“The National Association of Realtors® applauds the Consumer Financial Protection Bureau for creating a broadly defined Qualified Mortgage rule that establishes strong consumer protections while ensuring continued access to safe, affordable mortgage credit.
“NAR forged a coalition of partners that urged regulators to honor Congressional intent by crafting a broad QM and we are pleased that the rule encompasses the vast majority of the safe, high quality lending being done today. We will continue to work closely with the CFPB to ensure that the cap on fees doesn’t restrict consumers’ mortgage options, but believe today’s QM rule is a positive step to bringing certainty to the housing finance system.
“Realtors® urge regulators to mirror the forthcoming Qualified Residential Mortgage rule after the QM rule to ensure affordable credit remains available to qualified borrowers.”
The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.
This year the National Association of Realtors (NAR) Convention for 2011 was held in
Me at the 2011 National Association of Realtors Convention in Anaheim, CA.
Anaheim, California. I attended, and was there for a period of five days. As part of the convention, I was able to participate in special exclusive events for Realtors called ‘knowledge sessions’.
Some of the knowledge sessions consisted of briefings on the national economy from members of the Federal Reserve, as well as a NAR economist. Others that I attended were on marketing, social media, video making and many other special interests I had to help me improve my business and relationships with my clients.
There was also in the convention center a bookstore and a very large expo center. In the expo, I was exposed to products and services from around the world to better help my business and relationships with my clients.
Being a Realtor from Battle Creek, Michigan, it was very benefitial to find new ideas to help me reach more people to help them become homeowners. Having an understanding of what is happening at a national level gives me an better understanding on how my local market will be impacted. Here is a photo of me on one of my more casual days on Sunday at the NAR convention.
If you have ever wondered where your equity went in your home, the answers lie in a book written by Michael Lewis entitled ‘The Big Short: Inside the Doomsday Machine’.
The book carefully unravels the incidents behind the scene on Wall Street that led up to the crash of the real estate and mortgage market starting in 2005 or 2006.
Sparked by policies created during the Clinton administration in the White House, when the sub-prime loan was introduced to loan money to the poor for housing, this type of lending was exposed in as early as 1997 and several companies engaging in these practices went bankrupt at that time. However, the model was continued and used as an instrument that evolved into what amounts to a massive Ponzi scheme of the mortgage industry that lasted over a decade, and ultimately crashed the economy.
This book is very enlightening, and is well worth the read. In March of 2010, when the book was released, the New York Times had this to say about it: “When the crash of the U. S. stock market became public knowledge in the fall of 2008, it was already old news.
The real crash, the silent crash, had taken place over the previous year, in bizarre feeder markets where the sun doesn’t shine, and the SEC doesn’t dare, or bother, to tread: the bond and real estate derivative markets where geeks invent impenetrable securities to profit from the misery of lower- and middle-class Americans who can’t pay their debts. The smart people who understood what was or might be happening were paralyzed by hope and fear; in any case, they weren’t talking.”
Defaulting on a Federal Student loan can scar your credit, which can impact your ability to borrow money again in the future. Many students do not realize that when they sign up for a Federal Student loan, it does not leave their credit report until it is paid. Federal Student Loans are immune to bankruptcy proceedings, so even if you declare bankruptcy, the loan remains on your credit bureaus.
Defaulting on a Federal Student Loan can scar your credit for a long, long time.
It is important for young people to know this information, so I have taken time to write a lot about it recently. I am of the personal opinion that one should never sign up for a Federal Student loan unless they are going to recieve an marketable skill in society after graduation with their degree. Persuing a degree that is obscure or narrow in demand in the market place is too risky an endeavor to incur a sizeable student loan.
One should only, in my opinion, utilize a the Federal Student Loan program if the career one is going into is in high demand and pays well, and offers one readily marketable employment right after graduation. Examples of such careers might be a Medical Doctor, Lawyer, Accountant or Engineer.
Taking on a four year program for a degree in ‘Green Energy Conservation’ as an example
The future generation needs to exercise caution with Federal Student Loans.
may sound good on paper, but despite the rheteric in the media, it is not a wide open and high demand field providing immediate employment for those with such a degree.
One could probably list many degrees some students end up pursuing in this category, such as ‘Eastern Philosophy’ and ‘Political Science’. Unless you have gauranteed employment upon graduation, it is not advisable to roll up a high dollar student loan debt on an obscure career choice.
When one is attempting to buy a home in later years, your unpaid or negative marks from a defaulted student loan can damage your credit scores and place this out of reach. Too many times I run into young people in their mid 20′s who have $50,000+ in Federal Student loan debt that is eating up all their monthly earnings, and usually they are in a job that has no relation to the degree or education they obtained in school.
This is a sad future for millions of American students, and it wise to step back and let your practical side of the decision guide you. Follow this basic rule: Pursue an education that is going to offer you a readily marketable skill immediately upon graduation, and one that will give you a large enough salary even at an entry level position to pay back the loan within 5 years, and you will do well.
When trying to analyze what brought about the current decline in property values in recent years, one has to examine a lot of different factors. I recently created a video called the ‘Battle Creek Market Report Chapter 2’ and I covered some of the aspects of the cause of these changes in the last several years.
The Government had a big hand in creating the foreclosure crisis.
If you have lost your equity on your home, you are not alone. Millions of Americans have as well. The housing crash was brought out by not just the out of control loan industry, as many media ‘experts’ would have you believe. The truth is there were a number of factors.
A great deal started the Community Reinvestment Act which was passed in 1977 by the 95th Congress during the Jimmy Carter administration.
The Community Reinvestment Act (or CRA, Pub.L. 95-128, title VIII, 91 Stat. 1147, 12 U.S.C. § 2901 et seq.) is a United States federal law that requires banks and savings and loan associations to offer credit throughout their entire market area. It also prohibits them from targeting only higher end or wealthier neighborhoods with their services, a practice known as “redlining.”
The purpose of the CRA was to provide credit, including home ownership opportunities to underserved populations and commercial loans to small businesses. Over the years it has been subjected to regulatory revisions.
The CRA was passed by Congress following national grassroots pressure for affordable
The CRA made housing opportunities available, but personal financial discipline on the part of the buyer as a requirement was omitted.
housing, and despite considerable opposition from the mainstream banking community. The CRA mandated that each banking institution be evaluated to determine if it has met the credit needs of its entire community. That record is taken into account when the federal government considers an institution’s application for deposit facilities, including mergers and acquisitions. This legislation was the first sweeping government hand into the mortgage industry.
The bill encouraged the Federal National Mortgage Association, commonly known as Fannie Mae, to enable mortgage companies, savings and loans, commercial banks, credit unions, and state and local housing finance agencies to lend to home buyers. It also encouraged the Federal Home Loan Mortgage Corporation, commonly known as Freddie Mac, to buy mortgages on the secondary market and sell them as mortgage-backed securities on the open market.
Homeownership became a roller coaster with adjustable rate mortgages.
In 1995, the Bill Clinton began implementing changes to the regulations for the CRA with revisions starting January 31, 1995. These revisions included radically increased CRA loans to low- and moderate-income borrowers for home loans, which was controversial when it was approved.
Following this time in history, lending institutions became more efficient with the advance of computer technology, and the internet. Lending institutions were born like Countrywide which embraced the subprime loan industry, and made them widely available to consumers creating a 39% increase nationwide from 1995 to 2002. By 2006, subprime loans became the standard for most first time home buyers in the low to moderate income range.
However, personal financial discipline had fallen out with this new generation of borrowers
Buyers being persuaded to not hire a Realtor by sellers eager to make a profit was also a contributing cause to homes being sold for higher than market values.
indoctrinated into the easy spending habits promoted by the credit card industry, and the tangle became even more complex. Renters with poor credit history were able to buy homes with zero money down, and because of the lack of personal investment into the home, began walking away from homes as they would a rental home. Rising interest rate loans such as the ‘Adjustable Rate’ mortgages were utilized broadly, with the sales pitch to the homebuyer to re-finance in 2 years once your credit improves into a fixed rate mortgage.
However, financial discipline being lost with many among this new group of borrowers, a greater percentage did not improve their credit in the two year period. Thus, the refinancing options became to refinance into another adjustable rate mortgage or struggle with the new increased payments.
Working with a Realtor can help you through the process of buying a home, but also offer you professional advice on market values.
The home buyer lost money with each new transaction, and the lending industry appeared to prosper. The bubble that was said to have popped was essentially when the increase of foreclosures finally crossed the line with a majority of these loan companies into massive insolvency. The point of too many borrowers defaulting on loans became something that reached new heights, never before seen.
During this same period a great deal of energy in the buying and selling of homes was directed at ‘For Sale by Owner’ companies that promoted buyers and sellers to not use a Realtor, and ‘save money on paying commissions’. What essentially happened with this is that many home buyers bought homes that were over priced due to no professional representation to advise them, and sellers sold homes without the legal disclosures creating long term problems for the buyers.
The loser would appear to have been the home buyer, but in actual fact when the homes went into foreclosure, and were taken back by the banks the financial institutions lost their investment. However, when this became too excessive, they lobbied Washington, and persuaded Congress, the Senate and the President to pass a ‘Stimulus’ and financial bail-out bill to offset their losses. So who really lost out in the end? : The American tax payer.
Is it any wonder that in the past few years we have seen rapidly rising inflation?
Some creditworthy borrowers may not be able to obtain mortgages, if Wells Fargo & Co. gets its way. The nation’s largest mortgage lender is asking U.S. regulators to set a down payment standard of 30 percent for loans that would be exempt from a risk-retention requirement. Banks would have to retain 5 percent of any loans with down payments of less than 30 percent if those loans are securitized.
Raising the down payment requirements will limit the number of those that can purchase a home.
To put this in perspective, a 20 percent down payment on a $300,000 home is $60,000. At a level of 30 percent, a borrower would need to produce $90,000. Banks could still make loans to borrowers with less than 30 percent down, but borrowers with lower down payments would ultimately receive higher interest rates for loans that would be perceived as more risky.
This kind of strategy, although might be a lesser risk for larger mortgage companies like Wells Fargo & Co, Bank of America and Chase Bank, but if enforced as a blanket policy, it would drive first time home buyers out of the market place in many areas of the country.
Currently according to research by the National Association of Realtors, first time home
The American Dream could be pushed further out of reach if too steep a change to down payment requirements were introduced.
buyers reflected nearly 1/3rd of the market last year in real estate purchases. 53% were motivated to just own a home of their own. Another 33% bought a home just because they knew the timing of the current market place would offer affordability.
At present there exist many government loan programs such as FHA, VA and USDA Rural Development that offer low up front expenses and low interest rates. VA and USDA Rural Development do not require a down payment, and FHA requires just 3 1/2% down. Many first time home buyers are taking advantage of these programs, despite the requirements for higher credit scores than 5 years ago.
The pendulum swinging in the direction of what Wells Fargo proposes would deny many new prospective home buyers their chance at the American Dream, and would be too extreme a solution.
The Following article was release last week by the U.S. Census Bureau concerning the 2010 U.S. Census:
The U.S. Census Bureau announced today that the 2010 Census showed the resident population of the United States on April 1, 2010, was 308,745,538.
The resident population represented an increase of 9.7 percent over the 2000 U.S. resident population of 281,421,906. Commerce Secretary Gary Locke, Acting Commerce Deputy Secretary Rebecca Blank and Census Bureau Director Robert Groves unveiled the official counts at the National Press Club in Washington, D.C.
“A big thanks to the American public for its overwhelming response to the 2010 Census,” U.S. Commerce Secretary Gary Locke said. “The result was a successful count that came in on time and well under budget, with a final 2010 Census savings of $1.87 billion.”
The U.S. Census results are in...
Rebecca Blank, now Acting Deputy Secretary of Commerce who has overseen the 2010 Census as Under Secretary for Economic Affairs, echoed Locke. “The 2010 Census was a massive undertaking, and in reporting these first results, we renew our commitment to our great American democracy peacefully, fairly and openly for the 23rd time in our nation’s history.”
The U.S. resident population represents the total number of people in the 50 states and the District of Columbia.
The most populous state was California (37,253,956); the least populous, Wyoming (563,626). The state that gained the most numerically since the 2000 Census was Texas (up 4,293,741 to 25,145,561) and the state that gained the most as a percentage of its 2000 Census count was Nevada (up 35.1% to 2,700,551).
Regionally, the South and the West picked up the bulk of the population increase, 14,318,924 and 8,747,621, respectively. But the Northeast and the Midwest also grew: 1,722,862 and 2,534,225.
Additionally, Puerto Rico’s resident population was 3,725,789, a 2.2 percent decrease over the number counted a decade earlier.
Just before today’s announcement, Locke delivered the apportionment counts to President Obama, 10 days before the statutory deadline of Dec. 31. The apportionment totals were calculated by a congressionally defined formula, in accordance with Title 2 of the U.S. Code, to divide among the states the 435 seats in the U.S. House of Representatives. The apportionment population consists of the resident population of the 50 states, plus the overseas military and federal civilian employees and their dependents living with them who could be allocated to a state. Each member of the House represents, on average, about 710,767 people. The populations of the District of Columbia and Puerto Rico are excluded from the apportionment population, as they do not have voting seats in Congress.
“The decennial count has been the basis for our representative form of government since
Michigan was the only U.S. State to see a drop in population over the last decade.
1790,” Groves said. “At that time, each member of the House represented about 34,000 residents. Since then, the House has more than quadrupled in size, with each member now representing about 21 times as many constituents.”
President Obama will transmit the apportionment counts to the 112th Congress during the first week of its first regular session in January. The reapportioned Congress will be the 113th, which convenes in January 2013.
Beginning in February and wrapping up by March 31, 2011, the Census Bureau will release demographic data to the states on a rolling basis so state governments can start the redistricting process.
Article I, Section 2 of the U.S. Constitution calls for a census of the nation’s population every 10 years to apportion the House seats among the states. The 2010 Census is the 23rd census in our nation’s history.
Governor Jennifer Granholm, Michigan’s lame duck Governor, in her final days in office had an opportunity to pass a bill beneficial to new homeowners across the State. Instead, she chose to veto Senate Bill 77 (aka SB 77) yesterday on the 21st of December.
Governor Jennifer Granholm
The bill has not gotten much press coverage, and certainly was not one of the most high profile pieces of legislation coming from Lansing recently, but it was perhaps the most significant bill that would have been of benefit to new home buyers in the coming years ahead.
SB 77 began development in January of 2009, and went through several changes in committee and passed both the house and Senate on December 3rd, and it was presented to the Governor on December 15th. The bill provided for changes in the filing of the Michigan Principle Residence Exemption, which currently homeowners can file for once a year in May.
The Principle Residence Exemption (also known as the Homestead Exemption) essentially gives a tax break in favor of homeownership on property taxes, and reduces ones property taxes annually by approximately 40%.
Under current law, if you bought a home in June, and the principle residence exemption
On December 21st, Governor Granholm Vetoed SB 77.
was expired, you can not renew it until the following May. That means than new home buyers are required to pay the full property taxes on their new home for one year. This difference in property taxes can often mean the difference in whether they can afford the monthly payments or can qualify for the home with their lenders guidelines.
The new bill proposed changes to the law that allowed for homes in the foreclosure process to allow a bank or credit union to file a form that retained the principle residence exemption for a period of 3 years. Because a great many homes on the marketplace are foreclosures, this would allow a new homeowner purchasing a foreclosure to retain the homestead exemption if they purchase the property.
With Governor Granholm's veto of SB 77, relief for home buyers acquiring homes with an expired priciple residence exemption is halted.
Additionally the language of the bill covering homeowners who perhaps moved and are trying to sell their home that read: “If an owner is eligible for and claims an exemption for that owner’s current principal residence, that owner may retain an exemption for not more than 3 tax years on property previously exempt as his or her principal residence if that property is not occupied, is for sale, is not leased, and is not used for any business or commercial purpose by filing a conditional rescission form prescribed by the department of treasury on or before May 1 with the local tax collecting unit.”
The Michigan Association of Realtors had hopes that the Governor would sign the bill, as it clearly benefited homebuyers, and the general consensus on the hill in Lansing was that it would be favorable to the Governor. Apparently it was not, and she chose to veto the legislation on December 21st. You can see the progress of the bill here.
I will refrain from commenting on Governor Granholm’s decision in this matter. However, I will note to homeowners that in January we have a new Governor, Mr. Rick Snyder. There will also be a lot of new faces in both the State House and Senate, so perhaps this issue will be brought through the process again under his administration.
Perhaps under a new administration in Lansing starting in 2011, Michigan home buyers will be able to see some relief with new legislation surrounding the Principle Residence Exemption.
“NAR forged a coalition of partners that urged regulators to honor Congressional intent by crafting a broad QM and we are pleased that the rule encompasses the vast majority of the safe, high quality lending being done today. We will continue to work closely with the CFPB to ensure that the cap on fees doesn’t restrict consumers’ mortgage options, but believe today’s QM rule is a positive step to bringing certainty to the housing finance system.
