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Show Page Enterprise Review, March 31, 1976 10b OMR (OUTSIDE) Residential Sales Report BY Andrew B. Hansen, broker Landmark Realtors Last week's article dealt with the importance of understanding financing and its impact on the housing market. To get a little more specific, the types of financing in the home market will be discussed. All Cash. While this method of purchase is used, it is so uncommon in most areas of the counry that when it occurs, it will put even the most experienced sales associate in a temporary "state of shock." This buyer is usually one who makes a point of bing a bargain hunter, or older persons who cannot afford to make payments out of low retirement income. Banks. Banks are in and out of the real estate market. In recent years they have placed most of their emphasis in consumer credit loans. Loans of this type are higher in yield and they receive interest on the original amount of the loan for the full loan term. General- ly, banks will only make real estate loans to preferred cus- of the bank, usually at a low loan percentage to value for short loan periods, Higher ratio loans are usually required to have independent mortgage insurance, such as M.G.I.C.. Many banks will administer loan plans of the government, with guarantee purchase on the secondary Financial Summary Patrick J. Vaculin What is to become of the future of the Federal Housing Administration? Since FHA came under the direction of the Department of Housing and Urban Development, there has existed nothing more than a bureaucratic boondoggle. The problem seems to stem from the lack of real power or authority by the regional and insuring offices. They must obtain their directives from Washington and may not take any initiative on their own. This has caused many inefficiencies. A classic example is the obtaining of approval as an FHA mortgagee or an approval of a branch office. The application for approval must pass through so many channels that the mortgagee would be lucky to obtain his approval in three to six months. Another example which affects most .of us, is the processing of applications for mortgage insurance. Since FHA has become bogged down with HUD projects and directives, they have become about as fast in the processing of applications for conditional and firm commitments as an oldtime athlete competing against a youngster. What is needed is a separate FHA, solely for the insurance of mortgage loans. What we have now is a super fragmentation of FHA which truly lacks any local authority. With a consolidated FHA authority and function on a local level, we could again expect an efficient well run department of the federal government If the above does not come about, we can expect levels wihin HUD which will bring FHA to such a sluggish state that it and the homebuilding industry will come to a halt for all intents and purposes. Locally, the insuring office is doing a commendable job in spite of the many obstacles it has to face from HUD. There is a tendency though, on the part of realtors, builders, and other individuals to shy away from using FHA. This increasing tendency away from FHA is an attitude of time and cost. They feel that it is taking too long to get an FHA loan. Also, it is becoming more apparent that the costbenefit ratio for FHA versus conventional loans has decreased. If the mortgage, real estate, and homebuilding industries are to survive, we must push for a separate FHA that can be competitive and with greater benefit than its conventional brother. ever-increasi- ng market. Those plans, however seem to be drying up as the government is seeing less necessity in supporting the building industry. A very definite advantage in working with banks is that they usually do not charge excessive points for making the loan and also may have lower pay-of- f penalties than saving and loans, Many people have been couraged by bankers without understanding the ultra con-an- d servative nature of bankers in real estate loans. Remember too, that bankers are sensitive over losing deposits to real estate transactions. For every dollar taken out of the bank to continued on page 12b dis-tome- rs |
