Tag Archives: mortgages


Mutual of Omaha Buys Mortgages to Support Habitat Mission

A growing number of families in central Arizona now have access to affordable housing, thanks in part to a unique arrangement between Habitat for Humanity Central Arizona (HFHCAZ) and Mutual of Omaha Bank.

Mutual of Omaha Bank recently purchased more than two dozen non-interest bearing mortgages originated by Habitat for Humanity, totaling approximately $740,000. HFHCAZ has been able to immediately use the funds as capital, investing the money to help further its mission to build, renovate and repair affordable homes in partnership with families in need.

In total, Mutual of Omaha Bank has purchased nearly 250 mortgages and contributed nearly $8.1 million in capital to HFHCAZ since 2009. HFHCAZ has used that funding to provide adequate shelter to more than 500 low income families throughout central Arizona. The nonprofit organization also has invested in new land, new developments, new Re-stores and new home repair programs.

“During one of the worst recessions in history, Habitat for Humanity Central Arizona has been able to grow and triple our volume, serving hundreds of families, thanks in large part to Mutual of Omaha Bank’s support,” said Roger Schwierjohn, president and CEO of HFHCAZ. “Surviving this economic downturn and housing crisis would’ve been even more challenging without access to this important capital. Today, Habitat for Humanity Central Arizona is a much stronger and more vibrant organization because of Mutual of Omaha Bank.”

As part of its mission to provide affordable housing for low income families, HFHCAZ works to keep costs low with volunteer labor and donated materials. Once a home is built, HFHCAZ then sells the home to the new owner by asking for a minimal down payment and offering a zero-interest mortgage.

By acquiring the mortgages, Mutual of Omaha Bank has provided HFHCAZ immediate access to capital, while ensuring the mortgages are serviced by a local nonprofit that specializes in mortgage lending.

“With Habitat’s significant presence in the Valley, we saw this as a great opportunity partner with a solid nonprofit organization who invests in the local community,” said Kevin Halloran, Arizona state president for Mutual of Omaha Bank. “We are well-positioned to support and service these mortgages and are proud to help such a great non-profit like Habitat.”

For more information about Habitat for Humanity Central Arizona, visit http://www.habitatcaz.org or contact Roger Schwierjohn at (623) 583-2417.

real estate - Arizona Business Magazine May/June 2012

Real Estate Trading Trend Is Paying Off

Home builders, sellers and buyers say, ‘I’ll trade you’

An emerging real estate trend is paying off for some Valley companies.

For The Landmark in Scottsdale, real estate trading has accounted for almost 20 percent of its sales the past 12 months. The average list price for the trade homes: $1,100,000.

“We had a buyer prospect who told our sales team, ‘I want this condo and I would buy it in a heartbeat, but I need to sell my home first,’” says Kirsten Brown, vice president of Butte Companies. “We didn’t want to lose that excitement and timing is everything when a buyer is in the heat of the moment. (Butte Companies’ owner, Ed Lewis) asked the location of their home and how much is it was listed for. The dialogue opened and grew from there. That’s where the general concept of trading came from for us.”

The trading concept is especially beneficial for buyers with a singlefamily home, vacation home, or lots they need or want to sell before they make another purchase.

The concept is simple: Buy my house and I’ll buy your house. The exchange takes place on the same date via a simultaneous closing. The sales are contingent upon each other. Since contracts require a closing on the same date for both properties, the bank will not use the monthly payment from the client’s current mortgage as a liability, nor will it use the old mortgage balance in total loan to value ratios. Having fewer liabilities helps the client qualify for the new loan and negotiate better mortgage terms.

Fulton Homes touts its trade-in program with this slogan on its website: “Why stay in an old home when you can trade up to an energy efficient Fulton Home?” It took the trade movement a step further with a Super Bowl ad.

“Fulton Homes saw great response in the heightened level of interest (in the trade-in program),” says Doug Fulton, CEO of Fulton Homes. “It was definitely a touchdown.”

With the local housing market struggling for the past few years, homebuilders have struggled to find innovative ways to find buyers. While trading has been labeled as simply a marketing gimmick by some critics, Brown says it fills a need in the current economic atmosphere.

“Many buyers don’t want to put their home on the market and face the reality of today’s prices or others simply don’t want the hassle of open houses every weekend in their home disrupting their life,” Brown says. “This resolves those concerns and many more. When we make an offer for a trade deal, we don’t focus on the price of our home or the value of their home, we simply discuss the difference in the price between the two. Once that is agreed upon, the rest falls into place.”

If trading is a trend, it doesn’t appear to be one that is going away any time soon.

“The concept is gaining momentum as is exemplified by the ARMLS recent board decision to add a tab in all online MLS listings that allows an agent to list and/or search for ‘trade’ properties in order to pair up your clients willing to trade with those homeowners looking to trade,” Brown says. “This was just implemented in the last nine months by ARMLS, so that to me says they agree it’s not a fad, but a helpful tool agents can use to help their clients sell or buy regardless of the market.”


Buying Commercial Property Through Commercial Mortgages

Buying Commercial Property Through Commercial Mortgages

As we’ve all heard; the sky is falling, everyone is unemployed and the there will be no more small business. OK, maybe I’m exaggerating a bit, but I can walk away from a local news broadcast feeling like I’ve been diagnosed with a fatal disease and have only three days to live.

Moments later I’m back in my office grinding out phone calls to existing clients and prospects that are looking to buy a commercial building with the right frontage and signage opportunities, but of course, they want to buy the building at 50% off. So no, the sky isn’t falling, small business is strong and growing and the commercial buildings with the right amenities are all but gone or have multiple offers on them.

This is my favorite question from clients: “What percentage does a seller typically expect to reduce their price by when they list their property with you?” Of course I tell them that the seller would most likely expect to get what they are asking for the property. Clearly, we are beginning to see the commercial real estate market become more of a seller’s market than a buyer’s market.

If a seller has a great piece of commercial real estate in a good neighborhood with C Class zoning or better it’s like having a rare coin – everyone wants it and buyers are seemingly willing to pay extra for it. I am speaking of Scottsdale and the areas of close proximity. Vandalism, theft, burglary and simple external obsolescence are just a few of the reasons other areas lose value and simply don’t come back for years until the entire area is redeveloped.

How did we get where we are today? As historical trends show and continue to show decade after decade; commercial real estate ebbs and flows follow residential free falls. We see this happen about every 8 to 12 years depending on the economic health and vitality of the country and world. We knew that property values here in Arizona eventually had to slow down but we didn’t expect the significant drop that we had. The great news – the Scottsdale real estate market hit bottom 17 months ago and we are slowly creeping back up; with very little inventory currently available.

Let’s not forget how this mess started; Mortgage Backed Securities, including but not limited to Residential and Commercial Mortgage Backed Securities. First, a quick definition of a commercial mortgage backed security – A mortgage-backed security (MBS) is an asset-backed security that represents a specific claim on cash flows that originates from mortgage loans through a process known as securitization.

The process of securitization can be complicated and convoluted, and is highly dependent on the jurisdiction within which the process is conducted. The basics are this: Mortgage loans or notes are purchased from banks and other lenders and assigned/sold to a trust, then the trust assembles these notes into pools. The trust then securitizes the pools of notes by issuing a mortgage backed security. Residential mortgage backed securities are backed by single family to quad-plex or four family housing units. Commercial mortgage-backed security (CMBS) are secured by commercial and multifamily properties, such as apartment buildings, retail or office, hotels, schools, industrial properties, commercial sites, etc. A CMBS is usually structured as a different type of security than an RMBS.

Fannie Mae and Freddie Mac are the most common securitization trusts in the United States. So what happened? It’s been suggested that the inherent complexity surrounding the securitization of commercially backed mortgages can suffer from and are highly prone to steep and quick changes in underwriting standards. It’s believed that the U.S. subprime mortgage crisis was in large part created by competitive private mortgage securitization. Additionally, there was a lot of securitizing that was “not on the books,” so a lot of the securitizing firms’ balance sheets were less transparent.

What does this mean for us here in the Phoenix and Scottsdale areas? Keep your eye on both the residential and commercial markets in your area; these provide excellent indicators of your ‘local market’. Are new small businesses opening up? Are rents getting more expensive? What I’ve found is that landlords and owners are charging more for rent and getting more when selling. This is a good thing and means that particular market is on the rise.

I always recommend retaining a professional commercial real estate broker familiar with the area you are interested in. Make sure your broker provides demographics, current sales and rental information and understands your needs.