Existing home sales in July were horrible.  New home sales were also down.  Unemployment remains stubbornly high as companies are seemingly content with staging a jobless recovery.

Foreclosures and short sales continue to depress values in all neighborhoods.

Mix all of this together, and the pessimism and fear just ooze from people.

The only residue from this is that mortgage interest rates – which feed on bad economic news – have never been lower for this generation. The irony, however, is that the people who seem to be able to take advantage of these rates mostly are those who least need the help. They’re the homeowners who still have significant equity and so are able to refinance or sell their home and move up and benefit from a 4.5 percent interest rate.  Or you have first-time buyers who think a 4.5 percent interest rate is not low enough.

Even Time magazine, in its latest issue, is questioning the validity and wisdom of purchasing a home in these times.

It’s been three years since the mortgage meltdown started and CNBC’s Jim Cramer told us that the government “knows nothing.”  Well, to many people, that may still be the case.

Even so, from my seat as a mortgage banker and as a reporter who covered the housing industry on its meteoric rise to its crash, I’ve come to some conclusions and observations. So here they are:

• Things will never be as they were.  When then-President George W. Bush told a gathering in 2008 that the banks got drunk and now they have a hangover, he was right.

And like someone who had some bad tequila, it’s doubtful that they will go back to it any time soon.  Easy qualifying mortgages are a thing of the past.  Can someone get a loan?  Absolutely.  But be ready to hand over every single piece of financial information and be prepared to have letters of explanation ready to go for anything that might be harmless in your eyes, but a red flag to an underwriter.

• That being said, the pendulum has swung too far.  One of the things that banks learned in the meltdown was they never want to be subject to buybacks.  Buybacks happen when the investor who buys the loan scrutinizes it, and if there is one hair out of place, can toss it back to the originating lender and say they don’t want it.

That’s part of the reason why underwriters want to over-document the file – so that the investor has no wiggle room.  Eventually, there has to be some moderation.  Having a borrower try to explain a $500 non-payroll deposit into their bank account, while having more than enough other verified funds to complete the transaction, should not be a condition of getting a loan.  Today, it is.  Common sense lending has to return in some form.

• Housing won’t fully recover until something is done about home equity lines of credit that have put homeowners under water. Earlier this decade, banks tossed out home equity lines with teaser rates and lines of credit that would go up to – in some cases – 125 percent of a home’s value.

No problem while values were rising.  Home improvements were financed.  College educations.  Cars.  Boats.  It all made the economy hum.  Now the bubble burst and values have plummeted.

While the government has programs for underwater borrowers with just a first lien, very little attention has been given to those homeowners who can’t refinance because the holders of the equity line won’t subordinate to a new first mortgage.  So these homeowners are in limbo. They may be able to pay the mortgage and equity line, but when the prime rate starts moving up, watch out.

The brain trust at the Federal Reserve and the Treasury better be thinking about a roadmap for these people to follow.

• Appraisals.  With the advent of the House Valuation Code of Conduct, a firewall between loan officers and appraisers has been put in place.  Were there abuses before?  Without question.  Perhaps relationships between lenders and appraisers were too cozy.

But now with third-party management companies sending out appraisal requests on behalf of lenders and telling appraisers how much they can earn, the highly qualified appraisers are shunning the business and leaving the appraisals to the not-so-qualified.

Also, the unintended consequence is that there is no incentive for going out on a limb and maybe giving a higher value if it is warranted. The main goal for these appraisers is to stay on the management company’s approved list, and the best way to do that is to lean more conservative when appraising someone’s home, rather than going the other way, as long as the value can be supported.

You typically don’t get scrutinized if the value tends to be lower than higher.

Again, these are just observations on what has happened over the last three years.  Who knows what the next three years will bring.

Source:  Robert Nusgart is a loan officer with Prospect Mortgage LLC & IBR

“If you’re a homeowner wanting to sell, it’s not a good thing.  But if you want to purchase your first home, this is good news,” said Mark Lebowitz, executive director of the Ada County Association of Realtors.

According to the National Association of Realtors, home prices rose in 100 cities across the country during the second quarter of 2010. In the Boise-area, prices actually declined by 13 percent.

The Intermountain Multiple Listing Service reported the average selling price in July for a single-family home in Ada County was $195,595. In July 2009, the same house was $197,712. For the year-to-date in 2010, average price was $183,306, as opposed to the same timeframe in 2009, with a price of $201,362.

In Ada County specifically, many first-time homebuyers who took advantage of the $8,000 tax credit earlier this year were buying homes in the $120,000-$160,000 range.

“It’s what they could afford to buy,” Lebowitz said.

Other factors which have caused prices to decline locally include the fact that more homes in short sale or foreclosure are on the market, many with greatly reduced listing prices.

Low interest rates combined with an inventory of lower-priced homes on the market is a “win-win” for buyers.  Every price range was flourishing for all types of homes in 2005 and 2006 yet After that money was gone, upper-end price ranges were affected much more than entry-level homes.

Source:  IBR

The county’s foreclosures hit a high in January, rising from 214 filed in December to 365 filed in January for a total increase of 70.5 percent, according to IdahoDataProviders.com.

“What this all means is that you should brace yourself for a double dip in the housing market in 2010,” Charlie Nate, president of the foreclosure-tracking company, said in a release. “Look for local prices to still fall another 7% to 10% starting in the next few months.  A bottom to the housing market and the beginning of a real recovery is unfortunately still at least one year away.”

Ada County’s number of foreclosures filed dropped 8 percent to 408 in January this year, a 19 percent increase from January 2009.

Short sales dropped 1.3 percent in the two counties in January, a lull which Nate calls the “calm before the storm.”  He expects a new flood of short sales this year caused primarily by the U.S. Treasury Department’s Home Affordable Foreclosure Alternatives program, which must be implemented by April 5, 2010.  The program requires each distressed property to first be considered for a loan modification, and then evaluated for a short sale or deed in lieu before a foreclosure can be initiated.

source:

Those who have weathered the recent recession and remain fiscally sound may be in a position to benefit from the current vacation home real estate market.

In certain parts of the country, an over saturation of real estate and a shortage of qualified buyers have resulted in lower median prices on vacation homes.  Some areas have also seen a wave of foreclosures and short-sales.

Many foreclosure properties are due to individuals finding themselves underwater with ballooning mortgage payments.  There also are a fair number of properties available that were held by developers unable to sell vacation homes on spec.  As a result, in some areas you can find price-reduced vacation homes at the higher end of the spectrum along with a variety of modest cabins and lake homes.

Keep in mind, there are risks associated with buying a foreclosure property.  Don’t be surprised to find broken windows or appliances – or worse, since maintenance often falls to the wayside when a homeowner is unable to make payments.  Be prepared to put additional money into repairs.  If you aren’t handy yourself, you may want to enlist someone who is when you tour properties, to help you evaluate potential repair costs.

When you’re ready, consult a reputable Realtor, such as myself–Matthew Le Baron, in your area to learn about available foreclosure properties in your area.  If you prefer to do the legwork yourself, explore web and print resources for current lists of foreclosures, which become public when they are filed in your state.  Purchasing a bank-owned property tends to be less risky because you can be confident the property has been vacated and is available.

Do think carefully before you venture into second homeownership.  The recent downturn showed how important it is to stay within your means and be prepared for unexpected changes in your earning capacity or the performance of your investments.

Therefore, before you take on an additional financial responsibility, you need to be confident of your ability to make a second mortgage payment.  That means you must have a strong credit rating, a solid bank account and a steady income source.  Visit your banker and get preapproval for a second mortgage so you can act quickly if a desirable property becomes available.

An experienced financial advisor can help you evaluate your financial health and determine if you can afford a second home and stay on track with your long-term goals.  Make an appointment today and then take advantage of the opportunities that are out there to realize your dreams.

source:  IBR

The loan to value position at closing improves, but the monthly mortgage insurance payment will increase.

Today, HUD has announced their intention to

• Lower the Up Front MIP from 2.25% to 1% AND
• Increase the Annual (monthly) MIP From .50 – .55% to .85 - .90% depending on LTV

on loan terms greater than 15 years.

This is scheduled to be effective for case numbers issued on September 7, 2010 pending being signed by our president.

The results of this change is:

Assuming

$100,000 base loan

UFMIP

$101,000 using the new MIP in the mortgage amount 

$102,250 using the old MIP in the mortgage amount

Annual MIP

$909.00 ($75.75 Monthly) New Annual MIP based on $101,000

$562.38 ($46.86 Monthly) Old Annual MIP based on $102,250

At 5% 30 years assuming 96.5% LTV

$617.94 New payment

$595.76 Old payment

A borrower will need an estimated $75-80 more in monthly income or $900 more per year to qualify per $100,000 in loan amount.  

This is cutting edge news and a more formal announcement will be made, however, we wanted you to know about this ASAP

1) Make an all-inclusive offer – when you decide on a figure, make sure it includes all costs, such as closing costs, appraisals, etc. This just makes things simpler for the seller, so they won’t have to figure this out.

2) Have your financing in place – try to pay with all cash if possible, or have a lender ready to provide you with the money to purchase.  Do your research beforehand and give your bid accordingly, instead of relying on the seller.

3) Have a realistic offer – this can’t be said enough times, but do your research.  Look at the prevailing market price, and also how much the lender has already lost on the property.  Don’t lowball too much and risk being ignored (they will take the the first “best offer”). About 20% below the fair market value should be a good starting price.

4) Dot all the i’s - read the requirements and the fine print.  Many opportunities are missed because of missing or incomplete paperwork.

5) Don’t be discouraged – it’s nothing personal if you don’t get the property you really want.  Just move on and find another home you’re interested in.  Also, don’t be surprised if you see the same property back on the market a few months later–nothing is ever final.

6) Close ASAP – closing shouldn’t take months and months – try to speed up the process as much as you can.  Most of the time the trouble comes from problems over the title.  Try to iron out these details from the beginning or try to make offers only on properties with no disputes.

The lender will always take the path of least resistance, and will take the best offer they can – after all, they’ve already lost money on the first transaction and will want to recoup their losses.

source:  gohoming.com

Although flipping houses is not simple,  it does follow a  pattern:  purchase a home for low-cost, renovate it and sell it at a profit, then buy the next home, renovate and sell that, and so on.  There are some caveats of course, and it’s not just about buying and repainting a house.  There’s so much more to flipping houses so evaluate carefully before you jump in.

Funding

As the old saying goes, you have to spend money, to make money.  If you have enough money to buy a property outright, then good for you.  Otherwise, you’ll either have to find investors or take on a loan from the bank.  Either has its pros and cons – other investors mean having to share the profit while taking on a loan will mean needing to cough up the downpayment (and monthly mortgage) on your own. There are government grants available to home buyers yet it is very difficult to obtain these grants for the purpose of flipping or investing.

Research

Do you know which neighborhoods are up-and-coming, that is, those with home values which are low enough so you can afford it yet soon to rise by the time you’re ready to sell?  It is likely that  you can purchase a property that’s inexpensive yet might be located in a bad neighborhood – no one will want to buy it no matter how beautiful it is. It is important to research the neighborhood as well as the house itself.  Often, bank-owned properties (REO homes) are a good investment – these can be found in all types of neighborhoods and the owners (lending institutions) are often eager to get them “off of the books”. 

When an accepted offer is obtained one must make certain to inspect the home and make sure the repairs to be made are cosmetic only, not structural.  Sometimes, paying a good surveyor to inspect the home is a good investment, especially if you want to avoid money pits.

DIY As Much As Possible

If you have some skill in making more than basic repairs or painting, such as fixing plumbing fixtures or electrical wiring, then you can save on the costs of hiring someone to do it for you.  Most cosmetic fixes can be completed by folks like you and I.  Sometimes, all you need is a new carpet, new lighting fixtures and scrubbing off the dirt to increase the value of a home.  If you must hire someone else, make sure your subcontractor is licensed, bonded and insured.  Try to get a recommendation from someone you know, and once you’ve built a relationship with a subcontractor, you’ll find that the process becomes much easier.

Once your flip property is complete then it’s time to begin the marketing process  (or perhaps you’ve already started )  In Part 2, we’ll tackle how you can best sell your home, and how to close the deal on your property.

source: gohoming.com

Let’s start with the official definition for title insurance.  From www.ctic.com, we have the following:

Title Insurance – Assurance of indemnification for loss occasioned by defects in the title to real property or to an interest therein which is insured.

Huh?   Clear as mud, right?Let’s get away from the legalese and talk in plain English.   Title insurance is an insurance policy.  It is different from other forms of insurance.   Automobile insurance, for example, protects you from some “future” event, be it a fender bender or theft of the car.   Title Insurance also protects you from some future event, like a claim or loss due to a title issue.  The difference is that these issues were caused by a past event.  The event causing the claim occurred prior to your purchase of the property.Another big difference from other insurances you may carry is that title insurance on your real property is a one-time premium.  There is no annual premium to keep the policy in effect.   It covers your real property as long as you or your heirs own retain an interest in the property.Let’s go back to our original question.  Why do you need title insurance?  The easiest answer is to protect what is probably the biggest and most important investment you will ever make.What sorts of issues are covered? Here’s a short list of some of the more common risks that can cause a loss or encumbrance of title: 

• False Impersonation
• Forged Deeds
• Fraud
• Undisclosed or missing heirs
• Deeds by persons purported to be single when actually married
• Liens for unpaid inheritance, income, or estate taxes

What happens if any of these defects or hidden risks are discovered?   Title insurance covers the cost of defending any lawsuit against your title as insured.  It will also rectify any issues discovered, or pay any losses for the insured.   It is important to understand that these claims can arise from a past event that could not be discovered in a public record search.  Therein (oops, legal word) lies the true value of title insurance.

So the answer is simple.  You need title insurance because it provides peace of mind in knowing that the property you are buying and the investment you are making is a safe one.

One last bit of legal-speak.   Please be aware that this post is designed to be introductory and educational only.   It is not to be construed as a statement of duties, liabilities or coverages.

Source: Bill Risser, Chicago Title Co

A Concordia University School of Law construction project at the southwest corner of Fifth and Front streets in downtown Boise may not have been feasible or even contemplated two years ago.

Concordia has been looking for a building of 40,000 to 50,000 square feet to buy or a building site.  Concordia ultimately looked at about 40 properties, many unlisted.  The university had in mind a budget that wouldn’t have allowed a project that size in downtown Boise.

Last spring, Concordia bought the former Front 5 building on the 0.74-acre downtown site. Immediately south of the 16,800-square-foot building is a parking lot on which Concordia is expanding the structure to about 50,000 square feet.

It took a little imagination to make this site work for the project, but there were two keys:  the excess land immediately south of the existing building presented an opportunity not readily apparent at first.  And the property’s value had dropped.

Two years ago, the multi-tenant Front 5 building was full.  Some tenants left as the economy weakened, which created an opportunity for an owner-occupant, he said.

Another recent owner-occupant is the Idaho Pizza Co. restaurant chain.  Idaho Pizza constructed and recently occupied a 3,000-square-foot building at 310 Sugar Ave. in north Nampa for its commissary – where it makes dough and sauces, and grates cheese, for daily delivery to the restaurants.

For more than two years, Idaho Pizza had been looking to lease a facility, but it wasn’t until this year they decided to buy property and build, CEO John McNicholl said.  The deal enabled the pizza company to own instead of rent, and to expand the operation.

McNicholl credits the dour economy for the buy-and-build scenario.  The Nampa site is central to the five-restaurant Treasure Valley wide chain.  Idaho Pizza took occupancy in late May.

Lorana Quintero, president of the franchise operation, said franchised owner-operators are keeping their eyes and ears open for opportunities in the southwest Idaho commercial real estate market.

Kristi Bowins, senior property manager with Colliers, said shopping center managers must stay creative in what has been a higher-vacancy, lower-rent market.

“It’s how creative you get that makes it work for both the tenant and the owner,” she said.

Vacancy can hurt the landlord but can benefit businesses that are growing, Bowins said.

Leapfox Learning’s recent move from Oakbrook to Shopko Plaza is an example of a business taking advantage to expand, she said.

Leapfox, which offers computer training, last March expanded in Oakbrook.  And again in June, the business took over an additional 5,000-square-foot space at Shopko Plaza in part because an ideal expansion space wasn’t available at Oakbrook.

Leapfox Education Director Debbie Nolan, said, the move was possible in part because Leapfox’s lease at Oakbrook was a month-to-month add-on to the lease of neighboring Quick Computer, a sister business.

“They worked me such a deal at Milwaukee (Shopko Plaza), at a fantastic, discounted rate that a small business owner could afford,” she said.

Leapfox now has two locations including part of the Quick Computer space in Meridian.

Commercial vacancy rates, rents

Office vacancy was 18 percent throughout the Treasure Valley at the end of 2009 and 18.2 percent in mid-2010.  Average full-service asking rent for office space in the Treasure Valley was $17.21 per square foot per year at the end of 2009 and $16.30 as of mid-2010. The average rent paid is $14.73 per foot as of mid-2010.

Retail vacancy in the Treasure Valley increased from 13.1 percent at the end of 2009 to 13.5 percent in mid-2010.  Average triple-net asking rents (tenant also pays taxes, insurance and maintenance costs) were $13.83 per square foot per year at mid-year, down from $14.47 a year earlier.

Treasure Valley industrial building vacancy dropped from 12 percent at the end of 2009 to 10.9 percent in mid-2010.  Monthly, triple-net, average asking rents were 52 cents per square foot at the end of 2009 and 49 cents at mid-2010.

Source: 2010 Colliers Idaho Mid-Year Real Estate Market Review & IBR

• “Available” obviously means the property remains unsold and is available (I told you it was “:101″!)
• “Pending” means there is a pending sale (the property is “in escrow”, pending closing).
• “Sold Contingent” means that there is an accepted offer that is contingent upon another event, such as selling another property, closing another property, getting the down payment from grandma, etc.)
• “Closed” means that the property has been sold and escrow has closed.

Spec Home

A spec home is one that has been built by a builder who’s speculating that someone will buy it (very risky business these days).

In other words, the home was not pre-sold before starting construction.

Build Job/Build To Suit

A build job is a home sold prior to starting construction that is being built-to-suit for the buyer.

Prequalification Letter

Mortgage lenders issue pre-qualification letters to provide general assurances that a borrower will be able to obtain mortgage financing. It is not a firm loan commitment because the lender has not thoroughly investigated the borrower’s ability to obtain financing.

Loan Commitment

A loan commitment is issued by a mortgage lender after the lender has completed a thorough review of a borrower’s credit, employment, debt to income ratio, etc. Generally speaking, a loan commitment is more reliable and more thorough than a pre-qualification letter.

REO

The term “REO” means “real estate owned” and refers to foreclosed real estate that is owned by a mortgage lender.

Short Sale

The term “short sale” means that the net proceeds from the sale of a property are “short” (less) than the amount owed on the mortgage(s) for the property.  It definitely does NOT mean that the sale will be short or easy!

Title Search

The term “title search” refers to the process of searching the title of a property to determine ownership, legal issues, liens, etc.  In Idaho, this process is completed by the title/escrow company prior to closing and issuance of title insurance.

Source:  Boiseblog.com