In response to the increased use of broker price opinions and other types of valuation methods other than appraisals, NAR has come out with what it calls its Responsible Valuation Policy statement.
It’s intended to provide a framework for the association’s volunteers, so when they need to make valuation-related policy that involves more than appraisals, they can do so in a more holistic way. Prior to the release of the statement and some internal structural committee changes, policies were looked at based on the type of valuation method.
If you’re interested in valuation policy issues, you might find this 4-minute video of interest. It’s intended to help explain how this internal revamping works.
The policy statement itself doesn’t weigh in on valuation methods. Rather, it says, in effect, whatever valuation method the situation calls for, there are minimum standards that have to be met: no conflict of interest, that they be done in accordance with NAR’s Code of Ethics, and so on.
In a nutshell, it’s a big-picture statement about meeting minimum standards regardless of what valuation method the situation calls for.
Access the Responsible Valuation Policy statement.
More from NAR’s Appraisal Insight blog.
By Katherine Tarbox, Senior Editor, REALTOR® Magazine
Warren Buffett, CEO of Berkshire Hathaway, said yesterday on CNBC’s “Squawk Box” that buying single-family homes is such a great investment right now, if it were practical, he’d buy a couple hundred thousand of them. Given how low rates are for a 30-year fixed-rate mortgages (3.95 percent, according to the Freddie Mac Mortgage Index), Buffett told CNBC’s Becky Quick that homes, held over the long term, provide a better investment than stocks. If you factor in that prices in some areas are at a 10-year low and inventory levels are high, the conditions are ideal for buying.
While the “Omaha Oracle” has been right about a lot of investments, his opinion on housing hasn’t always been on the mark. At last year’s annual Berkshire Hathaway meeting, he said 2011 was going to be the year that housing prices were going to rebound. In a letter to his shareholders sent last weekend, he apologized for being “dead wrong.” He explained his belief that housing is a sound investment at least in part the inventory of new homes isn’t growing at a rate that will satisfy future demand. People living with their in-laws to save money, he quipped, will find that attractive for only so long.
You have to give Buffett credit for putting his money where his mouth is. Home Services of America Inc., a Berkshire Hathaway Affiliate, is one of the largest independent residential real estate and settlement servicing companies in the U.S. While Buffett wouldn’t comment completely on Berkshire Hathaway’s stake with each of the banks, the fund actively invests in them. He says if he could own only one bank stock right now, it would be Wells Fargo.
By Todd Carpenter, Director of Digital Engagement, National Association of REALTORS®
REALTOR.com’s iOS apps received a significant upgrade this week. Chief among the changes is the ability to identify foreclosed listings and price reductions. In addition, the app features a new “Nearby Recently Sold” search on the home page. After testing a beta of the app over the last week, I see this as a great new feature. Consumers want to know what homes in an area might be worth, and this is a great alternative to providing a “guestimate” of value. Sold data is available on the app as soon as 24 hours after a final sale.
REALTOR.com also made two significant user experience improvements to the new app. The Area Scout feature is more prominent in the navigation. This function updates a map with new listings as you travel — perfect for a client to view as you drive them around a neighborhood. The Area Highlighter has also been promoted to the home screen. This function allows the user to draw a border around a specific area on the map to isolate listings within that specific boundary. This is an incredibly useful feature that many of REALTOR.com’s competitors are now trying to replicate.
Mobile traffic to sites like REALTOR.com is suggesting that apps are becoming many consumers’ preferred method of searching for real estate. Even regional MLSs like Metrolist are adopting these technologies. It’s more important than ever for real estate professionals to consider how their listings are being viewed on these apps. Do you have a mobile marketing strategy for your listings? Maybe it’s time to consider one.
After the housing downturn there were calls among lawmakers and policymakers in Washington to scale back the country’s historic commitment to home ownership. Those calls continue today.
Maybe the value of the mortgage interest deduction should be curtailed, as President Obama is suggesting in his latest budget proposal. Maybe there should be little or no federal backing of mortgages once Fannie Mae and Freddie Mac are restructured out of existence, as some bills would do. Maybe loans that lenders originate for securitization should be required to have at least 20 percent down, as banking regulators have proposed. Maybe the fees that lenders pay to have their loans guaranteed by Fannie and Freddie should go up, as Congress has just passed into law.
All of these and more add up to an attack on home ownership and raise the question of whether our children and grandchildren, despite the unquestioned good home ownership does for our country, will have the same options for buying as we or our parents had.
Here in Washington, largely behind the scenes, NAR has been waging a battle on Capitol Hill and among the regulatory agencies to try to keep some balance in this debate over home ownership and dial back the reaction to the housing downturn.
In May, though, the battle will come into sharp relief as thousands of REALTORS® join NAR President Moe Veissi and the NAR Leadership Team at a rally on the grounds of the U.S. Capitol.
The Rally to Protect the American Dream takes place on May 17 and is REALTORS®’ high-energy way of letting Washington lawmakers and policymakers know that REALTORS® are ready to go to the mat to protect this most cherished of American institutions.
“Extraordinary times call for extraordinary measures,” NAR President Veissi says.
You’ll be hearing more about the rally in the months ahead. President Veissi and other leaders in the industry are reaching out to REALTORS® across the country to join them on the ground of the Capitol for what promises to be a memorable morning.
Sharing the stage with President Veissi will be members of Congress, home buyers, and others. Theirs will be a simple message: Real estate is the bedrock of the country and the country’s REALTORS® are taking a stand to keep it that way.
Lear more in this video podcast with President Veissi.
Send any questions about the rally to firstname.lastname@example.org.
The secondary mortage market company Freddie Mac has updated its bulletin to servicers of Freddie Mac mortgage loans to make clear that they aren’t to pursue a deficiency judgment against a borrower after a short sale or deed-in-lieu of foreclosure if the transaction was processed in accordance with Freddie Mac’s guidelines.
In a deficiency judgment, a lender goes after the borrower to collect the amount of loan that was “shorted” in a short sale or deed-in-lieu of foreclosure, even after the lender approved the short-pay agreement. State laws apply differently to the practice, but in some states a lender can go after a borrower several years after a transaction closes–sometimes to the surprise of the borrower.
The new language, says the company, reinforces “the requirement that the Servicer, for itself and on behalf of Freddie Mac, must waive all rights to seek deficiencies for short payoffs and deed-in-lieu of foreclosure transactions on Freddie Mac Mortgages that have closed in accordance with the Guide.”
You can find the updated language in Freddie Mac Bulletin 2012-5, dated February 15, 2012.
If you have any questions about the language, the company asks you to contact your Freddie Mac representative, if you have one, or call 800/FREDDIE and select “Servicing.”
By Erica Christoffer, Multimedia Web Producer, REALTOR® Magazine
Developers of multifamily homes should be relishing in the fact that demand is incredibly strong. But in reality, developers are struggling to build new apartments because financing is so hard to come by.
The National Association of Home Builders is forecasting the construction of 208,000 multifamily residences in 2012, which is well below the 350,000 units needed to maintain balance in the market, according to Sharon Dworkin Bell, NAHB senior vice president for multifamily and 50-plus housing.
Bell, who spoke on a panel during the NAHB International Builders’ Show in Orlando last week, said that the demand for new apartments will only continue to grow as the economy improves and job seekers find employment.
What’s more, the young adult population entering the job market today is one of the largest in U.S. history, which is creating even more demand for multifamily real estate, said Ron Witten, president of Witten Advisors, a market research firm that works with multifamily developers.
“As an industry, we can’t keep up with this demand right now. This is likely to put inflationary pressure on rents, resulting in higher rents for consumers,” Witten said.
The multifamily market suffered a serious slowdown in production from 2008 to 2010, and now the lack of credit to finance the development of new apartments is likely to cause a supply and demand imbalance, according to the NAHB panelists. Continue reading »
One of the most helpful laws on the books for underwater home owners is set to expire at the end of this year. At this point, NAR expects to make a strong push to get it extended because the law will likely be needed in the years ahead as lenders continue to make loan modifications for hard-hit home owners.
The law is mortgage cancellation relief and it was first passed in 2007 with NAR taking a prominent role as industry supporter. It relieves home owners who get part of their mortgage loan forgiven from having to pay tax on the forgiven portion of the loan.
Ordinarily, the IRS would count that forgiven loan amount as income. But in light of how hard home owners were hit in the market downturn, it was unrealistic to expect households to pay tax on tens of thousands of dollars on forgiven debt when they lack money to pay their mortgage without a modification.
It’s safe to say many members of Congress want to extend the relief. It has already been extended once, in 2009. And given its strong bipartisan support in both houses, many members can be expected to support extending it further, especially with its need poised to grow.
But in talking with NAR Director of Tax Policy Linda Goold about the issue, the challenge could be in finding a legislative vehicle that can make it through Congress. Goold says trillions of dollars in tax provisions are expiring at the end of this year. Bills for extending expiring tax provisions in the past have tended to be the last pieces of legislation Congress considers before the end of its session, leaving little room for alternative approaches.
What’s more, all of these expiring provisions tend to get considered as a big package. That means mortgage cancellation relief, as popular as it is, could get snagged if this larger tax package gets held up.
More about mortgage cancellation relief.
Tax time is nearing and once more rumors are circulating on the Internet and by e-mail that the health care reform law enacted two years ago includes a 3.8 percent transfer tax on real estate starting in 2013. That rumor is not true and NAR has material available to explain how that 3.8 percent tax works.
It’s a tax on a very narrow band of investment income for high-wealth households (those who earn $250,000 in a joint return or $200,000 as an individual) that could come into play on the sale of a house if the sales gain is more than $500,000 for a married couple or $250,000 for an individual.
Even in the unlikely event the sales gain is more than that amount, the tax would only apply based on other considerations having to with the household’s income and its tax situation.
The bottom line is, the tax, which was imposed to help shore up Medicare, will only hit some portion of investment income.
The value of the mortgage interest deduction (MID) and other itemized deductions for wealthier households would be trimmed in the fiscal 2013 budget proposal President Barack Obama released yesterday, but as in the previous three years, the proposal is expected to attract little support in Congress.
As in previous years, the budget would reduce the value of itemized deductions to 28 percent for married couples with incomes over $250,000 and individuals with income over $200,000. Currently, depending on the tax bracket these households are in, the value of their deductions could be as high as 33 or 35 percent.
The proposal has never attracted sufficient support in either party to be considered, and NAR President Moe Veissi in a statement yesterday said the association would strongly oppose this or any proposal that would limit MID and other itemized deductions.
“The mortgage interest deduction is vital to the stability of the American housing market and economy,” Veissi said. “We urge the president and Congress to do no harm” to today’s fragile economic recovery. “The nation’s homeowners already pay 80 to 90 percent of U.S. federal income taxes. Raising taxes on them, now or in the future, could critically erode home values at all price levels.”
The budget request also includes a previously rejected proposal to tax the carried interest of general partners in investment partnerships, including real estate partnerships, as ordinary income rather than as capital gains, which is taxed at 15 percent. If taxed as ordinary income, it could be taxed at a higher rate, depending on the taxpayer’s tax bracket.
Analysts have said that this provision is mainly aimed at general partners of hedge funds, but general partners in real estate partnerships could get caught unintentionally in it, and NAR in the past has opposed the tax change.
Overall, the budget request, which is just the opening step in a long process in which Congress will develop a budget for passage, envisions fiscal year 2013 spending of about $3.8 trillion. Of that amount, several hundred billion would be new spending for infrastructure, research and development, and other priorities of the administration. The budget envisions cutting about half a trillion dollars from the defense budget, and another roughly half a trillion dollars through tax law changes, including the NAR-opposed curbs to the value of MID for upper-income households. More savings would cone from allowing tax cuts enacted during President George W. Bush’s administration to expire for all households except those earning less than $250,000.
In all, the administration is saying it would cut the deficit by about $3 trillion over 10 years, plus another trillion dollars from legislation Congress passed in August of last year as part of the budget deal to raise the debt ceiling cap.
For the MID curbs, click here and scroll to page 39.