Recently, I have had the opportunity to become familiar with Casas del Oso, a custom luxury home builder in Scottsdale, Arizona. They build the most beautiful homes based upon the romantic architecture of Spain, Italy & Mexico. Most of their homes are located predominantly in golf communities in the greater Phoenix area.

I had the chance to tour one of their homes, and I must tell you, the craftsmanship, care and passion is very impressive and nothing but stellar. Over the past few months, I have also had the opportunity to speak with Barry and Christy Smith, the owners of Casas del Oso. Barry is the architect of the homes they build. He has a deep passion for building the client’s life experiences and lifestyles into their homes. He takes great pride in the close relationships they build with clients and the authenticity and craftsmanship these homes bring to the neighborhoods. These homes are truly a work of art.

Barry explained to me how when meeting with clients, he takes their passion, heart and soul and creates an authentic home that meets their needs, wants and desires. As no two clients are ever the same, Casas prides itself on its innovative design. Barry feels that every home they build is custom designed and calculated to meet each homeowner’s specifications.

Don’t take my word for it; head on over their website and take a look at the slideshow under “the details” section. It is truly amazing!

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This loan is not available to everyone and there are restrictions, but there are plenty of borrowers out there for whom this can be a great fit. The USDA Guarantee Rural Housing program is available to homebuyers purchasing a home in a rural area. The area must be defined as rural by USDA Rural Development and eligible properties cannot produce income (so no investment properties allowed). To determine if a property is within an approved area the USDA website has tools to help you identify them. So, if you have a property in mind, go ahead and enter it in and see if the property is located in an eligible area.

There are many advantages to the program. Such as:

1. 100% financing for first-time and repeating homebuyers.
2. No limit on seller contributions of gift funds from acceptable family, friends or non-profit organization.
3. No Maximum loan amount.
4. 30 year Fixed Rate.
5. No monthly mortgage insurance.
6. No reserve requirement (you do not need to show you have sufficient money to cover a mortgage payment for 2-3 months)

Keep in mind that even if you do meet the property requirement there are other requirements specific to your situation. So for borrowers to qualify they must be purchasing a primary residence, not own any other real estate and must meet income limitation requirements. Additionally, income from all household members over the age of 18 must be counted in household income. This household income may not exceed the moderate income levels set by the USDA for the area. Again the USDA website has the details to see if you meet this income limitation.

The USDA Guarantee Rural Housing program has become to mortgage of choice for most borrowers who qualify for the program and want to put a minimal amount down. Arizona homebuyers purchasing a home in the towns of Maricopa, Buckeye, Queen Creek and many other communities will find this mortgage to be a very attractive option.

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My good friend Jennifer Furrier is organizing a seminar in January on being organized. Sometimes the only thing standing in the way between resolutions and results is a plan. It looks like Jennifer’s seminar could go a long ways towards helping develop a solid plan. In this seminar she says she “will provide simple and effective solutions to become better organized and more efficient with time management.”

Here is a little introduction she sent me about the upcoming seminar:

Do you plan on working another 365 days of your life? What’s that you say? Oh, more than that! Then WHY continue putting up with the stress and angst that comes with disorganization? How about working those upcoming years being more organized, efficient, productive and effective than ever before? These days, maximizing the way you spend your time is more important than ever! Take your business to the next level by attending a one-of-a-kind, info-packed seminar that guarantees you’ll walk away with tools you can immediately implement to start 2009 off on the right foot.

She’s offering a $30 discount if you register before January 1st. Otherwise its $79 for this one day event. Download the PDF for details and registration information. Her website is EssentialOrganizing.Com if you’d like to learn more about her company.

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Hitched to the economy
Divorce rates drop as couples realize it’s cheaper to stay together
By Marty Orgel

SAN FRANCISCO (MarketWatch) — The recession and economic turmoil is creating a new class of casualties: Married couples who can’t afford to get divorced. In these tough times many people are finding it’s cheaper to stay together, even when they can’t stand each other.

“The reason that the economy has such an enormous impact on divorce is that most people in the middle-income brackets are getting by on whatever income they have. They’re just getting by,” said Bonnie Booden, a family law and divorce attorney in Phoenix.

A major factor in the divorce downturn, Booden said, is divorced couples have to establish two separate households with current funds — a prohibitive factor when you’re looking at divorce in tough economic times.

Booden said one out of every two clients is seeking consultations because they can’t afford to get divorced. They want to know what other options they might have.

“I tell them about the process, about the cost, and what a reasonable outcome might be. And once they hear the cost, and especially how you have to duplicate two households on the same money that currently funds one household, they try to think about some other options,” she said.

Who knows maybe something good will come out, as couples stick “around” and weather the storm together.

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Two Rivers is meets at 645 N Gilbert Rd (corner of Gilbert and Guadalupe Rd).  The church office number is (480) 892-2435 just so you have it.

If you decide to come, don’t forget to say hi, we’ll be in attendance.

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No surprises here – a high of 4F in Madison today and 40F with rain forecast for Wednesday in Boston. Gilbert has the best weather of them all. Lots of houses here guys. Come on over!

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Read WSJ story related to this video.

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A little after 5pm we received a call stating that one of these buyers had an accepted contract. Aimee quickly jumped on the Home in Five website (lenders only) to reserve funds. She was stunned! There was only $229,000 left at about 5:25PM. This is a depletion rate of about $585,000 per hour! Wow.

Moral of the story is that these funds go fast. With 100% loans scarce everyone is looking for down payment assistance. There are still programs like the Home in Five out there which are available to needy borrowers, it’s just that there are lots of restrictions attached to them and oftentimes its only available on a first come first served basis.

Fortunately our borrowers loan size was smaller than fit under the available funds, so we were able to reserve the money for their purchase.

Read more on the Home in Five Down Payment Assistance Program.

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The problem is the average consumer is not tremendously financially savvy. And therein lies the problem. When option arms were marketed to the average Joe as a financial vehicle, loan originators who themselves are not tremendously financially savvy saw an opportunity to sell more house for lower monthly payment. I’m not trying to put the onus solely on the originator here either. I am of the opinion that the head of every bank in the United States fully knew what they were selling to the average borrower.

I remember a borrower a few years ago who insisted beyond any reasonable persuasion that he wanted to be in such a loan. He said that the payment on the 5/1 ARM I was proposing was to high and he wouldn’t’ be able to afford the house after a few years. However, with the option ARM a different lender had proposed he would be “comfortable”, so if I didn’t give him a similar option he was going to go with the other lender.

This borrower had no business being in an option ARM. Not only was he relatively financially unstable, he was trying to live way beyond his means, counting on future income and future equity to compensate for the short term loss. This was never the market for the option ARM and these types of borrower had no business being in this type of loan. In fact I wrote a post back in 2005 warning borrowers about the dangers of the option ARM. I wanted to remind folks that despite how things were being advertised as a borrower you are still obligated to pay back the full loan amount with any accumulated interest.

And it is because of stories of such borrowers over the past few years that today we sit where we are. Today, Wachovia, one of the largest underwriters of option ARM’s pulled the plug on these negative amortization loans. Here is the news clip from Fortune magazine:

Wachovia (nyse: WB – news – people ) announced Monday that it is pulling the plug on it’s Pick-a-Pay program. The pay-what-you-will exotic loan offerings weren’t exactly subprime –the borrowers were a bit better-heeled Alt-A types– but the default rates on the loans have been much higher than expected and have been driving the lender’s losses.

The loans gave borrowers the option of paying several amounts each month, including low payments that led to an increase in the principal amount of the loans.

Not only did they stop the program they also have said they’ll waive the prepayment penalties on these loans as well. Most option ARM included three year hard pre-payment penalties. So whether you sold or refinanced the loan within the first three years you had to pay a prepayment penalty. With the fall in home prices adding to negative amortization more than they had figured things are not looking good that the banks can make money on these. So, Wachovoia took a long hard look and decided to cut their losses. According to Housing Wire:

Wachovia also said it will waive all prepayment fees for borrowers looking to refinance out of an option ARM, a clear indication of the stress borrowers in such loans are now facing; the bank recently hired Goldman Sachs Group Inc. (GS: 174.90, +0.19%) in an effort to help it figure out what it should do with the Option ARM loans on its books.

As you can tell it’s not just the consumer who is in pain here, Wachovia is hurting too.

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As promised here is a link to the Powerpoint presentation from yesterday. Additionally, I have posted the video of a class I did on setting up a WordPress blog at the Arizona RE Bloggers Network meeting last month.

Arizona Real Estate Bloggers Network Meeting – May 2008 from phoenixrealestatelive on Vimeo.

I do mortgages on the side to support my blogging habit, so please feel free to refer any clients who may be in the market and need a good quality lender! If you browse through this blog you’ll realize that Aimee and I certainly know what we’re doing and we have a history of providing 100% customer satisfaction!

Just a friendly reminder

Post Updated Monday June 16th. Here is the powerpoint slide from my presentation via SlideShare:

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