Mortgage Rates End Year Under 4%

By MIA LAMAR

Average fixed mortgage rates in the U.S. over the past week finished the year near all-time lows, with the 30-year home loan at 3.95%.

According Freddie Mac's weekly survey of mortgage rates, the rate for a 30-year fixed-rate mortgage has been at or below 4% for the past nine consecutive weeks and only twice in 2011 did it average above 5%.

The 30-year fixed-rate mortgage averaged 3.95% for the week ended Thursday, up from 3.91% the previous week and below 4.86% a year ago. Rates on 15-year fixed-rate mortgages averaged 3.24%, up from 3.21% last week and below 4.20% a year earlier.

Five-year Treasury-indexed hybrid adjustable-rate mortgages, or ARM, averaged 2.88%, up from 2.85% yet below 3.77% of a year ago. One-year Treasury-indexed ARM rates averaged 2.78%, up from 2.77% in the prior week and below 3.26% last year.

To obtain the rates, 30-year and 15-year fixed-rate mortgages required payments of 0.7 percentage point and 0.8 percentage point, respectively. Five-year and one-year adjustable rate mortgages required an average payment of 0.6 percentage point. A point is 1% of the mortgage amount, charged as prepaid interest.

President Obama is coming to Los Angeles and CD4

102111 LaBonge email newsletter

We're honored to welcome President Barack Obama to Los Angeles early next week.  The Commander in Chief comes to town for a Hancock Park fundraiser at a private home.  The President will land on Monday afternoon, and will stay through Tuesday.  The City of Los Angeles is coordinating with the U-S Secret Service to make sure the President's stay is smooth; but you can count on street closures as the President's motorcade moves across town on Monday afternoon.  Stay tuned to local media on Monday for the very latest on the President's movements, and the traffic tie-ups that will follow.

1 bedroom Apt for rent in Downtown near USC

I have a client interested in renting their apt in Downtown.  Here's the information:

1 bedroom / 1 bathroom

rent $1,000

all utilities included except electricity

1 garage parking space

1 month security deposit

safe and quiet area

pets are welcome

stove and refrigerator included

If you are interested or know someone that might be, please contact me at 310.777.2844.

Are you Quake Ready?

Getting prepared for the "Big One" can be a daunting task that can overwhelm us and make it easy to procrastinate.  We recommend that you do a little preparation each week.  That's the idea behind our
Earthquake Preparedness Tip of the Week
Job One: Assemble a survival kit.  You want to have at least three days of supplies in an easy-to-carry evacuation kit, with additional supplies on-hand.  So what's in it? 
*Most important, water-- have at least one gallon per person per day.
*Food -- pack non-perishable, high protein items like energy bars, instant soup and peanut butter.
*Flashlight -- hand-crank and alternative energy options are available. (add extra batteries if needed)
*First-Aid Kit -- include a first-aid reference guide.
*Medications -- don't forget prescription and non-prescription items, and an old pair of eyeglasses.
*Radio -- include extra batteries or use a hand-crank radio.
*Clothing -- provide a change of clothes for everyone, including sturdy shoes and gloves.
*Sanitary Supplies -- you may need toilet paper, paper towels, moist towelettes, feminine supplies, personal hygiene items, etc.
*Money -- Have cash. (ATMs and credit cards wont work if the power is out.  Small denominations are best.)
*Contact Information -- compile a current list of family phone numbers and email addresses.
*Pet Supplies -- for each pet, include food and water ... and medications if necessary.
Store your disaster supplies in sturdy, but easy to carry containers.  Keep a smaller version of the kit in your vehicle and at your workplace.  Remember to check your kit periodically and replace the stock every six months.
Click here to learn more about disaster preparedness
Stay tuned for next week's tip: MAKE A PLAN

Los Angeles has a comprehensive "Mansionization" Ordinance

The City of Los Angeles is putting reasonable limits on the footprint and height of single-family, residential-zoned homes.  The idea is to protect neighborhood character and integrity from out-of-scale development and renovation -- the so-called "mansionization" of Los Angeles.  Councilmember Tom LaBonge introduced the origninal motion for the Baseline Mansionization Ordinance in June 2006.
Two years later, the city had new anti-mansionization regulations for flatland areas of Los Angeles.  On March 18th, the City Council unanimously approved the Baseline Hillside Ordinance, which sets new standards for building on hillside lots.  Now that the Mayor has signed it, the new hillside regulations will take effect on May 9th, 2011, giving the City of Los Angeles a comprehensive, enforceable ordinance that puts an end to huge homes on small lots.

No More Used-Car sales on Los Feliz Blvd. and Franklin Ave.

The Los Angeles City Council, responding to a motion introduced by Councilmember LaBonge has approved a draft ordinance prohibiting the parking of vehicles "For Sale" on certain city streets and public lands.  The new policy makes it illegal to park a car or truck on Los Feliz Blvd. and Franklin Ave. and offer it for private sale.  Councilmember LaBonge put forth the motion after numerous complaints from homeowners and neighborhood organizations about the practice.  This ordinance covers Los Feliz Blvd. between Interstate 5 and Western Avenue; and Franklin Avenue between Hillhurst Avenue and Western Avenue.  The City Council may amend that to include other streets in Los Angeles.  The measure now goes to Mayor Villaraigosa's office for his signature.

California plans $2-billion program to help distressed homeowners

The Keep Your Home California program could help more than 100,000 struggling homeowners, including about 25,000 borrowers with underwater mortgages.

More than 100,000 struggling homeowners could get help from a $2-billion program that California is launching, including about 25,000 borrowers who owe more than their properties are worth and could see their mortgages shrink.

The Keep Your Home California program, which uses federal funds reserved for the 2008 rescue of the financial system, has the potential to make a sizable dent in California's foreclosure crisis and help the general housing market. State officials hope to fend off foreclosure for about 95,000 borrowers and provide moving assistance to about 6,500 people who do lose their homes.

Consumer advocates have criticized other attempts at foreclosure prevention as falling short, particularly the Obama administration's $75-billion program to help troubled borrowers. They were heartened by the scope of California's effort but concerned it would be hampered if the state can't get major banks on board.Out of the five major mortgage servicers — Bank of America Corp., Wells Fargo & Co., JPMorgan Chase & Co., Ally Financial and Citigroup Inc. — only Ally has formally signed on to a key part of the plan: reducing mortgage principal on homes that are "underwater," or worth less than the size of the mortgage. A Bank of America spokesman said the bank intends to participate but hasn't yet reached a formal agreement with the California Housing Finance Agency, which designed the program.

Said Paul Leonard, California director for the Center for Responsible Lending, "Two billion dollars in total for the state to provide assistance to help borrowers avoid foreclosure is a substantial amount of money, and we hope that it will have some significant impacts in achieving its goals.

"Cal HFA went out of its way to meet the needs of the financial industry in terms of providing a generous incentive to get them to participate, and even after taking their extensive input into the design, the banks are still not stepping up to participate in what is really a critical element of the program."

Preeti Vissa, community reinvestment director for the Greenlining Institute, called lender involvement "pretty dismal."

"The key to this program is how much the banks are willing to participate and be flexible toward homeowners' needs," Vissa said.

The size of the Golden State's foreclosure problem was underscored by data slated to be released Thursday, showing 15,893 California homes seized by big banks last month, the third-worst performance in the nation.

January's tally was a 32% increase from the previous month, though still down 7% from January 2010, according to RealtyTrac of Irvine. Nationwide, lenders took back 78,133 properties in January, up 12% from the previous month but down 11% from January 2010.

"We are not out of the woods by a long shot," said Rick Sharga, RealtyTrac senior vice president. "Economic factors are what are driving most foreclosures right now, and so the state's economy being what it is, it doesn't appear that there is going to be a near-term correction either."

The state's new program, which officials plan on detailing in Sacramento on Thursday, aims to address the two central issues facing California's beleaguered housing market: the state's stubborn joblessness problem and the massive number of underwater homeowners.

By keeping some cheap foreclosed properties from reaching the market, the program could give a boost to home values in general.

"If they can actually stave off foreclosures and the people stay in the homes, then that is a great thing for the market," said Stan Humphries, chief economist at Zillow.com. "It would be great because the continuing flow of foreclosures on the marketplace exerts downward pressure on home prices, and it also creates more supply of inventory on the marketplace, so foreclosures are really a double whammy."

The biggest of the plan's four parts allocates $875 million as temporary financial help to people who have seen their paychecks cut or have lost their jobs, providing as much as $3,000 a month for six months to cover home payments and associated costs. The second-largest chunk of money, $790 million, is slated for a principal reduction program that would write down the value of an estimated 25,135 underwater mortgages.

Another piece would use $129 million to provide as much as $15,000 apiece to help homeowners get current on their mortgages, and another would take $32 million to provide moving assistance for people who can't afford to remain in their homes.

The program is aimed at helping low- and moderate-income people who own only one property. To qualify in Los Angeles County, for instance, a family couldn't earn more than $75,600 a year. The maximum benefit for any household participating in the program is $50,000. Homeowners who refinanced their homes to take cash out of their properties won't be allowed to participate.

The principal-reduction component would pay lenders $1 for every dollar of mortgage debt forgiven. Many experts have said reducing principal on such underwater loans would go far toward reducing foreclosures because home values have fallen so steeply that homeowners are tempted to walk away from their obligations.

But banks have been reluctant to significantly reduce principal on loans other than on certain kinds of risky mortgages that are now seen as having been highly imprudent.

"You hear a lot of people calling for it, but there are not a lot of people in the mortgage industry who favor it," said Guy Cecala, publisher of Inside Mortgage Finance. "There are a lot of issues around who deserves principal forgiveness."

The nation's largest mortgage investors, Fannie Mae and Freddie Mac, also aren't taking part in the principal-reduction program. That's not surprising, Cecala said, because the two are in government conservatorship and billions of taxpayer dollars already have been spent rescuing them.

Diane Richardson, director of legislation for the state's housing finance agency, said she expects other lenders to join the principal-reduction program.

"We are continuing to have conversations with other lenders about coming on board," she said. "So if somebody sees their lender, and it doesn't show them participating, they shouldn't assume that they won't be." Money will be reallocated to other parts of the program if it isn't spent on principal reduction.

Even as the state struggles to get big lenders to sign on, the program has prompted complaints that it's a giveaway to the banks. Critics have said that property values have fallen so steeply that much troubled mortgage debt is not worth what the banks would be paid. Foreclosures on the homes are so costly that the banks will come out ahead financially by writing down loan balances to keep borrowers in the homes, they contend.

alejandro.lazo@latimes.com

Copyright © 2011, Los Angeles Times

Real Estate Investing: 5 Postscripts You Need to Know

By Bonnie Lee

Published January 20, 2011 FOXBusiness

I received several e-mails regarding my series on real estate investing prompting the following postscripts.

1. 1099s for landlords 2011. Generally, businesses are required to file Form 1099-Misc. Beginning in 2011, landlords will be required to issue 1099s for services rendered for their rental properties. If an individual or company provides a service such as repairs, legal and professional fees, tax planning and preparation, cleaning, pest control, management, etc. for an amount in excess of $600, you will be required to report the payment(s) on Form 1099-Misc. When you contract for services, please provide the payee with Form W-9, available at www.irs.gov, to obtain his address and Tax ID#. Forms 1099 must be prepared and remitted by Jan. 31, 2012.

Real Estate: Finally a Good Investment?

The housing market still looks pretty bleak: There were a record one million foreclosures last year, home prices are still falling in many regions and the number of "underwater" properties is at a record high.

And things don't look much better in other areas of real estate. The number of construction jobs continues to decline, even as other parts of the economy have added jobs. And mortgage rates have moved higher as long-term Treasury yields have backed up during the past few months.

Basically, the real estate market remains a mess.

Real estate encompasses a wide range of markets – homes, apartments, hospitals, office buildings, strip malls, dormitories and other properties. But for our purposes, let's focus on residential real estate, or homes. Here are four reasons to think residential real estate might represent a bargain – with one big caveat.

Everyone hates homes.

Homes are probably the most hated asset class in the country. That's what happens when a bubble bursts. People avoid thinking about the value of their home. Sellers moan about no offers, buyers gripe about impossible lending requirements.

Hatred of an asset is often the precursor to contrarian interest, and being contrarian is at the heart of many investment strategies. To paraphrase Warren Buffett, be fearful when others are greedy and greedy when others are fearful. Mr. Buffett backed that idea when he invested in the stock market in the teeth of the financial crisis in late 2008 and early 2009.

Of course, being contrarian for its own sake isn't wise investing. Gold was hated for years ("dead money") before it recently became an attractive asset class. Still, a lot of smart ideas begin with the question: What does everyone hate?

Smart people are buying real estate.

This cohort is led by John Paulson, the hedge-fund manager who made $20 billion betting against the housing bubble. Last fall he said in a speech: "If you don't own a home buy one. If you own one home, buy another one, and if you own two homes buy a third and lend your relatives the money to buy a home."

Why is Mr. Paulson so adamant? Because he believes long-term interest rates are not going to get much lower. They have, in fact, risen since he gave that speech, but they remain remarkably low by historic standards. Low rates and the expectation that home prices will rise is his argument. For his part, Mr. Buffett has predicted the housing market will bottom this year.

Real estate performs well during inflation.

There's no inflation these days, but when buying a home one should take a longer view. And the longer view shows that the economy has enjoyed a disinflationary period since the early 1980s. A number of folks think that cycle is slowly reversing itself.

If that's the case, then convention would argue for holding assets that do well in an inflationary environment. That includes Treasury Inflation Protected Securities, commodities and real estate. Remember that during the stagflation nightmare of the 1970s, real estate had a strong run.

Inflation isn't a significant issue in the U.S., but it's a growing problem elsewhere. China and India have taken steps to fight inflation, the euro zone is getting flickers of inflation and the U.K. has had oddly higher prices (above 3%) for an extended period of time. If the cycle is slowly turning, real estate makes more sense.

Demand may be coming back.

Supply isn't as out of whack as it used to be. At the end of November, home builders reported 197,000 new homes on the market, the lowest level since 1968, according to Yardeni Research. The National Association of Realtors reports that the inventory of existing homes for sale fell 4% to 3.71 million homes, which represents a 9.5-month supply at the current sales pace, down from a 10.5-month supply in October.

Those aren't pretty numbers, of course, but they are moving in the correct direction. And that may be a reason that many home builder stocks, such as KB Home ( KBH: 14.83*, -0.15, -1.00% ) , Hovnanian ( HOV: 4.46*, -0.05, -1.10% ) , Pulte ( PHA: 24.06, +0.02, +0.08% ) and Toll Brothers ( TOL: 20.43*, -0.27, -1.30% ) , have come off their lows in the past several weeks.

It's all comes down to jobs. There are a zillion caveats to any positive home thesis, but the big one is unemployment. If the economy is not creating jobs, the chance of a rebound in housing is diminished. It's hard to buy a home without a job, and folks who aren't working don't want to take long-term risks.

The job market is still struggling and the debate is hot about when it will recover. Optimists see recovery this year. Pessimists see pain for several years ahead. How this X factor gets resolved will say a great deal about whether housing will rebound.

Longshot by Dave Kansas

L.A. investor buys Hotel Californian

Michael Rosenfeld, owner of the Hyatt Regency Century Plaza in Century City, says a partnership he heads will redevelop the historic hotel on Santa Barbara's waterfront.