One of the issues receiving significant attention following the announcement of the REALTOR® commission suit settlement is the topic of buyer commissions, specifically regarding whether a buyer has to pay them and how lenders will treat the commissions.
In a recent letter to the Federal Housing Finance Agency (FHFA), Federal Housing Administration (FHA), Fannie Mae, and Freddie Mac, NAR and MBA sought confirmation on the treatment of buyer agent commissions following a proposed settlement agreement in the Burnett et al and Moehrl et al cases.
What does this mean for homebuyers? Under the settlement, cooperative commissions will no longer be displayed on Multiple Listing Services (MLS), but listing brokers and sellers will still be able to offer compensation for buyer broker services through other means. Additionally, the settlement does not prohibit home sellers from paying buyer agent commissions directly.
NAR and MBA believe that FHA and Government-Sponsored Enterprise (GSE) policies should continue to exclude seller or listing agent payments of buyer agents’ commissions from Interested Party Contributions (IPCs). IPCs are concessions from the seller to the buyer for items traditionally paid by the buyer, such as loan closing costs or rate buy-downs. Maintaining this practice is essential to ensure that the flow of mortgage capital to homebuyers remains uninterrupted.
As a homeowner or potential buyer, it’s important to stay informed about these developments and how they may impact your buying or selling process. NAR and MBA have requested confirmation from the FHFA, FHA, Fannie Mae, and Freddie Mac as soon as possible to prevent any confusion and potential disruptions that may cost you money or even jeopardize your home purchase.
The MBA and NAR Letter
(click to view entire letter)
Last week, the Federal Housing Finance Agency (FHFA)announced that effective January 1s, 2021, the maximum loan amounts for Fannie Mae and Freddie Mac conforming loans will be increased from $510,400 to $548,250. Once a home buyers loan amount exceeds the Fannie and Freddie limits, their loan is considered a “jumbo” loan and typically less attractive terms, so an increase in the Fannie and Freddie limits is definitely helpful to home buyers in higher price ranges.
Fannie Mae and Freddie Mac are also increasing the loan limits for loans to purchase multi-family properties as well. The multi-family property limits for 2021 are:
- Two Units – $702,000
- Three Units – $848,500
- Four Units – $1,054,500
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In response to the coronavirus pandemic, the U.S. Dept. of Housing and Urban Development (HUD), as well as the Federal Housing Finance Agency (FHFA) (which oversees Fannie Mae and Freddie Mac), directed their loan servicers to suspect foreclosures and evictions for at least 60 days to help those people affected.
In a statement, Mark Calabria, the Director of the FHFA, said that borrowers affected by the coronavirus who are having difficulty paying their mortgages should reach out to the mortgage servicers as soon as possible.
HUD Secretary Ben Carson said that “The halting of all foreclosure actions and evictions for the next 60 days will provide homeowners with some peace of mind during these trying times,”
In mid-April the Federal Housing Finance Agency (FHFA) announced a new program aimed to help homeowners with a Fannie Mae or Freddie Mac loan that are seriously underwater on equity, meaning that their mortgage balance is at least 115 percent of the current value of their home. This new principal reduction modification program offers, to those that qualify, a one-time reduction in the balance of their mortgage to bring them out of a negative equity position.
Below is an outline of the program details as well as link to Principal Reduction Fact Sheet:
Search St Louis Homes For Sale HERE
Principal Reduction Program Fact Sheet
Find the Current Value of your home in under a minute!
Continue reading “Help For Underwater Homeowners – One-time principal reduction plan“
The Federal Housing Finance Agency (FHFA) issued a release yesterday stating that while that agency acts as conservator for Fannie Mae and Freddie Mac, no “property of the Agency shall be subject to levy, attachment, garnishment, foreclosure, or sale without the consent of the Agency.” The release went on to say that Title 12 United States Code Section 4617(j)(3) “precludes involuntary extinguishment of Fannie Mae or Freddie Mac liens while they are operating in conservatorships and preempts any state law that purports to allow holders of homeownership association (HOA) liens to extinguish a Fannie Mae or Freddie Mac lien, security interest, or other property interest.”
Just in case a homeowners association or others are still considering giving it a try to have their lien take priority over a Fannie Mae or Freddie Mac lien, not that back in December 2014 the FHFA said they have an obligation to protect Fannie Mae and Freddie Mac’s rights and “will aggressively do so by bringing or supporting actions to contest HOA foreclosures that purport to extinguish Enterprise property interests in a manner that contravenes federal law.”
The seriously delinquent mortgage rate (90+ days late) fell to 1.91 percent of all outstanding mortgages in November, the lowest level since December 2008, according to a report just released by the Federal Housing Finance Agency (FHFA). The percentage of loans that were 30-59 days late rose in November to 1.69% from 1.39% the month before and the 60+ day delinquency rate rose from 2.32% in October to 2.36% in November.
The tables below have complete mortgage delinquency data.
Search St Louis Homes For Sale HERE
See ALL Homes That Will Be Open In St Louis This Weekend
Today, the Federal Housing Finance Agency (FHFA) told Fannie May and Freddie Mac to change their policies to allow foreclosed homeowners the opportunity to buy their home back at the property’s fair-market value, just like any other purchaser can. Currently, if a foreclosed homeowner wanted to buy their home back from Fannie Mae or Freddie Mac they would be required to pay the entire amount owed on their previous mortgage although a non-related purchaser, not buying the home for the benefit of the former homeowner, only has to pay the current fair market value.
“This is a targeted, but important policy change that should help reduce property vacancies and stabilize home values and neighborhoods,” said FHFA Director Melvin L. Watt. “It expands the number of potential buyers of REO properties and is consistent with the Enterprises’ practice of requiring fair-market value for those properties.”
Search St Louis REO’s For Sale
See ALL Homes That Will Be Open In St Louis This Weekend
In spite of warning from the Mortgage Bankers Association (MBA), the St. Louis Association of REALTORS (SLAR) and other housing-related groups of the damage the “Mortgage Foreclosure Intervention Code” (Bill #174 introduced by Hazel Erby, District 1) could do to the already struggling St Louis housing market, including increasing the cost of home mortgages, last month the St. Louis County Council passed the bill, it was signed into law by County Executive Charlie Dooley and will go into effect on September 28, 2012. Then, just last week, Lewis Reed, President of the St. Louis Board of Alderman, introduced what is a basically the same bill in an attempt to get the same law enacted by the City of St. Louis.
Opponents of the law, including SLAR and the MBA, say this law will likely lead to higher cost mortgages in St Louis County (and, assuming they pass it, the city of St Louis) as lenders will increase fees to cover additional costs they will have in complying with this new law and proponents of the law say this is not so. I think the proponents of the bill are wrong and am confident that this will lead to higher cost mortgages in areas that have enacted the Mortgage Foreclosure Intervention Code or similar laws. So, why am I so sure? It just so happens that yesterday, the Federal Housing Finance Agency (FHFA), the agency charged with overseeing Fannie Mae and Freddie Mac, issued a notice of a proposal to increase mortgage fee pricing (guarantee fees that Fannie Mae and Freddie Mac charge) on loans in states where, due to laws and the requirements imposed upon lenders (or other investors) to “manage a default, foreclose and obtain marketable title to the property backing a single-family mortgage“, foreclosures take longer. Continue reading “Home mortgages may become more costly in St. Louis thanks to local law“
I have good news for homeowners that are underwater on the mortgage and need to do a short sale, or for buyers looking to buy a short sale. The Federal Housing Financing Agency just issued new guidelines to lenders that service Fannie Mae and Freddie Mac loans that are intended to “offer a streamlined short sale approach” which will be music to the ears of anyone that has been through the process. I don’t always agree with the actions of the FHFA but I think this is a good move and will help the market. The new guidelines (see below for highlights) go into effect November 1, 2012 Continue reading “Short sales just got better“
Update August 10, 2012 – New HARP Program FAQ’s Click Here.
The Federal Housing Finance Agency (FHFA) announced it eased the requirements as well as extended the Home Affordable Refinance Program (HARP) to December 31, 2013 from the current expiration date for the program of June 30, 2012. According to FHFA, as of August 31, 2011, nearly 894,000 borrowers have been refinanced through HARP and they (FHFA) feel easing the requirements will make it possible for many additional borrowers to refinance as well.
Continue reading “Home Affordable Refinance Program (HARP) Guidelines Eased and Deadline Extended“
Federal Reserve Governor Elizabeth A. Duke, while speaking at the Federal Reserve Board Policy Forum last week, discussed the effect on the housing market that properties acquired by banks and lenders through foreclosure (REO’s) and suggested that if some of this inventory was converted to rental property by the lenders, this may have a positive effect on the housing market. Continue reading “Converting REO’s to rentals could help housing recovery according to Fed Official“
Lee Bentley Farkas, the former chairman of a private mortgage lending company, Taylor, Bean & Whitaker (TBW), was convicted today for his role in a more than $2.9 billion fraud scheme that contributed to the failures of Colonial Bank, one of the 25 largest banks in the United States in 2009, and TBW, one of the largest privately held mortgage lending companies in the United States in 2009. Continue reading “Former Chairman of Taylor, Bean & Whitaker Convicted for $2.9 Billion Fraud Scheme That Contributed to the Failure of Colonial Bank“
The Federal Housing Finance Agency (FHFA) announced it has extended the Home Affordable Refinance Program (HARP) to June 30, 2012. The HARP program was scheduled to end June 30, 2011.
This program is designed to help homeowners whose homes have lost value. Through 2010 there have been 621,803 HARP refinances with loan amounts from 80 percent of value up to 125 percent of value.
For more information, or to see if you are eligible for HARP, click here.
The Federal Housing Finance Agency (FHFA) back in August, 2010, published proposed “guidance” related to private transfer fee covenants that applied to Fannie Mae, Freddie Mac and Federal Home Loan Banks (the “regulated entities). The message in this guidance was that private transfer fees are bad and those regulated enterprises should stay away from lending on real estate subject to such covenants. Continue reading “Feds Propose Rule on Private Transfer Fees“
The National Association of Realtors® announced that it “strongly supports” the proposed guidance from the Federal Housing Finance Agency to prevent government-sponsored enterprises Fannie Mae, Freddie Mac and the 12 Federal Home Loan Banks from investing in mortgages encumbered by private transfer fee covenants.
In a letter sent to the Federal Housing Finance Agency (FHFA), NAR reiterated its opposition to these covenants, which developers often attach to a property to require payment of fees back to that developer each time the property is resold. These covenanted mandates are often extremely difficult to reverse once in place, and in many cases are attached to a deed for up to 99 years. Continue reading “REALTORS® Support Proposal to End Private Transfer Fees“
Dennis Norman
In a letter to the Federal Housing Finance Agency, John A. Courson, the President and Chief Executive Officer of the Mortgage Bankers Association (MBA) said that the MBA “opposes the practice of private third parties, such as developers, builders, licensing companies and real estate brokers, imposing private transfer fee covenants on residential real estate for the purpose of extracting future income.” However, in his letter Mr. Courson goes on to say that the “MBA is concerned thatencumbering housing transactions with these types of PTFs will impede the marketability and affect the valuation of properties and thus the value of the loans and securities backed by such loans.” In addition, the MBA points out that “distinctions among PTFs (private transfer fees) are necessary” as they do not oppose private transfer fee covenants that are: Continue reading “Mortgage Bankers urge Feds not to ban all private transfer fees“
Dennis Norman
Today the Federal Housing Finance Agency announce proposed guidance that would prohibit Fannie Mae, Freddie Mac and the Federal Home Loan Banks from investing in mortgages with private transfer fee covenants. Considering that covers the lenders that originate, invest in or, or insure over 90 percent of the homes in the U.S. that pretty much puts the kibosh on financing a home with such a transfer fee. Continue reading “Private Transfer Fee Covenants Draw Fire From FHFA“
Dennis Norman
UPDATE June 21, 2010- I said I would update this post after the proposed rules were published on the Federal Register with info on how to submit a comment -If you would like to comment, see the comment instructions in the Federal Register (I highlighted them) by clicking here -end of update.
June 4, 2010
Are they really going to repeat the same mistakes that helped cause this housing recession?
I say this because of a release I received from the Federal Housing Finance Agency (FHFA) last week announcing that the FHFA “has sent to the Federal Register a proposed rule implementing provisions of the Housing and Economic Recovery Act of 2008 (HERA) that establish a duty for Fannie Mae and Freddie Mac (the Enterprises) to serve very low-, low- and moderate-income families in three specified underserved markets — manufactured housing, affordable housing preservation, and rural markets.” While the statement is a little ambiguous on the surface it sounds like a nice thought, “serve the underserved.”
However, as I read on I couldn’t believe my eyes as I read other aspects of the proposed rule. The “Enterprises” (Fannie and Freddie) would be required to take actions to “improve the distribution of investment capital available for mortgage financing for underserved markets” and are expected to continue their support for affordable housing (again, something that sounds great, just depends how you plan to go about supporting “affordable housing”). The rule would establish a method to evaluate the Enterprises performance in these underserved markets for 2010 and subsequent years. Of the four criteria the enterprises are to be evaluated under, one really got my attention; “the development of loan products, more flexible underwriting guidelines, and other innovative approaches to providing financing“. WHAT?? More FLEXIBLE underwriting, INNOVATIVE approaches to provide financing? Isn’t this the stuff that got Fannie Mae and Freddie Mac (not to mention thousands of homeowners) in trouble to start with? Now, I don’t claim to be an economist or even that smart for that matter, but this sure appears to me to be the Federal Government putting pressure on Fannie Mae and Freddie Mac to make loans they shouldn’t be making….again.
I’m not saying that the pressure on Fannie Mae and Freddie Mac to make loans to borrowers that weren’t really qualified is the only cause of the housing bust as there were many contributors to it, but this was certainly one of them and definitely a large part of what led to their financial demise and need for a tax-payer bailout.
A book I’ve read that I think has the most complete and thorough analysis of what caused the housing market to have it’s longest positive run only to be followed by a collapse is Thomas Sowells’ “The Housing Boom and Bust“. In his book Mr. Sowell says this about the housing bust and the demise of Fannie Mae and Freddie Mac; “in reality, government agencies not only approved the more lax standards for mortgage loan applicants, government officials were in fact the driving force behind the loosening of mortgage loan requirements.” So is this deja vu or what?
Mr. Sowell goes on to say “the development of lax lending standards, both by banks and by Fannie Mae and Freddie Mac standing behind the banks, came not from a lack of government regulation and oversight, but precisely as a result of government regulation and oversight, directed toward the politically popular goal of more ‘home ownership’ through “affordable housing,” especially for low-income home buyers. These lax lending standards were the foundation for a house of cards that was ready to collapse with a relatively small nudge.”
Correct me if I’m wrong, but it appears to me the government has opened the deck of cards and begun construction again.
There will be a 45 day period for public comments once the proposed rule is published in the Federal Register. I just tried to access the website site and it is down so I don’t know if it’s published yet but will check again and update this post with info on how to comment on the rule if you like.
Fannie Mae and Freddie Mac notified the New York Stock Exchange (NYSE) of its intent to delist its common and preferred stock. The Federal Housing Finance Agency (FHFA), the conservator for Fannie and Freddie, has directed the companies to delist their common stock and their preferred stock from the NYSE. “FHFA’s determination to direct each company to delist does not constitute any reflection on either Enterprise’s current performance or future direction, nor does delisting imply any other findings or determination on the part of FHFA as regulator or conservator,” FHFA Acting Director Edward J. DeMarco said in a press release.
The mortgage market has benefited from the “flight to quality” mentality since the news of the uncertainty of debt defaults in Europe over the last few weeks. As the perception of these uncertainties diminish, mortgage rates should hold steady if not rise.
St. Louis Mortgage Interest Rates – June 16, 2010 *
- 30-year fixed-rate mortgage 4.75% no points
- 15-year fixed-rate mortgage 4.25% no points
- 5/1 adjustable rate mortgage 3.85% no points
- FHA/VA 30-year fixed rate mortgage 4.75%
- Jumbo 5/1 ARM 4.125% no points
- Jumbo 15 year fixed rate mortgage 4.625%
For more information or if you have questions on mortgage rates in St. Louis you may contact me by phone at my direct line, (314) 372-4319, email at rfishel@paramountmortgage.com or you can visit our company website at http://www.paramountmortgage.com.
*Note- The above rates are based upon a typical sale price of $187,500 with a 20% percent down payment leaving a loan amount of $150,000 to a borrower with a 720 credit score for a loan with no discount points charged. Rates and terms will vary depending upon loan amount, home value, credit and income of borrower.
This information is provided by this author and this site for informative purposes only and is not warranted or guarteed in any way.
Dennis Norman
Today the S&P/Case-Shiller Index report for the first quarter of 2010 was released showing that the U.S. National Home Price Index fell 3.2 percent in the first quarter of 2010, but remains above it’s level from a year-earlier.
In March, 13 of the 20 MSA’s covered by the Case-Shiller report, as well as both the 10-city and 20-city composites, were down for the month however both the composites as well as 10 of the 20 MSA’s showed year-over-year gains. The report cites the end of the tax incentives and the increasing foreclosure rate as reasons the housing market is seeing some “renewed weakness“.
Other highlights from the report –
- The S&P/Case-Shiller U.S. National Home Price Index for first quarter 2010 is up 2.0 percent from the first quarter of 2009.
- In March the 10-City Composite was up 3.1 percent from the first quarter of 2009, and the 20-City Composite was up 2.3 percent for the same period.
- These two indices are reported monthly and have seen improvements in their annual rates of return every month for the past year.
“The housing market may be in better shape than this time last year; but, when you look at recent trends there are signs of some renewed weakening in home prices,” says David M. Blitzer, Chairman of the Index Committee at Standard & Poor’s. “In the past several months we have seen some relatively weak reports across many of the markets we cover. Thirteen MSAs and the two Composites saw their prices drop in March over February. Boston was flat. The National Composite fell by 3.2% compared to the previous quarter and the two Composites are down for the sixth consecutive month.
“While year-over-year results for the National Composite, 18 of the 20 MSAs and the two Composites improved, the most recent monthly data are not as encouraging. It is especially disappointing that the improvement we saw in sales and starts in March did not find its way to home prices. Now that the tax incentive ended on April 30th, we don’t expect to see a boost in relative demand.”
FHFA Shows Lower Home Prices in First Quarter Also:
The Federal Housing Finance Agency (FHFA) released their report on first quarter home prices today as well. The FHFA report data and methodology differs from NAR and Case-Shiller, in that the FHFA home price index is based only on the sale prices of homes that are financed with a conforming loan (by Fannie Mae and Freddie Mac’s standards).
The FHFA report for the first quarter of 2010 shows home prices fell 1.9 percent from the quarter before, so not terribly far off from the 3.2 percent decline the Case-Shiller report showed. In contrast to the Case-Shiller report however, the FHFA report showed March’s home prices rose 0.3 percent from February. Also, the FHFA report shows home prices for this quarter fell 3.1 percent from a year ago.
St. Louis Home Prices Doing Better:
For the St. Louis metro and surrounding areas, the median home price for the quarter ended April 30, 2010 was $130,000 an increase of 1.6 percent from the prior quarter’s median price of $128,000 and an increase of 8.3 percent from a year ago when the median home price was $120,000. In case you are wondering, the median home price for the St. Louis area has dropped 3.0 percent in the past six years.
Median Home Prices in St. Louis Metro and Surrounding Areas for Past Six Years - Source: Mid America Regional Information Systems (MARIS)
Comparison of St. Louis Median Home Prices to Prior Periods - Source: Mid America Regional Information Systems (MARIS)
Where are home prices headed?
As we are frequently reminded, “all real estate is local”, so there will be markets that do better than others, but in general I think we are in store for soft home prices for a while. I think after the “sugar-rush” of the tax credit incentive wears off as the deals close over the next couple of months, and the next wave of foreclosures hit the market we will see prices regress again in many markets, enough so to bring overall home prices in the US down modestly in the coming months.
Dennis Norman
According to a report issued this morning by the the Federal Housing Finance Agency (FHFA) St. Louis area home prices increased by 1.32 percent in 2009. Granted that’s not much but, hey, after what we’ve seen the last couple of years in the housing market I think this is very good news.
This information comes for the FHFA’s purchase-only price index which is based upon repeat sales of the same single-family properties therefore making it a much more accurate barometer of the market than just looking at median prices of homes sold as many reports do. In addition, since FHFA obtains the sales data from mortgage records of Fannie Mae and Freddie Mac, which form the nation’s largest database of conventional mortgage transactions (more than 5 million repeat transactions) which represents probably the most comprehensive sampling of data available.
One thing to remember though, is Fannie Mae loan limits are $417,000, so the data compiled does not reflect what is happening in the upper end of the market with loans in excess of $417,000 however here in St. Louis that makes up a very small part of the market . In 2009 there were 23,565 homes and condos sold in the St. Louis metro area and only 808 of them (3.4 percent) sold for $500,000 or above.
Other highlights from the report:
- St. Louis ranked 8th of the 25 largest metro areas in terms of price appreciation for 1 year. Washington-Arlington-Alexandria topped the list at 10.55 percent. Miami-Miami Beach-Kendall, FL was at the bottom of the list iwth -12.86 percent
- For the 4th quarter of 2009 St. Louis home prices increased 0.83 percent.
- St. Louis home prices have appreciated 3.91 percent in the past 5 years, coming in 7th of the 25 largest metros. Houston-Sugar Land-Baytown, TX came in 1st at 21.63 percent and Riverside-San Bernardino-Ontario, CA came in last at -37.18 percent.
- Since 1991 St. Louis home prices have increased 99.17 percent, coming in at 14th place of the 25 largest metros. Denver-Aurora-Broomfield, CO had the highest appreciation in that period at 177.80 percent and Warren-Troy-Farmington Hills, MI came in last at 30.99 percent.
So there you go….some good news from me for a change. :)
Dennis Norman
By: Dennis Norman
Yesterday the Federal Housing Finance Agency (FHFA) reported that Fannie Mae and Freddie Mac’s trial mortgage loan modifications under the Obama Administrations Home Affordable Modification Plan (HAMP) were up more than 40 percent in September 2009 from the previous month. According to the report, mortgage loans that are 60-plus-days delinquent increased to 1,401,000 borrowers in July, up a whopping 147 percent from July, 2008 when there were 566,000 borrowers 60 plus days delinquent.
Here are highlights from the report (all the data, unless noted otherwise is from July 31, 2009): Continue reading “HAMP loan modifications up 40 percent in September; Serious mortgage delinquencies up 147 percent in past year“
- Dennis Norman
By: Dennis Norman
Today the Federal Housing Finance Agency (FHFA) reported that U.S. home prices rose 0.3 percent on a seasonally-adjusted basis from June to July and are down 4.2 percent for the past year. Missouri is included by the FHFA in the West North Central division which was right on target with the US with an increase of 0.3 percent from June to July. Our region was only down 1.5 percent from last year according the report.
Many of the reports I’ve seen in the press on this are saying this is a sign of the housing market recovering:
The Wall Street Journal, on WSJ.Com, Reported “U.S. Home prices climbed in July as some of the country’s worst-hit housing markets showed signs of recovering.”The AP reported “U.S. home prices rose slightly in July from a month earlier, according to a government index, further evidence the housing market is stabilizing.”Snaps goes to Bloomberg.com for I feel being more alert by reporting “U.S. Home prices rose 0.3 percent in July from the previous month, less than analysts’ estimates, in a sign that the housing recovery is tenuous. Continue reading “US Home Prices show modest 0.3 percent increase from June to July according to Federal Housing Finance Agency“
Charles Hugh Smith, Of Two Minds
By: Charles Hugh Smith:
In February 2007 I suggested a 4% mortgage delinquency rate could trigger a decline in the entire housing market. Since that proved prescient, we should revisit the analytic tool behind that call: the Pareto Principle.
There is a whiff of euphoria in the housing market, a heavily touted confidence that “the bottom is in.” It’s all roaring back–rising sales, multiple bids by anxious buyers, 3.5% down payments, low mortgage rates and the bonus of an $8,000 first-time home buyer credit (a gift from U.S. taxpayers). Housing Lifts Recovery Hopes (Wall Street Journal) Continue reading “Beware The False Bottom In Housing“
