5th & Main Condos in Nashville Lose FHA Certification, Again

Fifth and Main condos NashvilleCall it fate, bad luck, the yo-yo effect or whatever you may, according to HUD’s website, the 5th & Main condos have lost their FHA certification for the second time in the past 9 months.

As you may recall, the condos entered into receivership in February 2009, but began to show signs of life as the construction lender began to pour money into a new advertising campaign while simultaneously dropping the condo prices. This effort coincided with the development re-obtaining FHA certification in late January 2010 after a concerted effort by the project’s preferred lender, CityLife Wells Fargo. This gallant effort appears to have been thwarted at the end of last week as an FHA audit did not agree that the development currently met all of the FHA prerequisites.

Why FHA Certification so Important

FHA certified (or approved) condo developments allow buyers to put down as little as 3.5% (another way to say this is that you are getting a 96.5% LTV loan) and be confident that you are buying into a financially stable HOA approved by the lender. This is HUGE in a market where a couple of homeowner associations are in financial straits. To qualify for FHA mortgages, developments must:

  • At least 30% of the condos must be sold or currently under contract
  • No more than 50% of the all loans may be FHA loans
  • Maintain a reserve equal to 10 percent of the annual budget
  • Make sure no more than 15 percent of its owners are more than 30 days late with condo fees
  • Allow lenders to review their financials and insurance policies
  • No more than 10% of the units may be held by a single owner
  • No more than 25 percent of space is allowed for commercial use

Why 5th & Main Lost FHA Certification

The answer is unclear at the moment as it is not outlined on HUD’s website, but I am left to speculate that their “purchase with early occupancy” contracts were viewed simply as “leases with an option to purchase” contracts by regulators. I am not convinced that the terminology actually describes a different type of transaction, but the prior sure sounds better. Sort of like calling a used car a ‘pre-owned vehicle’ or saying that the tires are ‘gently worn’ rather than worn down. Same difference, right? Maybe.

What the Future Holds for the Fifth and Main Condos

5th & Main can quickly get back to viability via several routes. The first is to simply reapply with HUD for FHA certification based upon a revised audit of the building. The second is to bulk sell condos to institutional investors who can quickly get the development’s ratios back to within FHA guidelines. The third is to auction off 20-25% of the condos much like what the West End and Terrazzo did earlier in the year. The final method would be to simply drop prices to the point where buyers would be willing to come back to the building a third time and take the risk that the project may not be financeable.

Investors and Condo Vultures are Both Interested

The truth of the matter is that the 5th & Main project is of good enough quality and location that a few large investors could be interested in buying the entire development, at least, they were a year ago. This could potentially solve the whole conundrum as that group would most likely offer privately backed loans that would be as good as, if not better than, the current FHA terms and rates. Not only would the financing piece of the puzzle be solved, but so would the price issue. Should an investor be able to purchase the development, a significant savings would most likely be passed down to end purchases to help encourage them to come back to the development.

To address the vultures, I get the sense that the construction lender does not have an appetite to sell the entire development at a price that would attract condo vultures. In my opinion, the only development close to Nashville that may have a shot at going that route would be The Braxton in Ashland City.


Due to the renewed annual optimism brought about by the warmer weather coupled with the first-time buyer credit expiring in just over a month, I believe that condo developments will see an incredible amount of sales activity over the next 30 days. This will be especially true for the more moderately priced 1 bedroom condos in desirable FHA approved high-rises like the Icon in he Gulch, Terrazzo and Encore. However, I am expecting a Sunday morning after your best friend’s bachelor party-like hangover in the coming summer months that may cause the more expensive condos to come down in price.

Depending upon what happens at Fifth & Main, this may not affect that particular development, but I would expect 2 bedroom condo buyers to be able to secure a better deal in the later summer months or certainly, by the fall/winter. BUT, and this is a big but, mortgage rates may have risen a half point to three quarters of a point by then, so be prepared for your borrowing costs to rise should you be planning on financing your purchase.

Happy condo shopping!

Al Gore’s Home or George Bush’s Ranch

Al Gore Nashville house

Okay, so many of you have seen a similar email containing similar information, but I felt it was time to break from my typical serious article and insert a little housing irony. Which of the following two home descriptions belong to Environmentalist Al Gore’s house? BTW – Liz and I certainly could shore up the energy efficiency of our own home, not attempting to throw stones here.

House #1

Al Gore Nashville houseA 20 room, 10,000 square foot mansion (not including 8 bathrooms) heated by natural gas. Add on a pool (and a pool house) and a separate guest house, all heated by gas. In one month this residence consumes more energy than the average American household does in a year. The average bill for electricity and natural gas runs over $2,400 per month. In natural gas alone, this property consumes more than 20 times the national average for an American home. This house is not situated in a Northern ‘snow belt’ area.

House #2

George Bush Texas ranchDesigned by an architecture professor at a leading national university. This house incorporates every ‘green’ feature current home construction can provide. The house is 4,000 square feet (4 bedrooms) and is nestled on a high prairie. A central closet in the house holds geothermal heat-pumps drawing ground water through pipes sunk 300 feet into the ground.

The water (usually 67 degrees F) heats the house in the winter and cools it in the summer. The system uses no fossil fuels such as oil or natural gas and it consumes one-quarter electricity required for a conventional heating/cooling system. Rainwater from the roof is collected and funneled into a 25,000 gallon underground cistern. Wastewater from showers, sinks and toilets goes into underground purifying tanks and then into the cistern. The collected water then irrigates the land surrounding the house. Surrounding flowers and shrubs native to the area enable the property to blend into the surrounding rural landscape.

House #1 is located in the ultra-wealthy enclave of Nashville called Belle Meade; it is Al Gore’s house. House #2 is on a ranch near Crawford, Texas ; it is the residence of George W. Bush.

A couple of photos of George Bush’s Ranch

crawford texas ranch  George Bush Crawford Texas House

 Photos and Tax Record for Al Gore’s Nashville House

Al Gore House Nashville

Million Dollar Homes for Sale In Nashville

million dollar home in nashville

Wow, Google is making MLS searching just a little bit easier (and scarier for most real estate agents who are worried about losing control of their data). Check out this million dollar home search that I set up in Nashville in about 15 seconds flat. What is even more awesome, is that you can also set up your own searches in Google too.

To use this map, simply mouse over a red dot on the map and click on it once the hand appears. This will pop open an information window. Then click on the address of the property and most of the available MLS information will appear.

These are all Million Dollar Homes!


I wonder if any of these providers are about to get in trouble with their local Association of Realtors? Hummm

30 Year Mortgage Rates Under 5 Percent, Trouble

30 year mortgage rates are going up

nashville 30 year mortgage ratesAt the end of last week, Freddie Mac reported that mortgage rates remained under the 5 percent mark for the second consecutive week, with the average interest on a 30-year fixed loan coming in at 4.95 percent from 4.97 percent a week earlier. Meanwhile, interest on 15-year fixed loans averaged 4.32 percent versus 4.33 percent the previous week. Rates on five-year, adjustable-rate mortgages settled at 4.05 percent, a decline from 4.11 percent the previous week.

Rates dropped to a record low of 4.71 percent in December and have hovered around 5 percent ever since the Federal Reserve began a program to stabilize the housing market by lowering mortgage rates. The theory is that the reduced borrowing rate increases home affordability and thus, home sales. However, you must take into account that the vast majority of lenders have tightened their qualification standards as well as internally restricting total lending limits leading to a much slower housing recovery than initially expected.

30 Year Mortgage Rates Going Up in April?

The Federal Reserve has confirmed their position that it will most likely stop purchasing mortgage backed securities at the end of March. The FED has been collectively buying the securities since January 2009 which kept the housing market from sinking to lower levels. Because the FED has pumped nearly $1.25 trillion into the market, interest rates have held at historic lows during a very critical time for the housing industry. With the FED backing out of securities business there is no question that rates will begin to rise. But how far?

Most experts are undecided on how much rates will increase. Using the 30 year conforming rate as the guide we’re hearing the 30 year rate could land anywhere from 5.75% – 6.0% and fairly quickly. Most experts expect the rates to fluctuate in this range through the fall and then experience another potential increase during the winter months. Regardless of exactly when, mortgage rates will begin to go higher and soon. I am not an alarmist, but I do play the trends. It appears that unless the FED decides to extend their current MBS purchase program, your chance to secure record low interest rates may be drawing to an end.

Rare Foreclosure in Belle Meade

foreclosed homes in belle meade

foreclosed homes in belle meadeThe downturn in the economy has reached the Belle Meade area of Nashville resulting in a of a 3,250 square foot renovated home. The home was originally built in 1940 and is located in the Highlands area of Belle Meade at 308 Page Road. The Kemps had purchased this property for $581,830 on 2/11/2005 and is currently appraised for $640,100 by the Davidson County Tax Assessors office. The current asking price is $599,900.

Fully renovated in 2004, this house includes 4 bedrooms, 4 full bathrooms and a rather large main floor master bedroom with en suite master bath that features marble surrounds, tumbled stone flooring and a rather spacious closest with generous built-ins. The first floor of the home is all hardwood floors that lead into a gourmet kitchen with stainless appliances and granite countertops and continue into a large family room that features a central fireplace and bookshelves. There are even washer and dryer connections on the main floor and upstairs for your convenience.

The home sits on a 0.400 acre level lot that is watered by a full irrigation system and surrounded by a privacy fence in the back. 306 Page Road is located just blocks from Cheekwood and Warner Park, making this a wonderful walking location. This property was just listed with Michael McKee of adex! Homesellers. Contact us for a showing.

Williamson County is one of America’s Wealthiest Counties

williamson county tennessee homes

williamson county tennessee homesForbes outlined the 25 wealthiest counties and interestingly enough, the east coast dominates the list and shows that the urban areas are not where the biggest paychecks are landing in the new decade. Ah, but look who else is climbing up the list…Williamson County. Thanks to a healthcare business that continues to grow and a stable executive base, Brentwood and Franklin are leading the charge up the wealth ladder. This news is surprising to many except for those of us who live here.

25 Richest Counties in the United States in 2010

1. Loudoun County, VA
2. Fairfax County, VA
3. Howard County, MD
4. Hunterdon County, NJ
5. Somerset County, NJ
6. Fairfax City, VA
7. Morris County, NJ
8. Douglas County, CO
9. Arlington County, VA
10. Montgomery County, MD
11. Nassau County, NY
12. Stafford County, VA
13. Calvert County, MD
14. Prince William County, VA
15. Putnam County, NY
16. Goochland County, VA
17. Williamson County, TN
18. Marin County, CA
19. Santa Clara County, CA
20. Forsyth County, GA
21. Charles County, MD
22. Summit County, UT
23. Alexandria City, VA
24. Chester County, PA
25. Suffolk County, NY

According to the author, “It makes sense that suburban median incomes tend to beat out big cities; workers earning big metropolitan incomes look for top-tier schools and space to settle with their families, thus pulling up median incomes in small bedroom communities.” Brentwood and Franklin are no exception. The Williamson County school system has been the top ranked public school system in the state of Tennessee for more than 2 decades.

Williamson County Demographics

Population: 165,336

Median Household Income: $88,316.00

Percent of Residents 25 or Older with Bachelor’s Degree or Higher: 53%

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