviously, this is the area of the great affordability. Agents are reporting to us the frequency of multiple offer's being made when a new property comes on the market. This isn't just short sales being priced ridiculously low just to get offers in. These are properties competitively priced and many are equity sellers. FHA financing which will end up being 40% of the financing this year, has been a tremendous help with getting buyers into homes.

What we have really noticed oon our end, is the more frequenet conversations with clients telling us they believe the market is bottoming. 6 months ago everyone was asking why they should purchase now as they believed home prices still had room to fall. Now thy are concerned prices may not fall much more on the low end and they are concerned interest rates may move up as the economy improves. Both are legitimate concerns, rightfully so.

Unfortuanelty, we are no seeing as much enthusiam over the $1 million dollar price range. The cliens who purchase in the upper maret generally are either self-employed or hold executive titles with major corporations. Qualifying self-employed borrowers has become more difficult as they often have many write off's due to business expenses. The executives are not recieving the larg bonuses they were making or stock options they can sell at a large profit.

Never the less, the activity is real and it should continue to grow as the economy stabilizes and improves.

Current Market Trends: More Bank Foreclosures To Come

Here is the current market trends for the upcoming years It's forecasted that there are more foreclosures to come. Please click here for any questions regarding any of these points.

San Clemente Real Estate

The San Clemente market is starting to see a large number of homes come on the market as typically happens this time of year. I just noticed that there are 19 homes for sale in the Sea Pointe Estates area of San Clemente which is a very high number of homes for sale in San Clemente. Interest rates are still low and there is a general feeling that we have hit the bottom of this market so things are optimistic for the remainder of the year. As a San Clemente Realtor, I can answer any questions regarding the San Clemente Real Estate marketplace.

Obama's New Plan: Making Home Affordable Refinance

Do you Qualify for a "Making Home Affordable" Refinance? On March 4, 2009, guidelines were released under President Barack Obama's Making Home Affordable initiative, which is designed to help up to 9 million homeowners stay in their homes through refinanced mortgages or loan modifications.

To qualify, you must:

1) Owe between 80-105% of your mortgage.
2) Have a loan backed by Fannie Mae or Freddie Mac. Approximately 60% of single-family loans are backed by Fannie or Freddie, but a homeowner may not know this about their own loan. If you don't know, call Fannie at 1-800-7FANNIE and Freddie at 1-800-FREDDIE or submit online forms with Fannie and Freddie.
3) Have a conforming loan. That means a loan under $417,000 in many areas or up to $625,500 in high-cost areas like San Francisco, Boston or Washington, DC. Even still, the Zillow Home Value Index (median home value) for the city of San Francisco is $724,244, which says that lots of people have loans higher than the conforming limit. (Note: the conforming loan limit for certain high-cost areas of the U.S. for 2009 mortgage originations is now $729,500.)
Take this financialstability.gov Q&A to see if you qualify. If you don't think you qualify for a refinance, you might qualify for a loan modification under the plan.

Refinance Loan Overview
If You have an Adjustable Rate Mortgage (ARM) which was doing fine enough that you bragged about it but your loan is going to reset to a higher interest rate amidst market uncertainty and everyone is buzzing about it. Lying awake at night is interfering with your job, so you figure you'd better say goodbye to that low but fluctuating interest rate, and get a nice secure fixed-rate loan before the swing hits the sky.

This is a common scenario these days as interest rates inch up and many homeowners who opted for ARMs in the past 10 years are hoping to switch to a traditional loan.

Switching types of mortgages, as described above, is one reason people refinance, which is simply replacing a current mortgage with another. But there are others.

Reasons to Refinance Lower your interest, but keep your term: When rates drop you want to take advantage of it and lower your monthly payments, but keep the length of your mortgage.
Take care of that balloon payment: You opted for a short-term ARM with a balloon payment and the due date is looming, so you have to come up with a longer-term loan.
Shorten your term: Lower interest rates (or an increase in your income) mean you can pay down your principal faster.
Credit rating change: Take advantage of an improved credit rating and get out from under that high rate you had to accept when you bought.
You need cash: In some cases, you can refinance for an amount more than what you still owe on your home. Lenders limit the Loan to Value at no higher than 70 percent for this type of loan.

First Time Buyer Mortgage Protection Program

On Thursday, April 2, 2009 the Housing Affordability Fund has launched a new program designed to provide peace of mind to first-time buyers who are hesitant to enter the housing market due to concerns about potential job loss, and subsequently being unable to meet their monthly mortgage obligations.

To qualify for the Mortgage Protection Program, Applicants must:

· Be a first-time home buyer – someone who has not owned a home in the last three years.
· Open escrow April 2, 2009, or later, and close on or before Dec. 31, 2009
· Use a California REALTOR® in the transaction
· Purchase the property in California
· Be a W-2 employee (cannot be self-employed)

What is the Mortgage Protection Program?
The Mortgage Protection Program provides a combination of involuntary unemployment,
accidental disability and accidental death protection for qualified first-time home buyers.
The program is being offered by the California Association of REALTORS® Housing
Affordability Fund (“CARHAF”), to help build confidence in the purchase of a home and
to reduce the fear of foreclosure in the event of a job loss or accidental death or
disability. CARHAF has committed $1 million to provide this program to qualified home
buyers.

What are the benefits?
Through the program, first-time home buyers who lose their jobs or become accidentally
disabled may be eligible to receive up to $1,500 per month for up to six months to help
make their mortgage payments. A qualified co-buyer can also participate in this program,
for a reduced monthly benefit of up to $750 per month for up to six months in the event
of a job loss or disability. In addition, the program offers a one-time $10,000 accidental
death benefit.

How much does it cost?
It costs the home buyer absolutely nothing! If the home buyer is granted an insurance
policy, the insurance premium is prepaid for one year by CARHAF.

Who qualifies for this program?
An applicant must:
• Be a first-time home buyer who hasn’t owned a home in the last three years;
• Open and close escrow between 4/2/2009 and 12/31/2009;
• Purchase a primary residence in California;
• Be represented by a California REALTOR®; and
• Be a W-2 employee (i.e. not self-employed) but can not be a sole proprietor,
partner or controlling stockholder in the business in which you are employed, or a
dependent of a sole proprietor, partner or a controlling stockholder in the
business in which you are employed.
There are no income or home price caps under this program.

Are there any exclusions under the policy?
Yes. You cannot be self-employed, an independent contractor, a business owner, a
temporary or seasonal worker, an educational employee on a scheduled break, or work
for your immediate family. There are other exclusions such as voluntarily choosing to
become unemployed, expiration of employment contracts, willful misconduct, criminal
misconduct, death, disability, family leave, childbirth, pregnancy and war. See the
insurance policy for specific definitions of these exclusions.

How do home buyers apply?
Home buyers must apply through a California REALTOR®. The REALTOR® will submit
the completed application to CARHAF on the home buyer’s behalf. The application can
be downloaded at http://www.carhaf.org/.

When does the home buyer get the insurance contract?
An e-mail confirming coverage under the insurance policy will be sent to the insured and
a special web address and password will be included to use in order to access and
review the insurance policy within thirty (30) days after eligibility has been verified.

Must the monthly benefit amount be used to pay for the mortgage payment?
Yes. Under the CARHAF Mortgage Protection Program, a home buyer agrees to use the
insurance proceeds first to pay the mortgage, and the remainder however he/she sees
fit.

Are the benefit payments taxable?
It is possible that unemployment benefits may be taxable. Home buyers should consult
their tax advisor about any benefits received and determine what tax rules apply. The
plan pays regardless of any other coverage a home buyer may already have.

For general customer service questions, who do I contact?
Call Monica Rodriguez at (213) 739-8380, or email Ms. Rodriguez at monicar@car.org.
Be sure to mention that you are a CARHAF Mortgage Protection Program customer.
When can the home buyer receive program benefits?
The insurance policy requires a “vesting” period of six months before becoming eligible
to apply for benefits and a one month “elimination” period before payments begin. More
information about the policy can be found at www.carhaf.org or by calling Della Romero
at RealCare at 800-939-8088 or emailing her at dromano@realcare.biz.

How long will this program last?
Applications will be reviewed and insurance policies will be awarded on a first come, first
served basis until the program funds are depleted or until CARHAF discontinues the
program, whichever occurs first.
Questions about the Insurance Benefits

What is meant by Involuntary Unemployment?
Under this plan, Involuntary Unemployment is defined as totally and continuously losing
full-time employment as a result of:
(1) a permanent involuntary termination of employment; or
(2) an involuntary layoff or suspension of employment; or
(3) an authorized, unionized strike or labor dispute by a chartered or previously
organized trade or labor union; or
(4) a lockout, discharge of employees or temporary closing of business in response to
organized employee activity; or
(5) a state or federally declared disaster caused by a geological or weather-related
natural event.
Involuntary Unemployment does NOT include quitting, resigning, retiring, expiration of
an employment contract, being fired for cause, or being on leave due to accident,
sickness, disability, family obligations, childbirth, pregnancy, or due to scheduled
seasonal or temporary breaks.

What are the waiting periods?
Initial Vesting Period and Actively at Work Requirements. Before involuntary
unemployment insurance can be utilized, there is an initial Vesting Period of six (6)
months and a four (4) month "actively at work" requirement. These periods can run
concurrently, so you must be enrolled for at least six (6) months and also be working for
at least 4 consecutive months immediately prior to the date your involuntary
unemployment begins before you can have an unemployment event qualify for a claim.
If you become unemployed anytime before the initial vesting period is over, you will not
be eligible to file a claim, and you will have to return to work for at least 4 consecutive
months before eligibility begins. The unemployment claims procedure requires
documentation of registration with your state's unemployment office which will verify the
date of your unemployment.
Elimination Period. Once the vesting period and "actively at work" requirement has
been met, there is also a 30-day "Elimination Period" before cash benefits are paid. The
first 30 days of involuntary unemployment are not covered.

How long do I get involuntary unemployment cash benefits?
There is a six (6) month "Maximum Benefit Period" per unemployment occurrence. You
will be paid 1/30th of the monthly benefit amount for every day you are unemployed
(beyond the vesting and elimination period) up to a maximum of 6 months. You will be
paid in arrears, not in advance.
If you go back to work after having a claim paid, you have to return to work for at least
four (4) months consecutively, to "requalify" for benefits. But this will only apply if you
renew the coverage beyond the first year.

How do I file an unemployment claim with the insurance company?
Contact 1-800-888-2738 for a claims package. Please mention that you are a CARHAF
Mortgage Protection Program customer when doing so to ensure that your call is
forwarded to the appropriate personnel. You will need to complete the claims package
and submit it according to its instructions. You must register with your state's
unemployment division. The claims administrator will verify your coverage and start the
claims payment process. If the waiting periods are over and your claim is otherwise
valid, you will be paid a benefit equal to 1/30th of the monthly benefit amount for every
day beyond 30 days that you are out of work due to unemployment for up to six (6)
months. The insurance company does not pay claims benefits in advance.

If I get sick and am out of work do I qualify for Accidental Disability?
No, it only pays if you miss work due to an accident.
Is there a vesting period for the Accidental Disability?
There is no initial vesting period for this coverage but it does contain a 4 month "Actively
at Work" requirement among other conditions, exclusions and limitations.
Can I upgrade my benefits or renew the coverage at the end of the one year
program?
Prior to the end of the first year, you may be given the voluntary option to renew at a
"contributory" rate, which may include the same benefit package or an enhanced
package. Renewal of the product is subject to insurance company and/or CARHAF
Mortgage Protection Program availability. Methods for payment and other terms and
conditions will be provided along with the renewal offer.
The descriptions above are intended to serve as a summary and are not part of the
insurance contracts. You should consult your own insurance policy or certificate for the
specific terms which apply to you.

Jumbo Loans Are Back

Syndicated real estate columnist Kenneth R. Harney reported in a recent column that jumbo mortgage money is flowing back into the home loan market. This is great news for agents and their qualified luxury home prospects.
Jumbo loans are generally mortgages exceeding Fannie Mae and Freddie Mac's statutory high-cost market purchase limit. At the beginning of this year, the ceiling was $625,500, compared to $417,000 a year earlier. Congress has raised the upper limit in high-cost areas for Fannie, Freddie and the FHA to $729,750, a figure extended by Congress through the end of 2009.
According to Harney, new money is starting to flow into mortgage loans which are too large to be purchased or backed by Fannie Mae, Freddie Mac or the Federal Housing Administration. Major banks are starting to fund programs offering "jumbo loans between roughly $730,000 and $1.5 million, with fixed 30-year rates starting in the upper five percent range," said Harney.
Tim Kruger, a Westlake Village (CA) based Private Mortgage Banking officer for Wells Fargo, told a recent Institute training class in Beverly Hills that Wells Fargo is once again offering jumbo loans. Bank of America reports they will offer jumbo loans through their retail network and also through their Countrywide Home Loans subsidiary. Amsterdam-based ING Group has also begun offering jumbos. Rather than spinning these loans off to Wall Street, the lenders are expected to hold them in their own portfolios. Expect stringent qualifying requirements and minimum required down payments from 20% to 30%

New Supply of 'Jumbo' Financing In Pipeline. Bank of America and Others Are Stepping Up The Availability of High-Value Loans for Low-Risk Borrowers!

March 22, 2009
As Reported in the LA Times Reporting from Washington — New money is about to flow into an area of the real estate market that has been hardest squeezed by the credit crisis:
mortgages too large to be purchased or backed by Fannie Mae, Freddie Mac or the Federal Housing Administration.
Though the so-called jumbo mortgages are heavily concentrated in California, portions of Florida and the Northeast, higher-cost neighborhoods
throughout the country traditionally have depended on their ready availability to finance houses. But with the collapse last year of the private
mortgage bond market on Wall Street, home buyers, builders and refinancers who relied on jumbo financing were left with few sources -- except at
punitively high interest rates and huge down payments.
That's about to change. Major banks are heading into the jumbo segment, originating big loans at affordable rates -- not to then sell to Wall Street
bond traders but to keep in their own investment portfolios.
Bank of America, the country's largest mortgage lender, is rolling out a large program to finance loans between about $730,000 and $1.5 million,
with fixed 30-year rates starting in the upper 5% range. The loans will be available through the bank's retail network and through its Countrywide
Home Loans subsidiary. After April 27, Countrywide will be re-branded -- shedding the name it's had since 1969 -- and morph into Bank of America
Home Loans. Bank of America acquired Countrywide in 2008.
Barbara Desoer, the bank's head of consumer real estate operations, said there's "a real need" for capital in the jumbo arena, where interest rates last
fall sometimes exceeded conventional loan rates by three to five percentage points -- if financing was available at all.
Traditionally, jumbo loans have been defined as any home mortgage whose principal amount exceeded Fannie Mae's or Freddie Mac's statutory
high-cost market purchase limit. Most recently that ceiling was $625,500, up from $417,000. But in 2008, Congress temporarily raised the upper
limit in high-cost areas for both companies and the FHA to $729,750. In the economic stimulus legislation passed by Congress last month, that
maximum was extended through Dec. 31 of this year.
Though it will almost immediately become the biggest player in the jumbo loan segment, Bank of America will not be alone. With little fanfare,
other financial institutions have become more active. For example, ING Group, an Amsterdam-based banking and insurance conglomerate, offers
jumbos as large as $2 million through its online ING Direct unit. The minimum down payment for an ING Direct jumbo is 25%; Bank of America
quotes a minimum of 20%.
ING's jumbos typically are "5/1" and "7/1" hybrids, with a fixed interest rate for the first five or seven years, followed by an adjustable rate tied to
the LIBOR inter-bank index for the balance of the 30-year term. Current rates start around 5%.
San Diego-based Luxury Loans originates jumbo and "super-jumbo" mortgages of $3 million and higher in 50 states for a handful of large
commercial banks, which then put them in their investment portfolios.
Victoria Johnson, chief executive of Luxury Loans, declined to identify the banks that buy the biggest loans but said their underwriting standards can
be rigorous. For example, some investors want proof of substantial cash reserves -- at least six months of borrower income -- deposited even when
down payments are substantial.
Bank of America's new program requires hefty liquid resources -- six months of principal, interest, property tax and insurance payments in reserve --
plus fully documented income, solid credit scores and a full appraisal.
In Fort Collins, Colo., Brian Shaver, senior loan officer for 1st City Mortgage Group, originates jumbos through MortgageBase.com, selling them to
banks in the U.S. and as far away as Hong Kong. For a loan of $1.5 million to $2.5 million, MortgageBase wants a 40% down payment and liquid
reserves of 50% of the loan amount to qualify for a 4.875% note rate on a 5/1 hybrid.
Johnson says she welcomes Bank of America's entry into the mass-market jumbo arena. "We need them," she says, "there's been a really serious lack
of liquidity at this end of the market," which has hurt home prices throughout California as well as parts of the East Coast.
"The more competition the better," she says. Properly underwritten, with solid down payments, large reserves and high credit scores, "jumbos are
probably a smart move" for large and small banks that have capacity in their portfolios, she says.
Bottom line: If you've been postponing a purchase, sale or refi because the loan amount you need is too big for Fannie, Freddie or FHA, check out
the new, non-Wall Street sources of jumbos.

Just Listed: Two New Short Sale Listings: 14 Lansdale & 6521 Alexandria

6521 Alexandria - Huntington Beach, CA - $465,000

14 Lansdale, Ladera Ranch, Ca - $350,000

We have just listed two new short sales in Orange County. 14 Lansdale In Ladera Ranch listed for $350,000 & 6521 Alexandria in Huntington Beach listed for $465,000. Please visit http://www.bclh.com/ or email sam@bclh.com for more information.

California Budget Resolution - What It Means To You

Following several months of debate and delays, our state representatives in Sacramento delivered a 2009-2010 budget to Governor Schwarzenegger today. The governor is expected to sign the budget as presented. Although details are sketchy, the budget appears to raise existing sales tax levels by 1 percent, and places a 0.25-percent income tax increase across the board. Under provisions included in the new budget, the vehicle license fee will increase from 0.65 percent to 1.15 percent of a vehicle’s value.

The budget also includes: a tax credit (equal to the lesser of 5 percent of the purchase price, or $10,000) for the purchase of a single-family residence that has never been occupied, as a principal residence, between March 1, 2009, and March 1, 2010; and a 90-day additional delay in foreclosure sales, intended to force lenders to implement a proactive workout program that rewrites loans in default.

The state budget package also includes a limit on future spending as a trade-off for new taxes; this would have to be approved by voters in a statewide ballot at a special election on May 19. This approach also contemplates $5.5 billion in short-term loans and voter approval of a plan to borrow $5 billion this year against future lottery revenues at the same statewide ballot election.

Fearful that special interests may try to derail the effort at the ballot box, a provision has been included in the budget to extend the major new taxes by one to three years if the spending cap is approved by the voters. Voters also would have to approve some shifting of existing special funds for mental health services and child development programs to help balance the budget.

Should California receive more than $9.2 billion in federal aid, the income tax increase would fall from 0.25 percent to 0.125 percent, and $950 million in planned spending cuts to several programs, including in-home care and Medi-Cal, would be eliminated.

At the demand of Senator Maldonado (R-Santa Maria) -- who cast the final vote needed to pass the budget -- three additional propositions will be placed before the voters. If approved, these would institute an open primary system, prevent legislators from getting paid if the budget is not passed on time, and will stop salary increases to legislators if the state is operating in the red.

Although both the process and the result have left a lot to be desired, having a balanced budget in place is critical for our state in these challenging times. Our Sacramento staff and our member volunteers will continue to monitor, advocate, and report on the actions of our elected representatives in Sacramento. We’ll keep you apprised of additional information as it becomes available.

James Liptak
2009 PresidentCALIFORNIA ASSOCIATION OF REALTORS®

Obama Housing Plan Questions and Answers

Feb. 18 (Bloomberg) -- The following is a reformatted
version of questions and answers on the Obama administration’s
housing plan released today by the U.S. Treasury in Washington.

Questions and Answers for Borrowers about the Homeowner
Affordability and Stability Plan

Borrowers Who Are Current on Their Mortgage Are Asking:

1. What help is available for borrowers who stay current on their
mortgage payments but have seen their homes decrease in value?
Under the Homeowner Affordability and Stability Plan, eligible
borrowers who stay current on their mortgages but have been
unable to refinance to lower their interest rates because their
homes have decreased in value, may now have the opportunity to
refinance into a 30 or 15 year, fixed rate loan. Through the
program, Fannie Mae and Freddie Mac will allow the refinancing of
mortgage loans that they hold in their portfolios or that they
placed in mortgage backed securities.

2. I owe more than my property is worth, do I still qualify to
refinance under the Homeowner Affordability and Stability Plan?
Eligible loans will now include those where the new first
mortgage (including any refinancing costs) will not exceed 105%
of the current market value of the property. For example, if your
property is worth $200,000 but you owe $210,000 or less you may
qualify. The current value of your property will be determined
after you apply to refinance.

3. How do I know if I am eligible?
Complete eligibility details will be announced on March 4th when
the program starts. The criteria for eligibility will include
having sufficient income to make the new payment and an
acceptable mortgage payment history. The program is limited to
loans held or securitized by Fannie Mae or Freddie Mac.

4. I have both a first and a second mortgage. Do I still qualify
to refinance under the Homeowner Affordability and Stability
Plan?
As long as the amount due on the first mortgage is less than 105%
of the value of the property, borrowers with more than one
mortgage may be eligible to refinance under the Homeowner
Affordability and Stability Plan. Your eligibility will depend,
in part, on agreement by the lender that has your second mortgage
to remain in a second position, and on your ability to meet the
new payment terms on the first mortgage.

5. Will refinancing lower my payments?
The objective of the Homeowner Affordability and Stability Plan
is to provide creditworthy borrowers who have shown a commitment
to paying their mortgage with affordable payments that are
sustainable for the life of the loan. Borrowers whose mortgage
interest rates are much higher than the current market rate
should see an immediate reduction in their payments. Borrowers
who are paying interest only, or who have a low introductory rate
that will increase in the future, may not see their current
payment go down if they refinance to a fixed rate. These
borrowers, however, could save a great deal over the life of the
loan. When you submit a loan application, your lender will give
you a “Good Faith Estimate” that includes your new interest rate,
mortgage payment and the amount that you will pay over the life
of the loan. Compare this to your current loan terms. If it is
not an improvement, a refinancing may not be right for you.

6. What are the interest rate and other terms of this refinance
offer?
The objective of the Homeowner Affordability and Stability Plan
is to provide borrowers with a safe loan program with a fixed,
affordable payment. All loans refinanced under the plan will have
a 30 or 15 year term with a fixed interest rate. The rate will be
based on market rates in effect at the time of the refinance and
any associated points and fees quoted by the lender. Interest
rates may vary across lenders and over time as market rates
adjust. The refinanced loans will have no prepayment penalties or
balloon notes.

7. Will refinancing reduce the amount that I owe on my loan?
No. The objective of the Homeowner Affordability and Stability
Plan is to help borrowers refinance into safer, more affordable
fixed rate loans. Refinancing will not reduce the amount you owe
to the first mortgage holder or any other debt you owe. However,
by reducing the interest rate, refinancing should save you money
by reducing the amount of interest that you repay over the life
of the loan.

8. How do I know if my loan is owned or has been securitized by
Fannie Mae or Freddie Mac?
To determine if your loan is owned or has been securitized by
Fannie Mae or Freddie Mac and is eligible to be refinanced, you
should contact your mortgage lender after March 4, 2009.

9. When can I apply?
Mortgage lenders will begin accepting applications after the
details of the program are announced on March 4, 2009.

10. What should I do in the meantime?
You should gather the information that you will need to provide
to your lender after March 4, when the refinance program becomes
available. This includes:
• information about the gross monthly income of all borrowers,
including your most recent pay stubs if you receive them or
documentation of income you receive from other sources
• your most recent income tax return
• information about any second mortgage on the house
• payments on each of your credit cards if you are carrying
balances from month to month, and
• payments on other loans such as student loans and car loans.


Borrowers Who Are at Risk of Foreclosure Are Asking:

1. What help is available for borrowers who are at risk of
foreclosure either because they are behind on their mortgage or
are struggling to make the payments?
The Homeowner Affordability and Stability Plan offers help to
borrowers who are already behind on their mortgage payments or
who are struggling to keep their loans current. By providing
mortgage lenders with financial incentives to modify existing
first mortgages, the Treasury hopes to help as many as 3 to 4
million homeowners avoid foreclosure regardless of who owns or
services the mortgage.

2. Do I need to be behind on my mortgage payments to be eligible
for a modification?
No. Borrowers who are struggling to stay current on their
mortgage payments may be eligible if their income is not
sufficient to continue to make their mortgage payments and they
are at risk of imminent default. This may be due to several
factors, such as a loss of income, a significant increase in
expenses, or an interest rate that will reset to an unaffordable
level.

3. How do I know if I qualify for a payment reduction under the
Homeowner Affordability and Stability Plan?
In general, you may qualify for a mortgage modification if (a)
you occupy your house as your primary residence; (b) your monthly
mortgage payment is greater than 31% of your monthly gross
income; and (c) your loan is not large enough to exceed current
Fannie Mae and Freddie Mac loan limits. Final eligibility will be
determined by your mortgage lender based on your financial
situation and detailed guidelines that will be available on March
4, 2009.

4. I do not live in the house that secures the mortgage I’d like
to modify. Is this mortgage eligible for the Homeowner
Affordability and Stability Plan?
No. For example, if you own a house that you use as a vacation
home or that you rent out to tenants, the mortgage on that house
is not eligible. If you used to live in the home but you moved
out, the mortgage is not eligible. Only the mortgage on your
primary residence is eligible. The mortgage lender will check to
see if the dwelling is your primary residence.

5. I have a mortgage on a duplex. I live in one unit and rent the
other. Will I still be eligible?
Yes. Mortgages on 2, 3 and 4 unit properties are eligible as long
as you live in one unit as your primary residence.

6. I have two mortgages. Will the Homeowner Affordability and
Stability Plan reduce the payments on both?
Only the first mortgage is eligible for a modification.

7. I owe more than my house is worth. Will the Homeowner
Affordability and Stability Plan reduce what I owe?
The primary objective of the Homeowner Affordability and
Stability Plan is to help borrowers avoid foreclosure by
modifying troubled loans to achieve a payment the borrower can
afford. Lenders are likely to lower payments mainly by reducing
loan interest rates. However, the program offers incentives for
principal reductions and at your lender’s discretion
modifications may include upfront reductions of loan principal.

8. I heard the government was providing a financial incentive to
borrowers. Is that true?
Yes. To encourage borrowers who work hard to retain
homeownership, the Homeowner Affordability and Stability Plan
provides incentive payments as a borrower makes timely payments
on the modified loan. The incentive will accrue on a monthly
basis and will be applied directly to reduce your mortgage debt.
Borrowers who pay on time for five years can have up to $5,000
applied to reduce their debt by the end of that period.

9. How much will a modification cost me?
There is no cost to borrowers for a modification under the
Homeowner Affordability and Stability Plan. If you wish to get
assistance from a HUD-approved housing counseling agency or are
referred to a counselor as a condition of the modification, you
will not be charged a fee. Borrowers should beware of any
organization that attempts to charge a fee for housing counseling
or modification of a delinquent loan, especially if they require
a fee in advance.

10. Is my lender required to modify my loan?
No. Mortgage lenders participate in the program on a voluntary
basis and loans are evaluated for modification on a case-by-case
basis. But the government is offering substantial incentives and
it is expected that most major lenders will participate.

11. I’m already working with my lender / housing counselor on a
loan workout. Can I still be considered for the Homeowner
Affordability and Stability Plan?
Ask your lender or counselor to be considered under the Homeowner
Affordability and Stability Plan.

12. How do I apply for a modification under the Homeowner
Affordability and Stability Plan?
You may not need to do anything at this time. Most mortgage
lenders will evaluate loans in their portfolio to identify
borrowers who may meet the eligibility criteria. After March 4
they will send letters to potentially eligible homeowners, a
process that may take several weeks. If you think you qualify for
a modification and do not receive a letter within several weeks,
contact your mortgage servicer or a HUD-approved housing
counselor. Please be aware that servicers and counseling agencies
are expected to receive an extraordinary number of calls about
this program.

13. What should I do in the meantime? You should gather the
information that you will need to provide to your lender on or
after March 4, when the modification program becomes available.
This includes:
• information about the monthly gross income of your household
including recent pay stubs if you receive them or documentation
of income you receive from other sources
• your most recent income tax return
• information about any second mortgage on the house
• payments on each of your credit cards if you are carrying
balances from month to month, and
• payments on other loans such as student loans and car loans.

14. My loan is scheduled for foreclosure soon. What should I do?
Contact your mortgage servicer or credit counselor. Many mortgage
lenders have expressed their intention to postpone foreclosure
sales on all mortgages that may qualify for the modification in
order to allow sufficient time to evaluate the borrower’s
eligibility. We support this effort.

Courtesy of: Corissa Dailey
REO Loan Specialist
949-280-4410 Cell
949-341-7221 Office
866-671-8731 E-Fax

Open House: 24772 Anchor Lantern: Sat/Sun Feb 21st & 22nd: 12-4pm

Open House This Weekend: Feb 21st & 22nd. No appointments needed! Come See this great House in the gated community of Lantern Bay Estates in Dana Point which is 500 feet to the Harbor. Just let the gaurd know you are coming to the open house and they will let you through! Call Sam Smith at 949-291-0424 with any questions! Great Price at $1,499,000.

Located In The Ultra Exclusive Lantern Bay Estates - A Beach Bluff Gated Community Consisting of Only 45 Luxury Homes Next To The Dana Point Harbor & Doheny Surf Beach. This French Normandy Estate Has The Feeling of 1920's Historical Home With All The Modern Amenities. Exquisite Architectural Detail with Hardwood & Slate Flooring, Hand Painted Walls & A Barreled Brick Ceiling. The Living Room Is A Favorite With Floor to Ceiling Stone Fireplace, Hardwood Flooring & Italianate Light Fixtures. A Gourmet Kitchen with Black Granite Countertops, Stainless Steel Appliances, with a Viking Stove-Top and Built-In Refrigerator. The Kitchen Opens To A Circular Breakfast Nook & Large Family Room. A Fabulous Game Room With Brick Covered Ceiling & A Den Complete The First Floor. Upstairs Features A Master Suite With Built-In Entertainment Center & Tumbled Stone Master Bath. A Private Backyard with An Incredible Black-Bottom Pool with Waterfalls. No Ocean Views By Just 500 Feet To Harbor & Beach! Hurry On This One!

Just Listed: 24772 Anchor Lantern, Dana Point,CA - $1,499,000 - Lantern Bay Estates

We haven't seen prices this low in Lantern Bay Estates in a long time!!! This is a neighborhood where homes sell around the $4 million dollar range. This is a potential short sale so hurry on this one! Here is a brief description of the property: Located In The Most Exclusive & Desirable Locations In Dana Point; Lantern Bay Estates - A Beach Bluff Gated Community Near The Dana Point Harbor & Doheny Surf Beach. This French Normandy Estate Has The Feeling of 1920's Historical Home With All The Modern Amenities. Exquisite Architectural Detail with Hardwood & Slate Flooring, Hand Painted Walls & A Barreled Brick Ceiling. The Living Room Is A Favorite With Floor to Ceiling Stone Fireplace, Hardwood Flooring & Italianate Light Fixtures. A Gourmet Kitchen with Black Granite Countertops, Stainless Steel Appliances, with a Viking Stove-Top and Built-In Refrigerator. The Kitchen Opens To A Circular Breakfast Nook & Large Family Room. The Family Room Features Built-In Cabinetry & A Charming Brick Fireplace And Opens To The Formal Dining Room. A Fabulous Game Room With Brick Covered Ceiling & A Den Complete The First Floor. Upstairs Features A Master Suite With Built-In Entertainment Center & Tumbled Stone Master Bath. A Private Backyard with An Incredible Black-Bottom Pool with waterfalls. Separate Sitting Area with A Charming Fireplace For Those Cozy Gatherings. Lantern Bay Estates Is A Great Location Where You Can Walk To Great Restaurants & Quaint Shopping & Enjoy The Dana Point Harbor and the Beach!

Please contact Sam Smith at Beach Cities Luxury Homes at 949-291-0424 and visit http://www.bclh.com/

Lowest Price Home in SW San Clemente: $599,000

We haven't seen prices this low in a long time! The Southwest part of San Clemente is the most desirable part of San Clemente by the beach. All of the homes are custom and have a very quick and easy walk down to the beach. I sold the house next door 2 months back for $650,000 so this is a good deal. Give me a call at (949) 291-0424 or sam@bclh.com for more information about this property. Property photo courtesy of Prudential CA Realty.

Just Listed: 169 Avenida Junipero, San Clemente, CA - $1,299,000

Just Listed in the Highly Desirable Southwest San Clemete Area! Here is a brief description from the listing agent:
"HUGE PARK-LIKE BACKYARD! WALK TO BEACH! OCEAN VIEWS! UNIQUELY REMODELED! ROOFTOP DECK! Words Cannot Describe This Fabulous Home That Has Been Remodeled And Improved. The Owner/Architect Took A Small 800sq.ft. House And Created A 2300sq.ft. Masterpiece. Travertine Floors, Distressed Hardwood, Onyx Backsplash, Glass Pebble Tubs, Roof Top Deck, Artist Studio At Back Of Property...The List Goes On. Before You Buy...Be Sure To See This Property. Don't Miss The Cute Artist Studio At The End Of The Property Next To The Little Stream And Bench. The Lower Level Is Separate From The House And Is Plumbed For A Bathroom. Currently, It's A Game Room...But Could Be A Third Room. The Master Suite Has Ocean Views And Is Perched Within Huge Trees And Palms. The Picture Windows Create A Feeling Of Living In The Tropics. Climb The Staircase To The Rooftop Deck And Watch The Sun Set Behind Catalina Island. The Seller Is Motivated And Will Look At All Offers." Please Contact Sherry Bauer at Beach Cities Luxury Homes at 949-212-8911 for more info on this home!

President Bush Buys New Home in Dallas, TX

It has been reported that this property is currently under contract from President Bush and this is where he plans to retire. Click Here to see the full listing detail.

Just Sold - 11 Via Cartama, San Clemente, CA - $972,000

Just Sold! Owner had bought the property for $1,625,000 in 2006 and was sold as a short sale for $972,000. We are the short sale specialists and can get your home sold. If you need to sell, contact our office at 949.444.1901 for a free consultation on your property. Details on this home can be found at LuxuryRealEstate.com

Forster Mansion Exclusive Events: (949) 661-6676

The Forster Mansion is now the premier place to have your special event.

The Forster Mansion is conveniently located in San Juan Capistrano on Ortega Highway near the I-5 freeway - less than 30 minutes away from all of Orange County-

The Forster mansion is Orange County’s "new" preeminent venue for exclusive events. This private and gated indoor and outdoor venue can accommodate up to 400 guests for a private event.

The Forster Mansion is a National Historic Landmark, and a distinctly recognizable and proud structure located just over the freeway from the San Juan Capistrano Mission. It is a magnificent example of early California Mission Revival architecture. The garden transports you back to slower times. A wall in the garden is part of the original San Juan Capistrano Mission that Frank Forster owned. A magnificent Pine Tree frames and shades the Mission Wall and is recorded as the oldest Pine Tree in Southern California. They are protected, as is the entire Forster Mansion, as a National Historic Landmark.

The property is zoned A1 Commercial. In addition to weddings and receptions, our staff of professionals exceeds the expectations for Bnai Mitzvot, Corporate and Charity Events, Parties, Showers, Luncheons, all with attention to detail to make your celebration unique and elegant. Enrich your celebration by allowing staff at The Forster Mansion to bring your dream event perfectly to life.

Please contact them at (949) 661-6676 today.

Interest Rates Have Fallen Precipitously! Look at the Jumbo Rates as Well

So what happened? The Federal Reserve Board keeps saying the economy won't be able to fully recover unless financial markets resume moral functioning. The U.S. economy is under considerable stress and has downshifted further after the financial crisis of September. Interest rates though had continued to remain flat the last several months even with all of the dire news.

What happened is the Feds announced plans last week to buy up to $100 billion in agency debt from Fannie Mae and Freddie Mac, and to buy up to $500 billion in mortgage-backed securities.

Eventually, once this crisis has passed, the Fed will have to shrink its balance sheet by selling back the private-sector assets it has accumulated. But that is an issue for the future. For now, the goal of the policy makes must be to support financial markets and the economy. Courtesy of Kevin Budde of Countrywide Financial Services.

Just Listed: 221 W Avenida Cordoba, San Clemente, CA - $1,149,000

Just Listed: Large Two Story Home Just Steps Down To The Beach. Aspen Style Inspired Home with Seperate Guest House In The Back Ideal For Mother-In-Law Quarters. Property Features Large Open Wood Beam Ceilings With Peek Ocean Views from Upstairs Front Deck. The Property Is Completely Fenced In For Dogs & Children To Play. This Is One Of The Best Streets In Southwest San Clemente with Stunning Views Of The Ocean As You Come Down The Street. The Majority of Homes on This Street Are Large Two Story Custom Beach Homes With Great Curb Appeal. No Homeowners Fees & Ocean Side of PCH! See the posting at the Wall Street Journal's Real Estate Section and LuxuryRealEstate.com featured home.

Just Listed: 33642 Sea Point Drive, Dana Point, CA - $895,000

Just Listed: Luxurious Single Family Home in the Exclusive Gated Community of Waterford Pointe just a half mile to the beach! Beautiful Panoramic Views of the San Juan Valley & Coastline Ocean Views from your large view deck. Very Open Floor plan with beautiful hardwood flooring, custom travertine stone fireplace & floor to ceiling windows, surround sound audio with custom wall Plasma TV (included!). Kitchen is tastefully done with granite countertops, recessed lighting, and stainless steel appliances. The home features a main floor bedroom & bath with pull down murphy bed for maximum space utilization. Downstairs features two bedrooms with a large Master Suite with direct access to backyard. Master Bath features both Jacuzzi Tub & Shower and His & Her closets. Front & back decks have been installed with high quality Trex material. Waterford Pointe is a highly desirable neighborhood due to its proximity to beach & great ocean views and features a large pool, spa & tennis. Featured on Wall Street Journal's Real Estate Page and LuxuryRealEstate.com. Contact Sam Smith at 949-444-1901 to view this great home.

Interest Rates Drop 1/2% Down To 5.25% for 30 Year Fixed Loan!

What a great day for rates. We finally got what we have been looking for which is the government coming out and saying that they are supporting the mortgage market directly. They are doing this by putting out 600 billion dollars to purchase Fannie/Freddie/Ginnie Mae bonds. The impact was immediate. 30yr fixed conforming is at 5.25% 30yr fixed and FHA traditional 30yr fixed at 5.5%. This is a .5% drop from yesterday.

Cotton Point Estate - San Clemente - $15,000,000

"Stunning brand new construction in Cotton Point Estates--home of the Western White House!!! Spectacular ocean view estate situated on a 39,000 (approx.) sq.ft. parcel. This property is fit for royalty. Designed by respected local architect David York, this San Clemente Spanish Revival home features a formal reception room, 32-seat dedicated theatre plus lobby, spa with custom sauna, steam room, roman tub and rain showers. Six stunning bedrooms each with an en-suite bath. The property also includes a guest residence w/ a full kitchen, great room, laundry room, bedroom and bath. Other features: double offices, a full gym, recreation room, library and art/crafts/music room. The amazing grounds offer a resort quality negative edge pool with a sunken bridge, spa and palm islands, a large sports court, cabanas, fire pit, and fountains. Breath-taking ocean views from many rooms. Outstanding fixtures & finishes from Morocco and around the world". Listing text & photos courtesy of Keller William Realty.

High-end Real Estate Requires Marketing Touch

This Is A Great Article from Sunday's Daily Herald. "In today's market, it is actually easier to sell a $3 million home than to sell a $1 million home, according to two local luxury home experts.
"Sales in that top bracket are actually much more stable than those in the $1 million to $1.5 million category," said Carol Best of Keller Williams Success Realty in Barrington.
"In fact, until just recently, sales in the luxury market were quite strong, and going forward we hope that these buyers will go back to investing in real estate since the stock market has become so unstable," added Valerie Zelinski of Century 21 Roberts & Andrews in Crystal Lake.
According to Best and Zelinski, when you are selling a luxury home to top-tier clients, you are selling a lifestyle more than you are selling a home.
"Instead of looking at a house and asking yourself as an agent, 'What does this house have to offer,' you have to figure out who the buyer of this property will probably be, and target them in your marketing," Zelinski said.
Best and Zelinski are part of a rare breed in the Chicago area market. They are members of the Institute for Luxury Home Marketing, and while Best has earned the organization's coveted certified luxury home marketing specialist designation, Zelinski is still working on hers.
The institute is an independent organization that is not tied to any specific real estate brand, so membership is open to agents from all firms.
"Today's affluent are citizens of the world and the successful luxury agent must know how to reach them and what lifestyles they are seeking," said Laurie Moore-Moore, founder of the institute and author of "Rich Buyer, Rich Seller: The Real Estate Agents' Guide to Marketing Luxury Homes."
Among our affluent citizens, Best and Zelinski said, there are various distinct lifestyles and personality types that institute members are taught to recognize.
"There are the unmistakably affluent people like Donald Trump and Paris Hilton," Best said. "They have an annual income anywhere from $300,000 to $6 million per year and they are the ones who will want their home to have an exclusive design that suits their personality. They want to know what the home says about them."
Then, Best said, there are people who, like Oprah Winfrey, are called the "dependably affluent" people. They want their home to reflect true craftsmanship and want everything in the home to be functional and have a direct benefit.
Another category is the "economically affluent" people like Alan Greenspan and Suze Orman. According to Best, this type of client wants their home to have great value, but they want to be quiet about it.
Other affluent people want to be totally anonymous in their wealth - like Katharine Hepburn. She wanted a home that made her happy, but didn't want anyone else to know about it.
Wealthy people like Martha Stewart and Ralph Lauren crave a home that is unique and makes them feel good, but they don't want it to scream affluence. They want it to be tasteful, above all, Best said.
Finally, there are the Warren Buffets of the world who want a quality home that suits his needs but is understated.
"Warren Buffett has lived in the same house for 40 years and is perfectly happy," Best said. "That is something that people who spend hundreds of dollars at Starbucks every year can't begin to understand."
"When I take a listing, I have to profile the type of buyer who I think will buy the property," Best explained.
The more seasoned agent of the two, Best has been in the local real estate business since 1992 when she left Federated Department Stores' commercial real estate department after helping to purchase the land and build countless Main Street stores that are now Kohl's.
She heard about the Institute for Luxury Home Marketing at a National Association of Realtors convention and took the training in Dallas with other top agents from around the world in early 2006.
Zelinski, on the other hand, got into real estate 2 years ago and immediately decided to specialize in luxury homes. She read about the institute on the Internet and took the training in Tampa, Fla., this past summer.
"With your marketing you have to go out and grab a buyer and bring him or her to that property," Zelinski said. "You cannot just list this kind of property on the MLS (Multiple Listing Service) and expect someone to buy it."
Members of the Institute for Luxury Home Marketing know they need to invest in expensive Internet and other forms of advertising that will allow word about their listing to reach a national and even international audience.
They are also taught how to assess the actual number of potential buyers in a given market and how to price a property to maximize the buyer pool, Best, a certified residential specialist, said.
"Agents and sellers out there are just randomly picking listing prices. But there is a science to it, depending on your time frame," she continued. "I have done a major study of MLS listings and it taught me a lot about this market."
That has also given her the confidence to be frank with potential sellers about what they need to do to sell their property and refuse the listing if they do not seem willing to follow her advice.
"I have learned to let other agents spend their time and money on it," she said.
Best and Zelinski make sure they network with other luxury home specialists around the world and refer buyers and property back and forth.
"It definitely helps to reach out to other luxury home experts because you never know when they might have a buyer for one of your properties," Zelinski said.
"There is definitely a higher risk with spending the money to market these properties, but there is also a higher payout at the end," she continued.
Zelinski currently has listings in Wisconsin for a historic 21-room lakefront mansion in Sheboygan and for an island in Door County. The Sheboygan home is listed for $3.75 million and the island is priced at $3 million.
"They sought me out after seeing my marketing because they assume that their buyer will come from the Chicago area," Zelinski said.

If you are looking to sell your Luxury Home, please contact Sam Smith of Beach Cities Luxury Homes for unique selling ideas & pricing at (949) 291-0424 or email sam@bclh.com

Make The Recession Work For You!

Champions Love Recessions, Companies that out marketed and outsold their competition during slow times emerge from the recession with increased market shares and better long term profitability.

Studies in September 2008 by the Marketing Planning Institute, Mc Grawhill and Nielsen show that Marketing Investments are more critical in gaining market share during the downturn rather than when business is good. A Mercer company study shows 802 of the top 1000 companies that cut cost on marketing during a downturn couldn't turn profitable for 5 consecutive years after the recession

Here are the 3 ways you can Grow Market Share while others are loosing

1) Marketing Champions attack the market place in a downturn. They Carefully spend marketing dollars on online or email marketing activities where cost of customer acquisition is much lower. During tough times, Marketing Champions deploy counter intuitive strategies to Gain new customers and expand to global markets and expand market share. Pushing off new campaigns or Reducing Marketing is a sure shot way to ride your business to the bottom of the Totem pole. This is the time to make the investment in to Growth while most others are cutting costs.

2) Multi channel marketing solutions including email and online promotions help bring superior ROI at reduced marketing expense. Invest in Web projects to cut administrative and direct mail or telemarketing costs and take products to market faster.

3) Customers have more time now than ever to meet Sales Executives and discuss long term propositions. Some of them might be planning initiatives to develop and launch new products and you could get through to them at the right starting point. Target customers of competitors and particularly those of competitors who have pulled back and reduced their visibility. You can have Top Sales Managers call up top clients and add extra contacts to your clients to expand business within your client base.

Play Hardball, Be Relentless, Lot of Business is up for Grabs, Grab It! The Playing field is less crowded. Many of the competitors take a Survival approach in a Recession. You should take the Trivial approach instead of succumbing to Recessionary Pressures.

Welcome the Recession and Get to work on Grabbing Market share now!!

The Government Plan Will Work

Accoding to Kevin Budde, Assistant Vice-President of Countrywide, The government's steps will help the economy. They are pumping liquidity into the credit markets, keeping the businesses' doors open allowing them to make payrolls and setting a floor under housing. It seems it can't happen fast enough for the scared buyers.

Here's how I expect the situation to unfold. In a few weeks the Treasury's plan will start up. The government will begin buying up the bank's toxic debt, getting it off their books. The debt will be sold later hopefully at a profit paying back some of the national debt.

By Thanksgiving it will be clear how it's working. This process is known as reverse auctions. If these reverse auctions aren't enough to get the banks lending again, the Treasury will implement their second phase of buying bank's shares to provide the liquidity needed to keep the wheels turning.

By year-end, the credit markets should be functioning better. Commercial paper will be moving again. Long-term lending, corporate bonds will start picking up. It will take more months to return to normal however. The measures taken by the Federal Reserve, Treasury Department and central bankers around the world will avoid the feared major economic downturn.

The New York Times ran an article this morning with an interview of Warren Buffet. Mr. Buffet said he has begun buying U.S. stocks in his personal account which prior to yesterday did not contain stocks, only bonds. He stated he has a minimum one year window time frame. The record shows Mr. Buffet has only stated this previously twice since 1972 and he was 3 to 6 months early. His philosophy is sell when everyone is greedy and buy when everyone is fearful.

The fourth quarter of this year and the first quarter of next year will remain difficult times for both the stock market and the housing industry. However, in January the lending process will be showing the steps being taken now are working and come Spring of 2009 sales of existing homes will begin a steady and consistent increase in volume as the fear diminishes. It can't seem to happen fast enough with what we have been through and are currently experiencing. January will begin my 34th year in the mortgage lending industry.

There is a light at the end of the tunnel and I am anticipating many good years to come. I wanted to share a little insight. I hope it help clarify things. Thank you. Kevin Kevin BuddeAssistant Vice-PresidentPrivate Client GroupCountrywide Bank, FSB

11 Via Cartama - Bank Approval at $1,029,000!!

We have formal bank approval for this short sale at $1,029,000. The is located at the end of a cul-de-sac in one of Talega's most upscale neighborhoods! Call Sam Smith at 949-444-1901 for more details on this home. More photos can be seen on our website: http://www.bclh.com/ or LuxuryRealEstate.com

Smart Moves to Make After the Fed Decision

The Federal Open Market Committee, or FOMC, surprised us with by cutting the federal funds rate by 50 basis points after leaving it unchanged at the last three meetings. So what moves should you make with your mortgages, home equity, auto loans, CDs and money market accounts, and credit cards?
Mortgages:
Keeping track of the recent ups and downs of the U.S. financial system is enough to give homeowners and others a nasty case of whiplash. America's biggest financial institutions are struggling; hence, the great volatility in the stock market," says Bob Walters, chief economist at Quicken Loans.
All this financial tumult prompted the Federal Reserve to act with an emergency 50 basis-point reduction in the target federal funds rate Oct. 8. The announcement was a surprise, as it came in advance of the Fed's next scheduled meeting Oct. 28 and Oct. 29.
However, the rate cut itself is unlikely to impact mortgage rates significantly, as cuts in the federal funds rate do not directly affect mortgage rates.
This is especially true of fixed-rate mortgages. While it's true that such mortgages sometimes decline in the wake of a Fed rate cut, they are just as likely to rise.

By contrast, adjustable-rate mortgages can be a bit more sensitive to Federal Reserve rate decisions. Many ARMs are pegged to the London Interbank Offered Rate, more commonly known as LIBOR. LIBOR rates usually closely track the federal funds rate. So reductions in the federal funds rate often result in lower payments for homeowners with ARMs. This is one reason why people traditionally have forsaken the safety and security of a fixed-rate mortgage for the greater volatility of an ARM. Good candidates for ARMs typically include people who live in their homes now, but soon expect to move -- such as retirees considering relocation, empty-nesters thinking about downsizing and workers in temporary job assignments who expect to move soon.

Adjustable-rate mortgages also may make sense for somebody who has "a lot of money in the bank and a pretty secure job and (who) isn't afraid to take on the uncertainty that his rate and payment could change in the future as a tradeoff for a lower rate and payment today," Walters says. However, today's economic turmoil has made ARMs a bit less attractive than normal. The spread between LIBOR and the federal funds rate has become uncharacteristically wide, meaning many people with ARMs will not see their mortgage costs fall as they typically would after a Fed rate cut.

In addition, the spread between ARMs and fixed-rate mortgages has been paper thin, negating the major traditional cost advantage of choosing an ARM. For now, homeowners will have to weigh the risks and benefits of choosing an ARM and decide for themselves which option is best.

Take-Away:

After leaving rates unchanged for several months, the Federal Reserve surprised many observers by cutting the target federal funds rate by 50 basis points. The move is thought to be a reaction to recent turmoil in the world's financial markets. The central bank's rate cut will not have a direct impact on mortgage rates. Rates may fall, but they could just as easily rise.

Home Equity:

A lower federal funds rate is good news for borrowers who use home equity lines of credit. Rates on HELOCs typically are tied to the prime rate, which moves in tandem with the federal funds rate. So, if you need to borrow money, a HELOC may be your best option. Not only is the cost of borrowing now cheaper, but the interest associated with this type of borrowing is tax-deductible. However, homeowners would be wise to borrow carefully. All signs point to coming economic hard times, and any type of debt can be toxic in such circumstances.

Bob Walters, chief economist at Quicken Loans, counsels American consumers hoping for a quick rebound of the financial system to be patient. "I don't think there is going to be some kind of a silver bullet," he says. "Some of this is just going to flat out take time."

Take-Away:

The Federal Reserve cut interest rates after leaving them unchanged for months. That means borrowing costs on home equity lines of credit -- which move in tandem with changes in the federal funds rate -- should fall. The uncertainty surrounding the fate of the financial system -- and the U.S. economy -- means Fed rate hikes are exceedingly unlikely in the near future.
For this reason, HELOC borrowers should expect costs to remain low for some time.

Meanwhile, changes in the federal funds rate do not directly impact existing home equity loan rates (which remain fixed) or rates on new loans. However, these rates have been climbing in recent months and may continue to do so.

Auto Loans:

Shopping for an auto loan is the same no matter what the Fed does. To get the best deal, show up with a very good credit score and shop around. Randy Ellsperman, chief financial officer at FirstAgain.com, an Internet-based lender, suggests checking online before going to the brick-and-mortar banks.

Though slightly self-serving, it's good advice no matter which online lender you decide to visit. The applications are quick and offer an almost instant answer for borrowers. "Determine what your options are. Don't just go to one bank, don't just go to the dealership and take their interest rate," says Ellsperman.

"You would be forearmed to know what your options are, and a lot of companies will approve you prior to completing the auto transaction, so then you have at least one benchmark," he says.
Online or otherwise, an excellent credit score will net the best loan but a hefty down payment will also help. Buyers with less than perfect credit reports will almost definitely need to put down a significant down payment.

Take-Away:

Just like getting pre-qualified for a mortgage, shopping first for the loan will allow buyers to get an idea of the rates available to them as well as the amount of money a lender is willing to offer.
"The whole auto purchase is an exciting and emotional process. It's going to be one of the largest purchases someone makes," says Mike Celuch, chief financial officer of Paragon Federal Credit Union in New Jersey.

"That's why it's better to take time to know what rate they can qualify for and how much they can actually afford before they get too excited or emotional. At the dealer they will be a lot more comfortable making the purchasing decision on that car," he says.

Copyrighted, Bankrate.com. All rights reserved.

Senate Approves Plan To Help Stabilize Nation's Financial Markets

The Senate last night approved a revised version of the Emergency Economic Stabilization Act of 2008 in a 74 to 25 vote, clearing the way for full consideration by the U.S. House of Representatives. The House voted down an earlier version of the plan on Monday.The revised plan, which is designed to shore up the nation's financial markets, includes a temporary one-year increase in Federal Deposit Insurance Corp. (FDIC) caps for bank and credit union accounts. The cap increases are critical because they increase the funding backstop the public relies upon should their banks fail. The plan also includes extensions on several business tax breaks and adjustments to the alternative minimum tax (AMT) for individual taxpayers. These, as well as the FDIC cap changes, are amendments lawmakers believe will help bolster a smooth approval by the House.

5 Tips for Selecting The Right Luxury Real Estate Agent

5 Tips for Selecting the Right Luxury Real Estate Agent

You've made the decision to buy or sell a luxury home, and now it's time to select the real estate professional who can best assist you. Not all good agents operate effectively in the upper-tier market. It is a market segment that requires special competencies. Here are some general guidelines for choosing an agent to help you in the upper-tier residential marketplace:

1. Look for market knowledge and real estate skills. Not only should your agent know the city or area you are interested in, he or she should be knowledgeable about the price range you've targeted. A luxury home expert should be able to discuss the amount of inventory available, the average number of days a property is on the market before going under contract, the number of sales in the last 90 days, and the list to sales price ratio, all by price range. The more knowledgeable the agent is about the upper-tier market, the more valuable he or she can be as a resource for you. When you schedule your first meeting with a prospective agent, let the agent know you want an overview of the market conditions based on price range. A solid track record of success is also a clear indicator of market savvy. Don't choose an agent based on country club membership, the kind of car he or she drives, or similar criteria. Do choose your agent based on the answer to the question, "Does this agent have the skills and resources necessary to help me accomplish my real estate goals?"

2. Notice special luxury affiliations and designations and ask what they mean. To zero in on professionals who specialize in the fine homes and estates market, look at an agent's memberships and designations. Some agents are members of organizations specific to the luxury market such as The Institute for Luxury Home Marketing, which awards an international designation (Certified Luxury Home Marketing Specialist or "CLHMS") to agents who meet education requirements and have a track record of success. Some real estate companies offer special recognition to their associates who work successfully in the luxury market. Some firms have special luxury marketing programs available to their agents. All these memberships, affiliations and credentials add credibility.

3. If you are selling, ask that the listing presentation include a specific marketing plan for your property. Don't assume that the best marketing plan is always the most expensive. Listen to why the agent has included each element of the plan. Be sure that your home will be promoted Online as well as in more traditional ways. If the home is very expensive or the buyer is likely to come from outside the area, a luxury home magazine may be an important part of the plan. Recognize that the marketing plan in a fast-moving sellers' market will differ from the plan to be implemented in a slower buyers' market. Your agent should outline his or her proposed plan and explain it. Look at the quality of the marketing pieces the agent has used in the past as part of your evaluation process. Some agents will have access to special luxury home marketing systems with special marketing pieces that add value to their toolkit.

4. If you are selling, don't let an agent "buy" your business. Choosing an agent based on the highest suggested list price is counterproductive if the house is overpriced. The agent doesn't set the price-the marketplace does. If your home goes on the market as an overpriced listing, agents and their prospects will quickly move on to other properties that offer more value relative to cost. Will they come back if the price goes down? In many cases, no.

5. Rapport and clear communication are important. Buying and selling can be stressful. Choosing an agent with whom you communicate clearly will help simplify the process. Be sure he or she understands your needs and expectations and that you understand the process and the agent's expectations of you. In short, specialized knowledge + quality tools + clear communication = an agent who can deliver the results you want in the luxury home arena.