“As bad as the 2009 numbers are, they probably would have been worse if not for legislative and industry-related delays in processing delinquent loans,” said James Saccacio, chief executive officer of RealtyTrac.

Saccacio said that monthly foreclosure filings hit their peak in July, then declined for four months before rebounding at years end. He said trial loan modifications, state legislation extending the foreclosure process and an overwhelming volume of inventory clogging the foreclosure pipeline were the main factors contributing to the second-half declines.

But “in the long term, a massive supply of delinquent loans continues to loom over the housing market, and many of those delinquencies will end up in the foreclosure process in 2010 and beyond, as lenders gradually work their way through the backlog,” he said.

There were a record 41,000 single-family home foreclosures in the Phoenix area last year. A new Realty Studies report from the Arizona State University’s W.P. Carey School of Business and ASU economist Jay Butler also said there were 4,000 foreclosures in Phoenix in December and 3,000 in November.

Median home price in the area was $140,000 in December compared to $148,600 in December 2008.

There were also 600 condos that were foreclosed on in December versus 285 such defaults in 2008.

Butler said the rebound of Phoenix’s housing market remains elusive to many.

“Recovery is a perception issue,” said Butler. “Some people believe they will see recovery when their home values are back where they were, and that’s going to take a long time. As for the economic recovery, Phoenix-area layoffs are still coming, and there’s an expectation interest rates may get higher, so the housing market will probably bounce around for a while longer.”

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in October, increased 3.7 percent to 114.1 from 110.0 in September, and is 31.8 percent above October 2008 when it was 86.6. The rise from a year ago is the biggest annual increase ever recorded for the index, which is at the highest level since March 2006 when it was 115.2.

“Home sales are experiencing a pendulum swing.” said Lawrence Yun, NAR chief economist “Keep in mind that housing had been underperforming over most of the past year. Based on the demographics of our growing population, existing-home sales should be in the range of 5.5 million to 6.0 million annually, but we were well below the 5-million mark before the home buyer tax credit stimulus,” he said. “This means the tax credit is helping unleash a pent-up demand from a large pool of financially qualified renters, much more than borrowing sales from the future.

“Still, as inventories continue to decline and balance is gradually restored between buyers and sellers, we should reach self-sustaining housing conditions and firming home prices in most areas around the middle of 2010. That would mean broad wealth stabilization for the vast number of middle-class families,” Lawrence Yun said.

A short sale is the final step a homeowner may take before giving up on a house and letting it slide into foreclosure.  However, in the past the foreclosure process has been time consuming and has not delivered the desired results.  Currently 3 out of 4 houses that start the short sale process end up failing and falling into foreclosure.  If the process does close it takes on average 8 months before the transaction is complete, this makes if frustrating not only for the seller but for the buyer as well.

The new plan A lender must give a yes or a no answer to an offer within 10 days.  It will also offer incentives to sellers buyers and lenders to complete the transaction.  The incentives include:

• Borrowers would receive $1,500 from the government in relocation expenses.
  
• Servicers receive $1,000 from the government per transaction.
  
• Second liens holders can receive up to $3,000 of the sales proceeds for releasing their liens.
  
• First lien investors can receive $1,000 from the government for signing off on payments to subordinate lien holders.
  
• Borrowers must be fully released from any further liability.

More information will be released shortly.

If you have any questions on the new program please contact Remax Alliance.

What is an FHA 203k Loan?

The FHA 203k renovation loan program provides the funds for both the purchase and renovation of a home packaged into one mortgage loan. Once the home purchase is closed, the funds are held in escrow to pay for pre-determined renovation work done by approved renovation contractors.

The purchase of a house that needs repair is often a catch-22 situation, because the bank won’t lend the money to buy the house until the repairs are complete, and the repairs can’t be done until the house has been purchased.

HUD’s 203(k) program can help you overcome this obstacle by enabling you to borrow funds for the purchase or refinance of a property plus the cost of making the repairs and improvements in one mortgage. The FHA-insured 203(k) loan is provided through approved lenders nationwide and is available to owners who will occupy the home themselves.

Down payment, credit qualification, loan limits and other requirements are the same as standard FHA loans. Additional guidelines are set forth specific to 203k loans to provide for renovation of the home.

How many types of 203k loans exist?

1. The Standard 203k is intended for more complicated projects that involve structural changes, such as room additions, exterior grading and landscaping, or renovation that would prohibit you from occupying the residence. A Standard 203k is also used if your project requires engineering or architectural drawings and inspections.
2. The Streamlined 203k is designed for less extensive improvements and for projects that will not exceed a total of $35,000 in renovation and related expenses. This version does not require the use of a consultant, architect, and engineer or as many inspections as the Standard 203k. As a result, when applicable, the Streamlined 203k generally becomes the simpler, less costly option.

Does the 203k program work for Single-family homes?

No. This program is eligible for use on 1 to 4 unit buildings only.

How does the appraisal work?
The appraiser is given a copy of the contractors bid documents to identify the repairs and remodeling to be done along with their costs. The appraiser then determines the value of the home after completion, “subject to” the improvements to be made. Up to 110% of this value may be used for loan approval purposes.

Can Investors Use a 203k?

A 203k loan is for use by owner occupants, local governments or  non-profits. However, an owner occupant can use a 203k loan to purchase and renovate up to a 4-unit building as well as multi-use building in some situations.

Is there a time limit for renovation of the property?

The renovation must begin within 30 days of the closing of the loan and must be completed within the time frame established in the loan agreement. The total time for renovation must not exceed six months.

“The Deed for Lease Program provides an additional option for qualifying homeowners who are facing foreclosure and are not eligible for modifications,” said Jay Ryan, Vice President of Fannie Mae. “This new program helps eliminate some of the uncertainty of foreclosure, keeps families and tenants in their homes during a transitional period, and helps to stabilize neighborhoods and communities.”

Many see this as a calculated bet from Fannie Mae, that home prices will be higher another year into the economic recovery.  The question that remains is, will it work?  Big banks got into this crisis by over leveraging themselves during the subprime mortgage days.  This move sees them once again putting all their eggs in one basket and betting on a rise in home values.

Fannie Mae will not have to list the homes as “for sale” so on their books they will show a revenue increase and will not have to write off the loss.  This will also make the ever growing shadow inventory even more complicated to dissect.  Many economists guess the number of homes that are currently foreclosed on but have not yet been listed on the market at over 7 million.  The move by Fannie Mae will significantly increase the shadow inventory, but it will be difficult to know by how much, given that the house will not technically be foreclosed on until the lease runs out.

If the bet pays off, it could be a win/win.  The homeowner will have cheap rent for at least one year, while Fannie Mae will take less of a loss when they do finally sell the house.  If however the shadow inventory starts making news and home prices decline even further, tax payers will be left with the bill. Again.

There were 937,840 filings in the third quarter representing a 5% increase from the second quarter.  The foreclosure filings also represent a 23% increase from the third quarter of 2008.  The nearly 1 million foreclosures are the highest on record, this means that 1 in 136 U.S. Households is currently in foreclosure.

Arizona and California are tied for the Nations highest foreclosure rate.  1 in every 53 households in the two states were in foreclosure during the quarter.  Florida, Idaho, Utah, Georgia, Michigan, Colorado and Illinois round out the top ten respectively.

Despite high foreclosures the housing market has seen some stabilization in recent months.  Prior to the end of Q3 there had been 5 straight months of growth in the sector.  Some economists say that the stabilization may be allowing lenders to work through their excess inventory and as a side effect, increasing the total foreclosure filings.

The future still looks uncertain as many predict foreclosure filings to continue to increase into 2010.  This may continue to put a downward force on the prices in the housing market.  Some economists predict the market could fall another 10% before hitting a bottom for good.

Dave Ramsey, who has been on the radio for years on AM stations is now making the transition into his first valley wide FM radio program Monday October 19th.   The Dave Ramsey Show will now be on KTAR 92.3 from 10 PM to 1 AM following Mac and Gaydos, and Joe Crummey.

Ramsey’s syndicated radio program The Dave Ramsey Show is promoted with a tagline that “It’s about life and money,” and it is heard on over 400 radio stations throughout the United States and Canada, as well as on XM and Sirius satellite radio. He has written numerous books. His books and broadcasts often feature a Christian perspective that reflects Ramsey’s own religious beliefs. Ramsey was named the 2009 Marconi Award winner for Network/Syndicated Personality of the Year

Remax Alliance Group and The Reeves Team are excited to hear that The Dave Ramsey Show is back.  For over 9 years we have partnered with Dave Ramsey to help family’s improve their financial situation through the purchase or sale of a home.

Glad to have you back Dave.

If there is one thing the media has made us aware of throughout the course of this morgage meltdown, its just how creative(and crazy) lenders were with the financing options.  As the credit from the banks tightened so did the lending options available for buyers.

While most of the exotic loans of the past are gone their are still many financing options available.  Below is a list of options and what it takes to qualify for the loan.

Conventional Loan: A conventional loan is a lender agreement that’s not guaranteed or insured by the federal government. At one point in our history, conventional loans were the only mortgage loans available and they were all made by local lenders such as banks, savings and loans, and credit unions. They kept and serviced these loans in their own portfolio until they were either paid in full or foreclosed on.

A Conventional loan typically requires a large down payment that may not be required when financing through the government, however it does offer more flexibility because you are working directly with a bank.

FHA: FHA loan is a federal assistance mortgage loan in the United States insured by the Federal Housing Administration. The loan may be issued by federally qualified lenders.  FHA primarily serves people who cannot afford a conventional down payment or otherwise do not qualify for PMI.

Required Documentation For FHA Loans

• A two year history of employment in the same field is required
• If you are a recent college graduate, your last two years of schooling can be used if you are currently working in your field of study
• Credit Scores normally need to be above 620 for Conventional financing-580 for FHA and VA looks at a case by case basis
• If no credit history exists-you may use cell phone bill, cable bill, previous rental history, etc. to establish a “pattern” of good credit payments
• Proper ID as defined by the Patriot Act (State Driver’s License or Birth Certificate along with a copy of your Social Security card required)
• Debt Ratios should be below 36/46

VA:  A VA loan is a mortgage loan in the United States guaranteed by the U.S. Department of Veterans Affairs. The VA loan allows veterans 100% financing without private mortgage insurance or 20% second mortgage. A VA funding fee of 0 to 3.3% of the loan amount is paid to the VA and is allowed to be financed. In a purchase, veterans may borrow up to 100% of the sales price or reasonable value of the home, whichever is less. Since there is no monthly PMI more of the mortgage payment goes directly towards qualifying for the loan amount, allowing for larger loans with the same payment.

The VA does not make home loans, they insure them.  We are VA approved and can help you with your VA loan request. Some VA benefits include:
- No downpayment is required in most cases
- Borrow up to 100% of purchase price
- Lower closing costs
- Mortgage is assumable
- No Private Mortgage Insurance (PMI)
- No penalties if you prepay the loan
- You may be eligible for waiver of VA funding fee
- VA support during temporary financial difficulties

GRH: A Guaranteed Rural Housing loan is a federal assistance mortgage loan in the United States insured by the RHS.

Some key features include:
-  No PMI. That’s right, no private mortgage insurance.  Like VA, this program has a Guaranteed fee that can be financed into the loan the same way VA loans have a Funding fee.
- 6% seller help/contribution is allowed
- No minimum contribution from your own funds.  FHA has a 3% requirement.  There are also no cash reserves required, as is the case with your typical conventional loan.
- This program only offers a fixed rate option for primary 1 unit residences.  Current maximum loan amount is $417,000.

requirements for loan:

• 1-unit primary residences, including single-family dwellings, condominiums, planned unit developments (PUDs) and eligible manufactured homes.
• Non-farm
• Leasehold and rehabilitated properties
• Property must meet the rural designation as defined by RHS

Good Neighbor Next Door Loan: Good Neighbor next door program is made available by HUD so law enforcement and Teachers may purchase a Hud home at half price.  If the police officer or Teacher uses fha financing for this purchase he/she will only need a downpayment of $100 and can finance the closing costs into the loan.

Interest Only and Adjustable Rate loans are still available but given the current market situation they are not used often.

A crowded room at the 5 Star Conference this week erupted as Gabriele Harrison announced that Fannie Mae will be using asset management companies to handle their companies short sale requests in the future. Fannie Mae, the single biggest player in the mortgage market, will be informing clients that they will need to work with asset management companies when “short selling” their property.

An asset management company acts as a middle man between the banks that own the mortgage and the client that is trying to short sale the property. Asset management companies are already big players in the Foreclosure market, but up until now have not worked with short sale properties. The change that Fannie Mae and Freddie Mac are making should have some positive effects. Because most major banks use them for their foreclosed on properties, making the shift to Short Sale homes should be fairly straightforward. Using one company for all short sales will also streamline the process and speed up the time it takes for a client to short sale their house.

However, the new process is not great news for everyone. Since the housing collapse in late 2006 real estate agents have struggled to stay afloat, many agents have turned to short sales and working with distressed properties to help them stay afloat during the down market. When Fannie and Freddie start working exclusively with the asset management companies they will essentially be cutting out these agents. Fannie and Freddie currently own roughly half of the mortgages in America, if other big banks follow the lead small real estate agents will be all but cut out of the picture.

Details on the short sale process are still to come. We have put in calls to Mrs. Harrison (Fannie Mae) and Mrs. Beckles (Freddie Mac) however they were both unavailable for comment. We will keep you up to date on all the new developments as they come. We are still doing research but thought this information was worth sharing even in its primitive state.

So is the Shadow Inventory buzz true? And wouldn’t it be in the best interest of the banks to sell the homes quickly and make their money faster? The short answer, No. While conventional wisdom would say the quicker the banks get their money the better, in the case of foreclosed homes the opposite seems to be true for two reasons.

1. Stopping the Bleeding – This is the obvious one, the real estate market has been in a free fall for quite a while now, if the banks dumped all the distressed homes onto the market right now it would devastate an already battered real estate market.  Reducing the inventory of distressed properties will help slow the downfall, and help stabilize the sector.   This helps make the banks remaining inventory more lucrative.
2. Cooking the books – This is the not so obvious one, the banks have a massive amount of homes being returned to them daily.  When the homes are returned to them they are on the companies books for the price of the loan.  However when the homes are listed and sold the bank must then change the books to reflect the accurate value of the home.  If big banks were to show their true worth, the companies equities and their stock prices would plummet.

Recent studies have compared the amount of foreclosed homes to the amount of listings from the banks.  The result was that only 30 percent of the foreclosures were making it to the market.  The remainder of these homes is what is known as the “Shadow Inventory”.

The revelations of this Shadow Inventory bring up another scary thought.  Is the bottom that we have been experiencing in the market real or is it a false bottom.  Will the bank eventually have to flood the market? Or will their efforts work and stabilize the market indefinitely?