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Empyrean Funding — Wed, 10 Nov 2010 19:58:52 +0000

As you all know, the Republicans took control of the House of Representatives, while the Democrats retained control of the Senate. This will undoubtedly create a “lame duck” session that will not only last over the next few months but most likely for the entire next term as the different parties fight over the direction of the country. As if Businesses and consumers haven’t already been feeling a great deal of uncertainty about the economy and legislation, this is certain to add to the confusion as the gridlock will dampen confidence even more.

To add to the political craziness, the Fed announced another $600 billion in government involvement in the purchase of Treasuries to help pump more money in the economy. Not long after the announcement, leaders of Japan, China, Brazil and Germany denounced the move with the German Finance Minister, calling the Fed “clueless.” Additional interference by the Fed to push down the dollar is upsetting many as the Fed attempts to make U.S. goods and services less expensive for export in the hopes of facilitating the economic recovery. While there is some value in devaluing the dollar, adding to government debt is a serious concern and undermines confidence in the business sector and worldwide financial markets.

It’s interesting how the media came out immediately after the announcement with commentary about how mortgage interest rates will drop as a result of the Fed decision. I have always emphasized how mortgage rates are tied to mortgage bonds and not Treasuries. In fact, mortgage rates have risen since the Fed announcement contrary to what most of the so called “experts” had said.

Even with the recent increase in rates, there is a tremendous opportunity to reduce debt payments for both residential and commercial property.

Give us a call to see how we can help you reduce your payments.

P. Jacob Yadegar

Empyrean Funding Inc.
Your Mortgage Loan Specialist
Commercial and Residential
310-571-3672
310-571-3681 fax
www.empyreanfunding.com

Your referrals are the lifeblood of our business!

Money Matters – Interest Rates and Mortgages

Empyrean Funding — Wed, 21 Jul 2010 17:03:17 +0000

Good Morning,
The Dollars keep coming!! Investment in U.S. debt continues to increase as the Dollar has once again become the single dominant currency of the World. Just a few months ago talk was everywhere of the dollars demise due to the Euro and now with the massive problems facing Europe, the Dollar has once again retained sole dominance at the top.
While this is great for interest rates, it does have its downside as the recent strength will make our goods more expensive. With the stubbornly high unemployment rates we need to be able to sell more of our products to the world to create and keep jobs.
Remember China agreed to allow the Yuan to appreciate against the US Dollar but that process will take years if not decades to complete.
China’s currency has been kept artificially weak so that Chinese goods are more affordable to global consumers giving Chinese manufacturers an edge over the competition. This surplus is what China has been using to buy U.S. Bonds helping keep interest rates dramatically lower in the U.S. and thus the U.S. response somewhat tempered.
We now have some of the lowest rates in over 50 plus years so there is no better time historically to take advantage of this and lock in rates for the long haul. We have been extremely busy putting transactions together for our clients and look forward to speaking with you about your specific loan needs for your commercial and residential loans!
P. Jacob Yadegar
Empyrean Funding Inc.
Your Mortgage Loan Specialist
Commercial and Residential
310-571-3672
310-571-3681 fax
www.empyreanfunding.com
jyadegar@empyreanfunding.com

Your referrals are the lifeblood of our business!

Money Matters – China and Interest Rates

Empyrean Funding — Fri, 25 Jun 2010 17:07:55 +0000

I have taken a number of calls regarding China’s announcement that they would allow the Yuan to appreciate against the US Dollar and what impact that may have on interest rates. China’s currency has been kept artificially weak so that Chinese goods are more affordable to global consumers giving Chinese manufacturers an edge over the competition.

This surplus is what China has been using to buy U.S.Bonds helping keep interest rates dramatically lower in the U.S. and thus the U.S. response somewhat tempered. Now that the complaints about unfair trading practices by China startto rise as more countries have troubled economies, the Chinese decided once again to preempt the world by announcing that they will allow theYuan to float. Coincidentally, the G-20 meeting of the worlds industralized nations is set to begin this week and China is on thehot seat for their currency and trade policy.

The downside of the currency appreciation is that the Chinese willhave fewer dollars to buy our bonds, which may put upward pressure oninterest rates in the long run. The big question is when and how farwill the Chinese allow the currency to increase? Just as in 2006 when I published a column titled “When will the bubble burst?” referring to the real estate market, I have been saying for several months now that there is a very high likelihood that interest rates will rise significantly. The big question is when and by how much? While it’s impossible to determine the exact timing of these types of events, the macro picture is pretty clear.

Interestingly, Alan Greenspan had an opinion piece in the Wall Street Journal called the “U.S. Debt and the Greece Analogy” wherein he talks about the increased likelihood of higher interest rates. “Don’t be fooled by today’s low interest rates. The Government could very quickly discover the limits of its borrowing capacity.” While I’m not Alan Greenspan, I did predict a real estate bubble which he claims he could not have seen coming so I am confident that higher interest rates are a real possibility in the mid to long term as we continue to push our debt levels higher.

P. Jacob Yadegar
Empyrean Funding Inc.
Your Mortgage Loan Specialist
Commercial and Residential
310-571-3672
310-571-3681 fax
www.empyreanfunding.com

Your referrals are the lifeblood of our business!

Empyrean Funding – Money Matters – Rates On the Rise!

Empyrean Funding — Thu, 18 Feb 2010 17:11:49 +0000

Good day. Some recent events are causing some concern about the inevitability of higher interest rates in the mid to long term. The Fed has announced that it will not extend its program to purchase U.S. Treasuries and mortgage backed securities bringing to an end the $1.20 Trillion program. In a recent speech, the Fed announced that while it will keep short term rates at or near zero, they will begin to slowly reduce their balance sheet by selling off portions of the debt that have purchased over the last 12 months. This in addition to the record amount of debt being issued will put upward pressure on interest rates.

Additionally, China sold off a record amount of T-bills and other U.S. Debt holdings in December to a tune of $34 billion giving up its first place ranking as the largest owner of U.S. Debt to Japan. While this is not of immediate concern as the Chinese are still net purchasers, it does add to the abundance of debt being issued and in order to entice buyers, rates will ultimately have to rise.

With that said, we have sourced several new sources that are offering excellent products and programs for both residential and commercial loans. Examples of some of the recently closed transactions are below:
$1,500,000 – cash out refinance on a residential property – 10 yr fixed rate with an interest only payment option at 5.625%
$2,750,000 purchase loan for a residential property on a 15 yr fixed interest only with a rate of 5.875% – 75% financing
$9,275,000 apartment financing on a 10 yr fixed rate at 5.665%
$6,500,000 cash out refinance of a retail/residential complex at 6.125% fixed for 7 years

Larger residential loans above $729,750 along with cash flow positive and income producing commercial real estate loans are becoming more readily available in the marketplace.

Given market and economic conditions, there is no reason for anyone to be taking interest rate risk on short term loans as there is a very high likelihood that interest rates will rise going forward. As always, if we can be of any assistance, please don’t hesitate to call on us.

L.A Business Journal – Prolonging the Pain

chiru — Mon, 23 Nov 2009 17:17:21 +0000

Clearly, we’re in the worse recession seen since the 1930’s. Unemployment continues to rise and is over 12.7% in Los Angeles, while the rest of the country is not far behind at 10% . If you include those who have had their benefits expire, we are well north of 17%. That’s one in six people that are ready, willing and able to work that are unemployed.
In recent weeks, the Federal Deposit Insurance Corp has seized Cal National Bank based in Los Angeles and United Commercial bank as it continues to work towards cleaning up the defunct banks and financial institutions that are basically operating without a pulse. Recent reports indicate that our state budget may have a larger deficit than expected and will need more cuts and tightening to deal with the shortfall.
Interestingly, the government has been touting that 650,000 jobs have been saved or created with stimulus spending. A more in depth review of the numbers as posted on www.recovery.gov shows that in California alone we have received $8.18 billion and created 110,185 new jobs at a cost of $74,238 per job. In some instances, like South Carolina the cost is closer to $1.50 million per job.
As a small business owner in Los Angeles, it doesn’t cost me nearly $74,238 to create a job. In fact, if I was given a tax break for this amount, I would be inclined to create three new jobs that would be longer lasting, more productive and much more beneficial to the City and State than any government created position.
While some have jumped on the band wagon of “the recession is over and behind us,” others, like myself, are far less optimistic and much more realistic about the facts. A statistical recovery based on programs like clash for clunkers are hardly cause for celebration. All of these “temporary” programs once taken off life support will most likely flat line and cause the GDP figures to drop and unemployment to rise.
In fact with the current economic conditions, revenues for the City of Los Angeles and the State of California will continue to decline as consumer spending slows, property values drop and unemployment continues to grow. It frightens me to think that we view the current market conditions with too much optimism and haven’t thought about what steps need to be taken to lessen the pain if this recession lasts for another year or two.
Unfortunately we still have not come around to making the tough decisions that need to be made to turn our local, state and national economy around. We continue to live on credit like a shopaholic who just can’t refuse that one last purchase at the department store.
Instead of providing incentives for productivity and enabling the intelligence and entrepreneurial spirit that drives Los Angeles, we continue to subsidize and prolong our pain. Politicians try to do please their voters when they are elected to serve us. Until we individually decide to change our ways, our elected officials will continue to spend recklessly as we pass the buck to future generations.
Californians, especially those in Southern California, are historically very resilient. We have one of the most diverse economies, brightest people and most advanced technologies in the world. We have to go back to creating more incentives to enable our small businesses to continue to create leading edge enterprises to get us through these tough economic times. Increased taxes and wasteful spending will only worsen our predicament and ultimately the quality of life for all of our residents.

P. Jacob Yadegar is the founder and CEO of Empyrean Funding, a Los Angeles based company specializing in residential and commercial loans and real estate. He can be reached at jyadegar@empyreanfunding.com. 310-571-3672

Empyrean Funding – Money Matters – Market Conditions

chiru — Thu, 12 Nov 2009 17:19:59 +0000

Good Morning,

Clearly, we’re in the worse recession we’ve seen since the 1930’s. Unemployment continues to rise and is over 10% and if you include those who have had their benefits expire, we are well north of 15% with some estimates over 17%. That’s one in six people that are ready, willing and able to work who are unemployed. Given current employment conditions, the Federal Reserve decided to not only leave rates unchanged but left language indicating that rates will remain low for the foreseeable future as there are to many signs of weakness still plaguing the economy.

For months I have been saying that the biggest threat to the economy is deflation and recent figures indicate that consumer prices are down 1.30% compared with a year earlier. A growing rift between policy makers and economists who believe the central bank has plenty of time to act before inflation flares and those saying rate increases may happen sooner is probably the most important issue. While long term fears of inflation may have merit, the short term fears of inflation are irrational.

The Federal Reserve can afford to keep rates low for some time as there’s a lot of excess slack built into the system, and it’s not going to go away quickly. I don’t expect to see rate increases in 2010 given current conditions. Our production is well below capacity and we have overbuilt everywhere and across most industries. Matched with reduced consumer spending and consumption, it will take a great deal of time and a much improved economy to take up all the slack in order to see rising prices and subsequently inflation. In the Fed Minutes of the Open Market Committee’s Sept. 22-23 meeting, officials weighed the risks that an anemic recovery would lead to “subdued and potentially declining wage and price inflation.” Later in the week, Fed Vice Chairman Donald Kohn and the New York Fed President William Dudley, said that inflation and growth will probably stay below the Fed’s objectives for some time, warranting low interest rates for an “extended period.”

With current market conditions, the government continues to take an expanded role with the passage of Health Care in the House on Saturday evening along with a number of renewed and expanded entitlement programs, government deficits can continue to explode. A one year extension of the $729,750 loan amount program was approved by the House and Senate along with an extension of the $8000 tax credit for first time the home buyer program. The recent proposals did not include an extension of the Mortgage back securities purchase program from its current level of $1.25 Trillion which is almost at full capacity.

While the economic reports are showing a slow recovery, for those that have a longer term approach, the timing couldn’t be better to buy or refinance real estate. Pricing for all types of real estate has dropped and sellers expectations have come down as more people are forced to sell. For those with the ability to buy, the timing could be a tremendous opportunity to build long term wealth by taking advantage of the current interest rates which are at historic lows. Many new lenders have entered the market and are buying up market share by providing very attractive loans on commercial properties that meet their lending guidelines.

Although times are tough, as Americans we will get through this as we always get through tough times. In the early 80’s as most were abandoning real estate due to higher unemployment and economic conditions, many used the timing as an opportunity to buy and to build long term wealth. We were at the forefront then and we are here now aiding our clients purchase and refinance all types of real estate with the most intelligent and creative financing options to take full advantage of the market. .

P. Jacob Yadegar
Empyrean Funding Inc.
Your Mortgage Loan Specialist
Commercial and Residential
310-571-3672
310-571-3681 fax

Your referrals are the lifeblood of our business!

Money Matters! Market conditions – Empyrean Funding

chiru — Mon, 12 Oct 2009 17:21:33 +0000

A recent survey conducted by the National Association for Business Economics concluded that more than 80 percent of economists believe the U.S. recession is over and an expansion has begun, but they expect the recovery will be slow as worries over unemployment and high federal debt persist.
With unemployment and the federal deficit continuing to rise a rapid recovery appears to be highly unlikely. The end of the recession that is currently being discussed by the media and economist is nothing more than a statistical recovery. We no longer are seeing the declines in gross domestic product that we have been experiencing for the last four quarters. Most economists are now predicting a slow growth rate of just under 3.0% thus signaling the end of the recession.
The Labor Department reported that the unemployment rate rose to 9.8 percent in September, which is the highest point in 26 years. Unemployment will continue to rise closer to the 10.5-11% mark in 2010 which signals some very difficult times ahead for those facing job losses. We have eliminated a net total of 7.2 million jobs, the majority of which will never come back and those employees will have to find work in other segments of the economy that will be driven by new technologies and industries.
Interestingly, most of the media is talking about the housing sector as a bright spot in the economy which is ignorant at best. Recent signs of stability in the housing sector are also statistical in nature as month over month figures are being touted as a recovery. On the other hand, when you view year over year figures the declines continue at an alarming pace. Additionally, some figures suggest that the number of unsold homes are also declining which is true but the reality is that the banks that hold delinquent mortgages (which by the way continue to rise) and foreclosed homes are not aggressively pursuing collection and resale of these bad assets. With the Federal Government lending to banks at close to no cost and applying very little pressure on the banks to get rid of their bad assets, banks are holding onto delinquent loans for extensive periods of time in the hopes that they can liquidate their bad debts in a timely manner as markets improve. If they were forced to liquidate, the number of unsold homes would climb dramatically and with consumers concerned about employment and spending we would see a continued sharp decline in the housing sector.
On the interest rate front, there is a significantly higher chance that higher interest and mortgage rates are around the corner. One of the most important indications of this was evidenced by an announcement last week by the Federal Reserve that they will not extend the $1.25 Trillion allotted to buy mortgage backed securities. To date, they have purchased $924 Billion which leaves $301B of funding left through the extended deadline of March 2010. Simple math tells us that over the next 25 weeks or so, the Fed could by a maximum of $12B per week which is significantly lower than what they have been buying in the past and in order for rates to stay low, new entrants must come into the market and pick up the slack which does not appear likely to happen as weakness in the dollar will continue to concern foreign investors and weigh on their appetite to purchase U.S. Dollar denominated debt.
With that said, there are a lot of opportunities given current market conditions. Prudent planning and investing will prevail over the long term as real estate in the long haul has always been a tremendous investment and paid handsome dividends not to mention the improved quality of life and enjoyment aspect for owner user properties.
As I have said and as evidenced by the recent omnipotence of American noble prize recipients, we, as Americans, will find and work our way out of the current issues we face but we must be more diligent and realistic about market conditions and more often than not, take the facts as presented by government and the media with a grain of salt.
As always, we are available to assist you with all of your real estate financing needs and continue to stress that the right financing can make all the difference!

P. Jacob Yadegar
Empyrean Funding Inc.
Your Mortgage Loan Specialist
Commercial and Residential
310-571-3672
310-571-3681 fax

http://www.empyreanfunding.com/
Your referrals are the lifeblood of our business!

Fed Leaves rates unchanged – Money Matters! Empyrean Funding

Empyrean Funding — Fri, 25 Sep 2009 17:23:36 +0000

Federal Reserve yesterday decided to leave rates unchanged which is not a surprise at all but what was a surprise to the market was that in their statement, the Fed indicated that they would not increase the amount of Mortgage Backed Securities they are buying above the $1.25 Trillion that they have committed to. This is a bit troublesome as the Fed’s departure from this market will most likely mean higher residential mortgage rates in the near future. The program was scheduled to terminate at the end of the year but the Fed extended the term through the end of the first quarter of 2010. This will give the Fed more time to wean off the program slower and enable the mortgage backed securities market to stabilize given the departure of such a large buyer. A sudden end could create a very rapid increase in rates for an already fragile market. I don’t see how the open markets will be able to absorb the vast amount and fill the gap that will be left with the Fed’s departure and rates will most likely have to rise in order to attract more buyers to the market.

With the massive amount of government debt that we are taking on and the fragile market conditions, a continued slow and steady approach is highly recommended. Recent consumer sentiment figures that came in higher than expectations tend to suggest that people are slowly getting more comfortable with the economic conditions however the underlying data shows that were not out of the woods just yet. Recent increases in the market since the March lows are a likely factor in the improvement to sentiment but housing sales, durable goods orders and capacity utilization figures are weak and continue to come in below expectations.

Globalization will certainly play a large role in getting us out of this economic downturn as developing countries will begin to drive demand as their citizens become more consumer oriented so the reliance on the U.S consumer may not be as dominant going forward as it doesn’t appear that U.S Consumer spending will recover any time soon.

As always, I will keep you posted on market events that impact us all.

Have a wonderful weekend.

P. Jacob Yadegar
Empyrean Funding Inc.
Your Mortgage Loan Specialist
Commercial and Residential
310-571-3672
310-571-3681 fax
http://www.empyreanfunding.com/

Your referrals are the lifeblood of our business!