California financial tips

Bad Economic Times - Good for a California Entrepreneur

Bad California economic times play a significant role in the evolution of budding entrepreneurs. Data from the Small Business Administration (SBA) show that during the past two recessions, more California small business with multiple employees started up than went out of business. During the bear market at the beginning of this decade, the number one-person businesses increased from 16.9 million to 18.6 million, according to the SBA. Why do recessions increase entrepreneurship? The saying goes that necessity is the mother of invention. As California unemployment rises and jobs become harder to find, more people state their own businesses. Whether it's a case of more free time or more motivation, people "have had the idea of being an entrepreneur in the back of their heads-and now they can do it, "says Chad Moutray, chief economist the SBA's Office of Advocacy. (Source - U.S. News & World Report)

ARM Loans Threaten California Housing Recovert

Many economists say is a looming threat to a California housing recovery as more than a half-million Option ARMs scheduled to reset in the next four years, at rates many homeowners cannot afford. His California mortgage payments have risen to $2,700 a month because of a clause he did not notice on his contract, and are scheduled to rise above $4,000 in two years. Since February, default and foreclosure rates on Option ARMs have passed those of subprime mortgages; according to the research firm First American CoreLogic, in part because so many subprime mortgages have already failed. As the California housing market seeks a bottom, option ARMs, which accounted for $750 billion in mortgages made from 2004 to 2007, according to the industry newsletter Inside Mortgage Finance, remain a risk, especially because many are not eligible for refinancing. About a third in California are already in default, according to analysts. Compared with subprime loans, Option ARMs are fewer but tend to have larger balances. Resets on California Option ARMs in recent years have often doubled the payments. Everyone's been focused on subprime, but should be more concerned about Option Arms. By the time subprime defaults had increased 200 percent, in June and July of 2007, Option ARMs had gone up 400 percent. First American CoreLogic anticipates 600,000 option ARMS will reset within four years.

California Home Short Sale

If you are thinking about dumping your California house via a "Short Sale", or Foreclosure, or a "Deed-in-Lieu" and then turn around and buy back in the market…think again. MI companies (Mortgage Insurance) have revised many of their guidelines regarding just this issue. For Conventional California loans over 80% LTV (Loan to Value) that require MI, here is a sampling of some of their new revisions: Bankruptcy: Chapter 13 Bankruptcy and all bankruptcy types with extenuating circumstances: Require minimum 4-year re-establishment period; Multiple bankruptcies in the last 7 years: Not allowed; California Short Sale: Require minimum 4 years since the completion of a short sale (pre-foreclosure); Foreclosure due to extenuating circumstances: Require minimum 5-year re-establishment period; Deed-in-Lieu: Require 5 years since the completion of a deed-in-lieu (financial mismanagement and extenuating circumstances)