White House Still Calling Housing Recovery ‘Fragile’

White House Still Calling Housing Recovery ‘Fragile’. Image courtesy of renjith krishnan / FreeDigitalPhotos.net

The latest Housing Scorecard from the Obama Administration shows progress on several fronts—notably home prices—but continues the familiar cautionary language in describing the recovery.

The scorecard evaluates housing data from December 2013. The majority of such scorecards provided by the administration this year utilize the word “fragile” to describe the market, and this month’s report follows the trend.

“December’s Housing Scorecard shows that we are continuing to make progress helping struggling home owners get back on their feet,” says Edward J. Szymanoski, associate deputy assistant secretary for economic affairs. “Since the beginning of 2012, the number of home owners underwater has declined by 5.7 million and homeowners’ equity has risen by 55 percent to $9.7 trillion. There remains more work to do to address the 6.4 million home owners who remain underwater; nevertheless, these are encouraging signs that the housing market recovery is providing millions of American home owners with more economic security.”

Each month, the report highlights how the Making Home Affordable program is performing. As of December 2013, nearly 1.3 million home owners have received permanent loan modifications through the Home Affordable Modification Program (HAMP). The report also showed that home values are on par with prices in early 2005, according to data from the Federal Housing Finance Agency.

Source: U.S. Department of Housing and Urban Development 

New Mortgage Rules Roll Out – What Will Be the Impact?

New Mortgage Rules Roll Out – What Will Be the Impact? Image courtesy of suphakit73 / FreeDigitalPhotos.net

New mortgage rules take effect Friday that set out to protect borrowers against risky lending practices. One of the biggest changes is that borrowers will likely need to show more proof that they can actually afford the mortgage they’re applying for.

Here are two main terms to know from the new rules:

“Ability-to-repay” rule: Mortgage lenders must ensure borrowers can actually afford their loans over the long term. Applicants’ income, assets, savings, and debt against their monthly house payments will be more closely scrutinized. Borrowers likely will need to produce “even more tax records, pay stubs, and bank and investment account information,” USA Today reports.

Qualified Mortgage: Borrowers who meet the ability-to-repay requirements will likely be eligible for a QM. QM loans must meet at least some of the following guidelines: They cannot contain risky features, such as terms that exceed 30 years or interest-only payments; carry more than 3 percent in upfront points and fees for loans above $100,000; or push a borrowers’ total debt above 43 percent of their monthly income unless the loan qualifies to be backed by Fannie Mae, Freddie Mac, the FHA, or a small lender.

Lenders can still issue loans outside of the QM guidelines, but lenders will have to do so realizing they’ll have less protections against future lawsuits.

The Consumer Financial Protection Bureau estimates that about 92 percent of mortgages currently meet QM requirements.

Still, the real estate and mortgage industry, the CFPB, and others will watch implementation of the new rules closely to determine whether they make it more difficult for borrowers to qualify for mortgages.

The new rules may make it more difficult for borrowers who have fluctuating incomes or self-employed individuals to validate their incomes, according to Goldman Sachs. The 43 percent debt standard also may prove a hurdle for some borrowers who find they can’t qualify for the loan they need to buy the house they want, and some borrowers may find they need larger down payments to keep within that 43 percent rule.

The new rules may also cause some delays in lending, at least initially, says Keith Gumbinger, mortgage expert with HSH Associates.

“It’ll be a muddy mess until the rules settle in,” Gumbinger says.

Source: “New Mortgage Rules Aim to Prevent Risky Loans,” USA Today (Jan. 9, 2014)

The Most Powerful Person in Real Estate Is…

The Most Powerful Person in Real Estate Is… Image courtesy of photostock / FreeDigitalPhotos.net

When it comes to influencers in residential real estate, no one was more powerful in 2013 than Realogy CEO Richard A. Smith, according to a new ranking of the 200 most powerful people in real estate by Stefan Swanepoel, who authors the Swanepoel TRENDS Report and Swanepoel TECHNOLOGY Report.

The first annual Swanepoel Power 200 list, co-edited by consultant Rob Hahn and billed as “the most comprehensive list of influential CEOs, thought leaders, and senior executives ever assembled in the residential real estate brokerage business,” bases its rankings on factors such as an individual’s tenure in the real estate business, the office he or she holds, the decision-making and financial power of the company, and how much significance the company has in the industry, among others.

“While there are others who have higher personal profiles within the industry, there is no doubt that none have more power and influence in almost every aspect of real estate than Smith,” SP200 said of its top pick, noting that Realogy owns top power brands such as Century 21, Coldwell Banker, and Sotheby’s International Realty.

Rounding out the top 10 most powerful people in real estate on SP200’s list are:

• Ronald J. Peltier (No. 2)
  Chairman and CEO, HomeServices of America
• Spencer Rascoff (3)
  CEO, Zillow
• Gary W. Keller (4)
  Co-founder and chairman, Keller Williams Realty International
• Dave L. Liniger (5)
  Co-founder and chairman, RE/MAX
• Alexander E. Perriello, III (6)
  President and CEO, Realogy Franchise Group
• Dale A. Stinton (7)
  CEO, National Association of REALTORS®
• Pete Flint (8)
  Chairman and CEO, Trulia
• Mark Willis (9)
  CEO, Keller Willis Realty International
• Steven Berkowitz (10)
  CEO, Move, Inc.

Members of NAR’s executive and leadership teams joined Stinton on SP200’s list, including Senior Vice President Bob Goldberg (No. 34), Past President Gary Thomas (No. 39), SVP and Chief Lobbyist Jerry Giovaniello (No. 45), General Counsel Laurie Janik (No. 47)*, and 2014 President Steve Brown (No. 51).

Local and state association leaders were also represented on the list, including Bob Hale, CEO of the Houston Association of REALTORS® (No. 23); Joel Singer, CEO of the California Association of REALTORS® (No. 36); and Ed Barisa, CEO of the Ontario Association of REALTORS® (No. 125).

*Janik retired from NAR in November.

—source Graham Wood, REALTOR® Magazine

More Home buyers Willing to Compromise

More Home buyers Willing to Compromise. Image courtesy of Stuart Miles / FreeDigitalPhotos.net

Faced with tight inventories of homes for sale, more buyers are realizing they may have to bend a little in order to get the home they want.

According to a new survey by the real estate brokerage Redfin, 35 percent of real estate agents said that buyers are now “willing to pay more” to find a home compared to this summer. About 30 percent of agents also reported that buyers are more “flexible on features,” held “lower expectations” for how far their money would stretch, and were “looking to new construction” due to inventory constraints. Real estate agents also reported that home buyers were more “prepared to waive contingencies” in order to win a bid.

Eighty-seven percent of the Redfin real estate agents surveyed cited “limited inventory” as the biggest challenge that home buyers face nationwide.

While home buyers may be getting more realistic about market conditions, the survey found that sellers are not. Sixty-three percent of agents said that sellers have “unrealistic expectations” about the value of their home. What’s more, 31 percent of agents say that sellers also are frustrated with the number of homes available that they would be interested in buying.

Source: Redfin

Banks Aim to Clear Foreclosure Backlogs

Banks Aim to Clear Foreclosure Backlogs. Image courtesy of renjith krishnan / FreeDigitalPhotos.net

Banks are trying to capitalize on rising home prices by selling seized homes more quickly. States with some of the largest backlogs of foreclosures are seeing an upswing in properties that are moving to auction for quicker sales since last July, according to RealtyTrac.

“Lenders know there’s now a much better chance they can get those properties sold, so they’re moving to do that,” says Daren Blomquist, vice president at RealtyTrac.

The number of new foreclosures entering the pipeline is slowing. However, the number of foreclosures going to auction is seeing an uptick in 19 states, particularly in Oregon, Massachusetts, Utah, Connecticut, Delaware, and New York.

In New York, the average foreclosure can take 1,037 days to process, and in Florida, the process averages 929 days.

Back when buyers were on the sidelines and prices were still falling, lenders’ had little incentive to speed up the foreclosure process. Doing so would only add to the large amount of empty houses that needed to be maintained. But now that prices are rising in most markets, the backlog of bank-owned homes is being trimmed quickly. With tight inventories of homes for-sale in many cities, banks are seeing opportunity in getting repossessed homes back on the market faster for a quick sale, analysts say.

Source: “Housing recovery sparks pickup in home seizures,” CNBC (Jan. 3, 2014)