NAR President Gary Thomas and CEO Dale Stinton moderated the candid discussion during the “Straight from the Top: Insights from Lending Leaders” session at the 2013 Realtors® Conference and Expo,
where the top mortgage industry executives expounded on new regulatory
hurdles that could temporarily restrict lending to some buyers, but will
likely even out over time.
The Qualified Mortgage, or ability-to-repay rule, will become
effective in January 2014 and contains a number of underwriting
standards that will constrict mortgage availability and deny credit to
some first-time homebuyers, said Bill Emerson, CEO of Quicken Loans. The
QM rule requires significant documentation from consumers to justify
lenders’ underwriting decisions; lenders face strict penalties if a loan
is made outside of the specific criteria.
Kevin Watters, CEO of JPMorgan Chase, agreed that lower- and
moderate-income buyers, as well as self-employed buyers who don’t have a
consistent flow of income, might have a tougher time in the new lending
environment. “We need to work together to help first-time buyers into
affordable housing options.”
“It’s important for Realtors® to be educated about the new
documentation requirements so they can work with buyers and meet lender
expectations,” said Matt Vernon, home loan sales executive for Bank of
America.
Mike Heid, president of Wells Fargo Home Mortgage, added that Wells
Fargo is using new technologies to create learning tools to help
consumers prepare to be homeowners, even before they find the house they
love. The new lending standards and documentation requirements are making
some potential borrowers anxious about competing with cash buyers in the
real estate market.
Thomas asked the panelists to share their average
approval timelines.Vernon said that in California, Bank of America’s mortgage loan
officers can process and approve loans in 16 days and always strive to
quickly deliver approvals. He said that the approval process can move
more swiftly when borrowers are educated about lender’s application
requirements.
“Our mission is to get someone approved. With clarity and
transparency, buyers will know exactly what is needed of them. We want
to do this in a manner that is as stress free as possible for consumers
and Realtors®,” said Emerson.
Heid agreed and said, “The way to compete against a cash buyer is to build a process that has no surprises as you go.”
Stinton turned the conversation to the debate over reforming the
secondary mortgage market and asked the lenders whether they fear the
risk of mortgage security “putbacks” and how that impacts underwriting. A
putback occurs when a bank is liable for misrepresenting the
creditworthiness of a borrower to the entity that buys the loan, and the
bank is forced to buy back the mortgage.
Watters said fears over putbacks are real and Heid agreed. “The
putback fear is still there and we’re working to put it to rest,” said
Heid. “The time is right for that. If the government-sponsored
enterprises weren’t in conservatorship, the issue of put backs wouldn’t
be there. We need a world where everything is more of a natural market
and we need competition with Fannie Mae and Freddie Mac. The
conservatorship should end.”
Thomas followed up by asking whether immediate steps should be taken
to reduce the government role in the housing finance market. Emerson
said that the security of their guarantee needs to stay, not the actual
government entities.
“I think if we want the 30-year fixed-rate mortgage, you need the
government guarantee,” said Watters. “The 30-year fixed-rate mortgage
needs the government guarantee because not all banks can soak up the
size of the market.”
When asked whether private investors are ready to take a bigger role
in the secondary mortgage market as the government’s footprint shrinks,
the executives provided varied responses. Heid said that more certainty
is needed before taking action.
“We’ve already started to do some private label securities,” said
Watters. “People are getting back into the marketplace, which is a good
thing. We might not be ready to take it all on, but we are headed in the
right direction.”
The lending leaders unanimously agreed that consumers will see a
healthy increase in the market next year, keeping pace with gains made
in 2013. Mortgage originations will dominate the 2014 housing market as
interest rates creep up and refinancing trends downward.
Heid said that while home values will continue to increase as the
market continues to heal, the economy is the wild card and the downturn
would be a game changer. “In spite of the economic crisis, Americans
still want to be homeowners. That hasn’t changed one bit,” he said.
“Homeownership is at the heart of what we do and that is worth
preserving.”
Source:The National Association of Realtors®
Showing posts with label rising market indicators. Show all posts
Showing posts with label rising market indicators. Show all posts
Home Prices Start to Rise, Sales Trend Higher: Housing Recovery Underway
For the first time in 18 months, home prices in February rose higher. With a median price of $171,881, prices in the 53 cities surveyed by the RE/MAX National Housing Report rose by 1.1% over February 2011.Home sales were even higher, up 8.7% from one year ago. With a positive sales trend of 8 straight months above the previous year, it’s looking like 2012 will witness a very strong home-selling season, RE/MAX reports. As a result of reduced foreclosure activity, inventory continued a downward trend for the 20thstraight month, 22.4% lower than the housing inventory in February 2011.
Consumer sentiment appears to be rising, and record low mortgage rates coupled with favorable home prices are attracting homebuyers and investors who don’t want to miss a historic opportunity.
“All the data is pointing to a very active spring and summer selling season this year, which is great news for a recovering housing market,” said Margaret Kelly, CEO of RE/MAX, LLC. “As sales numbers have trended higher for several months, we have been anticipating a turnaround in home prices, and it looks like it’s finally starting.”
Home Sales in February were 8.7% higher than sales in February 2011. This was the 8th straight month year-to-year sales have risen. February home sales were also 8.1% higher than sales in January. Of the 53 metro areas included in the survey, 45 saw increases over February last year and an impressive 26 metro areas saw double-digit jumps, including: Albuquerque, NM +46.6%, Providence, RI +36.7%, Raleigh, NC +33.8%, Boston, MA +30.5% and Chicago, IL +27.5%.
Median Sales Price
The Median Sales Price of homes sold in February was $171,881. This price represents a 1.4% increase from January, and a 1.1% rise from the median price seen in February 2011. February is the first time in 18 months that the year-to-year home price has increased. Of the 53 metro areas included in the February survey, 24 experienced price increases from February 2011, including: Miami, FL +20.5%, Orlando, FL +15.8%, Phoenix, AZ +12.5%, Tampa, FL +11.1%, St. Louis, MO +9.8% and Detroit, MI +8.9%.
Days on Market–Average of 53 Metro Areas
The average Days on Market for properties sold in February was 103, the same as for the month of January, and the same average seen in February 2011. Only two months in the last 12 months saw a Days on Market average below 90: July and September both reported 88. Days on Market is the number of days between first being listed in an MLS and when a sales contract is signed.
Months Supply of Inventory–Average of 53 Metro Areas
In the month of February, the average inventory of homes-for-sale in the 53 surveyed metro areas dropped 0.8% from January and also dropped 22.4% from February 2011. Month-to month inventories have now fallen for 20 consecutive months. Given the current rate of sales, and the size of the active inventory, the resulting Months Supply is 6.6 months, a drop from the 7.3 month supply seen in January, and significantly lower than the 9.3 month supply reported in February 2011. Months Supply is the number of months it would take to clear a market’s active inventory at the current rate of sales. A six-month supply is considered a balanced market between buyers and sellers.
Source: RISMedia
Consumer sentiment appears to be rising, and record low mortgage rates coupled with favorable home prices are attracting homebuyers and investors who don’t want to miss a historic opportunity.
“All the data is pointing to a very active spring and summer selling season this year, which is great news for a recovering housing market,” said Margaret Kelly, CEO of RE/MAX, LLC. “As sales numbers have trended higher for several months, we have been anticipating a turnaround in home prices, and it looks like it’s finally starting.”
Home Sales in February were 8.7% higher than sales in February 2011. This was the 8th straight month year-to-year sales have risen. February home sales were also 8.1% higher than sales in January. Of the 53 metro areas included in the survey, 45 saw increases over February last year and an impressive 26 metro areas saw double-digit jumps, including: Albuquerque, NM +46.6%, Providence, RI +36.7%, Raleigh, NC +33.8%, Boston, MA +30.5% and Chicago, IL +27.5%.
Median Sales Price
The Median Sales Price of homes sold in February was $171,881. This price represents a 1.4% increase from January, and a 1.1% rise from the median price seen in February 2011. February is the first time in 18 months that the year-to-year home price has increased. Of the 53 metro areas included in the February survey, 24 experienced price increases from February 2011, including: Miami, FL +20.5%, Orlando, FL +15.8%, Phoenix, AZ +12.5%, Tampa, FL +11.1%, St. Louis, MO +9.8% and Detroit, MI +8.9%.
Days on Market–Average of 53 Metro Areas
The average Days on Market for properties sold in February was 103, the same as for the month of January, and the same average seen in February 2011. Only two months in the last 12 months saw a Days on Market average below 90: July and September both reported 88. Days on Market is the number of days between first being listed in an MLS and when a sales contract is signed.
Months Supply of Inventory–Average of 53 Metro Areas
In the month of February, the average inventory of homes-for-sale in the 53 surveyed metro areas dropped 0.8% from January and also dropped 22.4% from February 2011. Month-to month inventories have now fallen for 20 consecutive months. Given the current rate of sales, and the size of the active inventory, the resulting Months Supply is 6.6 months, a drop from the 7.3 month supply seen in January, and significantly lower than the 9.3 month supply reported in February 2011. Months Supply is the number of months it would take to clear a market’s active inventory at the current rate of sales. A six-month supply is considered a balanced market between buyers and sellers.
Source: RISMedia
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