5 Housing Trends for this Fall - 2013

Home prices won’t climb as fast this fall as they had been rising. But sellers need not worry: This is still their market.

Still, this fall brings good news for homebuyers: They have been granted some extra time to grab low mortgage rates. Lenders now regard buyers as their golden customers. Even people who lost their homes to foreclosure or short sale may get a second chance to get a mortgage to buy a house again.

If you are still paying a higher interest rate on your mortgage, this is really your last chance to refinance.

For homeowners who have already refinanced but are thinking of cashing out some of that equity, think twice. But if you really want to cash out, home equity loans are making a comeback.

Here are five housing trends you should expect to see this fall.

Home prices chill

After a strong summer homebuying season, the housing market is likely to cool off in coming months.

That doesn’t mean buyers will no longer face competition when bidding on homes, or that prices will drop. But the end of warm weather, coupled with higher mortgage rates, will probably slow the housing frenzy, says Robert Dorsey, chief data analytics officer for FNC, a real estate valuation company.

“Price increases, which had been really robust, seem to be slowing down a little,” Dorsey says. “As we go into the fall and winter, there is a seasonal decrease in home sales. The economy has been stagnant and interest rates are increasing. I think there will be reduction in price increases and demand.”

This is good news for homebuyers. While the inventory of homes for sale remains tight, potential homebuyers will get a bit of extra time to find the home they want without the pressure of watching home prices shoot up.

Should you wait and see if prices eventually drop? No, Dorsey says.

“We may have a period of flat prices, but they will likely continue to go up,” he says. “I don’t think home prices in general are going to go down. Plus, you will likely get a lower interest rate today than in six months.”

Standards loosen up for buyers

As mortgage rates rise, lenders will no longer see homeowners lining up to refinance their mortgages. Their golden customers now are homebuyers, and they will do whatever it takes to attract as much business from homebuyers as possible.

Expect underwriting standards to loosen up in coming months as lenders turn their attention to buyers, says Anthony Sanders, professor of real estate and finance at George Mason University. Lenders also are likely to offer incentives and reduce loan fees to entice more buyers, Sanders adds.

“I think banks have gotten crushed because of the decline in refinancing,” Sanders says. “Now that the cash cow has been milked, they have to build up their pipelines for purchases.”

The average credit score for loans that closed in August has dropped to 734, according to data compiled by Ellie Mae, a mortgage technology firm. That’s the lowest average score since the company started tracking the data in August 2011. About 31 percent of the mortgages closed had a score below 700. A year ago, only 15 percent of the loans fell below that threshold.

But it remains to be seen how much the standards will be loosened, given the new mortgage regulations that go into effect next year.

Distressed buyers go after a second chance

A lot of people lost their homes to foreclosure or short sale in the last few years. If these people can show that a job loss, or reduction in income, was responsible for losing the home, they can apply sooner for an FHA-insured mortgage.

The FHA previously required a three-year wait after the foreclosure to apply for a new loan. The FHA now makes exceptions, shortening the wait time to one year for borrowers who lost their jobs or income, and whose credit was tainted as a result.

“It’s not one of those programs where everyone qualifies, but it’s a really good program for people who lost their jobs because of the economy,” says Scott Schang, manager for Broadview Mortgage Katella in Orange, Calif.

To qualify for the program, borrowers must present documentation showing they lost at least 20 percent of their income for six months and that they were able to get back on their feet and pay their bills on time for at least one year, he says.

“You absolutely have to have all your documentation, including unemployment benefit documents (and) bank statements showing the income loss,” he says.

There’s no shortage of buyers interested in the program, but they should make sure they really are financially prepared to own a home again before applying for the loan, says Ed Conarchy, mortgage planner for Cherry Creek Mortgage in Gurnee, Ill.

“Just because you can do something, it doesn’t mean you should,” he says.

Mortgage rates take a quick nap

After increasing by more than a percentage point over the summer, mortgage rates are likely to take a break this fall, as long as the Federal Reserve continues to cooperate with borrowers.

“This fall, I would see rates remaining fairly stable,” says Cameron Findlay, chief economist for Discover Home Loans in Orange County, Calif. “I don’t expect them to bounce out of the range of 4.3 (percent) to 4.8 (percent).”

But that could quickly change if the Federal Reserve cuts back on the $85 billion per month bond-purchasing stimulus program that has helped keep rates low for so long, Findlay says.

Mortgage rates spiked in May when the Fed said it planned on reducing the amount of purchases by the end of the year. Investors expected the Fed to trim the program after a September meeting, which would have caused rates to climb. But the Fed stuck with the stimulus program, giving borrowers some extra time.

Eventually, the Fed will slow the pace of purchases and rates will jump. This fall could be the last chance for buyers and refinancers to grab a low rate.

Homeowners cash out equity

Many homeowners have regained equity as home prices increased steadily this year. As these homeowners realize their gains, they may be tempted to cash out some of that equity to remodel their homes, pay for the kids’ college or pay off credit cards.

In the second quarter of this year alone, 2.5 million homes with a mortgage returned to positive equity, shows a recent report by CoreLogic.

Those who have enough equity have two common options to extract it: a cash-out refinance or a home equity loan. Since mortgage rates jumped over the summer, home equity loans have started to look more attractive to borrowers who don’t want to refinance with today’s rates.

Lenders also have been more willing to make home equity loans, now that prices are rising again.

One lender betting on the return of home equity loans is Discover Financial Services. The lender recently started offering home equity loans from $25,000 to $100,000 with rates fixed for up to 15 years.

Could we be heading back to the days when homeowners used their properties as cash machines?

Findlay says it’s unlikely, at least for now.

“This generation of consumers has learned that home prices can go up and they can go down,” he says.

All text by Polyana da Costa, Bankrate.com contributor

Who’s Side Are You On Anyway?

Who’s Side Are You On Anyway? Understanding Massachusetts Real Estate Agency & Designations

By Rich Vetstein on Oct 12, 2013 12:27 pm


Reviewing this blog, it occurred to me that I’ve never written about real estate agency and designations, which is one of the more confusing aspects of real estate law. I think all the new disclosures and regulations imposed by the Board of Real Estate, while well-intended, have made this area unnecessarily complicated. I’ll try to explain agency in plain English.
Massachusetts Mandatory Licensee Consumer Relationship Disclosure
The Massachusetts real estate brokerage industry is highly regulated by both state law and regulations, as well as local and national codes of ethics. Under state regulation, once you sit down with a Massachusetts real estate agent to discuss a specific property, the agent should give you a form called the Massachusetts Mandatory Licensee Consumer Relationship Disclosure. The disclosure form describes the five types of agency relationships between and among buyer, seller, and agent:
Seller’s Agent – This is typically known as a listing agent. The real estate agent represents only the seller, not the buyer. The listing agent owes the seller undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability. However, a listing agent must disclose all known material defects in the real estate to buyers.

Open Houses:  Open houses are often the cause of disputes as to agency and commissions. Under Mass. regulations, at any open house the listing agent must conspicuously post and/or provide written materials explaining to attendees the relationship they may have with the agent conducting the open house. If a buyer is working with an agent (but the agent is not present at the open house) it’s a good idea to write the name of the agent’s name and leave the agent’s card at the sign-in, otherwise the listing agent could be considered the procuring cause of the buyer which could cause a dispute down the road.

Buyer’s Agent – A buyer’s agent works for the buyer only. The agent owes the buyer undivided loyalty, reasonable care, disclosure, obedience to lawful instruction, confidentiality and accountability. Like a listing agent, a buyer’s agent must disclose any knownmaterial defects in the real estate. Some agents are exclusive buyer agent’s and do not take on listings. Some argue that the expertise of the market provided by a buyer’s agent provides a competitive advantage.
Designated Seller’s and Buyer’s Agent – This type of agency occurs when a listing agent refers an agent working in the same office to represent the buyer. So, two agents in the same office are representing both sides of the transaction. The happens a lot when an unrepresented buyer is introduced to the property at an open house, and the listing agent will refer the buyers to a fellow agent in her office. This is usually the smart and prudent choice to avoid the conflicts inherent in being a dual agent representing both buyer and seller, discussed below. Both buyer or seller must agree to a designated agent agency in writing. The designated agent owes her client the same duties and obligations discussed above.
Dual Agent – A dual agent represents both sides of the transaction — buyer and seller –but can be a risky proposition. The upside for the agent is that he or she keeps the entire commission, but the agency can be fraught with potential conflicts of interest. Dual agency is allowed only with the express and informed consent of both the seller and the buyer. Written consent to dual agency must be obtained by the real estate agent prior to the execution of an offer to purchase a specific property. A dual agent shall be neutral with regard to any conflicting interest of the seller and buyer.
Non-Agent Facilitator – This is the rarest of all agencies. When a real estate agent works as a facilitator that agent assists the seller and buyer in reaching an agreement but does not represent either the seller or buyer in the transaction.
What is a “broker” vs. a “salesperson”?  Under the Massachusetts regulations governing real estate agents, a real estate broker runs the real estate office and is the broker of record, overseeing the transactions of all salespersons (agents). A broker must complete 40 additional hours of education and must work for a broker for at least three (3) years before they can move on to licensure as brokers. A broker is responsible for accepting and escrowing all funds, such as a deposit placed on the purchase of a home, and for finalizing transactions. A real estate broker must supervise any transactions conducted by a salesperson.
A real estate salesperson is what most folks consider real estate agents. A salesperson must be affiliated with a broker, either as an employee or as an independent contractor, and work under the supervision of the broker. A salesperson can not operate his own real estate business.A salesperson also has no authority or control over escrow funds.
What Is A Realtor®? A Realtor is a real estate broker or salesperson who is a member of the National Association of Realtors and has agreed to conduct herself under the comprehensive NAR Code of Ethics. Not all real estate agents are Realtors. Membership in the NAR gives a Realtor full access to the entire Multiple Listing Service providing a national database of all sold and listed properties. Realtors can also file complaints against each other and the organization accepts complaints from consumers. Complaints can affect membership status and fines can be levied against agents who are found guilty of wrongdoing by a multi-member panel of their peers. The NAR does not have the ability to suspend a real estate licenses–that action can only be accomplished by the Mass. Board of Real Estate.
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Look At Your Windows - They're Paying Your Electric Bill!

I read House Beautiful - and always find something interesting in it, whether it'a about design or color (I'm an amateur artist) but this month's issue (October - see cover below) has an article titled Tech Support.  I was so amazed at what I read that I have to share it! (I'm going to type it as written in the magazine).

1. Save The Birds:  Every year, millions of birds fly into glass windows.  This patterned coating - visible to birds but not humans - prevents that.  All you'll see is clear class.  Ornilux Mikado coating, available through architects and contractors.  ornilux.com

Let's save the birds!

2. Power Windows: The next big thing in every? Coming soon: windows that double as solar generators! SolarWindows are sprayed with an electricity-generating coating that enables them to collect power from the sun and any fluorescent or LED lights inside.  newenergytechnologiesinc.com.

Amazing - right?

4. Fogging Up:  With this easily installed, Wi-Fi-enabled window film, you can use your smartphone to switch between see-through and opaque-but-translucent almost instantly.  Just measure the window, cut the electrostatic file to size, an stick it on the glass. Sonte Film, From $299 sonte.com

Who needs shades anymore?

5. Lockdown:  In collaboration with Honeywell, Andersen Windows is launching a system that lets homeowners know when windows or doors are unlocked.  Via sensors embedded in the company's E-Series/Eagle windows and doors, you can see a room-by-room list on your smartphone or tablet.  VeriLock, from $120 per wind or door.  andersenwindows.com

Maybe a bit much for where you live, but how about on your vacation home or Paris apartment?

7. Sunblock: 3M's Prestige window film allows in 40 to 70 percent of natural light, yet blocks up to 97 percent of infrared light, 99.9 percent of UV rays and 60 percent of heat.  It helps keep temperatures consistent from room to room and reduces glare on TV and computer screens.  3M Prestige Series window film, from $10 - $15 per square foot. 3m.com.

Never mind that it protects your carpets, furniture and artwork.

I hope you've been amazed as I have on what retail scientists are working on to make our lives a bit more comfortable and energy efficient.

Should I Wait for Interest Rates to Come Back Down?

Should I Wait for Interest Rates to Come Back Down?

Interesting Article on the Housing Finance Challenges

August 10, 2013 in the New York Times

The Housing Market Is Still Missing a Backbone

By GRETCHEN MORGENSON
IN a speech in Phoenix last Tuesday, President Obama finally entered the debate over the future of
United States housing policy. But his talking points offered few details about how to reduce the
government’s giant footprint in the mortgage market.
Mr. Obama vowed to keep mortgage costs affordable for first-time home buyers and working
families, pleasing those who think that the government should have a large role in this arena. His
call for investment in rental housing was a welcome change from past mantras that focused solely
on increasing homeownership across the country.
Playing to taxpayers who are angered by the government’s takeover of Fannie Mae and Freddie
Mac in 2008, Mr. Obama said he wanted to wind these companies down. That’s an important goal.
But as if to prove how hard this will be, both companies later in the week announced enormous
profits for the second quarter of this year, most of which go to the government in the form of
dividends. Together, the companies reported $15 billion in profits; with Treasury on the receiving
end of this lush income stream, it will be tempting to keep the mortgage finance giants in business.
Yet with the government backing or financing nine out of 10 residential mortgages today, it is
crucial to lure back private capital, with no government guarantees, to the home loan market. Mr.
Obama contended that “private lending should be the backbone” of the market, but he provided no
specifics on how to make that happen.
This is a huge, complex problem. In fact, there are many reasons for the reluctance of banks and
private investors to fund residential mortgages without government backing.
For starters, banks have grown accustomed to earning fees for making mortgages that they sell to
Fannie and Freddie. Generating fee income while placing the long-term credit or interest rate risk
on the government’s balance sheet is a win-win for the banks.
A coming shift by the Federal Reserve in its quantitative easing program may also be curbing
banks’ appetite for mortgage loans they keep on their own books. These institutions are hesitant to
make 30-year, fixed-rate loans before the Fed shifts its stance and rates climb. For a bank, the
value of such loans falls when rates rise. This process has already begun — rates on 30-year fixedrate
mortgages were 4.4 percent last week, up from 3.35 percent in early May. This is painful for
banks that actually hold older, lower-rate mortgages.
Private investors, like mutual funds and pension managers, aren’t hurrying back to the residential
mortgage market, either. Deep flaws remain in the mortgage securitization machine, and it needs
to be retooled before investors will begin buying these securities again.
Perhaps the largest problem for investors who might otherwise be willing to return to the mortgage
market is the lack of transparency in privately issued securities. Investors interested in mortgage
instruments are not allowed to analyze the loans going into these pools before they buy them.
The banks putting together the deals typically provide some data, like borrowers’ incomes and
credit scores, as well as whether the loans backed primary residences or second homes. But
investors don’t get access to actual loan files that can tell them what they need to know about the
quality and types of the mortgages packed inside the deals.
A CIVIL case filed by the Justice Department last week against Bank of America highlights the
downside of nondisclosure. In that matter, prosecutors accused the bank of misleading investors
when it sold them a mortgage security in early 2008. Although the bank contended in marketing
materials that the security contained prime loans that met its underwriting standards, more than
40 percent of those loans did not comply with those standards, prosecutors said.
Lawrence Grayson, a Bank of America spokesman, said the bank was fighting the case.
“These were prime mortgages sold to sophisticated investors who had ample access to the
underlying data and we will demonstrate that,” he said in a statement last week.
But the Justice Department contends that the bank failed to disclose important facts to investors
about the quality of the mortgages in the $850 million pool, which wound up performing badly. As
of June 2013, prosecutors said, 15.4 percent of those mortgages had defaulted, indicating that they
were of a far lower quality than advertised. The Justice Department estimates that investors will
lose more than $100 million on the deal.
Then there’s another issue. Investors are also unlikely to take an interest in mortgage securities
because serious conflicts of interest are still embedded in the process.
For example, in the aftermath of the crisis, investors learned that they could not rely on the trustee
banks charged with overseeing these loan pools to do their jobs. The trustees are supposed to make
sure that firms administering the loans treat investors fairly. These duties include taking in and
distributing payments as well as foreclosing on borrowers.
Even though the trustees are supposed to work for investors, these watchdogs are actually hired by
the big banks that not only package the mortgage securities but also provide administrative
services for them. So it was perhaps not surprising that the trustees failed to make the big banks
buy back loans that didn’t meet the quality standards set out when the securities were originally
sold. Such buybacks could have prevented billions in losses for investors, and the trustees’ inaction
indicated where their allegiances lay.
Yet another reason for investors around the country to steer clear of mortgage securities is the
recent action by Richmond, Calif., to seize underwater home loans and reduce the amount of debt
outstanding on the properties. Many of the loans that the city officials want to restructure are held
by mutual funds and pensions.
Pimco and BlackRock, two huge mortgage investors, are among those represented in a lawsuit filed
last week against Richmond, contending that such a plan would violate the contracts that investors
agreed to when they purchased the loans. And the Federal Housing Finance Agency, the overseer of
Fannie and Freddie, has concluded that Richmond’s action could threaten the safety and
soundness of the companies’ operations, harming taxpayers.
Mr. Obama’s views on the path forward for housing finance are welcome. But much work needs to
be done before private capital will come back to this market. Eliminating conflicts of interest and
increasing transparency in the securitization process will go a long way to achieving that end.

Open Houses this Weekend on the Island

We just listed two office suites in Vineyard Haven with views over the Lagoon.  I can tell you from experience that this view is very calming and a real plus to have in a small office environment where normally you might be looking at blank walls.  Each suite is available immediately and includes utilities.  There is a common kitchen, baths and a loading area.  The building was renovated in 2002 and the spaces have heat and air conditioning.  A short term lease is offered - up to 18 months.  Call for more details at 508-939-0206.