FHA Loan Limits Looking to Decrease
HUD is planning another shift in loan limits for FHA loans coming this October. Currently they are set at $295,000 for our Marion & Polk Counties within the Mid Willamette Valley in Oregon. Currently FHA requires a down payment of 3.5% of the sales price leaving a potential sales price to be no more than $280,880.00 come this October. Hopefully this will not have a huge affect on our home sales in this area. Many of the FHA buyers in this market are purchasing homes below $200,000. However, you will see that many move up buyers want to take advantage of the FHA backed mortgages with the minimal 3.5% down payment leaving some sellers with homes priced around the $280,000 price range and above in an ever more difficult position to find a qualified buyer.
Like most markets around the country, ours is also flooded with homes priced above $280,000 and it is a difficult task to find a buyer able to put down 20% during these economic times. Sellers need to look ahead so they are able to position themselves correctly for the coming changes.
April Jobs Report tied to Strategic Defaults?
Jobs continued to gain in the month of April according to the Bureau of Labor & Statistics. 290,000 non farm jobs were created with 66,000 of them for the government as temporary jobs for the census continue to gain momentum. Have you had your friendly census worker visit you yet?
Over the last 2.5 years this Great Recession has contributed to approximately 8 Million jobs lost. Last months jobs report is encouraging, but I am not expecting numbers like that to follow month after month. And even if it did it would take about 3 years to get all of those jobs back that we lost. I hate to be a pessimist here. I want this our economy to thrive again and thrive now! I hope I am wrong, but I just don’t see how we can continue to spend the money that we don’t have and sustain any kind of momentum that we are seeing. The bailout of Greece is a prime example of that. The U. S. holds 17% responsibility in the International Monetary Fund and they just decided to bail out Greece for a whopping 1 Trillion Dollars! Greece is a perfect example of entitlement programs coming to a head. The working class can not afford to pay for all of these programs! More taxes means higher costs for good and services or less jobs. Period.
A lot of this “growth” that we are seeing is believed to be due to the seasonal time of year and the notion that many people are out spending more money instead of paying for their mortgage every month. Many of these are people who have jobs and have the money to pay for their bills, but they are strategically missing payments in order to have a little more fun this year. People are frustrated that their equity is gone so they are not seeing the value in making their mortgage payments. This is known as Strategic Defaulting. They miss a couple of months, which can mount out to a chunk of change, every month or so until the bank comes knocking. The borrower then makes a payment to appease their lender and the cycle continues over and over again. This obviously brings up a moral dilemma. What would you do? Studies show that once the value of a person’s home decreases to 75% of their balance owed, that person considers a strategic default. The more popular this idea becomes the more people will consider it. This won’t help out the recovery of our economy, but it is the sign of the times.