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.

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 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. 

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

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.

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.

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.

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)

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.

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