The Low Down Dirty Mortgage Poop

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2012

            Utah’s rate of foreclosed homes has dropped 49% in the first three months of 2012. That should be great news for home sellers, right? Maybe property values will stabilize or stop falling?  Hold onto your bootstraps-Salt Lake City is still in the top of the pile of mortgage muck for the nation in foreclosures, according to RealtyTrac, Inc (a national data track service).  Data released last week by RealtyTrac Inc. shows one in 415 Utah housing units saw a foreclosure filing in March. That’s still behind the rates of most of our neighboring states but we’re in the top seven in the U.S. Arizona, Nevada and California are all about tied for bad news, in that-1 in 300 homes in those states are in the foreclosure process. In addition, Utah is 1:415, Colorado 1:591 and Idaho 1:839. And the really creepy part to these statistics is that RealtyTrac reported that more U.S. homes in general are entering the foreclosure process this year and “setting the stage for a surge in properties repossessed by lenders this year.” 

            Hear that wet sucking sound as you pull your shoe out of the mortgage mud? That’s the unpleasant noise of more foreclosures, which equals lower home prices. As a seller, that stinks. For buyers, this is great because lower prices means better deals.  Even if Utah may be experiencing a brief respite from foreclosure filings, the nation is up 7% this year in first time foreclosure notices says RealtyTrac, Inc.

            How does a foreclosure work here is Utah? First, we don’t have state laws that usually make your lender take you to court if you’re late on your payments. Most lenders just have to file a notice of default against you after you’ve become late at the County Recorder’s office. The lender can do it in person or on line. They also have to send you a notice of default to the address they have on file on you.  Once that notice is filed, you get three months before the property is sold at public auction…supposedly regardless if you claim you never received the notice.

            You can make up your payments and any late fees within those three months. Be very careful how you make the payments to the lender to insure you get confirmation they’ve received the monies. If you don’t pay up though, 20 days before the ‘sale date’/ auction date a notice is taped up, stapled or nailed onto your property for you and all your neighbors to see. I saw a notice the other day when I was visiting friends at a townhome. The paper was attached with blue tape onto the middle of the front door of a vacant property next door my friends townhome. We walked over to get a look at what the notice said as we were leaving for dinner. By the time we got back from our meal, the notice had been removed. It’s embarrassing as hell to have a foreclosure notice put on your property!  The lender also may run three weeks of ads in the local paper about the sale (per law) to add salt to the wound.

            Foreclosure sales are held as public auctions at the county courthouse with the property going to the highest bidder. If the sale price is above and beyond the amount owed to the lender, the extra monies go first to any junior lien holders and then to the borrower.

Help For Second Time Homebuyers

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2012

   The State of Utah has a pretty terrific non-profit that helps lower and middle income families here own homes. They’ve not necessarily been known as the ‘second time’ loan brokers, but with the economy as such, Utah Housing Corporation  is now providing second mortgages to current and previous home owners as well as first time home buyers, for the down payment and closing costs required to purchase a home.

    This public corporation was created by the State legislature in the mid-1970’s to raise money to assist in creating housing purchase opportunities for low income Utahns.  You have to go to a lender to actually get a UHC loan, as they just raise the funds and oversee them, and sadly foreclose on you if you don’t pay back the funds.  Think of UHC as your friendly local group of folks who want to get you into a home and work with lenders to help you with a down payment to get into that house or condo.

     UHC can help you get 6% of the sales price towards a down and the mortgage closing costs of a home loan. For first timers you have to have a credit score of at least 660 and not make more than $57,300 to buy a home or condo up to $250,000. With the new ‘HomeAgain’ or second time purchase, UHC provides money for a down payment via a 30 year fixed-interest second mortgage loan that is 2% more than the rate on the first mortgage. The HomeAgain loan can be granted to sales prices up to $320,000 to people with an income of no more than $81,000.

     It’s good to mention, too that Utah Housing Corporation is also give out help to folks who have credit scores of 620 or above, with a maximum income of $81,000 and a sales price of no more than $250,000. The down payment /closing cost assistance on this loan is up to 4%.

      The bottom line of this help is that you are going to get a first mortgage at a really good interest rate (under 4% right now) and the second mortgage that’s going to help you get into the house with down/closing cost help is going to be at 2% more, say 6%, for the life of the loan.   When you add it up, it’s still cheaper than rents these days.  Is there any ‘catch’ to this great loan program?  Yes, no part of the property can EVER be rented out. If you all of a sudden have to move and can’t sell your property and must try and rent it, Utah Housing will call your note due immediately if they discover you being a landlord.

      For more information, go to www.utahhousingcorp.org. You must go in person or apply online with one of the 40 mortgage lenders or 300 bank branches around the state to apply for the loan program.  Obviously I can’t list all the lenders here who do Utah Housing loans, but I can guide you enough to say that any lender that offers FHA/VA loans generally does these programs and that I think it’s a really great option for folks who don’t have quite enough money for a down payment.