MARKET UPDATE - JULY 2009

PHOENIX IS ON FIRE!

The real estate market in Greater Phoenix is heating up. In May 9,290 homes were sold. The last time we saw that type of activity was in August of 2005 when just over 10,000 homes were sold.

Although those numbers were the result of low home values due to foreclosures and short sales, it is a good sign for home owners that the market is rebounding.

As the inventory of homes for sale on the market decline, home values will increase. The real estate industry as a whole anticipates that this will take some time. Phoenix saw a 53% decline in value since 2006 and those loses will take a while to erase.

This is not the best news for the new home buyer. Well priced homes under $200k do not sit on the market for long. Over the last few months, 1st time home buyers and investors have flooded the market looking for good deals; and there are a lot of them. Homes are getting swept up fast. It is not uncommon to find bidding wars with accepted offers well above listing price.

HELP STOP H.R. 1728 – WE NEED YOUR HELP

H.R. 1728 has already passed the House and is headed for the Senate. In its entirety, this bill has the potential to devastate the mortgage lending industry and cost the home owner lending options and added fees. Contact your Senators and demand that they vote NO to H.R. 1728.

A quick review:

The bill is dangerously vague and has the potential to:
Eliminate yield spread premiums. Mortgage companies will be forced to charge the borrower in upfront fees; up to 2% of the loan amount in origination fees. Currently mortgage companies can offer “no points” options. Consumers will pay more for mortgages with fewer options.
Mandate lenders to hold a 5% stake in mortgages funded. This could eliminate most if not all mortgage brokers and bankers. Brokers and bankers currently employ seasoned loan officers that can offer the most competitive products and rates to consumers. Most lending institutions do not have the liquidity to carry a 5% stake in the mortgages they lend on. This will greatly reduce consumers’ options to shop for the best mortgage programs and rates. It will also be very difficult to regulate and make the industry even less efficient. Mortgage companies already have a stake in the mortgages they fund through representations and responsibilities to investors.
Eliminate your ability to sell your property through creative financing options. This bill has the potential to make illegal, owner carry backs, lease options, and owner financing.
Eliminate reduced documentation options for self employed borrowers. Stated income and reduced documentation loans have already been eliminated; as you know if you are self employed and have applied for a mortgage in the last year or so. The possibility of a “make sense” option for self employed borrowers to be created would be unlikely; leaving a large segment of the population unable to obtain financing, regardless of credit score and history.

Please take action now. If it passes, it will be hard to ever get your options/rights as a consumer back. Email me with any questions or concerns. – aaron@genevafi.com

NO DOWN PAYMENT MORTGAGES

“After announcing a plan that would have allowed first time homebuyers to use a special tax credit to cover the 3.5% required down payment on an FHA-insured loan, the Dept. of Housing and Urban Development apparently had second thoughts. Late last week HUD released a newly remodeled plan that does not allow the first-time homebuyer tax credit to be used for the down payment.” – cnnmoney.com
HUD did state that the tax credit could be used to cover borrower closing costs, but the 3.5% mandated down payment on FHA mortgages would still have come from the borrowers own funds, or as a gift from an immediate family member or employer. HUD felt that it is important for the home buyer to have at least some “skin in the deal.”
HVCC UPDATE

Representative Travis Childers (D-Mississippi) and Representative Gary Miller (R-California) who serves on the House Financial Services Committee introduced HR 3044 last week in an attempt to force an 18 month moratorium on the Home Valuation Code of Conduct (HVCC) which went into effect May 1st of this year.
The HVCC forced mortgage companies to order conventional appraisals through third party clearing houses know as appraisal management companies (AMC); many which are ironically owned by the “big” banks. The intent of the HVCC was to prevent all interaction between the mortgage lender and the appraiser. Since its implementation, the HVCC has had a devastating impact on many appraisal companies, forcing them from the industry altogether.

The HVCC is also showing a track record of undervaluing properties. “In the past month, we have suddenly been bombarded with many stories of, at the last moment, transactions falling apart because appraisals are coming in unrealistically low,” said National Association of Realtors Chief Economist Lawrence Yun. “As a result it opens up a new round of negotiations between a buyer and a seller or in many cases the buyer just steps away.” – cnbc.com

To be added to the petition to stop the HVCC, click the link below. Your support is appreciated.

HVCC Petition: http://www.hvccpetition.com/

HOUSING STARTS UP

“The nation's builders boosted their production in May, starting new housing units at an annualized rate of 532,000, up 17.2% from the revised estimate of 454,000 in April. The data release, a monthly report from the Census Bureau, also revealed that building permits jumped by 4% to a rate of 518,000 from 498,000 in April.” – cnnmoney.com
DOWN AGAIN? - INTEREST RATE UPDATE

Mortgage Type Interest Rate APR

30 Year Fixed 5.000% 5.288%
15 Year Fixed 4.375% 4.862%

Call today for your individual scenario rate quote.

*Interest rates as of 06/30/09. Conforming interest rates. Not applicable for FHA and VA loans. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 740+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify.

For any additional information, call or email me at any time.

Sincerely,

Aaron VanTrojen
President
Geneva Financial, LLC.
Office: 480-368-2000
Email: aaron@genevafi.com

Geneva Financial, LLC is a mortgage banker / broker licensed in: AZ, CA, CO, ID, MN, NM, NV, OR, WA, WI.

*If you wish to be removed from this email list, please reply with “REMOVE” in the subject line.