I love March in Tucson with the smell of orange blossoms wafting through the air. The weather is usually about as good as it gets and there are lots of fun activities to enjoy such as the 4th Avenue Street Fair and Spring Training. It’s not too hot and the days get a little longer even though we don’t set back the clocks here. I enjoyed the beautiful weather this afternoon by taking a long bike ride. I must have been passed by more than a dozen pickup trucks on Soldier Trail during while riding north from Tanque Verde. There must have been a pickup truck rally at Agua Caliente Park!

This morning paper had an article on the front page with the headline “Tucson’s No. 1 for housing investors”. This assertion is made by Realtor.com and is based on the low prices for investors who buy distressed properties and fix them up for resale. Homes are selling faster this year and the prices appear to be stabilizing although it is too soon to predict a turnaround in housing. Just this past week, the government released a report that existing home sales are down. Of course, the report is national and real estate is local. As I indicated in my last post, buyers that I have pre-qualfied and the Realtors who referred them to me are telling me the inventory is low and the competition for homes that are priced right and in good shape is very competitive.

In other mortgage related news, FHA mortgage insurance premiums (MIP) are going up. The program attracts buyers who have credit scores as low as 600 and small down payments so it is no mystery that the defaults are still happening and raising the MIP will help to reduce the governments losses by collecting higher fees. Starting in April, new FHA loans will have 1.75% upfront MIP instead of 1%. The FHA loan requires a minimum down payment of 3.5% of the loan amount. The 1.75% upfront MI is added to base loan (96.5% of the sales price). Another change to anticipate is reduced seller concessions from 6% of the sales price down to 3%. The reduced seller concessions should have little impact on the loan program. Even though sellers do wind up paying for buyer’s fees, it typically wouldn’t exceed 3% in my experience. FHA loans have represented a significant percentage of home loans in the past four years.

If you have any mortgage related questions, call me, David Wolsky! david@davidwolsky.com – (520) 977-3300.

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Since my last blog entry, there has been a wide array of mortgage related news out there. I suspect that anyone who may have been following my blog might have been following some of this news. Most recently, news of changes to FHA mortgages was been announced. The upfront mortgage insurance premium is being increased from 1% to 1.75% in April. The annual premium which is paid monthly will increase by 0.1%. The average mortgage payment will increase by $5 per month.

In the past couple of months since my last post, there have been some encouraging signs in the housing industry especially here in Arizona. We have seen headlines of declining values for months, but the Case Schiller Index which tracks real estate values has had two consecutive months of increased values in Arizona even though most of the country is declining. According to Kiplinger’s most recent weekly newsletter, the inventory of unsold homes is dropping. I can tell you first hand that Realtors are having a hard time finding good properties to sell their buyers. Any decent homes that are priced right are getting multiple offers. A fair amount of transactions are short sales or foreclosures.

Another sign of the improving economy is job creation. The numbers are climbing in the private sectors. One possible impediment to our recovery is the price of gas at the pumps. Let’s hope those speculators won’t drive up the prices too significantly.

So now that you have a job and you are ready to take advantage of record low rates and the reduced cost of a home, call me! I’m here to help you with your mortgage approval. You can reach me, David Wolsky at (520) 275-2536 or david@davidwolsky.com.

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Bank regulators and Congress are looking to make more changes to guidelines for conventional and FHA mortgages. Congress would like to privatize Fannie Mae and Freddie Mac. The timing of these changes is challenging, considering the struggling housing market and anemic economic recovery. Among the proposed changes being proposed are increasing the minimum down payment for conventional loans to 20%, setting higher income and credit qualifications and reducing the maximum loan limits. FHA proposals include increasing the minimum down payment to 5%. These changes will certainly eliminate potential buyers, causing the housing market to take a longer time to recover.

Short Sales Aren’t Alway Short!

In my mortgage practice, a large percentage of my deals are “short sales” or bank owned properties. Recently, I had a customer that offered to buy a home with a short sale. The listing agent set the sales price, the buyers agreed and  after several weeks, the bank declined the offer. The house will be foreclosed instead. It is likely that another buyer could buy this house on the steps of the courthouse for a lower price than the short sale offer than my customer had offered on the home. I guess the bank decided they could make more money foreclosing the property than accepting the short sale offer. Why else would they turn down a qualified buyer. In fact, he decided to pay cash for the house and the bank still turned him down. Another factor that makes short sales so tough to execute is junior liens. In other words, the current owner of the house has a first and second mortgage and both lien holders have to agree on the sale. This dynamic usually means the junior lien holder (second mortgage or HELOC), is taking a beating on the balances owed on their loans.

I had another interesting deal that closed a few weeks ago. The buyer was buying a short sale and it took months for the first and second lien holder to agree on the terms of the sale. Once it was finally approved, we put the loan in process. The listing agent requested that we close the loan within three weeks of the short sale approval. During those three weeks, we find out that Fannie Mae was going to auction off the house in a foreclosure acout a week before we were scheduled to close. We were able to stave of the foreclosure with a lot of persuasion from the REALTORs involved with the sale and the buyer was able to get the house. The first mortgage lender probably should not have approved the short sale if they knew the investor (Fannie Mae) had begun foreclosure proceeding.

Foreclosures are much easier to buy. The lenders are offering terms to sell the homes. For example, Fannie Mae (FNMA) has a program known as HomePath. They typically will offer 3.5% of the sales price as a concession to the buyer for a primary residence or a second home. The offer 2% for investors. The program does not require an appraisal and there is no mnortgage insurance required if you have a down payment below 20%. A million foreclosures are anticipated again this year. Half of the homes in Arizona have negative equity and home values continue to go south. Hang in there as time heals all wounds. The first quarter of 2011 has been robust for home sales in Tucson.

Tucson Is #4!

According to Inman News, Tucson is considered a top five best markets for investors thanks to the declining housing prices. Of the top ten, only two cities were out west (Tucson and Salt Lake City). The report looks at economic data, housing and demographics including the median price of homes, loan data and foreclosure sales.

If you have any questions about real estate in Arizona, contact David Wolsky at 520-275-2536 or david@davidwolsky.com.

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PHH Home Loans and Coldwell Banker Home Loans has announced new minimum credit scores guidelines for FHA loans. Applications are now being accepted with credit scores as low as 500 with a 10% down payment, assets of at least two monthly house payments verified in addition to the 10% down payment and debt ratios of 31% of the gross income for the house payment and 36% for all debt including the new house payment. The minimum credit score for a 3.5% down payment, is now 600 (down from 620). These terms can vary lender to lender. Other mortgage banks use 580, 620 or 640 for their minimum scores.

What’s next? Congress has passed a bill to eliminate FHA! I doubt that it will ever become law. It is more likely that Fannie Mae and Freddie Mac will be spun off from the government. Personally, I think these proposed changes will devastate a very shaky housing market. FHA loans already account for a major percentage of all home loans. Spinning of Fannie and Freddie would result in much tighter underwriting guidelines including 20 to 25% minimum down payments. You can expect FHA to raise the minimum down payment to 5%.

I’m David Wolsky and I can answer any questions you may have regarding various loan programs available at PHH Home Loans and Coldwell Banker Home Loans. The email address is david@davidwolsky.com or call (520) 275-2536.

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With declining home values, rising interest rates and FHA, Fannie Mae and Freddie Mac changes around the corner, now is the time to take advantage of the Tucson housing market and buy that house! Even waiting 60 days could cost you thousands.

The Obama administration released their “white paper” this past week on the housing market. The impact of their proposals could launch major changes in the mortgage industry. FHA has already announced .25% higher mortgage insurance fees effective on April 18, 2010. You can expect monthly payments to rise $30 per month for a $150,000 mortgage. It is my understanding that the government would like to reduce FHA’s exposure from its 30% market share of mortgages down to 10%. It is unclear where homebuyers can turn to for loan programs that will be similar to today’s FHA mortgages. Tomorrow’s FHA home loans will consider raising the minimum down payment which are currently 3.5%. As you can imagine, most people are already strapped for down payment money. The report also suggested that higher down payments should also be considered for conventional loans. A 10% down payment was recommended. The current terms allow a 3% to 5% down payment depending on the borrower’s qualifications. Other changes include reducing the maximum loan amounts under FHA and conventional mortgages in the so-called “high cost areas”. Those changes do not appear to impact loan limits in Tucson or Phoenix. Fannie and Freddie have raised their fees charged to lenders to guarantee pools if their mortgages for resale to bond investors. Lenders will pass along those charges to consumers. The hits just keep on coming! Fannie and Freddie recently began charging additional fees for borrowers with a credit score below 740 and down payments less than 25%. Those charges will translate to slightly higher rates or points for consumers.

If you are on the fence to buy that house, don’t wait! Call me, David Wolsky for mortgage advice. I can be reached at (520) 275-2536 or at david@davidwolsky.com. My company, PHH Home Loans is offering a $350 lender credit towards are closing costs which are already amongst the lowest in the business.

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As for conforming loans, the limit is still $417,000 for most of the country. In higher cost areas such as Califonia, there are Conforming Plus loans with higher loan limits up to $729,750.

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Call David Wolsky at 520-275-2536 to help you through the mortgage maze!

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Back in Tucson, my mortgage license was approved. All originators (except for the originators in those big banks like Wells Fargo, Chase and Bank of America) needed to be fully licensed in Arizona on July 1st to continue taking loan applications. National licensing is also required for originators including a background check. Several thousand loan originators have left the business because of the licensing requirement and thousands have been forced to the sidelines while going through the licensing process.

FHA announced some good news and some bad news. The upfront mortgage insurance premium has been reduced from 2.25% to 1%! The bad news it the monthly premium has rise to .9% from .55% for most transactions. Please get off the fence if you are thinking about purchasing a home with a FHA loan! You will save about $40 per month for a $200,000 loan. The implementation date is scheduled to be September 7th, but I have heard that it may get postponed until October 4th.

In other mortgage news, interest rates have been continuing to drop to record low levels in Freddie Mac’s weekly surveys. Freddie Mac has been reporting the weekly average of mortgage rates for over forty years. The phones have been busy with refinance and purchase applications. Unfortunately, not every applicant will qualify these days. The most common reasons for denials include credit issues, lack of down payments or lack of  equity for refinances, inability to verify income or assets and insufficient work history. Don’t despair! We are getting our qualified borrowers approved! I welcome your inquires and referrals.

For further information, contact David Wolsky at david@davidwolsky.com or call 520-275-2536. I have over 16 years of experience!

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To get a free pre-approval for a FHA, VA or conventional loan, call David Wolsky at 520-275-2536 or email me at david@davidwolsky.com.

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