New Bill Passed!

President Bush signed the Housing and Economic Recovery Act of 2008 today, a bill that will assist an estimated 400,000 homeowners facing foreclosure by allowing them to refinance their current mortgages with a Federal Housing Administration-backed loan. The bill also permanently increases the conforming loan limit to as high as $625,500.

“One of the biggest reasons we’ve seen a slowdown in home sales is because buyers are having difficulty obtaining mortgage funds. That’s why this bill is significant: It increases the access to affordable, stable mortgages,” said Chris Sloan, president-elect of the Utah Association of REALTORS®.

The new loan limits for Fannie Mae and Freddie Mac are the greater of either $417,000 or 115 percent of an area’s median home price, up to $625,500. The new FHA loan limit will be the greater of $271,050 or 115 percent of an area’s median home price, up to $625,500. Both new loan limits will be effective at the expiration of the economic stimulus limits on December 31, 2008.

Another part of the bill includes a temporary tax credit for first-time home buyers of up to $7,500 for those who purchase between April 9, 2008, and July 1, 2009. This credit is available to anyone buying their first house or anyone who has not owned in three years. Single taxpayers with incomes up to $75,000 and married couples with incomes up to $150,000 qualify for the full credit. A home is eligible for the credit if it is any residence that will be used as a primary residence (single-family, townhouse, condo, etc.)

For more detailed information about the bill and the tax credit, visit www.Realtor.org. Another Web site, www.federalhousingtaxcredit.com, also provides information about the tax credit.

New Housing Bill gives Mortgage Relief for Southern Utah Real Estate and National Home Owners

This Article was printed on July 25, 2008 in the New York Times by Ron Liber and was titled

"Housing Bill that Has Something for Nearly Everyone"

If you are ignoring the housing bailout bill because you think it benefits only troubled homeowners, you may miss out on a windfall.
The bill, expected to be passed by the Senate in the next few days and then signed by
President Bush, does offer incentives to certain overextended borrowers and their
mortgage lenders. But it also includes many handouts to first-time home buyers, longtime homeowners, returning veterans and senior citizens seeking to tap their home equity without getting hit with big fees. Millions of people have the potential to benefit in some way. Huge numbers of people buying homes for the first time, for instance, will be eligible for what amounts to an interest-free loan from the government. Meanwhile, older Americans will now be able to borrow more and possibly pay less for reverse mortgages that allow them tap the equity in their homes. Whether larding up the bill with all these benefits is good for taxpayers is a debate for another part of the newspaper. But there is no shame in taking advantage of what is offered. In fact, you would be foolish not to. Here are some of the new benefits:

Renegotiating Mortgages

Part of the bill is devoted to the creation of a program that may allow some people to cancel their old mortgage loans and replace them with new fixed-rate loans lasting at least 30 years. The amount of the new loans would be no more than 90 percent of what their property is actually worth now.

So who is eligible? You need to have originated your troubled loan or loans on or before Jan. 1, 2008. The loans in question must be on your primary residence. Vacation homes and investment properties are ineligible. You will also need to verify your income, which many borrowers did not have to do in recent years. Also, as of March 1, 2008, your monthly housing payment (including the principal on all your various mortgage payments, interest, taxes and insurance) has to have been at least 31 percent of your monthly household income. So if you were earning $5,000 a month and had housing payments of $3,000, you are eligible. But if you had payments of just $1,400, you would not be, presumably because that loan is affordable given the size of your income. Lenders, however, are not required to give you a better deal under the new law, even if you do meet the qualifications. They may not be willing to negotiate unless they think you are truly on the cusp of foreclosure.
If you manage to get a new loan, you cannot take out a home equity loan for at least
five years after you get the new mortgage. You will also have to pay a 1.5 percent fee each year on the remaining balance.
Finally, you have to hand over no less than 50 percent of any appreciation on the home to the government once you sell. Sell the house in less than five years, and you will have to turn over as much as all of the gain. This program ends on Sept. 30, 2011. While it does not officially take effect until Oct. 1, lenders may be willing to start their negotiations with borrowers now.

Break for First-Time Buyers


If you are buying a home for the first time, and it is your primary residence, you are eligible for a federal tax credit of $7,500 or 10 percent of the purchase price, whichever is smaller. With a tax credit, you subtract the credit amount from the total you would otherwise pay to the Internal Revenue Service. So if you owe $1,500 and you qualify for the credit, you would end up getting a $6,000 refund.
There are two big catches, though. If you earn a modified adjusted gross income of
more than $75,000, or $150,000 if you are married and filing your tax return jointly, the credit starts to phase out. For single people, it phases out completely at $95,000 of annual income, while for married people filing jointly, it phases out at $170,000. But you have to pay back the credit over the next 15 years, in equal amounts each year when you pay your federal taxes. That makes this more like an interest-free loan than a true credit. According to the National Association of Realtors, there were about 2.5 million first-time home buyers in 2007.
A large proportion of them would have qualified for this credit, but whether it is enough to push would-be buyers over the edge this year remains to be seen.
The tax credit is retroactive to home purchases on April 9, 2008, and expires on July 1, 2009. If you purchase a home from Jan. 1, 2009 to June 30, 2009, you can claim the tax credit on your 2008 tax return.

Additional Deduction

If you are a homeowner who takes the standard deduction on your federal income taxes and does not itemize, this one is for you. You can now take an additional federal tax
deduction of $500, or $1,000 if you are married and filing your tax returns jointly. Again, this one is gravy; you get it in addition to the standard deduction.
Since itemizers are often people who pay a lot of mortgage interest, this deduction will generally benefit people who pay little or none, like those who have paid off their mortgages entirely or close to it. There is one hitch here: you will need to report the property taxes you paid on your tax form. If they are less than $500 (or $1,000 if you are married and filing a joint return), your deduction will be limited to the amount of the property tax you paid.

Reverse Mortgage Changes

Reverse mortgages allow older Americans, generally 62 and older, to get a lump sum or a monthly check that comes out of their home equity. They do not have to pay the money back until they stop living there permanently or their heirs sell the house. The problem with these loans, however, is that they often come with high fees.
Moreover, some salespeople pressure borrowers who are applying for the loan to
purchase annuities, long-term care insurance or other financial products that are not
necessarily in the borrower’s best interest. The bill tries to address both issues. First, it limits origination fees on reverse mortgages at 2 percent of any loan up to $200,000 and 1 percent beyond that, up to a maximum of $6,000. The bill also states explicitly that borrowers cannot be forced to purchase an annuity or other financial or insurance product as a condition of qualifying for a reverse mortgage.

Finally, the bill raises the maximum amount that people can borrow. Before, the limits were set on a county by county basis, according to AARP’s legislative policy director, David Certner. The biggest allowable mortgage available anywhere was just over $400,000. Now, there is a nationwide cap of $625,500.

Redefinition of Jumbo Loans

Often, if you want the mortgage loan with the lowest possible interest rate, it has to be
small enough to be purchased by Fannie Mae or Freddie Mac from whatever bank or
other institution originated it. Under the new bill, Fannie and Freddie have permanent authority to buy bigger loans in areas with high housing costs. (Temporary measures allow them to buy bigger loans, but those expire on Dec. 31.) They can buy loans up to 115 percent of the local median home price, though they cannot buy any loans larger than $625,500. Any larger loan will
generally be a jumbo loan, which will cost more in interest.

A Break for Veterans

Lenders will have to wait nine months, instead of 90 days, before beginning foreclosure proceedings on homes owned by someone returning from the military. Lenders must also wait a year before raising interest rates on a mortgage held by someone returning from military service. These provisions expire on Dec. 31, 2010.

Note from Joe...

Interesting news coming down. I imagine these steps may take some pressure off the short sale and foreclosure market. I really hope some or all of this can gain if this legislation comes into being. On a personal note, I would like to thank Dr. Harper for sending this article. He so often provides germain information to our market.

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Foreclosures in the Southern Utah Real Estate Market

The following information comes from RealtyTrac, which is an online foreclosure tracker/seller on a national level. Though foreclosures are extremely financially and emotionally difficult on the families of those losing their homes, it is a necessary part of the market re-adjusting itself to meet the standards dictated by the market.

This is part of the ugly aftermath that was created by the perfect storm in real estate that in my mind started in the Spring of 2004 and lasted until about October of 2005.

Through this difficult process, home prices are currently adjusting back to levels where the working class citizen can actually purchase a home, and hopefully the lending institutions will establish some guidelines that will safeguard us from the affects of our past.

Contrary to my opinion in a previous post, there just may be some foreclosures coming out of the woodwork that are going to start to make sense through this process.

St. George Foreclosure Rate Among Nation's Highest
Ranks 27th among metro areas

ST. GEORGE - The St. George area ranked 27th among metro areas nationally for its rate of home foreclosure filings in June, with one foreclosure for every 245 properties - the highest rate among cities in Utah.

St. George had a 13 percent hike in foreclosure filings from May to June of this year and 174 percent year-over-year increase, according to a report from RealtyTrac.

The number of Utah homeowners who received a foreclosure filing in June jumped nearly 141 percent, compared with the same month last year, according to RealtyTrac.

The 140.54 percent increase was almost three times the national increase of 53.28 percent for the same period.

The most dramatic increase came from Utah County, where the Provo/Orem area ranked 37th among metro areas nationwide in the rate of foreclosures and experienced an 810 percent increase in foreclosure filings from June 2007 to June 2008.

The Beehive State had a rate of one foreclosure for every 600 households last month. The national average for the period was one foreclosure in every 501 households.

Overall, Utah ranked 10th among the states in the rate of foreclosure filings.

Salt Lake City was ranked 89th in the nation, with a rate of one foreclosure filing for every 662 households. The percentage change from June 2007 to this past June was 60 percent.

The states of Nevada, California and Arizona continued to lead the nation in the rate of foreclosure filings, the report said.

Nevada was up nearly 85 percent from June 2007, with one in every 122 households receiving a foreclosure filing. California had second-highest rate, with one in every 192 properties receiving a foreclosure filing in June, while Arizona ranked third at one in every 201 households.

This information confirms the fact that this is a national epidemic, and not just our neighborhood. So what does it mean? I still maintain it is a good time to buy. As some of these foreclosures come out, they are worth taking a look at, but do not step over a motivated seller that has equity. Sometimes they are the best to deal with.

Once again, if you need to sell soon, it is time to do it.

Click here to search sections of the MLS without having to talk to me, then click Find A Home.

Click here for a good estimate of your homes value without having to talk to me personally. Then go to Your Home's Value.

What is a "short sell" in the Southern Utah or St. George Real Estate Market?

In simple terms and circumstances, a short sell is a scenario when a banking institution or lien holder accepts less than what is owed on a property, and releases the lien to clear title to a new buyer. They may or may not release the seller from a future obligation to them for the amount of the mortgage not covered by the sell. This is an issue of solvency, or in other words, the seller's ABILITY to pay. Short sells are a loss-mitigation tactic that is used in lieu of foreclosure at the banks or lien holder's option, and is usually done when the lien holder feels it is a better option than foreclosure.

What is the process? (When a listing agent is involved)

When I list "short sells" I meet with a seller about their current situation. If there has been a "Hardship" such as a loss of employment, sickness, death, law suit or sincere bad luck, they may be a good candidate for a short sell. In addition to normal listing paperwork for their house we collect information such as the following:

Authorization to release information
Last two months pay stubs
Last two months bank statements
Last two years taxes
Financial worksheet
Hardship letter
Accompanying documentation
Other institutional and supporting documentation.

Before I get an offer, I send the "Authorization to release information" to the lending institution. This enables them to speak to you when you do get an offer. At that point, it is really good idea to ask them if they have a specific package, because, though my generic one covers nearly every situation, sometimes they want it on "their form".

Once we get an offer, I get a pro-forma settlement statement from the Title Company indicating what the net proceeds would be to the lien holder. Armed with that information, I then create a cover letter showing the lien holder how much money they would receive as a percentage of what they are owed, and all of the reasons and circumstances as to why this poor person is in this situation, and with the current market status how they would be absolute fools not to accept this instead of foreclosing. I attach the Real Estate Purchase contract and the documentation listed above and I sent it the loss mitigation department of whoever is the lending institution.

How long does it take?

Most banks/lien holders that accept short sells are very busy, and it could easily take about two to four weeks to get assigned to someone, and possibly another four to eight to be analyzed or processed. Sometimes they just get ignored or buried under hundreds of others, and despite our best efforts, there is nothing we can do.

Some of the tricks my office manager and I have used to get them looked at a little bit quicker are the following:

1. Call as much as possible. Plan on being “on hold” for at least a half of an hour and probably more than an hour.
2. Ask to speak to the supervisor.
3. Flatter them and be very kind. Give them the speech about Eagles and chickens and they sound like an eagle.
4. Ask for email address. They usually won't give you one, but if you say they wanted you to send something via email, they just may.
5. Get the loss mitigators personal fax, and fax them a message.

How often do short sells work?

It really depends on the circumstances and how many notes are involved and who the banks are. I have been able to with a lot of help from my good assistant, the client’s attorney and an iron gut from both seller and buyer; pull a house out of a bankruptcy to get one to work. I have also had a great offer on one, they denied based on a less informed appraiser only to see them sell it for $20k less after they painted it and foreclosed it.

Unfortunately the national average is about 35% of the time. My percentage is a little closer to 50%, and we really feel like we have a handle on things. We know however, we have a lot to learn, and could be better. We get “ah-ha's”every time. Though we are not looking to do these are our primary real estate source, we know how to do them and are happy when the real NEED is there.

If you know of anyone who may need this service, let me know by email. We would be happy to consider each case on a one by one basis.

Once again, if you want to search the multiple listing service for you St. George area home, or to get your own Southern Utah home assessed for FREE, just go to http://www.joelangston.com/

Status of the Southern Utah or St. George area Market

First of all, this is my opinion. I am not the number one agent in St. George, and I do not profess to know everything about our market, but this is how I feel about it, and why.

I believe the major influences in our market are macro influences. In other words, the things that are affecting us are affecting everyone. In speaking with a friend that is far more educated than am I about this recently, the biggest pressures we have on our economy right now are the following:

1. Politics: Lots of folks are in a standstill while they see how this turns out. Meanwhile, interest rates are creeping up.

2. Energy Costs: Back in 2005, when the market was good, I went to St. George Ford and bought a beautiful brand new F-250 diesel truck. My family wants to go camping on Beaver Mountain this weekend. Let’s see 120 Miles each way, pulling a trailer - 10 miles to the gallon (x) $4.80 a gallon... Need I say more?

3. Debt: Some of us are so in debt, we couldn't borrow a peanut butter sandwich. Most loans right now, not counting FHA, which is becoming a very popular option these days, are requiring a minimum of 10-20% down. My guess is if the average American has about $8,000-$12,000 in credit card debt, it is going to be tough to save up the $20,000-$50,000 to get into a house.

What does all of this mean if you want/need to sell your home?

If you don't have to sell in the next 18 months, great, don’t. If you don't have to sell today, but you might have to any time in the next couple of months, by all means get it on the market now. Interest rates are ticking up, and there are no indicators to me that say it is going to be any better soon.

Wait a minute, I want to buy a home!

I think a good deal now is a good deal always. Though we may not be at the very bottom of the pond, I think we are in the murky mud just before your foot stops. Don't get lured into thinking that REOs (Bank Owned), short sells are going to be the key to your success. I am finding most REOs are priced just barley under market, (with some exceptions, right Mr. S?) and by the time you fix them up, you could have stayed with a more conventional deal, had fewer headaches, more negotiating power, and less to fix up.

Short sells, though I list and sell them myself, are only successful about a 35% of the time as a national estimated statistic. (I do a little better than that, thankfully). I believe a good ole' fashion seller, selling for at, or just below "market value" is your best bet, unless you have time to wait on a short sell, or the time, money, skills and ability to bring an REO up to speed.
That being said, you truly can get a great deal, once in a while on an REO, or short sell, it just takes more time, and you have less negotiating power in the process. It's more of a take it or leave it proposition, and they are always sold as-is with no warranties.

That's what I think. Feel free to chime in. I would appreciate your thoughts to be posted right on the blog rather than via email. Thanks for doing that.

As always, if you want to search the MLS or have specific questions about Southern Utah or St. George Utah real estate, let me know. I will be happy to get them answered. You can always get more information at www. joelangston.com

What Happened in Southern Utah or St. George area in June?

According to the Washington County Board of Realtors MLS, these are the numbers and statistical data in our market place:

This is for Homes, condos, town homes, and PUD all in the greater St. George area:
(numbers for May)
Total Listings on Market: 2,039, (2,070)
Listed in June: 373 (386)
Sold In June: 146 (156)
Months of Inventory: 13.97 (13.27)

This is for Homes, condos, town homes, and PUD all in the Hurricane Valley: (numbers for May)Total Listings on Market: 331 (65)
Listed in June: 65 (65)
Sold In June: 13 (26) Ouch!
Months of Inventory: 25.46 (13.04)

For the rest of the numbers I am going to combine Hurricane Valley with Greater St. George:

Homes, condos, town homes and PUD $100,000-$200,000
Total Listings on Market: 458 (463)
Listed in June: 110 (130)
Sold In June: 40 (60)
Months of Inventory: 11.45 (7.72)

Homes, condos, town homes and PUD $200,001-$300,000
Total Listings on Market: 739 (745)
Listed in June: 141 (123)
Sold In June: 60 (66)
Months of Inventory: 12.32 (11.29)

Homes, condos, town homes and PUD $300,001-$400,000
Total Listings on Market: 404 (423)
Listed in June: 79 (73)
Sold In June: 29 (33)
Months of Inventory: 13.93 (12.82)

Homes, condos, town homes and PUD $400,001-$500,000
Total Listings on Market: 226 (232)
Listed in June: 42 (37)
Sold In June: 14 (10)
Months of Inventory: 16.14 (23.20)

Homes, condos, town homes and PUD $500,001-$750,000
Total Listings on Market: 271 (272)
Listed in June: 37 (39)
Sold In June: 8 (8)
Months of Inventory: 33.88 (34.00)

Homes, condos, town homes and PUD $750,001 +
Total Listings on Market: 249 (250)
Listed in June: 28 (39)
Sold In June: 6 (3)
Months of Inventory: 41.5 (83.33)

Yikes! Tough to be in the $750 plus market.

I will give my comments on the Status of the Market next week. Until then, I want to hear from you!