Home buyer strategy to cope with a low inventory market

real estateAs the weather warms, many home buyers are venturing out making themselves known; only to be greeted with low inventories and higher list prices. The National Association of Realtors® March 23rd press release indicated that nationwide low housing inventory is pushing home prices to grow rapidly; average home prices across the country increased 7.5% during February compared to the same period last year (realtor.org).

Much like the “tire kicker;” a typical home buyer visits selected open houses and lurks online to see what’s out there before talking to a lender and/or a real estate agent. While desiring to be low-key and pretending to be demure may be the strategy of choice; acting this way during a low inventory market could lead you to miss out on the home of your dreams.

If you’re part of this year’s home buyer cohort, prepare for a low inventory market by talking with a mortgage lender and a real estate agent before you begin your search. Working with an experienced agent and lender may increase your chances of not only finding a home, but getting your offer accepted.

Even though home buyers are instructed to get qualified for a mortgage before they begin looking for a home, it is often left until just prior to writing their first offer. A lender approval not only provides you the certainty of knowing what you can afford; it tells the home seller you are capable of buying their home.

Although getting a mortgage qualification letter today is more involved than it was in bygone years, it is for the better. To comply with new rules and regulations, lenders today require a formal application before they will provide you an approval letter that can accompany your offer to purchase. You will need to provide documents indicating your income and assets to determine how much you can afford as well as verify the funds for down payment and closing costs. The application not only helps you through the home buying process, it will make your mortgage process more streamlined too.

Although hiring a buyer agent is not always a consideration during the home search, your choice of agent could affect the outcome of your purchase. Choose carefully – research has indicated that real estate agents are not all alike; veteran agents positively affect your transaction and are more efficient compared to rookies. Experienced agents offer intangible services such as understanding the nuances of the housing market, as well as having an increased ability to engage the parties in the transaction. Additionally, it was found that home buyers who employ full-time agents have better outcomes than those who hire part-time agents.

Rather than waiting to choose your agent until you’re ready to make an offer on a home, meeting and interviewing several agents could help you determine their experience and commitment. Although most buyers think of savvy agents as being expert negotiators; in a low inventory market it also pays to have an agent who thinks outside the box to seek home sale opportunities that are not typically advertised in the MLS.

A low inventory housing market presents the home buyer with a number of issues. Working with an experienced agent and mortgage lender can help you through the ups and downs of the process as well as reframing your expectations to fit the reality of market.

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Posted in first time home buyer, Home Buyer, homebuyer, housing market, real estate | Tagged , , , , | Leave a comment

You are more resilient to winter than your home

home salesDid you know that enduring a harsh winter can make you more resilient? At least that’s what University of Buffalo researcher Mark Seery believes. His research on stress and coping reveals that negative events and adversity promotes adaptability and resilience, which benefits your overall wellness (buffalo.edu).

Your home, however, may not be as resilient as your psyche. A severe winter can create the ideal conditions for water penetration into and around your home. Unfortunately, many home owners won’t know that an issue exists until there is a noticeable leak, or water seeps into the basement. Left unchecked, water leaks can not only cause water damage to ceilings, walls, and basements, it can also promote mold growth as well as structural issues in and around the house.

Ice dams are often the cause of water finding its way into the home. Occurring on exterior coverings, ice dams typically occur through the melting and rapid freezing of snow or ice, which can lift and separate the covering giving water a pathway into the house. Ice dams are common on the roof, lifting shingles and separating chimney flashing; but can also occur on siding and exterior trim as well.

Rather than taking water away from your home’s foundation, blocked gutters and downspouts can be the cause of water penetration into the basement. Gutters and downspouts can become blocked with debris any time of year; however, winter presents additional issues. Snow and ice covered downspouts are sometimes shifted or damaged; while eroded grading can redirect water toward the house.

Part of the home’s drainage system, a sump pump helps to keep water from penetrating into the basement. It is designed to collect water in a basin and pump it away from the home. After severe winter weather, a large volume of melted snow and ice can saturate the grounds and fill the basin quickly. If the pump is not operating properly (or the pump drain is blocked), water can unknowingly seep into the basement.

Winter weather can also affect the home’s walkway and driveway. Freezing water can expand existing cracks, while snow removal and ice treatments can deteriorate the stability and integrity of the materials. Not only can the sidewalk and driveway become unsightly, they can also become a trip hazard.

You may be able to examine much of your home’s exterior by walking around the perimeter. However, it may be necessary to have a licensed contractor to inspect/repair the roof, gutters, and other areas. Although your home may not need maintenance, common items that may need to be addressed include repairing/replacing lifted or missing shingles; repairing flashing; realigning gutters and downspouts; re-grading; testing the sump pump; repairing/replacing broken or missing siding and/or exterior trim; repairing window and door seals; repairing/replacing fascia boards; repairing and/or sealing walkway and driveway; and touch-up painting.

Even if your home escaped busted pipes (which many home owners experienced this year), a leaking roof, or other cold weather crises this winter; it still may be in need of urgent maintenance. As the weather warms, taking the time to check your home’s exterior and making necessary repairs could not only improve your home’s aesthetics, but may also help prevent potential issues and impede developing damage. It should go without saying that this is a priority if you’re planning to put your home on the market this spring/summer.

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Posted in home condition, home maintenance, property condition, real estate | Tagged , , , | Leave a comment

Credit reporting changes may help home buyers

money to buy a homeIt’s no secret that your credit report can affect your ability to buy a home. Most mortgage lenders impose minimum credit score requirements to qualify; and tiered interest rates can cost you hundreds of dollars if your credit score is too low.

Your credit score is used as a predictor of your ability to manage debt. The score is the result of an analysis of information that is reported about you to the three credit reporting agencies; and is produced by each agency’s proprietary algorithm. Typical information that can be found in your credit report includes revolving and installment credit accounts, such as credit cards, home equity lines of credit, mortgages, and auto loans. Reported late payments, collections, and judgments can adversely affect your credit score.

Financial experts recommend you review your credit report annually to ensure accuracy, and dispute incorrect information. Annualcreditreport.com is the only authorized website where you can obtain a free annual credit report.

Correcting credit report errors can be tedious; and unfortunately, the outcome may not please you. However, this could change as a result of a recent settlement between New York Attorney General Eric Schneiderman and the three credit reporting agencies. A March 9th press release (ag.ny.gov) announced a settlement with the three credit reporting agencies to “improve credit report accuracy; increase the fairness and efficacy of the procedures for resolving consumer disputes of credit report errors; and protect consumers from unfair harm to their credit histories due to medical debt.” The statement quoted a 2012 FTC study that suggested that millions of consumers’ credit reports contain errors. The study indicated that 26% of the participants reported at least one error; and about 13% of the participants reported a positive change to their credit score after disputing errors.

The Consumer Data Industry Association (which represents the consumer data industry, including the three credit reporting agencies) also announced on March 9th (cdiaonline.org) the creation of the National Consumer Assistance Plan. Stuart Pratt, President and CEO of the Consumer Data Industry Association, stated; “The National Consumer Assistance Plan we are announcing today will enhance our ability to offer accurate reports and make the process of dealing with credit information easier and more transparent for consumers…”

The implementation of the National Consumer Assistance Plan (NCAP) is expected in upcoming months, and is focused on improving how consumers interact with the credit reporting agencies, as well as data accuracy and quality. The NCAP is to build upon recent improvements to consumers’ experience with the credit reporting agencies, which includes a 2013 digital application to facilitate credit report disputes. To ensure consistent and uniform data submission to credit reporting agencies, a multi-company working group is to be formed.

To improve the consumer experience, the NCAP is to: provide expanded credit report education; provide dispute results and suggestions on what to do if not satisfied with dispute outcome; and enhance dispute resolution for proven victims of identity theft and fraud.

To improve data accuracy and quality, the NCAP is to: implement a “waiting period” of 180 days for medical debt; remove previously reported medical collections that have been paid, or being paid by insurance; reinforce consistent standards for data submission; reject data that does not include a date of birth; and eliminate reporting debt which did not arise from a contract or agreement to pay (e.g., tickets or fines).

© Dan Krell
Google+

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Posted in credit report, Equifax, Experian, Fair Credit Reporting Act, Home Buyer, homebuyer, real estate, Trans Union | Tagged , , , , , , | Leave a comment

How to price your home in 2015

home for saleIn case you haven’t been following along closely, the March 3rd release of CoreLogic’s Home Price Index (corelogic.com) indicated that nationwide home prices increased 5.7% during January compared to the same period last year; and there was a 1.1% increase during January compared to December. And believe it or not, CoreLogic stated that nationwide home prices including distressed sales are only 12.7% below the peak; and only 8.6% below peak if you exclude distressed sales.

Of course, national home price data are an average of regions that vary economically, reflected in their respective housing market. CoreLogic Chief Economist Dr. Frank Nothaft stated, “House price appreciation has generally been stronger in the western half of the nation and weakest in the mid-Atlantic and northeast states…In part, these trends reflect the strength of regional economies. Colorado and Texas have had stronger job creation and have seen 8 to 9 percent price gains over the past 12 months in our combined indexes. In contrast, values were flat or down in Connecticut, Delaware and Maryland in our overall index, including distressed sales.” The only 2 states that realized negative price appreciation year over year (including distressed sales) during January were Maryland and Connecticut, where home prices appreciated (–0.3%) and (-0.6%) respectively.

If you include distressed sales, Maryland’s January home prices appreciated (–0.3%) year over year, (-0.1%) month over month, and is (-25.3%) from the peak. Regional differences, of course, exist: DC home prices including distressed sales appreciated 3.3.% year over year, (-0.4%) month over month, and is only (-1.4%) from the peak; Virginia home prices appreciated 1.4% year over year, (-0.2%) month over month, and is (-15.6%) from the peak.

The CoreLogic HPI Forecast projects nationwide home prices, including distressed sales, to appreciate 0.4% from January to February, with an annual appreciation of 5.3%.

CoreLogic expects consistent home price appreciation through 2015 and into 2016, due in part to a current shortage in housing inventory. Anand Nallathambi, president and CEO of CoreLogic, stated that “Many homeowners have taken advantage of low rates to refinance their homes, and until we see sustained increases in income levels and employment they could be hunkered down so supplies may remain tight. Demand has picked up as low mortgage rates and the cut in the FHA annual insurance premium reduce monthly payments for prospective homebuyers.”

According to the Greater Capital Area Association of Realtors® (gcaar.com) January Montgomery County single family home statistics, home inventory and home buyer activity increased compared to last January. Although total housing inventory increased 26.5% year over year, contracts (pending sales) increased 16.6%, and settlements (sales) increased 4.8%.

If you’re wondering how these statistics might affect your sale, you’re not alone; many home sellers are trying to shape a sensible marketing plan this spring, which includes deciding on a listing price. Consider that although listing inventory is currently relatively low, it is likely to spike within the next two months adding competition to a market competing for discerning home buyers.

Typical home buyers have been increasingly demanding value; besides looking for a “turnkey” (updated and ready to move in) home, they have also been sensitive to home prices. Since cash buyers are not as prevalent as they were two years ago, and many buyers are concerned about their monthly obligations and budgets; pricing your home correctly will be more important this year than it has in the past.

© Dan Krell
Google+

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Posted in Home Price Index, home prices, home pricing strategy, housing market, real estate, Real Estate Market | Tagged , , , , , | Leave a comment

Stumbling housing market reignites housing policy debate

real estateSurely 2015 is to be the year when the housing market would bounce back from its recent disappointing performance; at least that’s what I wrote back in November. But as January’s news from the National Association of Realtors® (NAR) is not as rosy as we expected; a housing policy debate, that has been subdued since 2010, gets heated.

The NAR revealed in a February 23rd press release (realtor.org) that although the pace of home sales increased compared to the same time last year, existing homes sales have declined to the lowest rate in nine months. The typically optimistic Lawrence Yun (NAR Chief Economist) was cited as saying “the housing market got off to a somewhat disappointing start to begin the year with January closings down throughout the country.”   Adding that “seasonal influences” can make January data erratic, the combination of low inventory and home price gains over the pace of inflation seems to have slowed home sales – notwithstanding low mortgage interest rates.

Keeping mortgage interest rates low is not the sole solution; however, if it was, the housing market may have bounced back several years ago. Although a myriad of causes have been blamed for a lackluster housing market that has been trying to make a comeback for six years, most are correlational and incidental.

However, Richard X. Bove (Equity Research Analyst at Rafferty Capital Markets) recently made a case for a sole cause in his February 23rd commentary (There’s a new mortgage crisis brewing; cnbc.com/id/102447414). Bove described how mortgage markets are in trouble; rules and regulations put into place to strengthen the market by increasing borrower standards have dried up a lot of the funding. And not necessarily in the way you might expect; besides shrinking the pool of qualified buyers, Bove suggested that the rules and regulations have made mortgage lending unprofitable and unpalatable for some lenders (leading them to walk away from the business).

As a response, it would seem as if the Federal Housing Finance Agency (FHFA) took steps to make mortgages increasingly available (returning to 3% down payment loans, and increasing the number of loans on Fannie and Freddie’s balance sheets). These actions, along with recorded losses in Q4 2014, Bove described, is making some nervous.

If you don’t remember, the FHFA was created in 2008 as a temporary conservator to Fannie Mae and Freddie Mac; whose original goals included: ensuring a positive net worth for Fannie and Freddie; reducing Fannie and Freddie’s mortgage portfolios; and facilitating a streamlined and profitable model for Fannie and Freddie.

Bove’s catch-22 conclusion, of either hindering the housing market by stopping Fannie and Freddie’s growth or increasing Fannie and Freddie’s debt obligations with continued growth, is not a new dilemma. The debate has been ongoing since 2008.

Having faded somewhat since 2010, the housing policy debate heated up during testimony given by FHFA Director Mel Watt on January 27th during the congressional hearing, “Sustainable Housing Finance: An Update from the Director of the Federal Housing Finance Agency.” Trey Garrison of HousingWire succinctly portrayed opposing views (January 27, 2014; FHFA hearing: GOP fear housing policy headed for Crash 2.0; housingwire.com): “Democrats said policies in the past year are necessary to expand housing opportunities to lower income and challenged borrowers…” while, “…Republicans…said the administration is adopting dangerous policies that risk another housing crash that will put taxpayers on the hook for billions.

© Dan Krell
Google+

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Posted in FHFA, home sales, housing market, mortgage, real estate, Real Estate Market | Tagged , , , , , | Leave a comment

Real estate’s new rules – common sense

home for saleReal estate canon used to be straight forward and for the most part consistent. For instance, if you planned a sale, you would target spring time because that was generally accepted as the time when home buyer activity was the greatest; or buying a home was a rite of passage. But since 2008, what was generally accepted has been persistently challenged; home buyers and sellers have shifted into a new paradigm with new rules.

It is no coincidence that Zillow Talk: The New Rules of Real Estate (by Zillow CEO Spencer Rascoff and Chief Economist Stan Humphries, Ph.D.) comes at a time when significant changes in consumer beliefs and expectations about real estate have become widely recognized. The book is described by Zillow as “…poised to be the real estate almanac for the next generation.” And looking at the table of contents, you might think that the highly acclaimed tome is just another book about the buying and selling process; yet it seems to discuss practical aspects about buying and selling a home, as well as possibly confronting real estate myths.

It will remain to be seen how influential the work will become, as research has indicated that home buyers are typically well informed and out in front of housing trends.

A 2012 study by Karl Case, Robert Shiller, & Anne Thompson (What have they been thinking? homebuyer behavior in hot and cold markets. Brookings Papers on Economic Activity, 265-315) revealed perceptions and expectations of homebuyers from four metropolitan markets over a 25 year period. The authors concluded that the surveyed home buyers were well informed and very much aware of home price trends prior to their purchase. Data suggested that home buyer opinions (beliefs) fluctuated over time; there was more agreement among respondents during strong markets, and increased doubt during times of market uncertainty. There was also a strong correlation between price perceptions and actual movement in prices. Although home buyers were “out in front” of short term market movements, their short term expectations “underreacted” to actual home price changes; while long term expectations were persistently “more optimistic.”

Suggesting a set of “guidelines” for real estate is a trap that implies that the housing market is straightforward and static; where personal and regional differences don’t matter and the market doesn’t change. However, David Wyman, Elaine Worzala, and Maury Seldin raise the question about becoming complacent with trends and models. In a 2013 exploratory paper (Hidden complexity in housing markets: a case for alternative models and techniques, International Journal of Housing Markets and Analysis, 6:4, 383 – 404) they discuss how rigid market models may lead to rules where buyers and sellers could make poor decisions.

The authors’ discussion of “complexity theory” in real estate in not unlike the application of “chaos theory,” which focuses on letting go of assumptions upon which rules are definitive; and view housing as a dynamic and changing environment. Citing incidents leading up to the financial crisis, the authors make a case for understanding the market as complex and using common sense before making (buying and selling) decisions.

So as we begin to understand the new real estate dogma, it is likely that the new rules will most likely change along with the market. And much like the housing market, consumer beliefs are also dynamic – which seem to be ahead of the industry experts.

© Dan Krell
Google+

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Posted in Home Buyer, home buyer behavior, home owner, homeowner, housing market, real estate, Real Estate Market, Real Estate Market Trends | Tagged , , , , , , , | Leave a comment

Protect your identity when buying a home

real estateLast year, hackers targeted a number of retailers to compromise shoppers’ financial and personal information. A recent hack of a health insurer possibly jeopardized policy holder data. And Krebbs Security (krebsonsecurity.com) reported on February 15th about an investigation being conducted by the Defense Contract Management Agency of a possible hacking.

Surely the reports of stolen data by hackers have made you more aware of protecting your credit cards when shopping. But how protective are you about handing over personal information to mortgage lenders, real estate brokers/agents, and title companies? If not managed or disposed of properly, your sensitive personal information could be at risk of being stolen – an identity thief only needs a few pieces of personal information to access bank accounts, credit card accounts, health record/insurance, etc.

When buying a home, your information is “out there;” and you are trusting those who have it to protect it. If you want to obtain a mortgage, you must complete a mortgage application; which requires a social security number, date of birth, address, employment, and other information. Mortgage lenders also collect financial documents (such as w-2’s, tax returns, and bank statements) to verify income and asset information on your application.

Additionally, your real estate agent may ask you to complete a financial information sheet to demonstrate to the seller your ability to purchase the home. And as a means of record keeping, transaction files maintained by brokers and agents may also contain copies of deposit checks, credit card information, and other financial instruments.

Renters may be required to submit personal information too. A rental application is a lot like a mortgage application, asking social security number, date of birth, address, employment, and other information.

The National Association of Realtors® (realtor.org) Data Security and Privacy Toolkit states that although there is no federal law specifically applicable to real estate brokers, the Gramm-Leach-Bliley Financial Modernization Act applies to businesses that qualify as financial institutions; which may subject brokers to comply with “Red Flag Rules” (and other rules), and require policies and procedures to protect against identity theft.

States have also implemented laws to protect consumers from identity theft. For example, the Maryland Personal Information Protection Act (MD Code Commercial Law § 14-3501) describes personal information as an individual’s first name or first initial and last name in combination with any one or more of the following: Social Security number; driver’s license number; financial account number (including credit cards); and/or an Individual Taxpayer Identification Number. Additionally, the law requires a business to take reasonable steps to protect against unauthorized access to or use of the personal information when destroying a customer’s records that contain personal information.

When choosing a mortgage lender and real estate agent, you might consider asking about the company policy on protecting personal information. Some questions about personal data might be: what types of information will be collected; what is it used for; who has access; when transmitted, is it encrypted; how long will the information be retained; and how will the information be disposed? Besides the management of your personal data, you should ask about procedures in case there is a suspected data breach.

To learn more about protecting your personal information and protecting yourself from identity theft, visit these consumer websites: the Federal Reserve (federalreserve.gov/consumerinfo/idtheft.htm); FTC (consumer.ftc.gov/features/feature-0014-identity-theft); FDIC (fdic.gov/consumers/privacy); and OnGuardOnline (onguardonline.gov).

© Dan Krell
Google+

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Posted in financial information sheet, Home Buyer, home owner, homebuyer, Identity Theft, mortagage application, privacy, real estate | Tagged , , , , , , | Leave a comment

Coming this summer – A new real estate settlement experience

real estateFor many, August 1st will be like any other summer day. However for those in the lending and real estate industries, August 1st is when the Consumer Financial Protection Bureau’s (CFPB) new lending, closing disclosures and rules go into effect.

Know Before You Owe” is a project that began before the official opening of the CFPB (which officially opened July 21st 2011), and undertook the remaking of mortgage disclosures to make them more consumer friendly. You might say the project started with the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which mandated the creation of the CFPB as well as amends the Real Estate Settlement Procedures Act (RESPA). Sec 1098 of Dodd-Frank states that the Bureau “shall publish a single, integrated disclosure for mortgage loan transactions” in a “readily understandable language” so as to help borrowers understand the financial aspects of their loan clearly and to be nontechnical.

A change in industry disclosure and compliance to enhance consumer protection is not new. RESPA and the Truth in Lending Act (TILA) were both devised as consumer protections, and amended over the years. RESPA was enacted in 1974 as a protection for consumers from abusive and predatory lending practices to help home buyers better shop for services related to the home buying process. Enacted in 1968, TILA provided guidelines for which lenders are required to inform consumers about the cost of their loan; which includes the disclosing the Annual Percentage Rate (APR), finance charges, amount financed, and the total amount paid as scheduled. The new integrated disclosure forms replace the Good Faith Estimate (GFE) and Settlement Statement (HUD1) required by RESPA and the Truth and Lending Disclosure Statement required by TILA with a Loan Estimate and a Closing Disclosure.

RESPA and TILA require disclosures to be provided to you within three days upon making your mortgage application, as well as not having changed prior to your closing of the transaction. Changes to these regulations and disclosures have often been made to keep up with the industry as well as to enhance consumer disclosure and education; the most recent revisions being made immediately after the financial crisis. Although redesigned to be more efficient and accurate, the most recent revision of the GFE and the Truth in Lending Disclosure Statement remained technical in nature. Many claimed the forms remained confusing making it difficult to compare mortgage costs between lenders; costs were not always labeled consistently and sometimes changed prior to closing.

By combining these disclosures into two forms in a clear and understandable language, the forms present important information conspicuously to help consumers decide if the mortgage is affordable and warn about loan features that they may want to avoid. The new forms seek to standardize fee and cost disclosures so as to make shopping easier; with standard cost and fee disclosures, comparisons will be more like comparing two apples rather than an apple to an orange.

One of the more important aspects of the new rules is that the new Closing Disclosure be given to the borrower three days prior to settlement. During the three days prior to closing, changes to the Closing Disclosure that increase charges are prohibited (unless allowed by exception). You can find more information about the CFPB and view the new disclosures at the CFPB website Know Before You Owe (consumerfinance.gov/knowbeforeyouowe).

© Dan Krell
Google+

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Posted in Consumer Financial Protection Bureau, Dodd-Frank, real estate, RESPA, settlement, TILA | Tagged , , , , , , , | Leave a comment

Fair housing and disparate impact – Supremes hear arguments

HouseApril is designated as Fair Housing Month. The timing for the commemoration is not arbitrary, but is the memorialization of the passing of the Fair Housing Act, which was enacted April 1968. According to HUD (hud.gov), “HUD hosted a gala event in the Grand Ballroom of New York’s Plaza Hotel” to celebrate the first year. Fair Housing Month celebrations held during April have become a “tradition” as events to remember the achievement became more prevalent. Fair Housing Month has become more than just recognition of the realization of passing a law; it has also become a celebration of diversity.

It’s January, and there’s an early buzz about Fair Housing; not because of any celebration or proclamation, but because of a case being considered by the Supreme Court of the United States. Oral arguments were heard last week by the Court in the matter of Texas Department of Housing and Community Affairs v. The Inclusive Communities Project. Although still obscure, the case may be one of the most important and controversial cases the Court will hear this year.

Amy Howe, in her January 6th article for SCOTUSblog (Will the third time be the charm for the Fair Housing Act and disparate-impact claims? In Plain English; scotusblog.com), succinctly described the case that emanates from Texas: “In 2008, the Project filed this lawsuit against the state agency.  It argued that the agency had allocated the tax credits in a racially segregated manner:  it disproportionately granted the housing credits in minority areas of the Dallas region, while at the same time disproportionately denying them in white areas of Dallas.  A federal district court agreed with the Project, finding that the agency’s allocation of tax credits violated the FHA because it had a disparate impact on minorities. Under the ruling, it did not matter whether the agency intended to discriminate against minorities; the effect was enough to violate the law.  The U.S. Court of Appeals for the Fifth Circuit agreed that a disparate-impact claim could be brought under the statute. The state then asked the Supreme Court to weigh in, which it agreed to do in October of last year.

Howe stated, that “The Fair Housing Act makes it illegal to ‘refuse to sell or rent . . . or to refuse to negotiate for the sale or rental of, or otherwise make unavailable or deny, a dwelling to any person because of race…’” This is the third case “…in less than four years, the Supreme Court granted review to consider whether this language allows lawsuits based on disparate impact. A disparate-impact claim is an allegation that a law or practice has a discriminatory effect, even if it wasn’t based on a discriminatory purpose.” The first two cases were settled before oral arguments.

According to the National Fair Housing Alliance (nationalfairhousing.org), disparate impact “…is a legal doctrine under the Fair Housing Act which means that a policy or practice may be considered discriminatory if it has a disproportionate “adverse impact” against any group based on race, national origin, color, religion, sex, familial status, or disability…” and “…safeguards the right to a fair shot for everyone.”

The outcome could affect more just the policies of a Texas housing agency. Although the Court’s opinion may not be given until later this year; the outcome will surely be felt beyond the housing and lending industries.

© Dan Krell
Google+

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Posted in fair housing, real estate | Tagged , | Leave a comment

Affordable housing redux

Affordable HousingStatistics and indices have indicated that buying a home has become more affordable in recent years. In fact, the October 2014 Trulia Rent vs. Buy Index indicated that buying a home was 38% cheaper than renting (trulia.com). Additionally, the S&P/Case-Shiller National Home Price Index released December 30th indicated that average home prices for the 10-City and 20-City Composites are at “autumn 2004 levels” (housingviews.com). However, while interest rates continue to be favorable along with an expanding inventory that offers more choices, obstacles remain to home ownership.

Unlike the high home prices that drove affordable housing concerns in the past, many would-be home buyers today face income and savings challenges. Statistics suggest that many do not earn enough to qualify for a home purchase and/or have not saved enough for a down payment and closing costs. The latest report (Q2 2014) of the Maryland Association of Realtors® First-time Homebuyer Affordability Index revealed a decrease in home affordability from 84.1% to 75.7%; which indicates that Maryland first time home buyers had 75% of the income required “to purchase a typical starter home” (mdrealtor.org).

More importantly, a survey conducted by the Consumer Federation of America (7th Annual Savings Survey Reveals Persistence of Financial Challenges Facing Most Americans; February 24, 2014, consumerfed.org), revealed that “most Americans are meeting their immediate financial needs but are worse off than several years ago.” And, “… that, despite the economic recovery, most Americans continue to face significant personal savings challenges….” Stephen Brobeck, Executive Director of the Consumer Federation of America and a founder of America Saves, was quoted to say: “Only about one-third of Americans are living within their means and think they are prepared for the longterm financial future. One-third are living within their means but are often not prepared for this longterm future. And one-third are struggling to live within their means.

With an eye to address housing affordability, the President reduced the FHA annual mortgage insurance premium (MIP). Increases in FHA’s MIP in recent years have helped offset losses from the foreclosure crisis; and inadvertently made mortgages more expensive. And although the recent MIP reduction helps more home buyers qualify, critics claim it increases FHA’s risk and exposure to future foreclosure losses. According to Zillow (How Much Can You Save with Lower FHA Annual Mortgage Insurance Premiums?; January 7,2015, zillow.com), a home buyer who has a 3.5% down payment on a 30 year mortgage of $175,000 can save about $818 per year (about $68 per month).

For those who have not saved enough for a down payment and closing costs, State and local initiatives offer down payment assistance and low interest rate mortgage programs. The Maryland Mortgage Program (mmp.maryland.gov) offers down payment assistance in the form of loans, an employer match program, or financial grants. Locally, the Housing Opportunities Commission of Montgomery County (hocmc.org) offers several down payment assistance options, including the House Keys 4 Employees program for many Montgomery County Employees. These programs have restrictions; you should check with each program for qualification and eligibility requirements.

The Montgomery County Department of Housing and Community Affairs (montgomerycountymd.gov/DHCA) offers additional affordable housing options: The Moderately Priced Dwelling Unit (MPDU) Program offers affordably priced homes to first-time homebuyers who meet the program’s eligibility; and the Work Force Housing Program promotes “the construction of housing that will be affordable to households with incomes at or below 120% of the area-wide median.”

© Dan Krell
Google+

Protected by Copyscape Web Plagiarism Detector
Disclaimer. This article is not intended to provide nor should it be relied upon for legal and financial advice. Readers should not rely solely on the information contained herein, as it does not purport to be comprehensive or render specific advice. Readers should consult with an attorney regarding local real estate laws and customs as they vary by state and jurisdiction. Using this article without permission is a violation of copyright laws.

Posted in affordable housing, closing cost assistance, down payment assistance, first time home buyer, Home Buyer, home buyer behavior, home prices, real estate | Tagged , , , , , , , | Leave a comment