September 14th, 2009 at 12:53 pm

 

Arizona’s Anti-Deficiency Statutes to Remain Unchanged

 

As a result of legislation that was signed by Governor Jan Brewer last week, the Arizona Anti-Deficiency statutes will remain unchanged.

 

Earlier this summer, the Governor signed SB1271, which effectively changed the rules on how and when lenders could pursue a borrower after a default of a mortgage loan. The statutes have been in place in Arizona for decades, and they protect a residential homeowner from being sued by a lender after a default, such as a foreclosure. With those statutes in place, after a lender foreclosed against a homeowner, in most cases, they were unable to pursue the homeowner for the deficiency. SB 1271 would have changed that, and many of the provisions of the bill were ambiguous as to the definition of a resident or occupant. This ambiguity could have thrown thousands of homeowners into a situation whereby they could have faced additional costs after a foreclosure.  Thus, The Arizona Association of Realtors along with many other consumer groups lobbied the Governor and the Arizona Legislature to draft legislation to repeal 1271 before it went into effect on September 30,2009.

 

The Arizona Legislature and the Governor did just that. During a special legislative session this summer, HB 2008 was drafted and approved and Governor Brewer signed the bill last week. HB 2008 repeals SB 1271 and its change to the anti-deficiency statutes; thus, the statutes remain as they were.

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September 11th, 2009 at 2:32 pm

HVCC Creates Havoc 

 

Are you confused by the HVCC (Home Valuation Code of Conduct)? Don’t feel bad, most people are. This new rule went into affect May 1, 2009 and has done nothing but create havoc for all concerned in a typical real estate transaction.

 

The original intent of the rule was to create a separation between a lender and the appraiser, so that the lender would not exert undue influence on the appraiser to appraise the property for more than it was worth. Sounds good on paper, but on the street it creates confusion and tension between lenders, buyers and their agents. NAR has lobbied Congress to impose a moratorium on the rules, so that everyone could obtain a better understanding. As of this date, the rules are still in place.

 

Without going into the complicated and gory details, there is one misconception that impacts agents. Many believe, since they have been told this, that they cannot talk to or interact with the appraiser, give them comparables or assist them in any way. That is flat-out; not true… The HVCC does limit the lenders ability to talk to the appraiser, but does not limit the agent’s ability to do so. Thus, we may still meet the appraiser at the property, provide them comparables or other data and assist in the process. We may provide updates comparables after an appraisals is done, just as we always have. If you attempt to do just that, and the appraiser tries to stop you, remind them that the HVCC rules allow for this.

 

Our National Association has an excellent flow chart dealing with the HVCC and can be found at http://www.realtor.org/wps/wcm/connect/f57e63804e57784890e4b3d4f1772a7a/HVCC+Flyer+6.16.09.pdf?MOD=AJPERES&CACHEID=f57e63804e57784890e4b3d4f1772a7a

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September 5th, 2009 at 7:08 pm

 

 

As a listing agent, getting listings on short sales can be challenging. With so many variables and every lender acting differently, it can be daunting to stay on top of all the issues. While there are so many steps to insure that a short sale transaction moves smoothly, I could never cover them all here. Yet, one issue looms large and if not done properly, could cause you considerable grief and aggravation possibly resulting in a failed transaction.

 

The issue is obtaining the HUD-1 that the lender will require when considering a short sale transaction. Most often, the process starts with you going to a title company and asking for a short sale HUD-1. With that request, most title companies will simply ask you and/or the seller about the current liens. Since the seller owns the home, they should be the one to answer those questions. So, let’s assume the seller tells the title company that they have one lien; that being the lender who is considering the short sale.

 

Thus, the title company prepares the short sale HUD-1, most often without doing a title search, and shows the liens that the seller tells them about. That’s the problem. By not doing a title search, and by not grilling the seller with questions which might uncover additional liens, the HUD-1 is prepared with incomplete information which is a recipe for doom. 

 

If done that way, the lender approves the short sale and everything moves forward. The buyer deposits their money, pays for an inspection, appraisal, and loan application and incurs various other costs, while assuming they are buying the house. Low and behold, much later in the process, the 2^nd lien pops up, typically a Home Equity Line of Credit (HELOC) or some other lien, which the seller either forgot about or did not realize was part of the transaction. Closing is delayed as the 2^nd lien holder is contacted and typically offered pennies on the dollar. Many of them say no, and the deal fails.

 

Is there a lesson to be learned? Yes. When ordering that HUD-1, either insist that the title search is done in conjunction with the preparation, or very soon thereafter, so that if another lien shows up, everyone will know about it long before the 1^st lender approves the short sale and the buyer spends any money. If the title company refuses to accommodate that request, find another title company, as some do this as a matter of course, but many do not.

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August 31st, 2009 at 1:04 pm

 

 

If so, the Federal Tax Credit for 1^st time homebuyers, of up to $8000 will come to an end on November 30. With September almost here, that gives buyers about 90 days to find a house, write an offer, get an accepted deal, have it financed, get it closed and have title transferred all before the November 30 deadline.

 

You might think that is plenty of time, but keep in mind the typical transaction now is either a short sale or a foreclosed, lender-owned property. Either could take weeks to obtain an accepted offer, with more time needed for repairs and other issues. The typical 30 day from offer-to-closing contract is a thing of the past, at least for now.

 

Thus, a typical 1^st time homebuyer might need to make numerous offers and then do it all again if an appraisal comes in lower, repairs are overwhelming or any other reason why a sale might fall apart.

 

Remember that the federal program offers a tax “credit”, not a deduction. There is a difference, but be careful in giving tax advice to your buyers. If you have any serious, potential 1^st time homebuyers, then have them first visit with their accountant to determine the benefit available to them at this time. Once they are comfortable with that, then start showing them houses.

 

A word of caution; be careful what you promise… Promising the credit to a buyer who ultimately does not receive it will be an issue you will need to defend. Always tell your buyers that they must comply with the federal requirements and that you have no control over how the credit is applied. For example, if you sell them a house with a November 30 closing, and for some odd reason, it closes December 1, they will not receive the credit. If you promised they would, you could find yourself if a very uncomfortable position.

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August 6th, 2009 at 7:44 pm

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August 4th, 2009 at 2:36 pm

 

 

It’s the words of a song, and a popular phrase, and it certainly pertains to some listings that you might have. Some of them are flat-out un-saleable. You just might not realize it.

 

What is your time worth? Once you know that, you will work to avoid those situations that take up your time and do not provide revenue.

 

The current market of lender-owned and short sale properties, coupled with many sellers being in bankruptcy often creates a situation where the property that is owned is un-saleable. Here are the more common reasons why and the reasons why you should think of “folding” and moving on…

 

1. Uncooperative or uncommunicative seller. In short sales, the sellers are often frustrated and worried, and will be less willing to cooperate. In either case, such as making certain disclosures or not paying some of the buyer’s costs might render the property un-saleable. If the seller has dropped out of sight, does not return any calls, e-mails, faxes or any other means of communication, you might need to walk away.
2. Seller turns down reasonable offers. You know what’s reasonable. No matter what the list price is, if your seller refuses to accept a reasonable offer, or at least provide a reasonable counter-offer, that might be time to cancel the listing. Give this stronger consideration after the seller does this more than once.
3. Sellers are divorcing, fighting or not agreeing with each other. Certainly, sales can occur with a divorce situation, or sellers who are arguing with each other. But, at some point, when the situation becomes untenable, when you are constantly being put in the middle, you need to think about your options. When one divorcing party clearly defies a court order and does not cooperate, or one sibling has made it clear that they will not agree to sell mom and dad’s place, it might be time to throw in the towel.
4. Sellers refuse to be reasonable on pricing or making repairs. Pricing today could be a moving target. If the seller does not agree to price adjustments to reflect the current market, and activity is slow or nil, then you might be wasting your time. If the seller refuses, either now before a contract, or in response to a contract, to make even the slightest repair, then it might be quitting time.

 

We never like to lose a listing. It often feels like failure. But in many cases it is not your failure. It is the seller. If they put you in the boxing ring blindfolded with your hands tied behind your back, how do they expect you to win the fight? Without their cooperation and assistance, you might just be wasting your time.

 

So, measure each listing with the above factors, and if the decision is to cancel the agreement, first confer with your broker to determine how you accomplish that.

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July 26th, 2009 at 1:39 pm

 

For certain, the Phoenix real estate market has seen both sides of the emotions; either a rapidly declining market fueled by negative economic news, a downturn in employment or rising interest rates, or an increasing market pushed on by available money and eager buyers. Is there a middle ground for a normal real estate market? Some say yes, but that lasts almost as long as an ice cube on the sidewalk in Phoenix in July. (About 5 minutes).

 

In reality, Phoenix is most often a stable market, either on a moderate rise or a gentle pull-back. Rarely do we see the markets we saw in 2005 and 2006, when builders could not build them fast enough, lenders were pushing money to anyone who literally had a pulse, and sellers who saw their values increasing by the day. That was an oddity and most likely will not occur again for quite some time. Contrast that to a market we have been in for the better part of 2 years with an increasing inventory due to foreclosures, lenders pulling back and not making loans and sellers seeing a rapid decrease in values. The fuel to that fire is the fact that many borrowers in 2005 and 2006 obtained teaser rates at 3% or lower, paying only interest. Often, buyers ended paying less for a mortgage for a big house than they were paying for rent on a small apartment. That was very attractive. They never projected that they could not re-finance in 24 months when the rates changed. Lenders promised to refinance as the values would continue to increase 20 – 30% a year. Well, we all know that the values went in the opposite direction, and many of those borrowers have subsequently lost their homes.

 

So, where are we now, in the middle of 2009, and most likely at the beginning of the climb out of the bottom.

 

Here’s why we feel we are climbing out…

 

May, 2009 saw 9760 sales in the Phoenix Metropolitan area. That was the 3^rd highest sales month in 5 years. (Sales are contracts in escrow waiting to close)

 

May, 2009, the existing inventory in the MLS system was 44,772 on May 31. It was 55,904 on January 1.

 

Some caveats to the improvements in the market.

 

1. We expect an increase in foreclosures through the summer and into the fall. Lenders sat back after the moratorium last winter and started the process up again in the spring.
2. Stricter FNMA and HUD regulations have slowed the lending process, causing frustration among buyers and sellers and causing deals to cancel.
3. Government regulations such as the HVCC laws (Home Value Code of Conduct) have hamstrung appraisers, lenders and agents with a bevy of convoluted regulations that befuddle many buyers and sellers.
4. Local statutes or regulations, such as revisions to a statute here in Arizona that relates to mortgage deficiencies, can cause confusion and in some cases panic among homeowners. While good intentioned, the net result is a law that places an unfair burden on homeowners in default. 

 

Thus, we are cautiously optimistic, seeing more lenders willing to loan, more buyers ready to buyer, foreign investors buying with cash and available inventory for them to buy. Lenders who have foreclosed have become more realistic in pricing, willingness to do repairs and incentives to the buyers. We are confident that we are climbing out of this hole and will return to a normal, stable market by the spring of 2010.

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July 13th, 2009 at 2:49 pm

 

SUMMARY OF S.896, TITLE VII-Protecting Tenants at Foreclosure Act of 2009

 

On May 20, 2009, President Obama signed into law a mortgage rescue bill that included the above referenced Act.  In short, any foreclosure of a federally-related mortgage loan or any residential real property foreclosed on after May 20, 2009 is impacted by this Act.

 

The major change to existing Arizona law is that arguably any successor in interest to such property shall assume the interest in the property subject to the existing bonafide lease.  If that lease was entered into by anyone other than the mortgagor or the child/spouse/parent of the mortgagor, that lease was entered into more than 90 days before the notice of foreclosure, the lease was the result of an arm's length transaction, and the lease requires rent substantially the same as the fair market rent, then that tenant shall have the right to continue to reside in the unit under the same terms and condition of the lease.  The tenant must pay rent, permit access pursuant to ARS 33-1343, etc.  If they do not, the new owner has all rights and remedies under the lease and Arizona statute.

 

There is one major exception:  In the event that the new owner wants to occupy that unit as their primary residence, the owner must give the tenant a 90 day written notice of termination of the existing lease.

 

If there is no written lease or if the tenancy is month to month, the new owner must give the tenant a 90 day written notice of termination of the tenancy.

 

Section 8 leases are subject to this law.  However, short sales are not.  Additionally, the tenant has no rights under this Act until and unless the home is foreclosed on, the loan was a federally related loan, the lease was in place at least 90 days before the foreclosure, and the lease was an arms-length transaction for at least market rent to someone who is not the owner's child, spouse or parent.  Simply receiving notice of a pending foreclosure does not trigger this Act.

 

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June 30th, 2009 at 1:34 pm

 

 

Is that true? In Arizona, do we see a significant slow-down of sales when the temperature climbs to 100 and above?

 

Not necessarily. While some agents feel that the heat stops people from looking at homes, that is simply not true. Our market is truly a 12-month market, certainly with peaks and valleys. April historically is the strongest month for real estate sales, both locally and nationally, while December is the weakest month. The strength of April is generally associated with weather; as the northeast and other parts of the country start to thaw out, those that hibernated in the winter come out and start looking. December, however, is not weather-related. It is that time of year from Thanksgiving to New Years where people are simply focusing more on family, gifts, etc and not real estate.

 

June, July and August are statistically strong months in Arizona. And, this year, we predict it to be even stronger, as several factors are in play. They are…

 

1. The market is coming out of a severe downturn and by simple timing, is improving.
2. Home prices have not been lower in decades, and many buyers are getting into the market.
3. Lenders, while actually tightening the rules, have money and are lending. In this market, however, someone needs to have a strong credit rating and a down payment in order to qualify. Believe it or not, lots of people do and they are ready to buy.
4. Investors are still grabbing foreclosed properties and placing them in the rental pool, believing that since many people cannot qualify to buy will still look to rent.

 

As a result, we expect a strong 3^rd quarter for 2009 going into the fall. While lots of real estate agents take the summer off, or a considerable amount of time, those staying in town and working are the ones that will grab these deals.

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