Archives for August 2010

Costa Mesa Weekly Real Estate Update



August 31, 2010

More Using the “D” Word

No, we are not talking about a depression here. We are talking about the more constant use of the word “deflation.” Actually, deflation can be considered a depression of prices. We often say that one of the objectives of the Federal Reserve Board is to fight inflation. We can also say that another objective of the Fed is to protect us against deflation, however the threat of deflation comes up so rarely, there is little discussion of the issue. We all know why higher prices are bad for the economy. When consumers have to spend more of their income on staples, they have less money left over to spend and contribute to economic growth. Inflation is typically accompanied by higher rates which also depress the economy. If money will be worth less in future years, banks that lend money have to charge high rates in order to make a profit.

So why would deflation be bad news? Deflation is not only a symptom of a poor economy, it would contribute to the lack of economic growth as well. Why would a manufacturer produce goods if those goods are likely to fall in price below the replacement value? We have such an example right now where builders have found in some areas that homes are selling for less than the replacement costs. Why build a home if you can’t sell it at a price that is equal to the cost of building? Here is the good news. Natural population growth in the world has put so much pressure on natural resources such as energy, it is not likely that deflation will become a problem. It is more likely that the slow economic growth we are experiencing will be accompanied by low rates of inflation and therefore low rates such as we are experiencing. And this is a good thing, because we need these low rates if we are going to continue to grow out of the slump. A little inflation right now is good news but increased rates of inflation while the economy is not growing would be bad news. Then we would be discussing another bad word: stagflation.

The Markets. Like a broken record (or we should say records), the weak economic data continues to contribute to the current string of record-breaking rates. The streak has been running for over two months now. Freddie Mac announced that for the week ending August 26, 30-year fixed rates averaged 4.36%, down from 4.42% the previous week. The average for 15-year fixed fell to 3.86%. Adjustables were stable with the average for one-year adjustables down slightly to 3.52% and five-year adjustables remaining at 3.56%. A year ago 30-year fixed rates were at 5.14%. Attributed to Amy Crews Cutts, deputy chief economist, Freddie Mac, “Existing home sales plunged 27 percent in July, while new homes fell 12 percent to a new all-time record low, which led to some market concerns that the housing market may slow the economic recovery. As a result, long-term bond yields fell to the lowest levels since January 2009, allowing fixed rates to ease to new record lows this week. Much of the slowdown in sales, however, was expected due to the recently expired homebuyer tax programs, which pulled through future home purchases into the first half of the year. The average existing home sales over the first seven months of 2010 were nearly 8 percent higher than over the same period a year ago. Moreover, house prices still appear to be stabilizing. Nationally, house prices rose 0.9 percent on a seasonally-adjusted basis during the second quarter of this year this year after 11 consecutive quarterly declines, according to the Federal Housing Finance Agency’s purchase only index. Eight of the nine census regions experienced positive gains, compared to none in the first quarter.” Rates indicated do not include fees and points and are provided for evidence of trends only. They should not be used for comparison purposes.

Current Indices For Adjustable Rate Mortgages
Updated August 27, 2010

  Daily Value Monthly Value

August 26 July
6-month Treasury Security 0.19% 0.20%
1-year Treasury Security 0.25% 0.29%
3-year Treasury Security 0.77% 0.98%
5-year Treasury Security 1.38% 1.76%
10-year Treasury Security 2.50% 3.01%
12-month LIBOR
1.124% (July)
12-month MTA
0.370% (July)
11th District Cost of Funds
1.797% (June)
Prime Rate

Breaking News: One of the most popular housing programs in the United States is tightening their guidelines for refinances, effective with loan applications taken on September 7th. If you are thinking about taking advantage of today’s record low rates, the time to act may be now as FHA is tightening their standards by requiring more equity in their homes for those who want to refinance to lower their payments.

More than 48 percent of first-time buyers expect home prices to increase by this time next year, according to a survey by Century 21 Real Estate. The survey posed questions to people who had bought or sold a home in the last year. Sixty percent of first-time home buyers say they didn’t understand the process of buying a home, and more than 85 percent of both first-time buyers and sellers said that using a real estate professional was important. The top three skills valued in a real estate professional by both buyers and sellers were knowledge of the area, trustworthiness, and responsiveness. More than 80 percent of buyers believe now is a good time to buy a home. In choosing a home, 95 percent of first-time home buyers thought price was the most important consideration, but 90 percent were also very concerned about neighborhood safety. About 54 percent of first-time sellers think home prices are more affordable now than they were this time last year, and 50 percent were selling because they were purchasing a property they saw as more attractive and better suited to their needs. Source: Century 21 Real Estate LLC

2009 survey of home owners conducted by the U.S. Census Bureau and the U.S. Department of Housing and Urban Development shows that most of them are satisfied with their residences. About 70 percent of respondents rated their homes an 8, 9, or 10 on a scale of 1 to 10, with 28 percent giving them the “best” rating of 10. Residents of new construction tend to rate their homes even more highly: 84 percent gave them between an 8 and 10, and 45 percent gave a perfect 10 rating. Likewise, more than 68 percent of residents rated their neighborhoods highly, with 25 percent giving it a “best” rating. People living in newly built homes rate their neighborhoods especially highly: 75 percent rated their neighborhoods highly and 35 percent said their neighborhoods were 10s. The nation’s home owners paid a median of $1,000 in monthly housing costs in 2009, compared with $808 for renters, according to the findings. The most common reasons recent movers had for choosing their neighborhoods were convenience to job (20 percent), convenience to friends or relatives (14 percent), look/design of neighborhood (10 percent), and the house itself (10 percent). Source: US Census Bureau

Reis Inc. reports that the nation’s second-quarter apartment vacancy rate slipped 20 basis points to an average of 7.8 percent from the first three months of the year — the first drop in over two years. SNL Financial, meanwhile, notes that the average occupancy for apartments owned by REITs increased nearly 100 basis points from a year earlier to almost 95 percent as of the end of March. Falling homeownership, coupled with the young and employed leaving their parents’ homes or roommates to rent their own units at a rapid clip, suggest that demand for multifamily housing could climb at a modest clip for at least the next several months. Investor Business Daily

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Costa Mesa Police DUI Checkpoint On August 31

The Costa Mesa Police Department will be conducting a DUI/Drivers License checkpoint on Tuesday,

August 31, 2010, from 6:00 p.m. to 11:00 p.m., at Bristol Street/Randolph Avenue. The department is

continuing its efforts at lowering the number of persons killed and injured in alcohol involved crashes

locally and through the County’s Avoid DUI Task Force Campaign with this DUI/Drivers License

checkpoint. Personnel will be checking drivers to identify offenders and get them off the street, as well as

heightening awareness to the dangers of impaired driving.

The summer months are a dangerous time of the year and your odds of being involved in an alcohol

involved collision can be high. In 2008 law enforcement statewide reported that 7,801 people were

injured or killed during the three summer months of June, July and August.

A major component of the checkpoints, beyond taking dangerous drivers off the road, is to increase

awareness of the consequences of impaired driving and to encourage using sober designated drivers. A

DUI checkpoint is a proven effective method for achieving this goal. By publicizing these enforcement

and education efforts, the Costa Mesa Police Department believes motorists are deterred from drinking

and driving.

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Costa Mesa Mortgage Mayhem

The banking industry has taken a great deal of time to help troubled homeowners and done a poor job by some accounts.  

“We’ve had people who met guidelines through and through,” says Charles Favor, a mortgage modification specialist with HLP Center. “They fall right into the category of every criteria that’s out there and the banks are just not helping people. They string them along through the loss-mitigation department and the attorneys don’t even know they’ve foreclosed upon the house.”

Additionally, the number of people assisted by banks pales in comparison to the number who defaulted or walked away from their homes. While it’s difficult to gauge the precise number of homeowners who fall into the category of “troubled,” somewhere between 3% and 5% of U.S. households are delinquent on mortgage payments, according to quarterly reports from major banks, Fannie Mae and Freddie Mac. That implies 3.4 million to 5.2 million households are now at risk of default or foreclosure, on top of the millions who have already faced the same fate.

Photos: CEOs Behaving Badly

CEOs Behaving Badly

Big banks have finally realized that the mortgage malaise won’t stop spreading throughout their loan books until barrier walls are erected. They’ve started providing better workout solutions than those offered by the federal government, because banks have more flexibility to tailor modifications to individual borrowers’ needs.

The question now is whether progress has come too late.
Despite initial unpreparedness, the country’s four largest mortgage servicers — Bank of America, Wells Fargo,JPMorgan Chase and Citigroup– have now added nearly 30,000 staffers to push borrowers through the pipeline more quickly. Hope Now, an alliance of financial firms that reaches out to at-risk homeowners, says the industry has completed 8.2 times as many successful workouts using their own solutions as those completed through the Home Affordable Modification Program.

“The latest results continue to support the industry’s unprecedented efforts to assist borrowers across the country using myriad foreclosure prevention programs,” says Faith Schwartz, senior advisor for the group.

Of course, banks aren’t restructuring loans out of the goodness of their hearts. Besides prodding from the Treasury Department, workouts also allow them to improve the credit quality of their loan books, avoid hefty write-downs and stop the crisis from bleeding into more viable loans in surrounding areas.

For instance, Wells Fargo structured a plan to assist its most troubled borrowers, those who were part of Wachovia’s “Pick-A-Pay” program. Partly as a result, the bank was able to move $1.8 billion worth of loans in that portfolio back to “performing” status last quarter.

Mike Heid, the co-president of Wells Fargo Home Mortgage who structured the program, says that “having a full range of options to address different customer circumstances is crucial to helping all of the borrowers who truly need assistance.”

But the Pick-A-Pay plan also comes with strings attached.

Wells Fargo is letting those underwater borrowers with financial difficulties ignore principal and pay “interest only” for six-to-10 years. At that point, the bank believes the economy will have improved enough to restructure the loans into more profitable ventures. Right now, the plan allows Wells to publish sunnier loan statistics and avoid higher mortgage-related costs.

Wells Fargo, Bank of America and JPMorgan each report greater success outside of the Home Affordable Modification Program than within it. Perhaps unsurprisingly, the most aggressive champion of the program among large, money-center banks has been Citigroup, the only one in which the U.S. government still holds a large ownership stake. Even so, Citi has pushed less than 30% of those eligible through to permanent modifications.

Banks have been making more progress outside of the government-sanctioned box for a few reasons. The federal program wasn’t structured to help all troubled borrowers. Banks don’t necessarily want to help all of them, either, viewing some financial situations as too precarious. They’d also prefer to tout successes without federal assistance, if they can avoid it.

Through June, fewer than 390,000 eligible borrowers have moved through the Home Affordable Modification Program into permanent modifications and stayed there. Meanwhile, nearly 530,000 of those who received modifications have canceled them. Overwhelmingly, defectors have turned to alternatives offered by banks.

For instance, Bank of America has completed 665,000 mortgage modifications since January 2008 — just 11% of which have fallen under the Home Affordable Modification Program. In May, Bank of America had difficulty even uploading files to the government’s computerized system, leading to apparent inaccuracies in the Treasury Department data.

“When a customer is found to be ineligible for HAMP or falls out of a trial modification, we consider an alternative home retention program, and if no viable solution is available, a dignified exit from homeownership,” Rebecca Mairone, an executive in Bank of America’s mortgage division, noted when discussing July performance. She added that “HAMP guidelines are quite specific with regard to the debt-to-income ratio, owner-occupancy, trial payment performance and other requirements.”

The picture isn’t all rosy of course — it took the industry roughly two years to accept a new philosophy about the mortgage market, in which losses aren’t heaped solely upon homeowners. But now they’re now reaching out to troubled borrowers across the country with a new pitch: Helping them stay in homes.

The Hope Now alliance has organized workshops across the country to connect homeowners with modification experts. Individual banks have promoted such events as well.

For instance, Wells Fargo CEO John Stumpf says the industry has offered suggestions to make the Home Affordable Modification Program “more friendly, more usable,” but in the meantime his firm has been doing community outreach instead. Wells has been promoting what is calls “home preservation workshops” in cities like Atlanta, Baltimore, Chicago and Phoenix in recent weeks.

“We bring our people in,” Stumpf says. “They are all hooked up online so people can sit down and have a modification done right at the event.”

Those proprietary programs have been repairing the system — in President Obama’s words — one house and one family at a time. Yet it’s hard to tell when the long-troubled housing market will finally show consistent signs of stability.

Andrea Risotto, a Treasury Department spokeswoman, explains that progress has been slow in part because “the face of a person who is struggling has changed.”

Problems are no longer isolated to irresponsible, naive or opportunistic subprime borrowers. Doggedly high unemployment and the continued depreciation of home values has been snaring responsible borrowers on an increasing basis — “many of whom never thought they would be in this position,” says Risotto. “They’re struggling through no fault of their own.”

Meanwhile, second liens have presented another hoop for many borrowers to jump through before resolving their primary home loan. Each time the government starts to gain traction addressing one problem, additional challenges seem to be presented.

As a result, mortgage transactions have occurred in fits and starts since “Making Home Affordable” was first announced. There were desperation-driven booms in the first half of 2009 and spring of 2010 when federal incentives were unveiled or about to expire. Those booms have faded when economic reality sets in.

“I think we’re sort of all learning as this shifts, as the economy ebbs and flows,” says Risotto, “as servicers learn from their own implementation challenges and their own successes, and we’re trying to remain as responsive as we possibly can.”

Yet while the enormous amount of taxpayer assistance devoted to the housing crisis has brightened banks’ profitability — delivering mortgage-servicing fees and lowering funding costs — it hasn’t helped homeowners nearly as much.

“The president is coming out with how great this was and how this plan has been successful,” says Favor, the mortgage-modification specialist, “and the bottom line is, it’s getting worse. The whole plan has kind of backfired.”

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Costa Mesa to offer The Bully and Me self defense classes

The Bully and Me – Local Kid’s Class to Start a Revolution Against Bullying

COSTA MESA, Calif., Aug. 24 ( NEWSWIRE) — Samurai Cop Self Defense and InControl announce The Bully and Me, a new, comprehensive course that will train children how to handle bullies and avoid becoming bully-targets. The Bully and Me will be offered through Costa Mesa Parks and Recreation and will be available Mondays starting October 4, 2010 from 6:00 – 7:00 p.m. for ten weeks. The class will be open to children between the ages of nine and seventeen. Instructor, Sensei Richard Milenkovich, will be conducting the class at Shuyokan Dojo located at 1360 Logan Ave, Suite #108 in Costa Mesa, California.

Registration for the class is conducted through Costa Mesa Parks and Recreation – call 714-327-7525. For further details, please go to:

Milenkovich and wife Cynthia, a former teacher, conceived the basis for The Bully and Me after reading about Phoebe Prince in Hadley, Massachusetts who had committed suicide after being severely bullied. The concept attracted the attention of Sensei David Dye, a retired Costa Mesa Police Officer who is the Chief Instructor at the Shuyokan Dojo, which has been based in Costa Mesa since 1980. Dye contributed to the title for the class, and offered Milenkovich the opportunity to teach The Bully and Me as part of the Samurai Cop Self Defense Program.

Dye’s popular program has trained and promoted black belts among hundreds of Costa Mesa youth. Considering Dye’s history of service to youth in Orange County, the Milenkoviches feel his dojo is the ideal place to launch an anti-bully program for kids.

“We aim to foster a culture in which bullying is invalidated,” says Sensei Milenkovich. “That’s what’s revolutionary, because bullies have often had some degree of social validation. The workshop will provide a variety of techniques for dealing with bullies. The class will cover basic self-defense, self-esteem, cultivating social alliances and effectively communicating with authorities in a variety of environments. We will also work with parents, so they too can understand how to support and be an advocate for their children. We will establish a code of conduct-an effective tool in Samurai Cop training.”

“Bullying is viral,” says Cynthia Milenkovich, “and the rise of cyber-bullying means it spreads at light speed.” Her passion stems from teaching experiences and the more personal heartbreak of seeing the effects of bullying on her son.

“That’s why we’re doing this,” she continues. “The Bully and Me workshop is a multi-pronged, multi-layered immunization against this deadly disease. If a child is being traumatized by bullying, this class could be a lifesaver.”

The Milenkoviches make themselves available to speak at schools, churches, businesses and other organizations on anti-bullying techniques. Richard Milenkovich also addresses conflict management, workplace bullying and martial arts.

About Sensei Richard Milenkovich:

Sensei Richard Milenkovich, Founder of InControl ( – a forum for conflict management thought leaders and a conflict management resource) assists with the Samurai Cop classes at Shuyokan Dojo in Costa Mesa. Sensei Milenkovich holds two second-degree black belts: one in Shin Shin Toitsu Aikido and one in Shuyokan Ryu Aikijutsu. Milenkovich is an experienced public speaker on Conflict Management and has taught martial arts for 15-plus years.

About Sensei David Dye:

Dye Sensei began his martial arts training in 1962 with the study of Kodokan Judo. He has studied a variety of arts, including Shito-Ryu, Shotokan Karate, Hawaiian Lua, etc. He holds advanced black belts across multiple martial arts. In 1967 he became a full time Costa Mesa Police Officer and retired in 1997 after serving 30 years. He is the recipient of a plethora of awards and recognitions from the highest echelons of the martial arts community, a published author, producer and expert consultant for the Film and Television industry.

Dye Sensei is the founder of Shuyokan, a dojo that has been serving the community of Costa Mesa since 1980 and offers group classes, seminars and private lessons for adults, youth and, law enforcement in both the traditional and practical training aspects of such martial arts as Yoshinkan Aikido, Kodokan Judo, Jujutsu, Shotokan Karate Jutsu and Hawaiian Lua.

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Costa Mesa Weekend Park Tour Announced

Just wanted to let everyone know that I will be conducting this park tour with fellow commissioner Jeff Mathews. Make sure you mark your calendar and join us in discussing your community park.


Kurt Galitski




CITY OF COSTA MESA Parks and Recreation Commission

N O T I C E Weekend Park Tour 

Sunday, August 29, 2010 

9:00 a.m. 


Welcome to the City of Costa Mesa Parks and Recreation Commission Park Tour. The tour will provide you an opportunity to meet with Commissioners and provide input. It is intended as an informational gathering, and the Commission members can take no action. The tour will begin promptly at 9:00 a.m.




1. Del Mesa Park 9:00 a.m. – 9:30 a.m.


2. Paularino Park 9:45 a.m. – 10:15 a.m.


3. Shiffer Park 10:30 a.m. – 11:00 a.m.


4. Wimbledon Park 11:15 a.m. – 11:45 a.m.


5. TeWinkle Park 12:00 p.m. – 12:30 p.m.


6. Volcom Skate Park 12:40 p.m. – 1:00 p.m.



Feel free to submit your comments regarding any of the parks listed above to:

Mailing Address: Parks and Recreation Commission

City of Costa Mesa

77 Fair Drive

P.O. Box 1200

Costa Mesa, CA 92628-1200

E-mail Address:

A passion for his community is the driving force behind Costa Mesa real estate professional Kurt Galitski of the Kurt Real Estate Group, one of Costa Mesa’s most fervent residents. In addition to representing the needs of buyers, sellers, investors and asset managers within his city and throughout Orange County, he has also dedicated himself to making a difference in the lives of his fellow citizens. A determined entrepreneur and proud family man, Kurt strives to provide every client with an exceptional level of attentive and knowledgeable representation.

The ability to adapt to ever-changing market conditions has enabled Kurt to thrive even in the most challenging of times. His thorough knowledge of the industry- from residential and commercial transactions, to new construction and development, to short sales and REO properties– ensures he is always available to meet the needs of his diverse clientele. Kurt’s concierge-level service is a professional signature; he has built a team of Costa Mesa real estate professionals, The Kurt Real Estate Group, designed to care for each client’s unique needs.

On Your Team,


Kurt Galitski

The Kurt Real Estate Group

Vice President, Weichman Realtors


Ca. Broker #1348644

Posted via email from The Kurt Real Estate Group

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