FHA’s Stevens Departs for MBA Greener Pastures


In the past I have written favorably about FHA Commissioner David Stevens. I even got a comment on one blog from Stevens thanking me for my post. I’ve attended several talks by Stevens, a couple webinars and phone chats, etc. I like Dave – think he’s done a good job keeping the FHA out of bail-out territory, adjusting some  policies – like the 90 day flip rule, etc.

Well, the end of this month what will be a big loss for the FHA will become a big gain for the Mortgage Bankers Association when David Stevens leaves the former for the latter. I don’t know if I will like him as well in the new position but hope he can bring the same clarity and focus to the MBA that he has brought to FHA and that his knowledge of a broad spectrum of the market from several perspectives will be put to good use.

Stevens joined the administration team at FHA as one of President Obama’s new hires and has usually been perceived as a straight shooter knowledgeable of the industry whereof he governs. The same could  not always be said of his bosses HUD Secretary Shaun Donovan or FDIC Chair Sheila Bair. Stevens, while toeing the company line, could also be candid in appraising some of the constraints of working within the administration, explaining why things were the way they were and what the impact and repercussions to the industry would be. Donovan and Bair can always be counted on to spout the strict company line regardless of whether you call BS on them or not. I always found him a refreshing fresh voice amidst the sea of blather.

He joined the administration after serving as President and COO of real estate firm Long & Fosters but he has an even more extensive background as a  mortgage lender at World Bank and Wells Fargo and a seven year stint running the small lender channel at Freddie Mac.

No word yet on who will be tapped to replace Stevens at the helm of the FHA when he  leaves at the end of the month. One can only hope that an equally competent and focused individual will be named, someone who knows what business they’re in, actually understands housing, lending and how they impact the economy and can work to keep the FHA a relevant entity for first time and lower income homebuyers.

Thanks Dave. We’re wishing you the best. If you can do the same kind of job at MBA you did at FHA the housing industry as a whole will benefit from it. Good luck.

Your February Housing Report

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

News from FHA on flipping and condos

Good news if you have clients who are FHA borrowers.  The FHA has extended its temporary waiver of its “anti-flipping rule.”  The original waiver, which was passed as the direct result of C.A.R.’s leadership efforts, was set to expire at the end of last month, but now will be extended through the remainder of 2011.  The ruling allows investors who acquire foreclosed properties at below-market value to be exempted from waiting the customary 90 days before reselling them.  The 90-day waiting period originally was put in place to protect FHA borrowers against predatory practices of flipping where properties were quickly resold at inflated prices to unsuspecting borrowers.  First-time buyers have responded overwhelmingly to the opportunity to buy “move-in ready” renovated homes with low down payments, prompting the extension.

If you work with condominium buyers, you’ll want to know if the condominiums in your area are approved and eligible for an FHA loan.  C.A.R.’s subsidiary, REBS®, has introduced Clarus FHA Approval™ Eligibility Check, which offers a unique searchable database that will allow you to quickly determine FHA loan eligibility via a simple property address search.  Using this service, you and your FHA clients can avoid failed transactions and non-recoverable costs due to undetermined FHA loan eligibility status.  C.A.R. has negotiated special discounts for its members.

You’ll also want to let the condominium associations in your area know that HUD now requires that an entire condominium development be preapproved before an FHA loan may be granted.  FHA loans currently represent almost half of all new mortgages nationwide, and failure for a development to be preapproved to be eligible for FHA loans will almost certainly impact the marketability and value of the development.  Clarus FHA Approval™ also offers Approval Services to assist condominiums in seeking HUD approval.  Discounts are available to condominium associations referred by a C.A.R. member.  For more information about both Clarus FHA Approval™ services.

CRE solicits your input on trasfer fees

The Center for Regulatory Effectiveness Solicits Public Comment on Three Public Policy Issues Associated with the FHFA Proposed Private Transfer Fee Guidance

The Federal Home Finance Authority has proposed guidance which would terminate the use of Private Transfer Fees.  Private Transfer Fees are paid each time a property is sold and are often used for community benefit programs. Private transfer fees have also been used to provide a continual source of income for developers and investors.

The FHFA has received in excess of 2,500 comments. While the FHFA is reviewing these comments  the Center for Regulatory Effectiveness is asking the public and the regulated community to comment on the following public policy issues which emerge from CRE’s review of the public comments submitted to the FHFA:
1.   Should the FHFA issue a rule in lieu of guidance?
2.   Should the FHFA prepare an environmental impact statement on the transfer fee proposal?
3.     Should there be a “carve out” for the public use of transfer fees?Please post your comments at  http://www.thecre.com/tForum/?p=68#respond (Scroll down to the bottom of the page to locate the comments section.)

The Center for Regulatory Effectiveness is a regulatory watchdog founded  by former members of the White House Office of Management and Budget http://thecre.com/ombpapers/OMB_Officials.htm

For additional information , contact
Jim Tozzi at the Center for Regulatory Effectiveness

Josh Van De Riet
Research Assistant
The Center for Regulatory Effectiveness
1601 Connecticut Avenue, NW   Suite 500
Washington, DC 20009(202) 265-2383

FHA Announces Short Refinance Program for Non-FHA Borrowers

On August 6, 2010, the U.S. Department of Housing and Urban Development (HUD) announced details for its new refinancing program to assist homeowners who owe more on their non-FHA mortgages than their home is worth. HUD originally announced the program in March. Beginning September 7, 2010, the Federal Housing Administration (FHA) will offer qualified non-FHA borrowers the opportunity to refinance with a FHA-insured mortgage on their primary residence. Borrowers must be current on their existing mortgage, qualify under FHA underwriting requirements, and have a credit score of at least 500. The first lien holder must agree to write off at least 10% of the remaining amount owed under the mortgage bringing the combined loan-to-value ratio (LTV) of all mortgages to 115% or less. The LTV for the new FHA mortgage may not exceed 97.75%. The Treasury Department will provide incentives to second lien holders who agree to forgive all or part of their liens. Additional information and guidelines can be found on the HUD website.

HUD Press Release
HUD Mortgagee Letter 2010-23, FHA Refinance of Borrowers in Negative Equity Positions

FHA FAQ’s on HVCC? Don’t bother us!

I had a good laugh this morning listening to the boys over at TBWS (Think Big, Work Small). If you don’t listen to these guys you’re missing a chunk of good real estate information because I can’t cover it all.

So after to listening to FHA Commissioner Dave Stevens yesterday and agreeing/disagreeing with what he had to report (FHA’s Dave Stevens Talks. WE created the mess. THEY’ll clean it up. Oboy), the TBWS rant this morning was entitle ‘FHA – The Toothless Dog?’ Now Brian & Frank have been known to embellish a bit sometimes in the interest of entertaining reportage but they are usually factually accurate and thought provoking. This morning they asked the 7 questions on the new FHA FAQ on AMC’s/Reasonable & Customary/Turnaround Times. You all know, of course, that the FHA has adopted certain of those lovely practices we have all come to know and love as HVCC. So they felt it was necessary to answer your questions about how that impacts your business with FHA. Fascinating.

The problem is in the way FHA chose to answer your questions and that makes for the entertainment value which, according to Frank & Brian, essentially boils down to -‘Don’t bother the FHA with that’. So when they ended the broadcast they put up a disclaimer that ‘while the questions were verbatim from the FHA, the answers were a distillation of what the FHA’s answer is.’ Gotcha! I thought. You boys were just poking fun at the FHA for maybe giving some less that comprehensive answers.

WRONG! Go to the website and check it out for yourself. While the answers are all longer and more obfuscative, the bottom line to almost every one is – ‘Don’t bother the FHA’. For example –

  • What is a reasonable and customary fee?
FHA believes that the marketplace best determines what is reasonable and customary in terms of fees. The fee is the result of a business decision, which may or may not be negotiated, between the appraiser and the client. FHA does not set fees or determine whether the fee is reasonable or customary.
Bottom line – Don’t bother the FHA.
  • Where do I complain when a lender wants to pay less than what is reasonable and customary?
The lender is responsible for ensuring that all FHA policies are followed and therefore has the responsibility to ensure that appraisers are paid a reasonable and customary fee. Any appraiser who feels the fee offered or paid is not reasonable or customary should file notice with the lender.
Bottom Line – Don’t bother the FHA.
  • Where do I complain if the AMC asks for unethical or inappropriate fees or services?
FHA has no authority to regulate AMC’s Complain to the lender or appropriate state agency but…
Bottom line – Don’t bother the FHA.
  • There are 4 more FAQ’s you could ask the FHA but the answer to all are about the same –
    • Is reasonable & customary an objective number? We don’t know – don’t bother the FHA.
    • What if the lender always assigns to the lowest bidder regardless of competence? None of our business – don’t bother the FHA.
    • What if there’s a big disparity between the fee the appraiser reports and the HUD-1? That’s an optional reporting thing – don’t bother the FHA.
    • What if the lender requires a quick turnaround? The FHA doesn’t set those standards – don’t bother the FHA.

screwedThis would be quite laughable if it weren’t true. So congratulations out there – contrary to earlier reports that the FHA was not going to jump into bed on the HVCC deal, they have and you get to deal with it. Problems with HVCC? Well, there may be a few but don’t bother the FHA. Seems everybody knows there’s problems with HVCC but nobody wants to tackle it head-on or try to straighten it out. Certainly not the FHA.

Ahhhh yes. Transparency, hope and change. Bend over, we’re from the government and we’re here to help.

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.

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?

New FHA Guidlines

FHA Announces Policy Enhancements to Better Manage Risk
On January 20, 2010, the Federal Housing Administration (FHA) announced major changes to ensure its long-term financial soundness. NAR has met with the FHA Commissioner on several occasions to discuss the state of the housing market and to underscore FHA’s invaluable role. By all accounts the new changes are a victory for home buyers. FHA has carefully balanced the need to make financial reforms with the need to keep FHA available to a large segment of consumers. This is evident by retaining the 3.5 percent minimum down payment requirement and allowing the upfront mortgage insurance premium to be financed.

FHA announced changes in the following areas: 1) The upfront mortgage insurance premium (UFMIP) will increase but may be financed; 2) Borrowers with a credit score below 580 will be required to have at least a 10 percent down payment, however, the minimum down payment will remain at 3.5 percent for all other borrowers; 3) FHA will seek legislative authority to increase the annual premium (currently capped at .55 percent); and 4) Seller concessions will be reduced to 3 percent from 6 percent.

On January 21, 2010, FHA released Mortgagee Letter 2010-02 and 2010-03, which provide details on the UFMIP increase and new procedures for terminating lenders underwriting authority for FHA insured mortgages. The UFMIP increased to 2.25 percent up from 1.75 percent for purchase mortgages and streamline refinances. ML 2010-03 states that HUD will review defaults and claims of approved lenders every 3 months. Lenders will be evaluated based on their default rate within the geographic area served by a HUD office and a default rate that also exceeds the national rate.

NAR Regulatory Issues Brief >
HUD Announcement on Policy Changes to Address Risk and Strengthen Finances >
Mortgagee Letter 2010-02: Increase in Upfront Premium for FHA Mortgage Insurance >
Mortgagee Letter 2010-03: Extended Procedures for Terminating Underwriting Authority >

Contacts: Jerome Nagy, 202-383-1233

Contacts: Megan Booth, 202-383-1222

90 Day FHA Anti-flipping waiver in place 2/1/2010



Measure to help bring stability to home values and accelerate sale of vacant properties

WASHINGTON – In an effort to stabilize home values and improve conditions in communities where foreclosure activity is high, HUD Secretary Shaun Donovan today announced a temporary policy that will expand access to FHA mortgage insurance and allow for the quick resale of foreclosed properties. The announcement is part of the Obama administration commitment to addressing foreclosure. Just yesterday, Secretary Donovan announced $2 billion in Neighborhood Stabilization Program grants to local communities and nonprofit housing developers to combat the effects of vacant and abandoned homes.

“As a result of the tightened credit market, FHA-insured mortgage financing is often the only means of financing available to potential homebuyers,” said Donovan. “FHA has an unprecedented opportunity to fulfill its mission by helping many homebuyers find affordable housing while contributing to neighborhood stabilization.”

With certain exceptions, FHA currently prohibits insuring a mortgage on a home owned by the seller for less than 90 days. This temporary waiver will give FHA borrowers access to a broader array of recently foreclosed properties.

“This change in policy is temporary and will have very strict conditions and guidelines to assure that predatory practices are not allowed,” Donovan said.

In today’s market, FHA research finds that acquiring, rehabilitating and the reselling these properties to prospective homeowners often takes less than 90 days. Prohibiting the use of FHA mortgage insurance for a subsequent resale within 90 days of acquisition adversely impacts the willingness of sellers to allow contracts from potential FHA buyers because they must consider holding costs and the risk of vandalism associated with allowing a property to sit vacant over a 90-day period of time.

The policy change will permit buyers to use FHA-insured financing to purchase HUD-owned properties, bank-owned properties, or properties resold through private sales. This will allow homes to resell as quickly as possible, helping to stabilize real estate prices and to revitalize neighborhoods and communities.

“FHA borrowers, because of the restrictions we are now lifting, have often been shut out from buying affordable properties,” said FHA Commissioner David H. Stevens. “This action will enable our borrowers, especially first-time buyers, to take advantage of this opportunity.”

The waiver will take effect on February 1, 2010 and is effective for one year, unless otherwise extended or withdrawn by the FHA Commissioner. To protect FHA borrowers against predatory practices of “flipping” where properties are quickly resold at inflated prices to unsuspecting borrowers, this waiver is limited to those sales meeting the following general conditions:

  • All transactions must be arms-length, with no identity of interest between the buyer and seller or other parties participating in the sales transaction.
  • In cases in which the sales price of the property is 20 percent or more above the seller’s acquisition cost, the waiver will only apply if the lender meets specific conditions.
  • The waiver is limited to forward mortgages, and does not apply to the Home Equity Conversion Mortgage (HECM) for purchase program.

Specific conditions and other details of this new temporary policy are in the text of the waiver, available on HUD’s website.

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.

At the NAR. No More 2nd Appraisals for FHA! Comm. Stevens Speaks Out.

Lots of good events going on at NAR. I’ll let you know what we did at the Land Use, Property Rights and Environment Committee yesterday and comment on our Government Affairs Directors meeting this morning as well as the very entertinaing and enlightening Legislative Forum featuring Bill Press and Mike Murphy. But today at noon we spent ‘An Hour with the FHA Commissioner’.

stevebnsIt’s amazing the difference it makes when you have somebody in a position of authority who actually knows what they’re doing as opposed to putting a bunch of bureaucrats and political hacks in charge. Commissioner and Under-Secretary of Housing Dave Stevens is one of us. Just like in the state of California we finally got Jeff Davi in place to help straighten out the Dept. or Real Estate, Realtors should consider ourselves lucky to have Dave Stevens minding the store at HUD.

After hearing the apologists and sycophants discuss HVCC yesterday, it was gratifying to have a discussion with somebody who listens and who, as Pres. McMillan said, ‘Gets It.’ According to Charlie Mac, the FHA & Stevens has been a ‘solid partner’.

Speaking before a packed house, Stevens gave a brief history of the FHA. Created in 1934, the FHA came into existence during circumstances very similar to where we are today. Stevens cited the fact that the FHA had grown kind of unpopular in recent years because they had no ‘sexy’ products, they insisted on a down payment, they did 30 year fixed loans and they insisted on documentation. As a result, their market share sank to around 2% from 2002 thru 2006. However, last year they wrote about 25% of the loans out there and this years percentage will be even higher. They also wrote over 80% of loans for first time buyers, 51% of loans to Black buyers and 45% of loans to Latino buyers. Fannie & Freddie combined only managed around 25% to that same demographic.

Stevens said that there would be no mortgage market today if FHA hadn’t been in place to fill the gap created by the collapse of sub-prime lenders. And that even though FHA’s capitol is eroding as a result of the current crisis, they have neither requested nor accepted any TARP or other bail-out funds and their balance sheet is still strong. He stressed that the FHA will not be the next sub-prime or GSE because the FHA focuses on buyers for whom a purchase is shelter, not an investment, not a speculation. The people who buy a house to mark their kids growth on the wall, who plant a garden, who take pride in their home and their neighborhood.

Not that the FHA has a problem with investors – in fact without them the market would not have recovered to the point it has today. He did not elaborate and was not questioned on the possibility of doing away with the 90 day flipping rule or on expanding the number of properties that one investor can own saying only that each buyers credentials must be weighed on it’s own merit.

He credited discussion with Charles McMillan with swaying FHA policy regarding HVCC implementation saying they realize the importance of the independent appraiser and are concerned about the proliferation of AMC’s, especially those owned by major lenders. He said they intend to apply the principles of HVCC as it was intended, not as it has actually been implemented. Along those lines he also announced that effective Monday there will be NO MORE 2nd appraisal requirements for FHA. That he also credited to Pres. McMillan. That’s a major step for FHA and one that should be welcome by our members.

He also gave kudos to his boss, HUD Secretary Shaun Donovan, as being a true ‘rock star’ and visionary who also ‘gets it’ about the need to stabilize housing to  lead the way in this nascent recovery. He also gave great accolades to the Realtor community for pulling off the homebuyer tax credit not just once but twice this year – once during its initial passage back in March and again just 2 weeks ago. He said that as recently as 2 months ago he would have bet there would be no extension and certainly no expansion – but with the active lobbying efforts of NAR and the massive (550,000+) letters and emails to congress, we pulled off an upset against long odds, against the media and other pundits, and we should be extremely pleased with out efforts. But don’t stop there.

It’s always nice to have somebody in authority tell you what you want to hear. It’s even nicer when they mean it. Stevens says he’s not in the government for the long haul – just to help fix a problem and then he’ll be back to selling real estate. I hope he means that too. He’s too nice a guy to stay in politics long.

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.

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.

NAR states position on HVCC/FHA/petitions

The National Association of Realtors clarifies its position on the HVCC & petitions – is working a bi-partisan bill to place an 18 month moratorium on the process.

Many of our members have had questions lately about NAR’s position on the HVCC and on the petitions circulating around the internet. Given the unintended consequences the HVCC ruling has fostered, this sounded like an effort NAR might get behind. Well,  NAR has heard those questions and in this brief position paper outlines a program the Realtor Party is working on to address the problem.


Many of our state and local association partners have been asked to sign an electronic petition to New York Attorney General Andrew Cuomo, Fannie Mae, Freddie Mac, and the Federal Housing Finance Agency (FHFA) requesting a permanent reversal of the Housing Value Code of Conduct.

NAR is not providing any direction regarding these petitions.  While the petition signatures may help raise the profile of the issue, NAR remains concerned about the accuracy of some of the petition claims.  NAR  worked with Congressmen Travis Childers (D-MS) and Gary Miller (R-CA) to craft HR 3044, a bill to place an 18 month moratorium on the implementation of the HVCC.  The bill currently has 54 co-sponsors and NAR is actively seeking additional co-sponsors for the legislation.