Buyer Beware!- Make sure Community is FHA eligible
August 18, 2008
One of the most popular type of financing used here in Greater Phoenix, Glendale, Peoria, even Scottsdale is FHA financing.
FHA financing here in the valley has really picked up steam as of late with the rush to take advantage of Seller-Assisted down payments or charitable down payment assistance programs like Ameridream, Nehemiah and Grant America (GAP).
The Down payment assistance programs have been banned by the recently passed Homeowner Rescue Act and
Down Payment Assistance will no longer be funded as of October 1st, 2008.
In fact, you should note that banks will no longer be accepting loan applications at the end of this month, August; Some bigger banks are no longer accepting them period.
One of the challenges facing approval of an FHA loan and use of Down payment assistance is that the community must be FHA eligible.
What does FHA eligible mean???
First, let me give you a story.
- Agent took buyers to see a home which they loved
- The listing agent confirmed that the community was FHA eligible
- Buyers made an offer which was Accepted.
- During underwriting the bank tell buyer that community is Not FHA eligible.
- Buyer cannot obtain FHA financing
- Client is now 2 weeks into loan process
- down payment assistance deadline is coming up quickly.
- Must find replacement home by end of August or not get FHA loan
- Maybe not buy a home at all if cannot get FHA loan and Down Payment Assistance
What does FHA eligible mean???
There are several guidelines that must be met to be an FHA approved community.
However, the primary one to look for is that more than 50% of the homes sold in the community must be owner occupied.
In most parts of the country this is not something to even consider. However, in most of the towns around Phoenix this is can be a difficult hurdle to overcome.
Especially, in the Condo conversion market where the community was 100% rental and was converted to Condo sales. Often times the developer did not sell 50% to owner occupants. Thus, there is a a much greater proportion of rentals than homeowners.
In new home sales and new build subdivisions a similar challenge arises. Although, Builders have all lots and homes available for purchase. In many cases 50% have not been sold when lot sales begin in the first many months.
I encourage you to ask your real estate agent do the research for you.
Do not assume because the community has been around a long time that it is more than 50% sold to owner occupants.
Most residents and even many sales agents who work in these communities do not know.
If you are going to use an FHA loan, find out first; Before earnest monies are non-refundable and eligibility for loan approval is denied.
If you are looking for expert FHA lenders here are some excellent professionals:
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Copyright © 2008 By James Wexler , *Buyer Beware!- Make sure AZ Community is FHA eligible *
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs
Monsoon Season - Buy Flood Insurance in AZ
August 13, 2008
Monsoon season has been here and seems to want to stay and break rainfall records in Scottsdale and the other cities that make up Greater Phoenix and the Valley of the Sun, AZ.
I hear daily stories about those whose homes are flooded. Yes, flooding in the Desert is not a myth. 
The harsh reality of flash floods is that the damage is swift and severe. Only a few inches of rain can cause thousands and thousands of dollars in damage.
Worse than that??… please take note
** Your standard home owner’s insurance policy does not cover flood Damage or Flood Losses **
Yes, I repeat, homeowners insurance does not cover flood losses.
You need to purchase a National Flood Insurance Policy that has been approved by National Flood Insurance Program (NFIP) through private insurance companies and agents; keep in mind, that there is usually a 30-day waiting period before coverage goes into effect.
Congress established the National Flood Insurance Program (NFIP) in 1968 as a way to provide protection to consumers. While your agent can write a flood policy on your behalf, all flood policies are written through the NFIP.
I can tell you that the vast majority of homeowners in Scottsdale and Greater Phoenix do not have flood insurance unless it is mandated by the lender if you are in a Flood Zone.
However, according to FEMA , Between more than 25% of all flood insurance claims are paid to people living outside of the high-risk areas. Further, as a homeowner in a floodplain, Did you know that an SFHA home has a 26% chance of being flooded over a 30-year period?
When you purchase a home, a title company will pull County records to find out if the home is within a Special Flood Hazard Area? If so, you will be required to buy flood insurance?
However, if you are purchase raw land, it is critical that you find out if you are in a designated high risk flood area. You may not need flood insurance now. However, you will when it you start construction. Make sure you find out before it is too late.
Also, if you are buying a previously owned home, make sure that you request a disclosure from the current owner regarding if the property has ever been flooded, or whether the property is within a 100-year floodplain.
Click this link to find more information and to determine whether any Arizona property is within a floodplain:
A standard flood policy will cover structural damage, furnace, water heater and air conditioner, flood debris clean up, and floor surfaces. You can usually buy added coverage for furniture and other items.
Tips to protect yourself from Floods and Flood damage
You can take protect yourself by following these basic tips: However, the most important thing you do is to …
Buy flood insurance; It is inexpensive; you can cover their home for up to $250,000 and contents for $100,000. A renter can cover their belongings up to $100,000.
Here are the names of some top Insurance Agents who can help you get a private Flood Insurance Policy:
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Copyright © 2008 By James Wexler, All Rights Reserved. *Monsoon Season - Buy Flood Insurance in AZ *
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs
Ameridream Responds to Ban on down payment assistance Programs
August 4, 2008
Last week, President Bush signed into law the housing stimulus package designed to help Americans stay in homes and prevent foreclosures.
Most importantly, the plan increased liquidity for Fannie Mae and Freddie Mac ultimately to stimulate Real Estate.
However, one of the contradictions in the legislation was the banning of Down Payment Assistance Programs (D
PA) that helped many homeowners in Greater Phoenix buy homes.
“Ann Ashburn, President of AmeriDream, Inc., issued the following statement :
“Eliminating charitable down payment assistance will slam the door on over 100,000 teachers, firefighters, working families and others who rely on these programs annually to become homeowners. ”
“We will continue to fight on behalf of low and moderate income families to preserve charitable down payment assistance and to help them achieve the American dream of home-ownership.”
“In the interim, supporters of down payment assistance should still make their voices heard by visiting www.supporthomeownership.com and telling HUD and Congress to regulate – not eliminate – down payment assistance.”
Home buyers in across Arizona were up in arms.
In fact, I wrote a post Down Payment Assistance Programs Banned by Law, in which I said ”
I understand the need to reduced loan exposure to riskier borrowers. However, in my opinion, limiting charitable down payments as a group is too broad.
Increasing income requirements, credit scores minimums, personal assets, requiring co-signers or reducing interest rates so payments for FHA approved buyers are some possible alternatives” to an outright ban.
As a result of the voices of homeowners ( and bloggers 
) 2 members of Congress introduced a new bill to revise this ban on Down payment assistance.
The pending draft would change, revise and regulate who would qualify under programs like Ameridream; not outlaw and ban charitable down payment assistance completely.
The Bill To revise the requirements for seller-financed down payments for
“mortgages for single-family housing insured by the Secretary of Housing and Urban Development under title II of the National Housing Act and to authorize
risk-based insurance premiums for certain mortgagors under such mortgages.”
I want to commend the efforts of Arizona home buyers, lobbyists and Congressman to move swiftly to support a revised draft of the Housing Stimulus Package to support down payment assistance programs on a per case basis; not ban them all together.
Many of the buyers are not qualified and should be denied a loan for many reasons. However, qualified buyers should not be painted with the same broad stroke.
Many who can benefit from these DPA programs, like Ameridream, should not be denied to purchase a home if the other levels of underwriting are met.
In my opinion this ban is another form of profiling and/or blockbusting; a violation of American Civil liberties.
Call you Congressman or visit www.supporthomeownership.com .
Let your voice be heard.
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Copyright © 2008 By James Wexler, All Rights Reserved. *Ameridream Responds to Ban on down payment assistance Programs*
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs
No FHA, Conventional Finance and Cash Buyers Only!!
July 17, 2008
In greater Phoenix, it seems that investors and first-time home buyers are looking to buy only homes listed as short sales or REO (bank owned real estate).
I am working with numerous first-time home buyers who are looking to purchase real estate in Scottsdale, Fountain Hills, Peoria, Tempe and other towns around Phoenix.
However, Realtors and home buyers are running across a new challenge.
I have started to notice short sale and REO listings on the MLS in which the bank/lender is asking for the following language added to the remarks:
- No Government Products allowed
- Offers must be Conventional Financing or Cash purchase only!!
In fact, even if banks are accepting FHA or Government or non-profit down-payment assisted financing , like Ameridream or Nehemiah , lenders are accepting significantly lower offers than other offers by qualified buyers who are using these programs.
I am aware of a buyer’s rejected offer on a property for 10% less cash price offer as the bank said, they “do not want to deal with FHA” financing.
I am concerned with this trend of banks looking at discouraging qualified buyers.
- First-time home buyers are what built our real estate economy.
- First time home buyers create the foundation of liquidity in the housing market.
- These buyers are the owners who sell to the next generation of first time home buyers.
- They are the buyers of the next higher tier of housing that allows those to sell and move upward.
I understand that banks want to sell their REO property as quickly as possible and further want to make sure that contracts do close escrow.
However, I think this may be a dangerous tactic of turning away the buyers that make real estate a liquid market and ultimately the main method of banks earning money. Lending!!
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Copyright © 2008 James Wexler *No FHA, Conventional Finance and Cash Buyers Only!!*
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs
Short Sale Nightmare in Phoenix
July 16, 2008
I have been calling for a “Ban All Short Sales” for some time.
In Phoenix, Scottsdale and the many towns surrounding Phoenix, Peoria, Glendale, Mesa, Chandler, Gilbert and Fountain Hills, are overwhelmed with Short sales, foreclosed homes and bank owned properties.
Foreclosures have been the primary factor that has driven down home values 18% year over year.
Let me give you another example of the difficulty, not only with Short Sales, but with ( REO ) lender owned properties for sale as well.
My client, let’s call them Jon and Jane Doe have finally found the home they truly love.
- The home is a bank owned property listed for $180,000.
- My clients , after missing out on other short sale and REO properties, decided to offer full price $180K
- They have been pre-approved using an FHA loan with only 3% down-payment.
- After waiting the requisite 72 hours response time, the bank responded they accepted another offer.
- The agent shared with me they accepted a lower price cash offer of $170K.
- My clients had given me permission to asked the agent if my clients we could re-submit an offer at %189K
- The listing agent said he would re-submit the offer at this 5% above asking price too the bank.
- This was the email I received later in the day from the agent/bank.
Subject: Asset manager came back with the “I’d rather have cash” statement
The bank accepted an offer for $19K (10%) less so not have to worry about a possible loan decline.
Some agents are going as far as adding to short-sale or REO listings to state clearly:
No government products allowed. Conventional financing or cash only.
Moral to the story; banks want cash, they don’t even want the few buyers out there who want to buy.
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Copyright © 2008 By James Wexler, All Rights Reserved. *Short Sale Nightmare in Phoenix*
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs.
Are down payment-assistance programs cash-back fraud?
July 15, 2008
In the midst of the mortgage crisis, rising interest rates and tighter lending and the disappearance of 100% financing, one lending option remains for credit worthy borrowers who lack the money for a down-payment. 
Down-payment assistance programs like
have offered Phoenix area home buyers….an opportunity to obtain mortgage loans with the help of non-profit organizations and charity assistance groups that contribute the down-payment for buyers to obtain FHA loans.
However,
Are down payment-assistance programs cash-back fraud?
As, Federal regulators are closely examining lending practices there is increasing scrutiny of these programs as questions arise if the down-payment is actually a contribution or kick-back from the seller. Here’s why.
The buyer is including an extra amount (usually 3%-5%) in the price of the loan which is insured by FHA which insures all loans involving down-payment assistance. The money then is a credit funneled from the seller to the non-profit organization to the buyer as a down-payment.
This practice, which has been described as a ‘loophole’ in FHA guidelines that allows down -payments from charities.
Now that sub-prime loans require much higher down-payments, this has become a very popular strategy to get risky loans approved with little money down that are still insured by FHA. Thus, Wall Street buyers of loans can more comfortably buy the debt as any default would be insured by the FHA.
The current housing-reform bill calls for eliminating this practice while other proposals call for allowing such down-payment assistance with more restrictions.
As Craig Anderson, of the Arizona Republic pointed out this has been a “lifeline” for Phoenix area borrowers which has allowed many credit-worthy home buyers to buy homes and aid support to a struggling market.
If you are interested in working with some experts in FHA programs that support down-payment assistance programs before legislation may change the rules, …
here are the names of some mortgage experts:
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Copyright © 2008 By James Wexler, All Rights Reserved. *Are down payment-assistance programs cash-back fraud?*
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs
Is the Phoenix Housing market doomed?
July 14, 2008
If Fannie Mae & Freddie Mac fail are not bailed out, does that spell doom for the housing market? 
The stock market collapse this week of Fannie Mae and Freddie Mac was not completely unexpected. Wall Street expected both publicly traded entities to announce quarterly financial statement with significant losses. However, investors in a panic sent the stocks spiraling downward.
In my humble opinion, these 2 companies which maintain $12 Trillion in US home loans are simply too important to not be saved.
However, widening losses, their inability to raise capital put lenders in a more difficult position to lend money to all but the most capable borrowers.
Thus, further credit tightening is forcing interest rates to go higher and money more scarce for buyers who are already struggling to obtain affordable loans.
The Fannie Mae & Freddie Mac fallout
It results is more expensive money, higher monthly payments making housing more expensive, not more affordable; further delaying any housing recovery.
Don’t fear. The crisis will end. This is a sad and unfortunate situation affecting millions of Americans.
However,
I am confident the result will be a better system and practice of lending and borrowing that will protect the foundation and future of the real estate market.
If you are a prospective home buyer, there is still money available at favorable interest rates. I have included a few names of real estate and
mortgage professionals you may speak with:
- Arizona - Martell Mortgage
- Florida - Matthew Blum
- Nevada - Jason Fox
- Wisconsin - Daren Sewell
- Connecticut - Jessica Beganski
- Illinois - Mel Metts
- Michigan - Maureen Webber
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Copyright © 2008 By James Wexler, All Rights Reserved. *Is the Phoenix Housing market doomed?*
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs.
Frozen HELOC’s squeezing Phoenix area Home Owners
July 1, 2008
Lenders are cutting off more and more Home Equity Lines of Credit (HELOC) here in Metro Phoenix as home prices decline across the valley cities of Mesa, Chandler, Gilbert, Peoria, Tempe, Fountain Hills and even Scottsdale and Paradise Valley. 
‘Freezing‘ Home equity lines is a new phenomenon that has always been, but seldom used, option contained in the small fine print of complex and lengthy mortgage and loan documents allowing lenders to reduce limits or freeze completely HELOC’s if home prices decline or consumer credit drops.
Although, some borrowers used the money to buy luxury items, most people use the money for renovation, pay down higher debt or emergencies.
Lenders are cutting or freezing these home equity lines of borrowers who are in need of money that they can afford to borrow.
Further, this inability to access needed credit is compounded by the fact that mortgage Re-Financing, the other popular option to extract equity is more difficult. Again, putting homeowners in a precarious situation.
Now, credit card companies are reducing borrowing limits in greater numbers than ever before.
I agree that the ability to receive credit was much to accessible , in too large amounts, to many borrowers who could not afford the loan amounts.
I also agree that lenders need to protect themselves from losses.
The majority of home buyers in metro Phoenix followed the rules and were prudent in their borrowing habits. However, today need the money to pay for consumer staples, (not luxuries) to get through a difficult time.
Too many borrowers are suffering as a result of poor lending practices, dishonest borrowers, and greedy investors who purchased homes or re-financed mortgages that they are walking away from.
Credit card companies and Mortgage banks need to keep their promise to lend,…if the borrower is still in the same economic situation when the loan was originally made.
I encourage banks to look at a case by case basis when making such drastic cuts.
If you want to know more about options when your bank freezes your Home Equity Line
For further expert advice on mortgage re-financing and Home equity lines of credit …
You can speak with any of these professionals:
- Arizona - Justin and Tammy McHood
- Arizona - Aimee Ghimire
- Nevada- Jeremy Stayton
- Orange County, CA- Sandra Carlisle
- Miami- Maggie Dokic
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Copyright © 2008 By James Wexler, All Rights Reserved. *Frozen HELOC’s squeezing Phoenix area Home Owners*
Contact James Wexler (480) 221-8080 for all your Phoenix | Scottsdale area Real Estate needs.
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