Team Empowerment Morning Mortgage Chatter: May 17; Giveaway Update; News & Headlines; Freddie Mac’s HomeSteps Launches Nationwide Sales Promotion; NAR Increases Dues; Distressed Sales Hamper Real Estate Pay

“Unless your campaign has a big deal, it will pass like a ship in the night.” – David Ogilvy in Confessions of an Advertising Man: Was an advertising executive, often called “The Father of Advertising”

 

MONDAY GIVEAWAY – UPDATE

UPDATE: Here’s an update to where we stand with our winners as of today, May 17th.

  1. Donna Chan
  2. Tom Watson
  3. Robin Jaurique
  4. Linda Slagle
  5. Angela Muetterties
  6. Larry Harris & Mary Esteban
  7. Name To Be Announced
  8. Name To Be Announced
  9. FUTURE WINNER
  10. FUTURE WINNER

This means we have 2 open winnner slots for our giveaway. See how to become a winner below. Good Luck! And Congratulations to those who have already subscribed!


News & Headlines

The compensation issue involving Quicken Loans is in the news again as “the U.S. Supreme Court asked the Obama administration for its views Monday on a case that examines when mortgage lenders can be sued for charging fees to borrowers when the lender offers no service in return.” The case centers on a group of lawsuits from Louisiana (the Freeman, Bennett and Smith families) alleging Quicken Loans Inc. charged loan-discount fees to borrowers but did not provide them with reduced interest rates on their loans. HUD has already issued relevant regulations and policy guidance that appears to support the plaintiffs’ contention that “Section 8(b) forbids the paying or accepting of any portion or percentage of a settlement service – including up to 100% – that is unearned, whether the entire charge is divided or split among more than one person or entity.” But does this apply to all transactions involving one or more parties, or is it limited to cases with third-parties and fee-splitting situations? Quicken

What does the House Speaker think about “fixing” the housing industry? “…Government programs aimed at preventing mortgage foreclosures have failed, adding that the only real solution is to wait until we get our economy moving again.” House Speaker

Reuters reports that seven new measures have been added to the eight bills already approved by the U.S. House of Representatives’ panel that oversees Fannie & Freddie. It is doubtful that any will sail through, but is more indicative of the confusion surrounding the mortgage industry that seems to be prevalent in Congress (editor’s opinion.) Anything approved by the panel goes to the House Financial Services Committee, and then the full House, and then the Senate, and then to the president. The fifteen bills include preventing a dividend payment increase, require F&F to disclose certain information in response to requests from the media and the public under the Freedom of Information Act, dispose of non-critical assets such as patents and data, cap the dollar amount of government support, prevent the future creation of agencies like F&F, stop the legal burden from falling on the taxpayer, eliminate the Affordable Housing Trust Fund, pay the employees of F&F on a government worker pay scale, raise the guarantee fees, speed up the reduction in F&F’s portfolio (now at $1.5 trillion), increase the oversight power of FHFA, require F&F to abide by risk retention rules, prohibit debt issuance by F&F, curtail any new business activity for F&F (taking the decision out of the hands of FHFA), abolish affordable housing goals of F&F.

(Take note, however, that HR 1859, introduced to eliminate Freddie Mac and Fannie Mae while still keeping a government presence in the housing finance marketplace by using 5 or more private institutions, would extend current loan limits until Fannie and Freddie are no longer in conservatorship. The proposed bill states that FHFA has six months to provide a transition plan to wind down the GSE’s and must determine within one year after five associations have been chartered whether the GSEs can be safely placed into receivership.)

For the bond market, we saw a bit of an improvement yesterday. Rate-sheet MBS prices ended the day better by about .125 and the 10-yr closed around 3.15%. There was no startling news, but instead a combination of weak economic data (Empire State), continued European debt worries, and “hedge unwinds” related to some corporate pricings. Mortgage banker selling remained in the $1+ billion area.

Last month Housing Starts and Building Permits came in stronger than expected, but not so this time around. Housing Starts were -10.6% for April versus up nearly 13% in March. Permits were down 4% in April versus up 7.5% in March. Housing Starts have certainly not followed the growth in the job market – probably due to the high overhang in existing homes. Starts for multi-family units dropped 24%. Later on at 9:15AM EST are Capacity Utilization and Industrial Production for April, called respectively at 77.6% and +0.4% compared to 77.4% and +0.8% in March. No Fed speakers are scheduled. The 10-yr is down to 3.12% and MBS prices are better by nearly .250.


FREDDIE MAC’S HOMESTEPS LAUNCHES NATIONWIDE SALES PROMOTION

Realtors listen up! In a sign of the times, Freddie Mac’s real estate sales unit HomeSteps is launching a nationwide sales promotion for its inventory of foreclosed homes. “The HomeSteps Summer Sales Promotion is offering up to 3.5% buyer’s closing cost and a $1,200 selling agent bonus for initial offers received until July 31 and escrows are closed on or before September 30. This offer is valid only on HomeSteps homes sold to owner-occupant buyers.” There is a potential two-year Home Protect limited home warranty, along with discounts on appliance purchases. Check out SmartBuy or HomeSteps.


REALTORS, YOUR NAR DUES ARE INCREASING

After months of talking about it, the National Association of Realtors (NAR) voted to raised dues by $40 starting next year to fund its political efforts.

That means Realtors’ national dues will increase from the current level of $80 to $120 starting next year. Well, sort of. Realtors now pay $115 in national dues thanks to a $35 assessment for the NAR’s Public Awareness Campaign that has been renewed and funded at varying levels in three-year cycles since it was put in place in 1998. That assessment is up for review again in 2014, meaning national dues have increased – in real dollars – from $115to $155 starting in 2012.

Factor in local and state associations dues that Realtors must pay to be members of the NAR and you’re talking about some real money after awhile. Here in the Natural State, for example, dues to the Arkansas Realtors Association (ARA) were raised from $100 to $160 starting this year, meaning those Realtors who paid state and NAR dues of $215 in 2010 and $275 this year are looking at $315 in 2012 – an increase of 46.51 percent in dues in two years during a time when housing markets are still in full recovery mode. And that’s not taking into consideration any increase in local dues.


STUDY: DISTRESSED SALES HAMPER REAL ESTATE PAY

Distressed sales and economic conditions are causing real estate professionals to make less and work more than they did back in the housing market’s heyday in 2006, according to an annual survey by Inman News about work and pay trends in the real estate industry.

Overall, the survey of more than 1,000 real estate professionals found that real estate professionals are making less on commissions, closing fewer transactions, and facing a spike in distressed properties that is dampening commissions and compensation for many in the industry.

Slightly more than 20 percent of real estate professionals surveyed said they plan to make $100,000-$200,000 in income from their real estate work – before taxes – in 2011; about 17 percent plan to make $70,000-$100,000; and about 12 percent say they intend to make about $35,000-$50,000 this year from real estate, according to the Inman News report, “Real Estate Compensation in 2011: Changing Times in Work and Pay.”

The survey also found:

▪ Distressed sales dampen incomes. More real estate professionals are finding themselves taking part in distressed property transactions, but distressed properties don’t usually nab the same real estate commission rates as typical sales. In general, experts say that’s because these properties tend to have lower sales prices. For example, REO properties sold for 36.9 percent less than nondistressed properties during the fourth-quarter of 2010, according to RealtyTrac. Distressed properties also tend to take longer to close.

▪ Economic conditions pull down compensation. In a separate 2010 study, most real estate professionals cited local and national economic conditions as having the biggest impact on their compensation and income in 2010. In this most recent study, “distressed properties” was an added option, in which the highest share of real estate professionals selected as having the most impact on their compensation/income in 2010. This is a change from just a few years ago. In 2008, the largest share of responses centered on “competition from agents offering discounts” as having the biggest impact on commission rates (only 3.4 percent of respondents in the latest survey said that was a problem).

▪ Agents report fewer sales. Nearly half of those surveyed said they closed fewer than 11 transactions in 2010.

However, more real estate professionals are optimistic that business is improving and plan to close more transactions this year than last, according to the survey. More than 25 percent of respondents say they expect to close more than 25 transaction sides this year–that’s up from 16.8 percent in 2010 and 15.7 percent in 2009. Also, nearly 70 percent of the real estate professionals surveyed said they expect to close 11 or more transaction sides this year.

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