April 2014 Industry News for the Appraisal and Mortgage Industries
Topics: FHFA to Expand Mortgage Database, Fracking Decreases Property Values, Expired Tax Breaks, Condo Spot Loans, ABA Lending Survey, Spring Activity Heats Up, Mortgage Debt Forgiveness, Zestimate Unpatentable, Freddie Releases MiMi, FHA Electronic Appraisal Submission
April 28, 2014
FHFA Will Expand National Mortgage Database
The Federal Housing Finance Agency (FHFA) has opened a commenting period on the proposed expansion of the national mortgage database it created in 2012 with the Consumer Finance Protection Bureau (CFPB). The FHFA proposal outlines the collection of additional data elements on borrowers and loans. More detailed demographic and personal contact information, loan-level mortgage performance data on other credit lines held by borrowers will be collected. The FHFA says that in most cases, the records will not contain personal identifiers. Records that contain personal identifiers will only be used to match the records with other datasets. Comments are being accepted through May 16, 2014.
Fracking Decreases Property Values
As the hydraulic fracturing or “fracking” boom continues to grow, it will have consequences for both lenders and homeowners. The property values of homes situated over fracking wells can fall by as much as 15% as outcomes like contaminated groundwater, polluted air and earthquakes begin to be linked to the operation of wells. The increased potential for environmental accidents should also give lenders and homeowners pause, as up to 5% of wells will experience some sort of incident. In some instances, homeowners do not own the property rights to the subsurface estate – the underground area where drilling takes place. Even if loans made to fracked properties are low risk, Fannie, Freddie, the FHA and the VA prohibit gas leases on their loans.
April 21, 2014
The Path to Renewal of Expired Tax Breaks May Be Bumpy
Renewal of expired federal tax benefits for underwater homeowners is moving forward. The Senate Finance Committee has approved a package of tax breaks that include a two-year extension of the Mortgage Forgiveness Debt Relief Act. However, some Senators, led by Ways and Means Committee Chair Dave Camp (R-MI), want to look at deductions line by line possibly slowing the process with months of hearings and markups. It is not known if the mortgage debt tax relief would survive the evaluation, especially if the provision relies on finding a way to cover the estimated $5.4 billion it would forgive over 10 years.
FHA May Offer Spot Loans on Condos Again
Condo owners who live in buildings that aren’t approved for FHA lending may once again be able to procure “spot loans”. These loans were banned almost four years ago, after being available from 1996 until 2010. Pressure from the National Association of Realtors as well as the Community Associations Institute have caused the FHA to reconsider the policy. The FHA says it now has better controls in place and if it does reintroduce spot loans it will be with much stricter qualification standards.
April 14, 2014
One Third of Bankers Say They Will Only Lend Within QM Guidelines
The results of an American Bankers Association (ABA) study are in and it shows that bankers are wary of stepping outside of new regulations. In the annual Real Estate Lending Survey, they found that over 80 percent of bankers see Dodd-Frank rules as restricting credit, which will shrink the number of people able to qualify for mortgages. Over a third also said that they will only offer Qualified Mortgages, while another third said they will offer non-qualified mortgages but only to certain borrowers.
Spring Housing Activity Heats Up
Demand from home-buyers is finally picking up after a rough winter that saw lackluster activity. Redfin Research Center’s Real-Time Demand Pulse, a monthly look at home tour and offer activity, found that the number of people touring homes rose just over 11 percent, the largest gain in three years and much, much higher than February’s 1.9 percent increase. In another sign of strength, the amount of people signing offers went up nearly 20 percent in March. This spring is expected to be a competitive season for home-buyers as the market gains steam and inventory remains relatively low.
April 7, 2014
Senate Moves Forward with Mortgage Debt Forgiveness Measure
The bill extends a measure that expired on Jan 1, 2014 that prevents underwater homeowners from being taxed if they have gone through a principal reduction or they sell their home via a short sale. If the bill does not pass, homeowners with negative equity stand to face thousands of dollars in tax liabilities for loan modifications or short sales. Senator Debbie Stabenow (D-MI) said the bill is “critical to homeowners who want to stay in their homes”. If passed, the bill will extend the Mortgage Forgiveness Debt Relief Act for two years.
National Mortgage News (Subscription)
Patent Office Rules that Zillow Cannot Patent “Zestimate” Valuation Tool
Over two dozen claims made by popular real estate site Zillow about its automatic valuation tool called “Zestimate” have been ruled unpatentable by a patent review board. They can not be patented, the board said, because the information and/or practices were already public before the patent was filed. This ruling may weaken a lawsuit Zillow brought against online real estate giant Trulia in September 2012 for creating its own valuation tool.
April 1, 2014
Freddie Mac Releases Multi-Indicator Market Index (MiMi)
Freddie’s new tool is a publicly-accessible index that monitors the stability of the national housing market, the markets of each of the states including the District of Columbia and the top 50 metro markets. Ratings are gleaned from purchase applications, payment-to-income ratios and employment, among other factors.
FHA to Require Electronic Appraisal Submission
Fannie Mae and Freddie Mac have required the electronic submission of appraisals for two years now and the FHA is just now catching up. The web portal that lenders and AMCs will use is slated to be available in 2015. The platform will be very similar to the Uniform Collateral Data Portal (UCDP) currently used by the GSEs Fannie and Freddie. The EAD will accept the same Uniform Appraisal Dataset (UAD) form that appraisers use for GSA and FHA mortgages.
National Mortgage News (Subscription)