Archive for category Housing Market

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Home valuation code could soon undergo major revamp

Posted by admin in Housing Market on October 31st, 2009

freddie_mac By Kenneth R. Harney – Nov 1, 2009
LATimes.com

A ‘dysfunctional system that’s holding back the housing recovery’ and has resulted in lowball property appraisals and busted home sale transactions, among other things, may be on its way out the door.

Reporting from Washington – Could the controversial appraisal system imposed nationwide by mortgage giants Fannie Mae and Freddie Mac in May — and now tied to lowball property valuations, busted home sale transactions and higher fees to consumers — be on its way out?

It just might be. Under a bipartisan amendment approved Oct. 22 by the House Financial Services Committee, the Home Valuation Code of Conduct would be terminated early in the existence of a proposed new Consumer Financial Protection Agency.

The amendment would require the agency’s director to replace the code with an improved set of rules developed through the regular administrative procedures and public comment periods used by all federal agencies.

The valuation code, by contrast, was the product of a settlement among New York Atty. Gen. Andrew Cuomo, Fannie, Freddie and the two companies’ regulator, the Federal Housing Finance Agency.

Cuomo agreed to back off from an investigation of Fannie’s and Freddie’s appraisal practices in exchange for their adoption of a set of valuation rules. The code’s core purpose was to ensure “appraiser independence” from loan officers, lenders and brokers who wanted them to “hit the number” needed to get the mortgage funded, even if it meant overstating the value of a home.

Though virtually no one disagrees with the goal of appraiser independence, critics say the code went overboard and created its own set of problems. According to home builders, real estate agents and consumers who signed protest petitions, the code has encouraged many lenders to use appraisal management companies, some of them owned by or affiliated with the lenders themselves.

Those management companies, in turn, often pay appraisers much less than their standard fees but hit home buyers and refinancers with full charges or higher at closing. An appraisal management company, for example, might pay $175 or $200 for a valuation that the appraiser normally would charge $375 or $400 to complete. The management company then would charge the consumer $400 or more at settlement, pocketing a large portion of the difference.

Management companies argue that they bring significant value to the equation — assembling networks of appraisers, making assignments and handling administrative tasks. But realty agents and home builders say the system often causes more harm than good. Appraisers who are willing to work for rock-bottom fees tend to be less experienced and more likely to accept assignments far from their geographic areas of competence, they say.
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U.S. to boost low-income housing aid

Posted by admin in Housing Market on October 21st, 2009

low_income_housing_aid by Catherine Reagor – Oct. 20, 2009 04:08 PM
The Arizona Republic

A new addition to the federal housing plan could help more low-income families buy homes and more developers build affordable rentals.

Earlier this week, the Obama administration announced a plan to aid state and local housing-finance agencies, which provide home loans to fledgling buyers and financing for rental properties for people making below an area’s median income.

The Treasury Department and lenders Fannie Mae and Freddie Mac will purchase more housing bonds issued by local finance agencies and refinance existing bonds to lower rates. The goal is to allow state, city and county housing-finance agencies to lend more money in an effort to help the housing market.

Typically, local housing-finance authorities issue tax-exempt bonds to finance their projects and loan programs. But over the past few months, the Arizona Housing Finance Authority and the state’s industrial-development authorities haven’t been able to sell bonds because of uncertain conditions in financial markets, said Sheila Harris, senior vice president with Phoenix consulting firm Molera Alvarez and former director of the Arizona Housing Department.

This year, U.S. housing-finance authorities have been able to issue just $4 billion in tax-exempt bonds, according to the National Council of State Housing Agencies. Last year, the total was $10 billion.

The Arizona Housing Finance Authority will discuss the new program at a board meeting Thursday.

State agencies must apply for the program. All bonds in the new program must be issued by the end of 2009.

The Obama administration predicts the new bond program will provide several hundred thousand new mortgages to first-time home buyers and help with the development of tens of thousands of affordable rental homes.

Apartment rents

The average rent for a Valley apartment slipped again, according to new data from research firm RealFacts. A typical Phoenix-area apartment now costs $761 a month to rent, down almost 1 percent from the second quarter of this year. The area’s apartment-vacancy rate is at 12.8 percent, down 2.5 percent from last year.

Key real-estate event

On Oct. 30, Sen. John McCain, R-Ariz., will speak at the Urban Land Institute’s town hall. The event starts at 3:30 p.m. at the Arizona Biltmore Resort and Spa. Details: arizona.uli.org.

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Realtors counting on homebuyer tax credit

Posted by admin in Housing Market on October 18th, 2009

housing_market By Brian Wargo (contact), In Business reporter

Fri, Oct 16, 2009

Las Vegas home sales traditionally slump at the end of the year as people wait until the spring to consider buying, and analysts are wondering how strong the market will be as the holidays and 2010 approach.

But the focus these days is more on Washington than on Las Vegas for what the future holds.

Congress is debating whether to extend the $8,000 tax credit for first-time homebuyers that expires Nov. 30. The credit has bolstered sales and likely will be extended, analysts said.

But Congress is considering making the credit available to additional buyers — a move that could boost the housing market.

“It would certainly be positive, and we really need all the help we can get for the consumers to get into a home whether it is a resale or brand-new home,” said Irene Porter, executive director of the Southern Nevada Home Builders Association. “I think it is important to extend it to everyone and not just first-timers. There are many families who have owned a house in the last three years who would want to take advantage of it. If it was extended, it could be an important factor in the housing recovery.”

The Greater Las Vegas Association of Realtors said the tax credit spurred people to buy before the deadline, helping Las Vegas housing sales to bounce back in September after tailing off in August.

The Realtors reported the 3,358 home sales in September were 4 percent higher than August.

The median price of $138,000 was 1.8 percent higher than August’s $135,500.

The increase in price may be because of a decline in inventory, analysts said.

Foreclosures made up 67 percent of sales in September, down from 71 percent in August. At the end of September 20,801 homes were listed, but only 7,909 didn’t have offers. That’s 8 percent lower than August, according to the association.

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Foreclosures drive Scottsdale sales

Posted by admin in Housing Market on October 18th, 2009

home_prices_gain by Peter Corbett – Oct. 16, 2009 03:36 PM
The Arizona Republic

Scottsdale

existing-home sales in September matched the previous month and were more than one-third higher than a year ago, but prices continue to slide, down 5 percent from August.

That is based on the latest monthly report from the Arizona State University realty-studies program.

Condominium resales in Scottsdale jumped 76 percent last month compared with a year earlier, but prices were off by 29 percent.

Foreclosures were driving some of the sales increase, accounting for 24 percent of the 470 home sales and 29 percent of the 255 condo sales. Foreclosure rates elsewhere run the gamut, from 25 percent in Gilbert and 29 percent in Tempe to 37 percent in Glendale and 32 percent Valley-wide.

Bank-owned properties that had been in foreclosure account for another one-third of the Valley’s September home sales, according to the ASU realty-studies report.

“The impact of foreclosures on the market has been the primary concern of the last year and will continue to be in the coming months,” said Jay Butler, an ASU associate professor of real estate.

Investors are buying many distressed properties at bargain prices. A recovery will not occur until owner-occupants regain control of the market, Butler said.

Scottsdale’s median home price last month, $375,000, was $10,000 lower than it was in September 2004. It shot up to $550,000 a year later.

Retail real estate: Stein Mart is scheduled to open Nov. 5 at the Promenade.

The shopping center southeast of Scottsdale Road and Frank Lloyd Wright Boulevard added the Miracle Mile Deli last week and Bad to the Bone Barbecue in May.

The Promenade will celebrate the arrival of the three tenants from 10 a.m. to 5 p.m. Nov. 7 with prizes and discounts.

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Washington needs to quit housing business

Posted by admin in Housing Market on September 27th, 2009

housing_market_washington September 25th, 2009

By James Pethokoukis – Reuters.com

There are, to be sure, lots of villains to blame for America’s financial crisis: regulators, Wall Street executives, credit ratings agencies, Alan Greenspan.

But the one baddie Washington doesn’t want to touch is, well, Washington. Its crime: pushing federal policies that favored ever-increasing home ownership, particularly from the mid-1990s on, and thus helping spawn the housing bubble at the center of the devastating meltdown.

The sheer scope of the bipartisan, federal pro-housing undertaking is mind-boggling.

As Jeffrey Miron, a Harvard University economist, noted in testimony this week to the House Financial Services Committee, a list of past and ongoing efforts would include the Federal Housing Administration, Federal Home Loan Banks, Fannie Mae, Freddie Mac, the Community Reinvestment Act, the deductibility of mortgage interest, the tax-favored treatment of capital gains on housing, the HOPE for Homeowners Act and the $8000 homebuyer tax credit.

Then, of course, there are the Federal Reserve’s efforts to bring down mortgage rates.

The federal tax subsidy alone amounts to some $200 billion a year, according to the Tax Policy Center. Put it all together and it’s clear that Uncle Sam created immense incentives for home ownership, from which Wall Street eventually found a way to coin huge profits. Well, at least for a while. Even former Federal Reserve chairman Paul Volcker conceded this week to the same committee that government housing efforts, in the form of Fannie and Freddie, were a “factor” in the crisis.

But while Washington is creating financial regulations and regulators, going after banker pay and questioning the role of the ratings firms, it seems intent on leaving its pro-housing policy bias intact.

That may be necessary for a while, until the housing market finds it legs. But then it’s time for Uncle Sam to gradually get out of the housing business. Breaking up and privatizing Fannie and Freddie would be a good start to an exit strategy, as would phasing out the mortgage interest deduction.

The risk of maintaining the status quo isn’t so much that we’ll have another housing bubble. Rather, it is the continuing opportunity cost of devoting so much precious capital toward housing.

Finding a better use for $200 billion a year in a country with a crumbling infrastructure, a yawning budget deficit and an uncompetitive tax system shouldn’t be hard.

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After crash, loan officers are reined in

Posted by admin in Housing Market on September 20th, 2009

loan_officer_rein by Catherine Reagor – Sept. 20, 2009 12:00 AM
The Arizona Republic

Most of the blame for the loans that led to the housing crash has been leveled at big lenders and Wall Street investment firms. However, all those high-risk mortgages that led to record foreclosures and fraud cases wouldn’t have been as popular without the loan officers who sold them.

Too many loan officers pushed mortgages that weren’t safe or smart for borrowers and collected higher fees on the riskiest mortgages. Hundreds of thousands of those loan documents were later found to be fraudulent, with exaggerated incomes, forged signatures and inflated property values.

In the second in an occasional series on real-estate and lending regulatory reforms, The Arizona Republic looks at the role unregulated loan officers played in bringing down the market and new rules aimed at making sure such recklessness doesn’t happen again.

In 2008, Arizona passed a law requiring loan officers to be licensed by next summer and undergo criminal background checks. A new federal law requires loan officers to be listed in a national registry that will help stop the industry’s worst offenders from moving between states and setting up new operations.

During the boom, there were almost 18,000 loan officers in Arizona. Mortgage brokers – the people who find lenders or investors to fund loans – needed a license to operate in Arizona. Loan officers did not. All that it took to become a loan officer was a phone and a relationship to a broker or lender.

With little regulatory oversight, loan officers had access to borrowers’ personal and financial information and made their money based on the size of the loans they sold.

Most of the illegal or unethical mortgage deals made during the housing boom involved loan officers. Regulators often found themselves dealing with cases that involved loan officers who deceived customers, lenders and even the mortgage brokers who hired them.

There are many ethical and knowledgeable loan officers in Arizona. But during the boom it was hard for the industry’s honest loan officers to compete against unscrupulous players promising mortgages and rates too good to be true.

“During the boom years, there were too many bad players out there taking advantage of borrowers,” said Felecia Rotellini, who for five years served as superintendent of the Arizona Department of Financial Institutions, the state agency regulating the mortgage industry. “If there would have been licensing during the boom, Arizona wouldn’t have as many foreclosures and the housing market would be in much better shape.”

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