Discussing a possible change that bans arbitration clauses, number of underwater home owners decreases again, agents can now receive the closing disclosure, housing sentiment, increasing FICO scores and much more!
CFPB Bars Arbitration Clauses
Great news for consumers this week from the CFPB:
The Consumer Financial Protection Bureau (CFPB) today announced a new rule to ban companies from using mandatory arbitration clauses to deny groups of people their day in court. Many consumer financial products like credit cards and bank accounts have arbitration clauses in their contracts that prevent consumers from joining together to sue their bank or financial company for wrongdoing. By forcing consumers to give up or go it alone – usually over small amounts – companies can sidestep the court system, avoid big refunds, and continue harmful practices. The CFPB’s new rule will deter wrongdoing by restoring consumers’ right to join together to pursue justice and relief through group lawsuits.
This is very unpopular with the banks and we have already heard from several critics…
House Financial Services Chairman Jeb Hensarling (R-Texas) said:
As a matter of principle, policy, and process, this anti-consumer rule should be thoroughly rejected by Congress under the Congressional Review Act. Congress must work with President Trump to make good on this mandate by fundamentally reforming the CFPB and dismantling the Administrative State.
Anti-consumer rule? Um….no. Anti-bank? Yes!
U.S. Senator Tom Cotton (R-Arkansas) said:
The CFPB has gone rogue again, abusing its power in a particularly harmful way. The Bureau’s new rule on arbitration clauses ignores the consumer benefits of arbitration and treats Arkansans like helpless children, incapable of making business decisions in their own best interests. This morning I’ve started the process of rescinding this rule using the Congressional Review Act. The last thing Americans need is more anti-business regulation that will prompt frivolous lawsuits while hurting consumers.
Sadly, this change may never take effect despite having plenty of supporters. The banks just have such a tight control on DC…
And this change could lead to more commercials from ambulance chasers and long drawn out lawsuits that lead to higher costs for consumers.
I often wonder why some businesses think they need to rely on under handed practices to make money?
Number of Underwater Home Owners Decreases Again
Great news from Black Knight that rising home prices have both decreased the number of borrowers underwater on their mortgages while increasing the amount of tappable – or lendable – equity available to homeowners.
Black Knight Data & Analytics Executive Vice President Ben Graboske said:
The steady upward trajectory of home prices continues to improve the equity positions of many homeowners. This is plainly visible in the number of borrowers who are underwater on their mortgages, owing more than their homes are worth.
Over the past year, we’ve seen a 35 percent decline in the total underwater population, with a 16 percent decline in that population over the first three months of 2017 alone. Home prices rose 2.3 percent in the first quarter, as compared to 1.8 percent over the same period last year, helping an additional 350,000 borrowers regain equity in their homes.
As of today, there are 1.8 million underwater borrowers remaining, the first time this population has fallen below two million since 2006.
Black Knight also reported:
- Underwater borrower population below 2 Million for 1st time since 2006
- The number of underwater borrowers declined by 16 percent in the first three months of 2017
- 350,000 borrowers regained equity in Q1 2017, bringing the total underwater population down to 1.8 million
- The underwater population has fallen by nearly one million borrowers since last year, a 35 percent annual decline
- Nearly half of remaining underwater borrowers live in the bottom 20 percent of homes by price in their markets
- Over 40 million Americans have tappable equity available in their homes today; the largest population on record
U.S. Office Sector Rebounds
Positive news from Cushman & Wakefield:
After a couple of lackluster quarters, the U.S. office sector rebounded in the second quarter in terms of net occupancy growth, according to Cushman & Wakefield. Nationally, rents continued to ascend to a new high, however, rising construction levels slowed the appreciation rate in most markets.
Hopefully this will lead to more business growth. Time will tell…
Agents Can Now Receive Closing Disclosure
You may remember me posting about the changes in the Know Before You Owe disclosure form last week. One very important improvement for real estate agents is we can now get a copy of the closing disclosure!
NAR has a pretty good article about this change:
Real estate professionals officially are entitled to receive a copy of the closing disclosure from lenders, the Consumer Financial Protection Bureau announced last week. Agents traditionally have used the information in the disclosure form to advise their clients during transactions, but about two years ago, when the CFPB made sweeping changes to the settlement process, some lenders stopped making the form available due to privacy concerns.
This change will benefit consumers as it means their agents will be able to check to make sure they are not over paying or receiving less than they should. I am glad this was finally changed but still say it took way too long to change.
RealtyTrac Twitter Account Posts NSFW Tweet
RealtyTrac’s tweets are all generally the same, each sharing a link to the latest “RealtyTrac Daily,” a collection of relevant news stories, with the company’s nearly 57,000 followers.
But Monday morning’s tweet was a fair bit different.
As per usual, RealtyTrac’s Monday morning tweet included a link to the latest RealtyTrac Daily, but Monday’s edition featured a wildly NSFW (not safe for work) image and link to an equally NSFW adult entertainment website. The apparently inadvertant post highlights the complexities mortgage finance companies face while navigating social media — and using third-party vendors to help.
I love Twitter more than any other social media channel but see so many agents that are obviously relying on automation. I do use scheduling tools but have never used automation or hired someone to tweet for me.
Remember, when you automate or hire someone to speak for you, it is your reputation on the line. If you are going to use social media, you either need to do it right or not at all…
Housing Sentiment at Record High
Fannie Mae recently announced Home Purchase Sentiment Index® (HPSI) increased 2.1 percentage points in June to 88.3, matching the all-time high from February of this year. The rise can be attributed to increases in four of the six HPSI components.
Doug Duncan, senior vice president and chief economist at Fannie Mae said:
The June HPSI reading matches the previous record set in February and reflects the trend toward a sellers’ market that respondents indicated last month. Consumers are also growing more optimistic about their ability to get a mortgage, and lenders expect credit standards to ease further going forward, as shown in our Mortgage Lender Sentiment Survey.
While consumer optimism on this metric is as high as we’ve seen in the survey’s seven-year history, it’s worth noting that this record is relative to the fairly tight standards in place post-crisis when we started collecting National Housing Survey data. Nevertheless, in the face of very tight housing supply, easing credit standards may fail to have the desired effect and could have the unintended consequence of fueling further house price increases.
Great news but sadly, the net share of Americans who think it is a good time to buy a home is only 30%. With mortgage rates still at historically low levels, it is a really good time to buy a home.
Also, only 39% think it is a good time to sell their home. With the tight inventory, it could be a great time to sell.
Of course, every market is different and every person’s situation is different.
Americans Average FICO Score Is 700
FICO just reported that the average FICO® Score 8 in America reached 700 this past spring. This is great news as it means that more people should have access to credit and get better rates than just a few years ago.
FICO® Scores are used in the mortgage lending process to help lenders determine if they will approve a particular mortgage loan and what interest rate will apply. Applicants with higher FICO® Scores will generally receive more favorable rates that can translate into thousands of dollars in savings over the life of the loan.
If you are thinking about buying a home, I strongly suggest you check out your credit as one of the very first steps of buying a home. Like when you start saving money for the down payment and closing costs.
If you check your credit early, it gives you time to work on raising your credit score. A higher credit score can save you a bunch of money and help you to qualify for a better rate or a higher amount.
Small Business Optimism Decreases in June
The NFIB just reported that:
The Index of Small Business Optimism fell 0.9 points to 103.6, but sustained the surge in optimism that started the day after the election. The Index peaked at 105.9 in January and has dropped 2.3 points to date, no doubt in part due to the mess in Washington, D.C.
Four of the 10 Index components posted a gain, five declined, and one was unchanged. Progress is being made, but poorly communicated, and the biggest issues, healthcare and tax reform remain stuck in the bowels of Washington politics.
Economic growth in the first half of this year will be about the same as we have experienced for the past three or four years, no real progress. There isn’t much euphoria in the outlook for the second half of the year.
While not devastating, this certainly isn’t good. I find it really interesting that they point to the mess in DC just like I do…
Foreclosure Rate Falls to Lowest Level Since July 2007
Awesome news from the CoreLogic Insights Blog:
In April 2017, 4.8 percent of home mortgages were in some stage of delinquency, down from 5.3 percent a year earlier and the lowest for any April month since 2007, when it was 4.5 percent, according to the latest CoreLogic Loan Performance Insights Report. The measure includes all home loans 30 days or more past due, including those in foreclosure. For the month of April, the share of delinquent mortgages was highest – 11.0 percent – in April 2010.
The foreclosure inventory rate, meaning the share of mortgages in some stage of the foreclosure process, fell to 0.7 percent, down from 1 percent a year earlier and the lowest level since July 2007, when it was 0.6 percent.
While this is a national statistic, it is still very good news. I can tell you that the number of foreclosures in our area has decreased substantially from the peak just a few years ago.
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