Wire fraud schemes are evolving, and scammers are finding new ways to infiltrate real estate transactions—including exploiting virtual meeting platforms to dupe home buyers and sellers. A hacker may break into an email account and invite your client to a virtual meeting. How will the client know he or she is being targeted by a scammer? Typically, the hacker will use a still picture, claim to have audio and video issues and then direct the client to initiate a fraudulent wire transfer, warns Charlie Lee, senior counsel and director of legal affairs for the National Association of REALTORS®, in the latest Window to the Law video.

A real estate agent, lender, attorney, buyer, seller or another party to the transaction could have their email hacked by a scammer who then poses as them. Victims who fall for these scams could lose the funds they’ve saved over their lifetime to move forward with a home purchase. Some real estate professionals have been named in lawsuits brought by clients who say their agents failed to prepare them for possible wire fraud scams adequately.

“Real estate is an attractive target for cybercriminals to steal large sums of money,” Lee says in the video. “Wire fraud usually involves a cybercriminal compromising a business or personal email account and sending the buyer or another party, in the last minute, a convincing yet fraudulent instruction to wire money to the wrong account.”

Lee urges real estate professionals to take the following steps:

• Talk to your clients and staff about the dangers of wire fraud scams and how to avoid them. Several REALTOR® associations have developed wire fraud notices for their members to use. Some require the client’s signature after reviewing. View examples.
• Tell clients to always verify wire instructions in person or through a known, trusted phone number. Do not trust wire instructions provided by email.
• Learn best practices for strengthening your cybersecurity both at home and in the office.
• Review your E&O and cyber liability policies. Ensure that you have sufficient coverage in case an incident occurs

©National Association of REALTORS®
Reprinted with permission

Renovation Startup Revive Wins iOi Pitch Battle

Revive, a technology startup enabling home sellers to update their properties with no upfront costs, was named Thursday as the winner of the fourth annual Pitch Battle at the National Association of REALTORS®’ 2022 Innovation, Opportunity & Investment (iOi) Summit in Los Angeles.

Twelve companies bringing solutions to the real estate market, from simplifying the home inspection process to helping renters save for a down payment, competed in the “Shark Tank”–style contest hosted by Second Century Ventures, NAR’s strategic investment arm. The contestants, representing companies in the U.S. and U.K., presented four-minute pitches to more than 400 conference attendees, including venture capitalists, futurists and real estate professionals. The Pitch Battle also was livestreamed to thousands of virtual attendees.

Revive founder and CEO Michael Alladawi highlighted the company’s hands-on approach to helping sellers maximize their property’s ROI. The company combines processes, technology and expertise to help owners and their agents create plans for renovations. Revive provides capital at no upfront cost to the homeowner and a vetted contractor to execute those plans. As the Pitch Battle victor, Revive will receive a prize package that includes $15,000, a national platform to help gain market share, and a booth at NAR NXT, The REALTOR® Experience—the association’s annual conference—this November in Orlando.

“Revive embodies the essence of iOi and our Pitch Battle,” says NAR CEO Bob Goldberg. “The products and services that were on display will have a tremendous impact on consumers and real estate agents. I’m thrilled we have this opportunity to promote the progress unfolding in the market, and I congratulate Revive on the well-deserved victory.”

In-person and virtual iOi audiences also voted on the Pitch Battle’s Crowd Favorite, which was awarded to Stake, a loyalty program delivering cash back for renters. Available in 30,000 homes nationwide, Stake empowers renters to save, build wealth and unlock free and equitable banking services. Stake cofounder and CEO Rowland Hobbs explained how rental communities that offer Stake outperform others with dramatically improved demand, loyalty and retention.

See the full list of 2022 Pitch Battle finalists.

©National Association of REALTORS®
Reprinted with permission

Mortgage Rates Inch Closer to 7%

Home buyers who waited to buy a home this month compared to last month may have some regrets. Home buying is 12% more expensive than just a month ago. Fast-rising mortgage rates—up one percentage point in September alone—have added an extra $250 more onto monthly mortgage payments over the past month, Nadia Evangelou, senior economist and director of forecasting, writes at the National Association of REALTORS® blog.

The higher rates are prompting the housing market to drastically slow: Pending home sales fell 24% last month compared to last year, and existing-home sales were down 20% annually in August.

Freddie Mac reports the 30-year fixed-rate mortgage averaged 6.70% this week. That is up from 3.01% a year ago.

“The uncertainty and volatility in financial markets is heavily impacting mortgage rates,” says Sam Khater, Freddie Mac’s chief economist. He adds that home shoppers would be wise to shop around.

“Our survey indicates that the range of weekly rate quotes for the 30-year fixed-rate mortgage has more than doubled over the last year,” he notes. “This means that for the typical mortgage amount, a borrower who locked-in at the higher end of the range would pay several hundred dollars more than a borrower who locked-in at the lower end of the range. The large dispersion in rates means it has become even more important for home buyers to shop around with different lenders.”

Mortgage Rate Averages For This Week

Freddie Mac reports the following national averages with mortgage rates for the week ending Sept. 29:

• 30-year fixed-rate mortgages: averaged 6.70%, with an average 0.9 point, rising from last week’s 6.29% average. Last year at this time, 30-year rates averaged 3.01%.
• 15-year fixed-rate mortgages: averaged 5.96%, with an average 1.3 point, increasing from last week’s 5.44% average. A year ago, 15-year rates averaged 2.28%.
• 5-year hybrid adjustable-rate mortgages: averaged 5.30%, with an average 0.4 point, rising from last week’s 4.97% average. A year ago, 5-year ARMs averaged 2.48%.

Freddie mac reports commitment rates with average points to better reflect the total upfront costs of obtaining the mortgage.

©National Association of REALTORS®
Reprinted with permission

FHA Moves to Include On-Time Rental Payments for First-Time Buyers

The Federal Housing Administration published a letter to lenders on Tuesday urging them to consider including a borrower’s positive rental payment history when applying for FHA-insured financing. The move is believed to be a boost for first-time home buyers to help to improve their credit scores when applying for a mortgage, the memo reads.

“If you’re regularly paying your rent on time, that’s a good indication you will also pay your mortgage on time,” says Julia Gordon, Federal Housing commissioner. “We hope that adding this positive factor to all of the characteristics currently considered in an FHA credit evaluation will increase access to affordable FHA-insured mortgages for first-time home buyers.”

The FHA will consider positive rental payment history as the on-time payment of all rental payments over the last 12 months. Lenders originating purchase mortgages for FHA insurance will be required to obtain verification of the borrower’s timely rental payments and indicate it on their TOTAL Mortgage Scorecard, which the FHA uses to evaluate borrower credit history and mortgage application information when underwriting loans.

“This change makes FHA requirements more flexible and can help remove barriers to homeownership, particularly for those with nontraditional credit or thin credit files,” says Julienne Joseph, deputy assistant secretary for single-family housing.

The FHA’s move follows on the heels of an announcement by Experian, one of the main credit bureaus, earlier this month that its Experian Boost program would offer a way for consumers to add qualifying, positive residential rental payments directly to their credit file. Experian’s research has determined that 66% of its consumers will see an instant increase in their FICO score by factoring in on-time rental payment data. The credit bureau said consumers who would see the biggest improvement—of about 14 points—are those with thin credit files or low FICO scores.

Also, Fannie Mae launched this week a “Multifamily Positive Rent Payment Reporting” pilot program, which is aimed at helping renters build their credit histories and boost their credit score. The program allows eligible property owners to share on-time rent payment data through a system to the three major credit bureau’s so it can be included in the renter’s credit profile. It’s the latest of several initiatives from the government-sponsored enterprise to get rental payment history included in the underwriting process.

In 2021, Freddie Mac announced a new program to help renters build up their credit profiles and help make them more creditworthy. The initiative provides a means for owners or managers of multifamily properties to report on-time rental payments to the three major credit bureaus.

The move was aimed at helping a portion of the more than 45 million U.S. adults who have no credit score.

©National Association of REALTORS®
Reprinted with permission

Decade-High Rates Deeply Cut Into Contract Signings

House hunters are backing away from the housing market as mortgage rates continue to rise sharply. The National Association of REALTORS®’ newly released Pending Home Sales Index—a forward-looking indicator of home sales based on contract signings—fell 2% in August compared to July and is down 24.2% compared to a year ago. This marks the third consecutive month that pending home sales have fallen.

“The direction of mortgage rates—upward or downward—is the prime mover for home buying, and decade-high rates have deeply cut into contract signings,” says Lawrence Yun, NAR’s chief economist. “If mortgage rates moderate and the economy continues adding jobs, then home buying should also stabilize.”

Until then, home buyers are faced with mortgage rates that have doubled compared to a year ago, adding hundreds of dollars to monthly mortgage payments. Yun warned that mortgage rates are likely to rise to near 7% in the coming months. That would mark a far jump from the 2.88% rates just one year ago.

The Mortgage Bankers Association reported on Wednesday that 30-year rates with conforming loan balances reached 6.52% last week, prompting mortgage applications for home purchases to fall by 29% compared to the same week a year ago.

Yun has said the real estate market has fallen into a “housing recession.” He expects the economy to remain sluggish throughout the remainder of the year. “Only when inflation calms down will we see mortgage rates begin to steady,” Yun says.

The higher rates also are leading more home buyers to get cold feet and back out of existing-home purchase contracts. About 15.2% of contracts for homes in August were canceled, according to newly released data from Redfin. That’s up from 12.1% a year earlier. In some Sun Belt regions, like Phoenix, Tampa, Fla., and Las Vegas, the number of canceled contracts has risen by 20% or more. These areas of the country also have seen the largest uptick in home sales and price appreciation over recent years.

What’s Ahead for Housing

NAR predicts that the higher mortgage rates will cause existing-home sales to drop by15.2% in 2022, reaching 5.19 million units. New-home sales are projected to drop by 20.9%.

Still, limited housing inventory and nearly “nonexistent distressed property sales” continue to support home prices, Yun says. Despite the drop in sales, he forecasts that home prices will post an increase of 9.6% for 2022.

But Yun does foresee slower price appreciation ahead for 2023 and says home sales will bounce back. “Next year, the annual median home price is expected to rise by only 1.2%,” Yun says. “Home sales will pick up in the second half of 2023, but will be down by 7.1% overall.”

Regional Snapshot for Contract Signings

Three out of the four major regions of the U.S. saw month-over-month decreases in contract signings in August. The West was the only one to post a gain, albeit modest, NAR reports. All major regions posted year-over-year, double-digit declines.

“Home prices are the least affordable in the West and, consequently, the region suffered deeper annual declines in contract signings due to rising interest rates when compared to other areas of the country,” Yun says. “However, the recent increases of the last two months, though small, are encouraging.”

©National Association of REALTORS®
Reprinted with permission

Realtor.com® Acquires Agent Matching Platform

Move Inc., the operator of realtor.com®, announced it was acquiring UpNest, a tool to help home buyers or sellers compare real estate agents and select the best match for them.

Realtor.com® already connects home sellers with agents through its ReadyConnect Concierge referral network, but, according to company officials, the UpNest acquisition will help the company further expand its matchmaking services to pair customers and agents. Terms of the acquisition were not public.

“Our open marketplace approach is all about empowering people with choices,” said David Doctorow, realtor.com®’s CEO. “While some of our competitors try to funnel buyers, sellers and real estate professionals into a specific set of services in a closed system, realtor.com® helps homeowners choose how they want to find and connect with an agent, and agents and brokers can decide which methods work best for them.”

Consumers who submit leads through UpNest’s marketplace will receive proposals from three to five agents within 12 hours. The consumers then can decide whom to contact.

Sellers who prefer to be connected directly with an agent can use realtor.com®’s ReadyConnect Concierge network. They can still be connected by the “List your home agent with an agent” link that is available on the seller tab on realtor.com®’s landing page. Realtor.com® also connects sellers with real estate agents through its Seller’s Marketplace. In the marketplace, several companies offer options for homeowners to sell their home to an iBuyer.

Source: 

Move Inc.

©National Association of REALTORS®
Reprinted with permission