California Realtors Alert Alert Contact your State Assemblymen

REAL ESTATE LEGISLATION

ALERT

*** IMPORTANT ISSUE ***

There is Bill before the State Assembly, AB 2678, (Nunez) that would be disastrous for all Californians, upon the sale of any residential home, including rental property, as well as any commercial property sold in the State of California.

The provision of this Bill, AB 2678, would require that any property sold must have an Energy Audit at the cost of $400, this also establish a regulatory committee to monitor the point of sale audits and would also require a mandatory energy efficiency investment be made before escrow can close. 

This will further hurt our already crippled real estate market.  The Audit will cost California property owners $400, plus the cost of mandatory required energy compliance that may run into the thousands of dollars, and eventually get filtered down to the consumer,  which would also add to the price of any property in California.  Renters will feel the added expense in the form of possible rent increases.  Consumer goods and services will also be affected in the form of high prices, adding to inflationary pressure.

I believe in energy conservation, and while the overall intent is good, we do need to get off oil dependency, and OPEC, however, this legislation was not well thought out, and puts a tremendous burden on ALL California property owners and tenants alike. 

What we need is good old fashion common sense thinking, not special interest, self serving sacred cow politicians, that like to spend tax payer dollars to support expensive junkets.  What this legislation really is, is a back door tax revenue raising source.  Call it what it is.

You want more dollars into the state treasury, lower the Capital Gains tax to 5%, see how many people cash in on those rental properties that never get sold because of the Capital Gains Tax is too high to sell.  This also would add tax dollars to the state's fragile economy, as the property tax revenues  would increase on the sale.  The Federal Government could also rake in hundreds of billions of dollars too.  They just don't get it!

What California needs, as well as America, is not an overly regulatory bureaucracy, it needs pure down to earth leadership, for the good of the people, and all of the people, not just special interest.  We've allowed Special    Interest to dictate the lives we lead, such as, career politicians, oil companies, automakers, insurance companies, wall street financial CEO's that gave us the credit crunch, as well as the medical and prescription drug companies. 

If California, and the rest of United States is going to survive this decade, we better start to re think our responsibility to the American public.  Respect the little man who doesn't have a giant bankroll.  I believe      John F. Kennedy said it so eloquently, "Ask not what your Country can do for you, Ask what you can do for your  Country.  ... I believe what this meant was, respect your fellow man, give them a chance to dream, and do good, to build better things for the sake of doing for others, not to line your pockets.  Contact your Ca;lifornia State Assemblyman today to vote against Assembly Bill AB 2678.  Thank you.  " This will be probably my last comment"

Our State Legislators need to be revitalized. 

My name is Carlos Arvizu Sr.

Unemployed Realtor

I'm not running for Office, I can't afford it.

Panicking to a Confusing Market and Communications adding to the problem

Comment and Perspective on the Real Estate Market

Carlos R. Arvizu Sr.

Contributing Writer

Communication and Panicking in the Market Place

Regardless what market your in, the stock market, real estate market or the Lending Market, sometimes we need to stop and rationalize what's going on.

The problem in this day in age, is that too much communication that causes confusion.  Were bombarded with everyone's varying opinion   Radio, T.V. Newspapers, Magazines and the Internet, you name it, it's no wonder why we have so many indecisive decisions clouding up our vision.  Just this morning my wife had a panic attack about the money in her 401 k retirement fund.  She is getting mixed signals from every directions, and is in a panic, and doesn't know what she should do.

On the lending side, I was talking to a prominent loan officer, she says that she had several people who heard that the interest rates were dropping (confusing the short term Fed. Funds rate with the 30 year fixed rate), in particular, several clients, wanted to wait for the rates to drop lower, instead of locking in a good rate, the rates went up considerately, and unfortunately several of these clients lost a good opportunity for lower payments.

On the real estate side, I don know how many people are setting on the fence to buy, waiting for that great deal, unfortunately, some of these people won't know when the real estate market has bottom out, until it's already past them going up again. 

Warren Buffet, a Billionaire and one of the smartest business people, said this;

"Buy from Pessimist, and Sell to Optimist." 

Which means, if opportunity presents it's self buy now, and profit from panicking people.  Stay cool, don't panic.  Now is a great time to buy real estate, and get a good loan.

Carlos R. Arvizu Sr.

Pronounced   (R. V. Zoo)

Prudential California Realty/

The Mulhearn Group 

562-755-3856 

The GSE finally approves to raise conforming loan limits by the end of this week.

This morning, the Director of the Federal Government Sponsored Enterprise, Jame B. Lockhard, finally agreed to allow FannieMae and FreddieMac to set the Conforming Loan Limits higher than the current $417,000.  Unfortunately, it's taken 18 months of huges sacrafices for the real estate and mortgage industry to get to the brink of total disater.

Why it takes so long for these people to make a decision is beyond me.  It's very frustrating for homeowners, who are trying to buy or refinance.  History teaches us valuable lessons, I not sure if politicians, short term economist, and the news media ever stop to rationalize the long term affects on their opinions, that affect our daily lives.

Carlos Arvizu Sr.

Prudential California Realty

TheMulhearn Group

562-755-3856

UNDERSTANDING THE COMPLEXITY OF THE REAL ESTATE MARKET AND THE ECONOMY.

How fragile is the real estate market in comparison to the rest of the world of economics, and what does it take to get us back on track to stabilility and eventually growth?

To answer that, we must understand how all the componets work.

The Federal Reserve System and the Secondary Market (FannieMae and FreddieMac)  which is operated under the Government Sponsored Enterprise (GSE), these two entities have a direct influence on our economy. 

The Federal Reserve Systems controls the money supply that influences banks who borrow from them and other banks, short term interest rates, such as adjustable rate mortgages, hybrid type loans.  They also affect consumer loans, home equity lines of credit, construction loans, cars loans, and also has a direct influence on the prime rate charged to the banks best customers.

FannieMae and FreddieMac are operated under the Government Sponsored Enterprise, they're main objective is much like an overdraft protection to a checking account, as a way for the financial community to maintain liquidity in the mortgage market and maintain an equillarium to the credit market.  

This system works well, as the need for mortgage money is forever assisting not only first time home buyers, also move up buyers, as well refinancing home owners, who also benefit from FannieMae and FreddieMac purchasing loans on the secondary mortgage market, this systems provide the flow of monies to the primary mortgage market that conform to their established conforming guidelines. 

Under these guidelines, pools of loans are graded by the types of loans, interest rates, due dates, rate of return etc.  These pools are a mixture of perfoming assets, as well as non performing assets.  These pools are also known as Mortgage Back Securities.  These MBS are often purchased by investors, who may want a certain rate of return on their money, such as a retirement fund, 401K's, etc., in many cases, these pools provide a safe rate of return.

When both these entities are allowed to operate in unison, the economy can maintain growth, keep inflation in check by controlling the money supply. 

So what happened?  Why are we faced with so many problem loans, and really, how bad is it?  Why is the economy in such a mess, and cofidence very low?

Raising short term interest rates 17 consecutive times consecutive and waiting to see what was going to happen took a tremendus toll without counter balancing the fed funds rate could have soften the landing of home prices losing values. 

A changing of the guard with the Federal Reserve Chairman Ben Bernake taking over, and delaying of taking action to restore order.

The last piece of the puzzle is a mechanical part of the process, by that, raising the conforming loan limits that allow the secondary mortgage market to provide liquidity in states that are considered high cost states, like California, and New York to name a couple.  

As an example, When you make it difficult for home buyers to buy, whether they are first time buyers or not, refinancing or move up buyers, you restrict the flow of money, this is the life blood of the economy. Like turning off a faucet that flows water to the things that grow, without it, it can not grow, it dies.  That's exactly what happened. 

Look at what a slow down of the real estate market actually does, if a person can not sell, buy or refinance, this ulltimentally filteres down to national level, as well as a state level.  look at states like California, who depend on property tax revenues for everything, schools, health, and other services.  You can't run it efficently without the flow of money. 

Subprime was just the source of the fuel, Monitary policy, in effect was the match that lit the fire.  The Federal Reserve is now taking a pro active stance, Congress finalally understand part of the problem, by raising the Conforming Loan Limits, now it's up to the consumers to take advantage by looking at the opportunity that now exist.  

Homebuyers have a short window of opportunity to buy now with attractive rates and lower home prices, it won't last long.  This was a mechanical correction, that needed to be done 18 months ago, .... it's a SHORT TERM GIFT OF OPPORTUNITY TO BUY NOW.    

Election Day

Tomarrow, is the election day.  This has been a long awaited time for Californians to finally have a real say in the decision who to elect someone in the party of their choice, whether you are Republican, Democrate or affliated with the other parties. 

When Voting, distinquish hype and rederick to logic and reprocussion.  Remember when their is an Action, there is a Reaction.  Make it a productive day and week.  Lets hope and pray we made the right choice.

Carlos Arvizu Sr.

TheDon1950@aol.com

Conforming Loan Limits stymied by Senate causes concern for Stimulus Package.

According to the Chronicle Staff Writer James of the SFGATE.com GOP is flagging resistance to increasing the conforming Loan Limits that allow FannieMae, and FreddieMac to purchase loans above the $417,000 treshold.

Unfortunately, a handful of Senators that don't realize that a combination of events have literally killed economic growth for Calirornia and the nation and it will get worst unless they raise the conforming loan limits now.  We don't have the luxury of time to wait.  How many people have to lose their homes, jobs and any kind of stability before actions is taken to get the country moving forward.

What some government officials don't realize is that the laws they create or delay taking action on, ultimatly can and will affect us one way or another.  Most politicians don't seem to realize that not everyone who has a mortgage is in trouble.

Take for an example, 70% of the mortgages made are not necessarily first time buyers, quite a few of thoses trying to get a mortgage are existing home owners, who are trading up to buy a larger home for their famiilies or baby boomers downsizing to move into much more manageable smaller homes, or they are trying to refinancing for some reason or another.  (Send their kids to college, pay bills, investments, get a better rate to lower their monthly payments, etc.)

Only a small percentage of home buyers buy a home less than the conforming loan limits, especially in places like California, New York and Massacusettes to name a few, where the average medium home price far exceeds the Conforming Loan Limits.  there are approximently 30% of the population are renters, on average only 6% of those renters convert to home ownership, the remaining 24% will never own a home unless they inheiret it, or win the lottery.   

All of the mortgages made are not in default.  Most lenders on average have a 3% to 5% delinquentcy rate that sometimes end up a foreclosure on a normal basis, due to many reasons, loss of employment, divorce, loss of a spouse's income , medical bills, death, job transfer, and yes, some loans that shouldn't have been made, but that's not totally the reasons why we are having financial calmity. 

One of the reasons why we are in our financial mess is that the secondary market has not been allowed to relieve the pressure that many lenders are faced with today, liquidity. 

Some lenders have assets that are performing as scheduled, and some have not done quite as well, and some that have assets being foreclosed on, which are non producing assets.  When lenders don't have the ability to sell their loans (MBS) on the secondary good or bad, they are caught up in a situation, they can't sell,  they can't loan, they can only borrow into more debt, like Countrywide did back in August 2008 from Bank of America, which ultimately is, was or could be the end of Countrywide, with Bank of America standing in the wings to pluck the remaining assets, consolidate and put more people out of work.

When the secondary market and the monitary policy act in unison, the flow of money keeps the money supply moving in the right direction.(Buying and Selling, like a revolving door)......    

Just like the air in a balloon, if you don't relieve the air pressure that keeps building up in the balloon, eventually at some point it's going to pop.  A lender who can't sell their loans on the secondary market, is force to somehow liquidate those assets, good and bad just to survive long enough, before the government officials gets off their (#?#$?) to do something.  (That's why we are seeing so many lenders opting to do a short sale to salvage cash too keep them afloat).

The Secondary market is much like an overdraft protection to a consumer, when funds start to deplete to a certain level and a need for more capital to lend out is necessary, the Primary market (Lenders) will often Sell a block of loans called Mortgage Backed Securities (MBS) at a discount to FannieMae, and FreddieMac.  These Mortgage Backed Securities are a combination of performing and non performing assets. 

The Secondary market, which means FannieMae and FreddieMac Buys  these MBS.  These two institutions also Sells these MBS to investment pools on wall street.  The secondary market acts much like a broker, they get paid for Buying and Selling.  This sustem works well when the flow of money keeps revolving, that's also why the Federal Reserve System also has so much leverage on the flow of money with their two key interest rates the Federal Funds Rate and the Discount Rate. 

The Biggest Problem occurred, and no one saw it coming, subprime loans, with an over zealous Wall Street, along with the Mortgage market credit crunch meltdown, couple that with the Federal Reserve raising short term interest rates (Federal Funds) for 17 long continuious months of increases of a .25% basis points. 

The results, of these interest rate hikes, were slow in nature, starting in 2004, the real estate market continued to trive, 2005 was a banner year, the rate hikes continued, slowly chipping away as the rate of appreciation slowed to a crawl in 2006, asking prices of homes began to drop, as the demand began to dry up, consummer confidence withered with an over zelious news media, grabing as many headlines to gather media attention to ultimately sell their advertising message, like a feeding frenzie, this provoked many political leaders to jump on the bandwagon, without looking at the underlying problem. 

As property values started to decline, we were on a direct collision course with the Home Equity Lines of Credit (HELOC). These 100% type financing had two loans, an 80% 1st Loan and a 20% 2nd loan, because of the 20% 2nd loan, there was no requirement to have mortage insurance.  The other part of this equastion leading us into a fast moving freight train is that when the loan is scheduled for recasting or resets, that's when the deferred interest reaches a 115% of the original loan balance, the mortgage is reamortized at the remaining balance plus any deferred interest, and usually at an adjustable interest rate based on the most commonly volitle Libor Rate, and ooften at a substancially higher monthly payment. 

This is a perscrition for disaster, not only for the 3% to 6% directly affected with this type of loans, the entire system is currently bottleneck.  While those politicians are still  trying to debate what to do, it a break down of the system.  The breakdown is this, The Conforming Loan Limiits need to be raised that will allow the flow of money to circulate the way the system is set up to do.   

With the conforming loan limits at current levels of $417,000, the people who want to buy, sell, move up, move down or refinance can't.  Can't Can't Can't. 

20 hours ago, the GOP have expressed opposition to the raising of the conforming loan limits.  This is out right stupitity on our elected leaders, they are not clearly looking at all the damage that has been done or what further damages that rest with the outcome.  The dollars, will drop like a bomb, it's already taken a beating against other currencies, this is sheer political bull, that makes no sense?  

Any attempts by the federal reserve to have lowered interest rates will all have been in vein.  I don't side whether you are a Democrat or Republican, which side or philosophy you have, We are all Americans, and deserve to have a government that's for it's people.  A hand full of United States Senators, are keeping the Country from moving forward.  Bankrupting the entire economy, doesn't make a lot of sense, doesn't it? 

My name is Carlos R. Arvizu Sr

562-755-3856 

Why do we wait for the economic problems to kill us?

The problem of waiting, is one of the reasons why the real estate and mortgage industry is such a shambles.  If you know what the problems are, take decisive action to fix the problem. 

Unfortunately, too many people in government, analyst, politicians, (and news media included which exacerbate the problem and prolong the agony without rationalizing what are all the components of the problem.  

There are too many people in the leadership position, that sometimes second guess, procrastinate or are opportunist for self purposes, until the problems are so out of control, that eventually everything's comes to a halt, making it worst for everyone.

Like in the case of the Federal Reserve, for an example, they always take a wait and see attitude, which is one of the components that was partially to blame for the credit crunch and why were in the mess today. 

They increased the short term interest rates for a long 17 months, and waited for the reaction to be full blown, instead of adjusting interest rates that would soften the real estate market to a soft landing.  What did they think was going to happen?

They waited well over a year and several months before they started to lower the interest rates.

It's like a car, ... if you know your brakes are in need of repairing, and find it difficult to come to a stop, you don't wait until you killed some innocent family, that happens to be in the way of your fast moving car.  The momentum will finally catch up to you.  Why does someone have to get hurt or killed, because your brakes failed? 

The same thing is happening to the country.  The other part of the equation is the lending industry is stymied because of the conforming loan limits are far below, the threshold of the medium home price.  How many people have to lose their homes, how many people have to lose their jobs, how many lives do you destroy.  I am at the point of running for office myself, but unfortunately, I don't have the financial backing or time.

The reality is self evident.  Why do you think, we are having all of these problems with mortgages, home values dropping, people losing their jobs, recession and so forth.  Not taking action, or relying on someone else to fix the problems we have.

Carlos Arvizu Sr.

TheDon1950@aol.com

Open Letter Regarding Stimulus Package and the effects

The Honorable George W. Bush                                                                                                   President of the United States

Dear Mr. President,

It's with respect for the office of the presidency, I write this letter.  I believe, as well as many others who are in the same opinion, that the stimulus package you propose who a couple of days ago would put the nation in debt without any sizeable contribution to growth to keep us out of recession.

It makes no sense to put us in debt, without creating a real stimulus package to put people to work, and grow the economy.  

We have far too much debt, that this may create pandemonium throughout the world's economies.  In order for the United States on the growth mode is to provide real teeth in an economic stimulus package is to create real Jobs.  To point out a few examples of this;

1.  Americans are losing good paying jobs to foreign countries, as of such, why not put before congress a tax rebate or credit that rewards U.S. taxpayers for buying products that are made up at least 51% that are produced here in the United States. 

2.  Energy efficiency should be rewarded to taxpayers in the form of a credit or rebate as a stimulus to reduce our dependency on foreign oil.

3.  Credit those automakers that Increase the Standards for fuel efficiency vehicles, increasing mileage per gallon, thus reducing fuel consumption, as well as tax credit or rebate those taxpayers who purchase energy efficient cars and trucks.

4.  Credit energy companies for Research and develop crude oil and natural gas here in the United States as well as explore other fuel alternatives to shake us from foreign oil interest. 

5.  Increase the Conforming Loan Limits in states like California, which exceed the average median home prices that of states like Alaska, Hawaii, and the Virgin Islands.  It makes no sense to why Mr. Lochard is refusing to acknowledge that California is a high cost state. 

The conforming loan limit for FannieMae and FreddieMac is set at $417,000.  California median price has been more than $500,000.  Most of the lenders that have been affected by the so called credit crunch, subprime debacle really stems from actions by the Federal Reserve acting to slow in adjusting the fed funds rate, hanging out to dry many lending institutions, such as countrywide for example. 

Now that the federal reserve has lowered the Fed Funds and Discount rate by .75 basis points, the only thing stopping the economy from moving foreword is the raising of the Conforming Loan Limits.  This should get the country back on the positive track.

I am forwarding this letter to the Federal Reserve Chairman, as well a few Congressional leaders as well as a few key senators.  I thank you in advance. 

Very truly yours,

Carlos R. Arvizu Sr.

TheDon1950@aol.com  

What's wrong with the our Policy makers?

A State of Confusion.  The Leadership of our Country is beyond confusion and comprehension. 

What Fed. Chairmen Bernake said that the Country needs a stimulas to keep us out of recession, is true, However, the political leadership in office, and the wantabe'e are all opportunist without rationalizing the damage that they would be doing to the country if they gave a rebate to everyone. 

Four or Five years ago, President Bush gave a credit of a few hundred dollars to everyone on the tax rolls, all it really did was push us into more debt.  Rebates or credits should be a stimulus for Job Creation and Growth Opportunities for the country. 

Look at the cost.  Let's say a credit went out of $800. to 150,000,000, thats' 120,000,000,000. that does nothing but put us in debt.  You want a stimulus do this:

1.  Since we have an Automotive Manufaturing base in the United States that have Jobs tied to it, give a credit to the taxpayers who invest in buying cars that are made in the United States.  Granted that there are foriegn companies already providing us with automobiles that are partially made here in the United States, any auto manufacture that has at least a minimum of 50% made in the USA, consumers of those vehicles would be entitled to receive a credit or a rebate.  At least it provides Jobs here, instead of being outsourced.  

2.  Energy conservation is another form of producing Jobs and reducing our dependancy of foriegn oil.  Create a credit that a taxpayer would be entitled to receive a tax credit for insallation of energy efficientcy within their homes.  This helps the building trades create more Jobs.

3.  Get real with the Corming Loan Limits that FannieMae and FreddieMac are authorized to purchase on the secondary market.  In states like California, which is the third largest state in the country, which is and has always been a high cost state, over and above Hawaii, Alaska, and Guam.  

The California economy is 20% of the nations income.  When President Bush's appointee, James Lochard, who is the director incharge of the Federal Housing Enterprise Oversight Committee, refues to raise the conforming loan limits above the $417,000 treshold, he is leterally causing the United State and California in to bankruptcy.  

The Conforming Loan Limits that FannieMae, and FreddieMac are allowed to buy on the secondary market helps the flow of money into circulation, which is why the Federal Reserve System can manuver it's two key interest rates to help keep us out of recession and keep inflation in check.   

The system can not work efficently without the flow of money, the way it's intended to be, our entire Economy is affected and at risk from bankruptcy, from the builders, to the guy who cuts your hair at the local barber shop, people rethink their buying decisions, when consumer confidence is shaken.  

When people can't make ends meet, and have to struggle just to survive, this is damaging to the country.  People who are unemployed, don't produce.  The very fabric of wealth of the United States economy is in our homes.  Countrywide, and other lending institutions are having problems, because the money supply is dried up, and without a revolving flow of capital that the secondary market provides.

Carlos R. Arvizu Sr

562-755-3856

TheDon1950@aol.com

Why the Sky is not falling. It's correcting it self.

Hi Dave D, in the San Gabriel Valley & my fellow active rain associates,

Wishing you all well for the holiday season and for a better 2008. 

In responce to Dave D. of the San Gabriel Valley, that the Sky is falling and what to do?

I can not afford to take my house off the market at this time, however I will tell you what I am going to do, however, before I do that, I want to point out a few things, why were here, and the sky is not falling, just correcting itself.

For months I have been telling people, that the foreclosure problem is only part of the problem, and not as bad as some people think.  I feel very good about that data I have been assembling to convince some of our law makers that it's not as bad as most people think and that it's more media hype than anything. 

This morning I heard Rush Limbau addressing  one of his radio callers that 94% of the mortgages made are doing O.K. with their mortgages and that only 5.9% or so, are having some form of difficulty.

Normally, in any market, there is a 3-5% degree of difficulty with the mortgages made, due to many factors, such as Death, Divorce, Illeness, Loss of Job, or transfer or a dozen or so S__t Happens.  What it looks like, only 1% or 3% are facing the problem with the sub prime loan debackle.  Not the sky is falling.

When the media picks up on something that will capitalize on headlines, and politicians are not to far behind to follow, that usually is enough to the stampied the cattle (people) into believing the sky is falling.

I have stated this so many times to anyone who would listen or read, and finally catching on to a few ears and eyes.

In August I had indicated that the feds needed to be pro active, they did in deed do that, they supplied cash into the market place by lowering the discount rate.  That helped B of A loan money to Countrywide (2 billion) 

I also stated the feds needed to lowed the fed funds rate, they did exactly that on  Sept. 18th, 2007, not enough in my humble opinion, but they did, they also lower the fed funds again on October 31st, and December 11th.  I also stated that the federal government needed to raise the Conforming Loan Limits, they helped to a small degree a few days by increasing the FHA loan limits to Fannie & Freddie limits, and currently working on making California a high cost state so that we may be able to see some light at the end of the table. 

Unfortunately, these moves are slow to making it into the system.  I do thing that the federal reserve is partially to blame, on being to slow to act, but at least it's a start.  I also think, that the federal reserve needs to back out of mandating so tight of restrictions requiring lenders to have all full documented loans.  There are many  business people such as ourselves, that greatly depend on stated income programs. 

The need really boils down to educate the borrowers and and make consequences for those who willfully offer loans that are preditors of greed.

I myself, believe that we need to elect law makers that rationalize the pproblems and offer real solutions and not hinder or stiffel the growth of the nation.  All of this, really a drag on the economy, and preventing many homeowners to sell, and making it harder for people to buy. 

I myself am caught between a rock and a hard place, I had to foreclose on someone who took advantage of my generiousity, that which I bailed out on 3 occassions, unfortunate, the friendship is gone and looks like the stigma of circumstance will be harder to sell.

What I am going to do is;  I am going to carry back a note & deed on a second for $152,000, someone coming in, can bring in the difference to the conforming loan limits, should have an easier time getting a mortgage.  Hopefully, that will be enough for me to sell.  It's a nice house, in a great neighborhood, near the La Mirada Golf Course.  I will let you know if i Sell it.  I beats losing it to the banks.

Good Luck, God Bless, and make it a productive 2008.

Carlos R. Arvizu Sr.                                                                                           proonounced   R.V. Zoo

562-755-3856

TheDon1950@aol.com