Arizona Real Estate Notebook

The funky new housing bill has me in a funk this morning. The more I look at it, the worse it looks.

The new housing bill continues the credit tightening we’ve seen for at least a year.

Since mortgage money more or less collapsed last summer, FHA loans have been a life line for the real estate market. Now our rocket scientist legislators have made FHA loans LESS attractive. Thanks for nothing, guys!

Notice in the email I ripped off from Robyn Robertson of Suburban Mortgage the new FHA guidelines.

• Minimum downpayment is now 3.5%. It was 3%. Not good. For first time homebuyers, however, it can go down to 2.25% if they take a class.
• No down payment assistance allowed from the seller or any person that benefits financially from transaction. That makes perfect sense since those loans default at a crazy high rate apparently. If Mr. Homebuyer doesn’t have any money in the deal, he’s a heck of a lot more likely to walk away if everything doesn’t go according to plan. Nevertheless, it will lower home ownership.
• The current FHA loan limit of $346,250 in metro Phoenix is expected to DECLINE! Huh?

The new housing bill will guarantee that home prices continue to decline at a steep rate.

I guess the only “good” news is that prices will bottom out sooner with this new legislation.

On the other hand, prices may bottom out lower with this new legislation.