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Blog by Doug Ingersoll | February 4th, 2015

Sunday, February 1, 2015

AZ Republic Article 

Arizona Prefers Deeds of Trust
Over Mortgages for Home Loans 

  Question:  In Arizona a deed of trust is used rather than a mortgage for a loan secured by a home or other real property.  Other states, such as our home state of Massachusetts, use mortgages rather than deeds of trust.  Is there an Arizona law that only deeds of trust must be used?      


  Answer: No.  Arizona law provides for mortgages, and since 1971 Arizona law also provides for deeds of trust.  Most mortgage lenders, however, prefer deeds of trust for several reasons.  One, a mortgage can only be foreclosed judicially by court proceedings, i.e., judicial foreclosure sale, while a deed of trust can be foreclosed either by a judicial foreclosure sale, or, most frequently, by a trustee's sale (typically at the courthouse steps or at a title company office).  Mortgage lenders save significant time and expense by a trustee's sale.  Second, after a foreclosure by trustee's sale the buyer can sell the property immediately.   After a judicial foreclosure, however, the borrower has the right of redemption, i.e., the right to buy the property back from the buyer, usually within six months.  The main disadvantage of a trustee's sale to a lender is that a borrower has the right of reinstatement with a deed of trust.  In other words, at any time before the trustee's sale the borrower can stop the trustee's sale by reinstating the loan, i.e., paying only the delinquent monthly payments and the costs of the trustee's sale.  In a judicial foreclosure, however, the entire loan balance is generally required to be paid by the borrower before the judicial foreclosure can be cancelled.

And lets hope this comes true!

Millennials Move Toward Home Ownership

Young couples and singles in their late 20s and early 30s are making a belated entry into the home-buying market, confirms several recent housing reports. Rising rents are prompting more millennials to move toward home ownership, along with an extra push from mortgage rates being in the mid-3 percent range, the government’s recent efforts to ease credit requirements for a loan, and moderating home prices that are helping to improve housing affordability.

Opening the Credit Door

3% Down Payments May Be Game Changer

FHA Lowers its Harangued Mortgage Costs

Smaller Down Payments Lure More Buyers

A recent monthly poll of more than 2,000 real estate professionals nationwide showed higher reports of first-time buyer activity much earlier than is typical, according to the Campbell/Inside Mortgage Finance HousingPulse Tracking Survey. The survey showed that first-time homebuyers accounted for about 36 percent of overall home purchases in December.

The real estate brokerage Redfin said that surveys of its agents have recently shown first-time buyers accounting for 57 percent of its home tours – its highest rate recorded in recent years. What’s more, home-purchase education class requests – which typically come from first-time buyers – surged 27 percent in January year-over-year.

The National Association of REALTORS® reported that first-time buyers comprised 29 percent of existing-home sales in December, up from 27 percent a year ago.

NAR President Chris Polychron says the Federal Housing Administration’s plan to reduce annual mortgage insurance premiums likely will have a positive impact on springing first-time buyers into action. FHA, which offers loans with down payments as low as 3.5 percent,decreased its insurance premiums on Jan. 26 from 1.35 percent to 0.85 percent. 

“REALTORS® support responsible lending to qualified borrowers and the move to lower premiums will enable more buyers to enter the market while continuing to protect taxpayers from the risky lending practices that led to the housing crash,” Polychron said in a statement.

Jonathan Smoke, chief economist realtor.com®, has called 2015 the “year of the millennial” in real estate.  

“Millennials are at a critical demographic tipping point where their sheer numbers will naturally drive demand for more home sales,” he notes in recent housing commentary at realtor.com®.

He says that home sellers should be encouraged, particularly those who own affordable homes and are looking for a long-overdue upgrade. With the move by many lenders recently to permit smaller down payments on home purchases, more millennials will likely make a move and that means home sellers “who’ve been sitting on equity in entry-level homes can finally upgrade to bigger homes and retirement homes.”