Justin Miller

HUD has a program that allows for only $100 down. That's correct, $100.00. What is a HUD home and who qualifies? Below is a link on HUD's website that states "A HUD home is a 1 to 4 unit residential property acquired by HUD as a result of a foreclosure action on an FHA-insured mortgage. HUD becomes the property owner and offers it for sale to recover the loss on the foreclosure claim." Who can buy a HUD home? "Almost anyone! If you have the cash or can qualify for a loan (subject to certain restrictions) you may buy a HUD Home. HUD Homes are initially offered to owner-occupant purchasers (people who are buying the home as their primary residence). Following the priority period for owner occupants, unsold properties are available to all buyers, including investors."

http://www.hud.gov/offices/hsg/sfh/reo/reobuyfaq.cfm

I have been hearing a lot of people commenting on the appraised value of their home whether for a purchase or a refinance. Many stated that the value has come in low due to appraisers not wanting to have the value too high because they might lose their license or the lender will get very cautious. That couldn't be further from the truth.

An appraiser is required in this market to find comparable sales within the last 3 months, within .5 miles from the property, 1 outside the neighborhood, and an active listing. What are the most recent sales? They are foreclosures and short sales. That is what is selling so that is the fair market value. Yes, it is artificially deflated but it is the "true value" in this market.

On a purchase transaction many want to see the appraised value $50,000 or more above the purchase price because they picked up a newspaper or turned on the TV and heard it's a buyers market and so and so got this incredible deal. Although this is great from a psychological standpoint, it means nothing. Think about it for a second. If you are buying a home for $300,000 and it appraises for $350,000, you are very excited because you feel you have an instant $50,000 of equity in your home. Wrong again. Remember how an appraisal is done. It is based on the most recent sales. What is the most recent sale now? You guessed it, your purchase transaction for $300,000.

This is a buyers market and buyers dictate the price of a home. That means the "true value" of a property is the amount someone is willing to pay. So whether your appraised value comes in $5,000 above your purchase price or $50,000 that doesn't necessarily determine how great of a deal you got.

Most of the transactions that come across my desk do not have a large gap between the purchase price and appraised value. What makes these transactions such a good deal is that they are one of the lowest sales in the neighborhood. Remember, you are not buying the market but you are buying a specific home, in a specific area, for a certain price. Now please keep in mind that although I close a lot of transactions per month I am the whole market. That is why this is just my opinion.

Here is a great script from www.mortgagemarketguide.com. They state to copy and paste it but I never want to lead someone to believe that I wrote something that I didn't.

I have good news and bad news...which do you want first?

OK - here's the good news. Interest rates are at historic lows, making it possible for many homeowners to refinance and improve their financial position - and combined with homes listed currently at bargain prices, those who are in the market to buy are able to purchase the home of their dreams and get a great deal.

Here's the bad news. All lenders and investors in the US have been completely slammed by with the recent increase in loan applications - right at the time that many have laid off staff to save money in a challenging economy. This means that timeframes they need for underwriting, approvals and closings have become longer than normal. It also means that some companies actually have chosen to raise rates, just to slow down the volume to a manageable level.

But wait - there's an answer. I know how to plan ahead and be smart, so that we can keep your rate protected. We may want to consider a longer lock in period than we might normally utilize, just to ensure that your loan will be processed, underwritten, approved and closed in this extremely volatile climate. I will also ask that you respond quickly when I request information or documentation, as the faster we can get your file submitted and approved, the better off we are to keep your rate protected.

The best news is that we are working together - and as always, I encourage you to get in touch with me with any questions you may have at this time!

There was a great article in "Origination News" all about fraud increasing in 2008. That is why it is more important than ever to do with someone that can be trusted. Many people go onto websites and read in the newspaper about rates. You have to be so careful with companies publishing rates that do not currently exist. You also need to make sure to read the fine print. Here is what 2 individuals said in the article:

"I think the losses are going to get a lot worse. I think we're closing a chapter on the rampant mortgage fraud that was out there. We're going to at least require people to falsify a W-2 and a pay stub, we're not going to let them just slide it through. We're not going to do it as foolishly as we did in the last five years. If you're going to commit fraud now, you're going to have to get creative on your Photoshop.

There will continue to be a high percentage of reported fraud as the market continues to constrict because we haven't seen the losses come in from the 2005, 2006 and 2007 books and I think those are going to be fairly substantial. My only concern about the new market is that I don't think that tightening underwriting policies doesn't necessarily stop fraud. It stops a lot of the marginal deals, but there are fraudsters out there that have to do it for necessity, as opposed to opportunity.

The fraud rates we are seeing on applications for 2008 originations are increasing. They are going back up again and it is, as Merle said, because of desperation.

Below is a great opinion article from The Wall Street Journal that talks about setting interest rates at 4% or 4.5%. "The problems are price-fixing, taxpayer cost, and a misunderstanding of housing trends. True, the government would not set the prices of the houses themselves. But by fixing the price of home financing, the government would be nationalizing one more branch of the housing market. The feds tried this recently with student loans, and the result is that the private market largely collapsed. After this all-too-predictable result, Congress did what comes naturally: It blamed lenders who withdrew from the market for being "greedy." And it had the government -- the taxpayer -- become the main lender to students."

http://online.wsj.com/article/SB123388493959055161.html?mod=todays_us_opinion