FHA to Reduce Annual Insurance Premiums on Most Mortgages

hudFHA’s reduction in premium rates is an appropriate measure to support the path to the American dream

By Jeff Sorg, OnlineEd Blog

(January 13, 2017) – As the nation’s housing market continues to improve, U.S. Housing and Urban Development Secretary Julián Castro announced the Federal Housing Administration (FHA) will reduce the annual premiums most borrowers will pay by a quarter of a percent.  FHA’s new premium rates are projected to save new FHA-insured homeowners an average of $500 this year.

FHA is reducing its annual mortgage insurance premium (MIP) by 25 basis points for most new mortgages with a closing/disbursement date on or after January 27, 2017.  For a full schedule of the new premium rates announced today, read FHA’s mortgagee letter.

This action reflects the fourth straight year of improved economic health of FHA’s Mutual Mortgage Insurance Fund (MMIF), which gained $44 billion in value since 2012.  Last year alone, an independent actuarial analysis found the MMI Fund’s capital ratio grew by $3.8 billion and now stands at 2.32 percent of all insurance in force—the second consecutive year since 2008 that FHA’s reserve ratio exceeded the statutorily required two percent threshold.

Secretary Castro said FHA’s action reflects today’s risk environment and comes at the right time for consumers who are facing higher credit costs as mortgage interest rates are increasing.

“After four straight years of growth and with sufficient reserves on hand to meet future claims, it’s time for FHA to pass along some modest savings to working families,” said Secretary Castro.  “This is a fiscally responsible measure to price our mortgage insurance in a way that protects our insurance fund while preserving the dream of homeownership for credit-qualified borrowers.”

Ed Golding, Principal Deputy Assistant Secretary for HUD’s Office of Housing added, “We’ve carefully weighed the risks associated with lower premiums with our historic mission to provide safe and sustainable mortgage financing to responsible homebuyers.  Homeownership is the way most middle-class Americans build wealth and achieve financial security for themselves and their families.  This conservative reduction in our premium rates is an appropriate measure to support them on their path to the American dream.”

In the wake of the nation’s housing crisis, FHA increased its premium prices numerous times to help stabilize the health of its MMI Fund.  Since 2010, FHA had raised annual premiums 150 percent which helped to restore capital reserves but significantly increased the cost of credit to qualified borrowers.  This step restores the annual premium to close to its pre-housing-crisis level.

This action is expected to lower the cost of housing for the approximately 1 million households who are expected to purchase a home or refinance their mortgages using FHA-insured financing in the coming year.

[Source: HUD press release]

 

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HUD’s mission is to create strong, sustainable, inclusive communities and quality affordable homes for all.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

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Categories: Mortgage, Real Estate Tags: , , ,

CFPB Orders TransUnion and Equifax to Pay $23.1 Million for Deceiving Consumers

“TransUnion and Equifax deceived consumers . . .”

By Jeff Sorg, OnlineEd Blog

(January 3, 2017) – The Consumer Financial Protection Bureau (CFPB) today took action against Equifax, Inc., TransUnion, and their subsidiaries for deceiving consumers about the usefulness and actual cost of credit scores they sold to consumers. The companies also lured consumers into costly recurring payments for credit-related products with false promises. The CFPB ordered TransUnion and Equifax to truthfully represent the value of the credit scores they provide and the cost of obtaining those credit scores and other services. Between them, TransUnion and Equifax must pay a total of more than $17.6 million in restitution to consumers, and fines totaling $5.5 million to the CFPB.

“TransUnion and Equifax deceived consumers about the usefulness of the credit scores they marketed, and lured consumers into expensive recurring payments with false promises,” said CFPB Director Richard Cordray. “Credit scores are central to a consumer’s financial life and people deserve honest and accurate information about them.”

Chicago-based TransUnion and Atlanta-based Equifax are two of the nation’s three largest credit reporting agencies. TransUnion and Equifax collect credit information, including a borrower’s payment history, debt load, maximum credit limits, names and addresses of current creditors, and other elements of their credit relationships. These generate credit reports and scores that are provided to businesses. Through their subsidiaries, TransUnion Interactive and Equifax Consumer Services, the companies also market, sell, or provide credit-related products directly to consumers, such as credit scores, credit reports, and credit monitoring.

Credit scores are numerical summaries designed to predict consumer payment behavior in using credit. Many lenders and other commercial users rely in part on these scores when deciding whether to extend credit. No single credit score or credit score model is used by every lender. Lenders use an array of credit scores, which vary by score provider and scoring model. The scores that TransUnion sells to consumers are based on a model from VantageScore Solutions, LLC. Although TransUnion has marketed VantageScores to lenders and other commercial users, VantageScores are not typically used for credit decisions. Scores Equifax sold to consumers were based on Equifax’s proprietary model, the Equifax Credit Score, which is an “educational” credit score that also is typically not used by lenders to make credit decisions.

TransUnion, since at least July 2011, and Equifax, between July 2011 and March 2014, violated the Dodd-Frank Wall Street Reform and Consumer Financial Protection Act by:

  • Deceiving consumers into enrolling in subscription programs: In their advertising, TransUnion and Equifax falsely claimed that their credit scores and credit-related products were free or, in the case of TransUnion, cost only “$1.” In reality, consumers who signed up received a free trial of seven or 30 days, after which they were automatically enrolled in a subscription program. Unless they cancelled during the trial period, consumers were charged a recurring fee – usually $16 or more per month. This billing structure, known as a “negative option,” was not clearly and conspicuously disclosed to consumers.

Equifax also violated the Fair Credit Reporting Act, which requires a credit reporting agency to provide a free credit report once every 12 months and to operate a central source – AnnualCreditReport.com – where consumers can get their report. Until January 2014, consumers getting their report through Equifax first had to view Equifax advertisements. This violates the Fair Credit Reporting Act, which prohibits such advertising until after consumers receive their report.

Enforcement Action
Under the Dodd-Frank Act, the CFPB is authorized to take action against institutions engaged in unfair, deceptive, or abusive acts or practices, or that otherwise violate federal consumer financial laws. Under the consent orders, TransUnion and Equifax must:

  • Pay more than $17.6 million in total restitution to harmed consumers: TransUnion must provide more than $13.9 million in restitution to affected consumers. Equifax must provide almost $3.8 million in restitution to affected consumers. The companies must send notification letters about the restitution to affected consumers.
  • Truthfully represent the usefulness of credit scores it sells: TransUnion and Equifax must clearly inform consumers about the nature of the scores they are selling to consumers.
  • Obtain the express informed consent of consumers: Before enrolling a consumer in any credit-related product with a negative option feature, TransUnion and Equifax must obtain the consumer’s consent.
  • Provide an easy way to cancel products and services: TransUnion and Equifax must give consumers a simple, easy-to-understand way to cancel the purchase of any credit-related product, and stop billing and collecting payments for any recurring charge when a consumer cancels.
  • Pay $5.5 million in total penalties: TransUnion must pay $3 million to the Bureau’s civil penalty fund. Equifax must pay $2.5 million to the Bureau’s civil penalty fund.

The full text of the CFPB’s Consent Order against Equifax is here:http://files.consumerfinance.gov/f/documents/201701_cfpb_Equifax-consent-order.pdf

The full text of the CFPB’s Consent Order against TransUnion is here:http://files.consumerfinance.gov/f/documents/201701_cfpb_Transunion-consent-order.pdf

More information about credit scores can be found here:http://www.consumerfinance.gov/about-us/blog/what-you-need-know-understanding-why-offers-your-credit-score-are-not-all-same/

[Source: CFPB Press Release]

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Categories: Real Estate Tags: ,

Los Angeles Housing Market is the Most Valuable Metro Area, Worth $2.5 Trillion

U.S. housing market regains value lost during the housing crisis

By Jeff Sorg, OnlineEd Blog

canstockphoto15953582-los-angeles(December 30, 2016) – Zillow® is reporting that the housing market saw a strong year of appreciation, growing 5.7 percent in value, or $1.6 trillion.

The U.S. housing market has regained all the value lost during the housing crisis. The cumulative value of all homes in the U.S. declined by $6.4 trillion between 2006 and 2012 as the housing market collapsed.

A home is typically the biggest part of an individual or family’s wealth, and the cumulative value of the U.S. residential housing stock is similarly significant to the national economy. The U.S. GDP is an estimated $18.7 trillioni, nearly $10 trillion less than the value of all homes in the country.

Los Angeles and New York metros hold the highest shares of the country’s overall housing value, at 8.6 percent and 8 percent, respectively. The next most valuable metro is San Francisco, worth 4.2 percent of the overall housing value.

While several markets are now more valuable than they were at the height of the housing bubble, about 60 percent of the markets in the U.S. are still below the maximum values reached during the bubble years. For example, Chicago is still about $134 billion below the highest value it reached in 2006.

“Housing is incredibly important to us personally and to the economy as a whole,” said Zillow Chief Economist Dr. Svenja Gudell. “The U.S. housing stock is worth more than ever, which is a sign of the ongoing housing recovery. As buying a home gets more expensive, affordability remains a concern for many, and these numbers highlight just how much people are spending on housing. The total value of the housing stock grew nearly 6 percent this year, a pace that will likely mean some American families are priced out of homeownership.”

Renters this year paid $478.5 billionii, a $17.7 billion increase from 2015. About 635,000 new renter households formed in 2016, contributing to the amount of rent spent even as rent appreciation slowed. Apartment renters spent nearly $50 billion more than renters of single-family homes, as more multifamily construction became available this year.

Renters in the New York/Northern New Jersey metro paid the most this year, spending nearly $55 billion on rent.

Metropolitan Area  Total Home Value, Year-End 2016 Total Rent Paid, Year-End 2016
United States  $29.6 trillion $478.5 billion
New York/Northern New Jersey  $2.4 trillion $54.6 billion
Los Angeles-Long Beach-Anaheim, CA  $2.5 trillion $38.6 billion
Chicago, IL  $772.7 billion $14.9 billion
Dallas-Fort Worth, TX  $456.9 billion $11.1 billion
Philadelphia, PA  $589.2 billion $8.5 billion
Houston, TX  $373.2 billion $10.5 billion
Washington, DC  $975.1 billion $14.4 billion
Miami-Fort Lauderdale, FL  $818.8 billion $12.3 billion
Atlanta, GA  $413.6 billion $8.4 billion
Boston, MA  $672.7 billion $10.3 billion
San Francisco, CA  $1.3 trillion $15.8 billion
Detroit, MI  $288.7 billion $4.9 billion
Riverside, CA  $440 billion $7.2 billion
Phoenix, AZ  $441.5 billion $7.1 billion
Seattle, WA  $571.4 billion $8.8 billion
Minneapolis-St Paul, MN  $332.5 billion $5.1 billion
San Diego, CA  $596 billion $9.6 billion
St. Louis, MO  $192 billion $3 billion
Tampa, FL  $254.7 billion $5 billion
Baltimore, MD  $287.9 billion $4.3 billion
Denver, CO  $377.5 billion $5.8 billion
Pittsburgh, PA  $148 billion $2.3 billion
Portland, OR  $286.6 billion $4.5 billion
Charlotte, NC  $186.1 billion $3.2 billion
Sacramento, CA  $269.4 billion $4.4 billion
San Antonio, TX  $116.4 billion $3 billion
Orlando, FL  $187.5 billion $3.8 billion
Cincinnati, OH  $128.6 billion $2.4 billion
Cleveland, OH  $116.8 billion $2.3 billion
Kansas City, MO  $129.7 billion $2.7 billion
Las Vegas, NV  $175.9 billion $4 billion
Columbus, OH  $132.9 billion $2.7 billion
Indianapolis, IN  $111.7 billion $2.4 billion
San Jose, CA  $636.2 billion $6.3 billion
Austin, TX  $161.4 billion N/A

[Source: Zillow]

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Zillow is a registered trademark of Zillow, Inc.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit  www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Advertising Guidelines for Oregon Real Estate Brokers

Oregon’s definition of advertising by real estate licensees includes all forms of promotion and solicitation

By Jeff Sorg, OnlineEd Blog

canstockphoto8435391-social-media-phone(December 29, 2016) –  Oregon’s definition of advertising by real estate licensees includes all forms of promotion and solicitation distributed in any manner and by any means for any purpose related to all professional real estate activity. This definition includes advertising by mail; telephone, cellular telephone, robocalling or telephonic advertising; the Internet, E-mail, electronic bulletin board, social media and other similar electronic systems; and business cards, signs, lawn signs, and billboards. Here are some important points to remember when advertising:

  • Don’t lead the public to believe that you have a level of expertise greater than you actually have.
  • Don’t claim or imply a license status other than the one you hold.
  • Design all advertising to be truthful and not be misleading.
  • Get the written permission of the property owner before advertising that owner’s property.
  • Include your license type in your advertising.
  • When using your name in advertising, be sure to prominently include the registered business name of your principal broker or property manager.
  • Submit all proposed advertising to your principal broker for review and approval before publication.
  • Keep a record of your principal broker’s approval of your advertising so it can be made available to the Oregon Real Estate Agency if requested. The burden of keeping advertising records and proving compliance is with the licensee.
  • When advertising personally owned real estate, disclose that you are a licensee.
  • Make certain the first page of your electronic communications includes your licensed name, your principal broker’s licensed or registered business name, and a statement that you are an Oregon real estate licensee. As long as the first e-mail communication includes the necessary disclosure relating to your status and identifies your principal broker, subsequent email communications are exempt from this rule.
  • Team advertising is permitted so long as the team name used does not constitute an unlawful use of a trade name or is too similar to another name by which another person is legally authorized to do business. The team or group must include at least one licensee, and all licensed members of the team must be associated with the same principal broker.
  • Do not guarantee future profits in any advertising.

NOTE: Sponsored links on a search engine are not considered advertising and are exempt from these rules because the search link is outside of the control of the licensee.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Deutsche Bank Agrees to Pay $7.2 Billion for RMBS and Related Activities

Deutsche Bank to pay $7.4 billion for residential mortgage-backed securities and related activities.

By Jeff Sorg, OnlineEd Blog

canstockphoto16214036-gold-bars(December 27, 2016) – Deutsche Bank announced December 23rd that it had reached a settlement in principle with the Department of Justice in the United States regarding civil claims that the DoJ considered in connection with the bank’s issuance and underwriting of residential mortgage-backed securities (RMBS) and related securitization activities between 2005 and 2007. Under the terms of the settlement agreement, Deutsche Bank agreed to pay a civil monetary penalty of US dollar 3.1 billion and to provide US dollar 4.1 billion in consumer relief in the United States. The consumer relief is expected to be primarily in the form of loan modifications and other assistance to homeowners and borrowers, and other similar initiatives to be determined, and delivered over a period of at least five years.

The settlement is subject to the negotiation of definitive documentation, and there can be no assurance that the U.S. Department of Justice and the bank will agree on the final documentation.

[Source: Deutsche Bank]

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Home Values Appreciated at Their Fastest Annual Pace Since August 2006

Portland home values rose 14 percent to a median value of $351,800

By Jeff Sorg, OnlineEd Blog

housing graph 3(December 23, 2016) –  In November, national home values rose at their fastest annual pace since 2006, near the peak of the housing bubble. The Zillow® Home Value Index (ZHVI) is $192,500, 2 percent shy of the records set in 2007, according to the November Zillow Real Estate Market Reportsii.

Rents, which were the big story of 2016 as they rose at a record pace, have slowed considerably to a 1.5 percent annual appreciation rate; this rate is expected to continue into 2017. The median monthly rent payment in the U.S. is now $1,403.

Home values were 6.5 percent higher this November than last. Strong growth is especially evident in a handful of new powerhouse markets, including Seattle, Denver, Portland and Dallas, whose strong job markets attracted new home buyers over the last year.

At their fastest pace, home values across the country were appreciating about 11 percent year-over-year. When the bubble burst, home values plummeted, falling 7.4 percent year-over-year during the depths of the crisis, and then began a steady recovery in 2012.

“Home value growth continues to be strong, supported by solid buyer demand and still limited for-sale inventory in many markets across the country,” said Zillow Chief Economist Dr. Svenja Gudell. “Conditions today are very different than the ones we saw back in 2006, which was the last time we saw home values rising this fast. Rampant real estate speculation and loose mortgage credit have been replaced by the sound economic fundamentals we are seeing now.”

Portland, Seattle, and Dallas reported the highest year-over-year home value appreciation among the 35 largest U.S. metros. Portland home values rose 14 percent to a median value of $351,800. Both Seattle and Dallas home values rose 12 percent since last November.

Seattle reported the fastest rent appreciation of the 35 largest U.S. metros for the sixth month in a row, up almost 9 percent annually. Portland and Sacramento follow Seattle, with rents up about 7 percent.

Inventory remains an issue for home buyers across the country. There are 6 percent fewer homes to choose from than a year ago, with Boston, Indianapolis and Kansas City reporting the greatest drop. In Boston, there are 26 percent fewer homes to choose from than a year ago, and 21 percent fewer in Indianapolis and Kansas City.

Metropolitan
Area

Zillow
Home Value
Index (ZHVI)

Year-over-
Year ZHVI
Change

Zillow Rent
Index (ZRI)

Year-over-
Year ZRI
Change

Year-over-Year
Inventory
Change

United States

$    192,500

6.5%

$                 1,403

1.5%

-5.9%

New York, NY

$    400,500

6.0%

$                 2,389

0.5%

-10.4%

Los Angeles-Long Beach-Anaheim, CA

$    590,000

6.3%

$                 2,616

5.2%

-7.1%

Chicago, IL

$    203,400

5.0%

$                 1,637

-0.1%

-10.2%

Dallas-Fort Worth, TX

$    200,400

12.0%

$                 1,556

4.0%

-13.9%

Philadelphia, PA

$    213,800

4.1%

$                 1,574

1.0%

-12.3%

Houston, TX

$    176,000

7.0%

$                 1,562

-1.1%

0.6%

Washington, DC

$    378,000

2.9%

$                 2,123

0.6%

-18.8%

Miami-Fort Lauderdale, FL

$    245,200

8.8%

$                 1,879

3.1%

11.8%

Atlanta, GA

$    172,300

7.5%

$                 1,329

4.3%

-5.7%

Boston, MA

$    408,400

6.1%

$                 2,322

3.5%

-25.5%

San Francisco, CA

$    824,600

4.9%

$                 3,385

1.8%

-5.0%

Detroit, MI

$    134,400

9.4%

$                 1,169

3.2%

-17.2%

Riverside, CA

$    318,200

6.7%

$                 1,742

3.1%

-8.1%

Phoenix, AZ

$    228,900

6.9%

$                 1,301

4.1%

-1.4%

Seattle, WA

$    412,600

12.2%

$                 2,095

8.8%

-6.5%

Minneapolis-St Paul, MN

$    235,000

6.6%

$                 1,552

3.3%

-18.2%

San Diego, CA

$    526,500

6.1%

$                 2,436

5.2%

2.8%

St. Louis, MO

$    147,800

6.8%

$                 1,123

0.1%

-14.5%

Tampa, FL

$    177,200

11.2%

$                 1,336

3.2%

-10.7%

Baltimore, MD

$    256,600

3.6%

$                 1,729

0.7%

-16.0%

Denver, CO

$    352,800

9.7%

$                 2,006

2.8%

4.0%

Pittsburgh, PA

$    133,400

4.8%

$                 1,081

-1.4%

0.3%

Portland, OR

$    351,800

14.1%

$                 1,802

7.1%

-3.6%

Charlotte, NC

$    166,600

7.1%

$                 1,244

1.8%

-10.4%

Sacramento, CA

$    350,200

7.5%

$                 1,707

6.8%

-6.3%

San Antonio, TX

$    156,200

6.5%

$                 1,324

1.6%

12.8%

Orlando, FL

$    198,100

9.9%

$                 1,383

3.1%

-11.1%

Cincinnati, OH

$    147,800

5.6%

$                 1,243

1.5%

-16.3%

Cleveland, OH

$    130,600

5.2%

$                 1,145

1.6%

-10.8%

Kansas City, MO

$    151,900

5.9%

$                 1,241

3.8%

-20.5%

Las Vegas, NV

$    213,700

9.6%

$                 1,243

2.4%

26.0%

Columbus, OH

$    160,400

3.9%

$                 1,293

1.7%

-18.9%

Indianapolis, IN

$    133,600

1.5%

$                 1,188

0.3%

-20.7%

San Jose, CA

$    961,600

4.3%

$                 3,486

1.9%

-14.4%

Austin, TX

$    259,800

8.4%

$                 1,701

0.9%

11.9%

Zillow

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Zillow and Zestimate are registered trademarks of Zillow, Inc.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

CFPB Takes Action Against Reverse Mortgage Lenders

The CFPB has long warned against deceptive reverse mortgage advertising

By Jeff Sorg, OnlineEd Blog

stack of 100 dollar bills(December 7, 2016) –  Today the Consumer Financial Protection Bureau (CFPB) took action against three reverse mortgage companies for deceptive advertisements, including claiming that consumers could not lose their homes. The CFPB is ordering American Advisors Group, Reverse Mortgage Solutions, and Aegean Financial to cease deceptive advertising practices, implement systems to ensure they are complying with all laws, and pay penalties.

“These companies tricked consumers into believing they could not lose their homes with a reverse mortgage,” said CFPB Director Richard Cordray. “All mortgage brokers and lenders need to abide by federal advertising disclosure requirements in promoting their products.”

A reverse mortgage is a special type of home loan that allows homeowners who are 62 or older to access the equity they have built up in their homes and defer payment of the loan until they pass away, sell, or move out. The loan proceeds are generally provided to the borrowers as lump-sum payments, monthly payments, or as lines of credit. Homeowners remain responsible for payment of taxes, insurance and home maintenance, among other obligations.

The Mortgage Acts and Practices Advertising Rule prohibits misleading claims in mortgage advertising. In addition, the Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits institutions from engaging in deceptive acts or practices, including with regard to advertising of consumer financial products or services.

American Advisors Group – American Advisors Group, headquartered in Orange, Calif., is licensed in 49 states and the District of Columbia. It is the largest reverse mortgage lender in the United States. The company ran television advertisements almost daily and disseminated its information kit to approximately 1 million consumers. The information kit included a DVD and several brochures with information about reverse mortgage products.

Through its investigation, the CFPB found that since January 2012 American Advisors Group’s advertisements misrepresented that consumers could not lose their home and that they would have the right to stay in their home for the rest of their lives. The company also falsely told potential customers that they would have no monthly payments and that with a reverse mortgage they would be able to pay off all debts. In fact, consumers with a reverse mortgage still have payments and can default and lose their home if they fail to comply with the loan terms. These terms require, among other things, paying property taxes, making homeowner’s insurance payments, and paying for property maintenance. Moreover, a reverse mortgage is a debt and therefore cannot be used to eliminate all of a consumer’s debt.

Under the terms of today’s consent order, the company must make clear and prominent disclosures in its reverse mortgage advertisements and implement a system to ensure it is following all laws. It will also pay a civil penalty of $400,000.

Reverse Mortgage Solutions – Reverse Mortgage Solutions, headquartered in Houston, Texas, is licensed to conduct business in 48 states. The company marketed its product through various media, including television, radio, print, direct mail, and the Internet.

Through its investigation, the CFPB found that since January 2012 Reverse Mortgage Solutions’ advertisements misrepresented that consumers could not lose their home and that they would have the right to stay in their home for the rest of their lives. The company also falsely told potential customers that they would have no payments with a reverse mortgage and that they would “always retain ownership” and “can’t be forced to leave.” In fact, consumers with a reverse mortgage still have payments and can default and lose their home if they fail to comply with the loan terms. These terms require, among other things, paying property taxes, making homeowner’s insurance payments, and paying for property maintenance.

The CFPB also alleges that the company misrepresented that heirs would inherit the home, without disclosing any conditions of the inheritance. In fact, heirs frequently are not able to keep the home after the death of a consumer with a reverse mortgage. Heirs are only allowed to retain ownership of the home after the consumer’s death if they either repay the reverse mortgage or pay 95 percent of the assessed value of the home.

The company also created a false sense of urgency to buy the reverse mortgage product and misrepresented that time limits constrained the availability of a reverse mortgage. For example, one call script required representatives to tell potential customers that if they didn’t call back by close of business, they would “turn your file down and you will miss out on a tremendous money-saving opportunity.” In fact, it was not a limited time offer. Lastly, the company misrepresented that a reverse mortgage could “eliminate debt.” In fact, a reverse mortgage is a debt and therefore cannot be used to eliminate all of a consumer’s debt.

Under the terms of today’s consent order, the company must make clear and prominent disclosures in its reverse mortgage advertisements and implement a system to ensure it is following all laws. It will also pay a civil penalty of $325,000.

Aegean Financial – Aegean Financial, headquartered in El Segundo, Calif., is licensed to conduct business in California, Louisiana, Oregon, Texas, and Washington. The company also operates under multiple names in the jurisdictions in which it is licensed. Under the name Jubilados Financial, the company advertises reverse mortgages to Spanish-speaking consumers in California. Under the name Reverse Mortgage Professionals, the company advertises reverse mortgages in California, Oregon, Washington, and Texas. Aegean Financial markets its product across various media, including print, direct mail, radio, and the Internet.

Through its investigation, the CFPB found that since 2012, Aegean Financial’s advertisements misrepresented that consumers could not lose their home and that they would have the right to stay in their home for the rest of their lives. The reverse mortgage broker also falsely told potential customers that they would have no payments with a reverse mortgage and claimed that consumers would not be subject to costs associated with refinancing a reverse mortgage. In fact, consumers who refinance reverse mortgages do incur costs, including credit report fees, flood certification fees, title insurance costs, appraisal costs, and other closing costs. And consumers with a reverse mortgage still have payments and can default and lose their home if they fail to comply with the loan terms. These terms require, among other things, paying property taxes, making homeowner’s insurance payments, and paying for property maintenance.

The CFPB also alleges that the company falsely affiliated itself with the government in its Spanish-language advertisements. For example, one advertisement said, “if you are 62 years old or older and you own a house, we have good news for you; you qualify for a reverse mortgage from the United States Housing Department.” In fact, although the Department of Housing and Urban Development provides insurance for the most popular type of reverse mortgage, a reverse mortgage is not a government benefit or a loan from the government. Nor is the product endorsed or sponsored by the government. The disclosures associated with Aegean Financial’s advertisements were in small type or rapidly recited at the end of commercials. The CFPB also alleges that the company failed to keep records of its advertisements as required by law.

Under the terms of today’s consent order, the company cannot imply affiliation with the government, must make clear and prominent disclosures in its reverse mortgage advertisements, implement a system to ensure it is following all laws, and maintain complete and accurate records. It will also pay a civil penalty of $65,000.

A copy of the American Advisors Group consent order can be found at:http://files.consumerfinance.gov/f/documents/201612_cfpb_AmericanAdvisorsGroup-consentorder.pdf

A copy of the Reverse Mortgage Solutions consent order can be found at:http://files.consumerfinance.gov/f/documents/201612_cfpb_ReverseMortgageSolutions-consentorder.pdf

A copy of the Aegean Financial consent order can be found at:http://files.consumerfinance.gov/f/documents/201612_cfpb_AegeanFinancial-consentorder.pdf

The CFPB has long warned of the dangers associated with misleading and deceptive reverse mortgage advertising given the complexity of the product and the consumers to whom the product is offered. For example, in a June 2012 Report to Congress on Reverse Mortgages, the CFPB stated that “[f]alse and misleading advertising poses a serious risk to consumers.” The CFPB also published a June 2015 study, and accompanying advisory warning, reaffirming the risk to consumers as a result of deceptive and misleading reverse mortgage advertising.

[Source: CFPB press release]

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

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How The Buyer Broker Gets Paid Their Fee

canstockphoto16101186-commissionA buyer broker is allowed to negotiate for a larger fee than offered through the multiple listing service

By Jeff Sorg, OnlineEd Blog

(December 7, 2016) – In Oregon, the source of the commission is not determinative of the agency relationship and a principal broker representing a buyer is free to receive compensation from the buyer or seller, the seller’s principal broker, or any combination thereof.

In the normal residential transaction, the listing principal broker contracts with the seller for a percentage of the sales price as compensation for the seller and buyer brokers. The seller pays this fee to the listing principal broker through escrow, usually from the proceeds of the sale. The listing principal broker then gives escrow instructions to pay the selling principal broker the fee the listing principal broker offered through their Multiple Listing Service (MLS), or as otherwise may be agreed to between the two principal brokers.

The buyer broker is allowed to negotiate for a larger fee from the listing principal broker than may be offered through the multiple listing service.

The amount the listing principal broker pays the buyer’s principal broker is usually offered through the MLS when the listing broker inserts the listing into its database, but the buyer broker is free to negotiate with the listing broker for a higher fee. Regardless of the fee offered, a buyer broker is required to show all properties meeting their buyer’s parameters. Because the listing principal broker might not offer any fee to the buyer’s broker, it’s good practice for buyer brokers to enter into buyer broker agreements with each buyer and to specify the minimum fee the broker will accept for their work. With a properly drafted buyer broker agreement, if the minimum fee is not covered by the fee offered by the listing principal broker, the buyer will owe the balance to their broker. When a buyer agrees to pay a fee and part or all of the fee is paid from another source, the amount paid from that source must be disclosed to the buyer and used to reduce the amount of the fee the buyer agreed to pay.

In Oregon, a real estate sale agreement written by a real estate broker should not be conditioned upon payment of a real estate commission or a certain amount to be paid to the buyer’s principal broker. Real estate sale agreements are between the buyer and seller and commission agreements or co-broker fee agreements are to be independent of contracts between the broker’s principals.

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Redfin Housing Demand Index Cooled in October

After a Strong September, Fewer Buyers Toured Homes and Made Offers in October

By Jeff Sorg, OnlineEd Blog

canstockphoto11274308-looking-at-houses(December 1, 2016) – The Redfin Housing Demand Index declined 3.5 percent to a seasonally-adjusted level of 100 in October, according to Redfin (www.redfin.com), the next-generation real estate brokerage.

A level of 100 represents the historical average for the three-year period from January 2013 to December 2015, meaning that current demand is at recent historical norms.

In October, the number of Redfin customers requesting home tours fell 3.7 percent from September, and the number of customers writing offers on homes fell 5.9 percent. Both of these measures posted double-digit increases in September.

One likely culprit is a shortage of homes to choose from, something that has put a damper on homebuyer enthusiasm month after month. Across the 15 metro areas tracked by the Demand Index, the number of homes listed in October was 9.5 percent lower than a year earlier. Those numbers dovetail with the shortages of homes reported in the most recent Redfin Real-Time Housing Market Tracker.

To read the full report, complete with charts, metro-level data and insights from local agents, please visit: https://www.redfin.com/blog/2016/11/housing-demand-cooled-in-october-dropping-to-a-three-year-average.html

Source: Redfin

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For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark

Santa’s North Pole Home Now on Zillow

 Follow Santa’s Christmas Eve journey via the Official NORAD Santa Tracker from Santa’s home details page on Zillow

By Jeff Sorg, OnlineEd Blog

canstockphoto22717197santa-laptop(November 30, 2016) –  Today, Zillow announces that one of the most famous homes in the world — Santa Claus’ North Pole house — is now on Zillow.  With a Zestimate® home value of $656,957, Santa’s home is one of the most valuable residential properties in the Arctic.

Zillow was able to calculate a special Zestimate value for Santa’s one-of-a-kind house using comparable homes in remote locations and applying a Santa premium. The home has never been sold and is not on the market.

Santa Claus’ log cabin has three bedrooms and two bathrooms and measures 2,500 square feet — about 1,000 square feet larger than the average U.S. home. It sits on a unique, 25-acre lot in the North Pole and features a river rock fireplace, a gourmet kitchen and a wood-burning stove in one of the guest suites. The property also boasts a sleigh parking garage, stables and a world-class toy workshop.

“Santa’s home in the North Pole is one of the most famous homes in the world, so we’re thrilled it’s now on Zillow,” said Zillow Chief Marketing Officer Jeremy Wacksman. “Millions of kids are looking forward to a visit from Santa this year, and now they have the opportunity to virtually visit Santa’s house themselves.”

To see Santa’s home, type “Santa’s house” into the search bar on Zillow.com. Visitors can flip through a photo gallery of the home and watch a video walkthrough to get a sense of the home’s flow. Santa’s house is not for sale, but by claiming his home, Santa was able to update his home’s facts and add photos, which can impact his Zestimate value.

Additionally, children can start following Santa’s Christmas Eve trek delivering presents around the world via the Official NORAD Santa Tracker, right from Santa’s home detail page on Zillow. This feature is a result of Zillow’s partnership with NORAD Tracks Santa, which has been following Santa’s annual journey for the past 61 years.

“We track Santa as he makes his journey around the world every holiday season and ensures he returns home safely,” said Preston Schlachter, spokesperson for NORAD Tracks Santa. “Santa puts a lot of miles on his sleigh delivering gifts all over the country, and we’re excited to partner with Zillow this holiday season to give families around the world a behind the scenes look at Santa’s home base.”

Zillow forecasts that Santa’s home will appreciate 2.2 percent over the next year, in line with forecasted home value growth in the United States.

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Zillow and Zestimate are registered trademarks of Zillow, Inc.

For more information about OnlineEd and their education for real estate brokers, principal brokers, property managers, and mortgage brokers, visit www.OnlineEd.com.

All information contained in this posting is deemed correct as of the date of publication, but is not guaranteed by the author and may have been obtained from third-party sources. Due to the fluid nature of the subject matter, regulations, requirements and laws, prices and all other information may or may not be correct in the future and should be verified if cited, shared or otherwise republished.

OnlineEd® is a registered Trademark