By Brian Summerfield, Online Editor, REALTOR® Magazine
Amid several news reports that the first-time home buyer tax credit will almost certainly be extended, I’ve seen more than a few blogs and online comments arguing against it. Some of them say the government can’t afford it, and lament the fact that we’re borrowing from our children and grandchildren to pay for this. Others maintain that the tax credit artificially stimulates demand, and the market will resume its slump whenever it does expire. Still others claim that it hasn’t really motivated enough buyers who would not have otherwise purchased a home to justify the program.
I may disagree with some of these arguments, but I’m glad people are making them. It’s essential that we have a healthy debate on this important subject rather than move forward with our eyes closed and our mouths shut.
However, there is one argument that I take issue with: The tax credit and the “Cash for Clunkers” program are essentially the same thing. I’ve read this line of reasoning in a few places, and in each instance, it seems to confuse rather than clarify. It seems to me that the two initiatives are very different in a few significant ways: Continue reading »
By Brian Summerfield, Online Editor, REALTOR® Magazine
If you regularly visit REALTOR® magazine online, chances are pretty good that you also check out our sister site, REALTOR.org, from time to time. In case you haven’t seen it yet, NAR’s official site got a design refresh yesterday, and it’s already getting some props in the RE.net. Deservedly so, too–kudos to our REALTOR.org colleagues on a job well done!
By Katherine Tarbox, Senior Editor, REALTOR® Magazine
Looking to maximize on Snickers and Milky Way bars this Halloween? Zillow.com has put together a guide to the best homes in Seattle and Los Angeles for trick-or-treaters based on property values, population density, a walking score, and safety. “There is a common belief that wealthy neighborhoods are the Holy Grail for harvesting the most Halloween candy,” Zillow’s Whitney Tyner writes. She claims that their calculations have produced a list of neighborhoods where children will get the most candy while doing the least walking (is this really a good thing?).
By Wendy Cole, Senior Editor, REALTOR® Magazine
Recently I was chatting with a very successful real estate pro who took great pride in the many plaques and other forms of recognition that his brokerage gave him month after month to acknowledge his enviable sales record. This Florida-based gentleman, with more than 40 years of experience under his belt, is still hard at work every day scoping for buyers and going after new listings.
His business has slowed some in the past few years as it has for many. But clearly the trophies of his excellent work were, and still are, a major source of pride, as well as a centerprice of his marketing effforts. But the encounter made me wonder about the real value of sales contests these days. Do your brokerages encourage competition among sales associates with plaques and other highly visible rewards for individual success?
For a future article in REALTOR® Magazine, we want to hear from broker-owners, managers, and sales associates how important you think it is to publically recognize top performers? Does such recognition motivate others to work harder or does it result in unproductive jealousy or griping? Please share your thoughts and experiences concerning sales contests. Feel free to e-mail me directly if you prefer at wcole@realtors.org.
By Robert Freedman, Senior Editor, REALTOR® Magazine
“Nobody has asked to come in and look at our balance sheet, to go through our finances, which I’ve offered to everybody.”—FHA Commissioner David Stevens
News reports raising concerns that FHA might be the next major financial institution requiring a government infusion are based on misinformed comparisons with what happened in the subprime market, FHA Commissioner David Stevens said in an exclusive interview with REALTOR® Magazine this week.
At their peak, subprime lenders commanded 40 percent of the residential mortgage market by making low-downpayment, no-document, interest-only, and other types of exotic loans to high-risk borrowers, investors, and speculators, a market that FHA sat out entirely, says Stevens.
Today, it’s FHA that commands 40 percent of the market, but that’s where the comparison ends. The agency makes 30-year, fixed-rate, fully documented loans only for households buying their primary residence. For each loan, the agency maintains capital reserves for the full 30 years of the loan rather than for the 1-2 years required of banks.
Today, the agency has more than $30 billion in reserves, including a fully funded loan-loss reserve. All the talk in the media about reserves dipping below a 2-percent required threshold is about a secondary account that’s above and beyond the agency’s primary reserve. Those two accounts together represent more than 4 percent of assets, he says.
An actuarial audit of FHA finances due out in a few weeks from a non-governmental auditor is expected to find that FHA has sufficient capital to cover all forecasted losses, even assuming further delines in home prices, says Stevens.
“What concerns me, and I think should concern all REALTORS®, is . . . non-fact-based [criticism] from people who jump to conclusions without looking at data [and] create an environment where we’ll be forced to make corrections where they are not required and can hurt this housing recovery.”
Stevens sat down with the magazine for a 30-minute interview that covered the agency’s new appraisal policy and an upcoming mortgagee letter that’s expected to make condo financing more attractive as well as the agency’s credit health. He also talked about the improvements to the agency’s processing that makes it comparable to conventional lenders in terms of processing speed and paperwork requirements.
Listen to snippets of the conversation here: Continue reading »
By Robert Freedman, senior editor, REALTOR® Magazine
It’s still early but there are signs the availability of jumbo financing might be improving—although underwriting standards probably won’t ease any time soon. That means the days of creditworthy borrowers having a tough time getting financing for an amount over the conforming loan limit might be ending but they’ll still have to come up with a significant down payment and be prepared to show lots of documentation, like three years worth of tax returns instead of the customary two.
NAR Chief Economist Lawrence Yun says lenders are slowly getting back into the game because the climate of dread is lifting: Wall Street analysts and business executives have recalibrated their performance scenarios to reflect the greatly improved conditions among lower-priced homes (thanks to the home buyer tax credit and steeply discounted pricing). That in turn is creating a virtuous cycle as the improved scenarios help relax concerns over the economy, pushing up equities, which in turn creates the wealth that further increases confidence.
Continue reading »
By Katherine Tarbox, Senior Editor, REALTOR® Magazine
A few months ago, I heard Alfred Lin, COO & CFO of Zappos.com speak at Inman’s Real Estate Connnect San Francisco 2009. The company has won accolades from the business community for taking an innovative approach in terms of their values. “We’re in the customer-service industry and happen to sell shoes,” Lin said.
I’ve found myself thinking about Zappos’s unique business model. Here are some key points from his talk: Continue reading »
By Robert Freedman, Senior Editor, REALTOR® Magazine
It’s a small thing, but it’s impact could have been big. Some new federal lending rules take effect tomorrow (under HOEPA—the Home Ownership and Equity Protection Act) and among them is a restriction on prepayment penalties, something anyone who’s taken out a mortgage would certainly appreciate. No one likes to pay a prepayment penalty, and certainly not when they’re abusive.
But lenders were concerned that the rule, which imposes the prepayment restriction on higher-priced loans (those with an interest rate 1.5 percent above prime), would snag higher-priced FHA loans. FHA requires borrowers, when they pay off their loan, to pay the entire month’s interest, no matter when during the month the pay-off occurs.
Depending on how you look at it, that extra interest payment has the character of a prepayment penalty, and indeed, NAR has been trying to get FHA to change that policy. Continue reading »
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