Utah Real Estate & Mortgage Blog

I wanted to post a list of pre-listed homes to our members. Pre-listed homes are listings that are in the process of being listed but not on the market at this time. The information that is provided is limited but useful in keeping ahead of the masses looking for a home in these areas.

If you are interested in learning more about any of these pre-listed utah homes, give me a call at 801-792-5040.

By: James A. Browning

Short sale transactions can be an excellent choice for homeowners who must sell & who owe more on their homes than their current values. Unfortunately, there are numerous misunderstandings regarding short sales, & it is extremely important to understand the proper procedures & best practices in this process should you choose this path for your homeowners/sellers.

Misunderstanding 1: THE LENDER/BANK WOULD RATHER FORECLOSE THAN CONSIDER A SHORT SALE TRANSACTION.
This is likely the most common misunderstanding. In reality, banks DO NOT want to foreclosure on properties, as the foreclosure process is rather costly and lengthy. Banks, lenders, investors, and even the Federal Government have stated publicly if a homeowner is qualified for a short sale, the transaction needs to be considered, based upon:

• FINANCIAL HARDSHIP: there is a current hardship causing the homeowner to have trouble affording his mortgage.
• MONTHLY INCOME ISSUES: The lender will want documentation showing that the homeowner cannot pay the monthly payment or will soon not be able to afford the monthly payments.
• INSOLVENCY, The lender will want proof that the homeowner does not possess significant liquid assets that could pay down the debt of the mortgage.

Misunderstanding 2: YOU MUST BE LATE ON YOUR MONTHLY PAYMENTS TO BE ELIGIBLE FOR A SHORT SALE.
While this may have been true in the past, today, lenders/banks are interested in verifiable hardships, monthly payment shortfalls, or pending monthly payment shortfalls and insolvency.
If the homeowner meets these requirements, & is unable to afford his mortgage, act immediately. Any delay may limit the homeowner’s options for a short sale transaction.

Misunderstanding 3: IT IS TOO LATE TO NEGOTIATE A SHORT SALE TRANSACTION BEFORE THE FORECLOSURE.
This misunderstanding probably hurts the homeowner the most. Many mortgage holders do not understand that foreclosure is a long process, & there is time to evaluate options & potentially make decisions that could result in a better outcome.

Misunderstanding 4: LISTING A PROPERTY FOR A SHORT SALE IS AN EMBARRASSMENT TO THE HOMEOWNER.
It is quite understandable that homeowners may have reservations about going public regarding their financial distress. Recent predictions, however, indicate that one in eight homeowners in the U.S. is currently behind in their payments.

Misunderstanding 5: SHORT SALE TRANSACTIONS ARE IMPOSSIBLE & NEVER GET APPROVED.
This is inaccurate. Short sales are becoming more streamlined & lenders have become more knowledgeable & willing to work with homeowners to complete these types of transactions. Real estate professionals are also becoming better educated in the short sales process.

For example, Realtors with the “Short Sales Certified” designation have received extensive training in methods to help homeowners in distress and how to successfully process short sale transactions. There are absolutely no guarantees in any distressed situation; however, the short sale transaction process has become more efficient, while timelines for approval have also become much shorter.

Misunderstanding 6: PROSPECTIVE PURCHASERS ARE NOT INTERESTED IN SHORT SALE TRANSACTIONS.
This is a major myth and homeowners hear this frequently, oftentimes causing them to be wary of listing their homes as short sales. This is not accurate. In fact, many real estate professionals receive phone calls/emails from prospective buyers who only want to look at short sales or foreclosures.

In conclusion, brokers/agents who have been awarded the “Short Sale Certification” designation have been trained in all aspects of the short sales process. Banks/lenders have come to expect that real estate professionals who have received this designation are the ones with whom they desire to work with.

Zoom Agents ARE Short Sale Certified. Call us today if you are considering short selling your home at 801-792-5040

Effective immediately for all offers accepted after 10/19/2011 the $100 down payment sales incentive for the Denver HOC has been approved for the next 12 months.

The requirements for the incentives are:
• owner occupant utilizing FHA-insured financing
• offering full current list price

If you have questions, please call me at 801-792-5040 and I can send you a list of eligible foreclosed HUD homes.

Check out this opportunity for an investor. I just went under contract on this home with a client.

$80,000 – Purchase Price
$16,000 – 20% down (required for investment)
5% – 30 year fixed rate
$394 – Monthly payment including principal, interest, taxes, insurance (estimate)

The 4 bedroom home easily rents for $1100 a month.

$706 monthly residual income.

WOW – There are some incredible deals out there right now. If you are looking to take advantage of this market and buy some investment homes, give me a call at 801-792-5040. There are plenty of other opportunities out there. Call me!

Regards,
Kris

The Down Payment Assistance Program is federally funded and is to be used to help income-eligible first time home buyers purchase single family residences. Funds can only be used for closing and/or down payment costs. There are a limited number of loan/grants available each year and qualified applicants will receive their financial award on a first come, first served basis.

No monthly payment is required & no interest accrues on any down payment assistance given.  Down payment assistance is paid back when (and if) a triggering event occurs, such as the homeowner sells the home, transfers title or refinances to take out equity.  If the amount owed is partially forgiven (e.g. $2,500 in Murray instead of $5,000 after 15 years), the remaining balance does not become due at that time – it would be paid back when a triggering event occurs, such as those already mentioned.
Cities that have down payment assistance:

• Salt Lake City
• Kearns
• Magna
• Sandy
• Murray
• West Jordan
• West Valley

Availability changes daily, first come first serve basis. For specific guidelines and applications you can contact:

Amber Segura
Loan Officer
Security National Mortgage    
801-815-9564

Starting in 2012, Fannie Mae and Freddie Mac are expected to increase their fees, which could impact homebuyers depending on the risk of their loan or the location of their home.

Here’s what you need to know – including what’s really happening and what it means to homebuyers.

What fee is being increased?

First, it’s important to remember that Fannie Mae and Freddie Mac do not actually make home loans. Instead, they provide financing to lenders by purchasing mortgages from those lenders. Then, Fannie and Freddie either keep those mortgages on their books or they package them (in the form of securities) for sale to investors.

That means, Fannie and Freddie don’t actually charge direct fees to homebuyers. But they do charge fees to lenders when they purchase home loans from those lenders. The lenders, in turn, build those fees into the home loans they offer. So the bottom line is that any increase in the fee that Fannie and Freddie charge lenders will essentially be passed on to consumers.

However, the fees likely won’t be increased the same amount across the board. For example, Fannie and Freddie may charge higher fees when purchasing riskier loans or they may vary the fees based on which part of the country the home is located in (taking into account things like the foreclosure rate of the location).

Why is this happening?

Fannie and Freddie were seized by the government three years ago to help protect them from failing. That’s important because Fannie and Freddie (along with other government agencies) actually guarantee about 9 out of every 10 new home loans—and with the challenges that the housing market has seen recently, those guarantees have been extremely important. However, Fannie and Freddie have also cost the taxpayers more than $140 Billion.

So Fannie and Freddie will gradually increase their guarantee fees next year and reduce the size of the home loans they purchase in an effort to:

1. Save taxpayers money and
2. Reduce the amount of government involvement (by attracting more private funding to the mortgage market)

What does this mean to homebuyers?

As stated above, the fees likely won’t be increased exactly the same across the board—so the impact will vary depending on the location of the home, risk of the loan, etc.

But we can look at one example to get an idea of the potential impact. For example, as the Wall Street Journal reported, if we calculate an increase of 0.1 percentage point (which is a number the White House proposed), we can see that a home loan for $220,000 would be increased by about $15 per month.

So the increase may not be very noticeable for many homebuyers. And, if people purchase a home while affordability is still high and home loan rates are still historically low, they’ll still benefit significantly compared to other times throughout history.

What should people do?

The fees are expected to begin increasing in 2012 and gradually rising thereafter. If someone you know is thinking about purchasing or refinancing, there’s still time to examine the options and make a move before the fee increase becomes much of an issue.

The best advice is to explore all options now. Call or email today at 801-792-5040 and I’ll be happy to answer any questions you may have.

I wanted to pass along a great audio clip from my CPA – Mark J. Kohler with KKO Lawyers. He hosts a weekly radio show online and some of them relate to Real Estate. This weeks clip focuses on the tax consequences to you as a seller when involved in a short sale or foreclosure.

I hope you enjoy it!

“Twist and shout.” The Fed inserted a “twist” into the market last week, but only time will tell if their decision will be cause for shouting. Read on to learn what the Fed did, and what this could mean for home loan rates.

The week began with speculation that the Fed would announce “Operation Twist” after its two-day meeting of the Federal Open Market Committee. What is Operation Twist? Essentially, Operation Twist is where the Fed sells its holdings of short-term securities and Notes and then purchases longer-term Notes and Bonds in order to try and lower longer term rates even further.

And Operation Twist is exactly what the Fed announced, but their announcement came with some key surprises:

• First, the Fed’s statement was more strongly worded than expected, as the Fed said that there remains “significant” risks to the downside for the US economy.
• Second, the funding for Operation Twist was larger than expected, coming in at $400 Billion.
• Third, the Fed said they will reinvest principal payments on their current holdings of agency debt back into Mortgage Backed Securities…which led to a huge rally in the Bond Market Wednesday, while Stocks took a nose dive.

So what does all of this mean for home loan rates? The Fed’s statement has heightened pessimism, fear, and concern…and normally those sentiments help Bonds (including Mortgage Bonds, to which home loan rates are tied) improve as investors seek a safe haven for their money. But it’s important to understand that even if Bonds improve, home loan rates may not improve much further.

Why? It is basic supply and demand: lenders’ pipelines have been overflowing with people wanting to refinance or purchase a home and take advantage of the historically low rates we’ve seen. This level of volume flowing into the system has already created a backlog of work for lenders, which means they may not pass along all the gains we are seeing in the Bond Market onto their rate sheets.

The bottom line is that home loan rates remain near historic lows, and now is a great time to purchase or refinance a home. Let me know if I can answer any questions at all for you or your clients.
Forecast for the Week

Economic data will impact trading throughout the week by giving investors a broad look at the economy:

• Housing will be first up with New Home Sales on Monday. Last week’s housing data was mixed with lower than expected Housing Starts but Existing Home Sales came in on the positive side. Pending Sales will also be reported on Thursday.
• The week will also give us a read on how consumers are feeling in this weakening economy. Consumer Confidence will be released on Tuesday and Consumer Sentiment will be delivered on Friday.
• Weekly Initial Jobless claims will also be closely watched on Thursday. The job markets continue to be a drag on the economy as each week over 400,000 people are claiming unemployment benefits.
• The big news this week will be the government’s report on Gross Domestic Product (GDP), which will be released Thursday. With the economy slowing, GDP will be on the radar screen for signs of recessionary numbers. Also important will be Wednesday’s Durable Goods Orders, which gives us an update on consumer and business buying behavior on big-ticket items.
• Investors will also be closely watching the inflation figures within the Core Personal Consumption Expenditure, which is the Fed’s favorite gauge of inflation and will be reported on Friday.

In addition to those reports, investors will be closely watching the movements in the Stock Market after last week’s plunge. The big questions will be: How low can Stocks go? And, are we in a bear market or just a correction phase?

Remember: Weak economic news normally causes money to flow out of Stocks and into Bonds, helping Bonds and home loan rates improve, while strong economic news normally has the opposite result.

Some interesting statistics for the week I thought I’d share with all of our readers!

The following are last week’s market statistics:

I found this report rather interesting and thought I’d share this with the readers. It’s incredible to see the growth that Wasatch and Utah counties have had in the last 10 years.

Enjoy!

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