That’s right.  After managing other people’s property for nearly 4 years on a full time basis, I have decided to close the doors, metaphorically speaking.

I actually made this decision a few months ago, but I’ve waited to put it on the blog until all of my landlords and tenants have had a chance to hear the news for themselves, make the decisions that are best for each of them individually, and wrap up all of the formalities associated with those decisions (primarily the transfer of repair funds and security deposits).

Why did I close my business?  For a reason I never expected: my personal health.  You see, with the current economic climate (and I absolutely hate that phrase, by the way), I was having approximately one unexpected vacancy every month.  Whether it was an eviction; a tenant calling and saying they cannot pay; a tenant moving out in the middle of the night, never to be heard from since; or even the strangest of cases: a tenant that was kidnapped from his home and is presumed dead; at least one property a month was experiencing an unexpected vacancy.

Although I don’t actually think these vacancies were my fault, at the moment of crisis I would consider it such, and worse, would consider myself a failure.  If you look at my tenant placement stats, they are kind of sick.  90% of the time, I personally find the tenant through my marketing efforts.  So if I wasn’t to blame (since I found this bad apple tenant), who was?  Certainly not the landlord.  But we all need someone to blame, so the easy answer was me.

Unfortunately, I typically found I was nearly unable to face or discuss the situation with the landlord, often going a week or more without ever answering my phone directly.  This is a horrible behavior in the face of crisis, which would further make it look like I was to blame.  In reality, though, I would plummet into a state of depression that I never, ever expected of myself…and it was happening every month.  Worse, the problem was affecting the way I managed every single property, not just the one in crisis.

Nine or Ten months of this scenario, and a very, very agonizing day on the sofa with my dear wife Jan, and I came to the realization that I had to stop the problem, before it stopped me.  And thus, I’ve closed it down.

I am now back to managing just my own properties.  And while I’m certainly not immune from the occasional bad apple tenant, I don’t fret talking to myself about the need to clean up, repair, re-market, or in other words, pay for the acquisition of the next tenant.  I mention my own properties, because I’ve already had a few people say, “Hey!  I thought you were closing this down, but I see one of your ads on craigslist!”  Rest assured I’m not playing favorites, but rather, just trying to fill my vacancies like any other landlord.

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

Are interest rates going to go up or down?

Great question.

Consider this:

For most of this year, the Federal Reserve has been buying mortgage backed securities – en masse. As of last week, they had spent about $792 billion and many people say that the reason that interest rates have stayed so low is because the Fed has provided the demand side of the supply/demand law and thus mortgage rates have remained reasonably low.

The total amount that was authorized by the Fed was $1.25 trillion in mortgage bonds that are guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae. This buying is designed to reduce home-finance costs and hopefully turn the housing market around. In addition to the $1.25 trillion in mortgage bonds, the Fed also intends to buy $300 billion of long-term Treasuries and $200 billion of federal agency debt.

But all that buying activity will be coming to an end in the next few months.

And if the main entity that has been providing the demand over the last year “quits” providing demand by buying up mortgage backed securities… what impact will that have?

Not only am I unsure, but some of the smartest people in the world are also unsure about what impact this may have. According to Richmond Fed President Jeffrey Lacker:

Lacker said it’s unclear whether an end to buying the securities will disturb markets. “Whether there is a so-called cliff effect or any disruption due to discontinuous change in our purchases is up in the air.”

Are interest rates going to go up or down?

I don’t know.  But interest rates are bouncing around their recent lows right now and it might be a good time to act.

Arizona Mortgage Rates

Current Mortgage Rates Get this widget See local rates

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

One of the great things about the way the mortgage markets work in the last couple of years is that reality always trails the announcement by anywhere from a couple of weeks to a couple of months.

For example, back in July, it was announced that the Obama Refinance was expanded to allow people who owed up to 125% of their home value to refinance – where previously the limit was 105% under the Making Home Affordable plan.

So, a month and a half or so ago it was announced – and just now today I saw the first lender say “ok, we can now do the 125% Obama Refinance!”

So the good news is that at least it is now available. The bad news is that you had to wait a while after it was announced.

Which is pretty much true about anything you hear being announced by the government… listen to it, then wait a little while before it becomes reality.

But if you have been unable to refinance because you owe more than your home is worth… the time has come.

Lenders are now ready for the Obama 125% refinance.

Well, at least some of them are.

Arizona Mortgage Rates

Current Mortgage Rates Get this widget See local rates

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

Another crazy week in the mortgage business. This week, one of the nations largest wholesale mortgage lenders – Taylor, Bean & Whitaker was effectively shut down by the government and as a result thousands of borrowers are now scrambling to try to find financing.

There is quite a bit of finger pointing as to whether or not the shut-down was done properly (or even should have happened at all) but to all of the people who were about to move into a home and are now back trying to find financing, I am sure that whether or not it should have happened doesn’t really matter too much to them.

Have A Backup Plan

One of the most important things that you can do when getting a loan is to have a backup plan. Backup plan as in a “backup lender” who will be able to do your loan should the lender that you are working with suddenly be unable to fund your loan for whatever reason.

Most loan officers will know how many lenders will be able to do your loan – and it may surprise you how many loans I see getting done where there is only one lender that does that type of loan. For example, if you are financing your home with a jumbo loan, it may be that there is only one lender available who does that type of loan – and if something should happen you may be left without being able to get financing on the same terms – or at all.

So when getting a mortgage in today’s market, be sure that you have a backup plan.

More Information on Taylor Bean & Whitaker:

HUD Press Release

Wall Street Journal Article

Taylor Bean Press Release

Dan Green does a great job of putting together a FAQ list for many questions people have about the Taylor Bean and Whitaker event.

Arizona Mortgage Rates for August 7 2009

Current Mortgage Rates Get this widget See local rates

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

I was having a conversation with one of my peers yesterday and I think I was called out on the carpet when he declared:

“Justin McHood has officially went crazy. No way, did I just hear that come out of your mouth!”

What did I say that made everyone think I was crazy?

I declared that I think friends are more important than money.

Keep in mind – I am in a field where money is everything. The people who I work with think about money, talk about money, try to show how smart they can be about money — anything and everything seems to be all about the money.

If I am in a money-driven, money-obsessed industry and I declare that “friends are more important than money” does it mean that I have “went soft” and am about to become a social worker?

No, it just means that tools like Facebook and Twitter have changed the way that I think about money and friends in the last year.

Now – before I go any further — I am NOT suggesting that having more friends on Facebook or followers on Twitter are more important than money. Not a chance.

But what I am suggesting by saying “friends are more important than money” some PR firms might also call “reputation management”. Translation: value money over friends and try to make an extra buck on someone and there is a good chance that all of your friends — and potential customers will hear about it.

Justin McHood Took My Money!

Justin McHood Is Awesome!

Both of those things can easily be said by people using the various social media tools out there – and both of them last forever, because Google doesn’t forget.

The smartest people in the RE.net space have figured this out – and have built in feedback tools on their sites for people either rant or rave about you.

What does this have to do with mortgages or real estate?

If you are thinking about working with a loan officer or a Realtor – do your homework first — see what their friends think about them.

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

If you are currently shopping for a house, be aware that it is probably about to take a little longer to get your loan done.

The reason it is going to take a little longer is because there is a new law going into effect on July 30th that changes the disclosure requirements and the way that your loan officer sends/discloses to you the Truth in Lending disclosure.

The Truth in Lending disclosure (sometimes called the “TIL” by people who are in the mortgage business) is a very important disclosure because it basically tells the consumer all of the “important” numbers about their mortgage. APR, Loan Amount, Interest Rate, Whether or not the loan is assumable, Late fees for payments and probably about 10 more important things as well.

As a result of the new Truth in Lending Disclosure law, I am expecting it to take longer to get your loan done — possibly about 30-50% longer.  Which means that if your loan officer used to be able to get a loan done in about 20 days, expect it to take maybe 30 now. If it was 30, expect it to take maybe 45.

Why the increased length of time? Because of the number of times the consumer must be sent a disclosure when something changes — even slightly — and then an associated “waiting period”.

Highlights of the new Truth-In-Lending law:

1. No upfront fees can be charged to the customer, except for a credit report charge until they have received the TIL. ( No more up front fees for those lenders who still charged an up front “commitment fee” or anything like it)
2. TIL must be disclosed to the buyer within 3 days of application.
3. Once they receive the TIL, then there is an additional 7 day waiting period before the loan can close.
4. Any changes to the loan that result in a change to the APR, you will need to get a new TIL disclosure and then there is another 7 day waiting period.

Generally speaking, it is not uncommon for various numbers in a transaction to change slightly during the process, and so when this happens starting in August, just be ready for an increased turn time to get your loan done.

Now, it is not every loan that will take longer to get done – but on average, I think it is safe to say that the overall turn times to get a loan done are about to go up.

So my best advice is to write a 45 day close of escrow, starting August 1, not a 30.

Arizona Mortgage Rates July 24, 2009

Current Mortgage Rates Get this widget See local rates

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

Many people have been asking me lately about the “1% down payment program” that is supposedly new and asking me for details.

I have some good news — there is a new program that is available where people can buy a home with an FHA loan and only put 1% down.

No, FHA requirements haven’t changed – but the new program allows this to happen under certain conditions. And wait – there is more! The program is much more than just the 1% down payment program.

Neighborhood Stabilization Program Highlights:

• If you own a residence, you must be leasing your primary residence at least 12 months before applying for the program.
• You must use us a lender from the ADOH participating lender list.
• You must attend and complete an eight‐hour Homebuyer Education Class provided by one of the ADOH participating homebuyer counseling agencies. (A list will be provided by your lender once you begin the process.)
• The property you purchase must be your primary residence.
• You must have a maximum debt‐to‐income ratio of 31/43.
• You must be AUS approved eligible.
• You must have two months PITI reserves.
• You can use any type of financing with the NSP program – including paying cash. That means you can still get up to 22% of the purchase price even if you pay cash for the house.
• You must be approved and have your paperwork completed for the program prior to submitting an offer on a house. (This means you are going to want to contact a loan officer who knows about the program as soon as possible in the process).
  

National Stabilization Program: 1% Down Payment?

A minimum of 3 percent of the property purchase price is required as down payment. One percent must come from the borrower’s own funds. Two percent can come from any other approved source.

National Stabilization Program: How Much Money Can You Get?

1. Up to 22 percent of purchase price
2. All loans are forgivable after a period of time based on the amount of the loan. * 5 years for assistance of $15,000 or less * 10 years for assistance of $15,001‐$40,000 * 15 years for assistance of more than $40,000
3. All loans are zero percent interest with no monthly payment.
4. The balance of the loan is forgiven at the completion of the term.

Neighborhood Stabilization Eligible Property Types:

• Foreclosed properties only. A property is considered “foreclosed upon” at the point that the mortgage or tax foreclosure is complete.
• One‐unit detached single family homes, condos and townhomes.
• The property must be vacant at time of listing.

Neighborhood Stabilization Program Income Limits:

In order to qualify for the Neighborhood Stabilization Program in any county in Arizona, you must have a gross income (the total income before taxes, health care costs, social security, etc.) of no more than 120 percent of the average median income for the county they want to purchase a foreclosed house in. Here are the limits for Maricopa County:

My Opinion On The Neighborhood Stabilization Program

Whether or not this program should exist is not the question in my mind — I have almost quit having an opinion about whether or not something like this should exist.

But what I can say is that the program is very real — meaning this program isn’t one of those programs that the government announces that really doesn’t exist and that there are too many “catches” where it narrows it down to where no one qualifies.

This program is very “real” and is generating a lot of excitement. The real bottom line is basically that if you are buying a foreclosed property and meet the guidelines – AND – plan on living in the home, then this program is easy to take advantage of.

With as much excitement as the 8000 tax credit has generated, I would think this will generate just as much once people get the word that free money is real and available.

Arizona Mortgage Rates July 20, 2009

Current Mortgage Rates Get this widget See local rates

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

Fees.

If you aren’t careful, they will drive you insane.

Fees are something that no one likes to pay and yet, somehow there is a never-ending list of fees that you will be required to pay when buying or refinancing a house. Everyone likes to pick on mortgage guys about fees – but the truth is that crazy-whacked-out-insane-fees come from all different sorts of places.

Even though I realize that there are all kinds of fees and some of them are actually legitimate, I really, really, really enjoy making fun of them – and indirectly of the people who think these crazy things up.

One of my favorite “junk” fees is where occasionally, I will see a title company charge someone an “email delivery” fee of $25.

What I wouldn’t give to be able to charge even 25 cents — heck, even five cents –  for every email I have to send or read.

Twenty five bucks?

For an email?

Oh, and title companies aren’t the only ones with fee-insanity. Just yesterday, I got a note that said Flagstar was going to begin charging a $50 “paper handling fee to help offset some of the costs associated with traditional closings.”

I suppose the price of paper went up recently.  Or, maybe this is their way of launching the “Flagstar Green Initiative” or something.

Who knows.

But my favorite fee story of all time?

The PITA fee. That is where the client was such a PITA that the loan officer actually charged him a PITA fee of $2500. At closing, the escrow agent didn’t even blink an eye — just went through the fees and actually described the PITA fee as “normal”.

What is a PITA?

Pain In The A__.

Make sure you look twice at the fees you are being charged when buying or refinancing a house. And try to keep a sense of humor.

Arizona Mortgage Rates For July 10, 2009

Current Mortgage Rates Get this widget See local rates

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

Lately, I have seen quite a few loans “struggle” to get approved for one reason or another. I have been reminded that many people just aren’t aware of how some of their seemingly unrelated decisions can impact whether or not they get approved for a loan.

And there nothing worse than thinking that you will be approved for a loan only to find out that a lender won’t approve you for __________ reason.

Here are just a few things that I have seen happen recently that helped people get denied for a loan. Some of these, the loan officer was able to “fix” and get the person approved – and some of them just won’t get approved now.

With turn times on loans probably averaging about 30 days right now (as quick as 10 and as long as probably 60 days) there is plenty of time to “make or break” your loan approval right now.

Rule #1: Don’t Quit Your Job

Seems like common sense, but many people think that switching jobs — especially if it is for more money — won’t impact their approval.

Wrong.

If you think you *have* to quit your job, make sure you talk to your loan officer how it will impact your approval.

Rule #2: If It Doesn’t Fit In A Shopping Cart, Don’t Buy It

Don’t buy anything new that is bigger than you can fit in a shopping cart — and no, not the super-size flatbed shopping carts at Costco or Home Depot.

No big screen TVs. No new cars. No boats. No motorcycles.

The “shopping cart” rule of thumb is because the “bigger” the item it is, the more common it is to see people finance the “thing” and financing will impact your credit score and debt to income ratios – usually not for the better.

And no, big screens don’t fit in shopping carts for those of you who were wondering.

Rule #3: Don’t Hide It

Make sure you disclose child support or alimony. If you pay these, make sure your loan officer knows and it is disclosed in your application. I saw it missed recently and the deal is “iffy” now at best.

I know, I know – you are probably thinking that I have been hanging out with Captain Obvious too much by taking the time to write these things down – but you might be surprised to see how many times I have had the conversation with someone about how big screen TV’s don’t fit in shopping carts.

Phoenix Mortgage Rates July 3 2009

Current Mortgage Rates Get this widget See local rates

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.

HVCC

HVCC seems to be de-railing quite a few transactions lately. Buyer wants to buy a house. Seller wants to sell a house. Buyer and seller agree to a price. Appraiser says house is worth fifty thousand dollars less than what buyer and seller agree on.

Now what?

Well, either the deal falls apart or buyer has to be able to bring an “extra” 50,000 in cash to closing becasue you can’t finance it.

I have been looking and looking for someone who had something positive to say about the new HVCC rules, but so far I haven’t really found anyone in the business who says “it is working”. However, I have seen quite a few petitions being circulated to get HVCC overturned.

8000 Tax Credit Monetization

I am still searching for a way that first time home buyers can “monetize” the first time home buyer tax credit here in Arizona. Today, I at least found a lender who will allow it to happen:

Wholesale lender Taylor Bean Whitaker, has sent this note out to the clients about the first-time home buyer credit: “HUD recently released Mortgagee Letter 2009-15 regarding the use of the First-Time Home buyer Tax Credit.  The program provides up to $8000 tax credit to qualified first-time home buyers. Although the program allows certain entities covered by Section 528 of the National Housing Act to use their current authority to offer tax credit advances with second liens, TB&W will not provide the second lien.  The Second Lien must be provided by an FHA approved non-profit agency or Federal, State, or Local government agency or instrumentality. Use and approval of the first-time home buyer tax credit is the responsibility of the entity providing the secondary financing.  All documentation must be submitted to the entity providing the secondary financing.  TB&W will only approve the use of the secondary financing being provided by the approved entity. TB&W will begin to accept this type of secondary financing immediately.”

(h/t Rob Chrisman)

I guess finding a lender who will allow this to happen is the first step — now we just need to find an organization who is actually helping people turn their tax credit into funds that can help cover closing costs.

Arizona Mortgage Rates

Current Mortgage Rates Get this widget See local rates

Copyright ©2007-2009 Phoenix Area Real Estate Blog by Steve Belt. This feed is intended for personal, non-commercial use only.