Monday, July 28, 2008

Fannie, Freddie jump in pre-market trading

Shares of the mortgage finance giants climb after Senate approves housing rescue bill.

By Aaron Smith,
July 28, 2008

NEW YORK ( - The battered stocks for Fannie Mae and Freddie Mac climbed in pre-market trading Monday, lifted by a housing rescue plan the Senate passed over the weekend.

Fannie (FNM, Fortune 500) and Freddie (FRE, Fortune 500) were each up at least 8% in pre-market trading.

The Senate approved a bill on Saturday that could establish a rescue plan for the two mortgage giants and provide up to $300 billion in loans for troubled homeowners.

The House passed the bill on Wednesday, and President Bush is expected to sign it soon.

The stock prices for Fannie and Freddie have fallen more than 40% in July. The companies, which together own or back about half the nation's mortgage debt, have been hard-hit by the imploding housing market.

On Friday, Standard & Poor's put some of Fannie and Freddie's ratings on watch for possible downgrade.

Buying real estate has never been cheaper. To look for a home of your dreams in the Phoenix-Phoenix-Metro area, visit an award-winning website at

Sunday, July 27, 2008

How Housing Rescue Bill Can Help You

How housing rescue bill can help you

The legislation - likely to be enacted soon - devotes $300 billion to helping troubled homeowners avoid foreclosure. See if you qualify.

By Les Christie, staff writer
July 26, 2008

NEW YORK ( ~ The Senate on Saturday passed a $300 billion housing rescue bill aimed at helping troubled homeowners avoid foreclosure and supporting mortgage giants Fannie Mae and Freddie Mac.

President Bush is likely to sign the bill into law within days. After the law kicks in on Oct. 1, thousands of at-risk borrowers will be able to refinance their unaffordable old mortgages into new low-cost fixed-rate loans insured by the Federal Housing Administration (FHA).

The Congressional Budget Office estimates that 400,000 borrowers with $68 billion in loans may benefit from the program - but the bill allows foras many as 1 million or 2million borrowers to participate in the program.

Here's what homeowners need to know.

Who's eligible?
Qualified borrowers must live in their homes and have loans that were issued between January 2005 and June 2007. Additionally, they must be spending at least 31% of their gross monthly income on mortgage debt to be eligible for the program.

They can be up to date on their existing mortgage or in default, but either way borrowers must prove that they will not be able to keep paying their existing mortgage - and attest that they are not deliberately defaulting just to obtain lower payments.

Before homeowners can get FHA-backed mortgages, they must first retire any other debt on the home, such as a home equity loan or line of credit. Borrowers are not permitted to take out another home equity loan for at least five years, unless it's to pay for necessary upkeep on the home.

To get a new home equity loan, borrowers will need approval from the FHA, and total debt cannot exceed 95% of the home's appraised value at the time.

How can I apply?
Borrowers can contact their current mortgage servicer or go directly to an FHA-approved lender for help. These lenders can be found on the Website of the Department of Housing and Urban Development.

How does the refinancing process work?
This is a voluntary program, so lenders holding the original mortgage have to agree to rework a given loan before things can get started. The bill requires lenders to make major concessions, writing down the value of the loan to 90% of the home's current value. In areas where prices have plummeted by as much as 20%, that will mean a substantial loss for the lender.

But lenders won't sign off on a workout unless they think that they'll lose less money on that than they would by allowing a home to go through the costly foreclosure process.

Each loan will have to be underwritten by an FHA lender on a case-by-case basis. That means the banks will do a new appraisal to determine the home's current value, as well as examine and verify income statements, bank accounts, job histories and credit scores.

Based on that new appraised home value, the FHA lender must determine how much the original lender has to reduce the original mortgage, so that it will reflect 90% of the home's market value.

If the original lender agrees to the writedown, the new lender buys the old loan and takes over the reworked mortgage.

As part of the deal, the old lender writes off any fees and penalties on the original mortgage, including prepayment penalties, and accepts the proceeds from the new loan on a paid-in-full basis. Additionally, it pays the FHA an up-front premium equal to 3% of the mortgage principal.

What does it cost?
There should be little up-front costs for borrowers to bear. Loan origination fees will vary by lender, but these can usually be paid by the borrower over the life of the loan in the form of a slightly higher interest rate.

However, the refinanced loans do come with many strings. For one thing, borrowers are responsible for paying an insurance premium to the FHA guaranteeing the loan, which will be 1.5% of the principal annually.

Borrowers also agree to share any profits from future home-price appreciation with the FHA. To do that, they'll pay a "3% exit fee" of the mortgage principal to the FHA when they resell or refinance.

Plus, they'll agree to pay the FHA 100% of any profits they realize from higher home prices if they sell or refinance within a year. So if the original loan principal is $200,000 and the home sells for $250,000, the borrower will owe the FHA $50,000, minus costs.

After a year, borrowers will share 90% of the profits with the FHA. The percentage keeps dropping in 10% increments to 50% after the fifth year, where it stays.

What will I save?
Savings depend on what borrowers are paying for their present loan and where they live, but for most people it will be substantial, even after factoring in the FHA fees.

In areas that have sustained huge price drops, such as Sacramento, Calif., where prices have fallen by about 30% over the past year, some loans might be reduced by more than 40%.

Additionally, the FHA loans carry reasonable interest rates, which are fixed for the life of the loan, as opposed to a subprime adjustable-rate mortgage that can jump higher every six months.

To get pre-qualified for an FHA loan, contact Laura Boyaian today. You may also visit her award winning website at

Monday, July 07, 2008

Process of Buying a Historic Phoenix Home

Process of Buying a Historic Phoenix Home
by Laura Boyajian - Historic Real Estate Specialist

Once you find the house you want, you need to move quickly to make your bid. If you're working with a Buyer's Broker, then get advice from him or her on an initial offer. If you're working with a Seller's Agent, you're involving yourself in what's called a "dual representation" or a "limited dual representation". Be careful that the agent handling this transaction is being fair to you as a Buyer.

Your agent needs to line up data on at least three houses that have sold recently in the neighborhood. They'll calculate the difference between the original list price and the final price of the homes sold.

If the average difference is, say, 5% below the asking price, then you know you can make an offer 8% to 10% below, leaving yourself a little room to negotiate. If you really want the house, don't lowball. The seller may give up in disgust.

Another factor to consider in determining your bid is whether the trend in recent home sales is up or down over the past year. For instance, if houses a year ago were selling at list, and recent ones are going at 3% below, then you might want to sharpen your pencil for your opening bid to just 5 to 8% below list.

There's no foolproof system for negotiating a fair price. In general, don't let the other side begin to believe you are negotiating in bad faith or being deceptive. Any deal you eventually reach has to involve trust on both sides and you better make darn well sure that your agent is representing this important fact.

Be creative about finding ways to satisfy the Seller's needs. For instance, ask if the Seller would throw in kitchen and laundry appliances if you meet his price, or, take them away in exchange for a lower price. Remember, too, that your leverage depends on the pace of the market. In a slow market, you've got muscle. In a hot market, you may have none at all.

Once you reach a mutually acceptable price, your Real Estate agent will draw up an offer to purchase that includes an estimated closing date (usually 30 - 45 days from acceptance of the offer).

Even though there are set contractual laws within the Purchase Contract, have your Real Estate Agent write this document to make sure the deal is contingent upon:

1. your obtaining a mortgage;

2. a home inspection that shows no significant defects (make sure you're clear on the definition of "significant");

3. a guarantee that you may conduct a walk-through inspection 24 hours before closing. This last clause allows you to check the home after the sellers have moved out, just in case the movers cause any damage, or that big living room sofa was hiding a hole in the floor.

You also need to make a good-faith deposit which is usually 1% to 4% of the purchase price that will be deposited into an escrow account. This money will be put toward your down payment and closing costs in order to close your deal. If the deal falls through, you will get the money back only if you or the home failed any of the contingency clauses.

Now call your mortgage broker or lender and move quickly to agree on terms, if you have not already done so, which I highly recommend you do before you even start house shopping. Read Financially Preparing Yourself To Buy a Home and Top 10 things to know and to do when buying a home. This is when you decide whether to go with the fixed rate or adjustable rate mortgage and whether to pay points. You may have to pay your appraisal fee upfront and will have to pay your home inspection fee upfront but most other fees will be due at the closing.

If you don't already have one, the lender funding your home loan will require a homeowner's insurance policy before they'll approve your loan. Ask for recommendations from friends, your lawyer or your real estate agent.

In addition to the appraisal that the mortgage lender will make of your home, you should hire your own home inspector. Again, ask for referrals, or check with the American Society of Home Inspectors, a trade group. An inspection costs about $300, on average, and up to $1,000 for a really big job and takes two hours or more, usually 4-6 hours in a historic property. When buying a historic Phoenix home, you'll want to get an inspector who specializes in historical structures. I have several on my team who do specialize in historic properties. They are a little more costly than a non-experienced historic home inspector, but well worth the nominal extra cost.

Ask to be present during the inspection, because you will learn a lot about your house, including its overall condition, construction materials, wiring, and heating. If the inspector turns up major problems, like a roof that needs to be replaced, then ask your agent to discuss it with the seller. You will either want the seller to fix the problem before you move in, or deduct the cost of the repair from the final price. If the seller won't agree to either remedy you may decide to walk away from the deal, which you can do without penalty if you have that contingency written into the contract, which is automatic as long as you're within your 10-day inspection period.

About two days before the actual closing, you will receive a final HUD Settlement Statement from your lender that lists all the charges you can expect to pay at closing.

Review it carefully. It will include things like the cost of title insurance that protects you and the lender from any claims someone may make regarding ownership of your property. The cost of title insurance varies greatly from state to state but usually comes in at less than 1% of the home's price.

The lender might also require you to establish an escrow account, which it can tap if you fall behind on your mortgage or property tax payments. Lenders can require deposits of up to two months' worth of payments.

After all this due diligence, the actual closing is often somewhat uneventful, though perhaps still nerve-racking. It's a process that your real estate agent, if experienced enough, should guide you through and have your back during the ENTIRE process. Be sure to ask your agent how involved they get with your loan, with Title & Escrow, with your Home Inspector and all other parties involved in the transaction. You'd be surprised how many agents walk away after your contract is accepted and don't follow through on anything out of sheer greed, laziness and lack of knowledge and experience. This is a nightmare for so many clients. I hear it every day from buyers. DON'T LET IT HAPPEN TO YOU!

If you want that agent, you're at her blog. Now, check out her award winning Historic Phoenix Homes website. Contact me today and I'll SHOW you!

4 Critical Factors In Choosing A Phoenix Historic Homes Realtor

4 Critical Factors In Choosing A Phoenix Historic Homes Realtor
by Laura Boyajian

If you're in the market to buy a Phoenix historic home and are ready to do your free MLS Historic Phoenix search, here are 4 very important factors to consider (for starters) when choosing your Historic Phoenix Homes Real Estate Agent. Don't forget to check out our Buyer's Services and Seller's Services sections, too.

1. Do they have the right Home Inspector for historical structures? How about a Structural Engineer who specializes in historic buildings?

2. Do they have an appraiser that specializes in historic homes and their districts? (This is more important than you may realize).

3. Do they have the resources and the will to assist you before, during AND after your purchase in anything from remodeling to restoring a historical home?

And probably one of the most important things to consider when choosing a Phoenix Historic District Homes Agent to represent you in a historical home purchase:

4. What is THEIR personal experience and knowledge in historical homeownership?

I offer services for free on this site without any obligation. Why? Because I want to be YOUR trusted, professional Real Estate partner. Not all Agents are the same, and no website can show that. That's why I encourage you to call me or email me today so I can SHOW you how I'm different.

Whether you’re buying, selling or investing in Historic Phoenix or Phoenix Metro area home, if you're looking for an honest, hard-working agent who will have YOUR best interest in representation at heart, call me, Laura B. today at 602.400.0008. You WILL NOT be disappointed.

Definition & Clarification of REO Properties

Real Estate Owned

Property owned by a lender, usually a bank, after an unsuccessful sale at a foreclosure auction. This is common because most of the properties up for sale at these auctions are worth less than the total amount owed to the bank: the minimum bid in most foreclosure auctions equal the outstanding loan amount, the accrued interest and any fees associated with the foreclosure sale.

If the property is real estate owned, the bank will then go through the process of trying to sell the property on its own. It will try to remove some of the liens and other expenses on the home, and then try to sell it on the market. Real estate investors will often go after these properties as banks are not in the business of owning homes and, in some cases, the house can be bought at a discount to its market value.

If you are interested in buying an REO piece of real estate, contact Laura Boyajian today. You may also visit her award winning website at