Arizona Lifestyle Team | Phoenix Real Estate

HAMP Revamp?

Christie Giannetto — Sat, 27 Mar 2010 02:27:00 GMT

A US Department of the Treasury press release today announced a series of enhancements to the Home Affordability Modification Program (HAMP) aimed at helping some of the 11 million households whose homes are worth less than the full value of their loans....(read more)

Short Sale Frequently Asked Questions

Christie Giannetto — Wed, 24 Mar 2010 23:56:00 GMT

If you are an Arizona homeowner with negative equity and are considering a short sale, you probably have a lot of questions. The answers to the most commonly asked questions vary widely based on each person’s unique circumstances and it i s important...(read more)

Is loan modification realistic?

Christie Giannetto — Tue, 15 Dec 2009 14:24:00 GMT

Loan modification may be the best option if your monthly payments are more than you can afford, but you do not have significant negative equity in the property. Most loan modifications involve a temporary reduction in the monthly payment amount, called...(read more)

What is a Short Sale?

Christie Giannetto — Mon, 14 Dec 2009 21:41:00 GMT

Definition of a short sale: A short sale is the process of selling a property for less than what is currently owed on the loan(s) and negotiating with the lien-holder(s) to accept the proceeds of the sale and forgive or settle the remaining debt (deficiency...(read more)

SB 1271 Repealed - Good News for Arizona Homeowners with Negative Equity!

Christie Giannetto — Wed, 09 Sep 2009 20:18:00 GMT

Governor Jan Brewer recently signed HB 2008, which repeals SB 1271 and the changes to the anti-deficiency statute that were set to take effect at the end of this month. This is good news for Arizona Homeowners, especially those with negative equity who...(read more)

First Time Home Buyer Tax Credit . . . Act Now or Go Double or Nothin'?

Christie Giannetto — Fri, 04 Sep 2009 01:36:00 GMT

For all those apartment dwellers, roommate haters and those who just haven't been able to cut the cord, NOW is the time! But time is running out . . . in fact, there about four weeks left to find a home, make an offer and have it accepted in order...(read more)

SB 1271 - Serious Changes to Arizona's Anti-Deficiency Statute*

Christie Giannetto — Mon, 20 Jul 2009 20:21:00 GMT

As a REALTOR^® specializing in short sale negotiations, some of the most common questions I’m asked by clients considering a short sale include “Will I have to pay back the difference?” and “Can the bank come after me later?” The difference, also called “deficiency,” is the amount of debt remaining after a property is sold for less than the current balance(s) on the loan(s). For example, a seller that purchased a home in 2005 with “100% financing” might have two loans for $240,000 and $60,000, totaling $300,000 in debt secured by the property. In the current market, the property will probably sell via “short sale” for about $125,000 leaving $175,000 in remaining debt or “deficiency.” Naturally, when considering a short sale, the seller wants to know if they will be required to repay all or a portion of the $175,000 in a lump sum, an unsecured promissory note or, worse, if the bank can sue them for the deficiency in the future.

One of the greatest tools for negotiating short sales in Arizona is A.R.S. § 33-814, often referred to as the “anti-deficiency statute*.” This statute* provides an exception to the right of a debtor to recover a deficiency judgment after a trustee sale (foreclosure) for any single family home or duplex on 2.5 acres or less. What this means, in laymen’s terms, is that if you foreclose on a regular, single family home on a regular sized lot and the bank ends up selling the property for less than you owe, they can’t come after you for the difference. This is a powerful tool when negotiating a short sale because if your lenders know they can’t sue you for the deficiency later on, why would they bother to foreclose on the property, hire their own REALTOR^®, deal with marketing, maintenance and repair costs, etc., only to end up selling the property for the same amount or less than they are being offered in the short sale? Deficiency laws vary by State and since Arizona has had one of the most rapidly declining real estate markets in the country for the past four years, it’s fortunate that we are an “anti-deficiency” State.

The Arizona anti-deficiency statute* recently underwent some significant changes, however. On July 10th, the Arizona State Senate passed SB 1271, which takes effect on September 30th, 2009, amending the current law to require that a certificate of occupancy must have been issued on the property and that the trustor (also the owner, seller and borrower in most cases) must have “utilized” the property for at least six consecutive months. Ok, so what does all this mean?

First off, a certificate of occupancy is a document issued by a local government agency or building department certifying a building's compliance with applicable building codes and other laws, and indicating it to be in a condition suitable for occupancy. This would apply primarily to new construction homes that may not have been fully completed prior to the trustee sale (foreclosure). The majority of the clients I work with have properties that were completed in 2006 or earlier and that have already been occupied by the homeowner or a tenant, so the certificate of occupancy will not be an issue in most cases.

The requirement of the trustor to have “utilized” the property for a minimum of six consecutive months, however, is of major concern to some borrowers who wish to pursue a short sale. The good news is that borrowers who are currently using the property as their sole or primary residence are probably in the clear. Borrowers who have used the property in the past as their sole or primary residence, but who have already moved out the property before deciding to pursue a short sale are probably safe as well. (Although the new law does place the burden of proof on the trustor to demonstrate that the statutory requirements to prohibit a deficiency judgment are met.) Those who own “investment” properties they have never lived in will, however, will be affected by the recent changes to the law. I have spoken to several attorneys about this, including John Lohr, an attorney specializing in real estate law with Hymson Goldstein & Pantiliat, P.C. If “utilized for either a single one-family or a single two-family dwelling by the trustor” is interpreted to mean that the trustor must have lived in the home for at least six consecutive months, then owners of “investment” properties that they themselves have never occupied, will no longer be protected by the anti-deficiency statute* if the property is sold via trustee sale (foreclosure).

This change is likely to have a dramatic effect on the outcomes of short sale negotiations for borrowers wishing to negotiate a short sale on a property they have never lived in. In the past, my team and I have been able to successfully negotiate 100% debt forgiveness for sellers who have used the property as their primary residence as well as for investors who have never lived in the property themselves. With these new changes, however, we suspect that 100% debt forgiveness for non-owner occupied homes will become a thing of the past.

So what’s an investor with negative equity to do? While the outcomes and consequences have changed, the options are still the same. The first option is, of course, to keep the property and wait for it to appreciate to what is currently owed. A home worth $125,000 today will be worth $300,000 in about eighteen years (2027) assuming a rate of 5% annual appreciation. Option number two is to allow the property to go to trustee sale (foreclosure). You may be able to file bankruptcy to avoid paying part or all of the deficiency if the lender pursues a deficiency judgment against you. Loan modification may be an option (read more here), but for many people with investment properties they have never occupied, the best option may still be to hire the AZ Short Sale Team to negotiate a short sale. While it is unlikely that your lender(s) will forgive all of the remaining debt if you are not protected by the anti-deficiency statute*, in most cases we will be able to negotiate a settlement. A settlement is an agreement between you and the lender to pay some of the remaining debt owed either in a lump sum, an unsecured promissory note or a combination of the two. When the lender agrees to settle the debt, they are agreeing NOT to pursue a deficiency judgment so long as you, the borrower, hold up your end of the bargain. Our track record includes settlement negotiations as low as 5% of the total deficiency for lump sum payments and zero percent interest for unsecured promissory notes. For a borrower with $175,000 in negative equity, a settlement as low as $8,750 in one lump sum or spread out in payments on an unsecured promissory note with low or zero interest is a lot more appealing that a $175,000 judgment that could result in garnishing of wages and bank accounts or even bankruptcy.

If you own a home with negative equity, please contact me at Christie@AZLifestyleTeam.com for a free, no obligation consultation to discuss your options according to your individual personal and financial circumstances. Consultations are 100% confidential and, as always, our goal is to help you determine the path that is in your best interest personally and financially, both short and long-term.

*You are advised to consult legal counsel regarding the application of the anti-deficiency statute and all other legal matters.

Short Sale vs. Loan Modification; Weighing the Options

Christie Giannetto — Thu, 28 May 2009 01:38:00 GMT

As a REALTOR® specializing in negotiating short sales for homeowners who owe more than their property is worth in today’s market, I am often asked if loan modification is an option. The answer in short, is YES, albeit with a few caveats. Negotiating a loan modification is a very similar process to negotiating a short sale and I am happy to report that the AZ Short Sale Team finally has a few success stories to report for clients who found themselves having trouble making their monthly house payments, but who wanted to stay in the home. (More on this later.)

In order to successfully negotiate a loan modification, the homeowner must be able to demonstrate that their current payment is greater than 31% of their gross monthly income. That’s not all, however. They must also be able to document sufficient income to support a reduced payment. In other words, you can’t be broke. If you’re broke, then your best option is probably a short sale. But, if you have a steady, documentable income and can prove that you can afford to make a reduced payment, then loan modification may be a viable option.

The most common question that follows “Is loan modification an option?” is “Will they reduce the principal balance?” The answer, in short, is NO. In fact, a recent article published on CCNMoney.com reported that the HOPE for Homeowners program which was intended to prevent foreclosures by giving lenders incentives to reduce the principal balance of loans to 90% of the current market value of the property, has saved just ONE family from foreclosure in the five months it has been in effect. Seriously, just ONE family has benefited from a program expected to help over 400,000 families! The bottom line is that lenders are far more willing to reduce the interest rate on a loan – to as low as 2% for several of our recent clients – than they are to take the loss on the property unless you’re willing to give up the house (sell via short sale).

While loan modification is the right choice for some, many others feel that a reduced monthly payment simply isn’t enough. Many who bought during the “boom” years have as much 50% negative equity in their homes today. For a homeowner who paid $300,000 for a house that is worth just $150,000 today, a smaller payment simply won’t suffice since it will still be nearly fifteen years before the property is worth the original purchase price.* For households that need to move for employment or growing families, for example, staying in a home for the next fifteen years in order to make up for negative equity just doesn’t make sense. After all, even the minimal impact that a short sale will have on a borrower’s credit score will be wiped clean long before the home appreciates to its original “boom” value.**

If you own a home with negative equity, please contact us at LoanHelp@AZLifestyleTeam.com to schedule a free, no-obligation consultation. We will be happy to discuss your individual situation and help you explore the options available to you.

*At an annual appreciate rate of 5%
**In most cases

Government Offers $1500 Incentive to Homeowners who Pursue Short Sales Instead of Foreclosure

Christie Giannetto — Wed, 27 May 2009 00:25:00 GMT

The Obama administration recently unveiled updates to the Making Home Affordable program to make it easier for home owners who owe more than the current market value of their homes to sell those properties at a loss via short sale and have the remaining debt forgiven. The updates, announced by Treasury Secretary Timothy Geithner, address situations in which borrowers cannot qualify for refinance or loan modification through the program and are at risk of losing their homes. The administration will now provide additional financial incentives to lenders willing to work with homeowners to negotiate a short sale and avoid the long and costly process of foreclosure.

The benefits of “short selling” a home versus allowing it to foreclose are three-fold. The homeowner benefits by minimizing the damage to his or her credit, the lender benefits by avoiding the costs involved in a foreclosure and the community at large benefits by keeping prices stabilized and avoiding yet another empty, neglected property on the block.

Under the new plan, loan servicers will receive compensation of up to $1,000 per short sale accepted. As an incentive to avoid foreclosure, borrowers could also be paid up to $1,500 in relocation expenses. In addition, because many homes have second mortgages, the Treasury will pay subordinate lien-holders up to $1,000 to settle the debt and forgive the remaining balance.

“We have heard from REALTORs^® that the extensive delay in the short-sale process has caused many buyers to go elsewhere and has left many would-be sellers with no option but foreclosure,” Charles McMillan, president of the National Association of REALTORs^®, said in a statement. “We are all pleased that the government has stepped in to help homeowners and those wishing to buy a home.”

Has consumption gone out of style?

Christie Giannetto — Fri, 17 Apr 2009 04:48:00 GMT

A recent article on TheDailyBeast.com reported that Kathleen Fuld, wife of the former CEO of the now defunct Lehman Brothers, was seen exiting the Manhattan luxury purveyor Hermès with her goods in a plain white bag instead of a signature orange Hermès shopping bag. While her husband no longer sits atop one of the largest investment banks in the nation, the couple is obviously far from impoverished. One might think Mrs. Fuld’s attempt to veil her ongoing lavish spending habits was out of shame or guilt over her husband’s blunders which led the 158-year-old investment bank to its demise, but it’s more likely that ostentatious consumption has simply gone of out style.

Richard Fuld has been described as the symbol of everything that was wrong with Wall Street. Is Mrs. Fuld the symbol of everything that was wrong with Main Street? After all, the culture of conspicuous consumption was practically a national sport until recently. Who needs a savings account when you’ve got a $20,000 credit limit on your Visa? Why drive a road-weary Honda when you can lease a shiny new Mercedes? Equity in your house? Cash it in and buy a boat! Remember those days? You should; they weren’t too long ago.

As a REALTOR® specializing in negotiating short sales for homeowners with negative equity, I have witnessed the long-term effects of irresponsible spending and borrowing on a more intimate level than most. I regularly sit at kitchen tables with homeowners who are struggling to make their mortgage payments and answer questions about how a short sale will affect their credit and when they might be able to buy a house again. The men inevitably declare that “it’s a business decision” and remain emotionally detached while occasionally letting slip a hint of anger. It’s the women who cry. The women are the ones who picked out the paint colors and the window treatments and trekked the aisles of home improvement stores for the perfect dining room light fixture. The women have appreciated the large capacity front-loading washing machine and the stainless steel side-by-side refrigerator and are now wondering if they can take those things with them when they move. The women are the ones worried about what the neighbors will think and hoping we can sell the house without putting a sign in the yard. Lately though, I’ve noticed a significant change in the attitudes of those considering a short sale.

When I first got into the business, the stigma surrounding short sales was much greater than it is today. A short sale was seen as “almost as bad” as a foreclosure. Today, however, with property values in some areas at less than 50% of the mortgage balance, many homeowners are looking for ways to “start over.” Short sales are now viewed as a more responsible way to get out from under the weight of a bad debt without simply walking away and leaving the banks to deal with the mess left behind. Many people who choose to negotiate a short sale are able to cut their housing expenses by as much as two thirds and end up living in a comparable property in the same neighborhood. Instead of boasting about that new pair of Kate Spade sunglasses, people are starting to brag about cancelling their cable and selling their ATVs on Craig’s List. Getting rid of hundreds of thousands of dollars in negative equity and significantly reducing your cost of living has become another thing to brag about. For many, a short sale is a way to close out one chapter of life and move on to the next.

One client of mine recently confided that she and her husband plan to start a family soon. They’ve decided to pursue a short sale in order to decrease their cost of living. Instead of staying in their current home with mortgage payments totaling $2,500/month, they plan to rent a more modest home for $1,000/month while saving for a down payment on another home in the future. In doing so, they feel they will be providing a healthier environment for their future children by teaching them the principles of living below your means. Perhaps there are more important things in life than upgraded cherry cabinets and Prada purses? This kind of thinking is a far stretch from the “more, more, more” attitudes of the past ten years. It seems living more conservatively and staying within your means is finally en vogue. Ironic isn’t it? Personally, I find it refreshing.

Are your property taxes fair?

Christie Giannetto — Tue, 24 Mar 2009 18:34:00 GMT

Given the dramatic changes in property values over the past few years, you may be wondering if your property tax rate is fair or accurate. In Arizona, property taxes are based on the Assessed Value, which, for owner-occupied residential property, is ten percent of the Full Cash Value. So, if the Full Cash Value of your home is $300,000, you will be charged property tax based on the Assessed Value of $30,000.

Your tax rate will vary depending on where you live. The rates are determined by cities, schools, water districts, community colleges, bond issues, etc. The tax rate applied to each property is the sum of the state, county, municipal, school, and special district rates. The average tax rate for homes in Arizona is about 1.3% of the Full Cash Value (or 13% of assessed value). So, if your home is assessed with a Full Cash Value of $300,000, and your property tax rate was exactly at the average 1.3%, then you'd be paying $3,900 per year in real estate tax on your home.

In the past, the Full Cash Value of most properties in Arizona has been lower than the actual market value. However, with the steep decline in property values that has taken place in the past three years, this may no longer be the case. In fact, the National Taxpayers Union estimates that 60 percent of homes are overassessed. It may be worth your time to do some checking to see if your property-tax assessment is realistic.

You can find the assessed value for a home in Maricopa County on the Maricopa County Assessor web site. Each year, the Assessor will send an updated assessment on the value of the home, upon which your property tax computation is based. You probably got this in the mail recently. The Assessor's Office utilizes a combination of information, including previous sales in the neighborhood, distance from major intersections or areas zoned differently, topography, view, livable square footage, lot size and components, etc.. The valuation is determined by a computer analysis of the information gathered.

Valuing properties is an inexact science to begin with, but when paper records were transferred to computers, many errors were made -- or retained. If there's a mechanical error, the tax assessor may offer a property tax reassessment. If you don’t catch any blatant

Once you’ve entered your address into the Maricopa County Assessor web site, scroll to the bottom and click on “characteristics.” This page will show some of the details of your home. Check each item for mistakes such as the square footage or the number of bathroom fixtures (a “fixture” is a sink, toilet shower). You may also want to look at the Full Cash Value of similar homes in your neighborhood. Look for properties similar to yours in terms of age, style and features. If the assessments on similar properties are significantly lower -- 10% or more – you may want to consider filing an appeal with the County Assessor.

To successfully appeal your property value, you'll need evidence. Property profiles and web-page printouts are helpful, and photos can be especially useful if you're comparing the condition of your home with others. You have 60 days after receiving your tax bill to appeal the property tax and present your evidence for an administrative review. For more information, including forms to help organize your appeal, get the AHA's Homeowner's Property Tax Reduction Kit. The kit is free with a trial membership on the AHA website.

Of course, if your home is worth considerably less in today’s market that what you currently owe on the property, you may have bigger problems than an overinflated tax bill. If you’d rather get rid of the house altogether, you should consider a short sale which would allow you to sell the home for less than the current balance(s) owed. For more information, please visit www.AZShortSaleTeam.com.

If you are injured by an uninsured driver and disabled for the rest of your life, what are you worth? Is your *#! covered?

Christie Giannetto — Thu, 05 Feb 2009 18:12:00 GMT

When I moved to Arizona in 2001, I purchased my auto and homeowner’s insurance through American Family Insurance . . . and didn’t think about it again for seven years. You would think after being a customer for that long and insuring three homes and two vehicles, that I would have earned the best rates available. Think again!
Last year, I met Jayson Hoffer with Farmers Insurance (480-518-0747) and, believe me; I’ve never met anyone so excited about insurance! Jayson convinced me to let him review my policies for free with no obligation to work with him or switch to Farmers. I figured “Hey, what the heck . . . nothing to lose, right?”
I was shocked by what I learned. Jayson educated me on the real value of coverage. “What if someone who is uninsured hits you and you can never walk again? What are you worth?” According to my policy with American Family, I was worth $50k. Think about that for a minute . . . if I had been hit by a driver with no insurance and had been injured to the point of being disabled for the rest of my life, I would have received a mere $50,000 from my insurance company.
Today, Jayson Hoffer (480-518-0747) handles all of the my insurance needs which include three properties, two vehicles, life insurance, my business insurance plus an umbrella policy. With Farmers, I now have – and I’m not exaggerating – FIFTEEN times the coverage I had with my old insurance company.
And the rates? We are actually paying LESS than what we were paying before for a fraction of the coverage we have now. How is that possible? Well, for starters, my husband and I were not getting all of the multiple policy discounts for which we were eligible. It seems most insurance agents have an attitude of “If they don’t ask, don’t give them the discount.” Jayson also got us additional discounts based on our good credit scores and the fact that we do not have any tickets or accidents on our records. We had mistakenly assumed that we were already getting these discounts from our old company, but again, we learned that our agent with American Family hadn’t bothered to look out for our best interest. After all, higher premiums, meant higher commissions for him, right?
Jayson Hoffer (480-518-0747) simply doesn’t think that way. His number one priority is the best interest of his clients and he knows that by making sure each of his clients is getting the best coverage at the best rates available, he’ll ultimately earn the referrals of their family and friends . . . which is why I refer him to my friends as well as my real estate clients, every chance I get.
Speaking of real estate, Jayson also educated me recently on the issue of insurance for vacant homes. Since I specialize in selling foreclosure properties and negotiating short sales for clients who are “upside down” in their properties, most of my listings are unoccupied. Vacant homes are a concern for insurance companies because they are at higher risk for vandalism and theft. Also, a leaking pipe that otherwise would not be much trouble could turn into a big problem if left unattended. If the insurance company is not notified that the property is vacant, the policy could be cancelled if they find out, and a claim could be denied because of this, as well. Each insurance company has their own guidelines with regard to vacant houses and some won’t insure them at all. Jayson Hoffer (480-518-0747) informed me that Farmers has an affiliate company called Foremost Insurance that handles coverage of properties that don’t qualify for standard insurance. The Foremost Vacant Program sets itself apart from the rest by offering specialized coverages developed for the unique insurance needs of a vacant home and its owner.
If you haven't had your insurance policies reviewed recently or if you have a property that is vacant, I encourage you to give Jayson Hoffer a call at 480-518-0747 for a quote and make sure your *#! is covered!

Today Show Video: Myths on Buying and Selling Your Home

Christie Giannetto — Tue, 27 Jan 2009 17:34:00 GMT

If you didn't catch the Today Show yesterday morning, you might be interested in taking a look at this video. The Realtor featured makes some excellent points. She does say that it's not the "worst" time to sell and I'm not sure if I agree with her on that one. It may not be the "worst" time, but it's definitely not a good time! Over 50% of the homes that are selling in the current market are foreclosures or short sales and those are tough to compete with. For sellers who have negative equity and need to get out of a home, a short sale is an excellent option and, in many cases, a way to avoid foreclosure. People with equity in their homes, however, may want to consider waiting a year or two (or longer) before they sell. The big exception to this (as the agent in the video points out) is for sellers who plan to "move up." The savings from buying a bigger home in the down market will more than compensate for the lack of profit gained on selling a smaller home in the same market. ...(read more)

Consequences for 'Walk-Away' Borrowers

Christie Giannetto — Wed, 28 May 2008 19:18:00 GMT

The government and the lending industry are taking aim at “walk-away” home owners who stop making payments and months later send the house keys back to their lender.

Such borrowers will not be able to get another mortgage through Fannie Mae for five years, unless there are “documented extenuating circumstances.” In that case, the prohibition is three years. Even after the prescribed time has elapsed, a borrower with a foreclosure in his file will have to make at least a 10 percent down payment and have a FICO credit score of at least 680 to qualify for a Fannie Mae loan.

Freddie Mac, which counts foreclosures as major credit black mark for seven years, is now aggressively pursuing walk-away borrowers where permitted under state law, a senior official said.

Federal legislation enacted last year allows home owners who negotiate loan modifications with lenders and have portions of their principal debt eliminated to escape income tax liability for the amount forgiven.

Walk-away borrowers, by contrast, have nothing forgiven, and the Internal Revenue Service may demand taxes on the balance they never paid, the IRS says.

Source: Washington Post Writers Group, Kenneth R. Harney (04/12/2008)

Home Sales, Prices Seen Rising in Late '08

Christie Giannetto — Sat, 17 May 2008 00:43:00 GMT

Daily Real Estate News | May 16, 2008

Home Sales, Prices Seen Rising in Late '08

First, the good news: home sales have stabilized over the last seven months and should increase slightly in the second half of 2008, NAR Chief Economist Lawrence Yun told a crowd of REALTORS® at NAR’s Midyear Legislative Meetings & Trade Expo Thursday.

The other good news is that the subprime lending crisis is becoming a thing of the past. “I believe 2008 will be the year when we have to clean up and recover from the subprime mess,” said Yun.

The bad news is that the numbers are in, and 2007’s annual sales volume of about 5.30 million homes was the lowest in 10 years. Luckily, the economy is stronger overall than it was a decade ago. “The difference is that we have 25 million more people and 13 million more jobs than we did 10 years ago,” he said.

And while sales should begin to grow later this year, real improvement in the housing market won’t happen until 2009, when sales should climb to 5.71 million units, Yun said.

Price Gains to Vary by Market

Prices also are expected to begin a turnaround later this year, although recovery will vary by market.

Middle-America cities that performed evenly over the past few years – like Cincinnati, Milwaukee and the Kansas City, Mo., area – are likely to experience home price gains in the 20 to 30 percent range over the next five years, while markets like Miami, Las Vegas and Phoenix could see prices go up as much as 50 percent during that time period, Yun said.

Healthier Mortgage Market Makes a Difference

A brighter credit picture is a major contributor to this improvement, Yun said.

If you look at where home prices fell the most, it’s the markets were subprime loans were prevalent,” Yun said. Cape Coral, Fla.; Detroit; Las Vegas; Miami; Orlando, Fla.; Phoenix and Riverside, Calif. were among the cities with a high percentage of subprime lending and where the markets suffered the biggest downturns, he explained.

These markets should get a boost from a more stable mortgage market. FHA lending doubled to 6 percent of all loans 2007 and should grow to 10 percent in 2008. It should reach near-historic norms of 15 percent in 2009, said Yun.

The increase will be slow because many lenders will have to be certified by the U.S. Department of Housing and Urban Development before they can issue FHA mortgages. Higher conforming loan limits at Fannie Mae and Freddie Mac have also helped lower interest rates and unlock the lending log jam for jumbo loans.

Even current borrowers with adjustable mortgages are in better shape, thanks to Fed rate cuts. In fact, some adjustable loan borrowers may actually see their resets produce lower payments. “The Fed has done its job on resets; now it’s up to Congress to encourage the home buying that will help stabilize prices,” Yun said.

Other Reasons to Be Optimistic

The home buyer tax credit currently being considered by Congress would also encourage uncertain buyers to act. Stabilized prices will not only encourage sales but could help reduce defaults, he added.

The foreclosures aren’t all in the past, warned Yun, though he believes that many investors and speculators already have exited the market. He expects foreclosures to rise throughout 2008 and perhaps into 2009, primarily among subprime borrowers, where foreclosure rates were near 20 percent in the third quarter of 2007.

Still, Yun notes, it’s important to remember that only 9 percent of home owners have subprime loans. Foreclosure rates for all loan types are much lower — currently, around 2 percent.

— By Mariwyn Evans for REALTOR® magazine online