Importance of Being a FHA Approved Lender

There is more and more evidence that our society is shifting from conventional mortgages to Government Insured mortgages, so for lenders there is a question whether they should become a FHA approved lender.

Look at the past activity. In July 2008, 29.1 percent of loan applications were for government issued loans. In just one year, the share of loans that are government issued has tripled. Since July 2007, we have seen an increase of 317 percent from conventional to FHA refinance applications, 260.8 percent conventional to FHA refinance endorsements, 133.9 percent applications for government-insured loans, and a 502 percent decrease in conventional loan applications.

Looking through more data it can be surmised that FHA is fast becoming the wave of the future for many wanting to purchase a new home. In January of 2007, FHA loans were only a mere 1% while Fannie Mae and Freddie Mac were at 60% for Lenders One. Scott Stern the CEO of Lenders One stated, “FHA is the fastest-growing product,” and went on to state that, “Now we are almost 48% conventional and 48% FHA.”

He believes that FHA is receiving more good publicity and the at the federal mortgage insurance program are helping with this new trend. The main reason the federal mortgage insurance program is aiding is that fees have not raised and they have not tightened their underwriting standards that we have recently seen with Fannie Mae, Freddie Mac and others.

In July 2008, Ginnie Mae reported 24.9 billion in fixed issuance whereas Freddie Mac was only at 20.3 billion. This is the first time in history that Ginnie Mae had been above Fannie Mae or Freddie Mac.

August is looking great as well for Ginnie Mae since they have issued 25.3 billion to date while Fannie Mae is at 24.0 billion and Freddie Mac is at 16.5 billion.

With this trend, more and more homeowners are searching for government issued loans for all kinds of reasons over conventional loans. Not only should lenders look into becoming FHA approved, but also more agents should be seeking these lenders to help homebuyers in search of their dream home.

Success in Foreclosures and Short Sales

Today, with foreclosures at the top of the list in sales and many distraught sellers looking for a way to sell their home, real estate agents need the know how in order to succeed in the market today. Many agents are falling to the wayside and in search of a new avenue for employment.

To make it in the market at this point in time, agents need to understand all they can about foreclosures and short sales. Foreclosures are the legal process that occurs when a homebuyer does not meet their terms and conditions of their loan agreement and the lending company takes the property for their own. Short sales involve a lending company taking a reduced amount of money as a full payoff for the property in question while it is in foreclosure.

Utilizing online public records to learn of home sellers that are in trouble of foreclosure will be a major asset for real agents. In the beginning, homeowners may not believe they are going to have to sell their home or even consider the fact they are going to actually lose their home. Many hang on until they are booted out of their home.

However, a good agent will contact these distraught homeowners and work with them to find a solution in selling their home before it is too late. Homeowners are searching for a way to keep their home or to sell it so they will have at least a bit of cash in order to find a new home. Real estate agents can talk with the homeowner and explain their options and when they are ready, they can list the home for sale.

Tips

First and foremost, when you are dealing with sellers that are in foreclosure you need a totally new approach. No hard sells! These individual are losing their home, there could be severe circumstances such as a death in the family or divorce that has caused this dilemma. In most cases, they are living month to month and are scared. You need to listen to their situation and be caring. Once, you understand their situation, you can suggest solutions such as a short sale.

Next, you must understand the inner workings of foreclosures and the ways in which you can help homeowners get the most they can by selling their home. You will need to learn how to negotiate their debt and in some cases learn how to talk with the IRS in order to remove IRS liens. Short sales are another area you need to learn as much as you can. After you learn how both of these processes work behind the scenes, you will be able to work with homeowners and help them out of this situation. Learn about the various loans available and the guidelines concerning the seller’s financials, as each one is different such as FHA and VA have different guidelines.

Learn how to find buyers. One awesome way in order to compile a list of investment buyers is by attending a few foreclosure auctions. Get yourself noticed by placing ads in the local newspaper or online as an expert in investment properties.

You must also get in touch with sellers. Look for homes that are in the foreclosure process and contact the homeowners personally. Let them know you can sell their home with your database of buyers.

With this knowledge, a real estate agent will be able to make a living doing what they enjoy instead of seeking new employment opportunities.

Problems with the Housing & Economic Recovery Act?

President Bush signed the Housing & Economic Recovery Act on July 30, 2008 with reservations due to the bill giving relief to Fannie Mac and Freddie Mac. Not only did the Democratic Congress add this provision to the bill but also there is another provision that is causing frustration for Americans. The provision prohibits the Federal Housing Administration commonly referred to as FHA from using any type of down payment assistance programs in which the seller will benefit from the transaction.

A few of the seller funded down payment assistance programs have been cited for causing serious problems and have lead to major losses for FHA as recognized by The U.S. Department of Housing and Urban Development (HUD) Inspector General, the Government Accountability Office, and the Internal Revenue Service. FHA noted had $4.6 billion in unanticipated long-term losses in its annual re-estimate this year, mainly due to the increase in seller-funded loans in its portfolio. Not only has FHA lost money, but also foreclosure rates for these loans have been to blame for three times higher than other FHA loans.

Is there help for individuals looking for a down payment assistance program for a FHA loan?

The answer could be yes. Representative Al Green (D-TX) introduced the “FHA Seller-Financed Down Payment Reform and Risk-Based Pricing Authorization Act of 2008” (H.R. 6694). This bill will reinstate FHA seller funded down payment assistance for those with certain credit scores. At the time of this writing, H.R. 6694 is pending in the House Committee on Financial Services. There is at this time, no Senate companion bill has been introduced.

Due to all the concerns of Senate Banking, Housing, and Urban Affairs Committee with these type of seller assistance programs, similar legislation in the Senate may not be forthcoming.

HUD & Coldwell Banker in the News

On August 14, 2008, the US Department of Housing and Urban Development (HUD) publicized it settled the federal lawsuit with Property ID Corporation, Realogy Corporation, Cendant Corporation, and Coldwell Banker, under the Real Estate Settlement Procedures Act.

The settlement will necessitate all companies to treat hazard disclosure reports as settlement services and not continue operations of a hazard report company assumed to be frauds by HUD.

This settlement gives HUD the authority to ask for a permanent injunction and disgorgement of illegally profiting of the companies under the Real Estate Settlement Procedures Act.

Another settlement in a federal class action lawsuit involves the companies must pay a total combined of $35 million in which most will be given to California consumers that purchased the hazard disclosure reports back to the year 1996.

The entire lawsuit boils down to the fact that HUD alleged that the Property ID Corporation of Los Angeles made payments to real estate brokers in the state of California in the way of referrals made by consumers. These are considered kickbacks and are against the rules set forth under Section 8 of the Real Estate Settlement Procedures Act.

HUD learned that year Property ID had created a scam with real estate brokers. The scams were created to funnel money instead of produce hazard disclosure reports which is required by California state law. The law states that home sellers or their agents have to provide information if a property is located in fire, earthquake, or flooding area.

The brokers had a few methods to get their agents and franchises to refer their customers to Property I. D. In most cases, they were given a pre-printed contract with Property I.D. as the provider of the hazard disclosure report, however, other methods were also used. The brokers were paid $25 quarterly for each report they conned consumers into purchasing with the other $75 going to Property I.D.

California Foreclosures

Reported filings for July were 29,285 foreclosures in the state of California. This is the highest total among all the states in the US. RealtyTrac Inc. stated the activity increased 5% from May and is up 85% over the same month in 2007. Default notices are up 34%, auction notices are up 67%, and bank repossessions are up 427% from 2007.

This does look grim for homeowners in the state of California; however, there are things that can be done to save your home. You can talk with your lender to see if you can refinance your home, talk with a realtor about a short sale, or try to sell your home prior to going into foreclosure.

If you are a homebuyer in the market for a wonderful home in the San Diego area, all these foreclosures could mean that you could find a dream home for a much less expensive price tag than just a few months ago. However, home price sales in California are beginning to stabilize which means the housing slump is close to an end. Many may not believe this is true; however, home sales in the San Diego area are on the rise. In 2008, we have started seeing a trend of more homes being sold in this area of California. In April there were 2,472 homes sold, in May 2,656, and in June 2,789. This is a tad less than last year at this time; however, it is quite a bit improved over 1,789 in March of this year.

Many homebuyers may be afraid to tackle a foreclosure especially with all the horror stories of homes in need of repair and so on and so forth. However, a home in foreclosure does not mean that the home was taken care of properly, only that the homeowners for some reason is not able to afford their mortgage at this time. To learn more about foreclosures in the San Diego area you can talk with a realtor, they have the information as to how long the home has been on the market and what repairs the home might need.

Moving to a new city?

If you are planning to move to a new city that you have only visited a few times, or maybe have never even visited, you more than likely have many questions. People every day are moving clear across the country due to a job transfer or better employment opportunities. However, making this move can be very exhausting and even a tad scary especially if you have children.

If you do not know anything about the city and do not know anyone living in the city, you are probably at your wits end trying to think of the best way to approach this new move. You have a friend that is a realtor or you at least know a realtor in your hometown. Will the realtor in your hometown be able to help find answers to all of your questions?

Let’s say you are moving to San Diego, California from Bloomington, Indiana. You talk with your realtor in Bloomington. They provide you with a long list of homes for sales in the San Diego area. You begin to ask questions.

What is the neighborhood like?
What is nearby this villa on the beach?
How close are the elementary schools to this downtown condo?
How close is this executive style ranch to the employment opportunities?
What are the property taxes like?

Your realtor hums and haws and tells you that she or he will have to do some checking.

The best way to learn all these answers is to find a realtor in the area you are moving. San Diego is a huge city and if you do not live there or have never lived there, you will not know the answers to these questions. Yes, you can look the information up on the internet, however, are you sure, the information is correct?

The only way to ensure you are receiving true information is with a realtor that knows the area, has children that went to school in the area, and pays property taxes in the area. If you are planning to move to San Diego or any other city, then you need an experienced realtor that knows the area, one that will help you every step of the way from finding the perfect home, to hiring a mover, to turning on all the utilities.

The Effect of the New Housing Bill

Anyone that has a stake in real estate whether you are homebuyer, home seller, investor, or real estate agent should be jumping for joy. The new housing bill signed by President Bush will soon be making a big splash where it is needed. Too many people consider banks as the lenders and due to this are very concerned with the news about banks going bankrupt; however, this is an easy mistake to make. The banks are not actually the ones in control it is the investors behind the scenes that are making all the decision. Two of these investors have been in the news recently, which are Fannie Mae and Freddie Mac.

Freddie Mac and Fannie Mae are government-sponsored enterprises, which are a group of services corporations that were created by the congress of the United States. This group was designed to enhance the availability and reduce the cost of credit in the agriculture, education, and home finance sector. The home finance sectors are the largest of the sectors. Along with 12 Federal Home Loan Banks, this group has a large sum of money on their balance sheet assets, a matter of fact, totally over several trillion dollars.

Due to this new housing bill, Freddie Mac has been in contact with banks offering to pay them outright $2,200 for every short sale they settle successfully. What these means is that instead of going through with a foreclosure many homeowners can now opt for a short sale and even if the bank does not receive the entire amount of the loan, they are guaranteed the above amount of money from Freddie Mac.

Now, that this group is more willing to work with banks due to the generosity of the US government, realtors, homeowners, and even home sellers are sure to benefit. The banks will be more willing to work with short sales along with more resources available to staff loss mitigation departments. In our market today, short sales are not only valued but are a great way to rid the market of homes in foreclosure and the ability to rid the market of excess housing opportunities which will cause the demand in housing to rise.

Stability in Home Prices

California is on the right track or so says veteran banking analyst Charles Peabody. Peabody suggested that the housing market could be near hitting bottom, which means that a national housing recovery is on its way. The reason he stated this is due to the fact that there has been a rebound in homes sales in which renters are now becoming homeowners.

Peabody stated, “The key is to try to get some stability in the price of homes, which appears to be happening in California.” he went on to say that California is of course a trend setting and the real estate market is no different.

Peabody believes that the bubble burst is close to its end in California, which is a ray of hope for real estate markets across the country.

In the recent report, Peabody stated, “Since California constitutes 25 percent of the housing stock in the U.S., any stabilization can have a profound impact on national averages,”

By extension, stabilization in home prices is required before any sustainable rally in financials can be expected,” Peabody said. “It is our belief that we are moving in that direction.” 

If the rest of the country follows in California’s footsteps, the market will begin to see a healing point and start increasing.

Looking at market conditions the price for single family dwellings are down a bit from $478,711 in May of 2008 to $468,508 in June of 2008. On the other hand, sales are up in San Diego County from 1,010 in May of 08 to 1,031 in June of 08. Throughout the San Diego area, there have been ups and downs in the market condition such as average sales price has gone up in Carlsbad, Escondido, La Mesa, and Rancho Bernardo anywhere from $20,000 to $70,000 from May to June. Sales are also up not only in San Diego but also in Escondido, San Marcos, Rancho Bernardo, Spring Valley, and Vista.

With the market looking better in quite a few cities, we may just be nearing an end to the real estate crunch, which means more homebuyers on the horizon.