SIGNS OF HOPE FOR HOME SALES IN 2011
“National home sales increased in January, breaking a six-month streak of home sales declines, with some markets experiencing double-digit increases, RE/MAX said Friday in its latest National Housing Report. Last month, home sales were 0.7% higher when compared to January of 2010. The move to positive territory hinged on the recording of double-digit sales increases in key markets, including Miami, Tampa, Richmond, New Orleans and Phoenix. All of these markets saw home sales rise by at least 16%.” – housingwire.com
WHY PROTECTING COMPENSATION PROTECTS CONSUMER CHOICE
Should a gallon of milk or a gallon of gas cost the same for everyone in every market? Do you think the price of goods should be fixed for a specific period of time, regardless of cost, service, and demand? Should the profits generated for selling a product have a federally regulated minimum or maximum dollar amount or percentage, or should the free markets decide? Price fixing drives consumer costs up and limits choice. The cost of money and/or debt works the same way as the cost of most consumer goods. In just over a month, the Federal Reserve Board is determined to limit consumer choice and drive homeowner / homebuyer costs up; unless we can stop them.
A Brief History:
At the height of the housing boom, mortgage brokers accounted for approximately 65% of mortgage origination in the United States. Mortgage brokers are an inexpensive way for Wall Street to delivery mortgage products to the market. Mortgage brokers have unlimited options because they are not tied to just one investor, but have access to hundreds. Mortgage brokers are very competitive. The great housing crash changed the perception of the mortgage broker.
Initially mortgage brokers were blamed for the collapse of the housing market and the global financial meltdown. The initial blame was flawed. Mortgage brokers did not create a single high risk mortgage; Wall Street did. Mortgage brokers delivered products created by Wall Street to the consumer that demanded those products. Mortgage brokers are not free of blame. There were many brokers and loan officers that coerced (or worse) homeowners into mortgage products they had no business purchasing; and most of those brokers and loan officers are no longer in business. Mortgage brokers were not too big to fail. Wall Street was. Mortgage brokers that broke the law went to jail; Wall Street executives did not (name one). Mortgage brokers’ market share fell to approximately 15%, as the “Big Banks” made a killing by overcharging the consumer due to the public’s misperception and misdirection. To add insult to injury, Wall Street and the “Big Banks” benefited from the Government’s implementation of new rules and regulations created to protect the consumer.
Government Regulation (2009-2011):
The Federal Government has made a staggering amount of errors in an attempt to regulate risk out of the market and prevent another financial crisis. All mortgage regulation to date has been to the detriment of the consumer.
Home Valuation Code of Conduct (HVCC): Appraisal fees skyrocketed. “Big Banks” cashed in on the increased fees charged by the Appraisal Management Companies (which in most cases are owned by the banks). The industry is now forced to use appraisal management companies due to Federal law.
Mortgage Disclosure Improvement Act (MDIA): Increase closing timelines. Delayed countless closings increasing consumer costs.
RESPA Reform: Sought to add transparency but turned a one page Good Faith Estimate that clearly outlined consumer costs into a four page disclosure that removed important information like, total monthly payment and cash to close. Mortgage brokers have to disclose all compensation. “Big Banks” do not.
S.A.F.E. Act: Forced all loan officers to be licensed (a good thing). Except for one thing; the “Big Banks” did not have to comply. Forcing the “Big Banks” to comply would put and undue burden on large financial institutions and cost too much money.
Regulation was needed. The tragic implementation of mortgage regulation to date has only hurt the consumer and small businesses; and benefited those (i.e. Wall Street, Big Banks) that created the problem to begin with.
The FED’s Final Rule on Loan Officer Compensation:
The Federal Reserve Board’s Final Rule on loan officer compensation is the latest attack on small business and the consumer. The Final Rule which goes into effect on April 1st, 2011 is nothing more than price fixing and an assault on your local mortgage company.
The Rule will mandate that loan officer compensation is fixed for all loans and for all borrowers, for set period of time (i.e. 90 days); at which time the compensation can be changed for the next set period of time.
Compensation can come from the borrower or the lender; not both.
Compensation cannot change based on loan terms or product.
Loan officers will no longer be able to use their compensation to credit the borrowers closing costs to help close a loan (a common practice).
The Rule goes against HUD’s 2010 RESPA reform on loan officer compensation.
And yes, once again, “creditors” (i.e. Big Banks) are exempt.
With just over a month to comply with the Fed Rule, an entire industry is at a standstill. Violations on the Fed Rule have dire legal consequences and because the Fed lacks any clarity as to how to comply with the Rule, the industry is frozen; unable to implement any policies, procedures or compensation plans. Mortgage companies currently do not know how to legally pay their employees or charge fees for their services.
Currently the SBA Office of Advocacy is challenging the Fed Rule sighting that the lack of clarity of the Rule and the burden it places on small business may prove that the Fed is operating outside of the law. The House Oversight Committee is also reviewing the Rule and its impact on small business and the consumer. The National Association of Independent Housing Professionals (www.naihp.org) and the National Association of Mortgage Brokers (www.namb.org) are both preparing lawsuits against the Fed.
The fight for loan officer compensation is a fight for consumer choice. The Fed Rule should be deemed illegal as it is anti-consumer, anti-business, and do I dare to say, anti-American. Without consumer choice, costs will go up.
Mortgage brokers will always have a competitive advantage over large banking institutions. We will always offer more mortgage products at a lower rate with greater customer service. Our loan officers are educated and licensed. We thank you for supporting your local mortgage companies. Your continued support allows us to provide you options, service, and amazing pricing. We will continue to fight for your ability to choose.
Coming soon: Regulation of Real Estate Agent commissions.
HUD INCREASES MORTGAGE INSURANCE ON FHA MORTGAGES… AGAIN
HUD announced this month that all FHA 30 year fixed mortgages with a FHA case number assigned on or after April 18, 2011 will have increased Annual Mortgage Insurance Premiums.
This is the second time in less than twelve months HUD has raised the Annual Mortgage Insurance Premiums in an attempt to increase revenue.
HOME SALES SLIDE IN 2010
“U.S. home sales totaled 3.6 million in 2010, a 12% drop from the year before that pulled prices down with it, according to data provider CoreLogic. In November, the latest month of data available from CoreLogic, home prices dropped 5.1% for the fourth straight month of decline. "The downturn in home prices is clearly being driven by weak sales, an excess supply of unsold homes and larger impact from distressed sales," CoreLogic said in its report. The number of homes sold in 2010 was at its lowest point since the housing market collapsed. Sales were more than 50% below the level seen before the crisis in 2005 and 33% below the level measured in 2000.” – housingwire.com
HOME VALUES GET WACKED IN 2010
“National home prices fell 4.1% during the last three months of 2010, compared with 12 months earlier, according to the latest report from the S&P/Case-Shiller home price index, a closely watched indicator of market trends. They were down 1.9% compared with three months earlier. The decline was widespread, with 18 of the 20 large cities covered in a separate S&P/Case-Shiller index recording losses for the year. The only gains were posted by Washington, which was up 4.1%, and San Diego, which saw prices climb 1.7%.” – cnnfn.com
FOR DAILY UPDATES JOIN US AT FACEBOOK
RATE WATCH
Mortgage Type Interest Rate APR
30 Year Fixed 4.750% 4.799%
15 Year Fixed 3.875% 4.088%
5/1 ARM 2.500% 2.900%
Interest rates as of 02/22/10. Conforming interest rates. Interest rates and APR based on loan amounts not to exceed $417,000. Loan to values not to exceed 80%. 720+ credit score. Owner occupied only. Purchase and rate in term refinances. Not all applicants will qualify. Call today for your individual scenario rate quote.
MARKET UPDATE brought to you by:
Chris Tiller, Realtor/Investor
602-561-1346
tiller34@hotmail.com
No comments:
Post a Comment