Archive for February, 2010
NEW FHA GUIDELINES
Changes are headed our way from the FHA.
New guidelines are coming down the road. I believe these are good changes for our industry in that perhaps they will stem the bleeding in the future with regard to people just “walking away” from a home. They’ll actually have skin in the game.
Here are the new proposals: The mortgage insurance premium that is paid “up front” will be increased from 1.75% to 2.25%. This increase is slated to take effect April 5, 2010. There’s a proposal to reduce seller contributions to NO MORE THAN 3% (down from 6%). And, there’s talk of increasing the down payment for persons with credit scores lower than 580 from 3.5% to 10%. Finally, there’s talk of raising the “annual mortgage insurance rate” to more than the current .55%. The FHA is in financial trouble–no surprise there!
Because of the unstable economy, most realtors are relying heavily on FHA for their first time home buyers. These changes, while they may seem extreme are actually being applauded by realtors, myself included. The reason we’re all in this mess is because someone in Washingon DC said that people deserve to own a home, so let’s make it easier….well, now we’re ALL paying for that brilliant comment!
Check back to see what has actually been enacted with regard to the FHA’s new rules.
(Realtor Mag, March 2010)
FIRST TIME HOMEBUYER TAX CREDIT
Once again, the tax credit is coming to an end.
It’s set to expire on April 30, 2010. We’ll see if we have the rush to write contracts in the coming weeks. If you’ve been pre-approved and are just waiting for the right house, you’ll be fine for the next few weeks. However, I wouldn’t be looking a short sales. These transactions take a bit longer. Stick with the “regular” sales or lender owned.
I took a couple out to look at homes last weekend. They have put offers in on several homes over the last few months and each and every time there is a multiple offer situation. It can be very disappointing. When you find a home you like, make sure your agent calls the listing agent (if possible) to ascertain whether or not there are any offers on the property. Offer what you would be willing to pay. For example, if the house (lender owned) is $80,000. Are you willing to pay that? What about if you end up in a multiple offer situation? You’ll be asked to come back with highest and best. You could be bidding against cash offers. If you’re an FHA buyer, the seller will most likely take a conventional loan over yours. If you’re asking for seller contribution for closing costs, that may make your offer less attractive if there are others that don’t ask for contributions. Be prepared to know how you will proceed. Once you’ve made an offer on a home, you’ve got an emotional stake in it, and it’s disappointing when it falls through.
I put an offer in on a home and there were multiple offers, so we moved on. I got a call from the listing agent 2 weeks later that all the other offers had fallen through and was my buyer still interested. That was a good outcome as my buyers will close in about a week.
It will be interesting to see if when the tax credit expires the number of offers presented on a property decreases and if the market slows down substantially. I’ve talked to people who don’t care about the tax credit and then some who are counting on it. Should be an interesting summer in the RE business.
GOING GREEN–WITHIN THE HOUSING INDUSTRY
I’ll have to admit, I’m not a big fan of the “green”
movement. Never have been. I’ve always been of the mind that if I want to recycle I will because I think it’s important, not because some government bureaucrat tells me to. So, in light of the global warming hoax that’s been perpetrated upon us, I feel vindicated. Of one thing I’m sure, the weather is cyclical just like the markets.
So to all of the real estate agents who have “gone green”, hopefully, there are still people out there who will feel the need for this type of service. Not that I don’t think that conserving energy and water are important, I just really don’t like being told that I have to or that my house isn’t up to code and therefore we’re going to fine you. This whole notion of “green” was just another way for people to make money through scare tactics and fear mongering. All that the global warming hysteria has done is produce several millionaires and lots of fools who believed them.
Until we stop drinking the kool aid folks, we’ll go like sheep to the slaughter.
ARIZONA’S ANTI-DEFICIENCY STATUES
Do Arizona’s Anti-Deficiency statutes apply to
short sale transactions? Well, according to counterpoint opinions in the Maricopa Lawyer, maybe yes, maybe no…it depends. One attorney states that there is currently no reported Court decisions regarding whether the statutes apply to short sales. This link will take you to the attorney’s website where you can read the entire statute.
He states “the mere fact that the lender releases the collateral so that the seller can transfer free and clear title to the buyer in a short sale does not necessarily mean that the lender is releasing the debt. Thus if the seller/borrower wants to avoid the risk that the lender may pursue a deficiency resulting from a short sale, he/she should have the lender sign an agreement that the lender releases the collateral and cancels the debt in exchange for the agreed upon proceeds from the short sale.” (emphasis added) (Kent S. Berk, Berk & Moskowitz, PC)
In addition, the law purports to apply to “purchase money loans” only, i.e., the down payment and not necessarily the seconds that were taken out on the property. Another lawyer claims that “cautious legal counsel will generally advise a borrower to reject any lender short sale proposal on qualifying property and a purchase money note if the lender conditions approval on the borrower agreeing to remain liable for a deficiency or providing the lender an unsecured note. Why should a borrower agree to a deficiency where none exists under Arizona law?” (Marc McCain, McCain & Bursh, PLC)
While I am not a lawyer I believe that, for realtors, these are uncharted waters and knowledge is power. I am in no way advocating that we advise our clients of what to do in these scenarios…..of course, direct them to speak with competent legal counsel. We should be sources of information for our clients.
HOMEPATH MORTGAGE ASSISTANCE
Big news in the real estate business….you can
Let me know if you need help. This is yet one more way to get first time home buyers into the market. Don’t let this pass you by!!
