June 2008

FHA LOANS FILLING SUB-PRIME VOID

Loans backed by the Federal Housing Administration (FHA) are starting to fill some of the void that resulted from the sub-prime meltdown. In this year’s first quarter, the amount of FHA loans increased 126% over that amount from the first quarter of 2007.

The FHA requires its borrowers to make a down payment of at least 3% or have at least that much equity in their homes. Many sub-prime lenders offered no-down-payment loans and were less apt to verify income of the potential borrowers. The recent wave of foreclosures on sub-prime loans has severely diminished their availability. That has, in turn, led to the increase in FHA lending activity.

Guy Cecala publisher of Inside Mortgage Finance said of FHA borrowers, "If your choice is vanilla ice cream or no ice cream, vanilla starts looking good."

ELLIOTT® OFFERS FIVE TYPES OF REAL ESTATE SERVICE

As our new Web site indicates, ELLIOTT® & Company Appraisers offers five different types of real estate services. Appraisals have been our best-known services and continue to be. We also, however, perform evaluations, consultation, research and representation. These five types of service will be looked at in future issues of Elliott Appraisal News, but information about them can be viewed on our Web site at www.appraisalsanywhere.com.

BANKS RELUCTANTLY OWN MORE HOMES

As a whole, home-ownership is great, but don’t tell that to lenders who are forced to take control of more and more homes, due to the failure of the borrowers to pay their mortgages.

Another result of the staggering amount of foreclosures hitting the U.S. economy is that lenders and mortgage investors were stuck with 660,000 foreclosed homes in April, according to First American CoreLogic. The research firm noted that in January that amount was 493,000 and the previous January, it was at 231,000.

The current figure amounts to one in seven previously owned homes on the current U.S. real estate market. Many of these lenders are so desperate to get these homes off their hands that they are cutting the prices on the unsold ones every 20 days.

REAL ESTATE PRICES SKYROCKET IN VIETNAM

While foreclosures and other economic factors are actually leading to a downturn in average U.S. home prices, real estate prices are soaring in Vietnam. Investment from multinational corporations in that country is driving these prices up.

The San Jose Mercury News reported that a local Realtor named Cindy Nguyen returned to her native land and found out that the return on investment in Vietnam "is at least 200% in one year."

Another Bay Area Realtor, Paul Huang, who also does a lot of business in Vietnam, sees dramatic return on investment, but believes the housing bubble will burst in that country also.

"Assembly-line workers probably make $70 a month; the white-collar people, probably $150 a month," Hoang pointed out. "Not too many [people in Vietnam] can afford to buy real estate."

ASK MARTITIA

QUESTION:  Must an appraiser obtain a release from a previous client before appraising the same property for a different one? Also, in such a situation, is the appraiser required to disclose the assignment from the second client to the first?

MARTITIA: No and no. Some appraisers feel it is ethical business practice to request a release from their original client when they are appraising the same property for someone else, but this in not required by the Uniform Standards of Professional Appraisal Practice (USPAP). In fact, disclosure of an assignment from one client to another might conflict with an ethics rule in USPAP’s Confidentiality section that says, "An appraiser must protect the confidential nature of the appraiser-client relationship."

Martitia Mortimer, Elliott’s executive vice president, answers appraisal questions on a regular basis in Elliott Appraisal News.

QUOTES

"You never really hear the truth from your subordinates until after 10 in the evening."
                                                                                                         -  Jurgen Schrempp

"I have always thought the actions of men the best interpreters of their thoughts." - John Locke

"There is nothing noble in being superior to somebody else. The only real nobility is in being superior to your former self." - Whitney Young

"Hard work spotlights the character of people. Some turn up their sleeves, some turn up their noses and some don’t turn up at all." - Sam Ewing

"Opera is when a guy gets stabbed in the back and, instead of bleeding, he sings." - Ed Gardner

"Stress is an ignorant state. It believes everything is an emergency. Nothing is that important." - Natalie Goldberg

"My toughest fight was with my first wife." - Muhammad Ali

"Politics is the art of preventing people from taking part in affairs which properly concern them." - Paul Valery

"No one has a finer command of language than the person who keeps his mouth shut." - Sam Rayburn

"Advertising may be described as the science of arresting the human intelligence long enough to get money from it."
                                                                                                                                                                  - Stephen Leacock

Newsletter Editor: kevin@elliottco.com
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