Arizona Mortgage Expert

My opinion on the Phoenix Real Estate Market

In the last (30) to (60) days our market has changed.  The Banks and GSE’s (FNMA/FHLMC) acting as sellers are trying to control the release of their inventory in an effort to stabilize our market – Less supply, increasing demand.  Buyers are encouraged to make their ‘highest & best’ offers on properties in order to get an accepted contract on a home.

In my opinion, this is similar to what got us into this situation in the first place – Artificially trying to increase values.  The issue here is that we (as lenders) have more restrictive guidelines on appraising these properties so we are seeing lower values as they compare to sales prices.  A bank on the sell side wants the most they can get for a foreclosed on property but on the buy side they are scrutinizing the subject property so as not to create another scenario as we saw three and four years ago.

They want it both ways – In fact, the selling bank may be the same lender the new buyer uses.

As I have said here before, “buyers do not get discouraged” – We (as lenders) are much more careful when we attach a value to a home; the collateral, your new home, must have a realistic and documented value for the area.

Housing and Economic Recovery Act - Truth In Lending (TIL) Act

As part of the Housing Economic and Recovery Act recently passed by the Federal Government, there are changes forthcoming to the Truth In Lending Act.  These changes go into effect for applications taken after 07/30/09.

•  Application Fees cannot be collected until three days after the initial Truth In Lending is disclosed to the buyer.  This is part of our application package so the buyer signs this form at time of application (whether electronically or in person).  There will be no impact on the ordering of the appraisal or processing of the file.

• The Final Truth In Lending must be given to the buyer three days prior to closing.  Our Final Truth In Lending can be issued after our closing department has signed off on the HUD1.  The buyer (s) will need to sign the Final Truth In Lending and then we will have to wait three business days before signing the loan documents.  If there are changes in fees increasing the APR by more than .125%, there will be an additional three day waiting period.  Sundays and Federal Holidays are not counted as business days .

 I will make a concerted effort to make sure that our Final TIL is signed at least three days prior to the close of escrow.

Checking Your Credit And Why It's Important

Most experts suggest you have your credit checked three to four times per year.

I would agree, it doesn’t hurt to have it checked to make sure there is no erroneous or inaccurate reporting.  Case in point, I had a customer who recently closed and his report (Trans Union) was reporting him deceased due to an error at the Social Security Administration.  Sometimes all it takes is for one input error and these types of errors can impact your ability to qualify for a loan.  Depending on the type of error, these corrections can take (30) to (60) days to fix.

Taking the mystery out of ECOA - Equal Credit Opportunity Act

The ECOA - Equal Credit Opportunity Act requires the following:

• Lenders provide fair and equal treatment to protected classes of individuals.
• A decision on a request for credit extension is provided within 30 days of accepting an application for an extension of credit from any applicant. 
• That disclosures regarding the reason for taking an adverse action on a request for credit extensions are provided to the consumer. 
• A decision on a loan is defined as: 
  •  Approved 
  • Approved with conditions 
  • Clear To Close 
  • Denied (Branch request or UW) 
  • Borrower Withdrawal 
  • Closed for Incompleteness 

Buyers Don't Get Discouraged

Sellers (if banks or GSE’s (FNMA/FHLMC)) and short sales are taking a long time to get paperwork executed and completed and then we, as lenders, are delayed in getting our files into the underwriters. Underwriters, in most cases, are still carrying a heavy workload and delays there should be expected. Interest rates have increased in the last two weeks and most experts are unsure if there will be another immediate drop or if there will be additional increases in the upcoming months.

There are fantastic deals on real estate right now, especially if you have buyers who are going to use the First-Time Home Buyer tax credit or even go FHA.  However, just be patient and keep open lines of communication with your Realtor and Lender.

May 2009 Residential Sales in Greater Phoenix Area

I know I blog about mortgage issues, but this is some encouraging news about the Phoenix real estate market.

May residential sales for Greater Phoenix were 9,290. The last time there were more residential sales was 45 months ago in August 2005 when sales were 10,031.  There were 3,653 more sales than in May 2008.

Attached is a graph measuring August 2005 and the last year in sales.

Thanks to Fletcher Wilcox and Lynnette Scheier - Grand Canyon Title Agency, Inc. - www.GCTA.com.

FHA Allowance of FTHB Tax Credit

This update from Mortgagee Letter 2009-15 establishes guidelines for use of the first-time home buyer tax credit as settlement funds.

 

Courtesy of Loan Tool Box - www.loantoolbox.com and Jeff Mifsud.

 

Here are the 10 things you need to know about these changes:

1. The IRS tax credit refund can be made only to the taxpayer and not a third party.

2. Government agencies may offer tax credit advances with second liens.

3. The buyer cannot get cash back through the tax credit advance.

4. The 2nd lien may not exceed the down payment, closing costs, and prepaid expenses.

5. The 2nd lien may be "soft" or require payments.

6. Payments on 2nd liens must be included in ratios unless deferred for at least 36 months.

7. Balloon payments on 2nd liens may not be before 10 years.

8. FHA approved lenders and FHA approved non-profits may purchase the tax credit.

9. Tax credit purchaser may not charge more than 2.5% of the tax credit as a fee.

10. IRS may deduct from the tax credit: unpaid student loans, tax liens and garnishments.

 

For more information - You can read the HUD update  - http://www.hud.gov/offices/adm/hudclips/letters/mortgagee/files/09-15ml.doc

$8,000 First-Time Homebuyer Tax Credit Used as a Downpayment....Not exactly......

Special Update:

New guidelines were issued today for the monetizing of the $8,000 first-time
homebuyer tax credit that was announced by HUD and then delayed by HUD. The
primary change is that the money cannot be applied toward the 3.5% down payment.
It can be used for a larger down payment or applied toward closing costs.

More details to follow.

On Hold - Using the $8,000 First Time Home Buyer Tax Credit as a downpayment

I posted last week how the Secretary of the Department of Housing and Urban Development (HUD) announced that home buyers would be able to use the $8,000 first-time home buyer tax credit for down payments on FHA loans by using a bridge loan.  HUD posted this information on its website - HUD Mortgagee Letter 09-15.  Since then, HUD has removed this information from its website and that the program is on hold.  It seems that HUD and the IRS are researching the details of the program and is on indefinite status. 

If this changes or if there is any new information, I will re-post.

$8,000 First Time Home Buyers Tax Credit - Could it be used as a down payment?

This has not been approved as of yet, but today it was announced that FHA insured mortgages may soon use the new first-time home buyer $8,000 tax credit as a down payment. 

US Department of Housing and Urban Development secretary Shawn Donovan made this announcement at a National Association of Realtors legislative summit this morning.  An official release won't be until next week, however, this initiative will allow "FHA-approved lenders to monetize the tax credit through short-term bridge loans".  Borrowers can access the funds at the time of close.

For more details, please read at http://www.housingwire.com/2009/05/12/fha-preps-tax-credit-for-down-payment-use/.

As soon as this is official, I will re-post the details.