Eric Murrietta

A new mortgagee letter from the FHA was posted yesterday. In it the guidelines were changed for those homeowners who currently own a home and are looking to rent the property and buy a new primary residence. The goal of these new changes is to "respond to an unscrupulous practice arising in the housing market that poses a risk to FHA..." This unscrupulous practice is known as buy and bail, where current homeowners buy a new home under the guise that they will rent their former residence and in turn they let the house go into foreclosure.

Here are the highlights:

1) Cannot use the rental income from the previous home unless there is 25% equity in that property.

2) Borrower must qualify for the new mortgage with the new mortgage payment and the previous home's mortgage payment.

3) Surrounding properties with FHA mortgages would be negatively affected by the bail out on the old residences by these customers seeking new FHA mortgages.

Exceptions:

1) IF THE BORROWER HAS SUFFICIENT EQUITY (25% or more) THEN THEY WILL UNDERWRITE USING RENTAL INCOME PERCENTAGES.

2) IF THE BORROWER IS REQUIRED TO MOVE THROUGH JOB TRANSFER WITH CURRENT EMPLOYER THEN THEY WILL UNDERWRITE USING RENTAL INCOME. (NEED VERIFICATION OF SECURITY DEPOSIT AND ONE MONTH'S RENT TO THE BORROWER FROM RENTER)

Hope this helps. Good luck. For the actual mortgagee letter check the HUD website and look up letter 2008-25.

I am excited about the new changes that are happening. Sure it will be sad to leave the people that I have come to know and love. They truly are special. Each person that I have worked with will be someone that I could look to in the future as a friend. But alas, things that are not in our control can make decisions and provide changes that we never can see.

So began the new part of my journey on Friday evening. When the news came down that Silver State Bank, my former employer, was going to cease to exist it took a minute for it to sink in. Actually it took several minutes, more like hours. It wasn't so much the job being gone that made the most impact, it was the hurt in the people who grew Choice Bank prior to selling to Silver State Bank. It was the feeling, or at least what I perceive to be their feelings, that we knew our residential mortgage family was going to split up.

If there was one thing we had it was camraderie. We worked hard, respected each other and always tried to do what was right for the company. Now we must move to the next stage and discover those new friends and colleagues that we will do battle with in the business world.

Though I am not sure where I will land, I learned a ton from my time at Silver State Bank and with the managers willing to teach it was easy to learn. So, I will keep everyone posted as to the new employer. The relationships that I have cultivated here on Active Rain and through my other business dealings I will continue. No matter where I go or who writes the checks that pay for me to live, I will forever remember the relationships I have formed and strive to see them continue in the future.

This job is about relationships and I haven't changed just the place I may call home.

An article on the Bloomberg website, one of a few that I check daily, had some interesting information regarding the trends nationally in regards to foreclosures. The article shows facts that foreclosures are the highest they have been in nearly 30 years.

Quick Points of Interest

• Prime ARM's accounted for 23% of new foreclosures (price declines starting to effect even the most savvy of borrowers)
• Sub-Prime ARM's accounted for 36% of new foreclosures
• Foreclosures are up to 4.33% from 1.29% a year ago.
• 75% of U.S. Banks surveyed indicated increased tightening of credit for even "prime" borrowers.

Prices could still decline further for homes if you watch this video...Shiller...which means pressure will mount as foreclosures continue to increase. (See last blog entry as well)

In an attempt to "always save the best for last"...Rates are BETTER!!!! In a week where it appeared rates would go up and make the situation even more strained, the opposite happened. Pressure on rates eased and they decreased for the longer term fixed loans. As you will see, there is no real change to the ARM products but the long-term fixed rates are lower by about a quarter of a point this week. Not sure how long this "trend" will continue, any buyers on the fence tell them to move now and reap the benefit for years to come.

As I was researching some new information I came across this video clip regarding home prices.

In it Robert Shiller of Yale University discusses his thoughts about housing prices and where they may or may not be heading.

Bleak outlook for sure, but perhaps a reality check as to the current situation.

Thoughts?

My coaching endeavors and travels will take me to San Jose this weekend for a hockey tournament that I hope is a huge success. A bit nervous as this is my first foray into "Head Coaching" and a lot of pressure is riding on my ability to put the athletes in a position to succeed.

However, dealing with pressure and making sure transactions "succeed" is nothing new to me. As the most important part of my job is creative thinking and problem solving.

For example:

• What specifically is the underwriter looking for within a specific file (when a "No" is the first response to a loan request)?
• How do I schedule a signing for parties who may or may not be out of town?
• How do I alleviate worries regarding transactions and time frames when usually certain items are beyond even my control?
• How do I ensure the success of every transaction so the Realtors and Clients who depend on me, find the process to be exemplary?

The answer to the above questions is communication and trust. As I must communicate with my players in a clear and concise manner to get the desired result and as they must trust me to give them the information they need to succed, so must all parties in the transaction have clear communication and trust. I think of myself as the "quarterback" of the transaction. Managing all the moving parts and working diligently to see the "ball" moved down the field for a score.

Remember: Pressure is nothing new, it only comes in different forms depending on specific functions and tasks. It is how we handle the pressure and solve problems that defines our success.