How To Buy and Bail.....or Bail and Buy! Via Jessica Sulliman (Ashby Realty Group, LLC):

568048 — Tue, 04 May 2010 22:57:00 GMT

Ok, not really, that was a joke. I can only imagine the extent of hate mail I would receive if I were truly offering actual "buy and bail" instructions or tips. I am simply providing the information regarding what terms you or your client will need to meet to qualify if you/they choose to retain their home and purchase a new one.....or bail on the old and eventually buy again. 'Buy and Bail' refers to the increasing number of home buyers providing misleading information about their intention to rent their current home which they, in fact, plan to vacate. In many cases, however, the true intent is not to turn the property into a rental at all. What lenders are seeing more and more is that these buyers simply abandon their former property, stop making their payments, and simply let it go into foreclosure. Although not everyone who is vacating one property for another has the intention to abandon their previous home, those who do have caused FHA, Fannie Mae, and Freddie Mac to take steps in order to prevent this activity and have deemed it to be fraudulent. The following requirements must be met when a borrower is converting their primary residence into an investment property and looking to purchase a new primary residence: FHA Must be able to qualify with both mortgage payments unless they meet one of the following: -The borrower is relocating with a new or existing employer -The borrower has a loan-to-value (LTV) ratio of 75% or less -Must be able to document an executed lease agreement of 1 year or more and must provide evidence of a security deposit and/or first month's rent. Fannie Mae/Freddie Mac -Must be able to qualify with both mortgage payments unless the borrower has a LTV ratio of 70% -If 30% equity exists, 75% of the rental income may be used to offset the mortgage payment. -Rental Income must be documented with a copy of the fully executed lease agreement -Receipt of a security deposit from tenant and deposit into the borrower's account must be documented. -Reserves of six months PITI (Principle, Interest, Taxes, Insurance payment) for both properties is required. Will this prevent the buy and bailers from buying and bailing? No way, Jose, but it has absolutely made it a bit more of a challenge and will definitely curb those who can't qualify for both mortgage payments. There are also other options. For those that are underwater on their home and are looking to do a short sale or Deed in Lieu, there is hope! Struggling borrowers who give up their homes through short sales or deeds in lieu of foreclosure will be able to obtain new Fannie Mae loans in two years instead of the traditional four. This new policy takes effect in July and is designed to make foreclosure alternatives more attractive. There are some stipulations, however. To qualify for a new mortgage after the two-year wait, Fannie Mae borrowers must make a 20 percent down payment. Those who have lost jobs or have other extenuating circumstances can make a 10 percent down payment. Also, this program applies only to Fannie Mae loans. Freddie Mac intends to make homeowners wait four years after a short sale or deed in lieu of foreclosure. Owners who go through an actual foreclosure wait five years for both Fannie and Freddie, or three for FHA, but they can contest that if extenuating circumstances exist.

Rediscovering the “Where of our Happiness”

568048 — Thu, 22 Apr 2010 23:29:00 GMT

I have always been a strong advocate that real estate is, and always will be, a viable long-term investment. The days of pure speculation in the market for short-term gain appear to be gone with good reason. Real estate has attributes that cannot be replicated in other investments, such as providing comfort and shelter, pride of ownership, a place for families to gather, and a legacy to hand down to future generations.

The physical amenities that have made Bozeman and the surrounding area such a remarkable place to live are undeniable. However, the good news is that current market conditions now offer outstanding opportunities to consider making the purchase of a lifetime. Interest rates remain attractively low, and area prices have receded in some market segments to near 2004 values, creating favorable conditions for investors.

To give a snapshot of our current market conditions, as of March 31st , there were 792 homes (both over and under 1 acre) available for sale according to Southwest Montana Multiple Listing Service. This data encompasses Bozeman, Belgrade, Manhattan, Three Forks and the surrounding area. The average list price for these homes is $594,807. Year-to-date, there have been 138 sales of homes in this same geographical area at an average sales price of $304,978. As for the condo/ townhouse market, there were 309 units for sale at an average price of $220,599. There have been 37 sales thus far in 2010 at an average sales price of $173,410. Vacant land is readily available with 1597 parcels on the market at an average asking price of $245,726. There have been 52 closing this year with an average sales price of $79,153.

The good news, which has continued for the past 6 months, is that sales are up year over year. From October 1, 2009 through March 31, 2010, homes sales are up 48%, condos sales are up 53%, and vacant land sales have increased 85% from the previous year. Inventory levels continue to decline, in some market segments to a 4 year low. We are seeing lots of new housing starts in affordable entry level price points.

In the Big Sky area, there were 156 homes available for sale at an average asking price of $1,606,087. There have been 8 sales in 2010 at an average closing price of $1,060,975. Likewise, there are 262 condo/ townhouse units on the market at an average price of $575,185. The 22 multi-family homes that have sold this year did so at an average price of $384,259. As for vacant land, there are 248 available parcels averaging $932,532 and 6 sales year-to-date at an average sales price of $353,666.

Again Big Sky’s trend lines mirror Bozeman’s, with home sales up 82% (October 2009-March 2010) over the previous year. Condo sales have increased 176% and vacant land 7%. There is also good sales activity being reported from the Yellowstone Club, which is not included in our MLS numbers.

One particularly strong factor in the region’s vitality is that the second home buyer appears to be returning to the marketplace. Baby Boomers, who are equipped with cash and understand good value when they see it, will continue to regard Bozeman, Big Sky and Livingston/Paradise Valley as a viable place to purchase a home for investment and vacation purposes. Our local real estate market currently has competitively priced properties that should be very attractive to savvy buyers. With a desire to return to the small town values many were raised with, our area gives the perfect combination of a strong sense of community with access to recreational and cultural amenities.

I am reminded of the book Life 2.0 by Rich Karlgaard, where the author discusses “ how people across American are transforming their lives by finding the Where of Their Happiness.” Chapter 10 has several references to Bozeman, and they are as relevant today as when first published in 2004. Even with a 27 percent increase in population since 2000, Bozeman retains its “small town appeal” and local flavor. In our current challenged national economy, many people are now considering a wider range of re-employment or entrepreneurial options. For those whose employment situation has changed, the opportunity to leave corporate positions and the “big city life” offers a wealth of opportunity for communities such as ours. The potential of placing “quality of life” over the “rat race” has much appeal. While deciding where to settle, it’s no wonder Bozeman has been given its fair share of national attention.

The reasons why so many of Bozeman’s inhabitants choose to live in this area are often not directly related to career advancement or extremely high earning potential. And much to our benefit, they include choosing to live where you love to be. For those of us who have lived in the region for most or all of our lives, we truly tend to take for granted the fact that we live in a place where many people save all year to spend a week of vacation. In fact, many people who move away from the area to “see the world” often find themselves immediately starting to plan on how to come back. We have the opportunity to live in the midst of clean air, open space, near Yellowstone Park, all the while enjoying mountain splendor and views that go on for miles.

This all suggests that proximity to a wide variety of recreational opportunities is a prime factor that draws tourists and new residents to our community. I remain convinced that all of the ingredients that make our “special place on earth” so desirable will cause us to weather the current economic challenges and emerge not only as a sought after destination tourist location, but as a premiere second home market. Wherever I travel, I hear the same song, “If I could live anywhere, I would live in Bozeman.” I wholeheartedly agree

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How To Buy and Bail.....or Bail and Buy! Via Jessica Sulliman (Ashby Realty Group, LLC):

Rediscovering the “Where of our Happiness”