Mortgage industry fights to keep 3.5% down payments
by KERRI PANCHUK
Wednesday, May 25th, 2011, 11:46 am
A litany of mortgage industry players spoke in Washington Wednesday about the challenges of doing business in the current housing market.
Additionally, they told the House Financial Services Subcommittee on Insurance, Housing and Community Opportunity, new regulations are doing more to kill their line of work, than to preserve it.
Changes to the current Federal Housing Administration requirement of 3.5% down on home purchases, is a clear example of this well-meaning, yet misguided directive coming from inside the Beltway, they said.
"NAR strongly opposes increasing the downpayment for FHA," said National Association of Realtors President Ron Phipps. "The correlation between downpayment and loan performance is significantly less important than the linkage to strong underwriting, which FHA continues to have. FHA's foreclosure rate remains less than conventional mortgages, so we don't believe changes to the downpayments would do anything but disenfranchise many creditworthy homebuyers."
Mark Calabria, director of financial regulation studies at the Cato Institute, offered an opposing view, telling the congressmen FHA reserves have fallen to $3.5 billion $22 billion, and warning "further declines could easily erode the remaining reserves," requiring direct appropriations to cover claims, which would put taxpayers on the hook.
Calabria said to ensure the solvency of the agency and to save taxpayers from future bailouts, FHA reforms should require a 5% cash down-payment instead of the current 3.5% threshold.
He also believes the agency should only accept mortgages with reasonable debt-to-income ratios. Calabria said borrower eligibility should be limited to borrowers with incomes that do not exceed 115% of the median area income.
Michael Berman, chairman of the Mortgage Bankers Association, said Dodd Frank's proposed risk-retention rule, which requires issuers to keep a 5% stake in securities to provide a hedge against potential losses to investors, could have the opposite effect — keeping private capital on the sidelines.
The oddity is that Dodd-Frank requires Fannie Mae and Freddie Mac to shrink in order to allow private capital back into the mortgage finance market. But risk retention will likely equal a higher down payment as borrowers will also be expected to keep some skin the game.
Berman said current proposals define a qualified residential mortgage under the risk-retention rule as a loan with at least a 20% downpayment. One school of thought is that lenders will not wish to retain risk, without further assurance the homeowners will not walk away from their investments in another scenario of consistent home price declines.
Therefore, as regulators continue to shape the future of the FHA, lawmakers must address the provisions of Dodd-Frank that conflict with the Treasury Department's goal of bringing more private capital back into the market, according to the market participants that testified Wednesday.
"We support FHA’s role as a source of financing for first-time homebuyers and other underserved groups," Berman said. "However, because of the wide disparity between FHA’s down payment requirement of 3.5% and the QRM's requirement of 20%, MBA is concerned that the FHA programs will be over-utilized."
Berman said that end-result would conflict with the Obama administration's stated goal of moving to a market that is more privately funded.
Berman also warned lawmakers about plans to lower the maximum loan limits for Fannie Mae, Freddie Mac and the FHA. While these loan-limit levels stand at $417,000 for average homes and $729,750 for properties in high-cost areas, an extension to the maximum loan limit expires Sept. 30. Allowing the expiration would cause the loan limit ceiling to revert back to a maximum high of $625,500.
"MBA believes the higher limits should be maintained until the housing market stabilizes and the private market shows more signs that it has returned," Berman said. "We believe that careful consideration should be given as to whether the housing market is ready for a change in the loan limits."
He added that any extension of the loan limits should occur before Oct. 1, to prevent market disruptions.
Write to Kerri Panchuk.
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Thursday, May 26, 2011
Friday, April 29, 2011
Real estate agent prices it right ... on 'The Price is Right'
Real Estate Roundabout
By Inman News, Friday, April 29, 2011.
Inman News™
Goddard, Kan., real estate agent Jamey Blubaugh answered the call to "Come on down!" -- and went away with more than $26,000 in goodies as the "Showcase Showdown" winner on a recent episode of "The Price is Right."
Among other prizes, Blubaugh won a washer and dryer, sailboat, underwater cameras, and a vacation on the Caribbean island of Montserrat, according to the Wichita Eagle newspaper.
Blubaugh, who was taped on the show in February, had a party for about 100 supporters in his Keller Williams Real Estate office on the morning the show aired.
Reports from the ranks:
The number of real estate licenses issued annually in the state of Florida has plummeted by about 75 percent since the market began to collapse there. Licenses issued declined from about 47,000 in 2005 to 11,700 in 2010, according to the Miami Today newspaper.
By Inman News, Friday, April 29, 2011.
Inman News™
Goddard, Kan., real estate agent Jamey Blubaugh answered the call to "Come on down!" -- and went away with more than $26,000 in goodies as the "Showcase Showdown" winner on a recent episode of "The Price is Right."
Among other prizes, Blubaugh won a washer and dryer, sailboat, underwater cameras, and a vacation on the Caribbean island of Montserrat, according to the Wichita Eagle newspaper.
Blubaugh, who was taped on the show in February, had a party for about 100 supporters in his Keller Williams Real Estate office on the morning the show aired.
Reports from the ranks:
The number of real estate licenses issued annually in the state of Florida has plummeted by about 75 percent since the market began to collapse there. Licenses issued declined from about 47,000 in 2005 to 11,700 in 2010, according to the Miami Today newspaper.
NAR weighs policy change on Facebook, mobile listings feeds
By Matt Carter, Friday, April 29, 2011.
Inman News™
The National Association of Realtors next month will consider revising rules governing multiple listing services in order to explicitly permit brokers or agents to display Internet Data Exchange (IDX) listings on social networking sites and mobile devices.
Some aspects of proposed changes to NAR's IDX policy -- particularly a recommendation to allow IDX listings to be distributed using Really Simple Syndication, or RSS -- have raised concerns by The Realty Alliance, a network of 60 real estate companies whose members include HomeServices of America Inc.
Distribution of listings via RSS "allows anyone to obtain all data in an MLS area with no permission required and allows situations where another broker, who does not have a contract with the seller, (will) broadly publish another broker's listing data with no limitations," The Realty Alliance said in a letter to the chairman of NAR's Multiple Listing Issues and Policies Committee, Pat Callan.
"This creates a condition where the legally responsible broker is no longer in compliance with their contract with the seller and their MLS rules and regulations."
NAR's Multiple Listing Issues and Policies Committee, which has been grappling with the issue for more than a year, is scheduled to debate the issue again next month at NAR's midyear meeting in Washington, D.C.
Brokers and agents have wide leeway over how and where they distribute their own listings in order to market properties on behalf of clients.
But IDX listings -- which include all the listings in a given market that brokers have agreed can be published on each other's sanctioned IDX websites -- are governed by more complex rules.
One intent of the rules is to encourage brokers to participate in the IDX system by providing assurances that listings they represent won't be redistributed to other, nonsanctioned sites without their OK.
(In a separate debate involving NAR's IDX policy, The Realty Alliance and Leading Real Estate Cos. of the World are protesting NAR's decision to allow franchise companies to index and display their broker's IDX listings.)
According to the latest report of a work group created to study the issue, NAR began receiving questions from MLS administrators early last year on whether the Internet display of IDX listings was limited to member agents' or brokers' sanctioned IDX websites, and whether delivery via RSS subscription was allowed.
The work group recommended revising the IDX policy to expressly authorize display of IDX information not only on MLS members' sanctioned IDX websites, "but also using RSS subscription, social media, mobile devices, and other electronic means."
The work group's proposal was presented to the Multiple Listing Issues and Policies Committee in November at NAR's annual convention in New Orleans.
A number of MLS administrators voiced concerns about compliance, questioning how they would monitor social media sites and mobile devices to make sure IDX rules were being followed. Some wondered whether listings posted to social media sites would be kept up to date, and whether required IDX disclosures could fit into formats like text messages and "tweets."
The committee put off making a recommendation to NAR's board of directors, and directed the work group to reconsider issues raised by MLSs.
After meeting again last month, the work group issued another report, acknowledging the issues raised by MLS administrators but concluding that such concerns were outweighed by the benefits of increased exposure of listings.
Increasing the ways MLS members can deliver IDX listings to consumers "might somewhat diminish the control MLSs exercise over that information, and might increase the administrative burden of MLSs," the work group concluded in its report. But "the value to sellers, potential purchasers, and to MLS participants and subscribers that will result from increased availability of those listings through enhanced IDX channels outweighs those concerns."
The Realty Alliance questioned that conclusion, saying the return on investment in distributing listings to multiple websites "drops dramatically after just a handful of websites," while problems and liabilities increase.
"There is no consumer outcry for more sources of listing data, as there exists today a bewildering amount of options, and they tend to concentrate their time on a small number of reliable sites," The Realty Alliance said. "Too often the obscure, third-party websites have old, expired and inaccurate data and do not produce meaningful leads for our firms anyway."
Concerns about RSS
Joe Horning, chairman of The Realty Alliance's board of directors and the president of Wisconsin's largest brokerage, Shorewest Realtors, said that the group is mostly concerned about RSS distribution of IDX listings.
A number of vendors offer "framed" solutions that allow agents to display IDX listings and provide IDX listings searches on their personal website, Facebook page, or blog that are actually driven by the brokers' or agents' sanctioned IDX websites.
"If I put my listings on my Facebook page (using an application) that frames my (sanctioned IDX) site, that's not really putting listings on a social media site," Horning said. "That's fine."
Similarly, "We don't have issues with mobile devices, when they are pulling (listing) data off the (MLS or MLS vendor's) server," because the information will be accurate and accessed with permission. "The RSS transmittal, we're definitely concerned about."
As its name implies, Really Simple Syndication is easier for brokers and agents to implement than "framed" solutions or application programming interfaces (APIs) that typically require support from vendors.
It's also easier for an agent's clients to tap into an RSS feed -- and, critics say, help themselves to listings data in unintended ways.
Michael Wurzer, president and CEO of Fargo, N.D.-based MLS vendor, FBS, said RSS is typically used by brokers and agents who want to provide buyers with updates on new listings in a particular neighborhood they're interested in, rather than to provide a stream of every available listing.
Such uses go hand in hand with mobile devices, Wurzer said. "To be able to read an RSS (listings) feed with Flipboard (a feed reader app) -- that's cool. Who doesn't want that?"
Wurzer said if the concern is that permitting brokers to provide RSS feeds of IDX listings would leave "the whole feed just sitting there, that it just lays it out for anybody," then the work group's recommendations could probably be tightened while still permitting more limited use of RSS feeds.
Mobile "is an interesting twist," Wurzer said, because while brokers and agents can easily argue that a website that's been optimized for mobile falls under the existing definition of an allowable IDX website, "when you enter the world of native applications, that's a little more fuzzy."
MLS executives have said they aren't sure how they will monitor mobile applications that provide IDX listings for compliance.
APIs and framed solutions
In a blog post on the topic, Wurzer said the work group "seems to have the right intent, which is to allow IDX to be a source of innovation and competition for brokers and agents."
But the work group's recommendations could be further refined, perhaps by limiting the number of fields allowed in an RSS feed, or to allow listings to be accessed only through queries directly to MLS servers by purpose-built APIs.
Wurzer's company, FBS, already makes a WordPress plug-in and API that work with the company's flexmls IDX system.
Janet Choynowski, CEO of Immobel Group, said Immobel's IDX-Buzz product serves IDX listings "with full IDX rules and disclaimers embedded" on social media sites such as an agent's or broker's Facebook business page.
"With the IDX-Buzz product, they go in a controlled, quality-assured way, disclaimers and all," Choynowski said in an email. "I think it gives a comfort level, rather than having members posting content to Facebook and tweeting it willy-nilly."
New Jersey-based Limeyboy, a website builder for real estate agents, provides a similar IDX search capability for agents' Facebook pages.
Limeyboy founder Nick Lovegrove said that framed listings solutions don't provide the boost in search engine results that RSS does.
"I do think RSS is a fantastic format for displaying information in a searchable format," Lovegrove said. "Any way to make content more searchable on an agent's website is beneficial" to the agent.
Inman News™
The National Association of Realtors next month will consider revising rules governing multiple listing services in order to explicitly permit brokers or agents to display Internet Data Exchange (IDX) listings on social networking sites and mobile devices.
Some aspects of proposed changes to NAR's IDX policy -- particularly a recommendation to allow IDX listings to be distributed using Really Simple Syndication, or RSS -- have raised concerns by The Realty Alliance, a network of 60 real estate companies whose members include HomeServices of America Inc.
Distribution of listings via RSS "allows anyone to obtain all data in an MLS area with no permission required and allows situations where another broker, who does not have a contract with the seller, (will) broadly publish another broker's listing data with no limitations," The Realty Alliance said in a letter to the chairman of NAR's Multiple Listing Issues and Policies Committee, Pat Callan.
"This creates a condition where the legally responsible broker is no longer in compliance with their contract with the seller and their MLS rules and regulations."
NAR's Multiple Listing Issues and Policies Committee, which has been grappling with the issue for more than a year, is scheduled to debate the issue again next month at NAR's midyear meeting in Washington, D.C.
Brokers and agents have wide leeway over how and where they distribute their own listings in order to market properties on behalf of clients.
But IDX listings -- which include all the listings in a given market that brokers have agreed can be published on each other's sanctioned IDX websites -- are governed by more complex rules.
One intent of the rules is to encourage brokers to participate in the IDX system by providing assurances that listings they represent won't be redistributed to other, nonsanctioned sites without their OK.
(In a separate debate involving NAR's IDX policy, The Realty Alliance and Leading Real Estate Cos. of the World are protesting NAR's decision to allow franchise companies to index and display their broker's IDX listings.)
According to the latest report of a work group created to study the issue, NAR began receiving questions from MLS administrators early last year on whether the Internet display of IDX listings was limited to member agents' or brokers' sanctioned IDX websites, and whether delivery via RSS subscription was allowed.
The work group recommended revising the IDX policy to expressly authorize display of IDX information not only on MLS members' sanctioned IDX websites, "but also using RSS subscription, social media, mobile devices, and other electronic means."
The work group's proposal was presented to the Multiple Listing Issues and Policies Committee in November at NAR's annual convention in New Orleans.
A number of MLS administrators voiced concerns about compliance, questioning how they would monitor social media sites and mobile devices to make sure IDX rules were being followed. Some wondered whether listings posted to social media sites would be kept up to date, and whether required IDX disclosures could fit into formats like text messages and "tweets."
The committee put off making a recommendation to NAR's board of directors, and directed the work group to reconsider issues raised by MLSs.
After meeting again last month, the work group issued another report, acknowledging the issues raised by MLS administrators but concluding that such concerns were outweighed by the benefits of increased exposure of listings.
Increasing the ways MLS members can deliver IDX listings to consumers "might somewhat diminish the control MLSs exercise over that information, and might increase the administrative burden of MLSs," the work group concluded in its report. But "the value to sellers, potential purchasers, and to MLS participants and subscribers that will result from increased availability of those listings through enhanced IDX channels outweighs those concerns."
The Realty Alliance questioned that conclusion, saying the return on investment in distributing listings to multiple websites "drops dramatically after just a handful of websites," while problems and liabilities increase.
"There is no consumer outcry for more sources of listing data, as there exists today a bewildering amount of options, and they tend to concentrate their time on a small number of reliable sites," The Realty Alliance said. "Too often the obscure, third-party websites have old, expired and inaccurate data and do not produce meaningful leads for our firms anyway."
Concerns about RSS
Joe Horning, chairman of The Realty Alliance's board of directors and the president of Wisconsin's largest brokerage, Shorewest Realtors, said that the group is mostly concerned about RSS distribution of IDX listings.
A number of vendors offer "framed" solutions that allow agents to display IDX listings and provide IDX listings searches on their personal website, Facebook page, or blog that are actually driven by the brokers' or agents' sanctioned IDX websites.
"If I put my listings on my Facebook page (using an application) that frames my (sanctioned IDX) site, that's not really putting listings on a social media site," Horning said. "That's fine."
Similarly, "We don't have issues with mobile devices, when they are pulling (listing) data off the (MLS or MLS vendor's) server," because the information will be accurate and accessed with permission. "The RSS transmittal, we're definitely concerned about."
As its name implies, Really Simple Syndication is easier for brokers and agents to implement than "framed" solutions or application programming interfaces (APIs) that typically require support from vendors.
It's also easier for an agent's clients to tap into an RSS feed -- and, critics say, help themselves to listings data in unintended ways.
Michael Wurzer, president and CEO of Fargo, N.D.-based MLS vendor, FBS, said RSS is typically used by brokers and agents who want to provide buyers with updates on new listings in a particular neighborhood they're interested in, rather than to provide a stream of every available listing.
Such uses go hand in hand with mobile devices, Wurzer said. "To be able to read an RSS (listings) feed with Flipboard (a feed reader app) -- that's cool. Who doesn't want that?"
Wurzer said if the concern is that permitting brokers to provide RSS feeds of IDX listings would leave "the whole feed just sitting there, that it just lays it out for anybody," then the work group's recommendations could probably be tightened while still permitting more limited use of RSS feeds.
Mobile "is an interesting twist," Wurzer said, because while brokers and agents can easily argue that a website that's been optimized for mobile falls under the existing definition of an allowable IDX website, "when you enter the world of native applications, that's a little more fuzzy."
MLS executives have said they aren't sure how they will monitor mobile applications that provide IDX listings for compliance.
APIs and framed solutions
In a blog post on the topic, Wurzer said the work group "seems to have the right intent, which is to allow IDX to be a source of innovation and competition for brokers and agents."
But the work group's recommendations could be further refined, perhaps by limiting the number of fields allowed in an RSS feed, or to allow listings to be accessed only through queries directly to MLS servers by purpose-built APIs.
Wurzer's company, FBS, already makes a WordPress plug-in and API that work with the company's flexmls IDX system.
Janet Choynowski, CEO of Immobel Group, said Immobel's IDX-Buzz product serves IDX listings "with full IDX rules and disclaimers embedded" on social media sites such as an agent's or broker's Facebook business page.
"With the IDX-Buzz product, they go in a controlled, quality-assured way, disclaimers and all," Choynowski said in an email. "I think it gives a comfort level, rather than having members posting content to Facebook and tweeting it willy-nilly."
New Jersey-based Limeyboy, a website builder for real estate agents, provides a similar IDX search capability for agents' Facebook pages.
Limeyboy founder Nick Lovegrove said that framed listings solutions don't provide the boost in search engine results that RSS does.
"I do think RSS is a fantastic format for displaying information in a searchable format," Lovegrove said. "Any way to make content more searchable on an agent's website is beneficial" to the agent.
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