Fannie & Freddie incentives for buyers & agents.

Fannie Offers Incentives for HomePath Properties
On April 11, 2011, Fannie Mae announced new buyer and selling agent incentives in connection with the sale of Fannie Mae-owned properties (HomePath properties).
A buyer of a HomePath property to be used as the buyer’s primary residence can receive up to 3.5% of the final sales price to be used toward closing costs.
A selling agent bonus is available in four states—California, Washington, Arizona, and Texas. In these four states, a bonus is being offered to selling agents who represent a buyer who will use the property as a primary residence. For properties in California and Washington, the selling agent bonus is $1,000. For properties in Arizona and Texas, the bonus is $500.
To qualify for either incentive, the buyer and, for properties in one of the four states, the selling agent must meet certain requirements, including the following. The buyer and selling agent incentive must be requested at the initial offer submission. The initial offer must be submitted on or after April 11, 2011, and the property sale must close on or before June 30, 2011. The buyer must use the property as a primary residence (auction, pool and investor sales are excluded). Check the HomePath website for more details. If you have questions, please CONTACT Jeff Lischer at 202-383-1117 or jlischer@realtors.org with any questions.

Your February Housing Report

Housing stats for Southwest California for January 2011. Sales volume, median price, foreclosures, trends & commentary.

NAR Pres. Elect Moe Veissi Talks Turkey at CAR Mid-Winter

Take-aways from our recent California Association of Realtors Mid-winter meetings.

From NAR President-elect Moe Veissi –

Six of the past eight recessions have ended due to increasing strength in the housing market. The other two were due to wars. That seems like an easy choice. We need to get behind housing. This battle against housing is counterproductive and the attack on the mortgage interest deduction is an attack on one of the basic foundations of the American Dream.

Similarly we should seek to preserve the basics of the GSE’s.They can certainly be improved upon but their services are vital to home buyers. They provide a foundation and critical financial instruments that allow many people to buy homes that otherwise would not be able to. Keep in mind that during the height of the meltdown, Fannie and Freddie had take-back rates of about 3 1/2% while at the same time banks like B of A and Wells were taking back 15% to 18%.

You hear people today who don’t know the history, who don’t know any better – oh, Canada doesn’t have a 30 year fixed mortgage and their housing market is great. Oh, Europe doesn’t have a Fannie/Freddie and their market is great. The fact is, their markets don’t compare with ours. Never have. Nobody does it like us. These other countries are trying to figure out how to do it like we do and we’re trying to figure out how to kill our system and adopt the systems others are trying to get rid of. So why would we try to emulate markets with which we have nothing in common? Why would we destroy 100 years of success to become more like an inferior market? It just doesn’t make sense.

These are not short term problems we are dealing with and they will keep rearing their heads. We have saddled ourselves with tremendous debt so attacks on basic and short term sources of tax revenue will be ongoing. Don’t believe them when they tell you – oh, we aren’t going to take it all away. Just this little bit. Yeah, just that little bit this time. Then  a little more, then a little more, you know how that works.

Realtors just don’t realize the power we have in our communities and our country. But we’ve got to stand up and be counted if we want to be heard. We need to present Congress with 1/2 million Realtor calls on issues instead of 100,000. When we can consistently deliver 1/2 million member voices or more to our Congressional leaders, they will know we mean business.

2010 NAR Public Policy Accomplishments

Throughout 2010, NAR made significant progress educating Congress and the Obama Administration that a stable and sustainable housing market is the primary building block for any economic recovery. NAR had a series of successes in the regulatory and legislative fields, some of which are highlighted below.

As we look ahead to 2011, NAR will continue to advocate policy initiatives that benefit REALTORS® and consumers in the residential and commercial real estate industry.

PROTECTING REALTORS®’ BUSINESS INTERESTS AND ACTIVITIES
Wall Street Reform and Consumer Financial Protection – On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act of 2010. This comprehensive reform of the nation’s financial services sector is the most sweeping since the financial reforms ushered in during the Great Depression. NAR worked with both Democrat and Republican members of the House and Senate committees responsible for the legislation to secure a “real estate professional exclusion” ensuring that the daily business of REALTORS® was not negatively impacted by this historic piece of legislation.

Me etings with Lenders – Starting in the summer of 2010, NAR’s elected leadership initiated a series of meetings with large lenders and servicers to discuss issues of concern for REALTORS®. The topics included origination issues (underwriting standards, appraisal issues, credit policy, condo financing); short sales; bank-owned properties; and the impact of the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act. NAR and the banks are discussing how we can work together to make significant improvements in all of these areas. The goal is to increase our mutual success and help support market recovery.

Health Insurance Reform – NAR successfully raised the profile of the challenges that face the self-employed and small employers, including REALTORS®, throughout the 111th Congress’ debate over health care reform. As a result, the underwriting and rating reforms in the final bill — guaranteed issue policies, ban on pre-existing condition exclusions, limited age rating, etc. — are in line with NAR’s policy principles and will give the self-employed access to insurance with most of the characteristics of a group plan. In addition, individual affordability credits and tax credits for small employers will help to make health insurance more affordable for many NAR members who are currently uninsured.

SUSTAINING HOUSING OPPORTUNITIES
First-Time Homebuyer Tax Credit – In November 2009, the $8,000 credit was again extended for purchasers through April 30, 2010. Those under contract by April 30 retained eligibility for the credit, so long as the transaction closed before July 1, 2010. An additional $6,500 credit was created for current homeowners purchasing a new or existing home between November 7, 2009 and April 30, 2010. These buyers were also subjected to the July 1, 2010 settlement requirement. In June 2010, NAR noticed that many purchasers who had signed contracts on or before April 30 were unable to close their transactions, particularly in short sales. At NAR’s urging, Congress extended the closing date requirement through September 30, 2010.

Protecting the Mortgage Interest Deduction – The Administration’s proposed budgets for Fiscal Years 2010 and 2011 included a recommendation that health insurance reform be “paid for” by limiting the value of the mortgage interest deduction (MID) and other itemized deductions for upper income taxpayers. The limitation proposal was based on an individual’s tax bracket. Itemized deductions for individuals in tax brackets above 28% would have not have received the value of their higher tax brackets. Rather, the “value” of itemized deductions would have been limited to 28 cents on the dollar, rather than the 33 cents or 35 cents to which they would have otherwise been entitled. NAR aggressively and successfully fought off changes to the MID through grassroots, advertising and similar advocacy tools.

FHA and GSE Loan Limits – NAR successfully advocated for legislation to once again extend the temporary higher loan limits for FHA and the GSEs in both 2009 and 2010. Had the limits expired, NAR estimates that more than 612 counties in 40 states and the District of Columbia would be negatively impacted, with an average decline in loan limits of more than $50,000. The current limits (at the greater of $271,050 [for FHA] and $417,000 [for the GSEs] or 125% of local area median up to $729,750) are now in place through September 30, 2011.

SUSTAINING COMMERCIAL REAL ESTATE OPPORTUNITIES
Small Business Lending Fund – On September 27, 2010, the Small Business Jobs and Credit Act of 2010 (H.R. 5297) was signed into law. Under this bill, which NAR supported, the U.S. Treasury is authorized to lend up to $30 billion to interested community banks to further expand lending to small businesses. As an incentive for community banks to participate and increase small business lending, participating banks’ interest rates will be adjusted relative to the amount of their small business lending activity. It is estimated that community banks could use the $30 billion lending fund to leverage up to $300 billion in new loans to small businesses. Additionally, NAR successfully worked to include provisions in the legislation that enhance Small Business Administration (SBA) programs and provide $12 billion in tax relief for commercial real estate practitioners and small businesses.

ELIMINATING BARRIERS TO CREDIT
Flood Insurance – NAR secured a full one-year extension through September 2011 of National Flood Insurance Program (NFIP) authority, after supporting legislation, which twice broke congressional stalemates that led to multi-week shutdowns of the program. Without the program, thousands of property owners in tens of thousands of communities across the U.S. would not have been able to obtain the insurance necessary for them to obtain a mortgage in federal-designated floodplains.

Development of NAR Credit Policy – The Conventional Finance and Lending Committee proposed a NAR Credit Policy for consideration by the Board of Directors in November 2010 which was approved. The new policy calls for the lending industry to reassess and amend its credit policies to increase mortgage liquidity for qualified home buyers, including low and moderate-income families and first-time home buyers. The policy also includes specific recommendations.

Appraisal Reform – On July 21, 2010, the President signed into law the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act. The legislation includes the first major appraisal reforms in more than a generation. NAR worked with Congress on this legislation, which regulates appraisal management companies (AMCs), establishes new appraisal independence standards, and regulates automated valuation models (AVMs) and broker price opinions (BPOs). The legislation also sunsets the Home Valuation Code of Conduct (HVCC). NAR is currently working with the Federal Reserve on the implementation of regulations related to appraisal independence, which must be implemented within 90 days of enactment of the legislation.

Meet the new HVCC, same as the old HVCC

Fannie Mae and Freddie Mac Unveil New Appraisal Independence Standards


On October 15, 2010, the government sponsored enterprises (GSEs), Fannie Mae and Freddie Mac, announced appraisal independence requirements to replace the Home Valuation Code of Conduct. The new requirements offer no significant changes to the core principles of HVCC. An appraiser may not be selected or retained by mortgage brokers and real estate agents. More specifically, lenders mortgage production staff, any person compensated on a commission basis upon the successful completion of the mortgage, and any person whose immediate supervisor is not independent of mortgage production staff, is prohibited from ordering the appraisal. Lenders must still separate mortgage production functions from appraisal functions. The borrower is entitled to a copy of the appraisal report no less than three days prior to closing. The new standards include language permitting appraisal portability assuming the appraisal continues to meet the independence standards.

Fannie Mae Appraiser Independence Requirements >
Fannie Mae Announcement SEL 2010-14 >
Freddie Mac Appraiser Independence News Release >
Freddie Mac Bulletin 2010-23 >

Fannie Putting Some Teeth to Strategic Defaults. Anybody Scared?

Up until now about the only thing preventing millions of homeowners from strategically defaulting on their home was the moral dilemma many of them faced. With as many as 1/3 of the nations 45 million homeowners currently upside-down in their homes (owing more than they can sell it for), lenders fear that a 3rd (or 4th, depending on how you keep track) wave of foreclosure activity could be launched by millions of owners simply walking away. They can afford to make the payments but the strategic argument is that they can re-build their credit and build equity in a new home faster than they can recover the lost equity in their homes – especially if it’s $200,000, $400,000 or more.

The position has been detailed in a much-hyped white paper by University of Arizona Professor Brent White which I explored some time back in Social Control of the Housing Crisis vs Strategic Default. It can be a tough argument to refute – when somebody is making payments on a home they bought for $600,000 while their neighbor just bought the same property as an REO for $285,000. The only thing keeping them there is the sense of moral obligation because they are honorable folks who signed a contract and gave their commitment that they would. At what financial point does that moral obligation start to break down? And if you can make the argument that the lenders themselves had some culpability in the run-up and subsequent collapse (an argument that is pretty easily made), then does that provide even further justification for underwater homeowners to simply bail?

teethNow Fannie Mae has decided to ‘put some teeth’ into their enforcement and take some pre-emptive action on strategic defaults in what they’re terming a ‘get tough’ strategy. They have notified their lenders that effective next month they should begin monitoring loans facing foreclosure and issuing recommendations in cases that might constitute strategic default for possible pursuit through deficiency judgments. Of course deficiency judgments only work in states that allow such a thing. California doesn’t so that avenue is closed off to them here. They can still pursue deficiency judgments here if the owner re-fi’d but the California Association of Realtors is looking to shut down that avenue as well with SB1178, which just passed the Senate and is working through the Assembly as we speak. Of course as I’ve explained that one before, if you did a cash-out refi, you’ll still be on the hook but if you re-fi’d just to get a better interest rate you’ll dodge another bullet the lenders are aiming your way.

So what else has Fannie got up there sleeve for this get-tough policy? Well, if it appears you exercised a strategic default then Fannie will not guarantee anothernloan for you for 7 years. As of right now, the policy is if you exercise your options for a loan-mod, short-sale or deed-in-lieu, and can show extenuating circumstances (job loss, illness or divorce), then Fannie might give you a new loan in as little as 2-3 years with 10% down, 20% down if you exercised your options but have no extenuating circumstances.

teethIs that enough get-tough toothiness to make a difference? Well, if Freddie joins in it could be. With the government backing or directly involved in 95% of the mortgage market today, that could be sufficient incentive to try to work within the system instead of dumping on the system. Innstates where there is recourse it’s even tougher – although there’s a reason why most lenders avoid judicial foreclosure as an option today. It’s expensive and time consuming and leaves savvy homeowners in their homes free far longer than otherwise. With the nationwide average already running 18 months, does Fannie really want to stretch that out even more?

Well, I certainly don’t have the answers to that – it’s tough enough coming up with the questions. Having just gone through an exercise in financing myself, I can’t imagine a much more exhausting, convoluted scenario of an industry in disarray. Then you have to wonder if Fannie will even be here next year or if this is just a last ditch effort to forestall the wave that would put them under.

If you’re $400,000 upside-down in your home I’d love to hear what you think and why you’re gritting it out.

FHA Commissioner Dave Stevens Speaks. WE made the mess. THEY’ll clean it up. Oboy.

dave stevensThis morning we were treated to an hour long conference call with FHA Commissioner Dave Stevens, courtesy of NAR. Long-time readers know I’m a fan of Stevens, even got a nice comment from him on a blog I wrote last fall following his address at NAR. I think it’s a good thing to have somebody in his position who actually knows real estate, knows what it takes to sell a house, get a mortgage, work a short sale, etc. As introduced this morning, they said it’s ‘refreshing to have someone who knows our industry.’ I concur.

Stevens started his talk saying these are ‘unprecedented times’ in the housing industry. ‘The good news is that the housing industry has never received this much attention. The bad news is that the housing industry has never received this much attention.’ The housing industry brought the U.S. economy to it’s knees and nearly took the world economy with it.  We had a severe hiccup when people lost sight of housing as shelter and started viewing it as an investment strategy.

He then ran through some of the stats that most of us are aware of. Exotic mortgages nearly wiped out the FHA base. With their 3% down, 30 year fixed mortgages they were too boring, couldn’t complete with ‘0’ down, no interest, no doc loans – they were irrelevant and shrank to less than 3% of the market. Today they are back up to 30+% and growing. They originate 50% of loans to Blacks, 45% of loans to Hispanics and 80% of loans to 1st time homebuyers.

He also talked about some of the changes FHA has made to protect their base things like increasing the down payment amount in for some buyers and decreasing the amount of seller contributions. He noted those things are vital to protect FHA and he quoted numerous studies showing the rise in failure rates between buyers getting 3% seller contributions and those getting 6%. He also talked about the SAFE Act, which he believes will go a long ways toward eliminating the type of ‘rogue’ lender that contributed so much to questionable lending. He sees this as a good step toward rebuilding consumer confidence in the market.

He also stated that, in hindsight, it’s clear that everybody should not have become homeowners as was the mantra for the first half of the decade, and through their policies they intend to make sure everybody doesn’t become a homeowner going forward – only those who should be, who can demonstrate the fiscal ability to meet the responsibility they are undertaking. He realizes that some of the policies sound harsh and that some innocent people will be hurt, but in the interest in returning credibility, confidence and integrity to the market, these are steps that need to be taken. And with 95% of the financial market under the control of the Federal Government, they are in a position to set those rules.

And for the most part I find myself in agreement with what Stevens said – up to a point. He started losing me when he said that the belief in Washington is that THEY  need to act to restore confidence in the market because WE failed. WE collectively built this market – all of us, according to Stevens, but it is the Obama administration that now sees the mandate to ride to the rescue. He credits this administration with stabilizing the market at a time it was in free-fall. He believes the HAMP & HARP and other programs have been resounding successes and that without them the crisis would have gotten much worse.

That’s all partially true but it strikes me that in some respects Dave has been drinking the Kool-Aid. And that’s OK – I mean he works for the administration and his job depends on toeing the company line on this kind of stuff – just don’t expect everybody else to believe it without question. And we were all too polite to question it on the call this morning.

I just sent out my monthly newsletter in which I pretty much said the same thing Stevens did about it being a unique market and that the government has their finger in darn near every aspect of the market. Where we diverge is that while Stevens thinks more government intervention and manipulation is a good thing, I think it has artificially propped the market up and has kept us from a true stabilization, reaching a real bottom and starting a sustainable recovery. We simply don’t know what the government is going to do next – and that creates instability – especially when the  majority of people don’t have much confidence in that government.

As Ben Bernanke recently commented to the Dallas Regional Chamber, “We have yet top see evidence of a sustained recovery for the housing market. Mortgage delinquencies for both prime and sub-prime loans continue to  rise as do foreclosures.”

It’s cyclical. The market would never have peaked as high or as boisterously as it did without government intervention. When Barney Frank and Bill Clinton decided everybody who could fog a mirror should buy a house, the die was cast. When the financial markets, including the GSE’s responded with vigor and with increasingly exotic products and Barney Frank and George W encouraged it, we were toast and didn’t know it. So when Stevens said WE built this market, he should have expanded his collective WE to include all the federal cronies who are now charged with straightening out the mess they helped create in the first place. Dave didn’t mention that.

Oh well,. As always, we at the street level are left to deal with what plops in steaming piles from the bowels of Congress. Thus has it always been. Obama didn’t create the mess and he sure as heck ain’t cleaning it up, though when the cycle ultimately turns you can bet he’ll be leading the parade to take credit for it. The rest of us will just keep working and trying to eke out a living and stashing as much as we can before higher taxes and interest rates take it. That’s the fun part. As Dave Stevens closed today he quoted that thing that makes each of us get up in the morning and do what we do – “We still own the American Dream business.” Well, at least the part the administration doesn’t lay claim to.

The opinions expressed in this article are those of the author and do not represent the official position of anybody who matters.
If you don’t like it (Martin), don’t read it – but quit yer whinin’. OK?

Short sale & Deed-in-Lieu Incentives & Guidelines

On November 30, The U.S. Treasury Department released guidelines and forms for its new Home Affordable Foreclosure Alternatives Program (HAFA), which is part of the Home Affordable Modification Program (HAMP).  HAFA will provide incentive in connection with a short sale or a deed in lieu of foreclosure used to avoid foreclosure on a loan eligible for modification under the HAMP program.  HAFA applies only to loans not owned or guaranteed by Fannie Mae or Freddie Mac as they will be issuing their own version of this program in a few weeks.

NAR staff has reviewed the aspects of the program and prepared a brief on the intricacies in hopes to make it more understandable.  To view more information about HAFA, visit the mail page of the REALTOR® Action Center:  www.realtoractioncenter.com.  To get more information on short sales, visit the short sales page on REALTOR.org: http://www.realtor.org/realtors/basics_short_sales.

Social Control of the Housing Crisis vs. Strategic Default

Brent T. White, an Associate Law Professor at the University of Arizona, has published a 50+ page paper on why he believes homeowners who are upside down in their mortgages should just walk away. It’s an interesting piece and, while I don’t agree with some of his hypothesis and conclusions, he does have some valid points.

You can read the whole paper here and I would love to hear your comments. I know we are seeing more ‘strategic defaults’ in our area and there are those that are voicing concern that a new wave of these may derail the fragile recovery we are seeing.

Underwater and Not Walking Away: Shame, Fear and the Social Management of the Housing Crisis

White essentially boils the argument down to a ‘logic vs emotion’ basis and posits that the reason people aren’t taking the smart alternative and walking away in droves is because we are being socially conditioned or worse – socially controlled – to stay in our homes even when it makes no sense. A vast government/lender/media conspiracy is convincing us it’s not the right thing to do morally or ethically and we should just continue to suck it up and pay off our underwater loans.

According to White, our emotions are being played like a fine fiddle by what he calls “the social control of the housing crisis” — pressures and messages continually sent to consumers by the “social control agents,” namely banks, government and the media. The mantra that these agents — all the way up to President Obama — pound into owners’ heads is that “voluntarily defaulting on a mortgage is immoral.”

White says: Banks set the rules during the housing boom, handing out home loans with no down payments, no income checks and inflated appraisals. Now that property values have dropped 20% to 50% in many areas, banks have been slow to modify troubled mortgages and reluctant to reduce principal debts. Only when homeowners cut through the emotional fog and default strategically in large numbers will this inequitable situation be seriously addressed.

How does White’s 54 page manifesto go over with mortgage lenders? Predictably, not well. Officials at Fannie Mae and Freddie Mac – investors who fund the bulk of all new mortgages in the country – disputed White’s characterization of how quickly after foreclosure a walkaway borrower can obtain a new loan. It’s a minimum of five years, not three, absent extenuating circumstances such as medical or employment problems that caused the foreclosure. “Borrowers who walk away from their mortgage obligations face serious consequences,” including severely depressed credit scores for extended periods, said Brian Faith of Fannie Mae. In addition, he said, “there’s a moral dimension to this as homeowners who simply abandon their homes contribute to the destabilization of their neighborhood and community.”

I know we advise homeowners to try loan mod 1st, short sale if that doesn’t work and foreclosure as a last resort if all else fails. Are we doing our clients a disservice? According to White, who obviously dwells in the halls of academia and not so much the real world, we are. What do you think

Fannie Mae Announces’First Look’ Program – May help buyers.

On November 24 Fannie Mae launched their ‘First Look’ program which, if applied as intended, could prove to be a real value to frustrated homebuyers in many areas. Prospective homebuyers in our area have suffered through much of this year seeing offer after offer go begging as homes are sold to investors with cash. Adding to that frustration, many times the accepted offers net the seller (bank) less than their offer would have but cash has been king.

As encouraging as this program sounds, it will remain to be seen what impact it has on the market. If Fannie operates in good faith, accepts an offer from an individual or public entity during that 15 day window and consummates the transaction, it will be good. If Freddie & the FHA follow suit it will be even better.

However, if they just accept offers for 2 weeks and then throw  the door open to investors to see if they get a better offer – then it’s pretty much business as usual with no real benefit accruing to the buyers.

For the full text and particulars, click here:

Fannie Mae Supports Neighborhood Stabilization Through “First Look” Initiative

First Look, Other Benefits for Owner Occupants and Buyers Using Public Funds

WASHINGTON, DC — Fannie Mae (FNM/NYSE) today announced that the company has launched several initiatives supporting neighborhood stabilization and promoting home purchases by owner occupants and buyers qualifying for public entity housing programs.

To provide owner occupants and public entities an advantage in purchasing Fannie Mae-owned foreclosed properties, the company has created the First Look initiative. With First Look, only offers from owner occupants and buyers using public funds are considered during the first 15 days a property is on the market. Offers from investors will be considered only after the first 15 days have passed.

Meanwhile the City of El Cajon, CA has had a similar program in place for awhile now and has created a checklist to use to expedite the buying process. To download a PDF of what your buyer needs to know – click here:

Fannie Mae First Look Acquisition Checklist.

Fannie Mae Reports ‘Recession Over’.

Fannie Mae economists report that the recession appears to be over – according to this latest release from Inman News.

The deepest and longest recession since the Great Depression appears to be over, Fannie Mae economists say, projecting sales of new and existing homes will jump 11 percent next year and that national home prices will stabilize, remaining essentially flat.

The mortgage guarantor’s monthly housing forecast projects 5.96 million home sales in 2010, with sales of existing homes growing by 10 percent, to 5.46 million. New-home sales are expected to rebound even more sharply in 2010, growing by 24 percent to 498,000.

“It appears that the economic recovery is here,” Fannie Mae economists Doug Duncan and Orawin Velz said in a report summarizing their economic and mortgage forecasts, although they expect it will be weak compared to previous recoveries from deep recessions.

Real gross domestic product (GDP) grew at a 3.5 percent annualized pace in the third quarter, following five declines in the prior six quarters, they noted, but growth is likely to moderate in the final three months of the year before strengthening in late 2010.

The first-time homebuyer tax credit helped boost third-quarter home sales, which also led to a jump in real estate brokerage commissions, Duncan and Velz said in their report.

A 23.3 increase in the annualized rate of residential investment (home sales) in the third quarter was the largest in more than two decades, although it came from “extremely depressed” levels, the report said. Real residential investment was contributing to economic growth again, adding 0.5 percentage points to third-quarter GDP growth.

At the NAR. HVCC Problems? Not according to the Government.

One of the seminars I attended today at NAR was entitled ‘Managing the Risks and Opportunities of the New Home Valuation Code of Conduct (HVCC).”

Let me say at the outset, I sat through the whole friggin thing and didn’t note any opportunities – unless you count aggravation as an opportunity.  No shortage of risks, however.

NAR did a great job staging this – they had a panel in place that included spokesholes from FHFA, FHA, Fannie Mae, Freddie Mac and an AMC. Oh, and they had two Realtors sitting in for balance. In my humble opinion, if I had a load of the bullshit they were peddling today, I would have the healthiest, greenest lawn in Southern California.

Alfred Pollard, General Counsel for the Federal Housing Finance Agency; Jacqueline Doty, Directory of Collateral Policy for Freddie Mac; and Mark Johnson,  COO for LSI (and Appraisal Management Co), started the process with brief statements on why the program was started (to combat fraud) and how well it’s working.  As Mr. Pollard stated – ‘we have experience a systemic event for the financial markets, primary and secondary lenders, Realtors, institutional lenders and appraisers – all of those industries are on the table as we determine what comes next.’

It was interesting to note that the one entity that he left out, the one he happens to work for, wasn’t included as being on the table – THE GOVERNMENT.  The one institution central to the whole fiasco is the only one not up for evaluation and found wanting. In fact, these sanctimonious bastards are now sitting in judgement of the reat of us and determining how they can keep us from running amok again. Ain’t that special.

Our Realtor panelists, Steve White, owner of two large Keller-Williams offices in LA; and Penny Triplet, a Realtor and appraiser from Ohio, stated the litany of complaints that you are all familiar with. Delays, incompetence, bad appraisers, out of area appraisers, higher costs to customers, lost transactions, lack of portability – you name it, they brought it up.

The government people claimed to be listening but the were just dancing. Time and again they quoited passages from the 6 page HVCC document – well this is how it’s supposed to work; well, this is what it says; well that’s another of those myths; well this is how you’re supposed to work through that. Basically they acknowledged that ‘there might be a few bad actors in the group but this HVCC has solved a lot of problems and is a wonderful thing.’

Oh, and if you thought it was scheduled to expire in June of 2010 – think again, It’s in place until next November and there ain’t nothing you or (NAR President) Charles MacMillan or anybody else can do about it. Your opportunity is to learn how to work with it because it’s here to stay.  Even after the current HVCC expires, some form of the bureaucracy that has been set up to administer it will continue because, like any government program, once born it never dies.

As if the moderator knew the Q & A might get testy, she decided that rather than  take questions from the floor, she would just take questions submitted in writing. That lasted about 15 minutes until she could no longer ignore the line of Realtors standing quietly at the microphones waiting to ask questions.

Still no straight answers were forthcoming. Realtors were advised to report bad appraisers – that is if you can figure out who they work for or if the AMC or the lender cares enough to return your call (after 18 months, the office for reporting bad appraisers still hasn’t quite been set up but it’s coming soon). Realtors are allowed to talk to appraisers and even give them comps, of course provided the appraiser even bothers to call you or come out to your city or doesn’t report you for applying undue influence by giving them accurate comps. If you get a bad appraiser you can request a do-over, of course it will be done by the same guy whom is now pissed off and never mind that the delay might cost you the deal. If it’s so bad your buyer switches to another lender of course the appraisal should be portable (like you’d want to port that crap) unless the new lender doesn’t want to accept it or it’s from an appraiser that’s not accredited by their AMC, in which case your client will get to buy a new one and hope it’s better than the old one. You’ve got an appraiser from 200 miles away? Or even from another state? Jeez, that’s not supposed to happen because the HVCC says it’s not so it can’t be. That’s just anecdotal information.  The Freddie Mac rep said complaints to her office are waaaay down since HVCC. Complaints from appraisers that is. Turns out they don’t take complaints from Realtors unfortunately.

One Realtor summed it up perfectly – ‘The government appears to think the problem in under control. Realtors think the problem is out of control. How do we get the two sides together?

If todays panel is any indication, we don’t. Hang on kiddies – it’s gonna get worse before it gets better. We’re from the government and we’re here to help you.


Fannie Mae Announces Electronic Appraisal Submission Update

In Announcement 09-14: Electronic Appraisal Reports, Enhancements to the Loan Delivery File Format, and Mortgage Fraud Reporting; Fannie Mae stated it will require the submission of electronic appraisal reports in XML format. In support of this announcement, Fannie Mae is updating the 2000-Character Loan Delivery File Format. Fannie Mae is advising lenders of the new data element that will be required to support electronic appraisal submissions. The Document File Identifier is a 10-digit alphanumeric data element that will be assigned by the Collateral Data Delivery (CDD) system. A unique identifier will be assigned at the time the electronic appraisal report data is successfully submitted to CDD, and will allow the lender to retrieve submission results and findings and make updates or corrections to the submitted appraisal data in CDD.

Fannie Mae
Collateral Data Deliver Information
Announcement 09-14: Electronic Appraisal Reports, Enhancements to the Loan Delivery File Format, and Mortgage Fraud Reporting

New Fannie Mae Deeds-for-Lease Program


On November 5, 2009, Fannie Mae announced its new Deed-for-Lease Program (D4L) that allows eligible borrowers facing foreclosure (or their tenants) to stay in their primary residences. Under D4L, the borrower transfers ownership of the property to the lender through a deed-in-lieu of foreclosure and the borrower (or the tenant) signs a lease for up to 12 months. The program is designed for borrowers who don’t qualify for other workout solutions, including modifications, or who do not meet their obligations under the modification. The purpose of the program is to minimize displacement of families and deterioration of neighborhoods that often occurs when homes are left vacant. The rent may not exceed 31 percent of the family’s gross income. Fannie reserve the right to market the property during the lease term and may sell it to an investor subject to the lease.

Fannie Mae Statement (including links to Announcement 09-33 and FAQs)

FHA 90 Day Anti-Flipping Rule Under Attack

carIn addition to the Action Items summarized in the previous article, CAR Legislative Agenda Shapes Up, there was another Action Item that came before the 526th Board of Directors session on October 10, that being a motion from the Real Estate Finance Committee.

By way of background, here’s a brief primer on how things happen at our state association level. Any member can bring forward an issue through their local association representatives for consideration at the state level. The matter is brought into the committee structure so that a decision can be made on whether the matter is appropriate, whether the impact is significant and what action should be taken. I mean, face it – Just because you’ve got a beef about a local lockbox issue or had a problem with some lenders short sale negotiator may not qualify the issue for consideration by a state committee.

If the committee determines the issue is of sufficient import to tackle it, it will be placed on the agenda for discussion along with supporting documentation. The committee will then determine what, if any, action should be taken.

Should they decide to recommend some form of action they will determine whether they will go forward with a request to SPONSOR a bill, SUPPORT a bill that’s already in process or just ask CAR to devote some staff time to further research the most appropriate course of action. That recommendation, in the form of a motion or report, will then proceed from the originating committee to a policy committee, generally the Legislative Committee. That committee can decide to approve the committees motion, oppose the motion, or draft an amended version. One or both motions will then proceed to the Executive Committee where they will look at it, approve it for the general session agenda, draft an amended or competing version or, in rare instances, oppose the motion.

One such motion came before the session on Saturday having to do with the current FHA 90 day anti-flipping rule. Originally drafted in 2001, the FHA rule was intended as a consumer protection back in a day when FHA loans, especially in California, were the exception rather than the rule. Due to the FHA’s unwillingness to keep pace with escalating prices, again especially in areas like California, the use of FHA mortgages fell to single digits by 2005 contributing to the widespread reliance on sub-prime and other more exotic financing methods.

Today FHA loans are becoming more the standard again with increased loan limits in our area. This is especially true for first time and other low-to-moderate range buyers, currently estimated to account for as much as 40% of todays loans statewide. The anti-flipping rule, originally intended to prohibit investors/intermediaries from acquiring cheap homes and simply ‘flipping’ them with no value added thereby driving prices up, doesn’t really apply in this market. In fact the argument was made that investors play a very significant role in todays market buying abandoned and stripped foreclosures that would not qualify for an FHA loan to begin with. They rehab the home, often within 30 days, and then put a move-in-ready home on the market (at market price, not inflated). But 40% of buyers who might otherwise qualify for that home with an FHA loan cannot because of the anti-flipping rule.

As you might imagine there was substantial debate at every level of advancement for this motion. But when it came to the floor on Saturday it carried an almost unheard of prohibition – a recommendation from the Executive Committee that the motion be defeated. Why? Their stated reason had little to do with the particulars of the rule or the motion but a general caution that in todays political climate of increasing regulation, they didn’t think this was a winnable fight.  HONEST.

After about 45 minutes of spirited back-and-forth on the motion before the general assembly, members delivered a stinging rebuke to Exec. Not only was it determined that C.A.R. in conjunction with NAR ‘SUPPORT’ the elimination of the anti-flipping rule, an amendment was inserted telling CAR we want them to write a letter to the FHA Commissioner and others appropriate parties advising them of our opposition to the rule. NOW.

It’s kind of fun to see the members get riled up sometimes. In an environment that at times resembles a convention of rubber stamp politics as usual, passion can carry the day. Enough of our member/Directors realize the impact this is having on you and your Buyers and decided political correctness and/or lack of balls be damned. This was the right thing to do and we’re by God gonna do it.

Will it result in an immediate change? Not likely. But the message is being delivered. As we continue to define what is the new ‘normal market’, your Association of Realtors will be at the table assisting in that process. It was a proud moment to stand up and be counted.

Fannie Mae Issues New Short-Sale Fraud Guidlines

A number of you have reported being approached by investors to perform some level of service in conjunction with this type of transaction. If you are going to try it, make sure you follow the guidelines outlined by Fannie Mae or you and your investor/buyer/ client may be indictable.
fraud

fraud

A Successful Loan Modification thru Making Home Affordable.

Tuesday after speaking to the City Council about our housing market, several people chased me out as I left the chambers. No, not for the usual reasons, but to share stories and ask about getting help with their housing problems.

One story I still hear way too often in spite of all our efforts to get the word out was a story of fraud. One gentleman lamented that he had sent $2,500 to a Florida company that promised to get his loan modified. Not only has nothing been done in three months, but now they don’t even answer the phone there and their website states they no longer do business in California. Nice!

What should he do?

My advice – kiss the $2,500 good-bye and don’t send anymore money to scam artists. I did put him in touch with the District Attorney and the Attorney General because how is one individual going to sue a company clear across the country – especially a company that was probably founded on fraudulent grounds and specializes in flim-flam? That he possesses no significant resources and has only a halting command of English doesn’t make it any easier for him to proceed and undoubtedly made him a prime target for the unscrupulous. I’ve also put him in touch with a legitimate counseling service and the HUD website and hope it’s not too late for him to recover.

home affordableOn the flip side, last night I got a call from a good friend of mine on an altogether happier matter – his loan modification had been approved! Honest. I don’t know about you but this is the first success story I’ve heard from the Making Home Affordable program and it was a welcome relief from all the failures experienced by so many. There may be rays of sunshine out there somewhere, folks.

chaseMy friend – let’s call him John – said he was fed up with the 20 calls and letters he was getting every day offering to refi or modify his loan for a fee – or to make his mortgage go away completely. From being my friend for years he knows all about fraud and only recently came to realize how pervasive it is in the housing industry. He found the onslaught of offers frustrating and very insulting in their blatant attempts to rip him off.

wfAnd it’s not that John was in imminent danger of losing his home but being self-employed they have seen a substantial decline in their own business the past couple years and are finding that the money runs out before the month does anymore. So they contacted their lender, Chase, on-line and he said the process couldn’t have been easier or simpler. They filed the appropriate paperwork on March 8 and this month their monthly mortgage payment will be reduced by over $200 – or about 18%. Granted we’re not talking huge numbers here (especially for California) but how many people do you know who would be able to stay in their home with even that amount of relief?

hudNow over the years John and Betty have been prudent homeowners. They bought their house during the last big drop for about $90,000. After 16 years and two kids, the house needed some updating and repairs so they refi’d in 2007 but only took out the amount they needed for the update. Their current mortgage is about $125,000 though at the time they could have sucked more than $300,000 equity out of the house. They also have the good fortune to have a Fannie/Freddie backed loan, which is not all that common in California – especially after the over-heated run-up the past few years. And they still have positive equity in their home and they are not delinquent in their payments even though they’ve been paying a $38 late fee for so long it seems like part of the mortgage.

baThe modification was accomplished through an interest rate adjustment only – the principle and term remain the same. Based on individual circumstances he said there are programs where the principle might be reduced or the term extended to 40 years in combination with an interest rate reduction but those options didn’t apply in their case. Their assigned caseworker was personable and almost always answered her phone immediately.She encouraged them to be diligent in their follow-up every week or two, was happy to answer questions and the promise of an answer within 120 days was actually less than 90.

rivcoAs John pointed out – this is a legitimate program for legitimate people. I know I’m happy as heck for my friends as they do a lot for our community with minimal compensation. It’s great to see deserving people get something for a change.

I’ve sprinkled a variety of company logos throughout this post. If you click on any of them, it’ll take you to the company website where the details of their modification program is available. The Making Home Affordable site even has an easy on-line form to see if you might qualify. It couldn’t get much simpler. The Help for Homeowners site is currently local to Riverside County, but expanding. This group puts on seminars throughout the region geared to put homeowners in touch with FREE or low-cost LEGITIMATE resources to help refi, modify, short-sale or even lose your home (everybody cannot be helped). This is done with every effort to provide relief, comfort and with as little impact as possible with an eye to future homeownership for those who can’t be helped right now.

There are resources available. Remember – if the deal sounds too good to be true, it probably is. If they ask for money up front – it’s probably a scam. Also be aware of ‘affinity’ fraud. Your own ethnic group will prey on you before others. Your church group, your workplace (nurses, teachers) are all more likely to be victimized by an inside job – somebody you may know and trust.

If you’re in trouble, start with YOUR OWN bank first. Be patient, be persistent and be professional. If they can help you they PROBABLY will. Banks don’t always seem to operate rationally or in their own best interest (or yours) but as John & Betty can tell you – sometimes it works just right and sometimes you win the lotto. Good Luck.

CAR Releases Mortgage Mod info

Mortgage modification information now available

C.A.R. has created consumer information sheets detailing the various mortgage modification programs available through the larger lenders and government entities. C.A.R. also has created an easy-to-use reference chart about available programs.

The consumer sheets contain information such as eligibility requirements, who to contact to apply, costs associated with the program, and other vital data. The sheets also are formatted in Microsoft® Word, enabling REALTORS® to print and e-mail them to their clients.

For more information, please visit:
http://www.car.org/legal/mortgage-workout-programs/

The following information is intended for REALTORS® and homeowners seeking information on existing mortgage workout programs.  In general, the loan modification programs on the chart (see link below) and consumer information sheets (see links below) are intended for primary residences only.

For consumer information sheets containing detailed information on specific programs that REALTORS® can share with their clients, please click on the appropriate link below.

. Making Home Affordable Refinance
. Making Home Affordable Modification
. HOPE For Homeowners (H4H)
. Countrywide Financial (Bank of America)
. Citigroup, CitiMortgage
. JP Morgan Chase & Co.
. IndyMac Federal Bank, FDIC
. Federal Government Loan Modification (Participants include: Fannie Mae, Freddie Mac, Federal Home Loan Banks, Hope Now participants, Department of the Treasury, Federal Housing Administration and the Federal Housing Finance Agency, and Wells Fargo.)

Ex-Prez Wunderlich Talks About the Same Program

Let me begin by saying I like our NAR President Charles McMillan. I think he’s a good guy, he works hard for us and he truly believes in the Realtor Party. Having said that I must beg to differ with some of the recent utterings from the national office regarding Realtors ‘success’ with the recent stimulus bill.

In his most recent update, posted immediately before this one, he refers to the major gains by Realtors in the bill:

Dear Fellow REALTOR®,

For nearly four months, NAR has been working to deliver to you and to our nation a comprehensive plan to stabilize the housing market.

This week, we saw countless hours of hard work pay off “ in a MAJOR way “ when the federal government implemented NAR’s recommendations to stimulate housing with the signing of the American Recovery and Reinvestment Act of 2009

  1. Lower interest rates for home mortgages;
  2. A greater ability to get financing through FHA, Fannie Mae and Freddie Mac in high-cost areas;
  3. A true tax credit incentive to buy a home NOW; and
  4. Foreclosure mitigation and short-sale standards.

As on wag summarized in response to another post of mine on the topic – ‘well, we didn’t get what was on the table but at least we didn’t lose what wasn’t on the table’. So lets’ look at these a little closer.

1. Did we really get lower interest rates? Or have interest rates actually been edging lower since the Fed reduced the prime to .025% last year? Where in the economic stimulus package does it mandate lower interest rates? And are interest rates even the problem right now? Interest rates are, and have been, pretty darn good for awhile now. Banks not loaning money is the problem, not  high interest rates. Sorry, Charles. That dog don’t hunt.

2. Greater ability to get FHA & GSE financing? Well, partly true I suppose. Actually nothing new or the result of the stimulus, but we did get the increased GSE limits extended at least through the end of this year. Of course as Paul Harvey might say, we need to see page 2. That’s the page that talks about Fannie & Freddie increasing mandatory fees and toughening credit score and down payment rules. For example, if an applicant doesn’t have 30% to put down, they pay higher fees. Got a 699 FICO but you can make a 25% down payment? You still get hit with a 1.5% ‘delivery fee’ at closing. If your FICO is between 700 – 720, you’ll still pay an extra 3/4 point. If you’re buying a condo and you don’t have 25% down payment, you’ll pay an extra 3/4 point regardless of your FICO. Does this sound like a ‘greater ability to get financing’ to you? Me neither.

3. A true tax credit? Well, this one is correct. Last year you recall the $7,500 kinda tax credit that you got one time and then paid back over three years. Not so much a credit as an interest free loan that buyers ignored in droves. This year the credit was extended to $8,000 and if you stay in your home 5 years, you don’t have to pay it back. That’s pretty good. Of course it’s still only for first time homebuyers rather than trying to stimulate the full buy-side of the equations. And it’s certainly not the $15,000 carrot that was dangled so enticingly in front of our faces to get us to call our legislators to urge them to vote for the porkulus bill. Heck, it’s not even as good as what the home builders got included in the California budget bill which is a $10,000 credit for buyers of NEW homes – but I guess this is as close to a win as we can get on this one.

4. Foreclosure mitigation and short sale standards? Oh puhleeze. Short sale standards? In what alternative universe do these exist? Have ANY of you seen anything even approaching even modest short-sale cooperation? We can’t even get standards on REO’s and that’s a walk in the park compared to short sales.

Foreclosure mitigation? Hmmmm, that must be the continuing moratoria on deed sales. I guess if you get to live in your house rent free for an extra 90 days that’s a form of mitigation. He can’t be referring to the $275 Billion program announced by Obama last week encouraging banks to modify loans. That’s the one that’s aimed at Fannie & Freddie borrowers, of which there are virtually NONE in our region. That’s the one that makes it incumbent upon banks to modify loans that fall within a loan-to-value range of 80% to 105%. Yeah, that’s gonna be a BEEEG help for people in Southwest County, or California in general, with LTV’s of -150%.

So while I am busy looking for the silver lining, while I am focusing on the positives and the greatly improved sales figures over twelve months ago, a modicum of reality does need to be interjected into the debate. Lawrence Yun has already been neutered by his continuing Pollyanna pronouncements in the face of reality. NAR runs the risk of being totally marginalized if they continue to blow smoke up our nether regions as if those of us in the field don’t actually KNOW BETTER. If the four points enumerated by Charles McMillan above constitute a ‘big win’ for Realtors, then the sad fact is we got our asses handed to us on a platter and we’re trying to decide which condiment will make the dish most palatable.

Of course, that’s just my opinion. I could be wrong.

The opinions in this commentary are strictly Gene Wunderlich’s personal opinions. While any reasonable and/or rational indivdual should agree wholeheartedly,
the opinons reflected herein may not necessarily be those of the Southwest Riverside County AOR, or any local or state government or other mental institution.

One-Two Punch for Homeowners

Hmmm – given the recent history I’m not sure I’d have picked the ‘One-Two Punch’ headline but maybe this will turn out better than the last go-around.

One-Two Punch for Homeowners, Posted By Dick

Posted: 19 Feb 2009 08:36 AM CST

Yesterday President Barack Obama announced a $75 billion Homeowner Affordability and Stability Plan to help address the foreclosure crisis – the right cross in a one-two punch to help the housing market recover. The plan complements the new American Recovery and Reinvestment Act by promising to help up to 9 million homeowners refinance or restructure their current mortgage loans.

In short, the plan will:
1. Enable Fannie Mae and Freddie Mac to refinance loans owned or guaranteed by the GSEs.

2. Create for a $75 billion Homeowner Stability Initiative, with incentives for servicers, investors, and borrowers to make their loans work, provided the loan amount is at or below GSE conforming loan limits.

3. Provide more financial support for Fannie Mae and Freddie Mac, so they can make more loans at lower rates. The plan would double the potential Treasury investment in each GSE from $100B to $200B and raise their portfolio cap by $50 billion. Both steps will help keep rates low for all borrowers and could even lead to lower mortgage rates.

Now, it’s our turn to get in the ring. REALTORS® need to get out there and help our clients and all homeowners who need help to take advantage of these resources.

We have posted a Q&A on Realtor.org with details on who is eligible for help under the plan and how to apply. I encourage you to read it and pass the information along to your clients.

http://www.realtor.org/government_affairs/gapublic/homeowner_afford_stability_plan

We all know that an economic recovery depends on a stable housing market. And, I don’t need to tell you that our businesses depend on our ability to keep people in their homes. With your help, I know we can score a knock out on the credit crisis once and for all. – Dick Gaylord, 2009 Immediate Past President