July 2011







 The Meredith Mortgage Team ~ We Always Have Your Best Interest In Mind ~



Buyers Rejected for Loans Can Now Find Out Why

Daily Real Estate News | Thursday, July 21, 2011
A provision in the Dodd-Frank financial reform law, which took effect this week, is requiring lenders to provide consumers with a free credit score, which will help provide new insights into why they may have been rejected for a loan or did not qualify for the best, lowest rate.

While borrowers can access their credit scores from the credit bureaus, the credit score that a lender uses isn’t always the same one that the credit bureau provides you. According to a report by the Consumer Financial Protection Bureau, some credit bureaus sell consumers “educational” scores that aren’t the same ones used by lenders, or these bureaus may base the score on a different model than the one lenders use.

Now, borrowers for the first time will get a more accurate view of what credit score lenders are using to base their mortgage on.

Under the new provision, lenders will be required to provide potential borrowers with a free credit score whenever they reject an application for a loan. Lenders must provide borrowers with an “adverse action” notice, which will include their credit scores as well as an explanation of why they were rejected for a loan.

Lenders will also be required to provide a free credit score and an explanation whenever they approve a loan but at a higher rate than what is given to their best customers.

Mark Greene, CEO of FICO, says that many borrowers may be surprised to learn that they didn’t qualify for a lender’s lowest rate when applying for a loan.

Source: “Turned Down for a Loan? Now You Can Find Out Why; Consumers Can Also Get Free Credit Scores if Loan Rate Isn’t Best Available,” USA Today (July 21, 2011)

Where Closing Costs Are the Highest, Lowest

Daily Real Estate News | Wednesday, July 20, 2011 
Closing costs on mortgages have increased dramatically nationwide, increasing on average 8.8 percent from one year ago, according to a new survey from Bankrate. Origination, title, and third-party fees on a $200,000 loan, for example, averaged $4,070 — that’s up from $3,741 from Bankrate survey in June 2010.

Why the increase? Analysts say it’s because lenders have to do extra work in approving mortgage applications due to increased scrutiny and tighter lending regulations.

The survey found that it can pay off for borrowers to shop around for a mortgage. In New York, for example, lender origination fees were found to vary anywhere from $700 to more than $4,000.

Most-Expensive States for Closing Costs

1. New York: $6,183

2. Texas: $4,944

3. Utah: $4,906

4. California/San Francisco: $4,832

5. Idaho: $4,643

Least-Expensive States for Closing Costs

1. Arkansas: $3,378

2. North Carolina: $3,410

3. Indiana: $3,430

4. Iowa: $3,474

5. Alabama: $3,501

Many Home Owners in Denial About Price

Daily Real Estate News | Wednesday, July 20, 2011



More home owners — particularly those who bought their homes in 2007 or later — are overpricing their properties when trying to sell them, according to a new analysis from Zillow.Home owners who purchased their home in 2007 or later are overpricing their homes by an average of 14 percent, according to Zillow.

While sellers who purchased their home prior to the housing bubble also overprice their homes, they don’t overprice by as much, the study finds. For example, home sellers who bought their home prior to 2002 are pricing their homes on average about 11.6 percent above market value; those who bought between 2002 and 2006 are pricing their homes 9.3 percent over market value.

“Post-bubble buyers seem to believe they escaped the worst of the housing recession, as evidenced by how they price their homes today,” says Stan Humphries, Zillow’s chief economist. “But 2006 was just the beginning of the housing recession, and it is continuing in earnest to this day. That means that even people who bought after the bubble burst need to break out the pencil and paper and do serious research into what has happened in their market since they first bought their home, whether it was four years ago or six months ago.”

In its analysis, Zillow compared the asking price of 1 million homes for sale to the home’s previous purchase price and factored in the home’s estimated current value.

Source: “Sellers Who Bought Post-Bubble Guilty of Overpricing Homes; More Likely to Base Asking Price on Original Price, Rather Than Current Market Conditions,” Zillow (July 14, 2011)

Gen Y to Lead ‘Massive Increase in Housing Demand’

Daily Real Estate News | Wednesday, July 20, 2011


Watch out for Generation Y: This large, diverse, well-educated generation will drive the housing market recovery over the next 10 years, according to economists with the University of Southern California Lusk Center for Real Estate.

Gen Y (15-32 year olds) boasts about 77.4 million members, which is about equal in size to the baby boomers (46-64 years old). Yet, Gen Y is much more diverse and educated (60 percent of Gen Y goes to college), according to the center, which recently presented its findings at the USC Lusk Center Orange County Executive Briefing.

Stan Ross, Lusk Center Chairman of the Board, says that “baby boomers and Gen Y comprise 50 percent of the population and will soon be part of the largest U.S. wealth transfer ever.”

As more of this age group joins the work force, “they will produce a massive increase in housing demand,” forecasts the USC’s Lusk Center.

However, Ross points out “these kids are concerned. They have watched the stock market, financial markets, and economy wipe out their parents’ retirement plans. As a result, they will choose lower-risk investment strategies.”

Source: “USC Lusk Center Says More Educated, Diverse Generation to Drive Real Estate Recovery,” The Hoyt Organization (July 19, 2011) [No Link]

Study: Tax Credit Had ‘Fleeting’ Effect on Housing Market


By Nick Timiraos

Bloomberg News

Critics of last year’s $8,000 tax credits for home purchases routinely argued that the credits were unlikely to do more than offer sellers the chance to boost their sale price by the amount of the tax credit.

Those critics won’t be surprised, then, by a new paper that finds—you guessed it—that average listing prices rose by around $8,000 in the month after the signing of the first major tax credit, and that they fell by slightly less than $9,000 two months after the tax credits expired.

The paper by Jonathan Brogaard and Kevin Roshak, doctoral candidates at Northwestern University’s Kellogg School of Management, found that the tax credit did little to change the quantity of homes for sale. But the researchers found that in certain markets, the tax credit had a substantial impact on prices.

Researchers looked at different types of housing markets: stable and low-cost markets were more likely to be influenced by the credit, while more expensive markets or those with more volatile prices were less likely to see an impact.

In the first class of housing markets, researchers found that homes sold for around $6,500 more than before the credit. “These price and quantity changes imply that sellers captured the credit in treatment markets,” the paper says.

While the estimates of the changes in home prices during and after the tax-credit program “are imprecise, they are also dramatic and distinct relative to other noise,” the authors write.

The paper concludes that “rather than igniting ‘animal spirits,’” the tax credit had a transitory effect. “These results suggest that the tax credits had only a fleeting influence on the housing market, resulting in little more than a redistribution of wealth,” it says.

8 Common Seller Problems (and How to Resolve Them)

If you’re working in real estate, you’re bound to run into one of these problems. But if you address them early and honestly, they shouldn’t present major obstacles for your transaction.
July 2011 | By Rich Levin

Do you ever clash with sellers on price, staging, or marketing? Has someone ever asked you to lower your commission? Has a seller’s personality ever rubbed you the wrong way?

If you work in real estate—and you aren’t exclusively a buyer’s agent—then the answer to those questions is almost certainly yes. But unless you’re working with someone who’s incredibly dense and obstinate, these problems don’t have to slow down the selling process.

The Problems

Note that the problems below don’t apply just to real estate professionals. In fact, they’re even bigger issues for sellers. These cost them time, money, and aggravation, and disrupt their lives far more than their agents’.

1. Sellers can be uncooperative on price.

2. Sellers frequently believe that the way they live in the house is the way they can sell the house.

3. Sellers are often unprepared for low appraisals.

4. Most sellers aren’t negotiation experts. They may bring expectations and anxiety that make everyone’s experience more difficult.

5. Sellers can be uncooperative on commission and might even request a reduction.

6. Sellers regularly have unrealistic demands concerning showings, advertising, marketing, and communication.

7. Agents and sellers may have personality conflicts.

8. Sellers might not be aware of all the closing costs.

Solving these problems gets sellers’ homes sold faster, for more money, and with less stress.

The Universal Solution in Two Parts

Before we get into the solution, it’s important to point out that owners don’t fully understand the entire process of selling a home. These problems would occur far less or not at all if agents could give them a crash course on selling, in which the practitioners covered these issues in a frank way. If that happened, I believe that sellers would be more cooperative.

The universal solution in two parts is first to ask the seller specific questions over the phone and at the beginning of the listing presentation as the agent is establishing rapport. These include:

▪ “Have you done much research to determine the asking price or how to sell a house?”

▪ (If yes) “We’ll talk more when we get together, but what are some of the more important things you discovered?”

▪ “Why are you thinking of selling?”

▪ “Where are you going?”

▪ “Is there an ideal time frame to have the move complete?”

▪ “The tax records indicate that you bought it x years ago, is that correct?”

▪ “Have you refinanced?”

Similar to how a doctor asks patients about their health history, this process gives the sellers confidence in the thoughtfulness, thoroughness, and ability of practitioners.

The second part of the universal solution is for real estate pros to build a listing presentation that addresses each of these problems before they arise. Details on how to do that are below:

1. If they’re uncooperative on price, prepare a very thorough comparative market analysis. Show sellers all the research that you used to select the properties you chose for the final CMA. Offer your pricing recommendation, but let sellers choose — and “own” — the list price.

2. Sellers believe the way they live in their house is the way they can sell it. Ask sellers if they are planning to do any work to prepare it for the sale. If they are, use your judgment to determine whether they will follow through or not. Share examples and anecdotes of how house cleaning, reorganizing, renovations, and so forth have helped homes sell faster and for more money.

3. Describe the entire pending process, from offer acceptance to closing. As you go through this, cover other stumbling blocks and how you work to prevent or address them.

4. Go over the entire negotiating process, from interested buyers to accepted offer. Also, explain pitfalls and emotional turbulence and describe how you will be their advocate.

5. If they’re uncooperative on commission, sometimes you will simply have to walk away. When possible, build so much value into your marketing plan that sellers are reluctant to even ask you to adjust your commission.

6. Show proof that what you do works. Continuously check for agreement. If and when they challenge you, make a note and return to it after they are impressed with your entire effort.

7. When it comes to personality conflicts, make sure you’re self-aware. Determine your personality style, and your strengths and weaknesses. Learn to recognize others’ personality types, and figure out which will naturally conflict with yours. Learn strategies for adapting.

8. Get sellers’ mortgage balances. Find out what else they plan to pay off with the proceeds. Then complete a detailed net sheet. Use a conservative sale price. Inflate the numbers a bit, so you can assure them it will likely be more in their pocket.

All of these bases can be covered either in conversations with owners over the phone before making an appointment or during the listing presentation. Top practitioners have spent years interacting, building, rehearsing, presenting, adjusting, and improving. Solving these problems consistently comes out of that effort.


19. Jul, 2011

FTC Rules That Real Estate Agents No Longer Have To Comply with the Mars Advertising Rules

Just a few short months ago, the Federal Trade Commission (FTC) issued the new M.A.R.S. rules and specifically determined that these new rules would be applicable to real estate agents who list short sale properties. This would require that all the mandatory advertising disclosures be included in all short sale marketing materials. On July 15 the FTC commissioners voted 5 – 0 to stop enforcing most provisions of the new rules against real estate brokers and their agents who assist financially distressed consumers in obtaining short sales from their lenders or servicers.

As a result of the stay on enforcement, real estate professionals will no longer have to make the disclosures required by the rule if they are assisting with the listing or purchase of short sales. It had become evident that the new disclosures were in the context of short cells misleading and confusing consumers and was having the inadvertent effect of discouraging real estate professionals from helping consumers with these types of transactions when more and more American homeowners are seeking assistance with short sales.

Commission stated that the stay of enforcement apply only to real estate professionals who are 1) are licensed and in good standing under state licensing requirements; 2) comply with state laws governing practices of real estate professionals; and 3) assist or attempt to assist consumers in obtaining short sales in the course of securing the sales of their homes. The stay exempts real estate professionals who meet these requirements from the obligation to make disclosures and from the ban on collecting advance fees. Agents however, will remain subject to the rules ban on misrepresentations. The commission further stated that the stay does not apply to real estate agents who provide other types of mortgage assistance relief such as loan modifications.

I guess that this is another example of the government hurriedly writing and passing rules to protect consumers from foreclosure scammers without really considering their impact or even asking for input on how the new rules would work in the real world. Because of this lack of foresight, tens of thousands of short sale agents around this country with almost no advance notice were forced to change all their advertising and marketing at great expense or risk violating federal law. Now the rules are as they were before M.A.R.S. was implemented. To read a copy of the FTC’s news release go to http://www.ftc.gov/opa/2011/07/mars.shtm

NAR: Stabilizing Housing Is Key for Recovery

Daily Real Estate News | Tuesday, July 19, 2011


Stability in the housing market will lead to a quicker and greater economic recovery, according to the National Association of REALTORS®. In a letter to Shaun Donovan, secretary of Housing and Urban Development;Timothy Geithner, secretary of the Treasury; and Gene Sperling, director of the National Economic Council, NAR offered its recommendations for helping stabilize and revitalize the housing industry and economy.

“As the nation’s leading advocate for homeownership and housing issues, NAR understands how integral homeownership is to the nation’s economy. A strong housing market recovery is essential to the nation’s economic strength,” NAR President Ron Phipps said. “The housing market is in a fragile recovery, and our goal is to ensure that regulatory or legislative changes help lead the way out of today’s economic struggles and not jeopardize the recovery.”

In its letter, NAR cautioned that recent proposals could make a near-term housing recovery almost impossible, not to mention making it harder for millions of hard-working families to own their own homes. Phipps said more regulations and legislation that tighten access to credit and affordable safe mortgages are not the solution to righting the housing market and economy.

“We want to make sure that any legislative and regulatory changes don’t jeopardize a housing and economic recovery, so that anyone who is able and willing to assume the responsibilities of owning a home has the opportunity to pursue that dream,” said Phipps.

NAR urged support for policies that ensure qualified borrowers can obtain safe and sound mortgage financing. NAR called on regulators to revise the unnecessarily high down payment requirements of the Qualified Residential Mortgage (QRM) exemption from risk retention requirements under the Dodd-Frank Act. A broad QRM definition will encourage sound lending and reduce future defaults without delaying or denying home ownership to millions of creditworthy borrowers.

NAR also asked regulators to reduce the overcorrection in underwriting standards for mortgages from the Federal Housing Administration and government-sponsored enterprises because the now-too-stringent standards are preventing qualified borrowers from getting loans.

“Mortgage availability remains a concern, and borrowers continue to find it increasingly difficult to find affordable mortgage options. Requiring a higher down payment does little to reduce default risk, and only strips home buyers of their savings and increases the number of borrowers who are unable to purchase a home,” said Phipps. “We cannot have a viable housing market and economic recovery until creditworthy borrowers are able to obtain mortgage financing.”

NAR also recommends extending the FHA and GSE mortgage loan limits, which are critical to providing liquidity in today’s housing market. Reverting to the statutory limits on October 1 would reduce limits in 669 counties and 42 states and territories – the average decline in loan limits will be more than $68,000.

NAR also firmly believes that National Flood Insurance Program is essential to a properly functioning real estate market, and urges Congress to pass a long-term reauthorization of the program before it is set to expire on September 30 for the tenth time in two years. The program ensures access to affordable flood insurance for millions of homeowners.

“We look forward to working with Congress and the administration to not only preserve, but also strengthen the American dream for future generations,” said Phipps

Demographic Shifts Are Changing What’s Considered Desirable in Homes

July 18, 2011 by Melissa Tracey · Leave a Comment
Filed under: Home Trends

By Melissa Dittmann Tracey, REALTOR Magazine

Married couples no longer hold the majority in households. In 1960, married couples made up 75 percent of total households. In 2010, that percentage has dropped to 48 percent, according to U.S. Census data.

Meanwhile, “family households”–which includes married couples with no children–has bloomed from 45.1 million in 1960 to 77.5 million in 2010. And non-family households (people living alone or households where no one is related) has soared–increasing nearly five times in the last 50 years–from 7.9 million in 1960 to 39.2 million in 2010.

“These significant demographic shifts create opportunities to design and sell homes to a growing group who cannot find what they want in the resale market because the resale market was primarily built for families,” according to a report by John Burns Real Estate Consulting.

So given the growth in non-family households, what do these potential home buyers desire? Here are some of the findings from John Burns Real Estate Consulting:


Smaller home size. Non-family households tend to want less space than a family household–opting for a home under 2,500 square feet. A recent survey also found that more than two-thirds of non-family households tend to want no more than three bedrooms in a home too.

Location is key. Non-family households want a good location near work, entertainment, and shops. In fact, they consider the location more important than the size of the home.

Nothing over-the-top. Non-family households are less likely to choose extra amenities like media rooms, community pools, and tot lots.

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