Archive for May, 2009

NOT SO FAST!!!

Today Hud released rules allowing first-time homebuyers (FTHB) to use the $8000 federal tax credit as part of the down payment on their purchase of a home.  That’s good news, right?  Well, except for this part:

Accordingly, the proceeds of the sale of the tax credit to FHA approved mortgagees, the seller, or any other person or entity that financially benefits from the transaction (or any third party or entity that is reimbursed, directly or indirectly, by the financing benefiting person or entity), may not be used to meet the 3.5% minimum downpayment, but may be used as additional downpayment, buying down of interest rate, or other closing costs. [emphasis mine]

In other words, this program is not going to replace the Nehemiah or Neighborhood Gold programs that allowed homebuyers to get into properties with nothing down.  Yes, you can use the credit to cover closing costs, but those costs were in most cases already being covered by the sellers.  Yes, you can use the credit to increase your downpayment (as long as you’re getting an FHA loan), but because it’s an FHA loan, that won’t improve your interest rate.  It will reduce the monthly payment by a few dollars ($400 a year, about), because the initial balance will be lower, but that’s about it.

So, what do we give this?  One cheer?  A cheer and a half?  Maybe, but not three cheers.  Not for this.

Real Estate Top Ten and Jimmy’s Steal of the Week!

From Jimmy Rex, Realtor Extraordinaire:
These are all bank approved prices of foreclosures, no waiting to see if the bank accepts the offer!!!  All are in average to above average condition as well and all were built in the past 5 years!
10 best buys- May 27 2009
1. North east Lehi 1600 sq ft, Originally sold for $225k- bank approved price for $158k
2. North west Orem, 2778 sq ft, exact same model sold in Dec 2008 for $205k, bank approved price of $165,000
3. North East Eagle Mtn, 3030 sq ft townhouse, brand new, bank approved at $180,000, that’s $60 per sq ft
4. Ivory Ridge, Lehi, 2397 sq ft townhouse, same exact model under contract right now for $245k, bank approved at $185,000
5. South west Saratoga, 3900 sq ft, bank approved price $245,000, similar house four houses down sold last June for $370,000
6. North East Eagle mtn, 5894 sq ft, House on same street sold last August for $340k, bank approved $284,000
7. South West Bluffdale, 5000+ sq ft, was once under contract for $700k, bank approved price $349,000
8. South west Herriman, 6800+ sq ft, house 1000 sq ft smaller on street sold for $522,000 within last year, bank approved price of $350,000-This is the steal of the week!!!!!!
9. North East Provo, 6200 + sq ft, house on same street only 600 sq ft bigger currently listed at $995,000, bank approved price $425,000!
10. Pepperwood house, 6600 sq ft, half acre, bank approved price of $579,000
11. Southwest Riverton, 6700+ sq ft, fully decked out, originally appraised for $1.8 million, bank approved price of $975,000
Call to get more info on these or other great properties! These are all bank approved prices of foreclosures, no waiting to see if the bank accepts the offer!!!
I thought this was a great idea.  If you’re hunting a Utah home and a Utah mortgage, stay with us – I’ll be bringing you Jimmy’s Top Ten every week.

Two Years Ago

Two years ago, I decided that I was tired of working for the broker I was with, tired of the screwups of others at that company making it hard for me to do business the right way, tired of making a decent living but having no pride in my work.  Two years ago I opened my own brokerage, a one-man shop, right on Main Street.

Two years ago, the real estate market was flourishing, there were tens of thousands of loan officers actively plying their trade, and dozens of companies ready to welcome me with open arms.  There were 600 different lenders I could work with, and Mortgage Originator magazine had 110 pages every month.

Two years ago nobody knew that the market would collapse, credit dry up, property values decline 25%.  Two years ago nobody could have forecast the demise of GM and Chrysler, deficits of $1.8 trillion, the number of big-bank lenders declining from 25 to 4.  Nobody knew that if you weren’t a big shop, with FHA loan capability, backstopped by large correspondent lines, you were already dead.

In terms of the business, almost everything I thought was true, wasn’t.

But two years ago I knew that I wanted to be on Main Street in Lehi.  I knew I wanted to work in a small office, with people I hired myself, on a busy but – let’s face it – sleepy two-lane street less than a mile from my home.  I knew that I wanted to become part of the community, to put roots there, to learn the names and faces of everyone for two blocks in either direction.  I knew I wanted this place to be my home, and that I wanted desperately for my business to contribute something to the health and vitality of the community around it.  I wanted people to know me and to know they could trust me.  And I wanted to know myself.  And I wanted to trust myself.  And I believed that this place was the place it could happen.

Almost everything I thought I knew about the place I was, and the reason I was there, was absolutely true.

Two years ago, the Chair of the Chamber of Commerce, the lady that I chose as my Vice-Chair and who succeeded me as Chair, presided at the grand opening of my brokerage on Main Street.  Kris Belcher, who wasn’t an author then, but who was, and is, one of the toughest, most genuine, smartest and finest people on earth, made a short speech in honor of the occasion.  She said one thing that day that I won’t ever forget as long as I live.

She said we would go through hard times, but that we had been through them before, and we would always come out right, because, she said, “the Chris Jones Group has the fighting spirit.”

Two years ago, that was true.

By God, it still is.

RateWatch – The Day After

Markets: Bonds rallied today, avoiding the fifth straight day of red candles on the market, but the rally only pegged back 10% of the 4-day drop.  Still, it’s something.  Where are we on rates?  Weeeeeeelllll….

If you had 5.5% on an FHA loan yesterday (which some did, for various reasons), you probably still have it.  If you had 5%, you now have 5.375%.  If you had 4.75%, you have 5.25%.  Lenders compressed their rates on FHA rather than sliding the whole rate sheet higher (for a detailed explanation of how this works, go here).  On conventional, though, par is up to 5.375%, and that’s if you have 740 credit and 20% equity.  Above that LTV or below that credit is worse.

Analysis: Folks, it just isn’t pretty out there.  Bill Gross of PIMCO says the US is in some danger of losing its AAA bond status, the Obama Administration appears to be valuing labor contracts over the demands of Chrysler and GM bond holders, the government is offering record amounts of Treasury debt in an effort to keep spending, and the deficit is $1.8 trillion.  The geniuses at the Fed and Treasury thought that they could game the markets, get rates where they want them just by saying “boo” (and spending a $ trillion or so).  But that doesn’t work, fellas.  The market is bigger than that.  It’s bigger than you.  It will go where it likes and you can’t stop it.

I’d love to say, as many are, that the market is going to come back and the rate rises are temporary.  But I can’t.  I don’t believe they are.  Perhaps there will be some pullback here over the next couple of weeks, and rates will improve slightly.  That would be great.  The fundamentals, though, people, are just horrible.  The American people have too much debt.  The American government has too much debt.  Until we pay it off, things will not get better.

That’s how I see it.

Civil Rights 101

Amid the fountains of bloviation about the demise of Western Civilization because the California Supreme Court upheld a constitutional amendment, let’s have a short civics lesson.

Civil rights are “civil” because they are granted by the civic institutions of the state.  There is a lot of pontificating – yes, @ColinKelley, this means you, though you have plenty of company – about how civil rights should never be subject to majority rule.  Sigh.  People, think.

Civil rights BY DEFINITION have to be voted on.  It is inalienable rights that cannot be voted on (among these are life, liberty, and property).  By no possible stretch of the imagination is the right to have your sexual union recognized by the state inalienable.  ALL rights granted by the state are alienable.

When you get rid of the idea of God, and stop basing your laws on moral conduct, then you reach the point where all rights are civil rights, and all power rests in the hands of the government.  Then your inalienable rights, the ones that adults care about, can be violated at will.

[Side note here: if you are black, you understand all too well how government can do this.  Slavery was a violation of civil rights, yes, but it was also a violation of inalienable rights.  The Constitution did not emancipate blacks, but it did at least have a mechanism for the assertion of inalienable rights and it was that document that made emancipation possible, once people came to their senses.  Slavery remains, however, undeniable proof that the existence of a document doesn't automatically guarantee its legal force.]

This is one reason smart people revere the Constitution, because it at least attempted to put restraints on what government could and could not do with respect to those inalienable rights.  For this purpose, governments are formed.  However, as we learn, no amount of law will prevent bad people from being bad.  No set of regulations will make selfish people less selfish.  No constitution can stop people from choosing to be treated like infants, abdicating personal responsibility, and trying to make everyone else pay for their own stupid mistakes.

This is why even smarter people don’t believe that the Constitution can save the Republic.  It’s just a  document.  Only the people can save the Republic, and right now, my read is that the people don’t care.  They don’t have enough understanding to process how the CA Supremes can vote 6-1 not to invalidate a constitutional amendment process that was as meticulously legal as anything could be.  They just want to be mad.

Well, then.  Wish granted.

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