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We do a lot of FHA loans and this is critical to know before you make offers Via James Wexler, Scottsdale AZ Luxury Homes (Coldwell Banker):
One of the most popular type of financing used here in Greater Phoenix, Glendale, Peoria, even Scottsdale is FHA financing.
FHA financing here in the valley has really picked up steam as of late with the rush to take advantage of Seller-Assisted down payments or charitable down payment assistance programs like Ameridream, Nehemiah and Grant America (GAP).
The Down payment assistance programs have been banned by the recently passed Homeowner Rescue Act and
Down Payment Assistance will no longer be funded as of October 1st, 2008.
In fact, you should note that banks will no longer be accepting loan applications at the end of this month, August; Some bigger banks are no longer accepting them period.
One of the challenges facing approval of an FHA loan and use of Down payment assistance is that the community must be FHA eligible.
What does FHA eligible mean???
First, let me give you a story.
- Agent took buyers to see a home which they loved
- The listing agent confirmed that the community was FHA eligible
- Buyers made an offer which was Accepted.
- During underwriting the bank tell buyer that community is Not FHA eligible.
- Buyer cannot obtain FHA financing
- Client is now 2 weeks into loan process
-
down payment assistance deadline is coming up quickly.
- Must find replacement home by end of August or not get FHA loan
- Maybe not buy a home at all if cannot get FHA loan and Down Payment Assistance
What does FHA eligible mean???
There are several guidelines that must be met to be an FHA approved community.
However, the primary one to look for is that more than 50% of the homes sold in the community must be owner occupied.
In most parts of the country this is not something to even consider. However, in most of the towns around Phoenix this is can be a difficult hurdle to overcome.
Especially, in the Condo conversion market where the community was 100% rental and was converted to Condo sales. Often times the developer did not sell 50% to owner occupants. Thus, there is a a much greater proportion of rentals than homeowners.
In new home sales and new build subdivisions a similar challenge arises. Although, Builders have all lots and homes available for purchase. In many cases 50% have not been sold when lot sales begin in the first many months.
I encourage you to ask your real estate agent do the research for you.
Do not assume because the community has been around a long time that it is more than 50% sold to owner occupants.
Most residents and even many sales agents who work in these communities do not know.
If you are going to use an FHA loan, find out first; Before earnest monies are non-refundable and eligibility for loan approval is denied.
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Copyright © 2008 By James Wexler , *Buyer Beware!- Make sure AZ Community is FHA eligible *
Contact James Wexler (480) 221-8080 for all your Phoenix AZ | Scottsdale AZ Real Estate needs
With all the REO properties on the market, there is little reason to deal with short sales Via James Wexler, Scottsdale AZ Luxury Homes (Coldwell Banker):
Short sale specialists will tell you that you are missing the boat if you are not involved with these transactions in the greater Phoenix real estate market.
I completely disagree!! 
Here are 7 Good Reasons not to get involved with short sales.
- Average time to get acceptance (or more likely a denial) from a lender is more than 75 days. Some agents say longer.
- There is no guarantee the offer will get accepted at or near that price because the majority of Realtor list homes at random arbitrary prices that they think or hope the banks will accept.
- estimates as high as 80%, some say 90% of offers on short sales do not consummate in a closed escrow
- 3 month waiting periods prevent buyers from looking for other houses which often result in opportunities lost.
-
REO /lender owned listings are now priced as well or better than short sales. Make your offers on these homes.
- Lenders are more inclined to reject offers that do not have financing with large down payments. Many FHA offers are rejected due to high decline ratios and lengthy underwriting times.
- Banks are just not cooperative. In most cases, they prefer to reduce current REO inventory. Further, they can often collect PMI from insurers if the home actually is foreclosed upon.
I have prepared short sale packages for approval for sellers. I have negotiated contracts with bank asset managers. I have represented buyers with success. I have watched buyers wait and wait and miss out on other opportunities.
If you are thinking about buying a home, skip short sales. They Suck!
Instead, make offers on the many REO and lender owned properties on the market.
There are REO at as much as 50% discount to 2005 prices in Phoenix, Scottsdale, Carefree, Peoria and Fountain Hills.
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Copyright © James Wexler *Short Sales Suck ! - 7 Reasons Why!*
If you are listing your home as a short sale in Phoenix Arizona or Scottsdale Arizona make sure you hire an agent who knows how to do short sales and has the experience to get the job done.
Call 480.221.8080 to find out more about Phoenix AZ Short Sales and Scottsdale AZ short Sales
I hope all builders, suppliers, laborers work together to make homes more affordable. Via James Wexler, Scottsdale AZ Luxury Homes (Coldwell Banker):
Increasing competition, tightening profit margin, access to consumer lending has forced new home builders , smaller Scottsdale area builders, to the larger new York stock exchange public builders to  rethink and take a sharper pencil to their costs to find profits (or minimize losses).
How are the Home builders constructing homes cheaper and in theory better quality ?
The layman's language is Build my Phoenix area home with the same quality, functionally, and safety, with modern materials for less.
The industry term is what is known as "Value Engineering" and is presenting a unique opportunity to the Pheonix area buyer.
What is it ?
Value Engineering , as it relates to Home building, is an analysis of the cost of building home and how one can reduce cost and provide an equal product at lower cost.
Primarily, this is done in 2 main areas. ( Click here to find out how ) ...
Via James Wexler, Scottsdale AZ Luxury Homes (Coldwell Banker):
The White House temporarily suspends "flipping rule that imposes a 90-day waiting period before foreclosed homes can be sold in order for these buyers to receive FHA (Federal Housing Administration) insured loans.
According to the release, ...
"For one year, the Federal Housing Administration will no longer impose a 90-day waiting period before foreclosed properties can be sold to receive government-backed loans" as "part of an effort to help speed the sale of foreclosed properties".
In Maricopa County, Metro Phoenix, we are suffering from some of the highest foreclosure rates in the country. In fact, the foreclosure rate has nearly tripled since 2007, according to research firm RealtyTrac.
As a result, it is imperative that buying restrictions are eased and tax advantages are offered to excite homebuyers to purchase foreclosures, short sales, bank owned real estate, REO properties and resale homes.
Until the supply of homes is reduced, it will be difficult to see any improvement in sales volume and sales price.
Further, foreclosed homes cause wonderful communities and its residents suffer as they wait for a recovery.
Mr. President, this is a move in the right direction in what I hope will be many initiatives, by the Federal Government to legislate changes to stimulate real estate buying and prevent more foreclosures.
Americans are not asking for a 'Bailout'. However, struggling homeowners across the country implore you to consider a bi-partisan bill that will support the American Housing Rescue and Foreclosure Prevention Act , and the needed Rescue Plan that will be voted upon today in the Senate and tomorrow in the House of Representatives
I encourage you to support legislation that would stimulate buying and would have lenders ease struggling homeowners' loans and make Federal Housing Administration refinancings more widely available.
A government report says U.S. home prices fell a record 5.9 percent in August from the same month last year.
The Federal Housing Finance Agency also says prices, on a seasonally adjusted basis, fell 0.6 percent from July to August. The index is down 6.5 percent from its peak in April of last year.
The government index is calculated using mortgage loans bought or guaranteed by the government-controlled, mortgage-finance companies Fannie Mae and Freddie Mac.
Via James Wexler , Associate Broker ~ Coldwell Banker (Scottsdale AZ):
I have been hearing more and more stories of buyers approaching sellers with offers that include "Cash-Back". Why is this white collar crime and mortgage fraud making a re-occurrence? - Buyers are taking advantage of 'desperate' sellers hoping they will cross the line to do anything to sell a home.
Let me be clear that it is illegal. Period! In fact, on June 19th, the FBI charged More Than 400 Defendants Charged for Roles in Mortgage Fraud Schemes as Part of Operation "Malicious Mortgage. 
A cash-back transaction scenario is where a buy pays more than a home is worth with the extra money being paid from the seller (outside of escrow) back to the buyer
Wikipedia defines Mortgage Fraud Cash-Back Schemes:
"The buyer and seller or the buyer and real estate agent collude to deceive the lender as to the true sale price of a property. The seller or the real estate agent gives the buyer a cash rebate which is not disclosed to the lender. As a result the lender lends too much, and the buyer and/or seller pocket the overage. This scheme usually requires appraisal fraud to deceive the lender. "Get Rich Quick" real-estate gurus' courses frequently rely heavily on this mechanism for profitability"
Here is a Cash-back Scenario"
- Homeowner lists home for $320K
- Buyer approaches seller and offers to pay$400K and ask for $80K extra paid back to the buyer after and outside the escrow.
- Seller agrees as still receives the $320K net they had hoped
- Buyer is able to put down 20% on $400K ($80K) and receive a 30-year fixed mortgage with no PMI (private mortgage insurance)
- Buyer then receives the $80K back after the close of escrow; thus, getting a fixed rate, no PMI mortgage with no money down.
- other situations are buyers putting down $40K and getting $40K cash back in the buyer's pocket.
- Buyers are committing fraud.
- Buyers and sellers are inflating home prices which as the recorded sale becomes a 'Comp'.
- Houses usually go into foreclosure further hurting the housing market.
- Banks and shareholders take the losses.
- Losses are passed on to fair dealing consumers in higher rates and fees and stricter lending guidelines.
- All of these prevent buying; Lack of buying causes prices to fall or prevent recovery.
The Land 'Gold-rush' in Phoenix of the last 10 years saw the unfortunate proliferation of many unscrupulous brokers , appraisers, mortgage brokers, buyers and sellers who participated in cash-back schemes which hurt the honest majority and contributed to the large amount of foreclosures in metro Phoenix and many of the surrounding towns including Scottsdale, Tempe, Peoria, Gilbert, etc...
If you are approached with such a cash back deal or know of participants email: px_cashback@ic.fbi.giv
Thanks for helping the 99% who are contributing to your housing market and national economy.
For further details ask your local experts on Active Rain:
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Copyright © James Wexler, All Rights Reserved. *'Cash-Back' Deals and Mortgage Fraud*
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale Real Estate needs
-- Americans are more reliant on debt then ever before.
The portion of disposable income that U.S. families devote to debt hit an all-time high in the second half of last year, topping 14 percent, figures from the Federal Reserve show. When other fixed obligations -- like car lease payments and homeowner's insurance -- are added in, about one of every five household dollars is now claimed by bills.
The credit card industry lobbied heavily in 2005 to tighten bankruptcy laws to make it more difficult for consumers to seek court protection and shed responsibility for paying off debt.
But in a sign of just how much households have become dependent on borrowing, the average amount of credit card debt discharged in Chapter 7 bankruptcy filings has tripled -- to $61,000 per person -- from what it was before the law was passed.
"We are going to have to cut back," said Dean Baker of the Center for Economic and Policy Research, a Washington, D.C. thinktank. "We've really been living beyond our means."
-- Americans, borrowing to cover ordinary living expenses, have all but abandoned saving.
Via James Wexler, Associate Broker~Coldwell Banker:
On of the most puzzling , confusing and secretive little corners of the financial world is mortgage rates ; and how you can get the 'best' available rate for your personal  credit and financial situation.
Mortgage brokers perform a very important function. However, when it comes to what rate you are paying, I don't know anyone (outside the industry) who knows how they are quoted and/or how mortgage brokers are paid.
With the recent meltdown of the sub-prime section of the lending industry and re-setting of adjustable rate mortgages, there is now, more than ever, a call for more and more disclosure of how the industry operates, detail of loan structures, broker payments and rate transparency.
I need to point out that 99% of the mortgage brokers are honest, hard working, care about the clients best interest and provide an important service to the real estate and lending industry. I can without hesitation recommend many. Unfortunately, there are always a few bad apples that spoil the bunch for the rest.
There are efforts from the government, to the major web sites, to smaller tech savvy entrepreneurs to address the challenge head on.
One of the best, products to come to the lending market is just recently launched by RealEspace called "Rate Window" which I like to call the future of loan shopping
About Rate Window:
Mortgage bankers and brokers and real estate agents can now offer this transparent pricing tool to their clients through their websites or blog-sites. The paradigm shift has begun for how consumer's will price their mortgage loans.
Transparency is now available to the public as never before! They will no longer need to negotiate with their mortgage banker or broker like a used car salesman.
The window is open (RateWindow) to the world of wholesale mortgage rates where the public can't be manipulated on the cost of their mortgage loan. Mortgage bankers and brokers and real estate agents with vision will join in on this first to market rate pricing engine so they can wear the white hat.
For more about Rate Window and how it can benefit home buyers, mortgage brokers and real estate agents, please call or email Matt Dunlap
In my humble opinion, Rate Window is the future of the mortgage industry.
More transparency and disclosure is always a good thing. It instills trust and confidence for the consumers and public. Most importantly, transparency protects everyone involved before a situation occurs; not after a problem arises, often before it's too late.
Is America's long era of easy credit over?
Experts say that even when the current credit crunch eases, the nation may finally have maxed out its reliance on borrowed cash.
Today's crisis is a warning sign, they say, that consumers could be facing long-term adjustments in the way they finance their everyday lives.
"I think we're undergoing a fundamental shift from living on borrowed money to one where living within your means, saving and investing for the future, comes back into vogue," said Greg McBride, senior analyst at Bankrate.com. "This entire credit crunch is a wakeup call to anybody who was attempting to borrow their way to prosperity."
A prolonged period of tighter credit is ahead, experts say.
U.S. consumers will find it much harder to get a credit card, and to carry large balances. Late fees will rise and lines of credit will be reined in. After years of buying homes with interest-only loans, or loans that allowed people to borrow more than the value of the home, substantial payments and downpayments will be required. Interest rates are also likely to rise.
Lenders, far more wary of risk, have tightened the standards they use to judge potential borrowers
Here's what you should do 1st.
Contact your lender to make them aware of the pending problem. You may be surprised of their understanding and willingness to work with you to keep you in your home prior to a bank foreclosure.
If you contact a Realtor. Make sure you work with a foreclosure or short-sale specialist.
It is a complicated, time consuming process which requires a lot of communication and due diligence with your lender.
Try to remain as stress free as humanly possible. It is an emotional time. You did not do anything wrong. You are not alone. You will get through this with the other 3 million Americans.
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Sal Gutierrez
Tempe,
AZ
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