- TILA and RESPA disclosures will be changing again sometime in the next 12 months. Look for more mortgage officers to be pulling whatever hair they have left out of their heads.
- Yield Spread Premiums will be banned. Any loan officer receiving a YSP will be fined treble damages (3 times damages) plus court costs.
- Communication between mortgage originators, underwriters, and processors will be stymied in an effort to make it appear underwriters are doing a good job.
- New additional disclosure requirements, anti-steering provisions, restrictions on high-cost mortgages, a ban on pre-payment penalties...and more!
- BPO's are banned for use as a valuation tool on new loans.
- HVCC will sunset for appraisers. Hooray!
- Appraisal Management Companies will be required to pay "reasonable and fair" fees to appraisers. So who determines what is reasonable and fair? The market? The government?
- Agents, Loan Officers and Appraisers will all be put into an honor code system of being required to report bad players when they know about them.
Thursday, September 30, 2010
COMING SOON: Exciting New Regulations
The Division issued its quarterly news letter and I found the message from Deanna Sabey quite sobering. Here is a breakdown of changes that are coming to the real estate industry due to laws passed by our ever benevolent Federal government:
Monday, September 27, 2010
FOR SALE: North Ogden Fixer Upper
Bring your tools, your buddies, and some paint for this one. Post market fixup is around $230,000. Lots of sweat equity here. The home is on a half acre lot. It has 3 car garage, pool house, almost 3000 SQFT, 6 bed and 3 bath. It can be a show home but needs your love. Fix this one and make some money.
Downtown Restoration: Denver Rio Grande Building
In a win-win for Downtown Ogden and the IRS, it was announced recently that the Denver Rio Grande Buildings at the corner of 24th St. and Wall Ave will be purchased by the IRS for use as office space.
The IRS will restore the exterior of the buildings, reinforce the structures to comply with current seismic code, and remodel the interiors of the buildings according to LEED certification. The site is already adjacent to existing IRS buildings and makes sense as move to consolidate operations from other locations. Construction should be begin soon.
The IRS will restore the exterior of the buildings, reinforce the structures to comply with current seismic code, and remodel the interiors of the buildings according to LEED certification. The site is already adjacent to existing IRS buildings and makes sense as move to consolidate operations from other locations. Construction should be begin soon.
Friday, September 24, 2010
Death of a Short Sale: Not With A Bang But A Whimper
This week I concluded negotiations with the first mortgage servicer on a short sale transaction. I have been working on this short sale for over 6 months. Due to my clients' bankruptcy proceedings, we were unable to work with the bank on a short sale until the release-of-stay was issued by the court. It took us two months to get the court to issue the release but then it took the mortgage company another two months to process the paperwork.
In the meantime, my clients' phone numbers were disconnected. By a fluke, my clients contacted me via email and we able to delay the foreclosure auction just two hours before the scheduled sale by getting all of our paperwork turned in as requested. However, due to the long delays the bank kept having us resubmit our file for review.
Finally they reviewed it. I got a call on Thursday last week:
"Mr. Peterson, we have received your file and we are counter-offering your $80,000 offer at $95,000. Please respond with an acceptance no later than Tuesday next week. The foreclosure auction is scheduled for Friday next week."
I went back to the buyer and several back-up buyers and they all balked at the bank's counteroffer.
The bank proceeded to the foreclosure auction and it went up for sale today. Let's watch and see what the bank lists the home at when it comes back as an REO property.
In the meantime, my clients' phone numbers were disconnected. By a fluke, my clients contacted me via email and we able to delay the foreclosure auction just two hours before the scheduled sale by getting all of our paperwork turned in as requested. However, due to the long delays the bank kept having us resubmit our file for review.
Finally they reviewed it. I got a call on Thursday last week:
"Mr. Peterson, we have received your file and we are counter-offering your $80,000 offer at $95,000. Please respond with an acceptance no later than Tuesday next week. The foreclosure auction is scheduled for Friday next week."
I went back to the buyer and several back-up buyers and they all balked at the bank's counteroffer.
The bank proceeded to the foreclosure auction and it went up for sale today. Let's watch and see what the bank lists the home at when it comes back as an REO property.
Thursday, September 16, 2010
JUST SOLD! Ogden Valley Enclave
I just recently closed on a home for some clients moving into the area. What is interesting about this transaction is how it's an example of home prices moving to an equilibrium point for buyers and sellers.
This home was for sale by owners who lived in the home. In May of this year they listed it for $539,000. After two months, the listing was expired and the home was relisted for $459,900. Our initial offer on the home was $420,000 and we ultimately came to an agreement with the seller's at $440,000. That is quite a dramatic drop in price from the seller's perspective.
It took some hard work to bring this transaction together; but, in the end our buyer was satisfied and they now have a great property in a great part of Utah. Welcome to Ogden Valley!
Saturday, September 11, 2010
FOR SALE: Victorian Era Cottage
I present to you a very cute 3 bed 1 bath Victorian Cottage located just blocks to everything fun in Ogden. Views the of the Ogden LDS Temple from the front porch. It will have even better views when the Temple is rebuilt later next year. If you are interested in seeing this property in person, give me a call or email me.
Thursday, September 9, 2010
Density Destruction and the Economy of Rents
Unless you have lived on a different planet for the last three years, it is very apparent that we are in a period of economic contraction/stagnation/malaise. This has created uncertainty about the future in the minds of many people and this attitude change has had a direct impact on the rental market. However, the results of this change may surprise you.
Before I get started, lets queue today's visual of a plat map of my street (click to enlarge):
When people think of hard economic times they think of things going down: Property values go down, incomes go down, vacation time and spare time go down. At least that is the general mind set.
With that expectation many people expect rents and occupancy rates to go down as well. However, a survey of the market reveals that this is not happening. In fact, in some cases, rents are going up! What is going on here?
To help us understand what is happening we need to look at rentals with an eye toward supply and demand. Lets review the basics of demand for housing in general:
1. Everyone needs a place to live
2. People typically pay 30%-40% of their income to pay for shelter
3. An increase in jobs increases demand for all housing and vice versa
4. Population growth increases demand for housing.
5. Obsolescence decreases demand for housing.
What we are seeing in the market is a very interesting increase in demand for most rentals. The extra demand is coming from individuals who are losing their homes to foreclosure or otherwise needing to consolidate their housing expenses. Also, many qualified people do not want to buy a home due to the uncertainty of their future employment. However, they are willing and able to rent and do so. Our state population continues to grow which pushes demand upwards.
Also, at the same time, the supply of available rental housing is being constricted. Many rentals, shaded red in the graphic above, are vacant due to poor condition or obsolescence. Many of these buildings have foreclosed. Once the bank owns them, they are taken out of the supply pool until a landlord can buy them and restore them to tenable condition. The financial barriers to purchasing these kinds of rental units are many and therefore most of these units are sitting vacant while the banks wait for market conditions to improve.
Another factor affecting the Ogden rental market in particular is the drive to consolidate sub-divided houses and demolish unsavory property. In the last several months, I have watched 12 rental units in my area be eliminated through demolition. Last year, the condo complex at 23rd and Quincy burned and that removed 30 units from the market. Also, last summer, 5 units burned behind my home and eliminated those from the marketplace. I am aware of two separate fourplexes in my neighborhood that lost their non-conforming use certificates and now must be restored to single family homes. That is eight units turned into two.
Lets look at the figures for my neighborhood. Under ideal circumstances, 84 of the 89 available units on my street would be rented. The ambient vacancy rate even during good times is around 5%. However, today 14 of the units are bank owned and unavailable to rent. The supply pool is reduced 15% to just 75 units because of market distress. With potential demolitions looming over the horizon for some of these homes, that rental pool will be reduced much more.
The bottom line is that rents are maintaining their pre-recession levels in the Ogden market. I have raised my rents quite a bit over the last year. So, if you are nervous about rents, don't be. The dynamics that are in place will be here for quite some time. When the economy improves, rents will increase again as wages increase. But, it's better to own your rentals before that happens because prices tend to go up then too.
Before I get started, lets queue today's visual of a plat map of my street (click to enlarge):
When people think of hard economic times they think of things going down: Property values go down, incomes go down, vacation time and spare time go down. At least that is the general mind set.
With that expectation many people expect rents and occupancy rates to go down as well. However, a survey of the market reveals that this is not happening. In fact, in some cases, rents are going up! What is going on here?
To help us understand what is happening we need to look at rentals with an eye toward supply and demand. Lets review the basics of demand for housing in general:
1. Everyone needs a place to live
2. People typically pay 30%-40% of their income to pay for shelter
3. An increase in jobs increases demand for all housing and vice versa
4. Population growth increases demand for housing.
5. Obsolescence decreases demand for housing.
What we are seeing in the market is a very interesting increase in demand for most rentals. The extra demand is coming from individuals who are losing their homes to foreclosure or otherwise needing to consolidate their housing expenses. Also, many qualified people do not want to buy a home due to the uncertainty of their future employment. However, they are willing and able to rent and do so. Our state population continues to grow which pushes demand upwards.
Also, at the same time, the supply of available rental housing is being constricted. Many rentals, shaded red in the graphic above, are vacant due to poor condition or obsolescence. Many of these buildings have foreclosed. Once the bank owns them, they are taken out of the supply pool until a landlord can buy them and restore them to tenable condition. The financial barriers to purchasing these kinds of rental units are many and therefore most of these units are sitting vacant while the banks wait for market conditions to improve.
Another factor affecting the Ogden rental market in particular is the drive to consolidate sub-divided houses and demolish unsavory property. In the last several months, I have watched 12 rental units in my area be eliminated through demolition. Last year, the condo complex at 23rd and Quincy burned and that removed 30 units from the market. Also, last summer, 5 units burned behind my home and eliminated those from the marketplace. I am aware of two separate fourplexes in my neighborhood that lost their non-conforming use certificates and now must be restored to single family homes. That is eight units turned into two.
Lets look at the figures for my neighborhood. Under ideal circumstances, 84 of the 89 available units on my street would be rented. The ambient vacancy rate even during good times is around 5%. However, today 14 of the units are bank owned and unavailable to rent. The supply pool is reduced 15% to just 75 units because of market distress. With potential demolitions looming over the horizon for some of these homes, that rental pool will be reduced much more.
The bottom line is that rents are maintaining their pre-recession levels in the Ogden market. I have raised my rents quite a bit over the last year. So, if you are nervous about rents, don't be. The dynamics that are in place will be here for quite some time. When the economy improves, rents will increase again as wages increase. But, it's better to own your rentals before that happens because prices tend to go up then too.
Wednesday, September 8, 2010
JUST SOLD! North Ogden Giant
I worked with a buyer recently who needed to find a home that had architectural appeal but also was a good value. After previewing many homes and hours of screening, we finally were able to view the inside of this home in North Ogden. The home was listed at $448,000. We pulled the trigger and our final purchase price: $400,000.
Not a bad deal for 4860 fully finished SQFT built in 2007. I particularly like the use of clipped gables and staggered roof lines on this home. The interior was finished excellently with 10 foot ceilings in the basement.
Tuesday, September 7, 2010
Things to Do In Utah: The Heber Creeper
Our family spends a lot of time in Heber Valley. It's been a rendezvous spot for my family for quite some time now. Yet, despite the time we spend there, I am always finding new things to do.
This year's Labor Day experience took us to the Heber Creeper. What is the Heber Creeper you say? Well, its a train that runs on the rails that traverse Wasatch County and Deer Creek Reservoir to Provo Canyon.
We took the kids because we thought an old fashioned train ride would be fun for them. The Heber Valley Railroad is supposed to be a nostalgic experience since the cars are vintage and very well maintained. Its kind of like a working museum.
I was very impressed with the condition of the old cars and the attention to detail.
To understand why they call the train a "Creeper", you simply need to watch the scenery pass by. I don't think we exceeded 25mph the entire 20 minute trip.
The kids had a great time however. They were full of excitement and wanted to share that with us. On one part of the trip, the rail runs right through a brand new subdivision of large homes.
My oldest daughter, who is eight, leans over to me and says in a very excited yet sincere tone:
"Dad, these people are the luckiest people in the world. They get to see a train full of people go by everyday and they can see it right from their very own back porches!"
Ah, yes. A railroad passing through the back yard is a big bonus in the eyes of the scrutinizing mind of an eight year old home buyer.
I love my kids.
This year's Labor Day experience took us to the Heber Creeper. What is the Heber Creeper you say? Well, its a train that runs on the rails that traverse Wasatch County and Deer Creek Reservoir to Provo Canyon.
We took the kids because we thought an old fashioned train ride would be fun for them. The Heber Valley Railroad is supposed to be a nostalgic experience since the cars are vintage and very well maintained. Its kind of like a working museum.
I was very impressed with the condition of the old cars and the attention to detail.
To understand why they call the train a "Creeper", you simply need to watch the scenery pass by. I don't think we exceeded 25mph the entire 20 minute trip.
The kids had a great time however. They were full of excitement and wanted to share that with us. On one part of the trip, the rail runs right through a brand new subdivision of large homes.
My oldest daughter, who is eight, leans over to me and says in a very excited yet sincere tone:
"Dad, these people are the luckiest people in the world. They get to see a train full of people go by everyday and they can see it right from their very own back porches!"
Ah, yes. A railroad passing through the back yard is a big bonus in the eyes of the scrutinizing mind of an eight year old home buyer.
I love my kids.
Monday, September 6, 2010
Resort Ruins Rehash
About a year ago I posted Photo of the Day: Resort Ruins where I presented a decaying luxury home in Midway, UT that had been framed and sheeted but never dried-in.
While on vacation this weekend I drove by the same home. But before I show you that picture, for comparison, here is the picture from last year:
According to the locals, the home was fitted with windows just three months ago. Here is a photo of the home today:
Poof! Its gone! I suspect the home was so deteriorated from weather that the city condemned the property. They razed the foundation and all. It will be very interesting to see how long it takes for another home to be built on this lot.
While on vacation this weekend I drove by the same home. But before I show you that picture, for comparison, here is the picture from last year:
According to the locals, the home was fitted with windows just three months ago. Here is a photo of the home today:
Poof! Its gone! I suspect the home was so deteriorated from weather that the city condemned the property. They razed the foundation and all. It will be very interesting to see how long it takes for another home to be built on this lot.
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