BlogArizona Category: Mortgages & LoansThis page contains all BlogArizona posts related to Mortgages & Loans. Read a specific post by clicking on a title below, or scroll further down the page to read through all posts in this category.Tuesday, March 11, 2008Foreclosure Rates and Neighborhood CrimeHere's an interesting statistic: For every 1% increase in a neighborhood's foreclosures, violent crime increases 2.33%.
Posted by Shannon Hubbard, Arizona Real Estate Agent on March 11, 2008 | Permalink | Comments (7) | TrackBack Saturday, March 08, 2008Recent Changes to the FHA Loan ProgramIt seems like the FHA Loan program is being looked to by government leaders, consumers, lenders and anyone in between to save the housing market. As a result there has been a lot of changes to this program within the past few months. 1. FHA Loan Limits Increased: The loan limit has been raised across the entire country. For Maricopa and Pinal County (which includes all the major cities in the Phoenix Metro area) the new limits are as follows:
2. Down payment Assistance Programs: While this is not a direct FHA feature, one of the major reasons to use the FHA program is because it allows third-parties to contribute towards a buyer’s down payment. The FHA loan limit is 97% of the value of the property but it allows the remaining 3% to be gifted from such non-profits as AmeriDream, Nehemiah etc. Recently HUD (which oversees FHA) challenged the legality of such gifts and threatened to shut them down. The down-payment programs fought back and recently won in court. 3. FHA Secure: This was an initiate from the White House designed to help subprime borrowers refinance into a FHA loan program. It is targeted to those on adjustable rate mortgages facing abrupt increases to their monthly housing payment. The HUD website has addition information, but here are some high points on how you may qualify for FHASecure:
There are further changes coming to the FHA program. Congress is working on a FHA Modernization bill which will decrease the down payment requirement but add risk based insurance (higher insurance for lower credit scores). So, stay tuned, nothing stays the same in today’s mortgage market.
Posted by Shailesh Ghimire, AZ Mortgage Guru on March 8, 2008 | Permalink | Comments (2) | TrackBack Monday, February 25, 2008AZ Home Inspector Licensing Board going away?Arizona Home Inspectors need your help! Arizona's home inspector licensing agency, the AZ Board of Technical Registration (BTR) is inefficient, expensive and allegedly corrupt. In fact, Arizona lawmakers are thinking about eliminating the BTR altogether (SB1171), and moving home inspector licensing to the Registrar of Contractors (ROC). As most of my readers already know, I'm co-owner of Homewerx Home Inspections, one of the Valley's leading home inspection companies since 1999. As such, I sincerely appreciate your support on this matter. While I do NOT support eliminating the BTR, it definitely needs some change - starting at the top with the guy in charge. It's unfortunate, but AZ home inspector licensing seems to be alot more about money and power and industry organizations than it is about quality home inspections. There are some real problems and conflicts of interest that have just been ignored at the BTR, and we all know that problems don't just go away when they're ignored...they get worse! Now, the BTR is so inefficient and lacking accountability that I think the whole idea of protecting homebuyers got lost somewhere along the line. Home Inspectors don't trust the BTR, consumers kind of laugh at them. And the cost of inefficient government regulation is real... look at how much it costs to be a home inspector in Arizona compared to other professionals licensed by the same agency. And look at how much Arizona home inspectors pay compared to home inspectors in other states. "Wow" is all I can say! Home Inspection companies inevitably pass these ridiculous costs onto the homebuying consumer, who is already strapped for cash in case the BTR hasn't heard. And a home inspection is an out-of-pocket expense - those are the ones that really hurt and will be a deal-breaker alot quicker than borrowed money will. So please Help support the 'little guy', and you will help keep Arizona home inspection prices down plus eliminate government incompetence at the same time. Thank you again for your support!
Posted by Shannon Hubbard, Arizona Real Estate Agent on February 25, 2008 | Permalink | Comments (2) | TrackBack Wednesday, February 20, 2008Arizona MLS Listings I Don't Quite UnderstandAs I pull up various AZ properties on MLS, I'm frequently amused. Sometimes it's the price that makes me laugh. Sometimes it's the directions that get you nowhere near the home, which makes me go hmmmm. And sometimes it's just a comment about the house that catches my attention. Here are a couple that have recently caught my interest: 1. Found in the comments of a MLS listing: "Buyer proof of funds or prequalification letter from a Wells Fargo Mtg. Consultant must accompany all offers." As a Realtor®, I would never dream of requiring a potential buyer to get prequalified or have their funds verified by a specific mortgage company. I'm not sure if that's even legal from a mortgage perspective, especially if the mortgage company owns the house. According to the MLS, this property is "corporate owned". Public records don't show the new owner yet, but the house was sold at auction in December to "US Bank National Association as Trustee Asset Backed Pass Through Certificates Series..." (that's a mouthful and doesn't really tell me who owns it!). But the tax statements are being forwarded to "ASC for Wells Fargo Home Improvement". Hmmmm.... 2. Found in a Flyer Heading: "20% Co-Broke! / Attention All Investors" Call me crazy, but I wonder if this agent ever thought about recommending a price reduction to their client, instead of a HUGE co-broke. Perhaps, I dunno...maybe a 17% - 20% price reduction? Work with me here...! And what real investor isn't going to realize that a 20% co-broke means they're paying 20% too much? These are just a few of my thoughts... enjoy your day! Past BlogArizona articles you may also enjoy:
Posted by Shannon Hubbard, Arizona Real Estate Agent on February 20, 2008 | Permalink | Comments (3) | TrackBack Tuesday, February 19, 2008Selling Your House? Don't Take the Curtain Rods When You Move.By the title of this post, you might think I'm getting ready to talk about the difference between personal property and real estate fixtures, and what you can take with you when you move versus what has to stay with the house. Nope. This post is actually just something funny my Dad emailed me, which I thought my readers would enjoy. By the way, don't do this! She spent the first day packing her belongings into boxes, crates and suitcases. On the second day, she had the movers come and collect her things. On the third day, she sat down for the last time at their beautiful dining room table by candle-light, put on some soft background music, and feasted on a pound of shrimp, a jar of caviar, and a bottle of spring-water. When she had finished, she went into each and every room and deposited a few half-eaten shrimp shells dipped in caviar into the hollow of the curtain rods. She then cleaned up the kitchen and left. When the husband returned with his new girlfriend, all was bliss for the first few days. Then slowly, the house began to smell. They tried everything; cleaning, mopping and airing the place out. Vents were checked for dead rodents and carpets were steam cleaned. Air fresheners were hung everywhere. Exterminators were brought in to set off gas canisters, during which they had to move out for a few days and in the end they even paid to replace the expensive wool carpeting. Nothing worked!!! People stopped coming over to visit. Repairmen refused to work in the house. The maid quit. Finally, they could not take the stench any longer and decided to move. A month later, even though they had cut their price in half, they could not find a buyer for their stinky house. Word got out and eventually even the local real estate agents refused to return their calls. Finally, they had to borrow a huge sum of money from the bank to purchase a new place. The ex-wife called the man and asked how things were going. He told her the saga of the rotting house. She listened politely and said that she missed her old home terribly and would be willing to reduce her divorce settlement in exchange for getting the house back. Knowing his ex-wife had no idea how bad the smell was, he agreed on a price that was about 1/10th of what the house had been worth, but only if she were to sign the papers that very day. She agreed and within the hour his lawyers delivered the paperwork. A week later the man and his girlfriend stood smiling as they watched the moving company pack everything to take to their new home.... And to spite the ex-wife, they even took the curtain rods!! I LOVE A HAPPY ENDING, DON'T YOU? ORIGINAL SOURCE: UNKNOWN
Posted by Shannon Hubbard, Arizona Real Estate Agent on February 19, 2008 | Permalink | Comments (1) | TrackBack Tuesday, January 22, 2008Subprime Mortgage Problem Goes Global: Federal Reserve Makes 'Emergency' Interest Rate CutBen Bernanke and the Federal Reserve made an 'emergency' rate cut to the key interest rate this morning, rather than waiting until their next planned meeting at the end of January. The .75 basis point reduction in interest rates comes amid global economic fears. The Asian markets have been down sharply in recent days, and European markets have followed (although they're not down as much as the Asian markets). The fear is that America's subprime mortgage problem is now damaging the global economy. Fortunately, the US stock markets were not trading yesterday due to the Martin Luther King holiday. But DOW futures were down over 500 points until the announcement of the Fed's rate cut early this morning. The DOW (futures) has since recovered by a couple hundred points, but it still looks like today will be a bad day for the stock market (which is already down for the year). I guess we'll see when the markets open in a few minutes. Just remember, it's only a paper loss until you cash out!
Posted by Shannon Hubbard, Arizona Real Estate Agent on January 22, 2008 | Permalink | Comments (6) | TrackBack Friday, January 18, 2008AZ Termite Inspector Licensing Agency Going Away
Amid allegations of "cronyism, inefficiency, overregulation and instability", the executive director was recently fired by the seven member Commission. In protest, the 3 Commission members who voted against firing the executive director have resigned. A committee of Arizona lawmakers have since voted in favor of, and are introducing a bill to disband the SPCC altogether. Under the new bill, regulation & licensing of pest control professionals, including termite inspectors, will be transferred to the AZ Department of Agriculture. Arizona lawmakers also considered transferring the SPCC's duties to the AZ Registrar of Contractors (ROC) or the AZ Board of Technical Registration (BTR). However, agricultural pest control is already regulated by the AZ Dept. of Agriculture, so they are the most logical choice. Last I heard, the bill was supposed to be introduced in early January when the AZ Legislature reconvened. While I have not officially seen anything stating the bill has been introduced or approved, I was told by one of my State Representatives in early January that the SPCC's duties will be transferring to the AZ Department of Agriculture. I think he told me a time frame, but I don't remember what it was. So it sounds like a pretty done deal, even if it has not been officially approved. AZ Governor Napolitano mentioned late last year that she would consider the recommendation to get rid of the SPCC, and the State Representative I spoke with did not say the SPCC might go away, he said it was going away. Additionally, the SPCC (like all such agencies) is subject to review every ten years. I believe the SPCC's sunset review is due in June of this year, and even in the absence of other legislation, I don't think the SPCC is expected to be re-authorized or renewed. So, the "good ole boy network" at an Arizona licensing agency...could it really happen? Of course, I'm being sarcastic - yes, it really happens and probably more than you'd ever believe. I have personally witnessed the type of abuse of power alleged here at another AZ licensing agency. Luckily, it was not not directed at me personally. However, I would bet that it's much more widespread than the public really knows. That's a real shame since these licensing agencies are intended to protect the public. But when the agency is corrupt, it doesn't protect anybody - it just raises the cost of doing business. And that cost is ultimately passed on to the consumer, which means the licensing agency ends up hurting the very consumers it was supposed to protect. By the way, I want to apologize to my loyal readers for my recent "vacation" from blogging. Between the holidays, visiting relatives and another project I've been working on, the time has just gotten away from me. But I promise to post again soon. In fact, my friend the AZ Mortgage Guru recently sent me a very interesting article, which got me doing some research on another Arizona licensing agency. And what I found is definitely worth coming back to read. So be sure to check back in a few days and read all about it! Related articles:
Posted by Shannon Hubbard, Arizona Real Estate Agent on January 18, 2008 | Permalink | Comments (2) | TrackBack Wednesday, December 12, 2007Fed Lowers Interest Rates Again - Investors UpsetThe Federal Reserve met yesterday and lowered its benchmark interest rate again, in hopes of alleviating some of the economic pain caused by the current mortgage crisis and slow housing market. The federal funds rate was lowered by a quarter point (to 4.25%), and the discount rate was also cut by a quarter point (to 4.75%). The discount rate is the cost of direct loans from the central bank. The federal funds rate is now at its lowest level since January 2006. But apparently the rate cut was not enough to satisfy some Wall Street investors. Since most stock market investors had hoped for a .50% rate cut, many were disappointed by the .25% rate cut. As a result, the Dow Jones dropped about 300 points after the rate cut was announced. Today however, investors seem to have gotten over it since the Dow, NASDAQ and S&P500 are all up quite a bit (so far). Perhaps investors are comforted by the fact that the Fed also indicated a willingness to make additional future rate cuts if necessary. I think Bernanke is just being cautious after seeing his predecessor, Alan Greenspan, criticized for dropping rates too much, too fast. Besides, the most immediate positive effect of a rate cut is not lower mortgage rates, it's the boost it gives to consumer confidence. Therefore, maybe making smaller rate cuts more frequently is a better strategy than making bigger rate cuts all at once. Only time will tell!
Related articles: Posted by Shannon Hubbard, Arizona Real Estate Agent on December 12, 2007 | Permalink | Comments (2) | TrackBack Friday, December 07, 2007Subprime Mortgage Interest Rate Freeze - Private Sector Solution or Government Bailout?Yesterday, President Bush announced a plan to address the current mortgage crisis. The plan, which includes a 5-year freeze on certain subprime mortgage interest rates, was a result of the Hope Now Alliance. According to the President, "Hope Now is an example of government bringing together members of the private sector to voluntarily address a national challenge without government subsidies and without government mandates". The freeze is not a government mandate - it's an agreement by many mortgage industry leaders to freeze the interest rates on certain subprime mortgages for 5 years. The hope is that during those 5 years, real estate sales and values will increase allowing these borrowers to sell or refinance their homes. Not all mortgage companies are onboard, but many of the major players in the industry are involved. And not all distressed borrowers will benefit from the program. In order to qualify, the borrower must meet the following minimum criteria:
But there's more to the plan than just a subprime rate freeze for a few lucky borrowers. Bush also announced:
Many criticize the President's plan as a "bailout", but the President insists his plan is a private-sector solution. I agree this freeze on interest rates is not a government bailout. And although I'm a real estate agent, I can even applaud the idea of tighter lending standards and a more transparent mortgage industry (but personally I think the 20+ pages of disclosures already given to borrowers is quite sufficient as long as they read them - and adding more disclosures would probably make borrowers even LESS likely to read the fine print). But the FHA Secure program has me totally baffled. I just don't get how helping (risky) borrowers to refinance loans they couldn't afford to begin with is going to help anybody...except the subprime lenders who get to pass these risky loans off to the taxpayers. You see, when these loans get refinanced as FHA loans, they'll be government insured and then the taxpayers will eat the losses when these borrowers foreclose. And many of these borrowers will foreclose eventually - FHA Secure will simply prolong the agony and shift the financial burden of these foreclosures from the subprime lender, to the American taxpayer. I'm especially confused by the idea that FHA Secure is supposed to "enable FHA to be more flexible in how to offset the refinancing". So in other words, our government is planning to help these borrowers by using the very same type of "creative financing" that got these borrowers into trouble in the first place? At least the lenders who originally made these risky loans stood some chance of making a profit. But what do American taxpayers get in return for guaranteeing these risky loans? We get nothing, except possibly higher taxes to pay for the bureaucracy and resulting foreclosures. As far as "reforming FHA" goes, does that mean changing the rules so the government can guarantee even more risky loans? I can definitely agree that maximum FHA loan amounts need to be modernized after the recent run up of real estate prices, but I'm very skeptical of other potential FHA reforms. I also totally disagree that these borrowers who get out of paying part of their mortgage should also get out of paying taxes on the forgiven amounts. If someone gives you free money, the least you can do is pay the taxes on it. If nothing else, these borrowers should be paying a fee to the government for negotiating them such a good deal. And if these borrowers who benefit from the plan are getting tax breaks, who's going to pay for the cost of this mess? Should the 98.5% of American homeowners who are NOT in foreclosure be the ones to pay? Life is not fair, and we have to take the good with the bad. So I guess the term, "lesser of two evils" comes to mind here. I don't feel it's the government's responsibility to help homeowners escape loan payments they agreed to pay, nor is it the government's job to help homeowners keep real estate they can't afford. But I also don't believe in cutting off my nose to spite my face. If the problem is ignored, the mortgage fallout and its affects on both real estate and Wall Street could put the entire U.S. economy into a recession. Obviously, then we would all suffer. I'm generally leery of any government interference in the free market, but the President has negotiated a voluntary plan with leaders of the mortgage industry who realize it's better to get paid less interest on a loan, than to have the loan foreclose and get nothing at all. Quite frankly, I haven't heard any better ideas and while I disagree with parts of the plan, I'm optimistic it will help some borrowers. But more importantly, I think it will improve consumer confidence in both the mortgage industry and the real estate market. The President acknowledges "there is no perfect solution" to the mortgage problem, and this problem will require a multi-faceted solution. I definitely give the President credit for taking action and attempting to resolve the subprime meltdown, especially during this extremely political season when President Bush is being attacked from every direction, for everything he does or says. On a lighter note, when announcing this plan, the President accidentally gave out the wrong phone number for the mortgage help hotline - he even repeated the wrong number twice! You gotta love a guy who has good intentions, but constantly gets tripped up on the little details! The incorrect phone number announced by the President actually belongs to the Freedom Christian Academy in Texas, who were apparently good sports about the mix up! Hopefully, BlogArizona readers don't need to call the mortgage help hotline, but just in case, the correct number is 1-888-995-HOPE.
Related article from August 31, 2007: "President Says Reform FHA & Fannie Mae - Is there a Mortgage Bailout Coming?" Posted by Shannon Hubbard, Arizona Real Estate Agent on December 7, 2007 | Permalink | Comments (4) | TrackBack Tuesday, October 30, 2007Low Interest Rates + Lower Prices + High Inventory = Time to Buy Arizona Real EstateMany are waiting with anticipation as the Federal Reserve meets (today and tomorrow) to discuss a A lower Federal funds rate won't immediately affect mortgage rates, but it will (almost) immediately boost consumer confidence, and eventually it will lower mortgage rates. Those homeowners with Adjustable Rate Mortgages (ARMs) will get some relief as their interest rates adjust, hopefully preventing some foreclosures. We're nearing the bottom of a slow real estate market, with high inventory (supply) and lower than normal demand. While some people are scared by the current real estate market, it's actually an incredible buyer's market with great deals just waiting to be made. If you're thinking of buying real estate, the rest of this year is going to be perfect buying time - crazy deals and incentives are being offered. After mortgage interest rates have decreased and the real estate market begins its recovery is NOT the time you can make your best deals. If you're buying for the long term (3 or more years), you really don't need to worry about buying at the very bottom of the market. But you do want to buy before the market starts to recover since that's when the best deals can be negotiated. The real estate market is cyclic - it goes up and down. Here's why you should buy real estate before the market starts to recover (I stole this explanation from my friend and fellow Arizona Realtor, David Thomas, who read it on a blog!). Think of the real estate market as a "V", the current trend is definitely downward, toward the bottom of the "V". We don't know exactly how close we are to the bottom of the "V" right now, but most think we're pretty close. As we approach the bottom, inventory is at its highest and sellers are most willing to negotiate. But once the market reaches the bottom and the upward trend begins, deals begin to diminish. Inventory (choice) decreases, prices begin to increase and incentives go away. As the market recovers, interest rates are also likely to increase which will make it even more expensive to buy a home. So when do you want to buy - near (but before) the bottom? Or do you try to wait until the very bottom and take a chance that you'll catch the upward trend instead? It's impossible to know exactly where the bottom of that trend is, until after the upward trend begins. So if you wait, you might wait too long. By the way, don't believe anybody that claims to know exactly where the bottom of that "V" is!
Posted by Shannon Hubbard, Arizona Real Estate Agent on October 30, 2007 | Permalink | Comments (4) | TrackBack Thursday, September 20, 2007Do I Need Title Insurance When Buying a Home?Whether you know it or not, when you purchase a home you are required to obtain title insurance. This insurance protects you and the lender against any errors on the title report. These errors can range from simple discrepancies in the record to major ones, where the seller may not even own the property you are purchasing. Most homebuyers do not really get to compare and choose the type of title insurance they end up purchasing. Basically, the title company sells you an insurance policy when you close on the transaction. Since most homeowners simply use the title company recommended by their lender, real estate attorney, or real estate agent, in essence they are not offered a choice of title insurance. This is all about to change, as the title insurance industry reacts to consumer complaints and government oversight. From the Inman News website: Calling a GAO study that was critical of the way title insurance is marketed to consumers a "fair and thorough review," the American Land Title Association on Tuesday rolled out an industry plan to increase competition in the industry. The industry has set up a website at homeclosing101.com to help educate homeowners on title insurance and facilitate choice. I briefly reviewed this website and found it to be very useful. Among other things it explains why you need title insurance, how the title search is performed and discrepancies the policy covers. This website also has a real estate glossary, information on the closing process, and much more. If you’re a potential homeowner or a current homeowner, I suggest visiting this website and getting educated.
Posted by Shailesh Ghimire, AZ Mortgage Guru on September 20, 2007 | Permalink | Comments (3) | TrackBack Friday, August 31, 2007President Says Reform FHA & Fannie Mae - Is there a Mortgage Bailout Coming?Most investors and analysts have been predicting the Fed will lower interest rates next week in an effort to revive the mortgage and housing sectors. But this morning, some of those hopes faded a little as President Bush announced his plan to deal with the current mortgage crisis. And now, some investors are worried the Fed may not lower interest rates as most were expecting, or may not lower rates as much. The President didn't really give many details and he didn't take any questions about his plan. He did say that his solution includes reforming FHA, Fannie Mae, etc, thus making it easier for borrowers who are in trouble to re-finance their mortgages. But wait just a minute...isn't that what got us into this mess - easy loans for people who really can't afford them? And assuming the President can get his plan passed through Congress, I really don't understand how reforming FHA will help subprime lenders and borrowers. In fact, this 'FHA reform' isn't really in response to the mortgage crisis at all. This FHA reform is actually something the President started pushing for over a year ago. The President also mentioned making the mortgage industry more transparent in order to prevent future problems. I agree that borrowers should be informed and understand the terms of their loan before signing on the dotted line. But I don't totally buy into the victim mentality. While there's plenty of sleazy mortgage companies out there taking advantage of the proverbial 'little guy', I think the little guy has to take some responsibility too. If your loan officer asks you to sign an application that says your income is twice what it really is, and you sign it because he says nobody's going to check and it's the only way you'll be approved for the loan, yes the lender is wrong. But so is the borrower. And both the lender and the borrower should suffer the consequences for their bad decisions. That suffering is what will teach them both NOT to make the same bad decision again. In the absence of consequences, neither will change their behavior in the future. While I don't believe there should be a bailout for the greedy mortgage company when this borrower defaults, I don't believe there should be a bailout for the borrower who lied either. While there are truly some borrowers who didn't understand the terms of their mortgage, they shouldn't have signed something they didn't understand. It may be a tough lesson, but it's one that needs to be learned. Yes, it's nice to have someone else to blame and it's always easy to blame big business. But it's ultimately my responsibility to decide how much house I can afford. And if I get in over my head, I have nobody to blame but myself. By the way, 98.7% of American homes are NOT in foreclosure right now. So why should 98.7% of us have to pay to bail out the 1.3% who made bad decisions? As an American who makes a living in the real estate industry, I definitely want to support the President in any effort he makes to improve the housing market. But helping those in trouble to re-finance loans they couldn't afford to begin with just seems silly to me. I personally think it's more likely to prolong the agony than to resolve any problems. READ UPDATE to "President Says Reform FHA & Fannie Mae - Is there a Mortgage Bailout Coming?"
Posted by Shannon Hubbard, Arizona Real Estate Agent on August 31, 2007 | Permalink | Comments (7) | TrackBack |
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If you haven't already heard, the licensing agency for 
possible cut in interest rates. After lowering rates a half a point in September, the Fed is still concerned about the 'credit crunch' and a slower than normal housing market. However, with extremely high oil prices, the Fed is also concerned about inflation (which could prevent them from lowering interest rates). But most analysts think the slow housing market and lending problems are currently a bigger concern than inflation, and most are predicting a quarter (.25) point reduction in interest rates tomorrow.