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Is the Treasure Valley officially a "declining market"? Main Boise Home Loans
Depending on who you ask, you will get a different answer. You need to understand how Private Mortgage Insurance companies view our area...your LTV on your mortgage depends on it!

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Dear BuildingCredibility.com reader:

Your home may or may not be declining in value depending on who you ask. Your appraiser, local tax assessor, Realtor, and media outlet all seem to have a different take on that subject...and sometimes they are conflicting! Let's try to make sense of it from a mortgage qualification point of view:

ASSUMPTIONS: You are applying for a conventional conforming mortgage with a 97% LTV (loan-to-value). The 97% LTV means that you are attempting to mortgage 97% of your home's value or purchase price. In this scenario, a private mortgage insurance (PMI) policy will need to be taken out because you are financing more than 80% of the value or purchase price. Three different parties to this transaction have the opportunity to label the local housing market as declining in value. They are...

1) Fannie Mae/Freddie Mac -- When a mortgage approval is ran through one of these agency's guidelines, a message in the approval may indicate that the home is in an area where values are declining or difficult to determine.

2) Appraiser -- Your home's appraiser will indicate his/her opinion as to whether property values in the local market are increasing, stable, or declining.

3) Private Mortgage Insurance company -- There are many PMI companies (Radian, Genworth, MGIC, to name a few). These companies maintain their own lists of national housing markets and areas that they consider declining in value.

Although this guide is not 100% full proof, it mostly works this way: If one of the three parties listed above say that the local market is declining, your LTV on this transaction will probably be reduced to 95%. This is done to protect your mortgage lender and PMI company against the fact the future value of your home is probably going to drop.

If this were a purchase, you would be limited to a minimum of a 5% down payment. If this were a refinance, you would only be able to mortgage 95% of your home's value. How do you combat this if a higher LTV is needed:

 -- Apply for a government (FHA/VA) loan where convention PMI is not used
 -- Apply for a piggy-back 2nd mortgage (yes they still exist, although they are much tougher to get)

So, as a mortgage consultant, how have I seen these three parties so far? I have experienced Fannie Mae findings showing different homes in the Treasure Valley to be in declining markets. Not all PMI companies are labeling us as declining yet, but most are. I have not had an appraisal come back yet indicating that we are in a declining market yet.

So, is the Treasure Valley in a declining housing market? Like I said at the top...it just depends on who you ask.

If you have additional questions about mortgage loan or PMI guidelines, or are interested in talking about a mortgage for your home, feel free to call or email me at (208) 880-0316 and eric@ericsloans.com. You can also visit my website at http://www.ericsloans.com.

Warm Regards,

Eric Leigh, Mortgage Consultant
2965 E. Tarpon Drive, Ste. 150
Meridian, ID 83642
(208) 880-0316
http://www.ericsloans.com
eric@ericsloans.com
 
Posted by Eric Leigh at 7/2/2008 3:17:00 PM
Comments (3)
Re:Is the Treasure Valley officially a "declining market"?
Eric- good stuff, thanks-- I did mean to contact you, but have been super busy.

3% down unbelieveable(Does anyone remember when 20% down was NORMAL?)

This sort of BS is going to blow up our whole country. Look at the share prices of the insurers you mentioned. The market is saying they are all '0's', Freddie and Fannie won't file a normal financial report and are probably insolvent...especially if you consider everything on their books is marked as if the bond insurers are going to be able to pay. When they fail it is the good old USA (taxpayers) on the hook. We are talking 2-3 TRILLION. That amount will immediately send gov borrowing costs thru the roof, which in term will destory consumer rates for everything.

Just have a look at todays rates even after ALL the fed cuts. Take a look at Gas prices, take a look at the pathetic dollar!

Financial lies and failure to mark to maret, reckless gov spending and bailouts and FHA, FRE,FNE insanity are going to kill our country.

I urge readers to read and consider signing the following
http://financialpetition.org/

Please also look at
www.FedUpUSA.org

This is a non-partisan group. It is just simple people looking to stop the wallstreet/gov insanity and save our financial system for our children. I participate and endorse this group.

I warned people here months ago, and we are just in inning #3 of this game. Be prepared, and get informed and active with our legislators!
Posted by on 7/2/2008 5:32 AM
Re:Is the Treasure Valley officially a "declining market"?
Eric, question on the commercial reality stats for Boise. do you know the delinquency rate...?

Did you see just out today
7% of all outstanding commercial real estate construction loans out are delinquent as of the first quarter on a national basis. That's insane, higher than residential! Oh and 1/3 of all banks analyzed by the Wall Street Journal had construction loan portfolios larger than their total risk-based capital. We are close to 2x the deliquency of CREDIT CARDS...

Posted by on 7/2/2008 6:22 AM
Re:Is the Treasure Valley officially a "declining market"?
I don't have the deliquency rate for commercial loans locally, but will try to find out. There have been situations where owners of new industrial properties (who priced their properties above market, I might add) apparently have had to put their properties up for quick sale. My thought, given the tightening credit market & experiences shared with my by other developers, is that the banks will not renew loans for under-performing properties.

With few exceptions, however, my peer group is cautiously reporting a great year, so far, in the commercial market. I say "cautously" on purpose because we are experiencing a strange market. I think I reported earlier that property searches are down (meaning that inquiries / calls on commercial listings is significantly down), but at the same time the volume of transactions and the value of those transactions is actually up. We have experieinced that at our firm and I have visited on that issue with two other firms this week and they are reporting the same.

We have definately seen trouble in the certain segments of the retail market and in the building trades market relaive to commercial transactions. But the overall industrial segment is strong and the office market has been strong. That's not to say that certain segments of those markets haven't seen slowdowns, but the overall local market has been up - again, this is word from the street and I suspect we will see certain firms reporting differently.

Just thought I'd add my two cents worth from what we're experiencing and the feedback I've received from some of my peers.

One benchmark I use is whether my phone goes dead somewhere in the late afternoon & that has been the case several times recently. One way to read that is that the deals are getting tougher to close and requiring a lot more negotiation, but the other read is that there are a lot more of serious deals getting done and fewer lookie-lous (sp?).

Best to you all! Although I am always overly cautious, and I know the dynamics of this cycle are different, the Boise Valley has strong bones.

Scott Nicholson
Boise Valley Commercial Real Estate, LLC
208-890-3939
Posted by on 7/2/2008 10:32 AM
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