Robert Freedman is the former director of multimedia communications at NAR.
5 to Watch: May 2010
News and trends that we're keeping an eye on this month.
May 1, 2010
1. Rules for Short Sales In Effect
It took more than a year, but the federal government’s short-sale rules took effect April 5. Lenders must now use standardized forms and time lines, and if they already participate in the government’s program for modifying loans of troubled borrowers, they’re limited in the restrictions they can impose when they process short sales.
Fannie Mae and Freddie Mac are set to release their own versions of the rules, though they haven’t said when. When they do, most loans will apply (FHA-backed loans are the exception).
For more, watch our video "Understanding Federal Short Sales Rules" at REALTOR.org/shortsales.
2. Stirrings as HVCC Turns 1 Year Old
The Home Valuation Code of Conduct has been in effect for about a year and faces expiration at the end of 2010 but the procedures it has spawned, including a growing reliance on appraisal management companies to ensure lender-blind appraiser selection, are expected to persist, appraisers say.
But change is still afoot. Half a dozen states have passed laws requiring licensing of AMCs, and more such laws are in process. Mark Johnson of LSI, the country’s largest AMC, says his company has no problem with licensing but believes it should be done at the federal level.
Meanwhile, some companies like Mercury Network and AIMS Dashboard are touting their software as an alternative for banks to meet HVCC requirements without strictly relying on AMCs. Search for "HVCC" on REALTOR.org/realtormag for more.
3. Fannie, Freddie Under the Microscope
Almost two years after they were put under federal conservatorship to prevent their collapse, secondary mortgage market companies Fannie Mae and Freddie Mac are being put under something else: the congressional microscope. The House Financial Services Committee has started looking into how to remake the two entities.
Vince Malta, an NAR vice president, testified before the committee in late March that the companies should not be spun off as private businesses because a profit motive could spell the end of stable 30-year fixed rate mortgages. Nor should they be made into a government entity because taxpayers shouldn’t be 100 percent on the hook for bad debt.
He said a better model is what’s being used by the Export-Import Bank of the United States, an independent entity chartered by the government to achieve a public purpose but that capitalizes its own safety net. A solution isn’t likely until 2011 at the earliest.
4. E-signatures Gain Traction
The U.S. Department of Housing and Urban Development in early April announced that it will now allow electronically signed real estate contracts in transactions involving home loan guarantees by the Federal Housing Administration.
"This is just the beginning of the FHA’s commitment to use more electronic documents in our loan approval process," said FHA Commissioner David Stevens.
NAR President Vicki Cox Golder called HUD’s announcement a "refreshing attitude toward modernization." Since last fall, REALTORS® have been helping clients sign documents online through REALTOR Benefits® partner DocuSign.
5. Higher Gas Prices, Lower Affordability
Gas prices will creep up over the next few months, as they typically do in the spring and summer when refiners switch to more expensive blends. Prices are expected to top a national average of $3 per gallon.
Such news makes nobody happy, but it may have particularly dire consequences for home owners on the brink of foreclosure.
An analysis from the nonprofit Center for Neighborhood Technology finds that housing affordability is expected to take a hit because of rising transportation costs. When gas prices are factored into the cost of living in 337 metro areas, just 39 percent of communities are considered affordable for people who earn a median income.
Transportation costs typically account for as little as about 12 percent of household income in efficient neighborhoods that have walkable streets, easy access to transit, and needed stores and services.
But they’re as much as 32 percent of income in locales where driving long distances is the only way to reach key services.
Updated: November 24, 2021