Licenses Revoked At Record-Levels Industry-Wide

Hi Folks,
   With the Real Estate market starting to bloom again in many parts of the country, this is a much-anticipated time for many folks in our industry to shake off the pain of the past few years, put our chins up, and keep the market chugging.

   For those of us who have worked within the guidelines that are mandated by all-levels of the Government, as well as the State Real Estate departments, we will start to reap the joys of an up market. However, the actions of some folks who walked outside those lines, are now showing up in license revocations in multiple sectors of the Real Estate industry.

   "The California Department of Real Estate said it revoked a record number of real estate licenses in the recently completed fiscal year", states a recent article from Mark Glover on the SacBee.com website. The figures from fiscal 2011-12 showed a jump of 14% in revocations, along with a record number of "license surrenders from licensees facing disciplinary action", and these figures jumped to 1109 suspensions from 553 suspensions about 5 years back (Just about the time things took a bleak turn in the market). Indeed, as Glover writes, the California Department of Real Estate attributed the "collapse of the real estate market" as a contributor to the jump in revocations and suspensions.

   These actions are not confined solely to Real Estate Agents.

   A Real Estate Appraiser in Maine just recently had his appraisal license revoked, per an article on the website, BangorDailyNews.com. As a matter of fact, the Maine Department of Professional and Financial Regulation issued a press release regarding this particular case, in which they stated that the Board "has received indications" that this individual may be "continuing to conduct appraisal work, and may also be committing the same violations of Maine law that led to the revocation.” These violations came to light after complaints that the appraiser had a pattern of "taking money from property owners but failing to provide a promised appraisal or submitting an incomplete appraisal months late", per the article.

   Another such revocation involved an Auctioneer in Evansville, who was accused of, "colluding with two people to bid up the price of a house, even though neither of the two had any intention of buying the property", per a recent article by Jim Leute on the website, GazettExtra.com. The violation stems from a real estate auction in 2008 when the auctioneer allegedly asked relatives of the sellers to bid on the house. One relative opened the bidding, and the other bid several times, according to the state order against the auctioneer. In this case, the State agency said that he (The Auctioneer), "knowingly escalated or attempted to escalate bidding through collusion with another".

   So, the market is turning around, but as always, keep your head in the game.

   As the California Department of Real Estate stated in the article by Glover, "the large number of financially stressed homeowners set the table for scammers involved in foreclosure rescue and short-sale scams". Bill Moran, DRE enforcement chief and acting chief deputy real estate commissioner, said that "Consumer education is the key piece to really protecting consumers". Similarly, in the Maine case, the Board Administrator "encouraged property owners to report any appraisal dealings they have had" with the Appraiser in question.

   Be Vigilant!

   What can you suggest to make sure folks don't become victims to scams, theft, collusion, and other crimes?

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com


TAGS: #RealEstatemarket #California #departmentofrealestate #license #revocations #suspensions #agents #appraiser #Maine #propertyowner #auctioneer #collusion #bid #foreclosurerescue #shortsale #scam

The Rent to Own Juggernaut

Hi Folks,
   Welcome back to one and all.

   We have caught some flack over the past couple of years for keeping the title of this blog as, "HomeRun Homes Real Estate and Rent to Own Homes Blog", but the fact is that the Real Estate Market, Housing Numbers, Economic Conditions, etc., all have an effect on the gaining popularity and increasing momentum of the "Rent to Own Juggernaut", as I like to call it. Therefore, when it appears I am writing about Existing Homes Sales or Home Prices, these all tie in to the main title of this Blog. The sum of the parts are greater than the whole...

   On that note, today, we are staring directly into the face of the Juggernaut, as we are seeing more and more publicity on this form of Real Estate agreement. Some of the publicity is just an explanation of how the process works, but the point is, by educating the public, that is "publicity" !

   Our most recent example is a story in the Sioux City Journal, titled, "Rent-to-own transactions popular", by Jim Woodard. In this particular article, Woodard explains the process; "The homeowner agrees to rent his home for a specified period of time, usually from one to three years. At the same time, the tenant receives an option to buy the property at any time during the rental period at an agreed-on price.". Woodard also discusses the option fee and the rent credit (which vary by regional laws and between different homeowners).

   Woodard also points to some benefits to buyers that are perhaps cash-strapped or cannot qualify for a mortgage until their credit and financial status improves, however, they can move into the home and purchase it when their financial health improves.

   On the other side of the deal table, Woodard says that this can be a "wise option for the homeowner", who might need to wait quite some time in this sluggish market, and if the seller already owns a second home, they can "avoid making two mortgage payments each month without any revenue generated from his previous residence."

   Of course, there are caveats on both sides of the table (the buyer needs to make sure the seller's home is free of any liens of pending foreclosure, and seller needs to do some due-diligence on the buyer). As always, with any Real Estate deal, consult a local attorney or title company that is familiar with the local laws regarding these deals.

   Educating the public on Rent to Own Homes is a fantastic was to put it into the mainstream of the Real Estate market and start changing the Housing Market and the Economy for the better...what do you think?

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com


TAGS: #RenttoOwnHomes #RealEstate #HousingNumbers #EconomicConditions #pendingforeclosure #titlecompany

NAHB Hits a HomeRun With A New Comprehensive Index

Welcome Back,

   As you all know, from time to time, I break down the Housing numbers that are released to help you check the pulse of the Real Estate Market on a National basis. Along with these updates, I add an occasional rant (such as a rant about the need for an Index measuring Rent to Own activity). So far, though, that one has fallen on deaf ears, but something else has been created that I think is fantastic.

   Let me give you an example; if you take a photo of someone standing by the side of a building, you really can only see the person. If you back up a few steps and take the photo, you can see the building. If you step back a little more, you can also see the background, and perhaps the sky/clouds/weather. This example leads us to the newly created NAHB/First American Improving Markets Index (IMI), which was just launched by the NAHB (National Association of Home Builders), and includes three important factors to paint the big picture of the Housing market.

   According to an article by Claire Easley from Builder Magazine ("NAHB Launches New Index to Track Improving Markets"), the new index will be released monthly and will be "dedicated entirely to tracking metropolitan areas that have consistently shown signs of improvement".

   How can a Metropolitan area make the list? The area must have shown "at least six months of improvement from its trough" in the three factors that make up the index; housing permits, employment, and home prices. The Big Picture, basically!

   All 3 factors were deemed by the NAHB to be "key to determining the pulse of the housing market", will be drawn data from the "Bureau of Labor Statistics for employment growth numbers, house price appreciation data from Freddie Mac, and single-family permit numbers from the U.S. Census Bureau".

   In the article, the NAHB Chairman, Bob Nielsen, was quoted as saying that "Housing conditions are local and do not always reflect the national picture", and that they created the new index to "shine a light on those housing markets across the country that have stabilized and have begun to show signs of recovery."

   Who made the first release of the Index? The 12 Metro area that made it were: Alexandria, La.; Anchorage, Alaska.; Bangor, Maine; Bismarck, N.D.; Casper, Wyo.; Fairbanks, Alaska.; Fayetteville, N.C.; Houma, La.; Midland, Texas; New Orleans; Pittsburgh; and Waco, Texas".

   As an interesting side note, in the same article, the Chief Economist for NAHB (David Crowe), said that last year at this time "there was not a single market that showed improvement using these criteria." What are your thoughts on this composite index? Do you think they hit the target, or there should be more than these three factors?

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Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog: http://blogging.lease2buy.com
HomeRun Homes Websites: http://www.lease2buy.com and http://www.homerunhomes.com
TAGS: #NAHB #ImprovingMarketsIndex #IMI #RealEstateMarket #housingpermits #employment #homeprices

Should We Fear The Qualified Residential Mortgage Definition?

Hi Folks,

   Welcome back, and hope your weekend was great !

   There has been a humongous amount of buzz surrounding section 941 of the Dodd-Frank Act ("Wall Street Reform and Consumer Protection Act of 2010"), which requires, per the National Association of Realtors (NAR) website (Realtor.org), that lenders "securitize mortgage loans to retain 5% of the credit risk unless the mortgage is a qualified residential mortgage or is otherwise exempt (for example, FHA mortgages are also exempt)".

   Why is this so scary?

   The QRM definition is of extraordinary importance because it will determine the types of mortgages that will be generally available for borrowers for the foreseeable future. We look back at the NAR website, which says that the rule, "would (a) drive borrowers to FHA if they do not have 20% down or (b) mean those who couldn’t put 20% down would have to pay up to 3 percentage points more for a loan (for example, 8% mortgage vs. 5% mortgage) or not qualify at all. Even a 10% downpayment QRM would have a negative impact on FHA and the markets."

   Let's get a little bit more granular on this, namely, how this affects new buyers and sellers looking to refinance their homes. This is very important.

   Melanie J. McLane, a Real Estate Speaker and Trainer, says that stats from her trade organization, the NAR, indicates, "two striking things: 1) it will take the average buyer 16 years to save a 20% down payment, vs a 5%; and 2) the risk to the lender going from 95% LTV to 80% LTV is only 6/10 of one percent (less risky).". "The majority of home buyers do not have 20% to put down. Sellers are enlightened to offer creative financing due to low equity, a new attitude may emerge: "if I am about to lose my credit and home, of course you can take over my payments, forget saving 20% for down payment" What you may have as an end result is a nation of people taking over existing loans in lieu of obtaining new financing.", says Dean Wegner, a Mortgage Originator in Scottsdale, Arizona.

   Jeffrey R. Kershner, Managing Broker/Principal with an Illinois Real Estate Company, takes an even granular approach, and says that for a person making "the median household income in Illinois of just over $53,000", that it will take them "9.24 years to save up for a required $40,000 down payment on a $200,000 house; that is with saving 10% after taxes per year. This will greatly increase the age by which first time buyers can enter the market and will adversely affect the middle class."

   Substantial problems for new buyers, which would change the entire market.

   For existing homeowners, per an article by Jon Prior on Housingwire.com, "an overwhelming percentage of homeowners located in states hardest hit by the housing downturn would be shut out of refinancing their mortgage because they do not meet equity standards under the proposed risk-retention rule", according to a study from consumer and industry groups. The story says that a white paper submitted to regulators, "showed existing homeowners would be harmed as well", since, "A borrower must hold 25% equity in the home in order to refinance into a QRM loan and at least 30% equity for a QRM cash-out refinance loan, according to the current proposal."

   Where does this have it's biggest impact? In the story from Prior, he cites data from CoreLogic that, "showed the five states most impacted by the proposed equity requirements are Nevada, Arizona, Georgia, Florida and Michigan.", and says that home values dropped so much in these areas that the study "found two out of three homeowners in these states would not have the necessary 25% equity to refinance. The study also found six out of 10 would not be able to move out of the home and put 20% down on a new QRM." In Michigan, the study showed 64% of Michigan homeowners do not meet the 25% equity requirement, 66% in Florida, 65% in Georgia, 72% in Arizona, and the big one...Nevada...where 83% of homeowners, "do not have 25% equity in their home and would not be able – even if they had never missed a payment – to refinance into a lower-rate QRM loan."

   Prior summarizes that, "In effect, the proposed QRM would penalize families who have played by the rules, scraped each month to pay their bills, kept their credit clean, and saved for a modest down payment," according to the study.

   McLane feels that this is all due to that fact that we are, "over correcting from the early 2000’s when anyone with a pulse got a mortgage to an extreme on the other end now, where you can have perfect credit and offer up your first born child, and they still say either “no” or “maybe, we have to verify something else”. The banks are terrified of examiners, unknown parts of Dodd-Frank, etc.". Wegner feels that this is, "just another step backward for housing and adding to more years of recovery. We understand that risk prevention is critical for lenders going forward but knee-jerk reactions like this without fully understanding the implications are only going to hinder housing."

   Suggestions? Wegner says that the real estate market needs, "expansion in the buyer pool to open more doors to prospective home buyers", and he suggests that they should focus on, "expanding programs to self employed borrowers", since, "1 in 3 Americans is defined as "self-employed" for underwriting purposes and therefore can not purchase a home." He rhetorically asks, "What if they allowed them to go "stated" with 50% down, 750 fico's, primary residence and single family only.", and says that this would easily boost housing 10%.

   What are your thoughts? What would you suggest if you were able to chat with Regulators?

Have a Great Week, and Happy Rent-to-Owning !
Regards,
Rob Eisenstein
HomeRun Homes Blog http://blogging.lease2buy.com
HomeRun Homes Website http://www.lease2buy.com

TAGS: #QRM #NAR #QualifiedResidentialMortgage #FHA # mortgage