Docstoc

Financing Resort Real Estate

Document Sample
Financing Resort Real Estate Powered By Docstoc
					       Financing Resort
          Real Estate
“The future ain’t what is used to be.”


             Rick J. Klein
     Wells Fargo Home Mortgage
            435 647 9055
     rick.klein@wellsfargo.com
                       Staying upright
                   In a topsy turvy world

      Think back to the end of 2008
•  FNMA and FHLMC are nationalized
•  Lehman Brothers Xiles for BK
•  AIG received $85B bailout
• Countrywide absorbed by BofA
• WaMu fails, purchased by Chase
• Wachovia fails, purchased by Wells
• Citi’s major stock holder is Uncle Sam
                      Staying upright
                  in a topsy turvy world 


       Impacts in the past 24 months
•  HVCC ‐ now FHFA guidelines
•  Hera Hopea ‐ Truth in Lending
•  RESPA ‐ Good Faith Estimate
•  Fed intervention to purchase MBS
•  Home Foreclosures
•  Shadow Inventory strategic threat
                 What does this mean to you?
                    Today’s objectives:

✦Basic Principles of Mortgage Lending
 •  Financing as part of the sales process
 •  The four pillars of residential Xinance
 •  SpeciXic issues in a resort market
✦Financing and trends in our market
 •  Market mix and Xinancing
 •  A closer look at Condo Xinancing
 •  Looking forward and Recap
 Sales: a new deXinition




 Three basic communication skills
            Sales: listening

Criteria for good open ended questions:

1.
2.
3.
4.
5.

Examples:
Borrower Characteristics

✦ Owner Occupied
✦ Second Home
✦ Investor

  When is a second home an investment?

  Misrepresentation of ownership is a 
  leading type of mortgage fraud.

  A detour to discuss mortgage fraud.
Mortgage Fraud: the good news
          Utah is no longer in the top 10!




                     Mortgage Asset Research Institute Fraud Institute
                                 Top 10 States for 2009
Mortgage Fraud: the good news
          Utah is no longer in the top 10!




           Financial Crimes Enforcement Network
                   Rates Utah as 19th 2009
Mortgage Fraud: the bad news
                  FBI MLF Cases:
    (in 2009 822 indictments; 494 convictions)
Mortgage Fraud: the bad news
    (in 2009 $2.8B in loses up 86% from 2008;
      1st 6 months of 2010, up another 67%)
Mortgage Fraud: types of fraud
                            Application Fraud:
                            Incorrect names
                            Occupancy
                            Income
                            Employment
                            Assets
                            Citizen status
Mortgage Fraud: appraisal fraud




 Incorrect comps consist of fabricated properties
 Omissions consist of property conditions, room counts, or square footage
Mortgage Fraud and Foreclosures




    Ranked by Fraud   Ranked by Foreclosure
Mortgage Fraud: New Trends
Foreclosure scams

Loan modification scams

Builder/Developer scams

Flipping

Flopping?
Mortgage Fraud: New Trends
Flopping:
Perpetrators are conducting short sale property flipping schemes using
distressed properties of homeowners who are unemployed or facing foreclosure.
The perpetrators collude with appraisers or real estate agents to undervalue the
property using an appraisal or a broker price opinion to further manipulate the
price down (the flop) to increase their profit margin when they later flip the
property.68 They negotiate a short sale with the bank or lender, purchase the
property at the reduced price and flip it to a pre-selected buyer at a much higher
price.
Mortgage Fraud: Resources

    http://www.fbi.gov/hq/mortgage_fraud.htm

    http://saltlakecity.fbi.gov/pressrel/pressrel09/slc110409.htm


    http://makinghomeaffordable.gov/

    http://www.knowyouroptions.co
Borrower Characteristics
Diversity Happens
Non‐U. S. Buyers consist of 3 categories
 1. Permanent resident aliens: lawful permanent 
 residents of the U.S.
     a) Requires an Alien Registration (Green Card)
     b) All Xinancing programs are available
Borrower Characteristics
Diversity Happens
Non‐U. S. Buyers consist of 3 categories
 1. Permanent resident aliens
 2. Non‐permanent resident aliens: individuals legally 
 residing in U.S. who posses valid visa
     a) Required visa classes: A‐series; E‐1; G series;    
     H‐1 (temp worker, most common), L1, TN
     b) A valid social security number
     c) Two year history or residency, employment, 
     and credit in US. 
     d) All conforming Xinancing programs
Borrower Characteristics
Diversity Happens
Non‐U. S. Buyers consist of 3 categories
 1. Permanent resident aliens
 2. Non‐permanent resident aliens
 3. Foreign Nationals: individuals residing or visiting 
 the U.S. with a valid visa
    A.  Required Visa Classes: B‐1, B‐2, E‐2, H‐2A, H‐2B, 
    H‐3, I, J‐1, J‐2, O‐1, O‐2, P 1‐3, R‐1. 
    B.  Financial restrictions apply; 60% max LTV
    C.  Non‐conforming Xinancing

See Exhibit 1 for list of visa classiXications.  
Borrower Characteristics
Diversity Happens
From theory to reality 

      Documentation can be tough~


What question might you ask a non‐U.S. Buyer?
Debt
The Xirst and the most important area lenders consider 
is debt.

There are two questions lenders ask regarding debt:

     1.  ________________________


     2.  ________________________
Debt
Regarding “how much debt?”

                  Types of debt
                     Revolving
                 Installment Loans
                Mortgage Payments
                Commercial Loans
             Alimony & Child Support 
                        Liens
                    Collections
                Contingent Liability
Debt
Regarding “how debt is paid?”

              The world of Credit Scores
              Rational vs. Empirical knowledge
              What is a statistic?
              Understanding the score
              http://www.myXico.com/CreditEducation/WhatsInYourScore.aspx


              Funny, but don’t use
              http://www.youtube.com/watch?v=CdY4dtewURQ



              For a free credit report; my suggestion
              https://www.annualcreditreport.com/cra/index.jsp
Credit: tiered pricing
Risk‐based Pricing Models

     30 year Xixed, 80% LTV, conforming, (12/13)

               Credit     Rate    Points
               Score
               >740      4.875%    0.75
              720-739    4.875%    1.00
             700 - 719   5.000%    1.00
             680 - 699   5.125%    1.00
             660 - 679   5.250%    0.75
             620 - 639   5.375%    1.00
               <620       N/A
Credit: mortgage insurance
Required on loans > 80% LTV

More restrictive credit score guidelines

                            Credit Score Credit Score
              Guideline
                              in 2009      in 2010

            Primary > 80%   Min of 620    Min of 660

           2nd home > 80%   Min of 680    Min of 740

            C/O refi > 80%   Min of 620    Min of 720
FNMA 1st Qtr 2010 
Acquisition ProXile by Product Features



                83%≤80%LTV




                  89%≥700
Given Tighter Lender Standards
How do you complete the REPC pertaining to 
“Financing and Appraisal Deadline” and the “Settlement  
Deadline” dates?
Adverse credit: ramiXications
Extenuating Circumstances:  A non‐recurring, isolated 
event beyond the borrowers control; e.g. illness, loss of 
job, increased expenses rendering the borrower unable 
to pay as agreed (fully documented).


Financial Mismanagement: A pattern of too much debt 
reXlective of overall credit history.
Adverse credit: ramiXications
Short Sales


                 Guideline       Extenuating Mismanagement

               Before home
                                  2 years     4 - 7 years
                 purchase

              Min credit score   Min of 620   Min of 680
Adverse credit: ramiXications
Bankruptcy and Deed‐in‐lieu


             Guideline       Extenuating Mismanagement
            Before home                    4 year deed
                              2 years
              purchase                     5 years BK
          Min credit score   Min of 620    Min of 680

                              Min 10%
              Other                       Min 10% down
                               down
Adverse credit: ramiXications
Foreclosure


                 Guideline        Extenuating    Mismanagement

         Before home purchase       3 years      Min of 7 years

              Min credit score     Min of 620      Min of 680

                                 Min 10% down Min 10% down
                                  No 2nd homes No 2nd homes
                  Other
                                 investments, or investments, or
                                   cash-out refi    cash-out refi
Open ended question test
What question might you ask a buyer regarding credit?
Income
A second and increasingly important area lenders put 
under a magnifying glass is income.

There are two questions lenders ask regarding income:

     1.  ________________________


     2.  ________________________
Income
Regarding “how much and how stable is income” review the 
following:

                     Types of Income
          Employment              Seasonal
            Overtime        Alimony/child support
             Bonus           Dividend & Interest
          Commission               Rental
           Part Time           Self‐employed

           Retirement           Capital Gains
Income: process issues
Recall fraud for tax returns?  A 4506, request for tax returns, 
is now required for all borrowers prior to closing. 

Similarly, FNMA is now requesting lenders to obtain a new 
credit report a few days prior to closing.   
Income
Regarding income, what are some questions you could ask 
your clients? 
Assets
A third important area lenders consider is Xinancial 
assets.

There are two questions lenders ask regarding assets:

      1.  ________________________


      2.  ________________________
Assets
The amount of down payments drives the type of loan 
as well as the interest rate

There are two types of unacceptable sources of down 
payment:

     1.  ________________________

     2.  ________________________

Due to Patriot Act and tighter lending standards, ALL
large deposits must be explained and documented.
Assets
          Approx. 70% of potential Xirst time home buyers 
          who wish to purchase are cannot are constrained 
          by lack of down payment.
Consequently, schemes to circumvent lender down 
payment requirements from builders, agents and 
lenders is a major source of fraud.
“Ms. Shorten agreed to pay a civil penalty of $50,000 and to have her license
revoked for a period of five years. In violation of Utah Code § 61-2c-301, Ms.
Shorten fabricated documents in order to provide false information about at
least one loan applicant’s employment and insurance history and gave money
to at least one applicant in order to create the appearance that the applicant had
a down payment.”
 Utah Division of Real Estate News, First Quarter 2010
Assets: New guidelines
Post closing liquidity (PCL) is the amount of liquid 
assets left over after the down payment and closing 
costs.  

Generally, this is two months PITI.  

In a number of instances, this has been increased.

For example, for departure residences wherein the 
prior home is not sold and has less than 30% equity; 
six months PITI are required for both the prior and the 
new purchase. 
Assets: Old guidelines
Park City SpeciXic: Sales and Finance Concessions

See Exhibit 2 for deXinition of concessions.

Given the previous deXinition of Xinance and sales 
   concessions, consider inspection reports, out of` 
   state second home owners, and the use of 
   concessions in your REPCs. 
Assets: Major Trend
This year has seen the great de‐leveraging of America: from 
Wall Street, to Banks, to home buyers:

Down payment requirements have increased:
90/10 options are long gone
80/10 options are largely gone
 
In Park City, 20% to 25% down will be common this year.

Final request and easy, what question could you ask your 
buyers regarding assets? 
Property
The Xinal area lenders consider is the property

There are two questions lenders ask regarding 
property.

      1.  ________________________

      2.  ________________________
Property
Regarding value, the process of determining 
replacement cost and adjusting for comparables has 
not changed.

But, what if there is a scarcity of comps?
Property
Regarding marketability, our world has changed 
dramatically.  Consider:

 1.  __________________
 2.  __________________
 3.  __________________
 4.  __________________
PC is a market class 2; 5% LTV reduction
New 1004MC or Market Conditions Addendum. 

See Exhibit 3
Property: Park City SpeciXic
Flood insurance in the mountains is a reality

  FEMA creates Flood Insurance Rate Maps (FIRMs)
  to mitigate the effects of Xlooding.

  100 year Xlood plane (actually a 26% chance in 30 
  years) shows any zone beginning with “A” requires 
  Xlood insurance

  http://www.parkcity.org
Property: Park City SpeciXic
This personal property issue just won’t go away!
Property: Park City SpeciXic
This personal property issue just won’t go away!

One suggestion:  Include in the REPC or addendum the 
following language:

“All personal property shall be excluded from this 
transaction and shall be conveyed by a separate bill of 
sale”.
To Summarize: the basics
There are two parts to every loan:

The Credit Package: three areas, 
two questions each:
The Property Package: two questions:
Your mnemonic for real estate Xinance
What does your buyer need
to bring to the lender?
A little fun before break

 http://www.youtube.com/watch?v=k9m2FLHlEwA
   Greater PC Market
  DeXinition: Major areas: Old Town, Synderville Basin,
  and Jordanelle: Condos, Single Family, and Lots.


       Greater Park City vs All Sales
           (2009 Sales # of transactions)

                                                   Greater PC
403,                                               Other areas and classes
36%
                                                                     Greater Park City vs All Sales
                                                                         2009 sales - volume
                                                                161,935,508.00 ;
                                            710,                     19%
                                            64%




                                                                                                694,727,110.00 ;
                                                                                                     81%
                                       # of Transactions




                    0
                        20
                             40
                                  60
                                        80
                                              100
                                                    120
                                                           140
                                                                 160
                                                                       180
                                                                             200
     Jul
           -06
     Se
       p-0
                6
     No
          v-0
                6
     Jan
           -07
     Ma
          r-0
             7
     Ma
          y-0
              7
     Jul
           -07
     Se
       p-0
                7
     No
          v-0
                7
     Jan
           -08
     Ma
          r-0
             8
     Ma
          y-0
              8
     Jul
           -08




CO
     Se
       p-0
                8
                                                                                      Rick J. Klein




SF
     No
          v-0
                8
                                                                                   (as of 12/12/2010)




     Jan




VL
           -09
     Ma
          r-0
             9
     Ma
          y-0
              9
                                                                                                        Closed Sales: Greater Park City




     Jul
           -09
     Se
       p-0
                9
     No
          v-0
                9
     Jan
           -10
     Ma
          r-1
             0
                                                                                                                                          Greater PC Market: what we sell




     Ma
          y-1
              0
     Jul
           -10
     Se
       p-1
                0
     No
          v-1
                0
A closer look at Market Mix
                                          Greater Park City

                     800



                     700

                                   Historically, condos largest share of market
                     600

                                                                     Condo     SF   VL
                     500
 # of Transactions




                     400



                     300



                     200



                     100



                       0
                           2006   2007           2008         2009           Thru 11/10
Increasing role of cash sales
                                 Cash Sales History
                                  Source: Rick J. Klein

                    60%


                                                                  50%
                    50%
                                                          45%


                    40%
                                  35%
  % of Cash Sales




                    30%
                          26%


                    20%


                    10%


                    0%
                          2007    2008                    2009   2010 Q3
                                            Cash Sales
      Greater PC Market: Lots
                         # of Lot Closing                                           Percent Lot Financing
600                                                             80%

       571
                                                                70%
500                                                                   70%
                                                                60%          65%

400
                                                                50%

300               338                                           40%                         42%

                                                                30%
200
                                                                20%
100                                                   131                                                        18%
                                97                              10%                                     14%
                                            86

  0                                                             0%
      2006        2007         2008         2009   Thru 11/10         2006   2007           2008        2009   Thru 11/10




             Interesting Trends: between FY 2006 and 2009
             Lot sales have decreased 85%
             % of lots financed has declined by 75%
             % of lots in Greater PC mix have decreased from 30% to 14%
             Lots sales are improving YTD
Greater PC Market: Lot Financing
Terms for financing: Wells Fargo

 Max LTV 50%*
 Min Fico 740
 PCL of 20%
 15 year fixed 5 year call
 Max Loan $300,000
 Residential Lot < 5 acres
 *55% LTV unless appraisal shows declining value
                     Greater PC Market: Single Family
                                    Median Single Family Prices
              $1,250,000
                                              Rick J. Klein
                                         12 month rolling average                            $340

              $1,150,000
                                                                                             $320


              $1,050,000                                                                     $300
Median Sales Price




                                                                    Median SP   Med $/sqft




                                                                                                    Median $/Sq Ft
                                                                                             $280
                     $950,000

                                                                                             $260
                     $850,000
                                                                                             $240

                     $750,000
                                                                                             $220


                     $650,000                                                                $200
                                 ug 7
                                O 07
                                D 07
                                Fe 07
                                A 08
                                Ju 08
                                A 08

                                O 08
                                D 08
                                Fe 08
                                A 09
                                Ju 09
                                A 09

                                O 09
                                D 09
                                Fe 09
                                A 10
                                Ju 10
                                A 10

                                O 10
                                        0
                                       0




                                     -1
                           n-

                                     -
                                     -
                                    -
                                   b-

                                    -
                                   n-

                                     -
                                     -
                                    -
                                   b-

                                    -
                                   n-

                                     -
                                     -
                                    -
                                   b-

                                    -
                                   n-

                                     -
                                  ct
                                 ec


                                 pr


                                 ug

                                  ct
                                 ec


                                 pr


                                 ug

                                  ct
                                 ec


                                 pr


                                 ug

                                  ct
                         Ju
                                A
      Greater PC Market: Single Family
                     # of SF Closed                                           Percent SF Financed
600                                                       90%
       570
500                                                       80%
              498                                               81%
                                                                       78%
400                                                       70%
                                                388                                  70%            68%
300                                                       60%                                                64%
                           294        280
200                                                       50%


100                                                       40%


  0                                                       30%
       2006   2007         2008       2009   Thru 11/10         2006   2007           2008          2009   Thru 11/10



       Interesting Trends: between FY 2006 and 2009
       Single Family sales decreased 51% from 2006 to 2009
       % of SF financed has declined by 22%
       % of SF in Greater PC mix has increased from 30% to 42% in 2010
       2010 sales are seeing a strong rebound!
Greater PC Market: 
Conventional Financing: 3 “buckets”
 
                  Conforming        Conf. HB*           Jumbo
                  <$417,000         <$729,750         >$729,750
                   90% w/MI      90% Fixed; 75% Arm   75% - 80% SF
      Max LTV
                 >80% fico> 680     >80% fico> 720    70% - 75% Condo
      Primary     min fico 640      >75% fico > 700      fico > 720
                   85% w/MI      80% SFR to $625K
      Max LTV                                        65% - 75% SF
                 >80% fico> 740      65% condo
     Secondary    min fico 680        fico> 740
                                                      fico > 740

      Max LTV        75%               65%               N/A
      Investor     fico> 640          fico> 740

      Reserves     2 months          2 months        Min 10% PCL

    * NEW: High Balance conforming set to expire 9/30/2011
      Greater PC Market: Condos
                          Median Condo Prices
                                Rick J. Klein
              $650,000     12 month rolling average                         $500



              $600,000                                                      $450


                                                  Median SP   Med $/sq ft
              $550,000                                                      $400
Median Sales Price




                                                                                   Median $/Sq Ft
              $500,000                                                      $350



              $450,000                                                      $300



              $400,000                                                      $250



              $350,000                                                      $200
                      Au 07

                      O 7
                      D 07
                      Fe 07
                      Ap 8
                      Ju 8
                      Au 08

                      O 8
                      D 08
                      Fe 08
                      Ap 9
                      Ju 9
                      Au 09

                      O 9
                      D 09
                      Fe 09
                      Ap 0
                      Ju 0
                      Au 10

                      O 0
                              0
                            0




                            0
                         r-0



                            0




                            0
                         r-0



                            0




                            1
                         r-1



                            1
                           -1
                        n-
                        g-

                           -
                          -
                        b-


                        n-
                        g-

                           -
                          -
                        b-


                        n-
                        g-

                           -
                          -
                        b-


                        n-
                        g-
                        ct
                       ec




                        ct
                       ec




                        ct
                       ec




                        ct
                     Ju
      Greater PC Market: Condos
                    # of Condos Closed                                        Percent of Condo Financing
800                                                          90.0%
      754    757
700                                                          80.0%
                                                                     76.4%   74.4%
600                                                          70.0%

                                                             60.0%                         64.9%
500

                            465                              50.0%
400                                                                                                        51.6%
                                                   401                                                               46.1%
                                         377                 40.0%
300
                                                             30.0%
200
                                                             20.0%
100
                                                             10.0%
  0
                                                             0.0%
      2006   2007           2008         2009   Thru 11/10
                                                                     2006    2007          2008            2009    Thru 11/10


       Interesting Trends: between FY 2006 and 2009
       Condo sales decreased 50%.
       % of Condo financed has declined by 32%.
       % of Condo in Greater PC mix increased from 40% up to 54% down to 44%.
       Condo sales have increased slightly over the past year.
What makes Park City Unique
Our condominium market
To understand condo financing, must first answer
three broad questions:
The first question is to determine if new or existing:
Definition for an established project is:
 •All units, common elements, and facilities within the project -
 including those that are owned by any master association -
 are complete and the project cannot be subject to additional
 phasing or annexation.
 • At least 90% of the units in the project have been conveyed.
 • Control of the HOA has been turned over to the unit
 purchasers.
Resort Condo Financing
If the project is new, there are pre-sale requirements:
If the project is a standard condo, 51% pre-sale

If the project is a “resort” condo; 70% pre-sale
Resort Condo Financing
The second question is to determine if the project is
ineligible.
The are numerous issues which make a project ineligible;
the Red Flags in Park City are:
  More than 10% owned by a single entity.

  (Consider a developer who has rented out units; new pre-sale?)
Resort Condo Financing
The second question is to determine if the project is
ineligible.
The are numerous issues which make a project ineligible;
the Red Flags in Park City are:
  More than 15% of the units > 30 days delinquent
   on their HOA dues.

    (Consider foreclosed units; developers behind on dues...)
Resort Condo Financing
The second question is to determine if the project is
ineligible.
The are numerous issues which make a project ineligible;
the Red Flags in Park City are:
  Timeshare units within the project

    (Pinnacle?)
Resort Condo Financing
The second question is to determine if the project is
ineligible.
The are numerous issues which make a project ineligible;
the Red Flags in Park City are:
  Pending litigation: if impacts safety, habitability, or viability of the
  association. Okay if lender determines the suit a “minor matter.”

    (Fox Point, New Claim?)
Resort Condo Financing
The second question is to determine if the project is
ineligible.
The are numerous issues which make a project ineligible;
the Red Flags in Park City are:
  Owner and 2nd Home occupancy requirement: 70% for non-
  conforming loans; 51% for conforming.

   (This is consistent point of contention between lenders and
   property management companies.)
Resort Condo Financing
The second question is to determine if the project is
ineligible.
The are numerous issues which make a project ineligible;
the Red Flags in Park City are: New in 2010.
  HOA collecting < 10% for reserves.

   (Many HOAs adopt the process of minimizing HOA dues and
   then assessing a special assessment for major repairs.)
Resort Condo Financing
The second question is to determine if the project is
ineligible.
The are numerous issues which make a project ineligible;
the Red Flags in Park City are: New in 2010.
  Borrower must provide evidence of HO6 interior content
  insurance.

  (Easy sell)
Resort Condo Financing
The second question is to determine if the project is
ineligible.
The are numerous issues which make a project ineligible;
the Red Flags in Park City are:
  Project is considered a condo-tel.

    (This is what keeps me awake at nights!))
Resort Condos Financing
The third question is to determine the classification of
the project.
In the Wells world, we have three classifications:

  Standard Condos
  Resort Condos
  Condo-Hotels

  Distinguishing is often a very slippery task
Resort Condos Financing
Characteristics of a Condo-Hotel project.

  *Registration services - front desk
  Mandatory rental pools (Crescent Ridge!)
  Revenue Sharing (Silver King story)
  Lack of a full kitchen
  Excessive occupancy restrictions (winter restrictions...)
  Units < 500 square feet
  Excessive Commercial area (e.g., 20%)

  Projects with non-incidental business operations owned or
  operated the HOA; e.g. restaurant, spa. (Empire Pass!)
Resort Condos Financing
Determination of a Condo-Hotel project.

  Lenders to review appraisal and if it states any of the following:
  central phone or key system, room or maid service, restriction on
  interior decorating, lock-outs, or
  if located in a Resort Area;
  Then a more thorough review is required:
     Count on an internet search plus
     Review of CCRs, Amendments, Budget, and Insurance
Resort Condos Financing
Characteristics of a Resort Condo project.

  Project name includes “hotel,” “lodge” or “inn.”
  Zoned primarily for transient use
  May provide some hotel amenities such as nightly rentals, front
  desk, maid service, food service, centralized key system
  Must have < 10% commercial.
Resort Condos Financing
Resort Condo Financing

 Only non-conforming or jumbo loans
 Max LTV is 70%
 Min Fico is 740
 Min PCL is 20%
 Min PCL is 50% if buyer owns another second home
 Second homes only; no investment purchasers
Resort Condos Financing
What remains is a standard condo. However, if located
in a resort area, expect an internet search and review.
  Financing for a standard condo is the same as for a single
  family home;

  sort of: PMI is hard to obtain if > 80% and if second home, so
  assume second home buyers will require 20% - 25% down.

  Spot approvals: If LTV is 75% or less, lenders are not required
  to perform a full underwriting of the project. This may assist if
  there are other eligibility concerns.
Resort Condos Financing
What really happens; a quick google search of PC condos.

What is the designation?

                  www.google.com

                  Powderwood
                    Fox Point
                   Black Bear
               New Park Townhomes
                    Silverado
Resort Condos Financing
What is your role? Buyer’s due diligence.

Provide CCRs, budget, and minutes; but now you can provide
some of the key points lenders consider in condo financing.

Do not attempt to make a determination as to the “finance-
ability” of the project. This will vary between lenders;
between individual underwriters.
Resort Condos Financing
To recap:

What are the three questions?

What can you do to assist the lender/buyer?
When will lending guidelines ease
The easy answer is when home prices stabilize.

This will not occur until we work through the strategic threat
of foreclosures and shadow inventory.
                                                            Median Price


                Ja




                           $100,000
                                      $200,000
                                                 $300,000
                                                             $400,000
                                                                        $500,000
                                                                                   $600,000
                                                                                              $700,000
                                                                                                         $800,000
                   n
                M -01
                 ay
                Se -01
                   p
                Ja -01
                   n
                M -02
                 ay
                Se -02
                   p
                Ja -02
                   n
                M -03
                 ay
                Se -03
                   p
                Ja -03
                   n
                M -04
                 ay
                Se -04
                   p
                Ja -04
                   n
                M -05
                 ay
                Se -05
                   p
                Ja -05
                   n
                M -06
                 ay
                Se -06
                   p




12 Mo avg Med
                                                                                                                Source: Rick J. Klein




                Ja -06
                   n
                                                                                                              12 month rolling average




                M -07
                 ay
                                                                                                                                                                           Prices close to stabilizing?




                Se -07
                   p
                Ja -07
                   n
                                                                                                                                         Greater Park City Median Prices




                M -08
                 ay
                Se -08
                   p
                Ja -08
                   n
                M -09
                 ay
                Se -09
                   p
                Ja -09
                   n
                M -10
                 ay
                Se -10
                   p-
                      10
Many of these sales are distressed
                     Summit County Distressed Sales
                             Source Rick J. Klein
 30.00%
            27.40%

 25.00%



 20.00%



 15.00%



 10.00%                                                 8.47%


 5.00%



 0.00%
          Bank Owned                                Short Sales MLS

                                  % Sold
Foreclosures improving; yet elevated
  250
                                   Foreclosure Report - Summit County
                                                      Source: Rick J. Klein

  200
             NODs down 40% from 3rd Qtr 09
             TTDs down 2% from 3rd Qtr 09
  150




  100




   50




    0
        07


                 07


                          07


                                   07


                                            08


                                                     09


                                                              08


                                                                       08


                                                                                09


                                                                                         09


                                                                                                  09


                                                                                                           09


                                                                                                                    10


                                                                                                                             10


                                                                                                                                      10
        1


             2


                      3


                               4


                                        1


                                                 2


                                                           3


                                                                   4


                                                                            1


                                                                                     2


                                                                                              3


                                                                                                       4


                                                                                                                1


                                                                                                                         2


                                                                                                                                  3
    Q


             Q


                      Q


                               Q


                                        Q


                                                 Q


                                                          Q


                                                                   Q


                                                                            Q


                                                                                     Q


                                                                                              Q


                                                                                                       Q


                                                                                                                Q


                                                                                                                         Q


                                                                                                                                  Q
                                                          Notice of Default     Trustee's Deed
National Theme: REO up,
 delinquencies down
Yet, shadow inventory remains

    (Consider NAR: 35% of sales distressed; total SAAR of 4.5M)
To Summarize
WYSIWYG: current selling and financing
environment will be with us a little longer
To Summarize
Park City is similar to and different from the
national market.

Lending reflects this and understanding the
nuances of PC real estate finance will assist you
and your buyers this season.
Thank you for taking this locals 
designation course
               Time for end of movie?
  http://www.youtube.com/watch?v=3QFqpWOxwXA&feature=related




     Complete feedback form for class credit

				
DOCUMENT INFO
Shared By:
Categories:
Tags:
Stats:
views:9
posted:3/25/2012
language:
pages:90
yaohongm yaohongm http://
About