Posts Tagged average home price

HVCC could be phased-out by year-end

Although H.R. 3044 which would put an 18-month moretorium on HVCC seems to have gotten stalled, but some members of the House Financial Services Committee were able to tack a repeal of HVCC onto H.R. 3126, the Consumer Financial Protection Act (CFPA) as an amendment. H.R. 3126 passed committee 39 t0 29 with most Committee Republicans voting against it.

H.R. 3126 has been fought furiously by banks and credit card companies because is severely limits how they can put the screws to you and I when getting or servicing loan or credit card.

If passed by the House of Representatives it will go on to the Senate. President Obama has requested that CFPA be on his desk for signing into law before the new year.

As a brief review, HVCC is the Housing Valuation Code of Conduct, which was the brainchild of New York State Attorney Andrew Cuomo. He was wrongfully assuming that A) appraisers are all pansies, and B) because they are pansies they could be easily bullied by mortgage loan officers and real estate agents into artificially inflating the value of a home.

Well, for the most part appraisers are a pretty honest bunch and housing bubble was much more than just inflated appraisals due to some unscrupulous loan officers, real estate agents and appraisers. All HVCC did was add an additional layer of cost and time to the process: Appraisal Management Companies, or AMC’s.

AMC’s are the go-between for loan officers, Realtors and the appraiser. A buffer if you will. The AMC’s run interference and isolate the appraiser from talking to the loan officer or Realtor, the idea being that if a loan officer or Realtor can’t talk to the appraiser they can’t pressure them into “hitting a target value” to make the deal work.

Well, the market decides the value, all the appraiser does is compare the subject property to comparable properties that sold within a given period and a given distance from the subject property. In short: it is what it is.

There are a number of problems with AMC’s though:

  1. AMC’s increased the price the consumer pays for an appraisal because it added a middleman into the process.
  2. Appraisals have to be paid by the borrower before the appraisal is done, it can no longer be rolled-up into the loan like before.
  3. AMC’s take up to 60% of the amount collected from the borrower as “administrative costs” and appraisers are making only 40% of what they did just last April.
  4. Because of this the good appraisers have exited the business, leaving green appraisers who will work for pennies on the dollar, and thus;
  5. We are getting shoddy appraisals using comparatives that are not comparable properties. And, because we can’t talk with the appraiser we can’t go to bat for our borrower by questioning why the appraiser used a short-sale or a bank foreclosure as a comparable as compared to a genuine sales transaction, which represents the true market value of a home.

All HVCC has done is add another layer of bureaucracy, increased costs to the borrower, and hindered refinances that can help a borrower by reducing their interest rate and putting more cash in their pocket each month, thus reducing the chance of defaulting on their mortgage.

You’d think this would be a good thing, huh?

So let’s hope H.R. 3126 passes the House and the Senate and we can start moving forward with real economic recovery and your home will start increasing in value again as real, honest and competent appraisers get back to work doing what they love to do.

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Salt Lake City’s Mortgage Market Update for Jan. 6, 2009

I hope everyone had a great holiday season and are adjusting well to returning to real life and work again.  I’ve returned to work with incredible news for the new year.  The Federal Government has started it’s $500 Billion purchase of Mortgage Backed Securities (MBS) which has spurred interest by investors in Mortgage Bonds and has driven the rates even lower than last week (which were pretty dang good).  Analysts are saying that we could see some record low rates over the next three months.

In other news, the Board of Realtors has released November’s data for home sales in Utah.  Sales overall in November were lower than November of 2007 and 74% of homes sold in Salt Lake City and surrounding areas were below $300,000.  I feel this goes back to my theory that since there is no more stated income loans and borrowers must be able to document income and assets, that is all the majority of Utah borrowers can qualify for.

For instance, according to the Census Bureau’s income data (which is collected from the IRS) the median household income (the amount that 1/2 of people make less than and half make more than) is Utah is about $62,000 a year.  This would qualify half of Utahan’s for a home of $243,000 or less.

This number is probably skewed a bit too, since those that sign the front of checks don’t report their income the same way as those who sign the back.  Many business owners do not W-2 themselves, but rather file a Schedule C or K in which they work hard to minimize their taxable income by writing-off as much as they can, so their true take-home income from being a business owner is usually way understated.  In reality they can afford a $500,000 home (or more), but they can only on paper prove they qualify for a home in the $300,000 price range or less.

So until HUD (who oversees lending guidelines for FHA, Fannie Mae and Freddie Mac) changes their guidelines for calculating self-employment income, I think we are going to see much of the same, with homes under $300,000 selling quickly and those over $300,000 staying on the market for longer periods of time.

If you are looking to refinance a home or purchase a new home, right now is the time, though.  Rates are truly as low as they’ve been in over five years, and definitely the lowest they’ll be for a while.  So don’t delay.  Call me for a no-charge review of your current mortgage and if refinancing will benefit you.  Also, if you are looking at a home, call me for a mortgage quote or to get you pre-approved for the loan.

For Salt Lake City, UT today’s average mortgage rates are as follows:

30-year fixed: 4.75%

15-year fixed: 4.625%

Conforming Jumbo 30-year fixed: 5.125%

FHA 30-year fixed: 5.00%

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Salt Lake City Mortgage Market Update for December 16, 2008

The big news in Utah today is that the decline in housing prices has finally hit us, though not as bad as the nation on the whole.  According to the Federal Housing Finance Agency Utah as a whole saw a decline of 1.64% in home values from this same time last year.  The national average is 4%.

Salt Lake City dropped 1.8% while home values in Logan actually increaed 4.6%, making it #8 nationally.  St. George saw the worst decline in Utah at 8.5% less than last year.

Overall the drop seems to be in the larger homes, those prices above $300,000.  Homes below $300,000 seem to be holding their value since those are the ones most Utahns can qualify for under the revived “Full Doc” only lending policies.

On top of that, buyers aren’t buying it.  Even though prices are getting better and the increased time on market has sellers dropping their prices to stir interest in their home, many buyers seem frozen with fear do to all the bad news about the economy.  They’re afraid to make any big moves financially right now.

And if you have the means, right now is the time to do it.  Mortgage rates are the lowest they’ve been since 2004, and home prices are getting back into the range of being “affordable” for the average Utahn.  If you qualify for a loan right now you can pretty much write your own ticket when it comes to buying a house.

And remember, the $7,500 tax credit for first time home buyers (anyone who hasn’t owned a home in 3 years or more) is good through April 9.

For Salt Lake City, UT today’s average mortgage rates are as follows:

30-year fixed: 5.00%

15-year fixed: 4.75%

Conforming Jumbo 30-year fixed: 5.125%

FHA 30-year fixed: 5.00%

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