Archives For Real Estate Market

unreliableFrom my friend Craig Barton out of Fresno, CA – In case you haven’t heard already, a woman in Glenview, Illinois has filed a lawsuit against Zillow claiming that her Zestimate repeatedly undervalued her house and created a “tremendous roadblock” to its sale.

The lawsuit was filed in Cook County Circuit Court by real estate lawyer Barbara Andersen. You can get the full story from The Washington Post here, but I’ll summarize the main points for you now.

This suit may be the first of its kind. It says that, despite Zillow’s denial that they don’t offer “appraisals,” the fact that they “are promoted as a tool for potential buyers to use in assessing the market value of a given property,” shows that they meet the definition of an appraisal under Illinois state law.

It argues that Zillow should be licensed to perform appraisals before offering these estimates, while also obtaining “the consent of the homeowner” before they go online.

The Zestimate in question is for Ms. Andersen’s townhouse that she bought for $626,000 in 2009. It overlooks a golf course and is in a prime location, and she listed it on the market for roughly what she paid for it. However, the home’s most recent Zestimate was only $562,000. Ms. Andersen is suing for Zillow to either remove her Zestimate or amend it. She isn’t seeking monetary damages at the time, according to The Washington Post.

Zillow has a different take on the situation. They don’t see their Zestimates as appraisals but rather a tool that utilizes a proprietary formula to assess value, and they say as much on their website.

However, the accuracy of some of these estimates leaves much to be desired. They have a median error rate of 5%, which can translate to a lot of lost money on a home sale or a lot of money left on the table in a home purchase.

It will be interesting to see how this situation plays out. It might be a flash in the pan, but it might just be the start of something else entirely. We’ll be sure to keep you updated.

We also found this video of Shark Tank star and New York real estate mogul Barbara Corcoran giving her thoughts on the lawsuit on “Good Morning America” that we think you might enjoy.

If you have any questions for me about this topic or anything else relating to real estate, give me a call or send me an email. I look forward to hearing from you soon.

warningThe CFPB is beefing up its ongoing investigation into Zillow for possibly violating RESPA.  Full article here from my friends at HousingWire You’ve been warned: CFPB puts Realtors, Lenders on RESPA violation watch

house-huntingAccording to a survey conducted by Bankrate.com, one in four Americans are considering buying a home this year. If this statistic proves to be true, that means that 59 million people will be looking to enter the housing market in 2017.

The survey also revealed 3 key takeaways:

  1. Those most likely to buy are ‘Older Millennials’ (ages 27-36) or ‘Generation X’ (ages 37-52)
  2. Minorities, particularly African-Americans, were twice as likely to respond that they were considering purchasing a home this year than white respondents.
  3. Many potential buyers believe they need to put 20% down and need to have perfect credit to own and are unaware of programs that would allow them to buy now.

Holden Lewis, a mortgage analyst for Bankrate.com, pointed to one big reason why many Americans are starting to consider homeownership:

“Having kids and raising a family is a primary reason why Americans take the leap into homeownership—many consider it a key component of the American dream.”

Bottom Line

If buying a home is a part of your dream for 2017, let’s get together to determine if you are able to.

I’d love to serve you and your family! ~Cole cole@coleholmes.com #StressFreeHomeLoans

house logo with ascending arrowCheck out the new release below. Conforming loan limits will increase from $417,000 to $424,100 in 2017. This is the first increase in almost 10 years.

FHFA Announces Increase in Maximum Conforming Loan Limits for Fannie Mae and Freddie Mac in 2017

FOR IMMEDIATE RELEASE
11/23/2016
Washington, D.C.

The Federal Housing Finance Agency (FHFA) today announced that the maximum conforming loan limits for mortgages acquired by Fannie Mae and Freddie Mac in 2017 will increase. In most of the country, the 2017 maximum loan limit for one-unit properties will be $424,100, an increase from $417,000. This will be the first increase in the baseline loan limit since 2006. In higher-cost areas, higher loan limits will be in effect.

The Housing and Economic Recovery Act of 2008 (HERA) established the baseline loan limit of $417,000 and requires this limit to be adjusted each year to reflect the changes in the national average home price. However, after a period of declining home prices, HERA also made clear that the baseline loan limit could not rise again until the average U.S. home price returned to its pre-decline level. Until this year, the average U.S. home price remained below the level achieved in the third quarter of 2007 and thus the baseline loan limit had not been increased.

Earlier today FHFA published its third quarter 2016 House Price Index (HPI), which makes clear that average home prices are now above their level in the third quarter of 2007. The expanded-data HPI value for the third quarter of 2016 was roughly 1.7 percent above the value for the third quarter of 2007, and thus the baseline loan limit will increase by that percentage.

High-cost areas
In areas where 115 percent of the local median home value exceeds the baseline loan limit, the maximum area loan limit will be higher. HERA sets the maximum loan limit as a function of the area median home value, while setting a “ceiling” on that limit of 150 percent of the baseline loan limit.
This year, median home values generally rose in high-cost areas. Because the baseline loan limit will be higher in 2017, the new ceiling limit will also be higher. The new ceiling loan limit, which applies in areas with the most expensive homes, will be $636,150 (150 percent of $424,100) for one-unit properties in the contiguous U.S.

Special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam and the U.S. Virgin Islands. In these areas, the baseline loan limit will be $636,150 for one-unit properties, but actual loan limits may be higher in some specific locations.

County-level data
As a result of generally rising home values, the increase in baseline loan limit, and the rise in the ceiling loan limit, the maximum loan limit rose in all but 87 counties (or county equivalents) in the country.

A list of the 2017 maximum conforming loan limits for all counties and county-equivalent areas in the country can be found here. A map showing the maximum loan limits across the country can be found here. A description of the methodology used for determining the maximum loan limits can be found in an addendum to this news release and a short video shows the process used and why the loan limit is rising.

Questions concerning the maximum conforming loan limits can be addressed to LoanLimitQuestions@fhfa.gov.

Source:Federal Housing Finance Agency (FHFA)

appraiser-godfatherFrom my friends at TheTBWSgroup – Housing demand is rising rapidly, but a key cog in the wheel to homeownership is in deep trouble. The people most needed to close the deal are disappearing. Appraisers, the men and women who value homes and whom mortgage lenders depend upon, are shrinking in numbers.

That is causing growing delays in closings, costing buyers and sellers money and in some cases even scuttling deals. The share of on-time closings has dropped from 77 percent last April to 64 percent today for loans backed by Fannie Mae and Freddie Mac, according to Campbell/Inside Mortgage Finance. Appraisal-related issues in these delays jumped by 50 percent in that time.

“The appraisal shortage is massive. You’re seeing significant delays, you’re seeing cost increases, you’re seeing rate [locks] expire,” said Brian Coester, CEO of Rockville, Maryland-based CoesterVMS, a national appraisal management company.

 

Since 2007, when the U.S. housing market came crashing down, the number of appraisers has shrunk by 22 percent, according to the Appraisal Institute, an industry association. With so few new cadets, the current population of appraisers is aging. More than 60 percent are over the age of 50.

Ironically, the decline in new appraisers is largely due to new regulations designed to safeguard both banks and borrowers. They were put in place at the end of 2008 by Fannie Mae, Freddie Mac and the FHA, as the entire mortgage banking community was under strict scrutiny after the financial crisis. They changed the rules that would allow appraiser apprentices to do full appraisals and instead require the licensed appraiser to be on-site for the inspection.

The result is that appraisers no longer see a need to pay apprentices, but at the same time, licensing requirements to become an appraiser include 2,500 hours of appraisal experience to be completed in two years as an apprentice. “The typical appraiser, he’s going to do approximately 10-15 appraisals a week. For him to be able to take a trainee, he needs the ability for the trainee to go ahead and inspect the property for him,” said Coester. “The rules have changed now, and you cannot do what you used to be able to do 10 years ago, which is hire three to four trainees and really have them go and inspect the properties, go and do work for you and really function as an apprentice. That market has been completely eliminated.”

privacyYour right to privacy is a significant concern for mortgage professionals who are involved in the solicitation, origination, processing, closing and servicing of mortgage transactions.  Multiple laws protect the privacy of borrowers, and violation of these laws can result in serious liability.  Privacy laws protect borrowers from the time they receive a solicitation for a mortgage loan until their loans are repaid.

The actions that are necessary to maintain compliance with privacy laws are an ongoing concern for mortgage professionals.  Distinct privacy issues arise at each stage of a lending transaction, and additional issues arise while servicing a mortgage loan:

  • Completion of a Loan Application:  Under the Gramm-Leach-Bliley Act (GLB Act), a consumer becomes a customer, earning special protections of his/her personal financial information, when completing an application for a mortgage.
  • Processing of a Loan Application:  While processing a loan application, lenders and other settlement service providers exchange personal financial information about the loan applicant.  The Fair Credit Reporting Act (FCRA) protects the privacy of information that a lender and a consumer-reporting agency exchange.  The Gramm-Leach-Bliley Act (GLB) and the Safeguards Rule protect any private information exchanged by other settlement service providers.
  • Mortgage Settlement:  At the time of settlement, a loan is often transferred to a second financial institution for loan servicing.  The settlement service providers who no longer have a customer relationship with the borrower must safeguard the privacy of the borrower’s information during the period of time that they are required to retain records related to the transaction.  The Safeguards Rule establishes the standards for protecting the privacy of the borrower’s personal information.  When record retention periods expire and settlement service providers want to dispose of outdated records, they must protect the privacy of the information shown on the records by adhering to the requirements of the Fair and Accurate Credit Transactions Act’s (FACTA) Disposal Rule.
  • Loan Servicing:  As long as it accepts mortgage payments and provides statements to the borrower, a loan servicer must comply with the provisions of the Gramm-Leach-Bliley Act (GLB Act).  The loan servicer must protect the privacy of personal information and comply with the rules that address the sharing of information with affiliated and non-affiliated parties.  The loan servicer will also function as a furnisher of information to consumer reporting agencies.  When providing information to consumer reporting agencies on the borrower’s payment history, loan servicers must comply with the provisions of the Fair Credit Reporting Act (FCRA).
  • Loan Repayment:  When a borrower completes payment of a loan and record retention periods expire, the loan servicer must dispose of information in compliance with the Fair and Accurate Credit Transactions Act’s (FACTA) Disposal Rule.

question mark manAnswer: To remove private mortgage insurance you must be up to date with your monthly payments. And you have to reach the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home.

GREAT info from the CFPB’s original articlehere

To remove private mortgage insurance (PMI) that you pay on your mortgage loan, you must be up to date with your monthly payments. These rules apply to mortgages closed on or after July 29, 1999. Federal law generally provides two ways for you to remove PMI from your home loan: canceling PMI or PMI termination.

Request PMI cancellation

The Homeowners Protection Act gives you the right to request that your lender cancel PMI when you have reached the date when the principal balance of your mortgage is scheduled to fall to 80 percent of the original value of your home. This date should have been given to you in writing on a PMI disclosure form when you received your mortgage. If you can’t find the disclosure form, contact your lender.

You can also make this request earlier if you have made additional payments to reduce the principal balance of your mortgage to 80 percent of the original value of your home.

There are other important criteria you must meet if you want to cancel PMI on your loan:

  • Your request must be in writing.
  • You must have a good payment history and be current on your payments.
  • Your lender may require you to certify that there are no junior liens (such as a second mortgage) on your home.
  • Your lender can also require you to provide evidence (for example, an appraisal) that the value of your property hasn’t declined below the value of the home when you first bought it. If the value of your home has decreased, you may not be able to cancel PMI.

If you meet these requirements your servicer generally must cancel your PMI when you request it.

Automatic PMI termination

Even if you don’t ask your lender to cancel PMI, your lender still must terminate PMI on the date when your principal balance is scheduled to reach 78 percent of the original value of your home. You also need to be current on your payments on the anticipated cancellation date. Otherwise, PMI will not be terminated until shortly after your payments are brought up to date.

It’s worth noting a termination request is different than a cancellation request. Your lender must terminate PMI even if the principal balance of your loan has not actually reached 78 percent of the original value of your home – for example, because the value of your home declined.

Final PMI termination

There is one other important requirement that some homeowners need to be aware of:  your lender must terminate PMI if you reach the midpoint of your loan’s amortization schedule before the 78 percent date. The midpoint of your loan’s amortization schedule is halfway through the life of your loan. Most loans are 30-year loans, so the midpoint would occur after 15 years have passed.

Termination of PMI at the loan’s midpoint may occur before reaching 78 percent of the original value of your home for people who have a mortgage with an interest-only period, principal forbearance, or a balloon payment. Keep in mind that you must be current on your monthly payments for termination to occur.

If your loan is guaranteed by the Federal Housing Administration (FHA) or Department ofVeterans Affairs (VA), these rules generally won’t apply.  If you have questions about mortgage insurance on an FHA or VA loan, contact your servicer.

If you have lender-paid mortgage insurance, different rules apply.