Real Estate Information

With Congress due back on Capitol Hill after Labor Day, the legislative fight over Fannie Mae's and Freddie Mac's controversial appraisal rules is heating up.

Bipartisan legislation that would put the “Home Valuation Code of Conduct” (or HVCC) on hold for 18 months has steadily gathered support in the past month, and now has 54 co-sponsors.

Meanwhile, the National Association of Realtors continued its grass-roots lobbying push for the HVCC moratorium bill in key congressmen's home districts during the August recess. The association has been an outspoken critic of the HVCC rules, arguing that they produce deal-killing lowball appraisals, encourge the use of low-paid appraisers unfamiliar with local conditions, and have raised the cost of valuations for consumers.

Home builders, appraiser and mortgage brokers also have opposed the rules, which took effect May 1.

In late August, new FHA commissioner David H. Stevens weighed in on the issue with the first public comment from HUD. Stevens said FHA, which now accounts for about one-third of mortgage market volume, does not plan to adopt the HVCC. FHA has its own detailed, long-standing guidelines and standards covering appraisals and appraisers.

But in a statement provided to Realty Times last week, Stevens said FHA believes that some of the core principles of Fannie's and Freddie's guidelines are good.

“We do like the HVCC's separation of influence in ordering the appraisal from those who financially benefit from the outcome,” he said. Though FHA won't use the HVCC language in its rules, the agency is “considering changes” that “may incorporate some” of the HVCC's principles.

FHA's goal “is to get (these) changes into the marketplace in the near future,” Stevens said in his statement. That suggests that FHA will soon be coming out with new guidelines on home valuations that will affect lenders, realty agents, appraisers and consumers.

No details on what changes FHA is contemplating were available last week.

Complicating the issue for anyone hoping to avoid HVCC problems by opting for FHA loans is the fact that many of the largest FHA originators now follow HVCC procedures for all new loans, including FHA.

That, in turn, will put more pressure on supporters of the moratorium bill co-authored by Mississippi Democratic Congressman Travers Childers and California Republican Gary Miller.

Time is running short for getting that legislation through the House and Senate this Fall -- even with 54 Republicans and Democrats signed on in support of the bill - because Congress's schedule is jam-packed with bigger, more prominent issues such as health care and energy.

Written by Kenneth R. Harney
August 31, 2009

Steady jumps in pending home sales and low interest rates continue to lead housing out of the doldrums into growth mode -- and even toward price increases in some hard-hit markets as well.

Last week's 3.6 percent increase in pending sales marked the fifth consecutive month of positive news from this key leading indicator, the first time there's been a string that long since 2003.

Every region of the country saw increases in pending sales in June, according to the National Association of Realtors, which compiles the data based on signed contracts for home sales that haven't yet closed.

Lawrence Yun, chief economist for the National Association of Realtors, attributed the string of increases in part to first time buyers getting off the sidelines and looking to qualify for federal tax credits.

Another contributing factor is the dramatic improvements in affordability of houses in many markets, sharply lower prices combined with mortgage rates in the mid to lower five percent range.

The national housing affordability index is now 37 percent better than it was just a year ago. The typical family, with a monthly household income at the national median, can now devote just 16 percent of gross income to paying principal and interest on a median priced home financed with a 20 percent downpayment.

That sort of affordability hasn't been seen for decades!

Meanwhile, there are growing reports of multiple offers on low-priced houses for sale in some major markets, along with the first signs of possible price turnarounds.

For example, in the Portland-Vancouver market, resales in June were up 25 percent from May. But more significantly: the median price of homes sold there gained 2.1 percent, according to MDA DataQuick, a research firm.

On the mortgage front, new purchase applications to buy houses rose again last week, according to the Mortgage Bankers Association. Thirty-year average fixed rates fell to 5.2 percent from 5.4 percent. Fifteen year rates averaged 4.6 percent.

Not all the economic indicators are reading positive for real estate, of course. Unemployment rates in many parts of the country remain in the double digits, consumer confidence is brittle, and gross domestic product, GDP, was down last quarter by one percent, the fourth straight quarterly drop.

But economic forecasters like the Mortgage Bankers' Orawin Velz, see a bright side on the near horizon: The latest GDP negative number is much smaller than the 6 percent plus loss in the previous quarter.

That suggests "the end is near" for the recession, she says, and that's got to be good for housing.

Written by Kenneth R. Harney
August 11, 2009