Tag Archives: NAR

National Association of REALTORS® Moves to Dismiss Price-Fixing Lawsuit

Class action lawsuit claims real estate broker franchisors and National Association of Realtors conspire to require home sellers to pay buyer broker fees

By Jeff Sorg, OnlineEd Blog

(May 23, 2019)

CHICAGO (May 18, 2019) – The National Association of REALTORS® (NAR) moved to dismiss the Moehrl v. NAR lawsuit on the basis that the complaint misrepresents NAR rules for the operation of Multiple Listing Services (MLSs), which have long been recognized by the courts across the country as protecting consumers and creating competitive, efficient markets that benefit home buyers and sellers. The filing was made in federal court in Chicago.

“In today’s complex real estate environment, REALTORS® and Multiple Listing Services promote a pro-consumer, pro-competitive market for home buyers and sellers, contrary to the baseless claims of these class action attorneys,” said John Smaby, President of NAR. “Our filing today shows the lawsuit is wrong on the facts, wrong on the economics and wrong on the law.”

NAR’s brief points out that, as the centerpiece of their case, the seven class action law firms who represent one plaintiff have resorted to fundamentally mischaracterizing NAR’s rules. That mischaracterization, according to the NAR’s filing, led the class action attorneys to “dream up” purportedly anticompetitive rules that simply do not exist in NAR’s Handbook or Code of Ethics. In reality, NAR rules specifically direct listing brokers to determine – in consultation with their clients – the amount of compensation to offer buyers’ brokers in connection with their MLS listings. Furthermore, under NAR rules, a buyer’s broker is free to negotiate a commission from the listing broker that is different from what appears in the MLS listing. Neither NAR nor any MLS has any say in setting broker commissions.

Ultimately, these rules create a system of highly competitive markets where consumers receive superior service.

Beyond misreading the facts, NAR’s filing to dismiss demonstrates the shaky legal grounds of the plaintiff’s case, pointing out that the lawsuit disregards legal precedents that have upheld the pro-competitive benefits represented by the MLS system. For example, past court rulings have noted that NAR rules provide a more transparent marketplace, and encourage REALTORS® to share listing information and cooperate in the sale of real estate.

In fact, when considering the structure of commission payments, NAR’s filing notes that listing brokers’ offers of commission to buyers’ brokers on MLSs has been shown to actually increase the number of potential buyers. “When a seller elects to permit their brokers to pay compensation to the buyer’s broker, it frees up buyer cash thereby potentially increasing the number of buyers able to bid for that home and the amount of funds available for the purchase price,” the filing states.

“The MLS system is designed to create competitive markets to facilitate the sale of residential property in a way that benefits both buyers and sellers,” said Smaby.

Contrary to the career class action attorneys’ manufactured rules and claims, the plaintiff’s transaction was subject to the same rules as all transactions facilitated via an MLS: commissions are agreed upon up front by the seller and listing broker – independent of NAR – and commissions are negotiable. These rules have been proven to promote competition and ensure that brokers act in the best interests of their clients.

On the basis of these fundamental arguments that refute the plaintiff’s allegations and reading of legal precedent, as well as a failure to demonstrate harm, NAR is seeking to dismiss the lawsuit “with prejudice.”

[Source – NAR Press Release]

DEFENDANT: The National Association of Realtors, Realogy Holdings Corp., HomeServices of America Inc., RE/MAX Holdings Inc., Keller Williams Realty Inc.
CASE NUMBER: 1:19-cv-01610
COURT: U.S. District Court for the Northern District of Illinois

The National Association of REALTORS® is America’s largest trade association, representing more than 1.3 million members involved in all aspects of the residential and commercial real estate industries

 

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OnlineEd blog postings are the opinion of the author and not intended as legal or other professional advice. Be sure to consult the appropriate party when professional advice is needed.

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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First-time Buyers, Single Women Gain Traction in NAR’s 2016 Buyer and Seller Survey

 For-sale-by-owner transactions remained at an all-time low for the second straight year

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(November 1, 2016) – WASHINGTON  — The quickening pace of home sales over the past year included a small rebound from two key segments of buyers who have been missing in action in recent years: first-time buyers and single women.

This is according to the National Association of Realtors®’ annual Profile of Home Buyers and Sellers, which also found that for-sale-by-owner transactions remained at an all-time low of 8 percent for the second straight year. Nearly 90 percent of all respondents worked with a real estate agent to buy or sell a home.

The 2016 edition of NAR’s Profile of Home Buyers and Sellers continues the longest-running series of national housing data evaluating the demographics, preferences, motivations, plans and experiences of recent home buyers and sellers; the survey dates back to 1981. Results are representative of owner-occupants and do not include investors or vacation homes.

After slipping for three straight years, the share of sales to first-time home buyers 1 in the 2016 survey ticked up to 35 percent, which is the highest since 2013 (38 percent) and a revival from the near 30-year low of 32 percent in 2015. In the 35-year history of NAR’s survey, the long-term average of first-time buyer transactions is 40 percent.

Lawrence Yun, NAR chief economist, says more new homeowners were able to break through what continues to be a laborious market for many trying to enter. “Young adults are settling down and deciding to buy a home after what was likely a turbulent beginning to their adult life and career following the Great Recession,” he said. “Demand increased over the past year because of a robust job market for those with a college degree and renter fatigue at a time when homeowners continue to see their equity rise. These factors were why more first-time buyers (67 percent) said a desire to own a home of their own was the primary reason for their purchase (64 percent in 2015; 53 percent in 2014).”

Added Yun, “Even with the affordability challenges many buyers face, the allure of homeownership is not lost among the younger generation. Those under age 35 made up 61 percent of first-time buyer transactions.”

Although the increase in new homeowners is encouraging, their overall share of the market is still subpar, according to Yun. The lack of affordable new and existing inventory, home prices in many markets rising far above wages and difficulty saving for a down payment because of rising rents and student debt is why the homeownership rate for 18- to 35-year-olds is currently hovering near its historical low 2.

“First-timers’ ability to enter the market more convincingly over the next year greatly depends on supply improvements at the lower end of the market and if wages can finally awaken from their sluggish pace of growth,” added Yun.

Single female buyers on the mend, age of first-time buyers on the rise

As in year’s past, married couples once again made up the largest share of buyers (66 percent) and had the highest income ($99,200). However, the survey revealed that single women made up more of the buyer pie than in recent years (based on household composition). After falling to 15 percent of buyers a year ago, which tied the lowest share since 2002, single females represented 17 percent of total purchases (highest since 2011 at 18 percent).

“Despite having a much lower income ($55,300) than single male buyers ($69,600), female buyers made up over double the amount of men (7 percent),” said Yun. “Single women for years have indicated a strong desire to own a home of their own, as well as an inclination to live closer to friends and family. With job growth holding steady and credit conditions becoming somewhat less stringent than in past years, the willingness and opportunity to buy is becoming more feasible for many single women.”

The median age of first-time buyers in this year’s survey was 32, matching the all-time high last set back in 2006, and up from 31 the past five years. The typical first-time buyer had a higher household income ($72,000) than last year ($69,400) and purchased a slightly larger home (1,650-square-feet; 1,620-square-feet in 2015) that was more expensive ($182,500; $170,000 in 2015).

The typical repeat buyer was 52 years old (53 in 2015), earned $98,000 ($98,700 in 2015) and purchased a 2,000-square-foot home (2,020 square-feet in 2015) costing $250,000 ($246,400 in 2015).

Financing the purchase: buyers carrying more student debt; difficulty obtaining a mortgage on the decline

Down payment sizes have roughly stayed the same in recent years. In this year’s survey it was 6 percent for first-time buyers (third straight year) and 14 percent for repeat buyers (third time in four years). Fifty-nine percent of buyers financed their purchase with a conventional mortgage, and 33 percent of first-time buyers took out a low-down payment Federal Housing Administration-backed mortgage, which is down from 54 percent in 2011.

“Fewer first-time buyers (40 percent) compared to a year ago (45 percent) indicated that the mortgage application and approval process was somewhat or much more difficult than they expected,” highlighted NAR President Tom Salomone, broker-owner of Real Estate II Inc. in Coral Springs, Florida. “Those with healthy credit scores and manageable or little debt should talk to a lender to see if they qualify. They’ll likely discover that obtaining a mortgage isn’t quite the confusing and tiring inquisition it was in the years immediately after the downturn.”

Personal savings ranked first for both first-time buyers and repeat buyers as the primary source of their down payment. The second most popular source for first-timers was a gift from a friend or relative (24 percent; 27 percent in 2015), and for repeat buyers it was the sales proceeds from their previous residence.

Respondents reported that debt (all types) delayed saving for a down payment for a median of three years. For first-time buyers, 40 percent indicated they’re carrying student debt, with a typical amount of $26,000 ($25,000 in 2015). Furthermore, of the 26 percent of first-time buyers who said saving for a down payment was the most difficult task in the buying process, 55 percent said student debt delayed saving.

As NAR survey findings discovered earlier this year, even those financially able to make on-time payments on their student loans are struggling to save for a down payment, and many expect to be delayed from buying a home by over five years,” said Yun. “Repaying student debt could slow the path to homeownership even more for those living in markets with steep rents and home prices.”

The home search: buyers rely heavily on the internet and real estate agents; single-family homes are a top choice

This year’s survey convincingly proved once again that the two most popular resources for home buyers remain the internet (95 percent) and real estate agents (92 percent). Despite a record-high 51 percent of buyers saying they found the home they purchased online, most buyers who used the internet still ended up purchasing their home through an agent (90 percent).

Not surprisingly, mobile devices and tablets are increasingly becoming a resource for home buyers. Their usage lifted to 72 percent in this year’s survey, which is up from 61 percent a year ago and 45 percent in 2013. Furthermore, 58 percent of buyers indicated they found the home they purchased on a mobile app.

“Regardless of the plethora of online resources readily available at the click of a mouse or the swipe of a thumb, consumers serious about buying a home continue to seek the expertise and market insights that only a Realtor® can provide,” said Salomone. “Given the numerous competitive markets with minimal supply, it’s no surprise that both first-time and repeat buyers sought an agent for assistance finding the right home and negotiating the terms of the sale.”

Similar to recent years, the most common housing type continues to be a detached single-family home (83 percent for second straight year) and one in a suburban area (54 percent; 52 percent in 2015). Meanwhile, purchases of townhouses or row houses remained at 7 percent for the third straight year; only four percent of buyers purchased a condo.

Overall, the typical home bought was built in 1991 and had three bedrooms and two bathrooms. The share of buyers who purchased new home was at an all-time survey low of 14 percent.

Selling a home: seller use of an agent remains at all-time high; wanting a bigger house primary reason for selling

For the second straight year, 89 percent of sellers sold their home with an agent. This in turn — also for the second year in a row — kept for-sale-by-owner sales to their lowest share (8 percent) since the survey’s 1981 inception and below 10 percent since 2012.

“Although the imbalance of supply in relation to demand in recent year’s continues to put many sellers in the driver’s seat, they’re still looking for a Realtor® now more than ever to price their home competitively, market their home to the widest number of eyes possible and ultimately help close the deal within a given timeframe,” added Salomone.

The typical seller over the past year was 54 years old (unchanged since 2014), had a household income of $100,700 ($104,100 in 2015), and was in the home for 10 years before selling — a year longer than 2015 and matching the all-time high in 2014. Fewer sellers indicated they wanted to sell earlier but were stalled because their home had been worth less than their mortgage (12 percent versus 14 percent a year ago); the figure was 17 percent in 2014.

Sellers realized a median equity gain of $43,100 ($40,000 in 2015) — a 24 percent increase (23 percent last year) over the original purchase price. Homes sold after 21 years of ownership had the largest equity gain (124 percent or $127,600); underlining the volatility during the downturn, equity gains fell to 3 percent for owners who bought between eight and 10 years ago.

Back in the 2012 survey, it typically took respondents 11 weeks to sell their home. With tight inventory conditions gripping most markets once again over the past year, sellers were considerably more successful finding a buyer in a shorter amount of time, with homes typically on the market for only a month.

A tad more sellers traded up (44 percent) compared to last year (42 percent) and slightly more, at 32 percent, traded down (31 percent in 2015). Sellers moved a median distance of 20 miles — 72 percent stayed in the same state — and the most popular reason given for selling their home was it being too small (18 percent).

Feedback from sellers underscored once again that referrals and repeat business remain a large source of new opportunities for real estate agents. Nearly two-thirds of responding sellers either found their real estate agent through a referral by a friend, neighbor or relative, or used their agent from a previous transaction. Additionally, 85 percent of sellers indicated that they would definitely or probably use their agent again or recommend him or her to others.

NAR mailed a 132-question survey in July 2016 using a random sample weighted to be representative of sales on a geographic basis to 93,171 recent home buyers. Respondents had the option to fill out the survey via hard copy or online; the online survey was available in English and Spanish. A total of 5,465 responses were received from primary residence buyers. After accounting for undeliverable questionnaires, the survey had an adjusted response rate of 5.9 percent. The sample at the 95 percent confidence level has a confidence interval of plus-or-minus 1.32 percent.

The recent home buyers had to have purchased a home between July of 2015 and June of 2016. All information is characteristic of the 12-month period ending in June 2016 with the exception of income data, which are for 2015.

The National Association of Realtors®, “The Voice for Real Estate,” is America’s largest trade association, representing over 1.1 million members involved in all aspects of the residential and commercial real estate industries.

Source: National Association of REALTORS® 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

Metro Home Prices Continue Growth

Report shows unwavering price gains in an overwhelming majority of metro areas during the first quarter of the year

By Jeff Sorg, OnlineEd Blog

rising rents(May 10, 2016) – The median existing single-family home price increased in 87 percent of measured markets, with 154 out of 178 metropolitan statistical areas showing gains based on closed sales in the first quarter compared with the first quarter of 2015, according to the latest quarterly report by the National Association of Realtors®. Twenty-four areas (13 percent) recorded lower median prices from a year earlier.

There were more rising markets in the first quarter compared to the fourth quarter of 2015, when price gains were recorded in 81 percent of metro areas. Twenty-eight metro areas in the first quarter (16 percent) experienced double-digit increases – a slight decrease from the 30 metro areas in the fourth quarter of 2015; fifty-one metro areas (28 percent) experienced double-digit increases in the first quarter of last year.

“The solid run of sustained job creation and attractive mortgage rates below 4 percent spurred steady demand for home purchases in many local markets,” said Lawrence Yun, NAR Chief Economist. “Unfortunately, sales were somewhat subdued by supply and demand imbalances and broadly rising prices above wage growth. As a result, the path to homeownership so far this year remains strenuous for a segment of prospective buyers in the most competitive areas.”

  • The national median existing single-family home price in the first quarter was $217,600, up 6.3 percent from the first quarter of 2015 ($204,700). The median price during the fourth quarter of 2015 increased 6.7 percent from the fourth quarter of 2014.
  • Total existing-home sales, including single family and condo, rose 1.7 percent to a seasonally adjusted annual rate of 5.29 million in the first quarter from 5.20 million in the fourth quarter of 2015, and are 4.8 percent higher than the 5.05 million pace during the first quarter of 2015.

“The demand for buying is there, but unless the stock of new and existing homes for sale increases significantly – especially in several markets in the West – the housing market will struggle to reach its full potential,” added Yun.

  • At the end of the first quarter, there were 1.98 million existing homes available for sale, which was below the 2.01 million homes for sale at the end of the first quarter in 2015. The average supply during the first quarter was 4.3 months – down from 4.6 months a year ago.
  • Despite an increase in the national family median income ($68,431), climbing home prices and higher mortgage rates caused affordability to decline in the first quarter compared to the first quarter of last year.

“Current homeowners in many metro areas – especially those who purchased a home immediately after the downturn – have enjoyed a sizeable boost in housing equity and household wealth in recent years,” adds Yun. “At a time of stagnant wage growth and mounting rent increases, the same cannot be said for renters. Their inability to reach the market because of affordability and supply restrictions is contributing to rising wealth inequality in the U.S.”

  • The five most expensive housing markets in the first quarter were the San Jose, Calif., metro area, where the median existing single-family price was $970,000; San Francisco, $770,300; Honolulu, $721,400; Anaheim-Santa Ana, Calif., $713,700; and San Diego, $554,300.
  • The five lowest-cost metro areas in the first quarter were Cumberland, Md., $67,400; Youngstown-Warren-Boardman, Ohio, $77,500; Decatur, Ill., $83,300; Wichita Falls, Texas, $95,200, and Rockford, Ill., $95,800.

[Article Source: NAR news 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 of OnlineEd, Inc.

CFPB Director Addresses National Association of Realtors®

Prepared Remarks of Richard Cordray
Director, Consumer Financial Protection Bureau

 National Association of Realtors

Richard Cordray

Richard Cordray

WASHINGTON (September 17, 2015) – Thank you for inviting me today.  That renowned philosopher from the Garden State of New Jersey, Bruce Springsteen, once said, “I have spent my life judging the distance between American reality and the American dream.”  For the past few years, we have all been judging that distance for ourselves, and we have seen how the worst financial crisis of our lifetimes caused the gap to widen for far too many people.  But as we continue to emerge from the Great Recession, we are now starting to see things turn around.  The housing market is finally breaking out in many areas around the country.  It is a very happy development, one that is good for consumers, good for real estate professionals, and good for the United States of America.

In the wake of the financial crisis, Congress created the Consumer Bureau with the sole purpose of protecting consumers.  We do that by working to ensure that people have access to consumer financial products and services; that these markets work in a fair, transparent, and competitive manner; and that consumers are empowered to take more control over their financial lives.  To begin with, our first major task as a brand-new agency was to address the serious problems in the mortgage market that caused the crisis in the first place.

Since opening our doors four years ago, the Consumer Bureau has been hard at work to put new rules in place to encourage common-sense, consumer-friendly business practices.  We have sought to take a balanced and measured approach to this task, mindful of the concerns of many stakeholders.  When Congress required us to finalize several substantial mortgage rules within our first eighteen months, we stepped up and got the job done.

When we put those new regulations in place, some were critical of our work.  For example, the “Ability to Repay” rule requires lenders to make sure that borrowers actually have the ability to repay their loans before extending them a mortgage.  Some enjoyed describing this rule, which was also known as the “Qualified Mortgage” or QM rule, as the “Quitting Mortgages” rule.  They made aggressive predictions that our rules would cause mortgage prices to double and would cut the volume in half.  They offered dire predictions that our rules would lead to the demise of community banks and credit unions, which would have to withdraw from the mortgage market altogether.  We never believed any of this unsupported hyperbole.

And it turns out we were right.  The rules have now been in place for the better part of two years, and none of those heated claims has come true.  In fact, recent data confirms the very opposite of the fears that were voiced by our critics.  In 2014, the first year of our new rules, mortgage originations for owner-occupied home purchases increased between 4 and 5 percent.  The upward trend appears to have accelerated over the first half of this year.  And while we saw minor consolidation in some parts of the mortgage market, there is no evidence of any mass exodus, as the doomsayers predicted.  In fact, after adjusting for merger activity, the number of lenders that reported having originated mortgages showed an increase in 2014.  And in particular, the number of community banks and credit unions that originated home-purchase mortgages last year was higher than the year before.  Let me say plainly, from my standpoint as the Director of the Consumer Financial Protection Bureau, that is great news.  It means more opportunity for more consumers, and a renewed pathway to the American dream in a mortgage market that has been strengthened by the changes we have made.

There is no reason to be surprised at this outcome, because our rules merely imposed common-sense requirements that lie at the heart of all responsible lending.  In addition, we have been taking pains to create some special rules to protect community banks and credit unions, which had amassed the lowest default rates right through the wreckage of the financial crisis.  Reasonable regulation of financial markets, which includes evenhanded oversight and enforcement of the law, should always tend to benefit the most responsible providers.  By taking on and rooting out unfair competition that gobbled up market share by driving down sound underwriting standards, the Consumer Bureau is supporting responsible lenders.  The market leaders of today are those that have remained focused on providing sustainable homeownership rather than just making a quick buck, no matter how.

At the same time, sensible regulation that includes substantial consumer protections should foster greater trust by consumers in the financial marketplace.  If people believe they will be treated fairly rather than becoming victims of predatory lending, they can develop a renewed sense of consumer confidence.  And in the past few years, as consumers have improved their own financial health and seen their home values stabilize in many parts of the country, those sentiments are gradually returning.  Steady and prepared consumers, along with sound lending, are the key ingredients in the recipe for an improved housing market.  And what that means for everyone here is that you now have the chance once again to show America what you do best:  provide excellent customer service and help put people in the right homes for the right price.

It is hard to appreciate fully what that means for so many people.  Most immediately, it means that for those who lost so much during the economic crisis, buying a house may again be within reach.  A home is the most important financial investment that many families will ever make.  At the same time, homeownership remains the sturdiest foundation for building wealth among the middle class.  Although many people intend to create a nest egg for the future, the mechanism that most reliably causes it to happen for many Americans is making the monthly payments on an amortizing mortgage.  Beyond that, as we all know very well, a house that becomes a home is much more than four walls and a roof.  Instead, it is a special place to call your own, a place to rest and feel safe, a place to raise a family and create lasting memories, a place to hold up as a source of pride and accomplishment.

The National Association of Realtors represents more than one million hard-working members – brokers, salespeople, property managers, appraisers, housing counselors, and more.  You suffered greatly during the crisis and its aftermath.  The new Consumer Bureau is here to work with you to ensure that consumers’ experience of the financial marketplace and the promise of the American Dream are one and the same.

In that spirit, to improve the mortgage market we are making sure protections are put in place at every stage of the process, from shopping for a mortgage to closing on the house to paying back the loan.  As I have already noted, in January 2014, our first set of mortgage rules took effect.  They restored sensible underwriting practices (such as documenting income to ban Liar Loans) and addressed some of the worst practices by mortgage servicers.  By the way, we have heard all over the country from real estate professionals who have been frustrated – and lost countless sales – by poor practices from mortgage servicers.  We have come to understand that your interest in improving servicer performance is directly aligned with the interests of consumers, and of the Consumer Bureau.  We will continue to work with you and listen to you about how we can improve these features of the mortgage market.

After getting through the first set of new mortgage rules, we turned to another important task imposed by Congress.  We integrated and streamlined multiple forms that consumers received at the application and closing stages of the mortgage process, to make the forms easier to use and understand.  This regulation was completed almost two full years ago, but will finally take effect on October 3.  Among other things, what we call our “Know Before You Owe” mortgage disclosure rule makes it easier to shop for a mortgage.

In essence, what we have done is to replace four overlapping mortgage disclosure forms and put in their place just two forms that consumers have told us are much easier to understand.  The first form is the Loan Estimate, which provides a summary of the loan offered along with the estimated costs associated with the mortgage such as taxes and insurance and closing expenses.  The second form is the Closing Disclosure, which offers a detailed accounting of the transaction.  With a simple accounting of payments and fees, these new forms show what people are getting into – the price and key terms of their loan and how its terms could change over time.  They present the information in plain language, in a format that is easy to follow, where the costs and risks of the loan are made clear.  And right up front on the first page, shoppers can see what they want to see the most:  the loan amount, their monthly payments, taxes, insurance, other property costs, and the total cash required to close the loan.  Our consumer testing shows that when borrowers use our new forms, they will end up with a better understanding of the final terms of their mortgage before they close on the loan.

The changes we have made also are designed to make comparison shopping easier.  Our efforts here have centered on reducing the information gap between lenders, who understand mortgage pricing inside and out, and consumers, to whom the process can often feel like a mystery.  We want to encourage consumers to focus on “shopping for a mortgage” instead of just “getting a mortgage.”  Consumers have much more power than they realize to shop for the best deal.  The power to comparison shop allows them to take more control of their financial lives and make better choices that will make a difference for themselves and their families.

Homebuyers will get the Loan Estimate no more than three business days after they apply for a loan.  If they apply for loans with multiple lenders, they will receive all the information in a common format to make a direct comparison between them.  Consumers will be able to see directly and immediately who is offering them better rates or cheaper fees.  Consumers will then be better able to weigh those price differences against other factors that matter to them.

When consumers have decided on a loan, our new rules also require lenders to give them the Closing Disclosure three business days before the closing occurs.  It summarizes the final loan terms and costs and presents a detailed accounting of the transaction.  Before people arrive at the closing, they can compare this form to their Loan Estimate to see what has changed.  Our form makes that comparison very obvious, which minimizes the potential for nasty surprises such as “bait and switch” increases in rates, fees, or settlement costs.  Should the Closing Disclosure become inaccurate due to three very limited sets of changes that are especially crucial – changing the loan product (say from fixed-rate to adjustable-rate), increasing the APR beyond certain limits, or adding a prepayment penalty – consumers must be given a revised Closing Disclosure at least three days before the closing.  Some have been spreading misinformation about this point, claiming that last-minute changes based on walk-throughs or similar circumstances will cause frequent three-day delays in the closing process.  That is simply wrong.  Sellers’ credits and the like will never require a new Closing Disclosure that delays the closing date.  Only the three very limited circumstances just described relating to changes in the loan terms will require a new Closing Disclosure.  This rule will reduce paperwork, remove confusion, and make the process more transparent – all changes that will help promote home sales, not hinder them.

To further help consumers with their mortgage shopping experience, the Consumer Bureau is also developing and providing unbiased tools and resources as part of our “Know Before You Owe” mortgage initiative.  We believe knowledge is power, and that empowered consumers are good for the marketplace.

In March, we released “Your Home Loan Toolkit,” which provides a step-by-step guide to help consumers understand the nature and costs of real estate settlement services, define what “affordable” means to them, and find the best mortgage to fit their personal circumstances.  Creditors must provide a copy to all home purchase mortgage applicants within three business days of receiving an application, which means millions of consumers will get this streamlined, plain-language document each year.  We encourage all industry participants, including the real estate professionals in this room, to provide it to potential homebuyers as early as possible in the home-buying process so they can use this information most effectively.

Another signature offering we are developing and refining for consumers is called “Owning a Home” – an online, interactive set of tools and resources to help consumers navigate the home-buying process and make sound decisions.  Right now we are greatly expanding this section of our website to help consumers shop for a mortgage and go about buying a home, from the very start of the process all the way to the closing table.  It can be found on our website at consumerfinance.gov.

While many people want to buy a home, getting their finances ready for homeownership can be a challenge.  Owning a Home helps people assess their spending, learn how to check their credit, and figure out how much they can spend on an affordable mortgage.  The site also guides them through the process of meeting with lenders and getting a prequalification or preapproval letter, helps them know what questions to ask when meeting with lenders, and assists them in gathering the paperwork they need to move forward.  Gene Koo, who serves as the head of Consumer Engagement at the Consumer Bureau, will be giving us a demo of some of these Owning a Home features here very shortly.

We also recently launched a real estate professional’s guide to our Know Before You Owe rule and our supporting tools.  This guide summarizes the key facts you need to know and provides handy tips for achieving smooth closings on time.  We encourage you to check it out on our website.

As we move forward, we will continue to look for ways to make the mortgage process easier.  This includes our work on the closing experience.  We are well aware that the sheer volume of the documents can be overwhelming to people who are generally unfamiliar with the process.  So we have been evaluating electronic closings and how improvements in technology can benefit consumers and lenders alike.  We recently conducted a pilot project which found that those who closed their mortgage using an electronic platform showed higher measures of understanding, efficiency, and feeling empowered than borrowers who used only paper forms.  Based on those results, we are strongly encouraging further industry action and innovation around “e-closings.”

The mortgage market has experienced dazzling changes in the past decade.  It has gone from being the overheated, increasingly irresponsible market that blew up the largest economy in the world, to retrenching dramatically into an overly tight and restrictive market where many good, creditworthy applicants could not qualify for reasonable loans.  Lack of effective regulation that fostered a race to the bottom in underwriting standards has now led to strong new regulations designed to protect and support both consumers and responsible businesses.  The result today is a mortgage market that is steadily recovering, with home values increasing in many areas and millions of homes emerging from their previous underwater status.  Through these sometimes bewildering changes, the National Association of Realtors has hung tough and worked toward better times ahead.  It has been a difficult decade, but you have embraced change as we have worked to make the marketplace fairer and more transparent for all Americans.  Adversity always presents a test of strength, but you have risen to the challenge.  Together we are building a more solid foundation so that you can thrive and so that families across the country can make the American Dream their reality.  At the Consumer Bureau, we salute you and thank you for doing what you do.

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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 by 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.

Real Estate Firms Are Confident About Future Profitability

The demand for real property is back, says NAR Report

By Jeff Sorg, OnlineEd Blog

WASHINGTON D.C. (August 6, 2015) –Real estate firms are confident in the industry’s future growth and their increasing profitability, according to the 2015 National Association of Realtors® Profile of Real Estate Firms.

canstockphoto11275276“A majority of firms have a positive view of the future, with 95 percent of all firms expecting their net income to either increase or stay the same in the next year,” said NAR President Chris Polychron, executive broker with 1st Choice Realty in Hot Springs, Ark. “The improving economy continues to fuel job growth, and while some markets are still recovering, the demand for real property is back, and prospects are looking good for the real estate industry.”

The annual survey found that commercial firms are the most optimistic, with 75 percent expecting net income to increase, and 22 percent anticipating it to stay the same. Residential firms are only slightly less optimistic; 69 percent report that they expect to see an increase in their net income next year, 25 percent expect it to stay the same, and 6 percent predict a decrease. Only 3 percent of commercial firms predict a decrease in net income in the next year.

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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 by 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® Goes to NARdiGRAS

Coni Meyers

Coni Meyers, marketing VP for OnlineEd®, will be attending the expo in New Orleans with the goal of adding a new course to the ever-expanding catalog offered by OnlineEd®. Aside from attending workshops, browsing booths, and engaging in networking events Meyers will be speaking with top real estate trainers from all over the United States.

NARdiGras, as it is being called this year, is the annual conference of the National Association of REALTORs®(NAR). Every year the conference provides real estate professionals valuable networking opportunities as well as useful information on topics such as:

  • Social Media Integration
  • Short Sales
  • Lobbying 101
  • Embracing Agent Reviews
  • Much More!

Betty Kincaid

The main course to focus on for the trip offers a PMN (Performance Management Network) designation upon completion. The course, “The business of Your Business: Formula, Financials, Function & Freedom,”  is being offered on November 3, 2010, which is the first day of the conference. It will be in the live-lecture format and is being led by Betty Kincaid, former President of the Women’s Council of REALTORS®(WCR).

Meyers will be collaborating with international speaker and author J.C. Melvin in order to convert this engaging course to the convenient online format for which OnlineEd® is known. “It is very exciting because it puts us on the larger scale,” Meyers says. “We will be able to take the expertise and experience of these nationally recognized trainers and incorporate those things in OnlineEd’s course catalog.”

Agents can expect to see “The business of Your Business: Formula, Financials, Function & Freedom” made available in the OnlineEd® catalog within the next few months.

For more information please visit www.OnlineEd.com

The main course to focus on for the trip offers a PMN (Performance Management Network) designation upon completion.The course, “The business of Your Business: Formula, Financials, Function & Freedom”  is being offered on November 3

Find Out What Happens During a REALTOR® Mediation

OnlineEd

The National Association of  REALTORS® has prepared a sample mediation to help associations enhance their efforts to offer mediation as an alternative to arbitration. REALTOR® members and association staff who want to learn more about the mediation process can view the 85-minute video in its entirety or view individual segments. Visit the NAR Web site to sign up.