BluefoxToday blog : September 2010

The current real estate meltdown has been a true testing ground for anyone involved in its devastating turbulence. Homeowners have watched helplessly as their property values have headed south with little resistance. Home loan providers have worked under pressure for years to stay afloat in choppy waters full of creepy icebergs and many other deadly maritime hazards. Real estate agents are fighting to secure deals in a marketplace shrunk to a flat pie on life support from a full-blown strawberry cheesecake. The support industries are in it as deep as anyone else.

Something intriguing that could be rather meaningful for many in housing is in the works right now. Namely, the U.S. House just introduced a bipartisan - yes bipartisan, for change - bill that would require mortgage providers to come up with an answer to short sale requests within 45 days. It's common knowledge that mortgage banks usually take their sweet old time in reaching a decision on them. Sometimes they can't even make up their minds at all, ever, no "yes" or "no" at all, just deafening silence or bureaucratic runarounds until participants just give up, throw up their arms in disgust.

Underwater - the mortgage balance is higher than the property's value - homeowners would be big beneficiaries here. They would be informed in 45 days whether a short sale will work or not and then make plans for their next move regardless of the answer. Now they often don't know anything for months and many finally just decide to walk away from the mortgage. Failed short sales are one of the main reasons to climbing walk-away numbers.

First-time home buyers as well as other purchasers would get a much faster response to their offers, helping them with their strategies. The attitude of scores of real estate agents would change for the better toward the frequently ridiculously lengthy and complicated short sale process. Actually, even the mortgage lenders themselves would come out ahead in this, as they would be forced to make a decision and move on.

The bill does have merit aplenty, and should be passed. Who says Washington can't introduce useful housing legislation? Since the private mortgage sector was unable to satisfactorily act on this, the oft-maligned government stepped up to the plate with a well-designed bill that would yield nice dividends for the entire housing industry. 

Mountain's Edge August 2010 Real Estate Resale Market Report:

• Listings (9/15/2010):  316
• Under Contract (9/15/2010):  314
• Sold August 2010:  72

Since Last Month:  Listings are UP +39, Pendings are NO CHANGE, Sales are UP +10

Last Month's Mountain's Edge Market Report

View Mountain's Edge Homes For Sale Here (Updated Daily)

More Information on Mountain's Edge Real Estate Here

More Las Vegas Communities Here

My friend Ray Saenz recently commented on one of my blogs and suggested that I do an update on the upcoming Changes To The FHA Upfront Premium and Monthly Mortgage Insurance Premium.  This is a major change for FHA, and will have a significant impact on a Borrowers ability to qualify for a mortgage. 

The new Monthly Insurance Premium will go from a .55 multiplier to a .85 for LTV's of 95% or lower, and .90 for LTV's over 95%  This means that the Monthly payment will change from $46.49 to $76.08 per every $100,000 on a loan.   That is a difference of $29.59 on every $100,000, and could mean the difference a Borrower being able to qualify for a FHA or CHFA Mortgage in Connecticut.  This may look on the surface like not much, but as the loan goes higher and higher, so does the difference in the Monthly Mortgage Payment.  The Monthly Mortgage Payment on a $150,000 house now becomes $43.54 and on a $200,000 an increase of $59.18.  A Borrower might be able to qualify for a Mortgage under the existing Monthly Insurance Premium, but not under the new.  The Upfront Premium will go down from 2.25 points to 1.00 point, but his amount is rolled into the overall Mortgage and will represent a minimal impact to the monthly Mortgage payment.

The new Changes To The FHA Upfront Premium and Monthly Mortgage Insurance Premium.  Will go into effect on Monday October 4th, and will apply to all FHA Case Numbers that will be issued on or after that day.  It is important to remember that the change is based on the day the FHA Case Number is obtained and not the day of the Mortgage Application.  One might say what is the difference?  The difference is that on many occasions there is already a FHA Case Number on a property, and that FHA Case Number needs to be cleared before another FHA Case Number can be issuedon the same property.  This means the Lender that obtained the previous FHA Case Number needs to cancel it with FHA before the new Lender can obtain one.  This could take days depending on how quickly the first Lender acts on the request.

Another cause for a delay in obtaining an FHA Case Number is when the Borrower is trying to do an FHA Mortgage with one Lender, and that Lender for whatever reason is not able to do the Mortgage.  If the Borrower then goes to a different Lender to try to obtain a Mortgage on the same property, the FHA Case Number will have to be transferred to the new Lender.  This will actually present a second problem, because since it is still the same FHA Case Number it will continue to apply even though the change in Lenders is after October 4th.  This will present issues with the disclosure of the Good Faith Estimate (GFE).

You need to be mindful of this Changes To The FHA Upfront Premium and Monthly Mortgage Insurance Premium, and if possible even be a little pro-active.  If a Borrower is making an offer on a property within the next week, ask if anyone has tried to do an FHA Mortgage on the property previously.  If so ask the Listing Agent to contact the previous Lender and start the process to clear the FHA Case Number.  If you are a Listing Agent and have a property that had an FHA Case Number previously issued, take it upon yourself to contact the previous Lender and have them clear the FHA Case Number even though you do not have a new offer yet.

If we are all on top of the new Changes To The FHA Upfront Premium and Monthly Mortgage Insurance Premium, we can eliminate last minute surprises that could possibleblow a purchase apart.  As mentioned in the beginning of this blog, a Borrower might be able to qualify for a Mortgage under the existing Monthly Insurance Premium, but not under the new.  If we all work together we can make this transaction a smooth one and not put our clients through needless stress.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308, gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.

Quite often First Time Homebuyers have a need for someone else to be on a mortgage with them in order to qualify to purchase a home.  While conventional loan products have a provision for this, it is not a very good one, and do not really provide an advantage to do so.  The only true option for a Borrower that cannot qualify to purchase a property on his or herr own is FHA.  FHA Non-Occupying Owner Borrower Mortgages have a couple of options.

FHA Guidelines Section 606.02 Non-Occupying Owner Borrowers, states:

"When there are two or more borrowers, but one or more will not occupy the property as a principal residence, the maximum mortgage is limited to a 75% LTV.  However, maximum financing (as described in sections 605 to 605.03) is available for borrowers related by blood, marriage or law (spouses, parent-child, siblings, stepchildren, aunts-uncles/nieces-nephews, etc.), or for unrelated individuals that can document evidence of the family-type longstanding and substantial relationship not arising out of the loan transaction."

• So if you have a Non-Occupying Owner Borrower who is not related to the Occupying Borrower, they need to have a 25% downpayment.
• It the Non-Occupying Owner Borrower  is related to the Occupying Borrower, then they only need to have a 3.5% downpayment.
• Both the Non-Occupying Owner Borrower's income & debts, and  the Occupying Borrower's income & debts are used in qualifying for the FHA Mortgage.

As stated in the beginning conventional loans also have a provision by which there can be a Non-Occupying Co-Borrower, but there is no advantage to doing so.  This is because when a Non-Occupying Co-Borrower is used in qualifying for a conventional mortgage, the Occupying Borrower still needs to be able to qualify for the mortgage solely based on his or her own income.  Furthermore:

• The Total-Debt-To-Income Ratio cannot exceed 43%
• Loan-To-Value (LTV) cannot be higher than 90%
• And at least 5% of the Downpayment has to be from the Occupying Borrowers own funds.

So this leads to the question, why would anyone take on the financial obligation for a mortgage, if their income cannot assist the Occupying Borrower in qualifying for that mortgage?  I for one fail to see any sense in doing that, and therefore to the conclusion that the only viable option a FHA Non-Occupying Borrower Mortgage.

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Info about the author:

George Souto is a Loan Officer who can assist you with all your FHA, CHFA, and Conventional mortgage needs in Connecticut. George resides in Middlesex County which includes Middletown, Middlefield, Durham, Cromwell, Portland, Higganum, Haddam, East Haddam, Chester, Deep River, and Essex. George can be contacted at (860) 573-1308, gsouto@mccuemortgage.com, or visit my McCue Mortgage Homepage.

Have you ever seen anyone drive by your home slowly and take a picture of your home?  Wouldn’t that be creepy?

It happens quite a bit and for different reasons:

• Sometimes when your insurance policy needs to be updated
• Sometimes when an appraiser is using your home as a “comp”  (or comparable) and there isn’t a good exterior photo available in public records
• Sometimes a Tax Assessor may need to update the file
• Sometimes when the home is in default, being sold as a short sale, or the lienholder needs to “update” a file a BPO is ordered

A BPO is short for a “Broker Price Opinion”.  Basically a BPO comes in two forms:   interior or exterior (commonly known as “drive by”.)

Interiors are commonly ordered for pre-list REO second opinion pricing, deed in lieu of foreclosure or a short sale.

Exteriors (the “Drive-By”) is commonly ordered for short sale, default and simply updating a file.  Please NOTE:  You do not have to be in default to have an exterior BPO ordered.  I do not want tenants paranoid or freaking out about this!  Here is a short tutorial on how to find out if a Las Vegas Area home is in default.

Our goals are different from appraisers.  Appraisers value the property and BPO agents formulate marketing strategy and analyze a list price for the home in today’s market.

Most BPOs are ordered from third party systems and we do not (generally speaking) receive orders from the lienholder or investors themselves.

Please feel free to ask questions about this process if you have any!  I have performed close to 2000 BPOs since 2007 and I just wanted to let potential occupants of these homes know what is going on with this tutorial.  Back in 2007 most homes were unoccupied but since this past spring many of the homes ARE occupied.

When you see me (or us) there is no need to panic, we are not here to “take your home” nor are we here “casing it for burglary”.  If you are curious why you may have been subject to the BPO, call your mortgage servicing company or your insurance company before you call the cops!

The absorption rate for Las Vegas Valley Area Short Sales is finally seeing movement. Inventory has INCREASED by +702 units.  Under Contract has DECREASED by -453 units.    Sold units have DECREASED by -75 units.

There are many reasons for the lack of closings in this market and it is outlined in this post. 

Short Sale Synopsis:

• Listings 9/15/2010:  6846
  
• Pending 9/15/2010: 9372
• Closed August 2010: 1073

Short Sales Currently Account for:

• 49% of All Las Vegas Valley Listings
• 31% of All Las Vegas Valley Sales 

Read here for last month's report on Las Vegas Area Short Sales.

Most Current Market Report For Short Sales

What Areas Do You Cover for your Las Vegas Area Real Estate Market Reports?

General Las Vegas Area Real Estate Market Reports are for MLS Areas 101-605 (the average consumer probably asks, what’s that?)  It means that I cover the cities of Las Vegas, Henderson, North Las Vegas including unincorporated Clark County Townships of Whitney, Paradise, Winchester, Enterprise, Sunrise Manor & Spring Valley.  They do NOT cover the areas of Boulder City, Pahrump, Laughlin, Moapa or Mesquite.

View More FAQ About My Las Vegas Area Real Estate Market Reports.

Cash REMAINS KING in the Las Vegas Area Real Estate Market!!!  It is important for every buyer in the Las Vegas Area Real Estate Market to understand who their buyer competition is in this currently competitive seller's market LV is enjoying!  It is important to understand how a seller looks at each financing type:

Cash Offers:  Generally have less contingencies and quicker close times.  A cash offer may be accepted even if it is lower than a financed offer.

Conventional Financing:  Less strict with lender required repairs but larger down payments and more strict credit guidelines.

FHA/VA Financing:  Requires more scrutiny with lender required repairs via appraisal.  In general these take longer to underwrite and close so a cash or conventional offer looks more enticing to the seller.  FHA Requires the deed to be seasoned for several months so some flips bought at trustee's sales are generally out as options when competing with multiple offers!

Other:  Less common and creative financing types such as Lease Options, OWC (Owner Will Carry), etc.  The "other" category INCLUDES auction terms!!

Last Month's Report

Most Current Las Vegas Sold Terms and Trends Report

What Areas Do You Cover for your Las Vegas Area Real Estate Market Reports?

General Las Vegas Area Real Estate Market Reports are for MLS Areas 101-605 (the average consumer probably asks, what’s that?)  It means that I cover the cities of Las Vegas, Henderson, North Las Vegas including unincorporated Clark County Townships of Whitney, Paradise, Winchester, Enterprise, Sunrise Manor & Spring Valley.  They do NOT cover the areas of Boulder City, Pahrump, Laughlin, Moapa or Mesquite.

View More FAQ About My Las Vegas Area Real Estate Market Reports.

Las Vegas Real Estate Inventory is still increasing RAPIDLY.  It is rising so quick and I predict that we will emerge from a seller's market to stable market territory in the next month to three months. This is more than likely due to the first time buyer's tax credit expiring.  This will afford more opportunities for buyers to have less competition when placing offers in homes.

Las Vegas Area Market Activity (Includes North Las Vegas, Henderson and Las Vegas)

• Listings (9/15/2010):  14087
• Under Contract (9/15/2010):  13547
• Sold August 2010:  3518

Short Sales:

• 49% of Listings
• 31% of Sales

REO (Foreclosures, Bank Owned:)

• 20% of Listings
• 45% of Sales

In One Month:  Listings are UP +185 units, Contracted Listings UP +474, Sales are DOWN -93 units.  Close ratios are going lower because much of the pending inventory is short sales which requires LONGER close times. 

 DOWN PAYMENT ASSISTANCE HAS NOT ENDED FOR FIRST TIME BUYERS, HOWEVER!!

Last Month's Pending Report

For Most Current Las Vegas Real Estate Inventory Market Report Click Here.

What Areas Do You Cover for your Las Vegas Area Real Estate Market Reports?

General Las Vegas Area Real Estate Market Reports are for MLS Areas 101-605 (the average consumer probably asks, what’s that?)  It means that I cover the cities of Las Vegas, Henderson, North Las Vegas including unincorporated Clark County Townships of Whitney, Paradise, Winchester, Enterprise, Sunrise Manor & Spring Valley.  They do NOT cover the areas of Boulder City, Pahrump, Laughlin, Moapa or Mesquite.

View More FAQ About My Las Vegas Area Real Estate Market Reports.

Starting in January, 2011 the next part of the journey in underwriting loans that are "smart" and will "survive" the uncertain real estate market begins.  It's being called the Loan Quality Initiative, or LQI.

Fannie Mae's system will "Fail" loans that might otherwise be approved, if they do not meet mandatory Debt To Income Ratios... NO EXCEPTIONS.  45 is the hard and fast maximum number.

This is significant - because verified High Liquid Assets have ALWAYS been considered an "off setting" factor.

Let me give you an example... Let's say you are moving from California to be closer to all of your children here in North Carolina.  If you own a home in California, and you've decided to rent it, instead of trying to sell it right now... we have to count that payment in your ratio.  

Let's say with both your new house payment, and your "old" house payment, your ratio is 49 percent.  Now your ratio is not REALLY that high, because you are going to get rent to offset your payment in California - but for the computer underwriting the loan, we won't be giving you credit for that rental income until you've received it for 12 months.

Fine, you have a 48 percent Debt to Income Ratio... if you have 401Ks, stock accounts, CDs, Money Market Accounts that total a couple hundred thousand - we could get that loan approved. (we actually closed this exact scenario last month).

Starting in January of 2011 - we would be suggesting that you buy a smaller home here, or put more money down, or do SOMETHING to get your ratio to 45%... makes FHA Mortgage Loans in NC look more attractive #justsayin'.  Wish our maximum FHA loan was higher than the $295,000 cap!

If you have questions about qualifying for a home in North Carolina - call Steve and Eleanor Thorne, 919-649-5058 Certified Mortgage Professionals.  We have the Best Rates and the Lowest Fees available.!

Las Vegas Area REO Inventory has RISEN since last report (+121 units), Under Contracts have RISEN (+134) units  Closing data has FALLEN (-4) units.  Low interest rates have spurred a flurry of buyer interest & activity  and it continues.  

REO sales accounted for 45% of all Las Vegas Area Valley resale closings in July 2010.  REO listings account for only 20% of total resale listings.

Current Listed Bank Owned Statistics:

• Listings (9/15/2010):  2859
  
• Under Contract (9/15/2010): 2809
• Sold August 2010:  1586
  

View Last Month's Report Here  

For Most Current Las Vegas REO Inventory Market Report.

What Areas Do You Cover for your Las Vegas Area Real Estate Market Reports?

General Las Vegas Area Real Estate Market Reports are for MLS Areas 101-605 (the average consumer probably asks, what’s that?)  It means that I cover the cities of Las Vegas, Henderson, North Las Vegas including unincorporated Clark County Townships of Whitney, Paradise, Winchester, Enterprise, Sunrise Manor & Spring Valley.  They do NOT cover the areas of Boulder City, Pahrump, Laughlin, Moapa or Mesquite.

View More FAQ About My Las Vegas Area Real Estate Market Reports.