Get Your Government Hands Off My Mortgage Industry!
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.
