Gads I haven’t posted in quite some time. Summer has flown by. The wholesale mortgage landscape is going crazy right now - subprime lenders are dropping like flies. It’ll be interesting to see how it all plays out.

In other Utah news… football season is almost here and this year should be a fun one for Utah fans. Sorry BYU fans - you’ll most likely be back to another losing season

Home prices here haven’t started falling, that I know of, but I suspect it won’t be too long til we catch up with the rest of the country. Hold on tight kids it’s going to be an interesting ride.

For those of you who aren’t already aware, the mortgage business is going through a period of self-correction right now. By that I mean there are several loan programs that have drastically changed or gone completely extinct over the past month or two. This is both good and bad news.

Many have criticized the biggest lenders for accepting borrowers over the last decade or so that were too risky for traditional tastes, without making adjustments for more equity or mortgage insurance. Some even believed this would ultimately create a “credit bubble” that would eventually burst and cause widespread turmoil in housing both for businesses and homeowners. Well, we’re sort of seeing that right now. Foreclosures are way up and lenders are dropping like flies. The stock market has taken a beating because of all this as well.

The bad news is that it’s now harder for people with bad credit to get home financing and/or refinance their current loans. The good news is that hopefully the industry will learn a great deal from this experience and be able to prevent such a situation from occurring again in the future.

So, more than ever, if you want to buy a home be sure to make your payments on time, save up a little money for a down payment, and try not to overextend yourself with debt.

Inman News published a report that we may be seeing some new legislation that would mortgage fraud a second degree felony here in Utah.  We’re currently the second worst state in the nation for mortgage fraud (source), per capita.

As it stands now, the bill would view mortgage fraud much like racketeering, which would allow the state to seize illegally gotten assets in order to provide restitution to victims.

This would be a welcome change, in my opinion.   I’m not big on bigger goverment, but this is clearly a case where the goverment should be involved because it involves the enforcement of property rights.

Rep. Paul Ray from Clearfield is helping push this through - thanks Paul!

Rates have recently jumped up some, reaching their highest levels in the past several years.  With many people having ARMs (adjustable-rate mortgages), there are many with good reason to refinance into a fixed rate program or something similar before rate adjustments take place.

Typically, an ARM will adjust by 1% maximum in a single year, with a 6% adjustment cap on the life of the loan, however ARMs vary greatly so if you have an ARM you’ll want to look at the details of your particular mortgage.

On a positive note, rates are still relatively low (mid 6 range to high 6 APR for conforming 30 yr fixed) compared to oh, the 1980’s when rates were in the teens and even twenties.

It seems to be the case, at least for non-profit Habitat for Humanity, that rising land prices in the Saint George area have pretty much stopped new Habitat homes from being built. Check out this article from KSL.

It’s hard for me to believe that there is no available land anywhere around Saint George for less than $150,000 a lot, but if that is the case then it’s pretty remarkable that demand down there is so high. Perhaps there is room for a big developer to purchase land a bit further away from the hot spots and build some less expensive housing. It certainly sounds like it.

It will be interesting to see if Washington County median home prices topple approved FHA maximum loan limits, effectively nullifying FHA availability down there. That would be a major blow to the lower-middle class around Saint George as far as home ownership goes - especially for first time home buyers. FHA is not really an option (unless limits have been drastically increased lately) in the higher priced areas like California, Arizona, and Las Vegas. Hopefully St George doesn’t join that group.

Elsewhere in Utah the mortgage situation seems to be unaffected by the drastic increase in home values over the last year or so. FHA already increased it’s limits to around $225,000 along most of the Wasatch Front. So for the most part, getting a mortgage loan in Utah shouldn’t be too difficult for most people.

I recently posted about the IRS rescinding tax-exempt status from several non-profits acting as down-payment-assistance (DPA) charities, and how this would hurt buyers with low down payment money and some bumps in their credit.  Well, there’s still at least one DPA organization that is conducting business as usual, with full endorsement from the IRS and the FHA.

Buyers Fund is actually based in Utah - Provo to be exact.  They have issued a news release confirming their status as non-profit, with a link to the IRS website where you can lookup their charitable status on your own, if you like.  I did the search and sure enough, there they were.

(As a sidenote, you can look up the status of any organization that claims to be a charity on that page.  Might come in handy the next time you want to donate to a disaster relief fund of some kind.)

So what this means is that Borrowers who qualify for FHA loans are still able to also qualify for a 3% down-payment-assistance grant from Buyers Fund, making it easier to purchase a home.  FHA is a great program for many borrowers because it allows for dings in credit, has low down-payment requirements, and much better rates than subprime mortgages.  And believe it or not, FHA is one governmental organization that is completely self-funded and has been for many years.

There is a great deal of m&a (mergers and acquisitions) happening in the mortgage world right now.  The latest news is that Accredited Home Loans will be acquiring Aames Investment Corp. The company believes they will become the sixth largest retail mortgage originator in the country once the acquisition is complete.
Both Accredited and Aames do a great deal of mortgage origination (mortgage pros call that “retail”) and they also act as investors to smaller mortgage brokers (more commonly referred to as “wholesale”).  What’s interesting is that both Accredited and Aames specialize in non-prime loans, so their overall portfolio of loans is somewhat restricted to a higher risk category.

For consumers, this doesn’t necessarily mean a whole lot, other than if you currently have a loan serviced by Aames then you’ll probably start getting mail with Accredited envelopes and letterhead.

The FBI has reported that mortgage fraud losses in the United States more than doubled from 2004 to 2005.  The exact figures are $1 billion in 2005, up from $429 million in 2004.  Utah was listed in the top 10 states for mortgage fraud activity in 2004, per capita, according to the same report.

I’ve also heard that Utah is either number two or three for mortgage fraud in 2005, behind Florida, but I can’t confirm right now.  I will post a link to the source, once I can confirm.

Misrepresenting any information on a uniform mortgage loan application, including the source of a down payment, can be considered fraud.  Utah is considering legislation that would criminalize mortgage fraud.  So be accurate when completing your next mortgage application, whether it be to purchase a new home, refinance your existing loan, or take out a home equity line of credit (heloc).

This is some pretty big news in the mortgage and real estate world. The IRS decided to rescind the “non-profit” status of organizations that enabled buyers to purchase a home with no down payment on an FHA guaranteed loan. Without “non-profit” status, the funds coming from said organizations are no longer acceptable for use under FHA guidelines.

This will surely affect many would-be home buyers. There is talk from FHA, however, that changes to their guidelines may be forthcoming.

More information from RealtyTimes here.