It’s something many real estate professionals know about. Right after a sale closes, many clients don’t just like the agent that helped them; they love the agent that helped them, especially when the transaction went seamlessly and was even pleasant. Of course, happy buyers often make great sources of referrals and, down the road, they’re often move-up buyers who will want to use their agent’s help once again.
These are good business reasons to care about the success of clients long after a sale closes but really these reasons pale in comparison to the human reason for caring. Anyone of good will will want to see new owners succeed. And let’s not forget the benefits to neighborhoods when households are succeeding at homeownership. Successful owners tend to invest in their properties, helping to maintain values for everyone who’s in the area.
It’s with these thoughts in mind that a recent announcement by the Fedral Housing Finance Agency is important. FHFA is the agency that oversees Fannie Mae and Freddie Mac and it’s extending a program that enables financially struggling homeowners to refinance their Fannie- or Freddie-backed mortgage even if they have little or no equity in their home. A second program gives an incentive to lenders to modify the mortgage of borrowers who are underwater.
The programs were a response to the financial crisis several years ago and while many homeowners are seeing equity growth again, there are still borrowers struggling to make their payments and who have room to refinance into a lower interest rate.
The latest Voice for Real Estate news video from NAR talks about the programs and how borrowers who are able to refinance or get their mortgage modified can go on to become tomorrow’s move-up buyers. In the video, FHFA official Megan Moore talks about the pockets of borrowers who are still struggling.
If you know of struggling borrowers, you would be performing a service to them if you point them to these programs, because they can help them stabilize their situation and become tomorrow’s move-up buyers.
The video also looks at a pass HUD took on its FHA condo financing rules, which implement a recent law to make FHA-backed financing for condos more widely available. Today, only about 10 percent of all condo loans are FHA backed, which means a lot of buyers who need FHA to get financing are not able to buy a condo unit, even though condos are one of the best ways for households to get into homeownership.
By law, HUD is supposed to provide a maximum owner-occupancy ratio for a project to be eligible for FHA financing. Right now that ratio is 50 precent, which means if anything more than half the units are being leased out by owners, FHA can’t back the purchase of units in that project. Congress told HUD the ratio would automatically drop to 35 percent if the agency doesn’t do anything. Well, the agency decided to do something: it’s asking for input from the public on what the number should be. As a result, the ratio is still 50 percent while the agency seeks input, and NAR is trying to make the case that it should be dropped to 35 percent, as the law calls for.
On the plus side, the rule does bring back what’s known as spot loans. These are FHA loans that lenders can make for units even if the project isn’t FHA certified. The units can be purchased with FHA financing on a case-by-case basis. So, that’s an important improvement that can help borrowers right away.
The video also looks at the state of home sales, which are flat and expected to stay flat until the end of 2016, why it’s important for real estate professionals to vote in a month, and what makes for a cost-effective investment in landscaping. Another thing the video looks at is a new audio podcast NAR has launched to help you get ideas for boosting your business based on what successful agents, brokers, and other industry people are doing today. The first podcast in the series looks at how you can create a board of directors to get more referrals and also get ideas for improving your marketing, The new series is called “The Takeaway with Nobu Hata,” which refers to the host of the show, Nobu Hata, NAR’s director of member engagement.
Watch the video.