Cordray: QM Rule Should not Always Apply
Responding to what are perceived as carved-in-stone strictures, Consumer Financial Protection Bureau (CFPB) director Richard Cordray says regardless of the agency’s QM Rule with its highly-defined rules, lenders should feel safe originating loans that have exhibited strong performance over time, as nationalmortgagenews tells MHProNews. Noting community banks and credit unions have long made good loans, in a speech to the National Association of Realtors (NAR) he says, “Nothing about their traditional lending model has changed, and they should continue to offer such mortgages to borrowers whom they evaluate as posing reasonable credit risk—whether or not they meet the criteria to be classified as qualified mortgages.”
(image credit: andyenstallblog)
CNNMoney reports as home prices increase and inventories shrink, appraisers are valuing homes at or above their values, according to chief economist Lawrence Yun of the National Association of Realtors. A Seattle-based real estate agent says none of the appraisals for the homes he has sold this year have come in below the selling price. In some hot markets appraisals are above the selling price. As MHProNews has learned, in West Covina, Calif. an appraiser wrote up the appraisal at the purchase price. Agent Eric Tan says, “I was able to sell the client’s home for about $40,000 more than I thought the appraiser would value it.”
The number of Americans who own their homes fell to 65 percent in Q1, 2013, down from 65.4 percent the first quarter of 2012, and the lowest level since the third quarter of 1995. While it peaked at 69.2 percent in June 2004 because of easy credit, Paul Diggle of Capital Economics in London expects the rate to fall throughout 2013 as investors continue to take advantage of low interest rates, which pushes up prices and puts more rentals on the market. As BloombergBusinessweek tells MHProNews, the National Association of Realtors (NAR) reports the number of homes on the market fell 16.8 percent from a year earlier. While the Census Bureau says owner-occupied houses fell from 74.6 million Q1 2012 to 74.5 million this past quarter, renter-occupied homes increased to 40.1 million from 39.5 million a year ago. Overall, occupied residences rose one half million to 114.6 million Q1 2013 over Q1 2012.
MHProNews has learned from HousingWire the National Association of Realtors (NAR) says its pending home sales index (PHSI) rose 1.5 percent to 105.7 in March after sliding 0.4 percent in Feb., but the index is seven percent above the 98.8 reading in March 2012. The index is based on 2001 as the benchmark when the rating began, and equals the average level of contract activity at that time. Lawrence Yun, chief economist for NAR, predicts existing home sales will rise 6.5 to 7 percent this year, which approaches the five million mark. Regionally, the Northeast posted a PHSI rate 6.3 percent higher than March 2012, but unchanged from the previous month at 82.8. In the Midwest the number rose 0.3 percent from Feb. and 13.7 percent over last March. The South has the highest index of all at 120—it climbed 3.7 percent from Feb. to March of this year and is 13.7 percent better than March 2012. The West rose 1.5 percent March over Feb. 2013, but it is 4.3 percent lower than March 2012.
MHProNews has learned while many indicators continue to show improvement in the housing market, sales of existing homes nudged down 0.6 percent in March from Feb. to an annualized rate of 492,000, but rose 10.3 percent from last Feb. CNNMoney reports average time homes were on the market fell from 91 days a year ago to two months; and sales of distressed properties dropped to 21 percent of the market from 25 percent in Feb., and 29 percent one year ago. Meanwhile, the National Association of Realtors (NAR) reports the median sale price of a home in March rose six percent over Feb. and 11 percent from a year ago to $184,300. According to NAR’s President, Gary Thomas, “Multiple bidding is becoming more common, and more homes are selling above the asking price.”
Very much in line with what we have been hearing, CNNMoney tells MHProNews the National Association of Realtors reports the sale of existing homes reached a seasonally-adjusted annual rate (SAAR) of 4.98 million in February, ten percent above February 2012 but only slightly better than January 2013. It was the best month since November of 2009, but at that time the $5,000 tax credit was in place. February’s median sales price was $173,600, an increase of 12 percent from a year ago. The inventory of homes on the market rose for the first time since July, indicating people are taking advantage of the increase in home prices. Distressed home sales accounted for 25 percent of home sales in February, below the 34 percent recorded a year earlier. The improving market numbers result from the increase in employment, low interest rates, and the drop in foreclosures.
NationalMortgageNews reports with the mortgage industry complaining that the qualified mortgage (QM) rule issued by the Consumer Financial Protection Bureau (CFPB) will hinder hundreds of thousands of potential borrowers from obtaining a QM loan, HR Bill 1077 clears up the three percent cap on points and fees in the QM rule. The Consumer Mortgage Choice Act is being supported by the National Association of Realtors (NAR) and the Mortgage Bankers Association (MBA). Since points and fees on a QM cannot exceed three percent of the loan, QM loans are considered to be the least expensive and safest for borrowers. Before approving a loan, lenders have to make sure the borrower has the ability to repay it. As MHProNews has learned, low-income borrowers could suffer the most harm since it will be far less profitable to make smaller loans as opposed to larger ones.
HousingWire tells MHProNews the $85 billion sequestration cuts may affect several housing initiatives, including ones aimed at low-income households and individuals. The National Association of Realtors (NAR) says the Federal Housing Administration (FHA) admitted the time frames for FHA loans may be impacted; furloughs at the Dept. of Agriculture may delay rural housing service loans. In addition, the cuts may result in 75,000 fewer households receiving foreclosure counseling. Another 125,000 may lose Housing Choice Voucher (HCV) assistance which pays for their apartment, potentially making them homeless. Further, 100,000 others residing in emergency housing programs, formerly homeless people, including veterans, could be returned to the street. The Veteran’s Administration (VA) will not be affected.
Due to the low inventory of previously-owned homes, the National Association of Realtors (NAR) predicts existing home sales will reach five million this year, a 7.3 percent increase from last year, although total sales for the year will rise less than in 2012, as originationnews informs MHProNews. Tight inventories are shooting up prices. “We’re experiencing the strongest price growth in seven years,” says NAR’s Chief Economist Lawrence Yun. He says prices could go seven percent higher in 2013 as long as inventory remains tight. NAR’s pending sales index (PSI), which covers signed contracts, hit 105.9 in Jan., up from 101.3 in Dec. 2012.
CNNMoney reports the National Association of Realtors says previously-owned homes sold at an annual rate of 4.92 million in Jan., 2013,, a nine percent increase since last year at this time. Home prices climbed 12.3 percent to a median of $173,600, the largest percent gain in eight years. There was a four-month supply of homes on the market at current sales levels, 1.74 million of them, the leanest supply of homes available since 1999. Compared to Jan. of 2012, distressed home sales accounted for only 23 percent of sales in Jan. 2013, as opposed to 35 percent of sales a year ago. As MHProNews has learned, in Jan. builders applied for the most building permits in four years.
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