Friday, June 1, 2012

Distressed Homes Make Up a Quarter of Home Sales

About one in four home sales during the first quarter of this year was in some form of foreclosure, according to RealtyTrac. A growing number of those distressed sales were also from short sales, the newly released report shows. Distressed properties—either bank-owned, in default, or scheduled for auction—accounted for 26 percent of all residential sales during the first three months of this year, which is up 8 percent from the previous quarter, according to RealtyTrac.

 Short sales made up a bigger bulk of that number—12 percent of all home sales—and reached a three-year high during the first quarter of this year. The percentage of short sales rose 25 percent compared to a year earlier. Short sales in the first quarter sold for an average price of $175,461 (which is the lowest average ever recorded by RealtyTrac since 2005).

Meanwhile, foreclosures in the first quarter sold for an average of $161,214, which is 27 percent below the average price of a non-foreclosure, according to RealtyTrac. "Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions," says Brandon Moore, chief executive of RealtyTrac.

Source: “Foreclosures Made up 26% of U.S. Home Sales in First Quarter,” CNNMoney (May 31, 2012)

 Bayside Real Estate
Roslyn Heights Real Estate
New Hyde Park Real Estate

Distressed Homes Make Up a Quarter of Home Sales

About one in four home sales during the first quarter of this year was in some form of foreclosure, according to RealtyTrac. A growing number of those distressed sales were also from short sales, the newly released report shows.

 Distressed properties—either bank-owned, in default, or scheduled for auction—accounted for 26 percent of all residential sales during the first three months of this year, which is up 8 percent from the previous quarter, according to RealtyTrac. Short sales made up a bigger bulk of that number—12 percent of all home sales—and reached a three-year high during the first quarter of this year. The percentage of short sales rose 25 percent compared to a year earlier.

Short sales in the first quarter sold for an average price of $175,461 (which is the lowest average ever recorded by RealtyTrac since 2005). Meanwhile, foreclosures in the first quarter sold for an average of $161,214, which is 27 percent below the average price of a non-foreclosure, according to RealtyTrac. "Lenders are approving more aggressively priced short sales, which in turn is resulting in more successful short sale transactions," says Brandon Moore, chief executive of RealtyTrac.

 Source: “Foreclosures Made up 26% of U.S. Home Sales in First Quarter,” CNNMoney (May 31, 2012)

 Bayside Real Estate
 Roslyn Heights Real Estate
New Hyde Park Real Estate

The 'Walmart Effect' on Home Prices?

When a Walmart comes to town, critics have long argued that the big-box discount retailer has the potential to lower nearby home values. Researchers decided to test that theory to see if there really is a “Walmart Effect” when it comes to home values. What they found: Nearby Walmart stores can actually drive up home prices. Economists Devin Pope at University of Chicago and Jaren Pope at Brigham Young University analyzed more than 600,000 real estate transactions near 159 newly opened Walmart stores between 2001 and 2006 in their study. The researchers found that home owners located within a half mile of a new Walmart store saw their home prices increase anywhere from 2 percent to 3 percent, or an average of $7,000, in two-and-a-half years after a new Walmart store opened. Home owners located a half mile to one mile away also saw a boost, with home prices rising 1 percent to 2 percent or about $4,000. "It was not until after the announcement and during the building process that we see homes close to the Walmart start to increase in value relative to homes that are slightly further away," the researchers say. "This suggests that it was the building of the Walmart itself that caused the change in housing values that we find, and that our results are not simply explained by Walmart building in areas that are experiencing housing price increases." Critics, however, are quick to note that the study doesn’t take into account the effect on home prices with a new Walmart in rural areas. Also, some previous studies have shown that Walmart’s low prices can increase the number of nearby poverty-level households. Source: “When Walmart Comes to Town, Home Prices Go ...” CNNMoney (May 30, 2012)

REO Stigma Fades for Home Buyers, Survey Shows

The number of home buyers who say they are interested in purchasing a foreclosure has nearly tripled in the last two-and-a-half years, according to a new survey by What’s more, 92 percent of those buyers say they would use the foreclosures as their primary residence rather than using them as investments. "We see a combination of factors coming into play explaining the unexpected interest in foreclosures," says Steve Berkowitz, chief executive officer of "Reductions in supply, expectations that home prices will rise, and changing attitudes toward foreclosures are contributing to the increased demand, especially among owner-occupants. As lenders begin processing their distressed inventories and releasing them for sale at the local level, we look to them to move carefully and monitor conditions so recently gained home values aren't diminished." Nearly 65 percent of buyers say they’re likely to buy a foreclosure today compared to 25 percent who said that in October 2009, according to the survey. Many of these potential buyers say they expect a 10 percent to 30 percent discount when buying a foreclosed property, according to the survey. They also see greater potential for appreciation with a foreclosure purchase. Fifty-six percent of the possible foreclosure buyers surveyed said they expect their foreclosure purchase to appreciate about 10 percent within the next five years—or about 2 percent a year, according to the survey. "Foreclosures can present a new opportunity for buyers to become home owners, especially considering the discounted purchase prices and lower down payment requirements,” says Errol Samuelson,’s president. “This is especially true for owner-occupants interested in improving the property, and holding to it long enough to realize appreciation that can be carried over to future home purchases.” Source:

Congress Passes 60-Day Flood Insurance Extension

Congress passed and sent to President Obama a 60-day extension of the National Flood Insurance Program (NFIP) yesterday, which was set to expire today. The legislation gives lawmakers breathing room to look at a long-term extension and reform of the program, which NAR strongly supports. The program, which provides federal backing of flood insurance for some 5.6 million home owners in 21,000 communities around the country, has been subject to more than a dozen short-term reauthorizations similar to yesterday’s in the last four years. Since 2008, the program has lapsed twice, with one such lapse lasting almost two months in 2010. NAR estimates that some 1,300 transactions a day were stalled during that lapse, creating enormous economic dislocations for the communities in which the properties were located. NAR has estimated that 8 million homes, or about 10 percent of all homes in the country, are located in either the 100-year flood plain or other types of flood hazard areas. In testimony before the Senate Banking Committee earlier this month, NAR President Moe Veissi asked lawmakers to turn to long-term extension of the program as soon as possible. “All stopgap extensions do is maintain an uncertain status quo while shut downs risk homes, businesses, communities, and the U.S. economy,” he told the committee. NAR is urging lawmakers to reauthorize the program for five years and make reforms to increase the program’s efficiency. Among those reforms are changes to the appeals process for areas designated as flood hazards areas, streamlining and improving the review process for flood mapping, and making the pricing structure more accurate. More on flood insurance, NAR’s position, and President Veissi’s testimony is at REALTOR Magazine’s Speaking of Real Estate blog. By Rob Freedman, REALTOR® Magazine

Wednesday, May 30, 2012

Luxury Homes Fetching Multiple Bids

The housing recovery may be taking hold faster in luxury real estate. Several parts of the country are reporting bidding wars in wealthy pockets as buyers look to snag rising home prices and investors search for bargains. Property sales of $1 million and higher soared 7.2 percent in March compared to a year earlier, according to National Association of REALTORS®’ data. Paul Bishop, NAR’s vice president of research, told Bloomberg News that as the financial markets improve, demand for high-end homes is rising in the northeastern United States, such as in Boston and New York. Demand is also rising along the California coast and portions of the southern United States. "There's an added degree of confidence in the future and that prices are likely going to go up," says Joyce Rey, with Coldwell Banker Previews International in Beverly Hills. "There is a definite change in consumer attitude." Investors, looking to make a profit, are making purchases on high-end homes in many areas of the country in record numbers, with many of these speculative investors making cash-only deals. Still, many real estate professionals report the high-end bracket could be doing even better if the inventory of homes listed for sale wasn’t so tight. "We could have twice as many sales if we had more inventory," Syd Leibovitch, president of Rodeo Realty in Beverly Hills, told Bloomberg News. Source: “Luxury Homes are Selling for More than the Asking Prices in Many Parts of the Country,” Bloomberg News (May 27, 2012)

Celebrities Lose Their Star Power With Housing

Celebrities are increasingly finding that having a famous name doesn’t always help them sell real estate, even though those famous names may help them move movie or music tickets, perfumes, or other products. Several celebrities who have tried to sell their homes recently have had to reduce their asking prices or have found their big-priced homes linger on the market waiting for a buyer. In the last year, for example, actors like Goldie Hawn and Kurt Russell have had to reduce the asking price for their $11.2 million Malibu beach home by $3.5 million. Ozzy and Sharon Osbourne sold their Malibu home for 21 percent less than their original asking price at $7.9 million. Actress Meg Ryan has relisted her Bel Air mansion at $11.4 million, a 42 percent price reduction since she first listed it in 2008. "In the art world, there is this notion of provenance — that who owns something can detract or add to the value," says Elizabeth Currid-Halkett, author of Starstruck: The Business of Celebrity. "But it does not seem to translate to celebrity homes." However, celebrities do tend to draw extra attention for their for-sale homes. But real estate pros say that celebrities just shouldn’t equate that with a “sold” sign or a boost in sales price. “The value of a house has more to do with the individual stamp the person puts on the property, real estate experts say, than a famous autograph on the sales contract,” according to a recent Los Angeles Times article. Source: “Celebrity Sellers Have Little Effect on Home Prices," Los Angeles Times (May 19, 2012)

Retirees Struggle to Qualify for Mortgages

Retirees’ decreased monthly incomes may make it more difficult for them to meet the stricter underwriting standards that lenders have in place in order to qualify for a mortgage, according to an article in The Washington Post. Whether refinancing their current mortgage or applying for a new loan to purchase a home for the golden years, more retirees are saying they are increasingly facing roadblocks when it comes to applying for a mortgage. One 68-year-old home owner, with a net worth in the seven-figure range and an 826 credit score, said he was looking to refinance into today’s record low interest rates and that he was shocked when he was not approved to refinance his mortgage. He told The Washington Post that it was the first time he was rejected in 45 years of home ownership and after having eight different home loans through the years. The reason more retirees are being turned down: Insufficient income. If retirees are rejected by lenders for a loan, financial experts say: Don’t lose hope. They say that some loan officers aren’t aware of the various techniques for qualifying retirees who are “asset-rich but income-deficient,” according to The Washington Post. Even retirees whose income is lower during retirement should still be able to refinance or obtain a new mortgage as long as they have sufficient retirement assets, such as through their IRA or other retirement accounts, experts say. “You just need to shop around and deal with experienced loan officers who know the ropes and are willing to work with you for your business,” The Washington Post notes. Source: “Mortgage Rules Prove too Strict for Some Retirees,” The Washington Post (May 24, 2012)

Real Estate Agents Inch Up in Public Opinion

Real estate professionals rank higher than lawyers, business executives, and advertising practitioners when it comes to the public’s perceptions of honesty and ethics, according to a recent Gallup poll. In fact, real estate professionals received their highest rating yet in the poll, since Gallup began measuring Americans’ perceptions of honesty and ethics of 21 professions since 1976. In the survey, 20 percent of respondents gave real estate professionals a “very high to high” rating on honesty and ethics. Fifty-seven percent of the Americans surveyed rated them as “average” when it comes to honesty and ethics. Meanwhile, the profession that scored the lowest of the 21 professions ranked were members of Congress, in which only 7 percent of respondents rated them “very high to high” when it comes to ethics and honesty -- the lowest on record. The professions that scored the highest in honesty and ethics belonged to the medical profession, with nurses, pharmacists, and doctors -- who were all at the top of the list. Source: “Housing Prices Show Signs of Stability,” The Wall Street Journal (May 29, 2012) and “Record 64% Rate Honesty, Ethics of Members of Congress Low,” Gallup (Dec. 12, 2011)

Pending Home Sales Decline in April but Up Strongly From a Year Ago

Pending home sales retrenched in April following three consecutive monthly gains, but are notably higher than a year ago, according to the National Association of REALTORS®. The Pending Home Sales Index, a forward-looking indicator based on contract signings, declined 5.5 percent to 95.5 from a downwardly revised 101.1 in March but is 14.4 percent above April 2011 when it was 83.5. The data reflect contracts but not closings. Lawrence Yun, NAR chief economist, said a one-month setback in light of many months of gains does not change the fundamentally improving housing market conditions. “Home contract activity has been above year-ago levels now for 12 consecutive months. The housing recovery momentum continues,” he said. Yun notes home sales are staying well above the levels seen from 2008 through 2011. “Housing market activity has clearly broken out at notably higher levels and is on track to see the best performance since 2007,” he said. “All of the major housing market indicators are expected to trend gradually up, but a new federal budget must be passed before the end of the year for the economy to continue to move forward.” The PHSI in the Northeast rose 0.9 percent to 78.9 in April and is 19.9 percent higher than April 2011. In the Midwest the index slipped 0.3 percent to 93.0 but is 23.0 percent above a year ago. Pending home sales in the South fell 6.8 percent to an index of 105.7 in April but are 13.3 percent higher than April 2011. In the West the index dropped 12.0 percent in April to 94.9 but is 5.1 percent above a year ago. The housing forecast has been upgraded, with existing-home sales expected to reach 4.66 million this year, compared with 4.26 million in 2011. The outlook for 2013 is now 4.92 million, but could vary significantly depending on two scenarios. If lending returns to normal, the 2013 outlook for existing-home sales would measurably improve to 5.3 million. However, a fiscal cliff scenario of higher taxes and sharp spending cuts beginning in early 2013, which is an unlikely event but still worth noting, would lower the sales projection to 4.5 million. Because of measurably lower inventory supplies, the forecast for home prices has been upwardly revised with the median existing-home price projected to rise 2 to 3 percent this year and 4 to 5 percent in 2013, with wide local market variations. Miami and Phoenix will easily achieve double-digit price growth by year end. Yun said the price gains will measurably reduce the number of underwater homeowners. “For example, a 5 percent national price gain means the number of underwater home owners would fall to about 9 million from current estimates of around 11 million. A 10 percent gain, say over the next two years, would reduce the underwater status to about 7 million households out of 75 million owner-occupied homes,” he said. About 25 million homes are owned free and clear without a mortgage. Though the proportion of distressed properties is still high, the numbers have been falling over the past two years. “The diminishing share of distressed properties is another reason for higher home prices in upcoming months,” Yun added. Source: National Association of REALTORS®

Is Home Ownership Still the American Dream?

In the aftermath of the housing crisis, some analysts are questioning whether the public still considers home ownership to be part of the American dream. But the home ownership dream is still alive, according to several recent surveys. For example, a recently released survey by Woodrow Wilson Center found that the majority of Americans rated the importance of home ownership on a personal level at 10 out of 10. “I think for many people, [housing] is a fundamental piece of the American dream, the ability to even think about owning one’s own home,” says Michael Martin, a host with NPR. “And for most people [it’s] not owning only one home [but] owning a better home.” NPR has kicked off a series on home ownership and the American dream, and in its recently first segment that aired in the series experts talked about whether the dream of home ownership is still a dream. The foreclosure crisis and plummeting home prices has shaken some people’s perceptions of the dream of home ownership, the hosts acknowledged. Many young professionals are now putting home ownership on hold and opting to rent as they get their finances in shape. But “it's not giving up on home ownership as much as it's moving towards more of the way Germans think about home ownership, which is that a house is something you aspire to get eventually,” NPR's senior business editor, Marilyn Geewax, said on the NPR show. “It's sort of the reward you get after you've established yourself in your career. You don't start by buying a house and work your way up. You work your way up and then buy a house.” Geewax went on to explain the shift in the perception of home ownership: “In 2001, if you bought a house, it didn't matter what phase [of] life you were in. If you held onto it until 2005, you could flip it and make a profit. Today, home ownership is really returning more to that idea that a house is someplace where you settle down. You're looking for a stable neighborhood. You look at a house as a way to shelter your loved ones, your possessions, and your money. It's a pretty good place to sink your money. Instead of paying rent every month, you put it into the house and you can build equity over time. So if you look at it as shelter and a slow growing, long term investment, financial planners will tell you that owning a house can still make a lot of sense.” A recently released Coldwell Banker survey also revealed a shift in Americans’ perceptions of home ownership, from a financial perspective to a more emotional one. “Instead of taking things for granted, people are protective of their jobs, homes, and futures,” says Robi Ludwig, a psychologist in New York who was involved in the study. “And now that we’re picking up the pieces [after the financial crisis], we’re seeing a psychological shift. Instead of looking at homes through the eyes of an economist, we’re realizing that a home doesn’t solely equate to financial return or measure only to a mortgage amount. Instead the home is the emotional center of our lives, and it remains a critical component of who we are.” By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

Tuesday, May 29, 2012

Consumer Confidence Reaches Highest Level in 4 Years

Americans are more positive about the direction of the economy, as consumer confidence reached its highest level since October 2007, according to a Thomson Reuters/University of Michigan index on consumer sentiment. Americans are more positive about the job market and salary increases, and may be more willing to spend, the index showed. Half of the consumers in the index said the economy had improved in the last year. And more consumers reported plans to buy cars and household durables. Higher-income Americans are more optimistic about salary increases than lower-income Americans, according to the index. Americans with incomes greater than $75,000 predicted more salary increases with an average 2 percent boost in income by next year. However, Americans who make less than $75,000 only anticipate a 0.3 percent increase in salaries. “You’ve got a variety of forces working on consumer sentiment at this point. You’ve got obviously concerns about Europe, the economy in general, lower stock prices — all those are a negative,” Scott J. Brown, chief economist at Raymond James in St. Petersburg, Fla., told Reuters News. “But lower gasoline prices are a plus, so I think that’s probably part of the factor that you’ll see an increase in purchasing power if gasoline prices continue to move down.” Source: “May Consumer Sentiment Highest in More Than 4 Years,” Reuters (May 25, 2012)

Americans’ Perspective on Home Ownership Shifts

Home ownership is getting more emotional than it used to be. A new survey by Coldwell Banker Real Estate finds that Americans are increasingly saying that the real value of home ownership is emotional, not financial. That marks a stark contrast from Americans’ perspectives on home ownership during the housing boom, in which they mostly viewed it as a financial venture. “Instead of taking things for granted, people are protective of their jobs, homes, and futures,” says Robi Ludwig, a psychologist in New York who was involved in the study. “And now that we’re picking up the pieces [after the financial crisis], we’re seeing a psychological shift. Instead of looking at homes through the eyes of an economist, we’re realizing that a home doesn’t solely equate to financial return or measure only to a mortgage amount. Instead the home is the emotional center of our lives, and it remains a critical component of who we are.” The more emotional ties to home ownership are causing Americans to get more practical in their home buying, the survey finds. Eighty-six percent of those surveyed say that people should no longer stretch themselves financially just to get a bigger house. “Americans now recognize that they don’t need the biggest, most ornate home on the block,” Ludwig says. “Rather, they can and should live within their means.” Buyers today are more swayed by a home that they can easily afford and that reflects their personalities. Seventy-one percent of Americans surveyed said that a home is an expression of their identity. “Our homes help to define who we are, partly because we have to ask ourselves a lot of really honest questions, including what we want in life and why,” Ludwig says. She says that a home serves as an expression of peoples’ personalities, down to the wall colors they choose and the family photos they display. “It’s only been in the last few years that the conversation has shifted almost entirely to the financial aspect of home ownership,” says Jim Gillespie, CEO of Coldwell Banker Real Estate. Gillespie adds that a more emotional perspective on home ownership will make owning a house a more central of the American Dream once again and will aid in the housing recovery. The Coldwell Banker survey also found that 78 percent of owners say owning a home is one of their greatest life achievements. What’s more, 83 percent of renters say they plan to own a home one day. Source: Coldwell Banker and “The American Dream Gets Another Facelift,” Time Magazine (May 15, 2012)

Real Estate Outlook: April Existing-Home Sales Rise

The latest existing-home sales report from the National Association of Realtors (NAR) showed promising figures for the month of April. Sales rose by 3.4 percent, bringing the total amount of existing-home sales to 4.62 million. This is 10.0 healthy percentage points higher than April 2011. Lawrence Yun, NAR chief economist, said the housing recovery is underway. "It is no longer just the investors who are taking advantage of high affordability conditions. A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices," he said. He continued that "the general downtrend in both listed and shadow inventory has shifted from a buyers' market to one that is much more balanced, but in some areas it has become a seller's market." Home sales weren't the only figure on the rise in the latest report. Another indicator of a housing recovery made it's appearance. Home prices were also displaying upward movement in the month of April. The national median existing-home price rose 10.1 percent for the month, up 3.1 percent from last year. This brings the median price to $177,400. Regional prices varied, but all increased. The Northeast has the highest current median price-tag -- at $256,600. The West followed a close second at $221,700. The Midwest still holds the title for lowest median home price at $141,400. "This is the first time we've had back-to-back price increases from a year earlier since June and July of 2010 when the gains were less than one percent," Yun said. "For the year we're looking for a modest overall price gain of 1.0 to 2.0 percent, with stronger improvement in 2013." Home prices have been held down partially by the glut of distressed properties that flooded the market in years past, but Yun reports that these now make up a "diminishing share" of the market. The NAR reports that distressed homes made up 28 percent of April's total sales, down from 37 percent last year at this time. Healthy inventory levels will help keep a balance between supply and demand. Total housing inventory at the end of April rose by 9.5 percent, making for a 6.6 month supply. April 2011 saw a 9.1 month supply -- a record for unsold inventory according to the NAR. Inventory levels were 20.6 percent a year ago. Published: by Carla Hill May 28, 2012

Homebuyer Survey

One of the most useful research projects of the National Association of Realtors® (NAR) is the annual survey of homebuyers and sellers. The 2011 version (Profile of Home Buyers and Sellers 2011) became available in May of this year. The information is based on answers to a questionnaire mailed to a random sample of 80,099 consumers who purchased a home between July 2010 and June 2011. (Names and addresses were provided by Experian, a company that maintains an extensive database of recent homebuyers that is derived from county records.) There was a 7.3 percent response rate. In 2011, first-time homebuyers constituted 37 percent of the market. That is the lowest in five years, and a big drop from 50% in 2010 and 47% in 2009. The drop in first-time homebuyers was accompanied, not surprisingly, by an increase in the median age of homebuyers: from 39 years of age in 2010 to 45 in 2011. This statistical evidence gives support to the wide-spread Realtor® concern, reported here just last week, that overly-tight lending standards along with severe property restrictions by FHA are having the effect of keeping younger and entry-level buyers out of the market Certainly the most useful information for sellers and their agents is to be found in the section on the home search process. While the survey results are not significantly different from those of recent years, the trends continue. For example, this year 75 percent of buyers said that they used the internet frequently during the search process, about the same as 74% last year. In 2003 that number was 42%. Thirty-five percent of buyers went to the internet as the first step in the home search process. 21% contacted a real estate agent first, and 8% began by driving through neighborhoods looking for homes for sale. Buyers use multiple sources of information in the process of looking for a home. Far and away the most used sources are the internet (88%) and real estate agents (87%). What is the third most used information source? Yard signs (55%). Multiple Listing Service (MLS) websites were the primary source of information for buyers who used the internet in their search process. 56 percent of those buyers went to MLS sites. Of course, many went to a variety of different sites. 45 percent used Realtor®.com, 40% went to real estate company websites, and 46% went to sites hosted by individual agents. Aggregators such as Zillow, Homegain, and Yahoo were visited by 38% of buyers. Despite all the hoopla about using social networking sites such as Facebook and Twitter, only 2% of buyers used them as a source of information about available properties; and only 1% used video hosting sites such as YouTube. While there are a lot of intriguing data about the sources of information used by prospective homebuyers, certainly the most relevant has to do with where they actually found the home that they ultimately purchased. This year, for the first time, the information source that was highest in that category (40%) was the internet. In previous years it had been a real estate agent. Agents are a very close second at 35%. The differences in a decade are fascinating. In 2001, 48 percent of buyers learned about their home through a real estate agent, and only 8 percent found their home on the internet. The times they have changed. Some things, though, remain persistently the same – or close to it. In 2001, a yard sign was the third most likely source of information leading to the home that was purchased (15%). And this year? It is still the third leading source at 11%, the same as last year. Print media may not be dead, but it has shrunk to insignificance in this arena. In 2001, 7% of homebuyers found the home they ultimately purchased through a newspaper ad; in 2011, as in 2010, it was less than 2%. Fewer than 1% found their home through a home book or magazine. The 2011Profile of Home Buyers and Sellers shows what works. It is a valuable resource. Published: Realty Times : May 29, 2012

Volunteering Works Program Announces 2012 Winners

REALTORS® build communities in part by dedicating their time and resources to improving the lives of their neighbors as well as others across the country. Volunteering Works, an annual program that matches REALTORS® who work on small-scale charitable efforts with mentors and awards them seed money, helps REALTORS® expand their reach within their communities. The program recently announced this year’s recipients. The five winning REALTORS® will receive a $1,000 grant and a year of one-on-one mentoring from a member of the Good Neighbor Society, which is made up of past recipients of the annual REALTOR® Magazine Good Neighbor Award for volunteer service. This marks the fourth year the Volunteering Works program has recognized five REALTORS® for their charitable work. “The Volunteering Works program honors REALTORS® who recognize a need in their communities and are working hard to improve those communities,” said National Association of REALTORS® President Moe Veissi. “It is imperative that we give back to communities, as well as support those who dedicate so much of their lives to helping others.” The Volunteering Works recipients were selected based on their dedication to the community through volunteer work and the potential for their charitable work to be expanded or improved with the help of an expert mentor. 2011 Volunteering Works recipient Casey Stallone of Prudential Utah Elite Real Estate, in Orem, Utah, says the program benefitted her nonprofit, Our Legacy Vision. “My mentor, 2001 Good Neighbor Craig Conant, of Key Realty in Warrensberg, Mo., was unbelievably proactive, walking me through several fundraising ideas and most importantly, being a source of support and positivity through challenges,” said Stallone. "Volunteering Works enabled me to network with incredible individuals with a similar passion for living life in the service of others.” Stallone’s foundation provided nine single fathers and their children fully decorated Christmas trees last year. The 2012 recipients of the Volunteering Works grant and mentoring are: John C. Hallis, Keller Williams Select REALTORS®, Ellicott City, Md. Hallis coordinates his colleagues who volunteer for Keller Williams RED Day and Open Door Baltimore to help parents secure jobs, stock food banks, and renovate schools that serve 1,200 Baltimore children. His mentor will be 2011 Good Neighbor LeRoy J. Bendickson, Edina Realty, Edina, Minn., who raises money for the National Multiple Sclerosis Society, Minnesota Chapter. Hallis will look for guidance on obtaining 501(c)3 status, gaining access to financial grants, and finding other funding sources. To find out more about Open Door Baltimore visit Rick Jessen, ABR, SFR, Prudential Montana Real Estate, Missoula, Mont. Jessen started the charity Home Again to provide essentials like furniture, bedding and appliances to people who are moving from a transitional housing situation into permanent housing. His mentor is 2010 Good Neighbor David Philp, Coldwell Banker Burnet, Chaska, Minn., a master fundraiser for Ridgeview Medical Center. Jessen wants to learn to build a stronger network of volunteers and implement an effective fundraising strategy. To find out more about Home Again visit Wanda Klor, CIPS, CRS, GRI, SRES, Realty World Wanda Klor & Associates, San Jose, Calif. Klor founded Portera Celebration, an annual summer event that benefits four local charities—Second Harvest Food Bank, Career Closet, Community Health Partnership and Sacred Heart Community Services. Her mentor, 2010 Good Neighbor James T. Elcock, Elcock Properties, St. Charles, Mo., founded the Kids Against Hunger, Metro St. Charles/St. Louis satellite. Klor is seeking advice on becoming a 501(c)3 nonprofit, recruiting more volunteers, and implementing fundraising strategies. To find out more about Portera Celebration visit Penny O. Kovakas, GRI, Kovakas Realty, Inc., Westover, Ala. Kovakas renovated a home to use as a food pantry to serve the hungry in Shelby County, Ala. The Kovakas Food Pantry provides food and household essentials to over 45 families. Kovakas will work with her mentor, 2005 Good Neighbor Carole Sharp, a retired real estate practitioner who runs the Staunton Food Pantry in a small town outside St. Louis. Kovakas will seek advice from her mentor on new ways to reach out to contributors, gain public awareness, and improve fundraising. Jennifer D. Wiles, SFR, Real Estate Showcase, Wooster, Ohio Wiles is a founding member of the Golden Bear Brigade, which assists military members and their families through a support group, care packages, and events like homecomings and parades. She will work with her mentor, 2010 Good Neighbor Wendy Rocca, Keller Williams Realty, Newton Highlands, Mass., who cofounded Operation American Soldier, which sends care packages to thousands of soldiers overseas. Wiles will seek guidance on how to expand their organization, retain volunteers, upgrade the organization’s web site, and improve fundraising strategies. To find out more about Golden Bear Brigade visit Source: NAR

10 Metros Where List Prices Are Rising the Most

Prices of for-sale homes are on the rise in several metro areas. According to, which tracks 146 metro markets, the following areas have seen their median list prices increase the most from March to April: 1. Minneapolis-St. Paul, Minn.-Wis. Monthly median list price increase: 7.90 percetn Median list price: $199,500 2. Santa Barbara-Santa Maria-Lompoc, Calif. Monthly median list price increase: 7.07 percent Median list price: $545,000 3. Detroit Monthly median list price increase: 4.66 percent Median list price: $89,900 4. San Francisco Monthly median list price increase: 4.62 percent Median list price: $679,000 5. Seattle-Bellevue-Everett, Wash. Monthly median list price increase: 4.46 percent Median list price: $328,950 6. Boise City, Idaho Monthly median list price increase: 4.40 percent Median list price: $162,374 7. Trenton, N.J. Monthly median list price increase: 4.26 percent Median list price: $259,450 8. Boulder-Longmont, Colo. Monthly median list price increase: 4.20 percent Median list price: $375,000 9. Orange County, Calif. Monthly median list price increase: 4.19 percent Median list price: $448,000 10. Colorado Springs, Colo. Monthly median list price increase: 4.09 percent Median list price: $229,000 By Melissa Dittmann Tracey, REALTOR® Magazine Daily News

Short-Sale Process Expected to Speed Up in June

The short-sale process is expected to get shorter starting June 15. New guidelines issued under the Federal Housing Finance Agency will require Fannie Mae and Freddie Mac to give home buyers of short sales notice of their final decision within 60 days. The new guidelines also will require the mortgage giants to respond to initial short-sale requests within 30 days of receiving an offer from a potential buyer. The speedier process is expected to be a boost to the housing market, Michael McHugh, president of the Empire State Mortgage Bankers Association, told the New York Times. Home buyers and sellers often have to wait months before they receive a decision from a lender on an offer for a short sale. Some deals fall apart just from the long wait alone. Short sales have been increasing in recent months, as many lenders find them more appealing than foreclosures, which can be much more costly and take longer to remove from their books. Short sales now outpace foreclosure sales in many parts of the country. Short sales represent more than 14 percent of existing-home sales, according to CoreLogic housing data from March, the most recent month available. McHugh says that a faster short-sale process may be particularly helpful in speeding the recovery in judicial states, where foreclosures must go through the courts before they are approved. For example, in New York, judicial foreclosures can take a year or longer to be approved. Now short sales may be viewed by defaulting home owners as more of an option in avoiding foreclosure. “There should be a significant improvement in the turnaround,” McHugh said regarding housing markets with judicial foreclosure processes. Source: “Speeding Up Short Sales,” The New York Times (May 24, 2012)

RMBS Working Group Launches Website to Report Fraud

With the hope that whistleblowers will sound their horn, the Residential Mortgage-Backed Securities (RMBS) Working Group launched a website for insiders to report fraud, the Justice Department announced in a statement. “The RMBS website is a new call to those insiders who know about fraud that occurred in the RMBS market, who know it’s time to expose that fraud, and who want to help us hold accountable those individuals and institutions who broke the law in pursuit of bigger paydays,” said Acting Associate Attorney General Tony West. “Although the working group and its members have done a tremendous amount of investigative work already – including having issued more than 25 civil subpoenas – we know that hearing from insiders is particularly valuable. The RMBS Working Group was created in late January 2012 to investigate abuses and fraud in the RMBS market that only exacerbated the financial crises. While still a fairly new group, the unit has been criticized for its slow progress. In a Huffington Post article, Tracy Van Slyke wrote “there has been little to no significant progress to date. President Obama must put the full resources to hold Wall Street accountable. He must demonstrate to the American people that an aggressive, vigorous investigation into the banks is a priority for this administration.” According to the Justice Department, while group’s efforts are sensitive and must remain confidential, in general, the group continues to identify specific RMBS offerings for priority investigation through the use of forensic tools; analyze pending private RMBS lawsuits for connections to existing law enforcement investigations; and organize meetings among investigators, attorneys, analysts, and RMBS market experts and insiders. The department also announced the group’s appointment of a coordinating team, which includes Matthew Stegman, a career white-collar prosecutor, as the group’s coordinator. A collaborative effort, the group is led led by five co-chairs: Assistant AG for the Criminal Division Lanny Breuer, Acting Assistant AG for the Civil Division Stuart Delery, U.S. Attorney for the District of Colorado John Walsh, Director of Enforcement for the SEC Robert Khuzami, and New York AG Eric Schneiderman. The RMBS Working Group is meeting for two days from May 31 to June 1, 2012 so representatives from involved agencies can discuss investigations, identify new targets, and coordinate strategies. By: Esther Cho

Mortgage Rates Reverse Course Every Day This Week, But Stay Near Lows

Mortgage Rates continue to experience minor volatility near all-time lows, bouncing moderately LOWER today after moving HIGHER yesterday. Rates moved in a different direction every day this week! Today's moves didn't take rates to the lowest recent levels, but did slightly improve borrowing costs for the prevailing rates. The Best-Execution Rate for Conventional 30yr Fixed Loans remains at 3.75%, but closing costs would be slightly lower for that rate today vs yesterday (or the amount of lender credit would be higher, depending on your scenario). by Matthew Graham Mortgagenewsdaily

Majestic Brick Colonial For Sale In Beechhurst

Majestic Brick Colonial Situated On An 80X100 Lot.Features Double Story Entry With Handmade Grand Oak Staircase, Hardwood Floors Throughout, Custom Gourmet Cherrywood Kitchen With Top Of Line Appliances Wrap Around Balcony Overlooking Garden.Home Boasts Large Rooms Great For Entertaining. Master Suite With Jacuzzi And Shower,3 Additional Bedrooms And 2 Full Baths. Click Here For More Information or search MLS

Case-Shiller Home Prices Set New Post-Crisis Lows

Three measures of home prices issued monthly by S&P/Cash-Shiller declined yet again in March. The data released today showed that the national composite, the 10-City and 20-City housing price indices ended the first quarter of 2012 at new post-crisis lows. The national composite fell by 2.0 percent from the fourth quarter of 2011 and was down 1.9 percent compared to the first quarter of 2011. While the changes from a month earlier were minimal (less than 0.1 percent) the 10-city was down 2.8 percent from a year earlier and the 20-City lost 2.6 percent. At a press conference preceding the release, David M. Blitzer, Chairman of the S&P Index Committee said that flat monthly returns in March did indicate price stability and could be an indication of future gains. Robert Shiller, Professor of Economics, Yale University, said that the housing patterns we are seeing have lasted a long time. There are indications that we may be breaking out of the flat pricing trend, but previous attempts to do this have fizzled. Karl Case, Professor of Economics Emeritus at Wellesley College, said we don't have a lot of knowledge about how bubbles unwind but the first positive indicators appear to be volume data such as existing home prices, new home sales, housing starts, and affordability. These have all been up in recent months, but are still not great relative to history. Housing starts, in fact are still below what was a previous 30 year low. Case said other positives to look for are declining inventories, and distressed properties, improving demographics especially housing starts, and low vacancies. Countervailing forces would be tight credit, the shadow inventory, the overall economy and the wild card of the economy in Europe. Another factor which could negatively impact housing is the final outcome of current discussions about risk-based prices. Case said that if the government divorces itself from the risk, interest rates could rise by as much as 300 basis points. As regards demographics, Case said one key is household formation which is needed to absorb increases in housing stock. While household formation has been down, affected by falling immigration, the age distribution, and doubling up in housing, new census data shows that in the first quarter household formation rose by one million. However, during the same period rental households increased by 1.5 million which means that owner occupied households are disappearing; that homeowners are becoming renters at a rapid pace. Returning to the Indices, Blitzer said that while there have been improvements in some regions, housing prices have not turned. "This month's report saw all three composites and five cities hit new lows. However, with last month's report nine cities hit new lows. Further, about half as many cities, seven, experienced falling prices this month compared to 16 last time." Only three cities, Atlanta, Chicago, and Detroit saw annual rates of change grow worse in March. The other 17 cities and both composites improved the annual rate of change from February. In seven cities, Charlotte, Dallas, Denver, Detroit, Miami, Minneapolis, and Phoenix, the annual rates of change are now positive. As of the first quarter of 2012, average home prices across the U.S. are back at their mid-2001 levels and the 10 and 20-City composites have returned to levels in late 2001 and early 2003 respectively. by Jann Swanson mortgagenewsdaily

Homeowner's Advice: Spring Cleaning

If you haven't already started then now is prime time for Spring cleaning. The chills and frosts of Winter are a distant memory and this means you can comfortably get out in that yard, shed, or garage and do some real work! Where do you start, though? It can be an overwhelming task, especially if it's been years -- or never -- since you did a thorough Spring once-over. Our experts recommend that you begin with a solid game plan. Begin your planning with a comprehensive list. Go through each room and write down what needs to be done. Some rooms need a deep cleaning of the carpets while others simply need the clutter removed. One home may need the gutters cleaned and sidewalks repaired while another may just need flower beds weeded. Now that you have your list, it's time to prioritize. Some people like to start with the big projects or things they'd rather not do. This ensures these less fun tasks get done even if you lose motivation. Sometimes you need to prioritize by type of cleaning. You must declutter before you paint. Likewise, you must paint before you have your carpets cleaned. Start with one room and work your way through the house. Sort items into "things to store", "things to sell" and "things to trash." Get rid of old stuff at a garage sale. Donate what doesn't sell. Don't drag it back into your home. One you're organized and decluttered, you're ready to move onto the heftier projects, like painting and deep cleaning. Most any cleaning can be done yourself. If you have the funds, you can always hire a professional carpet cleaning service, maid service, or even window washer. If you don't have that extra cash laying around, it's time to roll up your sleeves and put some sweat equity into your home. Finally, don't forget about your yard and green spaces. Start from the top and work your way down. This means clean out your gutters, which will prevent roof rot. Trim your trees of any broken or dead branches. Then work on the lawn and beds. By working from the top down, you'll make sure that the pick-up step only has to be done once. It would be a shame to pick up the yard only to have a pile of limbs land in it again. Sack leaves and clippings and rake and haul away downed limbs and sticks after any trimming. The last step is to mulch around trees and in flower beds and to stage your seating areas. Add a pop of fresh color with some Springtime flowers. Petunias are a great addition to any patio or deck. Plus, they'll bloom all Summer long. Wash off any outdoor furniture and cushions and consider adding some indoor/outdoor touches like throws, pillows, and natural fiber rugs. Spring cleaning can be quite the chore, but you'll love reaping the benefits of an orderly home and yard for the year to come. Published: May 25, 2012 by Carla Hill

Job Expectations Raise Consumer Confidence in May

Consumer confidence is at a level that hasn’t been seen for years, according to the results of Thomson Reuters and the University of Michigan’s Survey of Consumers for May. Thomson Reuters and UM released the findings of the consumer survey, revealing that the consumer sentiment index improved to 79.3 percent in the month of May, an increase of 3.8 percent from April and 6.7 percent from May 2011. Consumer confidence has improved in each survey for the past nine months, but May’s level is the highest since October 2007. While falling gas prices helped calm worried consumers and restored confidence, the survey indicated that consumers were mostly encouraged by news of favorable employment trends despite the fact that the Labor Department recently reported a jobs slowdown. The survey also showed that fewer consumers reported of hearing about job losses in May than in any other monthly survey since mid-2007. It is speculated that continued growth in consumer confidence is going to depend largely on job growth. In the past three surveys, a majority of consumers reported an improved economy, and many more said they expected conditions will improve, if only a modest amount. Despite this optimism, 41 percent of consumers said they have faith in the government’s economic policies. Few consumers expressed any concern about the impact of the European debt crisis on the United States’ economy. Survey of Consumers chief economist Richard Curtin said that he expects these kinds of results to continue for a few more months. “The upbeat consumer reports on jobs could mean that more positive numbers will soon be reported by the government, or that consumers have yet again pushed their expectations beyond the likely performance of the economy,” Curtin said. “The most likely prospect is that job growth resumes at a modest pace and that confidence remains largely unchanged until after the November election and decisions about tax policy are made.” Views on buying conditions for household durables (such as cars or home appliances) were also very positive, with 63% of consumers expressing a positive attitude toward new purchases. This result, the highest percentage in more than a year, was achieved with the increased availability of discounts on items. More households with incomes of $75,000 or higher-those most likely to purchase new vehicles-held a favorable view of purchasing a vehicle than last month or last year. Yinbin Li, principal economist at IHS Global Insight, said that while the growth of consumer confidence is a positive thing, consumers aren’t out of the woods yet. “This is a good report,” Li said. “Consumer mood is slowly coming out of the ditch. However, there are still strong headwinds facing many American households such as rising student loan debt, a poor housing market, and weak wage growth.” By: Tory Barringer

White Paper Argues for AMCs to Pay Appraisers Full Fees

Competition can lead to low prices, but sometimes when prices get too low, someone ends up paying. This is an issue the appraisal industry is facing, where appraisal management companies (AMCs) compete for clients by lowering the cost of appraisals, leading to less compensation for the contracted appraisers. In a white paper, Jeff Schurman, executive director of Leading Causes and Rick Grant, president and CEO of RGA Public Relations, listed and explained 20 benefits for AMCs if they pay appraisers full fees. “One generally-held belief is that if the AMC doesn’t provide mortgage lenders cheap appraisals delivered fast, the other guy will. The other is that they must demand discounted appraisal fees to keep client fees low. Otherwise, clients won’t see the value added by the AMC industry,” the white paper stated, which focuses on the latter of the two beliefs. While it can be argued that appraisers need to simply stop accepting the low fees, the paper explained that appraisers know if they pass on the offer, another appraiser will accept it. “Therefore, they agree to work with AMCs and harbor resentment of the terms of the deal,” the paper stated. The first benefit for paying full fees to appraisers as stated in the white paper is paying full fees would remove 95 percent of the appraisal industry’s problem with AMCs and lead the appraiser to view AMCs as legitimate business partners. Another benefit of paying the full fee is it would increase the supply of appraisers. Currently, the industry is lacking new entrants and the average appraiser is now 50 years old. After all, the paper asks, why would a young person enter an industry to make what many say amounts to minimum wage? With organizations such as the Consumer Financial Protection Bureau seeking to identify industry problems, the paper said there have been signs that disgruntled appraisers are willing to cooperate with federal and state regulators to make the environment more difficult for AMCs to negotiate, and appraisers paid a full fee are less likely to be complicit. Even if 20 benefits can be found for AMCs to pay full fees, it is easier said then done. The paper explained it is hard to sell the full fee model due to reasons such as fear from AMCs of losing clients to competitors who stick to the old model and such standardization in the industry goes against the free market competitive system in which buyers and sellers have freedom to negotiate fees. Twenty benefits for AMCs Listed in the White Paper 1. Removes the single-largest barrier to acceptance of AMC as legitimate business partners. 2. Increases the supply of appraisers willing to work with AMCs. 3. Encourages new appraisers to enter the appraisal profession. 4. Leads to better control of appraisal quality. 5. Lowers costs for recruiting, quality control, and rework. 6. Enables AMCs to gain market share. 7. Provides AMCs rationale to charge lenders for the actual value the AMC brings to the transaction. 8. Enables AMCs to provide clients quantifiable means with which to compare AMC alternatives. 9. Reduces third-party risks described in numerous FFIEC Financial Institution Letters and agency guidelines. 10. Promotes less contentious treatment of AMCs. 11. Takes the subjective “customary and reasonable” fee requirement in the Dodd-Frank bill off the table. 12. Paves the way for nationalizing AMC regulation. 13. Provides clients better overall service quality. 14. Preempts external efforts of factions to force AMCs to pay up. 15. Is the most ethical thing to do in a fair and equitable society. 16. Allows for significantly improved vendor relations between the AMC and the appraiser. 17. Reduces the risk that disgruntled appraisers will draw the attention of federal regulators. 18. Provides joint marketing opportunities because appraisers will see the AMC as worth promoting. 19. Opens the door to a better borrower experience because the appraiser doesn’t enter the home angry. 20. Opens the door for joint publicity efforts because appraisers will feel like partners. By: Esther Cho

Zillow: Home Values See Highest Monthly Increase Since 2006

Zillow issued a released Friday reporting that both national home values and rents rose in the month of April. According to the April Zillow Real Estate Market Reports, national home values rose 0.7 percent in April to a Zillow Home Value Index of $147,300. This is the largest monthly increase in home values since January 2006, and it makes April the second month in a row in which home values climbed up. Zillow also reported that rents rose from March to April, increasing by 1.6 percent, according to the Zillow Rent Index. Of the 178 markets covered by Zillow, 78 percent experienced a rise in rents. The Miami-Fort Lauderdale and Phoenix metro areas saw the biggest increases in home values, rising 1.6 and 1.9 percent, respectively. Values continued to decrease in hard-hit markets like Atlanta, where home values fell 0.7 percent. “The housing market continues to show positive signs, with home values increasing significantly in April,” said Dr. Stan Humphries, chief economist at Zillow. “The recovery is moving in the right direction, but we caution that negative equity will cast a long shadow over the housing market. With almost one-third of homeowners with mortgages underwater and unable to sell their homes, inventory is having a hard time keeping up with increasing demand in many areas. We’ll continue to watch this signal as increasing home values turn from a blip into a trend.” Foreclosures also continued to decline in April, with 6.8 out of every 10,000 homes being foreclosed across the U.S. That figure was down from 8 out of every 10,000 in March. By: Tory Barringer

Sunday, May 27, 2012

Mortgage Applications Rise Again on Low Rates

Record low interest rates continue to pump up mortgage volume, as more borrowers try to take advantage. Mortgage applications increased 3.8 percent for the week ending May 18, the Mortgage Bankers Association reports. A boost in more home owners refinancing their mortgages was attributed to the rise last week. Refinance application activity increased 5.6 percent, reaching a nearly four-month high. Meanwhile, applications for home purchases dropped 3 percent in the week, the Mortgage Bankers Association reports. "Mortgage rates again dipped to new record lows in the survey, which spurred more borrowers back into the refinance market,” says Michael Fratantoni, MBA's vice president of research and economics. “As a result, applications for refinance loans have increased for the third straight week and are at the highest level since February of this year." Source: “Record low rates spur mortgage application filings,” HousingWire (May 23, 2012)

New-Home Sales Inch Up, Optimism Builds

Sales of new single-family homes in April continued to inch up, increasing optimism in the building industry that a recovery is finally taking hold. New-home sales rose 3.3 percent in April and were up 9.9 percent year-over-year, according to new Commerce Department housing data released Wednesday. The increase in April sales activity is in line with other important housing measures that have shown continued, gradual improvement from the first quarter as more consumers look to take advantage of today's low interest rates and affordable home prices," says Barry Rutenberg, chairman of the National Association of Home Builders. "In markets where demand is rising, we could be seeing a faster pace of recovery if not for persistently tight lending conditions that are slowing both the building and buying of new homes." New-home sales rose the most in the Midwest, by 28.2 percent in April, and by 27.5 percent in the West. The Northeast saw new-home sales rise by 7.7 percent in April, while the South posted a 10.6 percent decline last month. The inventory of new-homes remains historically low at a 5.1-month supply at the current sales pace. But housing experts say the record low inventories may prove an eventual boost for future housing prices. Home prices for new-homes are up nearly 5 percent compared to a year earlier, with the median price at $235,700 from April, the Commerce Department reported. In another optimistic sign at recovery for the housing market: The National Association of REALTORS® reported Tuesday that sales of existing homes also increased in April, rising 3.4 percent in April compared to March and increasing 10 percent year-over-year. Source: National Association of Home Builders and “New-Home Sales Amplify Optimism About Housing,” The Wall Street Journal (May 23, 2012)

Supreme Court Rules Fee Split Required for RESPA Violation

The U.S. Supreme Court decides in favor of the National Association of REALTORS'® position in a pivotal RESPA case. The following guidance on the case was provided by NAR's Legal Affairs: In a case involving mortgage lending but which has direct application to real estate brokerage, the Supreme Court of the United States has determined that a violation of Sec. 2607(b) of the Real Estate Settlement Procedures Act (“RESPA”) only occurs when a split of a settlement-service fee paid by a consumer to a real estate settlement-service provider is split with a third party. RESPA Sec. 2607(b) states that “[n]o person shall give and no person shall receive any portion, split, or percentage of any charge made or received for the rendering of a real estate settlement service [involving] a federally related mortgage loan.” “Real estate settlement services” are defined as covering all services connected to a real estate settlement, including real estate brokerage services. Three married couples (collectively, “Consumers”) received mortgage loans from Quicken Loans, Inc. (“Lender”). The Consumers filed three separate lawsuits against the Lender, alleging that the Lender had charged fees for which no services were provided and therefore the fees violated RESPA. One such charge was labeled a “loan processing fee,” while another charge was a “loan discount fee,” even though it was alleged the Lender had not provided a discount. The Consumers did not allege that the Lender had split any of these fees with a third party. The Lender argued that because it had not split its fees with any third parties there was no RESPA violation. The Consumers asserted that a 2001 policy statement issued by the United States Department of Housing and Urban Development (“HUD”) prohibited the collection of unearned fees for real estate settlement services and therefore any of the Lender’s charges where no services were provided violated RESPA. After the lawsuits were consolidated in federal court, the lower courts ruled in favor of the Lender and the Consumers appealed. The Court affirmed the rulings of the lower court, resolving a split among federal circuit courts of appeal. Previously, some circuits had required a fee split with a third party in order for there to be a Sec. 2607(b) violation, while others had followed the HUD policy statement and prohibited unearned fees, even when a settlement-service fee was not split with a third party. The Court rejected HUD’s policy statement and ruled that a Sec. 2607(b) violation requires the payment of a portion of a settlement-service fee by the party collecting the fee to a third party who performed no services in exchange for the fee. Looking at the plain language of Sec. 2607(b), the Court found that this section “unambiguously covers a settlement-service provider’s splitting a fee with one or more other persons; it cannot be understood to reach a single provider’s retention of an unearned fee.” Further, the Court stated that the language used by Congress in drafting Sec. 2607(b) describes two separate exchanges, where one party receives a settlement fee and then pays a portion of the fee to a third party. Without such payment to a third party, the Court determined that there is no violation of Sec. 2607(b). The Court found the Consumer’s arguments unpersuasive. First, the Court declined to defer to HUD’s RESPA policy statement because HUD’s interpretation was inconsistent with the plain language of the statute. The Court also rejected the argument that the consumers were the ones making the prohibited payments when they paid settlement service providers unearned fees, as Congress could not have intended to make consumers potentially criminally liable when it banned both the payment and acceptance of certain types of payments. Finally, the Court also stated that Sec. 2607(a) and Sec. 2607(b) contain separate prohibitions, rejecting the Consumers’ argument that the two sections must be read in conjunction with each other to ban unearned fees. Section 2607(a) broadly bans kickback arrangements in exchange for referrals of real estate settlement services, whereas Sec. 2607(b) covers arrangements dividing specific settlement service payments between two parties. Thus, the Court affirmed the rulings of the lower courts. NAR filed an amicus curiae brief, arguing that a violation of Sec. 2607(b) occurs only when a real estate settlement service provider pays a portion of a settlement service fee to a third party who performs no services in exchange for the fee. Freeman v. Quicken Loans, Inc., No. 10-1042 (U.S. May 24, 2012). What the Freeman decision means for real estate brokerages Suits alleging a violation of Section 8(b) of RESPA have been brought against real estate brokerages that charge consumers a flat fee in addition to a percentage-based commission. The first such suit, decided in 2009 in the case of Busby v. JRHBW Realty, Inc. d/b/a Realty South, sent shock waves through the brokerage community. In that case the court found that a fully disclosed administrative brokerage commission paid by a buyer violated Section 8(b) of RESPA because it was not sufficiently related to any specific service performed for the buyer’s benefit and could not be justified by the entire array of services provided to the buyer. In essence, the court found that a price increase violated RESPA merely because it was imposed as a flat fee added to a percentage-based commission as opposed to the brokerage simply charging a higher percentage-based commission. In spite of the fact that the ruling defied logic and was contrary to the language of the statute, other cases alleging the same violation soon followed, with equally troubling results. Today, in light of the unanimous Supreme Court ruling, such fees do not violate Section 8(b) of RESPA unless the broker who is paid the fee splits it and pays a portion of it to a third person outside of the brokerage firm who provides no services in exchange for the fee. Today’s decision has no impact on any state laws that prohibit charging an administrative fee. Likewise, the decision does not in any way alter RESPA’s prohibition against the payment by a broker of anything of value in return for the referral of business to the brokerage. Source: NAR