August 2015 and September 2015 Phoenix Real Estate Update

Taxes Due no later than November 1 -  The due date for the first half tax is October 1. The first half installment becomes delinquent after 5:00 p.m. on November 1. If Nov 1 falls on a Saturday, Sunday, or legal holiday, the time of the delinquency is 5:00 pm on the next business day.   The second half tax is due March 1 of the following year and becomes delinquent after 5:00 p.m. on May 1. If May 1 falls on a Saturday, Sunday, or legal holiday, the time of the delinquency is 5:00 pm on the next business day.  You may pay both halves together until December 31.   If you miss a deadline you may owe fees plus interest charges of 16% per year prorated monthly.  To avoid paying on the wrong property, always check the property description and parcel number on the tax statement with your records.

If you have a mortgage on the property the taxes are typically paid by the mortgage holder.  However this is not always the case so be sure to look at your mortgage statement or call your mortgage company to confirm.  

Phoenix Real Estate Update

I hope you enjoy this monthly newsletter. Remember whether you are buying a new or resale home it is important to have a realtor to represent your interests. If you know of anyone who is thinking about buying or selling please let me know.  You can search the MLS from my website at

Do you have a rental property and need a property manager?  Please call or email Karen Van Vugt at 602-316-7028 or


Pat Hune


1st Southwest Realty

Search the real MLS from my website!

Cell 480-703-1976

Fax 480-304-9099

Equal Housing Opportunity

Market Overview  

Where is the market going? - Nearly every week I get asked these questions.  Are home prices going to continue to increase? Is there going to be another real estate bubble where prices will drop? Are interest rates going to go up?  What factors will make home prices go up or down?  Though I don’t have a crystal ball I don’t believe there is another bubble coming because:

1) There continues to be a severe inventory shortage especially in homes priced under $250,000.

2) New home builders are not building that many homes and most are priced at $250,000 and up.

3) Interest rates are low and I expected them to remain low for the next few months.  However Greg Hansen of Envoy Mortgage thinks interest rates will go up.  "I unfortunately, see interest rates gradually moving upwards in the near future.  The inflation rate may be our only saving grace in keeping the rates down.  As long as the inflation rate and the 10 yr bond stay down then interest rates will remain somewhat neutral.  But at the Fed meeting last week they decided not to move the rate up .25 but did signal that they will be in the near future.”  When interest rates go up it makes houses more expensive.  Most people buy based on the monthly payment they can afford so this means they may not be able to buy the house they want.  Buyers would be advised to find a home quickly to lock in the low interest rates.  Sellers could see prices flatten out as Buyers will not be able to afford paying higher prices and higher interest rates.  But it may also trigger a buying spree as Buyer want to lock the mortgage interest rate before it goes higher.

4) Prices are going up slowly.  Not like the steep increase prior to the bust.  Not as quickly as in 2011-2012 when the bottom was reached and the investors and owner occupant buyers knew it. They swept in and started buying like crazy and this pushed prices up quickly  and solved the inventory oversupply problem.  The banks also decided it was time to clean house, so to speak, and put homes into packages to get the non-performing loans off their books.  Large and small institutions bought these properties. When these owners decide to sell they sell to other investors so these homes never go on the market as an individual resale.  Often these properties are in the lower price ranges further exacerbating the shortage of entry level housing priced under $250,000.

Low Inventory Increases Number of For Sale By Owner Properties -  More for sale by owner signs are popping up.  One reason is there are still about 18% of the homeowners who are underwater on their mortgages. Some of them are close to breaking even with the house value at about what they owe.  But by the time they pay real estate commissions they still have to pay money to close. (See article below.)  

If these owners can avoid real estate commissions they may break even for the price of a For Sale By Owner sign in the front yard.  (Most of the FSBO websites charge fees and supplies and signs are extra. They charge  $350 to refer the seller to a limited service realtor plus the seller has to pay the buyer’s realtor a commission and whatever fee the listing realtor charges.  Sellers should contact a realtor directly as it will probably save money overall since the listing with the FSBO website is for a short time and more money has to be paid to renew the listing.)   People sell homes about once every 5-10 years while realtors sell one every 5-10 days.  If you are thinking about buying a FSBO property DO NOT do this without an experienced realtor and mortgage professional assisting you in the process. 

Seller Financing with no Qualifying - There are ads and signs for No Qualifying Seller Financing.  There is an old saying if it sounds to good to be true it probably is.  The catch on some of these is the buyer does not actually own the property as title is not transferred.  The buyer only has equitable title similar to a car loan. If the loan is not paid the car is repossessed.  The foreclosure rules do not apply so the time from default to eviction will be short.  Another issue is there is no title insurance. If the property has other liens and at the owner stops paying the lien holder will foreclose.  The owner could also add more liens to the property without the buyer’s knowledge.  If the lien holder forecloses the buyer would be out any money they had paid with no recourse.  The seller carry back financing rules were changed in January 2014 to protect the buyers but do not apply to this type of loan. (See article below.)  Before entering into this type of an agreement consult with an experienced realtor, mortgage professional and/or an attorney.


1)  STAT Newsletter, PPI and Rent Check Link 

2)  Rental Market  

3)  Multifamily and Commercial Real Estate Trends

4)  Increase in Rental Rates in Phoenix Expected to Slow 

5)  Real Estate Briefs

a)  Phoenix is in the top 10 as city with most affordable homes   

b)  Only 18% of Phoenix homeowners have underwater mortgages 

c)  Will Mortgages be delayed when New Mortgage Rules go into effect on October 3, 2015?

d)  Seller Carry Back Financing Rules as of January 2014

6)  Tales from the Real Estate Trenches 

 Why should you use a title company for real estate transactions?



1) STAT Newsletter Link - STAT is produced monthly  by the Arizona Regional Multiple Listing Service - the database realtors use to list homes for sale and that have sold.   ARMLS® COPYRIGHT 2015


August STAT

STAT Newsletter and Real Estate Market Highlights

Commentary by Tom Ruff of The Information Market

Our housing market continues to show slow and steady improvement. On a year-over-year basis distressed inventories are down, foreclosures are down, traditional buyers are up, purchase money mortgages are up and new construction is up. Each and every one of these metrics continues to improve. Sales were up 16.8% year-over-year for example.   

Some readers may groan that the month-over-month sales volume was 8.8% lower in July 2015 than in June 2015, but this decline is best explained by seasonal factors. First, our sales volume historically peaks in June and then declines each successive month through November. Secondly, June contained an additional business day. 

On the national front, the number of households that rent or own has been growing. According to the Housing Vacancy Survey from the Census Bureau, the total number of households in Q2 grew by 1.6 million households compared to the same quarter a year earlier. An increase in household formations is a positive sign for housing. 

Contingent Home Sales to Rise 

Over the past nine years the real estate industry has seen many different market scenarios. Remember the peak prices in 2006 and then the turn to unimaginable depths in 2011? This drop in home values was accompanied by an unprecedented number of foreclosures, short sales and bank sales leaving several hundreds of thousands of homeowners with no equity and bad credit. In 2012, our market saw bargain driven cash buyers dominate along with local and institutional investors. Median home values rose nearly 29% in 2012 and 18% in 2013. 

If you’ve been practicing real estate for nine years or less, then your definition of normal surely has to have a different meaning than what was normal for the 50 years prior to the boom. The cornerstone of the real estate market was that traditional first-time buyer purchasing a starter home and then moving up using their existing equity to purchase a larger home as their family increased. The next big thing in real estate might very well be that same old cornerstone. We should expect a strong resurgence of contingent home sales. From an MLS perspective, we are preparing for such a rise. 

A report by Fannie Mae covered this exact topic, but from a slightly different perspective. We heard of underwater homeowners, now invisible equity? Per Fannie Mae: 

“Data from Fannie Mae’s National Housing SurveyTM (NHS) suggest an additional factor that may be weighing down housing markets: Homeowners may be underestimating their home equity. In particular, if homeowners believe that large down payments are now required to purchase a home, then widespread, large underestimates of their home equity could be deterring them from applying for mortgages, selling their homes, and buying different homes.”

The national real estate news outlets found more reasons to blame millennials for slow market growth this month. Sean Becketti, Freddie Mac Chief Economist, said in an interview with DS News that a slow job market, student loan debt and a hangover from the recession were slowing their entrance into the housing market. I believe I’ve found an additional reason - millennials are spending their cash on too much craft beer:   Craft beer consumption is highest among people ages 25 to 34, a majority of whom tell pollsters that the beer they drink is a reflection of their identity.” 

As a baby boomer, I fail to see how this generation is so different from mine. At that age, I identified with cheap beer. I remember spending most of my money on beer and girls, and I guess the rest of my money I just wasted. 

The ARMLS Pending Price Index (PPI) 

It is not uncommon for the median price to fall from July to August. This has occurred seven times over the 14 years ARMLS has been tracking median home prices. Our last PPI projected a July median price of $213,000 with the actual median coming in at $212,000. That’s an error rate of less than 0.5%. Looking ahead to August, the ARMLS Pending Price Index projects a median sales price of $210,000. We begin August with 6,341 pending listings and 3,385 UCB listings giving us a total of 9,726 residential listings under contract. This compares to 10,761 listings under contract at the beginning of July. The August 2015 sales volume will undoubtedly exceed August 2014 (6,428), but should be lower than the 7,914 total in July 2015. STAT is projecting 7,200 home sales in August. 

We have now come to the end of our home buying season. Here’s a tip to keep in mind when reading various housing reports over the next few months: quite a few real estate reporters do not know how to account for the seasonal aspects of the real estate market. As a result, housing reports will tend to appear overly pessimistic as fall approaches just as they tended to be overly positive in the spring.

2)  Rental Market Check - Rent Check is an ARMLS's  publication tracking single family home rentals.  Click on the link for the statistics.

August Rent Stats

September Rent Stats

3) Multifamily and Commercial  Real Estate Trends

Current Phoenix market trends data indicates a decrease of +1.1% in the median asking price per unit for Multifamily properties compared to the prior 3 months, with an increase of +10.4% compared to last year's prices. County-wide, asking prices for Multifamily properties are 0.2% higher at $58,848 per unit compared to the current median price of $58,793 per unit for Multifamily properties in Phoenix, AZ.  There has been an significant increase in the sales prices for duplexes, triplexes and fourplexes with very little available under $200,000.  

Loopnet Commercial Trends


4)  Increase in Rental Rates in Phoenix Expected to Slow 

Sloane Kingston, KTAR, September 2015

What goes up, must eventually level off, so say those keeping a close watch on the rental market in Phoenix and other parts of the country.  It’s a good time to be an investor in rental property with increasing rents and low vacancy rates. But with the supply of apartments rising, and renters looking to buy as the economy improves, investors shouldn’t expect those soaring rental incomes to continue for much longer.

Tina Tamboer of “The Cromford Report” told KTAR’s That Real Estate Show the high cost of rent is forcing renters to take a closer look at putting money into property they can call their own.  “If you’re actually trying to control your monthly income, renting is probably not the best idea for you,” she said. “If you’re able to qualify, if you really want to fix your monthly expenses, get a 30-year fixed mortgage rate.”  Tamboer added the increase in average rent per month per square foot across the greater Phoenix area has accelerated more over the past two years than it did between 2000-2013.  “Rent is now the one thing in the American economy that is rising faster than anything else,” she said.

Published as a contributor for Forbes, Lawrence Yun, the chief economist of the National Association of Realtors, offered a number of reasons for why we should expect a tapering off of soaring rental income.  Yun pointed out that construction activity on apartments is already above the historical norm and that steady job growth, along with falling debt levels (outside of student loans) should help renters improve their credit scores and put them in a better position to buy homes.  Yun also made note of so-called boomerang buyers re-entering the housing market after foreclosures and short sales forced many into rentals during the housing crisis.  He emphasized that while there may still be room for rental income growth for another year or two, we should also expect a slowdown in rental housing and rental income in the not-too-distant future.


5) Real Estate Briefs

a) Phoenix is in the top 10 as city with most affordable homes  

Catherine Reagor, The Republic, September 2015

Metro Phoenix’s calling card to new residents has long been its affordable home prices.  Valley home prices are steadily climbing, but the region’s houses are still bargains compared to much of California, Seattle, Denver, Chicago and even Las Vegas.  Metro Phoenix is the eighth most affordable big U.S. city to buy a house now, according to a new ranking from a reputable financial research firm.

Cleveland, Pittsburgh, Cincinnati, St. Louis, Detroit, Atlanta and Tampa are the only cities (in that order) to rank above Phoenix for the ease of someone making the area’s average salary being able to afford an average-priced house.  

In metro Phoenix, a homebuyer needs to earn at least $43,100 to be able to buy one of the region’s median-priced houses for $217,900, according to  Since the Valley’s household income is hovering around $50,000, it would appear more than half the area’s residents, families or households could afford to buy instead of rent.

Data show home sales, homebuilding are rising in region. But there’s a caveat. The index is based on a homebuyer coming up with a 20-percent down payment. So in metro Phoenix, a buyer needs to make about $43,000 and have almost that much saved to put down on the house to afford one.  Down payments are one of the biggest hurdles for many homebuyers now, particularly first timers. Tougher lending standards imposed by banks after the housing crash have made 20 percent down payments the new norm for many homebuyers.  But first-time buyers do have a few more options in the Valley, particularly as the federal government and local groups have stepped up to help this group that had little to nothing to do with the bad loans that caused the housing crash.

President Barack Obama announced in Phoenix early this year that the insurance premium on Federal Housing Administration-back mortgages, used mostly by first-time buyers, would be cut in half. Also, several programs allow buyers to put as little as 3 percent down on these government loans.  The Arizona Housing Department has a program that gives eligible buyers $5,000 or more in down payment help on FHA loans that require less money upfront.

No down payment? A new program could help. But for many first-time buyers, a down payment may not be the biggest hurdle to buying in metro Phoenix today.  Finding a house priced below $220,000 in a good area that at least five other buyers haven’t already made an offer can be tougher.


b)  Only 18% of Phoenix homeowners have underwater mortgages  

Amy Edelen, Conkrite News, September 2015

PHOENIX — As underwater mortgages continue to drop nationally, many Phoenix homeowners still grapple with negative equity, according to a report released this month by Zillow Inc.  The report indicated 18 percent of Phoenix homeowners had underwater mortgages — when homeowners owe more than their house is worth — in the second quarter of 2015.  Although negative equity decreased from 22 percent since last year, Phoenix ranks sixth out of the 35 metro areas surveyed for the highest number of homeowners with negative equity.

“Phoenix was definitely one of the hardest-hit markets during the housing bust,” said Svenja Gudell, Zillow’s chief economist.

Phoenix condominium owners are experiencing a higher rate of negative equity than single-family homeowners.  About 26 percent of Phoenix condo owners are underwater on their mortgages, also above Zillow’s national average of 20 percent.  Because condos took a much harder nosedive after the Great Recession, it’s taking longer for values to rebound, Gudell said.  “If we go back to the high point of the underwater time period, there were just a ton of $20,000 to $30,000 to $40,000 condos being sold,” said Jim Sexton, president of the Arizona Association of Realtors. “We don’t have those any more. Our prices have improved in some areas significantly.”

Zillow splits data into three tiers based on estimated home values.  The bottom tier of homes, which includes low-end or “starter” residences, are more likely to have negative equity. However, these low-end homes are appreciating in value and are fueling the national decline in underwater mortgages.  Nationally, underwater mortgages dropped to 14.4 percent — the first time it’s been below 15 percent since the housing bubble burst, according to Zillow, a real-estate database company.  Although home value appreciation has been quite good over the past four years, it’s starting to slow down across the board. If homeowners aren’t upside down on their mortgages, it’s a good time to sell because of limited inventory at the lower end of the market, Gudell said.

A few of the Valley’s outlying cities have depreciated in value, but homes within the city core have gained value, she said.  The average home price in metro Phoenix is $263,700, according to the Arizona Regional Multiple Listing Service.  “We’ve seen a lot of healthy growth in Phoenix and most cities across the metro area,” Gudell said. “But, the problem is there is still above average negative equity, so it will take some time.”  

Sue Klima, president of the Phoenix Association of Realtors, said the Zillow data is close to what she’s seeing in the Phoenix market. Klima was underwater on her mortgage and recently put her home on the market.  She said she paid $435,000 for a 2,400-square-foot home in 2006, which is now worth $355,000.  However, she was fortunate enough to put down a large down payment, reducing negative equity.  (Editor’s note:  Really.  So losing the $80,000 downpayment (more like $100,000 after closing costs and commissions) means she was fortunate?  She bought when there were 80-10-10 loans readily available. This would be 80% on the first, 10% on the second, and 10% or about $44,000 down.  Would it have been better to put less money down and sell it as a short sale or let it go to foreclosure and keep the $44K?)  

She advises homeowners with underwater mortgages between $10,000 to $15,000 to wait it out.  “I really think the whole area is going up in value, and we have a shortage of inventory,” Klima said. “There are so many people out there buying a property.”  The average time period a house stays on the market in Phoenix is about 75 days, Sexton said.  “It’s more of a sellers’ market now, which is good for folks that are underwater,” he said. “If anything, we are back into the multiple offer situation.”


c)  Will Mortgages be delayed when New Mortgage Rules go into effect on October 3, 2015?

Pat Hune, Fidelity National Title Agency, The Republic and Various Sources, September 2015

The Consumer Financial Protection Bureau (CFPB)  is changing how mortgage loans are processed on October 3, 2015.  Buyers and Sellers get to learn a bunch of new acronyms like TRID which stands for TILA-RESPA Integrated Disclosure Rule. (Don’t you love acronyms that incorporate other acronyms?) RESPA is the Real Estate Settlement Procedures Act.  RESPA was implemented in 2009 dictating when and what mortgage lenders had to disclose to homebuyers and what could and could not be changed less than three days prior to close of escrow.  The purpose is to make it easier for homebuyers to understand residential real estate transactions and lending. (Note this does not impact cash or commercial transactions.)

The new process is a Loan Estimate Disclosure Form (this replaces the Good Faith Estimate and the initial Truth in Lending disclosures) has to be delivered to the buyer three business days after the buyer submits the loan application.  There is a mandatory seven business day waiting period  before the homebuyer can sign loan docs.  These documents provide borrower with the sales price, loan term, type of loan, whether the loan is assumable and rate lock information.  It also shows the loan amount and what downpayment the homebuyer needs to close on the loan.  The homebuyer will also see the total monthly payment including HOA dues, homeowners insurance, property taxes late payment penalties and whether the lender intends to service the loan.  One new piece of information for some will be the APR or annual percentage rate of the loan and the total interest paid over the term of the loan as a percentage of the loan amount.  APR refers to the yearly fee the customer pays for borrowing money.  This number is typically the interest rate plus a small percentage.  For example if the interest rate is 4.00% the APR may be 4.2%.

The Closing Disclosure form replaces the HUD-1 Settlement Statement and the final Truth in Lending disclosures.  This form must show the transaction terms and costs and be received by the borrower three business days prior to the homebuyer signing loan docs.

These mandatory waiting times have raised concerns from homebuyers and sellers, lenders and realtors that the changes will delay loan processing.  According to the CFPB the answer is NO for just about everybody. For mortgage applications submitted on or after October 3, 2015, lenders must give homebuyers  new, easier-to-use disclosures about the loan three business days before closing. This gives the buyers time to review the terms of the mortgage before they get to the closing table.

Many things can change in the days leading up to closing. Most changes will not require the lender to give buyers three more business days to review the new terms before closing. The new rule allows for ordinary changes that do not alter the basic terms of the deal.

Only THREE changes required a new 3-day review period:

1)  The APR (annual percentage rate) increases by more than 1/8 of a percent for fixed-rate loans or 1/4 of a percent for adjustable loans. (Lenders have been required to provide a 3-day review for these changes in APR since 2009.) A decrease in APR will not require a new 3-day review if it is based on changes to interest rate or other fees.

2) A prepayment penalty is added, making it expensive to refinance or sell.

3) The basic loan product changes, such as a switch from fixed rate to adjustable interest rate or to a loan with interest-only payments.

NO OTHER changes require a new 3-day review period:

There has been much misinformation and mistaken commentary around this point. Any other changes in the days leading up to closing do not require a new 3-day review, although the lender will still have to provide an updated disclosure. For instance, the following circumstances do not require a new 3-day review:

1)  Unexpected discoveries on a walk-through such as a broken refrigerator or a missing stove, even if they require seller credits to the buyer.

2) Most changes to payments made at closing, including the amount of the real estate commission, taxes and utilities proration, and the amount paid into escrow.

3) Typos found at the closing table.

Other Changes for Buyers and Sellers 

Though it sounds like not much will change there will be things to consider.  

1) Contracts for VA and FHA buyers should never be written with a close date at the end of the month or on Friday.  If the loan does not close until the following month more interest will need to be paid upfront.  Contracts should be written with at least a 7 day window prior to the end of the month and typically not on a Friday.  

2) Lining up closings like dominoes will become more difficult.  The scenario is Buyer Cruise needs to sell his house before he can buy.  Buyer Cruise is under contract to sell his house to Buyer Washington.  Seller Jones has a contract with Buyer Cruise’ to purchase Jones house contingent on Cruise selling his house to Washington who is a first time homebuyer.  Seller Jones is under under contract to buy another house and it is contingent on Cruise completing the purchase of Seller Jones’ house. Seller Jones is counting on Buyer Cruise to perform.   At the last minute Buyer Washington’s lender has to increase the APR for whatever reason.  Now all the closings are delayed and those moving trucks idling in front of the house will have to wait.  

3) Interest rate locks are good for 30 days.  If there is a delay in getting information to the lender and the lock expires then it will cost the buyer money or the interest rate will go up.  

The objective is to provide a homebuyer more time to shop lenders for rates and costs and ask questions.  Initially the loan may take longer to process so homebuyers should plan on at least 45 days rather than 30 days as has been common.  But the days of closing loans in 15-20 days is definitely over.  

For more information go to or


d)  Seller Carry Back Financing Rules as of January 2014

Coombs, Gottlieb & MacQueen P.C, January 2014

On January 20, 2014 the Consumer Financial Protection Bureau (“CFPB”) provided some much needed clarity on seller carry back financing under Regulation Z of the Truth In Lending Act (“TILA”). According to the new rules, a seller can finance a purchase and will not be considered a “loan originator” under the act as long as one of two provisions applies. Specifically, the two provisions that exempt seller financiers from the requirements of TILA are 12 CFR §§ 1026.36(a)(4) and (a)(5).  The (a)(4) Exemption: This is an exemption for the sale of three or fewer properties in a 12 month period and provides that a person is not a loan originator if:

1) The person provides seller financing for the sale of three or fewer properties in any 12 month period to purchasers of such properties, each of which is owned by the person and serves as security for the financing,

2) The person has not constructed or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person,

The person provides seller financing that meets the following requirements:

a) The financing is fully amortizing,

b) The financing is one that the person determines in good faith the consumer has a reasonable ability to repay, and

c) The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increased. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations.

The (a)(5) Exemption: This is an exemption for only one property, but does not expressly prohibit a balloon payment. This provision states that a natural person, estate, or trust that meets all of the following criteria is not a loan originator if:

i) The natural person, estate or trust provides seller financing for the sale of only one property in any 12-month period to purchasers of such property, which is owned by the natural person, estate or trust and serves as security for the financing,

ii) The natural person, estate, or trust has not constructed, or acted as a contractor for the construction of, a residence on the property in the ordinary course of business of the person,

iii) The natural person, estate or trust provides seller financing that meets the following requirements:

  The financing has a repayment schedule that does not result in negative amortization,

  The financing has a fixed rate or an adjustable rate that is adjustable after five or more years, subject to reasonable annual and lifetime limitations on interest rate increases. If the financing agreement has an adjustable rate, the rate is determined by the addition of a margin to an index rate and is subject to reasonable rate adjustment limitations.

Although the rules above, and many others, such as repayment ability do not go into effect until January 10, 2014, Dodd-Frank has still had the effect of seizing up private financing for owner-occupied housing. Many are treading lightly in this area as warnings have been made that the provisions and penalties of the new law will be enforced. However, as long as the above rules and conditions are met, seller-carry backs on owner-occupied residences should still be possible. 


6)  Tales from the Real Estate Trenches 

Pat Hune, Broker at 1st Southwest Realty

Why should you use a title company for real estate transactions?

Recently I listed a house where the owner had passed away.  The owner had purchased the property in 2006 from a friend and did not use a title company as it was a cash transaction.  When the house went under contract and escrow was opened the title company found a lien of $527,000 that had never been released in 2006 when the property changed hands. The title company did find the release of the second. The title company started to search the records looking for the Trustee. Unfortunately the trustee had passed away and his records were destroyed.  It looked like this transaction would not close if this lien could not be released. While discussing the issue with the title officer it occurred to me that the house was in Queen Creek, AZ.  Part of Queen Creek is in Maricopa County while a majority is in Pinal County.  This property was in Maricopa County.  I suggested the title company check Pinal County and sure enough - there was the release. It was still quite a bit of work to get the original lender to re-issue a new release but thanks to the perseverance of Theresa Boehnke at Grand Canyon Title all paperwork was in place for the closing.

The moral of the story is always use a title company for real estate transactions. It may cost a little money but can save a lot of headaches and money in the long run.