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How housing rescue bill can help you

by Southern Californias Top Producing Mother & Son Te

Here is an article we found that gives some really helpful information regarding the new rescue bill that is supposed to help from losing there homes.  We noticed that there were a lot of guidelines and it's not as easy as the media may seem to explain.  This article gives some guidelines that many owners may find difficult to meet. 

The Senate on Saturday passed a $300 billion housing rescue bill aimed at helping troubled homeowners avoid foreclosure and supporting mortgage giants Fannie Mae and Freddie Mac.

President Bush is likely to sign the bill into law within days. After the law kicks in on Oct. 1, thousands of at-risk borrowers will be able to refinance their unaffordable old mortgages into new low-cost fixed-rate loans insured by the Federal Housing Administration (FHA).

The Congressional Budget Office estimates that 400,000 borrowers with $68 billion in loans may benefit from the program - but the bill allows for as many as 1 million or 2 million borrowers to participate in the program.

Here's what homeowners need to know.

Who's eligible?

Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 31% of their gross monthly income on mortgage debt to be eligible for the program.

They can be up to date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage - and attest that they are not deliberately defaulting just to obtain lower payments.

Before homeowners can get FHA-backed mortgages, they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it's to pay for necessary upkeep on the home.

To get a new home equity loan, borrowers will need approval from the FHA, and total debt cannot exceed 95% of the home's appraised value at the time.

How can I apply?

Borrowers can contact their current mortgage servicer or go directly to an FHA-approved lender for help. These lenders can be found on the Web site of the Department of Housing and Urban Development.

How does the refinancing process work?

This is a voluntary program, so lenders holding the original mortgage have to agree to rework a given loan before things can get started. The bill requires lenders to make major concessions, writing down the value of the loan to 90% of the home's current value. In areas where prices have plummeted by as much as 20%, that will mean a substantial loss for the lender.

But lenders won't sign off on a workout unless they think that they'll lose less money on that than they would by allowing a home to go through the costly foreclosure process.

Each loan will have to be underwritten by an FHA lender on a case-by-case basis. That means the banks will do a new appraisal to determine the home's current value, as well as examine and verify income statements, bank accounts, job histories and credit scores.

Based on that new appraised home value, the FHA lender must determine how much the original lender has to reduce the original mortgage, so that it will reflect 90% of the home's market value.

If the original lender agrees to the writedown, the new lender buys the old loan and takes over the reworked mortgage.

As part of the deal, the old lender writes off any fees and penalties on the original mortgage, including prepayment penalties, and accepts the proceeds from the new loan on a paid-in-full basis. Additionally, it pays the FHA an up-front premium equal to 3% of the mortgage principal.

What does it cost?

There should be little up-front costs for borrowers to bear. Loan origination fees will vary by lender, but these can usually be paid by the borrower over the life of the loan in the form of a slightly higher interest rate.

However, the refinanced loans do come with many strings. For one thing, borrowers are responsible for paying an insurance premium to the FHA guaranteeing the loan, which will be 1.5% of the principal annually.

Borrowers also agree to share any profits from future home-price appreciation with the FHA. To do that, they'll pay a "3% exit fee" of the mortgage principal to the FHA when they resell or refinance.

Plus, they'll agree to pay the FHA 100% of any profits they realize from higher home prices if they sell or refinance within a year. So if the original loan principal is $200,000 and the home sells for $250,000, the borrower will owe the FHA $50,000, minus costs.

After a year, borrowers will share 90% of the profits with the FHA. The percentage keeps dropping in 10% increments to 50% after the fifth year, where it stays.

What will I save?

Savings depend on what borrowers are paying for their present loan and where they live, but for most people it will be substantial, even after factoring in the FHA fees.

In areas that have sustained huge price drops, such as Sacramento, Calif., where prices have fallen by about 30% over the past year, some loans might be reduced by more than 40%.

Additionally, the FHA loans carry reasonable interest rates, which are fixed for the life of the loan, as opposed to a subprime adjustable-rate mortgage that can jump higher every six months.

Market Area

Many people in our market area of South East Los Angeles, including Downey, South Gate, Lakewood, Bellflower have been affected by the sub prime mess.  

July 2008 - Local Market News Report

by Southern Californias Top Producing Mother & Son Te

We were not extremely surprised when we saw the numbers for this past month.  Values have droped over $144,000 from exactly one year ago.  The average sales price for the month of June in the south east region of Los Angeles was $390,355 compared to $534,970 for June 2007 (Cities included in this report are Downey, Lakewood, Norwalk, Whittier, Santa Fe Springs, Pico Rivera, South Gate, Long Beach, and parts of North Orange county including Huntington Beach and Westminster).  Suprisingly of all the cities included in this paradigm, Huntington Beach was the city that had most homes sold for the month of June.  We are finding that properties are becoming more and more difficult to sell and since financing now is challenging to obtain, buyers are finding it more difficult to obtain a loan to purchase a home.  The combination of grueling guidelines and lack of buyers is causing home owners and banks to lower the prices on their homes in order to sell them. 

The graph below shows that overall values have been declining month after month.  If you have the opportunity to buy, we think you should go for it.  Last week we had a meeting with an asset manager from Goodman Dean and in his opinion the market was going to begin to level off towards the end of this year.  Don't wait too long to buy.  

You can't ignore the graph below!  Prices are at their lowest in years.   

What is the most popular type of Loan currently out there?

FHA is Back!

FHA loans were extremely popular over 10 years ago but in recent years they have pretty much been a lost cause.  Lenders came along with alternative products and when prices rose FHA became less attractive as they didnt raise the sales price much.

Well, you'd need to live in a cave to not know what has been going on in the mortgage industry as of late.  Most alternative loans such as the stated income, and 100% financing are gone now.  As a result, FHA has raised their loan limits to conform to our current market.  So with our average prices being what they are (see chart above) FHA is a real option now with little money down for a government insured loan.

More information can be found at or call us and we'll get you approved on the right financing for you. 

The Truth About FHA Loans - FHA Fact Sheet

by Southern Californias Top Producing Mother & Son Te

FHA Fact Sheet

Bellow is all you need to know about FHA loans. 

If you have any questions, please don't hesitate to contact us.  These loans are very popular in the market areas of South East Los Angeles cities of Downey, Lakewood, Long Beach, Pico Rivera, Whittier, and surrounding areas. 

Fed adopts plan to curb shady mortgage practices

by Southern Californias Top Producing Mother & Son Te

The Federal Reserve has adopted rules to give home buyers more protection from the types of shady lending practices that have contributed to the housing crisis and propelled foreclosures to record highs.


Chairman Ben Bernanke and his central bank colleagues approved a plan Monday that would crack down on dubious lending practices that have hurt many of the riskiest "subprime" borrowers - people with tarnished credit histories or low incomes.


In that regard, the plan would:


- bar lenders from making loans without proof of a borrower's income.


- require lenders to make sure risky borrowers set aside money to pay for taxes and insurance.


- restrict lenders from penalizing risky borrowers who pay loans off early. Such "prepayment" penalties are banned if the payment can change during the initial four years of the mortgage. In other cases, a penalty can't be imposed in the first two years of the mortgage.


- prohibit lenders from making a loan without considering a borrower's ability to repay a home loan from sources other than the home's value. The borrower need not have to prove that the lender engaged in a "pattern or practice" for this to be deemed a violation. That marks a change - sought by consumer advocates - from the Fed's initial proposal and should make it easier for borrowers to lodge a complaint.


"Rates of mortgage delinquencies and foreclosures have been increasing rapidly lately, imposing large costs on borrowers, their communities and the national economy," Bernanke said.


"Although the high rate of delinquency has a number of causes, it seems clear that unfair or deceptive acts and practices by lenders resulted in the extension of many loans, particularly high-cost loans, that were inappropriate for or misled the borrower," he added.


For all mortgages, the plan would require advertising to contain additional information about rates, monthly payments and other loan features, and it would curtail certain deceptive or misleading advertising practices.


Other practices also would be clamped down on. Lenders, for instance, have to credit a mortgage payment to the homeowner's account on the day it is received. And, brokers and others are forbidden from "coercing or encouraging" an appraiser to misrepresent the value of a home.


Consumer groups initially complained that the new rules are not strong enough. Lenders worry they are too tough, could limit mortgage options for people and made it harder for some to obtain financing.


The new lending rules may not get a test for some time because there are fewer home buyers these days, given all the problems in the housing and credit markets. Also, some of the shady practices - along with some lenders - have not survived, felled by the mortgage meltdown.


"Clearly this is closing the barn door after the fact," said Susan Wachter, a professor of real estate and finance at the University of Pennsylvania's Wharton School of Business. Yet, she said, "this is a very important move. It absolutely will make a difference going forward."


Much will hinge on effective enforcement.


The plan would apply to new loans made by thousands of lenders, including banks and brokers. It would not cover current loans.


Those different lenders fall under a patchwork of regulators at the federal and state levels. So it will be up to each of these authorities to enforce the new provisions.


Fed Governor Randall Kroszner, the central bank's point person on the new rules, said the Fed's goal was to protect borrowers from unfair or deceptive practices while also not impeding the flow of credit.


The Fed's rules, he said, should "better protect consumers, while preserving their access to credit as they make some of the most important financial decisions of their lives."

Fireworks - A list of locations that will provide Fireworks Shows July 3rd & 4th

by Southern Californias Top Producing Mother & Son Te

Here's a list of locations that will provide fireworks shows in the surrounding area of South East Los Angeles in Alphabetical order.  Some of them have a charge for entry and others are free! 

We hope that you all have a wonderful 4th of July and stay safe.  Please don't forget about us for all your real estate needs.

July 3

Bell Gardens
Suva Elementary School
6740 Suva Street
9:00 p.m.

Thomas Mayne Thompson Park - Rear Baseball Field
14001 S. Bellflower Blvd. / Rosecrans
9:00 p.m.

La Mirada
La Mirada High School
13520 Adelfa Ave.
9:00 p.m.

La Puente
La Puente Park
501 N. Glendora Ave.
9:00 p.m.

North City Library - Parking Lot
12350 Imperial Highway
9:00 p.m.

July 4

Artesia Community Park
12000 block of South Street / Elaine
Admission is free
9:00 p.m.

Cerritos High School
12500 E. 183rd Street
9:00 p.m.
Parking lot of Youth Center

Rowley Park
13220 S. Van Ness Ave.
Fireworks at 9:00 p.m.

Huntington Park
Salt Lake Park
3401 E. Florence Blvd.
9:00 p.m.

Vincent Park
700 Warren Lane
9:00 p.m.

La Habra
La Habra High School
801 Highlander
9:00 p.m.

Long Beach
It bills itself as California's largest fireworks display. Girlicious and the Spazzmatics lead a lineup of more than 15 live bands.
1126 Queen's highway, Long Beach
(562) 435-
10:00 a.m. - 9:00 p.m.
Check out the Queen Mary website for more information.
Tickets: Adult: $44.95
Children: $21.95 (ages 5-12)
Children under 5 years old are free
Parking not included in admission prices

Los Angeles
Los Angeles Coliseum
Music and fireworks at the LA Coliseum. This is a patriotic tribute to our men and women in uniform. There is no seating in side the Coliseum itself so head to the seating areas on Christmas Tree Lane or the South Lawn near the Natural History Museum.
3939 South Figueroa St, Los Angeles
9:00 p.m.
This event is free.

Lynwood City Park
Baseball Field
11301 Bullis Rd.
9:00 p.m.

Maywood City Park
Baseball Diamond
Walker St. & 60th Street
9:00 p.m

The Rose Bowl - AmericaFest 2008
This marks the 82nd annual Rose Bowl July 4th celebration. In addition to spectacular fireworks there will be a performance from the California Philharmonic Orchestra.
1001 Rose Bowl Dr, Pasadena
Phone: (626) 577-3101
10:00 a.m. - 9:00 p.m., Drum Corps performance begins at 7:00 p.m.
Fireworks at 9:00 p.m.
Adults: $13
Kids 7 and under: Free
Parking: $15 per car

Pico Rivera
Meller Elementary - West grass area
6016 Rosemead Blvd. at Mines Ave.

Rosemead Park
9200 Mission Ave. at Encinitas
9:00 p.m.

South El Monte
South El Monte High School
1001 N. Durfee Ave.
9:00 p.m.

South Gate
South Gate Park
Corner of Pinehurst and Tweedy
9:00 p.m.

Friendly Hills Country Club
8500 Villa Verde Drive / Mar Vista
9:00 p.m.

Famous People That Live and Grew Up In Downey

by Southern Californias Top Producing Mother & Son Te

We came across this list of people that either grew up in Downey or live in Downey and we thought it was pretty interesting.  Believe it or not James Hetfield of Heavy metal group Metallica and Weird Al Yankovic both group up in the city of Downey.

Here are some notible residents of Downey. 



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Contact Information

Photo of The Mother & Son Team - Maria Palacios & Chris Gon Real Estate
The Mother & Son Team - Maria Palacios & Chris Gon
Berkshire Hathaway HomeServices, California Properties
16911 Bellflower Blvd
Bellflower CA 90706
(877) 883-1003
Fax: 562-381-9113