C.A.R., NAR Oppose Down-Payment Requirement for QRM Exemption

U.S. bank regulators have submitted a proposal that would require lenders to originate mortgages with at least a 20 percent down payment if they want to repackage the loan to sell to other investors without keeping some of the risk on their books. The bank regulators say this would create strong incentives for responsible lending and borrowing. Loans sold to Fannie Mae, Freddie Mac and FHA and VA loans would be exempt.

The California Association of Realtors and the National Association of Realtors oppose the proposal because the 20 percent down payment requirement is too high and would make it difficult for many people to purchase homes, causing further deceleration in the housing market. Strong evidence shows that responsible lending standards and ensuring a borrower’s ability to repay have the greatest impact on reducing lender risk.

“We need to strike a balance between reducing investor risk and providing affordable mortgage credit,” said NAR President Ron Phipps. “Better underwriting and credit quality standards have greatly reduced risk. Adding unnecessarily high minimum down payment requirements will only exclude hundreds of thousands of buyers from home ownership, despite their creditworthiness and proven ability to afford the monthly payment, because of the dramatic increase in the wealth required to purchase a home.”

Saving the necessary down payment has always been the principal obstacle to buyers seeking to purchase their first home. Proposals requiring high down payments will only drive more borrowers to FHA, increase costs for borrowers by raising interest rates and fees, and effectively price many eligible borrowers out of the housing market,” added Phipps.

C.A.R. leadership currently is in Washington D.C. meeting with legislators on this issue and others that impact the real estate industry.

Source: C.A. R. & N.A.R.

February Pending Home Sales Rise

Pending home sales increased in February but with notable regional variations, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator, rose 2.1 percent to 90.8, based on contracts signed in February, from 88.9 in January. The index is 8.2 percent below 98.9 recorded in February 2010. The data reflects contracts and not closings, which normally occur with a lag time of one or two months.

Lawrence Yun, NAR chief economist, says it’s important to look at the broader trend. “Month-to-month movements can be instructive, but in this uneven recovery it’s important to look at the longer term performance,” he said. “Pending home sales have trended up very nicely since bottoming out last June, even with periodic monthly declines. Contract activity is now 20 percent above the low point immediately following expiration of the home buyer tax credit.”

Yun notes there could have been some weather impact in the February data. “All of the regions saw gains except for the Northeast, where unusually bad winter weather may have curtailed some shopping and contract activity.”

The PHSI in the Northeast fell 10.9 percent to 65.5 in February and is 18.4 percent below a year ago. In the Midwest the index rose 4.0 percent in February to 81.1 but is 15.9 percent below February 2010. Pending home sales in the South increased 2.7 percent to an index of 100.3 but are 5.3 percent below a year ago. In the West the index rose 7.0 percent to 105.6 and is 0.6 percent higher than February 2010.

“We may not see notable gains in existing-home sales in the near term, but they’re expected to rise 5 to 10 percent this year with the economic recovery, job creation and excellent affordability conditions providing confidence to buyers who’ve been on the sidelines,” Yun said.

Source: NAR

Scam Alert: Scammers Use Real Estate Listings for ID Theft

Scammers are using Craigslist to target would-be renters in an elegant ID theft con, according to Clay County Prosecuting Attorney Daniel White.

“What they’re doing is really sneaky. They identify a property that is for sale, harvest images from the Internet showing the property, and then list it on Craigslist as a rental. The rent is very attractive. In one instance, $700 a month that included cable and Internet access for a beautiful four-bedroom home.

“Once the target is interested in the property, the scammer invites them to fill out an application. The application, of course, is what they’re after,” White said in a press release.

White said one homeowner reported having visitors drop by to ask about the property and being told it was for sale, not for rent.

“They said, ‘Well it sounded too good to be true,’” he said. “With these kinds of scams, that’s what they’re counting on; people looking a good deal that lowers their defenses.”

According to White, the Craigslist ad is vague. Once a person responds, they are given a story about how the homeowner is moving to Texas to care for an ailing relative; that the move to Texas is going to be for a substantial period of time, and that they are looking for an honest, sincere family to move into their residence during this absence.

“It’s made to appear like the homeowner is naively looking for someone to take care of the place in their absence, and that’s why the rent is so cheap. The scammers pulled images from an online listing and touted these as their photos of the property,” White said. ““Then once the hook is set, the target is given a rental application which seeks personal and financial information. That is the scammer’s real target — the would-be renter’s identity.”

White suggests:

• Work with reputable firms.

“A Craigslist ad may be a good lead, but do your homework. If the rent is low or they want a bunch of personal information, walk away.”

•If you do respond to an online query, ask the “homeowner’s” opinion on a news item that a local would know or have an opinion about.

“If they don’t respond to your observation about Zack Grienke getting traded, maybe they aren’t from Kansas City,” White said.

• If the “owner” doesn’t let you in the place to view it, there’s probably a reason. Like, they don’t own it.

In the e-mail the scammer sent targets, the conmen said the keys were in Texas and would be delivered after the application process was completed but to view the property externally.

Actually what they said was, “Do get back to me if you are truly interested and sure of taking proper care of my house, there is a rent application form which I will like you to fill and send back to me. If you can do all this for me, then I will be willing to rent my house to you. … Your full information will be used to process all documents that will be coming together with the keys leading to the house.”

“That comment about full information — your personal identifiers, banking and other information is what tips you off to the scam,” White said.

White said that scammers are adept at adapting new technologies to exploit people.

“We have a very hard time prosecuting these cases. I’m confident that this situation originates off shore and that the only thing the scammer knows about Texas is how to spell it. Prevention is really our only tool,” White said.

Source: Smithville Herald News

NAHB: Home Buyers 31-45 Likely to Lead Home-Buying Recovery

Generation X – young families and adults ages 31 to 45 – are likely to lead the home buying recovery as it gets underway, according to real estate experts who spoke at an educational webinar produced by the National Association of Home Builders (NAHB) in partnership with Builder magazine.

Buyers in this age group are most likely to think now is a good time to get off the fence, the webinar panelists explained. Generation X members also have strong opinions about the design features their new homes will include.

At 32 percent of the population of home-buying age – generally defined as those who are at least 30 years old, the Gen X population cohort isn't the largest, but it's the most mobile, said presenter Mollie Carmichael, principal of John Burns Real Estate Consulting in Irvine, Calif. "They are in full force with their careers and they need to accommodate growing families," she said.

In sharp contrast, even though they constitute 41 percent of prospective home buyers, Baby Boomers continue to wait for the market to improve, and their decisions to delay retirement also delay their decisions to downsize into a smaller home, Carmichael said.

Source: National Association of Home Builders

California Pending Home Sales, Distressed Sales Rise in February

Pending home sales rose in February, as did the share of distressed properties sold according to the California Association of Realtors®

C.A.R.’s Pending Home Sales Index (PHSI) was 112.1 in February, rising 20.6 percent from January’s revised index of 93.0, based on contracts signed in February. The index was down 1.6 percent from February 2010, when the presence of housing tax credits played a strong role in home sales. Pending home sales are forward-looking indicators of future home sales activity, providing information on the future direction of the market.

The total share of all distressed property types sold statewide also increased in February, to 56 percent, up from 54 percent in January and up from 55 percent in February 2010. Non-distressed sales made up the remaining share at 44 percent in February, down from 46 percent in January and down from 45 percent in February 2010.

Source: C.A.R.

Fast Facts

Calif. median home price: February 2011: $271,320 (Source: C.A.R.)

Calif. highest median home price by region/county February 2011: Marin $632,580 (Source: C.A.R.)

Calif. lowest median home price by region/county February 2011: Merced $117,270 (Source: C.A.R.)

Calif. Pending Home Sales Index: January 2011: 93.6 (Source: C.A.R.)

Calif. First-time Buyer Affordability Index: Fourth quarter 2010: 69 percent (Source: C.A.R.)

Mortgage rates: Week ending 3/10/2011 30-yr. fixed: 4.88 Fees/points: 0.7% 15-yr. fixed: 4.15% Fees/points: 0.7% 1-yr. adjustable: 3.21% Fees/points: 0.5% (Source: Freddie Mac)