Phil's Blog

First-Time Home Buyer Tax Credit Ending, But Not For All Potential Buyers

Phil DePasquale (Prudential Northern Arizona Real Estate) — Mon, 19 Oct 2009 10:28:36 -0500

First-Time Home Buyer Tax Credit Ending, But Not For All Potential Buyers

The House of Representatives passed a bill yesterday aiming to extend the First Time Home Buyer Tax Credit. Before you get to excited, it appears that it will only be extended for veterans of our armed forces for up to 6 months. To qualify, the veteran must have served overseas for 90 days in 2009. If you are a first time home buyer looking to take advantage of the up to $8000 tax credit, the clock continues to tick. It is set to expire after November 30th so get your application in with your lender.

5 Bedroom/3 Baths, Fireplace, Split floorplan on 4.61 acres!

Phil DePasquale (Prudential Northern Arizona Real Estate) — Mon, 19 Oct 2009 10:25:57 -0500

5 Bedroom 3 Bath expansive 1997 Manufactured Home on 4.61 acres, bordering meanderland and Beaver Creek. Private well (222 feet) and septic. Hide away in this light and open, split floor plan home with vaulted ceilings and picture windows in rural setting. Two sided wood fireplace and front and rear wooden decks and rear concrete pad ready for your hot tub or gazebo. Front acreage fenced (electric) for horses, animals or for possible garden. Freshly painted inside and out. A/C and Heat. Walk to Beaver Creek for a swim or to fish. Property may be split. Paved access planned for October! Website: www.1015ReayRoad.com Priced at $225,000 Agent: Phil DePasquale-Assoc. Broker, Prudential Northern Arizona Real Estate, 1725 W. Hwy. 89A, Sedona, Az. 86336 928.399.9902

5 Bedroom/3 Baths, 2071 s.f. on 4.61 acres!

REDUCED.. Creekfront Retreat, 3+/2.5, 2480 s.f. home on 2.34 acres

Phil DePasquale (Prudential Northern Arizona Real Estate) — Mon, 19 Oct 2009 10:17:02 -0500

Centrally located in Cornville/Page Springs between Sedona and Cottonwood (10 minutes either way) this creekside retreat is off the beaten path yet close to everything. Complete privacy, endless days and evenings listening to Oak Creek from the home or from one of two decks that overlook the creek. This 3 Bedroom + Office, 2.5 Bath home is spacious and light. Updated kitchen with stainless appliances and tile countertops. Tree top views from every window where you can watch the hot air balloons drift by or watch bald eagles, hawks and herons as they search for food in the trout stocked creek. Entry level offers expansive Master Suite and Bathroom, Great Room, Dining Room, Kitchen and Powder Room. Covered Patio from Kitchen offers views of Page Springs Ranches, Pastures and Vineyards. Downstairs offers large Family Room, Large Guest Room and Third Bedroom, Full Bathroom with double sinks, Office and large Storage Room/Wine Cellar. Walk out onto concrete patio and then to first of two wooden decks that overlook Oak Creek. Follow aggregate walkway past rose bushes and boysenberry patch, through the gate to the lower wooden deck. Tile floors throughout home except for 2nd and 3rd Bedrooms and ceiling fans in every room. A/C, evaporative cooler and forced gas for heat. Private well, septic and propane. Home and decks are not in the flood zone and road is maintained by the Forest Service and the County. Mature trees and landscaping complete this one‑of‑a‑kind property that is fenced and gated. Complete privacy with gorgeous views and creek access. Star gaze from the hot tub while listening to the creek rush by. Endless hiking and horse trails as property is surrounded by State Forest land. Zoned for horses. Potential Bed and Breakfast. Cat 5 Wiring. This home is a must see! Reduced to $725.000, Owner/Agent: Phil DePasquale-Assoc. Broker, Prudential Northern Arizona Real Estate, 1725 W. Hwy. 89A, Sedona, Az. 86336 928.399.9902 Website: www.1140WillowPoint.com

3 BR 2 BA on approx. 1/2 acre (fenced) in Creekfront - Gated Community

Phil DePasquale (Prudential Northern Arizona Real Estate) — Mon, 19 Oct 2009 10:12:20 -0500

3/2 Impeccable home overlooking creekfront, gated community of Oak Creek Valley. Lovingly used as a vacation home, fully furnished, in move-in condition. 3/2 1400+ s.f. home on approx. .50 acre overlooking Oak Creek Valley. Cathedral ceilings and niches, split-floor plan, gas fireplace and inviting fenced back yard with redwood decks for entertaining or relaxing. Back yard plumbed for spa. Walk to creek, fishing, hiking, community pool, tennis courts, billiards and clubhouse. Need to store your boat or RV? Storage lot available. Like to travel? ... home under "neighborhood watch program" so just "lock and go." Offered at $279,000 Phil DePasquale-Assoc. Broker, Prudential Northern Arizona Real Estate, 1725 W. Hwy. 89A, Sedona, Az. 86336 928.399.9902 Website: www.10600ValleyView.com

Reduced $50,000 CREEKFRONT HOMEon 2.34 Acres

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sat, 10 Oct 2009 15:10:39 -0500

Creekfront Retreat, 3+/2.5, 2840 s.f. home on 2.34 acres on Oak Creek.

An 18 Month HVCC Moratorium Bill Introduced

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sat, 04 Jul 2009 15:17:41 -0500

A new bill, led by House Representatives Childers (Republican - MS) and Miller (Republican - CA) has been introduced and is currently in committee (Housing Financial Services).

This new bill H.R. 3044, would place an 18 month moratorium on the Home Valuation Code of Conduct (HVCC), which has received a frigid response since being implemented on May 1 of this year.

The National Association of Mortgage Brokers, which has been one of the most outspoken opponents of HVCC, sued the newly formed FHFA (Federal Housing Finance Authority) over the proposed changes back in February, and now supports legislation to halt it.

As you may recall, the HVVC was written up by the OFHEO and NY Attorney General Andrew Cuomo to help combat mortgage fraud and attempt to strengthen the home appraisal process.

The agreement eliminates mortgage broker ordered appraisals, is meant to prohibit appraiser coercion, and to reduce the use of lender in-house appraisals and captive appraisal management companies.

I will note here that this new appraisal law was a result of a 2007 lawsuit involving First American Corp.'s eAppraiseIt unit and alleged overly inflated home values tied to Washington Mutual home loans.

According to Marc Savitt, NAMB President; "the introduction of this legislation is a victory for consumers and members of the industry alike."

As a result of the new law, according to Savitt: "In the period of time since its implementation, the HVCC has increased costs to consumers and decreased the quality of appraisals and has provided a level of uncertainty in an ailing housing market".

Supporting this argument is Lawrence Yun, chief economist at the NAR (National Association of Realtors), and who recently reported that sales numbers are lower than anticipated because poor appraisals are delaying transactions. "Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan".

Mr. Yun went on to state: "In the past month [since the inception of HVCC], stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is dangerof a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected."

No matter where you fall on the argument of whether or not HVCC should exist, you as a realtor, homeowner attempting to refinance, home purchaser or loan officer/mortgage broker, have probably felt (whether you realize it or not) the market disruption that HVCC has created in its short existence.

Underwater Mortgages Can Now Refinance Up To 125% of Current Market Value

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sat, 04 Jul 2009 15:15:57 -0500

It is true, and hopefully not too late to help tens of thousands of U.S. homeowners' hold on to their primary residences.

In a release yesterday afternoon, the U.S. Housing and Urban Development Secretary Shaun Donovan announced an expansion of the Obama Administration's Home Affordable Refinance Program to include participation by borrowers who are current on there mortgage, but up to 125 percent underwater on their mortgage. Under authorization provided by the Federal Housing Finance Agency, borrowers whose mortgages are currently owned or guaranteed by Fannie Mae and Freddie Mac will now be allowed to refinance those loans according to the terms of the Home Affordable Refinance program established earlier this year.

Secretary Donovan made the announcement while touring a neighborhood in Las Vegas with Senate Majority Leader Harry Reid (D-NV) and Congresswoman Dina Titus. Las Vegas leads the nation in foreclosures and approximately 67 percent of the current mortgage holders have mortgage balances that exceed the worth of their homes.

According to Treasury Secretary Timothy Geithner; "This decision is part of our ongoing efforts to maximize the effectiveness of the Making Home Affordable program and adapt to an ever-changing housing market". "By expanding refinance eligibility, we can bring relief to more struggling homeowners more quickly. It's a crucial step in our broader efforts to get America's housing market and economy on the path to recovery."

With the current plan, only those borrowers whose first mortgage does not exceed 105 percent of the current market value of the property are eligible for the Obama Administration's Home Affordable Refinance Program. For example if the property is worth $200,000, the borrower must owe $210,000 or less. Yesterday's announcement will allow more homeowners to become eligible for the program, by increasing the eligibility to 125 percent.

Government subsidized mortgage rates the new way to go?

Phil DePasquale (Prudential Northern Arizona Real Estate) — Mon, 29 Jun 2009 14:09:27 -0500

Is a government subsidized (insured) fixed mortgage rate plan the way to go? And if so, at what interest rate (assuming a 30-year fixed rate)? What are your thoughts? What are the positives and negatives?

A recent proposal from Arizona businessman Kenneth Wm. Parker, owner of Parker Properties/Parker Development, has introduced what he calls the "4/40 for Freedom Loan."

It's essentially a government-backed (insured) mortgage set at a four percent interest rate with a 40-year amortization.

"Americans are begging for relief," said Parker, founder of 4/40 for Freedom. "The program benefits are immediate; lower mortgages means increased disposable income, which translates to available cash to stimulate the economy through investments and product and service purchases."

"We have received enthusiastic support from the financial and business community regarding the program," he added.

According to Parker's numbers; expected savings from the program are 33-38 percent per month per household, which would certainly ease pressure on struggling homeowners and move much needed money back into the economy.

"If each homeowner saves an estimated $250 a month on their mortgage, all of a sudden they can make additional purchases and the effect on the economy will be tremendous," Parker said.

Once passed by Congress, the program would be available for one year to both new and existing homeowners; those with a mortgage would receive loan modifications without a credit check or any other qualification.

According to his proposal -- Jumbo loans would also be offered up to loan amounts of $3.5 million.

"As the economy improves and home values go up, homeowners will refinance with conventional programs and the U.S. backed real estate interest loan debt will be repaid, resulting in additional economic capital," Parker's release stated.

Tri-Plex - Fully Rented - Cornville/Page Springs, Az. $339,000

Phil DePasquale (Prudential Northern Arizona Real Estate) — Mon, 29 Jun 2009 13:59:59 -0500

Fully rented - annually leased units @ $700 per month. Well maintained property, 1/2 acre, on propane, septic and well. Built in 1998. Each unit has attached garage with additional parking. Located off Cornville Rd. across from the Dollar Store. 3 Units @ approx. 964 s.f. each.

Mortgage Interest Rates Dropping...

Phil DePasquale (Prudential Northern Arizona Real Estate) — Mon, 29 Jun 2009 13:45:04 -0500

Mortgage Interest Rates Dropping After Weeks of Increases

According to a report just released by Zillow, the weekly average interest rates borrowers were quoted for 30-year and 15- year fixed rate mortgages decreased last week, from the weeks prior.

This information was compiled by Zillow Mortgage Rate Monitor.

Obviously, thirty-year and fifteen year fixed mortgage rates varied by state. The states, according to Zillow, with the greatest interest rate decreases (as of Monday) were Pennsylvania and New York. The states with the highest interest rates were Wisconsin and Massachusetts.

According to its ˜Mortgage Marketplace', the state with the lowest interest rates being charged was Florida.

I will note here: the Zillow Mortgage Rate Monitor is compiled each week using thousands of mortgage rates quoted on Zillow Mortgage Marketplace by mortgage lenders to borrowers who have submitted loan requests. State-level data is gathered for the top 20 states with the highest quote volume on Zillow.

I have used Zillow's data for the purpose of demonstrating that interest rates are trending down, albeit it may only be short term.

Significantly better interest rates (than those quoted by Zillow sponsors) can be found by calling around your local or state marketplace. I encourage mortgage rate shoppers' not to use on-line search engines as a basis of finding a mortgage, but only as an additional resource to garner information.

MUST-SEE... $779,000 CREEKFRONT Gorgeous Property - 3/2.5 2480 s.f. Home on 2.34 Acres

Phil DePasquale (Prudential Northern Arizona Real Estate) — Mon, 29 Jun 2009 13:38:43 -0500

CREEKSIDE Home on 2.34 acres. Centrally located in Cornville/Page Springs between Sedona and Cottonwood (10 minutes either way) this creekside retreat is off the beaten path yet close to everything. Complete privacy, endless days and evenings listening to Oak Creek from the home or from one of two decks that overlook the creek. 3 Bedroom + Office, 2.5 Bath home is spacious and light. Updated kitchen with stainless appliances and tile countertops. Tree top views from every window where you can watch the hot air balloons drift by or watch the eagles, hawks and herons as they search for food in the trout stocked creek. Covered Patio off Dining Room offers views of Page Springs Ranches, Pastures and Vineyards. Star gaze from the spa while listening to the creek rush by or follow the concrete stone walkway past the rose bushes, boysenberry patch and through the gate to the lower wooden deck. Wonderful home and property for entertaining 4 or 100. Large two car garage with shelving and cabinets, covered carport and two outdoor storage sheds. Private well, septic and propane tank. Road maintained by Forest Service and County. Home and decks are high above creek and do not flood. Endless hiking and horse trails, surrounded by state land...a nature lovers delight. Mature trees and landscaping complete this one-of-a-kind property that is fenced and gated. Possible Bed and Breakfast. Zoned for horses. Owner/Agent, Phil DePasquale, PRUDENTIAL, Sedona, AZ. 86336 For additional pictures visit website http://www.1140WillowPoint.com CALL 928.399.9902

Housing Starts/Building Permits Hit All Time Lows

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sat, 23 May 2009 08:18:18 -0500

In a report for ˜housing starts' released by the Commerce Department on Tuesday, numbers showed that new construction of residential property hit a record low last month, indicating that a housing recovery might not be in the works as some economists were hoping.

Housing starts, which are the actual breaking of ground of new construction, fell 12.8 percent to a seasonally adjusted 458,000 annualized units.

˜Building permit' numbers, which were also released on Tuesday, which represent new units authorized to be built, fell 3.3 percent to a record low seasonally adjusted annual rate of 494,000 units in April.

On a somewhat brighter note; yesterday, the National Association of Homebuilders said builder confidence for single-family homes improved for the second consecutive month to the highest level since September.

Government Offers Additional Options to Ailing Homeowners

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sat, 23 May 2009 08:16:48 -0500

The ˜Making Home Affordable' program was launched by the government back in March with a $50 billion budget to help struggling homeowners save their homes.

Last week the Obama administration expanded the program, announcing new initiatives which, it is hoped, would aid homeowners in preventing a foreclosure if they do not meet the current program criteria.

The new measures are geared toward streamlining the home sale process when a homeowner owes more than the current market value (by way of short sale), or the transfer of ownership of a home to the lender (by way of Deed-In-Lieu of foreclosure).

As you may expect, both options will have a negative effect on the homeowner's credit, but not as much of an impact as would a foreclosure.

Since March when the program took effect, mortgage companies have provided over 55,000 modification offers to homeowner's nationwide.

"We're seeing a lot of progress in a very short period of time," Timothy Geithner, Treasury Secretary said.

With that being said, the number of new foreclosures far outweigh the modification success stories and the housing credit counselors across the nation are inundated with a huge influx of troubled homeowners complaining that the program has been slow getting started.

As you may expect, mortgage companies, like housing counselors, are overwhelmed with borrowers' eagerness to become a part of the plan, but many companies have had to build up their staff with entry-level employees who appear to be steering borrowers away from the program or are just unaware of the plan.

Thus far, 14 companies have signed up for the plan, who serves approximately three quarters of the mortgage market.

The homeowner has two new options to avoid foreclosure; they can sign over their property title to the lender for what is referred to as a Deed-In-Lieu of foreclosure, or they can do a "short sale" where the lender may allow the homeowner to sell the property for less than the current mortgage balance. I am still not sure why the Obama administration is calling the options "new", as they have always been in existence.

As compensation for coming to an agreement with borrowers, the mortgage lenders would get up to $1,000 and borrowers would receive up to $1,500 in relocation costs.

Survey of Potential Home Buyers Shows Many Looking To Buy Foreclosures

A report recently released by Trulia (a real estate search service) indicates that 55 percent of potential home buyers surveyed were at least ˜somewhat likely' to purchase a foreclosed home, up from numbers the service released for November.

On the other hand, 40 percent of those survey respondents seem to be delusional, expecting to pay at least 50 percent less for a foreclosed home, compared to the 31 percent discount expected back in November.

Of those surveyed 85 percent of respondents are concerned with the negative aspects of buying a foreclosed home, up from 80 percent in November.

The number one drawback to buying a foreclosed home appears to be hidden costs associated with buying a foreclosed home, followed closely by the associated risk and concern that the home will lose value.

As a result, 83 percent believe they should receive at least a 25 percent discount in exchange for the risk of purchasing a foreclosed property.

Rick Sharga, senior vice-president of RealtyTrac stated: "Although consumers are aware that there may be some challenges involved in purchasing a foreclosed home, they are very interested in the bargain opportunities available in the foreclosure market."

He went on to state, "People want the best deals they can find and they are willing to go outside of their comfort zones if it means they can buy more home for less money."

The survey went on to point out that younger prospective homebuyers appear to be the most interested in foreclosed homes, with two-thirds of those aged between 18-44 willing to buy a distressed property, versus just one-third of those 55 and older.

Also of interest, current renters also expressed more interest in purchasing foreclosed homes, with 68 percent more likely to buy such a property versus just 49 percent of current homeowners.

It will be interesting to see how these survey numbers pan out over time as home prices will likely continue to drop.

Major U.S. Banks to Return TARP Funds

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sat, 23 May 2009 08:12:38 -0500

In news released yesterday, the Federal Reserve has approved the repayment of funds received from the Troubled Asset Relief Program (TARP) by some of the big banks beginning as early as June.

Several of the country's 19 largest banks, who recently participated in the government's recent stress tests, are looking to pay back the bailout funds they sought in order to stay afloat.

10 out to the 19 major U.S. banks that the government tested needed to raise $75 billion in additional capital in order to survive a deeper economic recession.

The government stress test was intended to measure whether or not the nation's 19 largest banks would need to scamper to raise additional capital in order to weather a further recession.

Additional information is being required by the banks in order to support the request for repayment of the TARP funds, a Fed source said.

Under the rules for repayment of TARP funds, banks who have received bailout funds must show that their current financial status is stable and that they will not need further future funds from the Federal Deposit Insurance Corporation.

If the banks meet the current rules for repayment, the Treasury Department would have the final approval to allow banks to return the bailout funds.

There was no mention of any specific bank who has requested to pay back their bailout funds, but other sources familiar with the situation have stated that Morgan Stanley and Goldman Sachs Group Inc. have officially requested permission to return federal troubled asset money.

The biggest and perhaps most difficult problem that will need to be solved, when the banks begin to return TARP funds, will be the fact that the banks will have to not only proffer the repayment, but will also have to rectify the repayment of warrants that were obtained (by the government) as part of the initial loans in the form of preferred stock purchases.

The warrants, originally, issued allowed the government to purchase stock at a specific price over a period of 10 years.

Since many of the banks are requesting to return the TARP funds, the banks and government will need to come to an agreement on how much the stock warrants are worth.

Sedona Real Estate

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sun, 10 May 2009 08:17:03 -0500

The recent set of economic conditions has affected the Sedona market but not as strongly as what you read in the news about the national market as a whole. There are some opportunities for purchasing short sales as well as REO (bank owned properties) in Sedona and most areas of the VerdeValley. In addition to the bank properties, there are excellent buys throughout the area - especially in homesites. If you plan to build your retirement home in Sedona (even many years out)there may never be a better time to buy a homesite than today. Lot prices on average are down more than 50% (and in some cases more than 80%) and there are many motivated sellers.

Number of listed homes & condos in all of the Sedona market: 574 (down from 587 60 days ago)
Number of homes & condos listed below $400,000: 181 (was 193 60 days year ago)
Number of homes listed over $1 million: 115 (was 126, 180 days year ago).
Median listed price: $549,000. (up from $525,000 60 days ago).
Number of homes & condos sold year in 2009: 92 (about twice the volume as Jan. - March 5))
Median sales price of all homes and condos sold in 2009 $405,550 (was $453,650 for Jan - Feb. 2008).

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Number of listed home-sites in all areas of the Sedona market 433 (has remained constant over the past year)
Number of lots listed below $300,000: 186 (was 95 - a year ago)
Number of lots listed above $1,000,000: 66 (was 70 - 60 days ago)
Median listed price: $350,000 (was $489,000 - a year ago)
Number of home-sites sold year in 2009: 12 (twice the rate of Jan - March 5) - plus there are 18 more in escrow!
Median sales price in 2009 $216,000 (Same as Jan, - Mar 5)

New Rules Crackdown on Mortgage Origination Business in Florida

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sun, 10 May 2009 08:07:12 -0500

It appears that one state is finally going to officially ban some felons that are still currently originating/selling mortgages in Florida.

Beginning next year, former bank robbers, felons, and those individuals indicted for mortgage fraud will no longer be able to sell mortgages in the state of Florida.

According to the Miami Herald, Governor Charlie Crist is expected to sign new legislation that calls for annual criminal background checks on those selling mortgages in the ˜Sunshine State'.

Along with submitting annual background checks, brokers will have their fingerprints screened by the state and the FBI, with those convicted of felonies involving fraud or money laundering permanently banned from the industry.

However, it appears that misdemeanors for fraud and theft may only carry five year bans, while some other felonies will draw a seven-year ban ... at least it will sideline them for awhile.

Brokers will also be required to submit their personal credit reports annually to the sates and must disclose bankruptcies past or present. Also, all those selling loans will need to be registered with the Nationwide Mortgage Licensing System (NMLS).

An investigation conducted by the Miami Herald last year found that one in four mortgages was "tainted with fraud" in 2007, in part due to the 10,000 former criminals were allowed to sell mortgages..

The annual checks will be aimed at weeding out currently licensed mortgage brokers, as the newspaper found 564 workers were convicted of crimes after licensure, including 20 for mortgage fraud, who were still able to continue selling loans.

The new bill, will also create a special state fund to compensate victims if they successfully sue their mortgage banker/broker, but are unable to collect because of insolvency; the funds would come from loan application fees.

The new regulations are supposedly the toughest in the country and represent the biggest changes to the state's mortgage laws in roughly 50 years.

It will be interesting to see how many states will follow this aggressive legislation - all of the states I hope.

Great News for Investors -- Some Lenders Offering Conforming Financing For Up To 10 Properties

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sun, 10 May 2009 08:05:56 -0500

Finally, there are a few mortgage lenders offering FMNA financing for up to 10 properties with Conforming interest rates.

FNMA (Fannie Mae) opened up a new program that allows investors to have up to 10 properties with mortgage financing existent (or to be existent) on their credit report for the purpose of refinancing and the purchase of new investment properties.

Of course there is a catch, but interestingly enough, not with FNMA.

Many traditional lenders are so laden down with their own ˜lender overlays', it has, basically, made the new loan program a ˜moot point' as their overlays cancel out FNMA's new guidelines (ergo, they will not honor FNMA guidelines, and thus not provide financing under the new program).

There is, however, a few lenders that have ˜stepped up to the plate˜ and are allowing the financing of these properties.

Financing is available for the following: 1-unit second home and investment property, and 2-4 unit investment properties.

97% Mortgage Financing is Back - Seller Can Contribute the 3%

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sun, 10 May 2009 08:01:58 -0500

Yes, that is right. Some investors are allowing 97 percent financing again for the purpose of purchasing a home and for rate and term refinances.

For the purpose of purchasing, the Seller can once again contribute the 3% down-payment, and in some cases can contribute up to 6% of the purchase price.

This program can also be used for 2-unit Owner occupied properties.

This is welcome news for borrowers who do not have cash reserves or cash to put down toward the purchase price.

This will fill a void that has existent, since the program went away and FHA requires 3.5% of borrower's own funds be tied to the mortgage transaction.

Again, please keep in mind that not all investors are carrying this product.

Mortgage Rate Trends

Phil DePasquale (Prudential Northern Arizona Real Estate) — Fri, 27 Mar 2009 12:30:52 -0500

Mortgage Rate Trends:

The Week's National* Conforming Loan Averages (BankRate avg.):

30 year fixed: 5.09%Down

15 year fixed: 4.81%Up

5/1 ARM: 4.78% Down

30 year Jumbo: 6.46% Down

5/1 Jumbo ARM: 5.34%Down

FHA and VA 30 year fixed rate loans have seen a rise this week- expect note rates to be in the range of 5.25 to 5.50 percent throughout the rest of the week.

Rural housing rates will likely remain in the range of 5.25 to 5.375 percent for a 30 year fixed rate mortgage

Treasury To Buy $1 Trillion of "Toxic Assets"

Phil DePasquale (Prudential Northern Arizona Real Estate) — Fri, 27 Mar 2009 12:28:05 -0500

In a plan just unveiled, the Treasury Department said it will remove up to $1 trillion in bad residential loans and toxic private-label mortgage-backed securities from the balance sheets of many financial institutions to jump start lending and revive the economy.

The plan will work like this:

Federal funding will be utilized to influence $500 billion in public-private funding to buy the assets, which the Treasury Department said could hit $1 trillion over time.

The objective is to utilize the private market to institute prices for assets which have halted trading or have had their market values plunge.

According to President Barack Obama, the plan will "allow banks to take some of their bad assets off their books, sell them into a market, but do so in a way that doesn't just obligate taxpayers to buy at whatever price they're willing to sell these assets."

Furthermore, Treasury Secretary Timothy F. Geithner said the public-private marriage is the most effective way to safeguard taxpayer money and get to the bottom of the financial crisis.

"Private investors will share the risk alongside with the taxpayer and the taxpayer will share returns," according to Geithner.

"There is no doubt that the government is taking risk," Geithner said, despite the fact "I am very confident that this scheme dominates all the alternatives for trying to find that balance" between cost to the government and effectiveness.

I am not particularly happy about his use of the word "scheme".

New FHA Head Named By President Obama

A former World Savings executive ( yes, I said World Savings), and current president of mid-Atlantic real estate company The Long & Fosters Companies, was selected yesterday by President Obama to run the FHA.

Here is a brief history of David H. Stevens: he began his career as a "loan originator" back in 1983 at World Savings Bank, before progressing to Group Senior Vice President, National Sales Manager for the mortgage division.

He then made his way over to Freddie Mac, where he served as Senior Vice President of the Single family business, responsible for all sales, marketing, business strategy, affordable lending, and product development for the firm.

Later, he ran the wholesale lending business nationally for Wells Fargo, before eventually making his way over to Long & Foster.

What I find interesting about this appointment by the President is the fact that, World Savings payment option arms killed Wachovia, Freddie Mac is in conservatorship, and Wells Fargo's wholesale presence is limited at best.

I hope that this is not a trend.

To be fair, it is still unclear if Stevens was involved with any of those toxic option arms World Savings spewed out, or if his advising in affordability products led to the decline of Freddie Mac, but let's hope he gets things right at the FHA.

As of late, the FHA has taken on what may be the most significant role in the mortgage industry, accounting for a staggering 21.13 percent of market share late last year and significantly more in recent months.

The good news is the FHA seems to be taking some risk mitigating actions, such as limiting cash-out refinances (which I covered in last week's newsletter) and stamping out seller-paid down payment assistance loans.

Per most recent estimates, FHA loan production for 2009 is projected to be as high as $400 billion; so he'll be plenty busy, especially with defaults rising above 6.5 percent.

FTC Cracks Down on "HOPE NOW" Loan Modification Companies

Phil DePasquale (Prudential Northern Arizona Real Estate) — Fri, 27 Mar 2009 12:22:50 -0500

The U.S. district court, at the request of the Federal Trade Commission, has ordered two loan modification companies to stop falsely advertising that they're affiliated with the foreclosure prevention alliance "Hope Now".

The two companies in question, "Hope Now Modifications" and "New Hope Modifications", have been charged by the FTC with violating federal law for claiming they could obtain loan modifications for customers in all or virtually all cases or refund payment if they could not.

The FTC alleges the pair often diverted one month's mortgage payment as a fee from at-risk homeowners, failed to help them obtain a modification, and denied any refund.

Seeking to capitalize on the "Hope Now" name, the defendants called their firms New Hope Modifications and Hope Now Modifications, and used telephone numbers that included "HOPE".

When consumers called the toll-free hotlines, they would be directed to pay an upfront fee, referred to as a "mitigation escrow fee," before work would begin.

Following the required "mitigation escrow fee" payment being made by the consumer, the defendants failed to return calls regarding the borrowers loan workout status, and in many cases, it turned out banks and mortgage lenders had never actually been contacted by the supposed loan modification companies.

The Chairman of the FTC Jon Leibowitz, stated "With many consumers desperate for relief and afraid they might lose their homes in these difficult economic times, some unscrupulous individuals prey on these fears for their own financial gain."

He went on to state: "The New Hope and Hope Now scammers have given consumers false hope under the guise of the government-endorsed HOPE NOW Alliance. We won't hesitate to take action against these types of con artists now and in the future."

I will note here that the actual HOPE NOW Alliance hotline number is: 1-888-995-HOPE, or 1-888-995-4673.

Home Prices and New Home Sales Up For January

Phil DePasquale (Prudential Northern Arizona Real Estate) — Fri, 27 Mar 2009 12:11:44 -0500

Although it is not overwhelmingly good news, it is a step in the right direction.

According to FHFA (Federal Housing Finance Agency), U.S. home prices climbed 1.7 percent on a seasonally adjusted basis from December to January.

The East North Central region posted the greatest increase, experiencing a 3.9 percent rise in home prices, while, not shockingly, the Pacific region dropped 0.9 percent, making it the worst performer.

The FHFA's monthly home price index is calculated using purchase prices of homes backed by mortgages that have been sold or guaranteed by Fannie Mae and Freddie Mac.

On top of this news, just released this morning by the Department of Commerce -- New Home sales numbers climb 4.7% for the month of February, shocking most economists.

Following this news, national homebuilder stock appears to be on the rise for the moment. Some of the stocks posting respectable gains include: KB, Pulte and Toll Brothers.

˜Jumbo' Financing Rates to Become More Competitive

Jumbo financing, which has largely been a thing of the past, is making a comeback.

In part, this comeback appears to be due to the announcement that the government will begin buying up ˜toxic assets'.

A number of major lenders are beginning to roll out programs that are specifically focused on loan amounts that exceed Conforming Conventional financing (balances over $417,000, and in High-Cost areas - balances exceeding $730,000).

The lender loan programs look to target the loan amount range of $730,000 min. to $1.5 million max., with mortgage rates in the upper 5% range.

Currently, the jumbo-conforming spread continues to remain high, but with conforming rates so low, it means more reasonable jumbo rates will likely follow, despite being offered at a premium.

As more banks and lenders enter the fold, rates on jumbo loans will likely be significantly pushed down, aiding the luxury-end of the market as well as hard-hit, costly regions of the United States.

This is great news for those home owners that are excluded from the recent release of the governments sponsored ˜Making Home Affordable" plan.

Tri-Plex - Fully Leased - 6% Cap Rate - Cornville/Sedona Az.

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sun, 22 Mar 2009 11:56:01 -0500

Fully rented - annually leased units @ $700 per month. Well maintained property on propane, septic and well. Built in 1998. Each unit has attached garage with additional parking.

Great access to shopping, Sedona, Cottonwood, and I-17. Stable rents with plenty of room for parking and expansion. Each unit has own attached one car garage and individual private, fenced back yards.

Clean with good tenants. Solid annual leases with over 6% cap rate

TARP Funds Appear To Be Helping According To Survey

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sun, 22 Mar 2009 11:27:34 -0500

According to a survey just released by the Treasury Department, mortgage loanorigination volume jumped in January among some of the largest banking institutions that have received and are receiving TARP Funds (Troubled Asset Relief Program).

The survey, which covered the top 21 recipients of government investment via the Capital Purchase Program (CPP), found consumer lending originations increased at most institutions between December and January.

"Mortgage origination volume rose significantly in January 2009 reflecting a strong, sustained demand to refinance mortgages, which continues to be driven by lower interest rates," the Treasury said in the release.

"The median percent change in mortgage refinancing was an increase of 110 percent from the December 2008 to January 2009."

Among the leaders were: Wells Fargo, which led the way with $24 billion in first mortgage originations, Bank of America with $22.9 billion and Chase with $9.6 billion. I will note here that the numbers just listed contain both wholesale and retail originations.

Following the leaders were: Citigroup with $7.8 billion, U.S. Bancorp with $4 billion and SunTrust with $3.5 billion.

Home Equity Line of Credit (HELOC) lending was still existent, but showed minimum numbers. Bank of America led with $1.4 billion, followed by Citigroup with $769 million and Wells with $597 million.

Mortgage Rates Dropping Significantly

Phil DePasquale (Prudential Northern Arizona Real Estate) — Sun, 22 Mar 2009 11:26:30 -0500

Just in (today) -- Mortgage Backed Securities (MBS) are moving aggressively down in coupon after the FOMC (Federal Open Market Committee - the monetary policymaking body of the Federal Reserve) announced they will outlay an additional $750 billion for Agency (Fannie/Freddie) MBS and that they will purchase an additional $300 billion longer term treasury securities!!!

The main thrust of this announcement is: ˜to provide greater support to mortgage lending and housing markets, the Committee decided today to increase the size of the Federal Reserve's balance sheet further by purchasing up to an additional $750 billion of agency mortgage-backed securities, bringing its total purchases of these securities to up to $1.25 trillion this year, and to increase its purchases of agency debt this year by up to $100 billion to a total of up to $200 billion. Moreover, to help improve conditions in private credit markets, the Committee decided to purchase up to $300 billion of longer-term Treasury securities over the next six months.'