Memphis Real Estate Buzz » National Real Estate News

Check out Real Estate Today Radio

Joe Spake — Wed, 17 Feb 2010 04:39:44 +0000

The National Association of REALTORSÂ® brings you Real Estate Today Radio.Â Check it out here:

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Joe Spake is a Memphis, Tennessee based Consultant, Real Estate Broker, and Blogger. Call 901.214.5563 for a consultation or click to make a social connection.
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Weekly summary of real estate news, Memphis comments, and other interesting stuff – February 11th

Joe Spake — Thu, 11 Feb 2010 23:05:16 +0000

	Shared Memphis foreclosure rates inch up in December.
	Shared Knuckleheads beware: Real estate is changing.
	Shared Number of U.S. Home Sale Listings Increases in January.
	Shared 8 photos.
	Shared Your Blog From the Prospectâ€™s Point of View.
	Shared Madoff’s Manhattan Penthouse Under Contract.
	Shared Frightened, clueless or uninformed?.
	Shared More Owners Optimistic About Home Values.
	Shared 3 photos.
	Shared White House Props Up Fannie and Freddie.
	Shared My Google Profile.

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FHA policy changes will impact home buyers

Joe Spake — Fri, 29 Jan 2010 01:40:51 +0000

Last Week (January 20, 2010) FHA announced policy changes that will impact home buyers beginning in April, 2010, raising costs associated with FHA loans.

Here are some highlights that effect the FHA buyer's pocketbook:

FHA Mortgage Insurance Premium (MIP) will increase by 0.5% (50 bps) to 2.25%. This is a front-end loan cost.Â FHA also seeks to increase the maximum annual MIP that FHA can charge, in order to shift some of the premium increase from up-front to annual MIP (My read:Â More money to close; possibly higher MIP premiums -higher house payment).

FHA applicants with FICO scores of less than 580 will be required to make a 10% down payment vs.Â the normal 3.5% FHA down payment.

Reduce allowable seller contribution to 3% from 6% (My Read:Â Many FHA buyers have been “cash poor” and, in the past have needed up to 6% of sales price in assistance from the seller to get the deal closed – this is a pretty big piece of cash that buyers will have to come up with from other sources.)

So, If you are in the market for a home now, and you are planning on using FHA financing, you can save yourself some money by closing before April.Â Talk with your agent about how these changes impact your personal situation.

Here are the policy changes as stated in the FHA release

Announced FHA Policy Changes:

Mortgage insurance premium (MIP) will be increased to build up capital reserves and bring back private lending

The first step will be to raise the up-front MIP by 50 bps to 2.25% and request legislative authority to increase the maximum annual MIP that the FHA can charge.
If this authority is granted, then the second step will be to shift some of the premium increase from the up-front MIP to the annual MIP.
This shift will allow for the capital reserves to increase with less impact to the consumer, because the annual MIP is paid over the life of the loan instead of at the time of closing
The initial up-front increase is included in a Mortgagee Letter to be released tomorrow, January 21st, and will go into effect in the spring.

Update the combination of FICO scores and down payments for new borrowers.

New borrowers will now be required to have a minimum FICO score of 580 to qualify for FHA’s 3.5% down payment program. New borrowers with less than a 580 FICO score will be required to put down at least 10%.
This allows the FHA to better balance its risk and continue to provide access for those borrowers who have historically performed well.
This change will be posted in the Federal Register in February and, after a notice and comment period, would go into effect in the early summer.

Reduce allowable seller concessions from 6% to 3%

The current level exposes the FHA to excess risk by creating incentives to inflate appraised value. This change will bring FHA into conformity with industry standards on seller concessions.
This change will be posted in the Federal Register in February, and after a notice and comment period, would go into effect in the early summer.

Increase enforcement on FHA lenders

Publicly report lender performance rankings to complement currently available Neighborhood Watch data – Will be available on the HUD website on February 1.
- This is an operational change to make information more user-friendly and hold lenders more accountable; it does not require new regulatory action as Neighborhood Watch data is currently publicly available.
Enhance monitoring of lender performance and compliance with FHA guidelines and standards.
- Implement Credit Watch termination through lender underwriting ID in addition to originating ID.
- This change is included in a Mortgagee Letter to be released tomorrow, January 21st, and is effective immediately.
Implement statutory authority through regulation of section 256 of the National Housing Act to enforce indemnification provisions for lenders using delegated insuring process
- Specifications of this change will be posted in March, and after a notice and comment period, would go into effect in early summer.
HUD is pursuing legislative authority to increase enforcement on FHA lenders. Specific authority includes:
- Amendment of section 256 of the National Housing Act to apply indemnification provisions to all Direct Endorsement lenders. This would require all approved mortgagees to assume liability for all of the loans that they originate and underwrite
- Legislative authority permitting HUD maximum flexibility to establish separate “areas” for purposes of review and termination under the Credit Watch initiative. This would provide authority to withdraw originating and underwriting approval for a lender nationwide on the basis of the performance of its regional branches

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So you want to buy a Short Sale?

Joe Spake — Wed, 27 Jan 2010 16:06:19 +0000

Second only to Foreclosures, Short Sales create a lot of buzz among investors and home buyers looking for the almighty good deal.Â A short sale is a property that is sold for less than is owed on it.Â Pretty simple concept:Â you bought a house for $200,000 in 2004, with 10% down.Â Over the years you pay down your $180,000 mortgage to $160,000.Â Then for one reason or another… say, you lose your source of income, you REALLY need to sell.Â BUT, because of the current housing market, your house is now only worth $130,000.Â A tough pill to swallow, but you have to unload the house.Â Well it beats having a foreclosure on my credit report.Â But what about the $30K difference?Â How will I come up with that money?Â Welcome to the world of Short Sales.

Jay Thompson, The Phoenix Real Estate Guy, wrote one of the most concise and informative posts on short sales that I have read,Â Â so I will skip the mechanics here and just say that the banks, being the altruistic entities that are, just love negotiating short sales with distressed owners, and what they love even more is working offers from buyers expecting a deal.Â Maybe love is the wrong word, as it implies some human element.Â The banks are not human, even though there is an interface with an Asset Manager, who, supposedly can make decisions.Â Human decisions can be measured in milliseconds, but bank decisions can take weeks.Â The bank does not care if your buyer’s loan lock or lease is running out, or even if she is a well-healed investor paying cash.Â It’s the bank’s way or no way.Â Oh, and if there is a second mortgage, double the trouble, because in a short sale, as opposed to a foreclosure, subordinate mortgage holders get a piece of the action too.

I closed my first short sale this month.Â My buyer clients fit all the criteria for Successful Short Sale Buyers:
1.Â They were not in a hurry to close
2.Â They could have and would have walked away from the deal at any time.
3.Â They had a very high tolerance for the erratic and inexplicable behavior of the bank.
4.Â They stood their ground when the bank’s foreclosure representative tried to squeeze a fee out of them for delaying a foreclosure auction (the bank backed down and canceled foreclosure sales- twice).
5.Â Their lender was flexible and helpful throughout the process.

So, for a purchase project started before Halloween with me preparing them for the process, Dave and PhoebeÂ were rewarded with a really good deal on one of the largest homes in their neighborhood.Â Was it easy?Â Was it worth it?Â Let them tell you.

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How’s the RealEstate Market?

Joe Spake — Sat, 09 Jan 2010 23:17:39 +0000

When people ask, “How’s the real estate market?” these days, I don’t know whether they are making small talk of if they are really interested in what’s happening in the national, local, orÂ micro market.Â If they are interested, I don’t respond with the usual pat real estate agent superlatives: Great, Amazing, Exciting, but with the word, “Interesting”.Â The market cannot be easily described.Â There are just too many things going on that don’t make sense and too many people doing commentary.Â Sorry, I guess I fall into that category, too.

Let’s look at some Headlines:

Pending Home Sales Drop, Housing Market Too Reliant on Government? (Agent Genius)

We keep hearingÂ a lot about Pending Sales (homes under contract, but not yet sold) from national and local writers and bloggers, and, reasonably, an up tic in Pendings should lead to an increase in sales down the road a month or 2 when those properties close.Â There was a huge up tic in Pendings as the first round of the First-time buyer tax credit was running out.Â Â Did the tax credit impact sales?Â You betcha.

Here’s a Similar headline from one of my favorite Real Estate Blogs, Matrix (link is active)

Pending Sales, the Tax Credit Wild card, Matrix

and another from our own Commercial Appeal:

Home sales up, pending sales plunge, sending mixed signals for November

What thes folks are writing about is thatÂ Pendings rose in October, but fell in November, as closed sales rose in November (a result of the October pendings).Â Duh.Â This kind of reporting, spawned by the National Association of Realtors, avoids dealing with the real issues in the market.Â Â Â Spin pendings, month over month sales, inventory however you wish, but bottom line, units sold are down 13.7% year to date, from 2008 in the Memphis market.Â The hoopla about the first increase in Y-O-Y sales for November is just an aberration.

For me, there are 4 major issues lingering fromÂ 2009 and carrying over into 2010, and perhaps beyond, that consumers, Realtors, main stream media, and maybe even the pundits should be watching more closely:

1.Â Shadow Inventory – Banks have done the foreclosures, or are legally empowered to do the foreclosures, yet we don’t see the properties on the market.Â This is probably theÂ biggest factor in the touted decreased inventory, which many report as a favorable sign.Â Also contributing to shadow inventory is the large number of Expired, withdrawn, or canceled listings which have not gone back on the market.
[1-b - i forgot to mention that the market numbers have been whipsawed for the last 3 years by the number of foreclosure sales and the depressed prices the properties sold for.]

2.Â Home Values I am not talking about the ubiquitous median price number.Â I am much more concerned about prices at the micro level – my neighborhood, my street, my house.Â What are the best “comparables”?

2-a. Coming to grips with lower values – It’s really hard to tell a potential seller who bought her house in a hot neighborhood at the top of the market in 2005 that she has lost money (at least on paper).

3.Â Mortages – RPR, Fannie Mae, Freddie Mac, FHA, RESPA…. it’s all changing, making the process even more complicated for the consumer.Â Going forward, finding a competent, well educated, up-to-date mortgage person will be a lot more important than “shopping rates”.

4.Â Real Estate Agents and Companies- More progressive real estate brokers and companies are adapting to the ever increasing transparency of every aspect of business.Â New business models that don’t concentrate on the “percentage” model are making inroads.Â Empowered consumers will look for alternatives.

So, how about thinking about something other than pending sales, month-over-month blips, and size of inventory, and address some of the other complexities of today’s real estate market?

This blog publishes a weekly post of articles I aggregate about national real estate stories, marketing and social media.Â See this week’s HERE.

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