sedonaLast month, FHA released yet another mortgagee letter clarifying FHA’s position regarding borrowers who recently had a short sale on a primary residence and want to purchase a new primary residence using an FHA loan.

 Summarized below are a few of the key points:

1) These changes are effective immediately

2) Borrowers are not eligible for new FHA financing if they pursued a short sale agreement on his or her principal residence simply to:

  •  Take advantage of declining market conditions, and
  • Purchase ,at a reduced price, a similar or superior property near the residence they completed a short sale on (this is a key point)

3) Borrowers are eligible for new FHA financing if:

  •  All mortgage payments due on the prior mortgage were made within the month due for the 12 month period preceding the short sale, and
  • All installment debt payments for the same time period were also made within the month due, and
  • The proceeds from the short sale serve as payment in full (another key point)

4) Borrowers whose mortgage was in pre-foreclosure status at the time of short sale are not eligible for FHA financing for 3 years unless they qualify for an exception

So yes, this means if you just sold your home via short sale you COULD qualify to purchase another home through an FHA loan (if eligible based on the requirements above) without waiting 2-3 years.

If you have questions or want to see if you are eligible, contact Kelly Zitlow at Suburban Mortgage, kzitlow@submort.com or 480-355-8105.

Kelly Zitlow, Suburban Mortgage, BK #10123

 

In 2010, expect short sales to be even more mainstreamed than 2009.  What a change in 2009!  According to the AZ Republic and real-estate analyst Mike Orr, “pending short sales, including all of the deals under contract, reached 9,343 in October, compared with 1,448 in January. Almost 40 percent of the homes currently for sale in the Phoenix area are properties homeowners are trying to sell to avoid foreclosure.”

Short Sales are expected to rise in 2010 while foreclosures are on the decline.  The chart below shows a slight increase in short sales toward the end of 2009 while REO sales are slightly down.

July-09

Aug-09

Sep-09

Oct-09

Nov-09

Total Single Family Home Sales

7,989

7,076

6,948

7,024

6,506

Less than $399,999

7,440 (93.1%)

6,609 (93%)

6,464 (93%) 

6,559 (93%)

6,078 (93%)

$400,000 and above

548

467

484

465

428

REO sales and % of total sales

4,246 (53.1%)

3,641 (51%)

3,331 (48%)

3,116 (44%)

2,637 (41%)

Short Sales and % of total sales

1,344 (16.8%)

1,353 (19%)

1,363 (19.6%)

1,379 (19.6%)

1,325 (20%)

In terms of negotiations, most short sales are averaging less than 3 months to get a decision, whereas some banks will respond more quickly and others take even longer.  The federal government has been incenting banks for over six months to close short sales, similar to the monies the banks were receiving for homes that were foreclosed.

As we enter this new year and an expected increase of distressed homes, we need to put our faith in the banks to help close more short sales and loan modifications.  More short sales and less foreclosures will help our market rebound more quickly.

 

real_estate5Taking effect on February 1, 2010 and currently effective for one year, FHA borrowers will no longer have to wait 90 days to purchase a home that was recently acquired by another buyer with intent of “flipping” the home.  Initially, the “no flip rule” was implemented to protect FHA borrowers against predatory practices.  Cash buyers are purchasing homes at auction and reselling at inflated prices, often to unsuspecting buyers.  Many times, these homes are badly damaged, fixed up, and relisted for a profit.  Until now, an FHA borrower would have to wait 90 days to purchase such a home. 

The announcement is part of the Obama administration commitment to addressing foreclosures. 

This waiver is limited to those sales meeting the following general conditions:

  • All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.  
  • In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost the waiver will only apply if the lender meets specific conditions.
  • The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

If you are a buyer and want to know if a specific home qualifies, please contact The Aladin Group at info@thealadingroup.com to do the appropriate research.

 

 

What is on the horizon for interest rates this year?

What will happen with home loan rates is probably the easiest prediction to make for 2010…they will move dc monumenthigher! The Federal Reserve’s Mortgage Backed Security purchasing program is set to expire in March of this year.  We have already seen rates trend higher with the Fed’s reduced purchasing power in the market.

Even though rates are expected to move higher, they won’t necessarily do so in a predictable manner but instead will move in waves and continue to be extremely volatile (this is so much fun when this happens!). The anticipated range for rates is broad, with lows being around 5% and the highs reaching 6.5%. While rates are no longer at the historical lows of 2009, they are still incredibly low right now but they won’t be for long. If you are on the fence, act now or be prepared to pay a higher rate in the future.

By:  Kelly Zitlow, Suburban Mortgage, BK #10123

 

Could there be “light at the end of the tunnel” when it comes to selling your home via short sale?  If you do not qualify for a home loan modification, there is a chance the bank will provide a pre-approved short sale which will streamline the sale of your home.  No more waiting months and months for a short sale decision!  Could it be this easy?  Expect to see more on this topic… 

Read the full article “Treasury Releases Guidance for Making Home Affordable Short Sales.”

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