Archive for July, 2010

Paulson: Remake Fannie and Freddie

Looking to the future of Fannie and FreddieDon’t forget to check out Hank Paulson’s editorial in today’s Washington Post, despite its engaging title: "Housing policy must be set on sustainable basis".

In it, George W. Bush’s former Treasury secretary argues that Fannie and Freddie have two mutually exclusive responsibilities: 1) maximize shareholder returns — because they are, after all, private corporations… sort of; and 2) not putting American taxpayers and the American economy at risk.

Instead, he says

Congress could eliminate that tension by restructuring Fannie and Freddie to create one or two private-sector entities that would purchase and securitize mortgages with a credit guarantee explicitly backed by the federal government and paid for by the new entity. These privately owned entities would be set up like public utilities and governed by a rate-setting commission that would establish a targeted rate of return. (Emphasis mine.)

It’s an interesting read, especially coming from a conservative who begins by saying, "The financial reform bill enacted last week is a significant step toward a much-needed modernization of our regulatory structure."

It will take time to reach consensus on the government’s proper role in subsidizing housing and how to replace the GSEs with a more stable construct that reduces risk to taxpayers and the economy.

4 unexpected ways to meet your next active client

Guest post from VAR’s awesome social media sponsor, Market Leader:

No doubt about it: the real estate market is different today than it was four years ago. Do you know how you will find your next active client? Here are a few ways:

  1. Wear your name tag – While 87% of buyers search for homes online according to NAR, you can still find ‘em at Starbucks. With your name tag, you’ll be more friendly and trustworthy as you introduce yourself.
  2. Twitter – Be social online! Over time you can amass Twitter followers and become the trusted source for real estate info.
  3. Comment on others’ blogs – Work to build your reputation as someone who helps others and look forward to a wave of new business.
  4. Or find your next client faster with…  Growth Leader – With our advertising specialists, client management tools and a website designed by lead generation experts, you can bring buyers directly to YOU.

If you want to meet your next client right away, click here now and receive a complimentary Agent Powerhouse Tool Kit filled with email templates, social media tips and other helpful information to help you attract your next client worry-free.

Obama policies to deemphasize homeownership?

A retreat in government programs and support for homeownership may be imminent according to an article published in the Washington Post on July 21, 2010.  

The administration’s narrower view of who should own a home and what the government should to do to support them could have major implications for the economy as well as borrowers. Broadly, the administration may wind down some government backing for home loans, but increase the focus on affordable rentals.

The shift in approach could mean higher down payments and interest rates on loans, more barriers to lower-income people buying houses, and fewer homeowners overall, government officials said. But it could also pave the way for a more stable housing market, one with fewer taxpayer dollars on the line and less of a risk that homeowners will not be able to pay their mortgages. And it could spell changes throughout the financial markets, as investors choose new places to put their money if the government withdraws some incentives for investing in the U.S. mortgage market.

The policy shifts described in the story are likely to be realized in a housing finance reform bill expected to make its way through Congress late this year or early next. The federal government has long encouraged and supported homeownership, perhaps (some would argue) to the point that these policies caused the housing crisis the nation is currently weathering.

There are other subtle signs that the Obama administration may be less enthusiastic about homeownership than its predecessors. For example, members of his administration have proposed scaling back or eliminating the mortgage interest deduction, and for the past two years the administration hasn’t formally recognized national homeownership month.

(photo credit)

NAR weighs in on future of GSEs

President Obama is arranging a Conference on the Future of Housing Finance in August 2010, but NAR isn’t waiting to represent the Realtor position to federal officials. In comments submitted to the US Treasury Department and HUD, NAR went on record to state that reforms to the secondary mortgage market, widely anticipated to be created by Congress in late 2010 or early 2011, should meet two requirements:

  1. that some level of government involvement should continue, and
  2. that the restructure of Fannie Mae and Freddie Mac should occur in a manner that ensures the flow of capital continues to enter the mortgage market regardless of the state of the housing or mortgage market or overall economy.

Case-Shiller index up, but authors cautious

The Case-Shiller index showed month over month and year over year gains of 1.3% and 4.6% respectively, but the report authors warn that the housing economy isn’t out of the woods yet. Much of this improvement could be attributable to the government’s now-expired homebuyer tax credit.

“We need to watch where the housing market will go after these temporary stimuli go away,” said managing director of the S&P indices David Blitzer. “June’s existing and new home sales and housing starts data have not shown real improvement either.”

He added: “It still looks possible that the housing market might bounce along the bottom for the foreseeable future before showing any real improvement that will filter through to the rest of the economy.”

Blitzer also noted a look at house price levels over the past year do not indicate a “sustained recovery” in housing. 

Source: Housingwire

HVCC to expire under financial reform bill

You may remember this image from the cover of the September/October 2009 issue of Commonwealth.  As much as we like that cover and story, you can now forget all about them.

New appraisal independence standards will replace the Home Valuation Code of Conduct (HVCC) within 90 days now that President Obama has signed the financial reform bill. According to HousingWire:

The “appraisal independence standards” will be written over the next 60 days. The newly enacted bill, unlike HVCC, allows Fannie Mae or Freddie Mac to accept any appraisal report completed by an appraiser selected or paid by a mortgage loan originator.

The reform also stipulates that the new standards will include a requirement that lenders and their agents pay appraisers at market rates.

The new standards will still subject loan originators to any state or federal laws that prohibit it from making payments, threats or promises to an appraiser to influence the work. But nothing in the standards will prohibit a person with an interest in the transaction from asking the appraiser to consider other information, provide further detail or correct errors in the appraisal.

FAQ’s on credit and distressed sales from NAR

How long will a short sale stay on my credit report? How many points on the score will I lose if I declare bankruptcy? How long until I can get a government-insured loan if the bank forecloses on my home?

You’ve probably heard some variation of these questions from your clients. If you’ve ever been unsure of how to answer, NAR has created two resources to help:

  1. A new FAQ sheet on FICO scores (sample questions: How long will a foreclosure affect your FICO score? How long will negative information remain on your credit report?)
  2. A chart describing how a short sale, foreclosure, etc. will affect someone’s ability to acquire a government-backed home loan in the future

(photo credit)

Governor appoints VAR past presidents to VREB

Accepting the recommendation of VAR, Gov. McDonnell appointed Sandee Ferebee and Joe Funkhouser, both past presidents of VAR, to the Virginia Real Estate Board. Each will serve a four-year term.

Ferebee is Retired Chairman Emeritus of Prudential Towne Realty in Virginia Beach and served as VAR’s president in 1990. Funkhouser is Managing Broker and owner of Coldwell Banker Funkhouser in Harrisonburg; he served as VAR’s president in 1986.

Builders likely to win sprinkler code battle

On Monday, the directors of the Virginia Department of Housing and Community Development are expected to pass revisions to the Virginia Uniform Statewide Building Code that would include a requirement that all new residential construction in the Commonwealth include a fire extinguisher in or near the kitchen. This provision is likely to be adopted instead of a proposal that would have required sprinklers in all new townhouse construction. According to an article in Leesburg Today, the current code requires that sprinklers be installed in all new townhouses with more than three stories. New single family homes have no sprinkler requirements, according to the article.

The Virginia Residential Sprinkler Coalition has been pushing for more stringent sprinkler codes for years, but builders say the cost of such systems, ultimately borne by the buyer, is simply too high.

(photo credit)

Press reacts to VAR’s 2Q Home Sales Report

Press reactions to our second quarter home sales report are rolling in. We’ll keep track of them here: