Top 10 rising real estate markets in May

Zillow Home Value Index down a slight 0.9% on an annual basis

 Friday, June 22, 2012.

Editorial note: This list is based on home value estimates, called Zestimates, from property search and valuation portal Zillow. The Zillow Home Value Index for a metro is the median Zestimate value in that area.
U.S. home values continued to rise this spring, according to an analysis by online real estate marketplace Zillow. As of May, national home values are up (0.5 percent) for the third month in a row, settling at $148,100.
Despite the spring season up-crawl – 0.5 percent in March, 0.8 percent in April – home values remain down (0.9 percent) on a yearly basis from last May when they stood at $149,445.
However, some hard-hit metros are seeing a sustained recovery in home values, including Phoenix and three Florida markets: Fort Myers (No. 2), Miami (No. 3) and Punta Gorda (No. 7). Fort Myers and Miami-Fort Lauderdale, Fla., saw 6.7 percent and 5.2 percent year-over-year home value increases, respectively, in May.


Familiar recovery front-runner Phoenix is living up to its name, topping the May list for its year-over-year home value increase of 9 percent to $133,400. High yearly increases in median list price as well as age and amount of inventory catapulted Arizona's capitol metro to the top of Realtor.com's Top Turnaround Town list in the first quarter of 2012.
Surging Denver captured the No. 10 spot in May with a 2.6 percent year-over-year home value increase to $209,000, the second highest home value of any metro in the top 10.
Honolulu (No. 9) has the by-far highest valuation in the top 10 at $489,000.
Tulsa, Okla. (No.4), and Oklahoma City (No. 6) are in the top 10, too, representing the "Sooner" state yet again as a Zillow Home Value Index list-topper in 2012

Shy Shinalt
Keller Williams Tyler
903.533.8114
www.shyshinalt.com

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Valid mortgage price quotes do exist

Do you know where to look?

By Shy Tyler Homes Monday, June 25, 2012.

"How many lenders must I shop to be certain I receive a competitive price?"
If you have access to valid price quotes, three is usually enough. If you don't have access to valid price quotes, you won't get a competitive price no matter how many lenders you solicit.
Valid prices are prices that the lender would be willing to commit itself to at the time the price is quoted. Differences in valid prices posted by different lenders are small, which is why you don't have to shop many lenders. The reason is that 95 percent of all new mortgages today are either sold to Fannie Mae and Freddie Mac, or insured by FHA or VA, so that the federal government assumes virtually all of the risk.
The residual risk to the originating lenders, that they might be required to buy back loans or, at an extreme, lose their right to originate, is small and does not result in large price differences between them. Some lenders are more efficient than others, but price differences from this source are also Tyler Homes

The challenge faced by mortgage borrowers who want to shop is that most price quotes are not valid, and soliciting them is a waste of time. Invalid prices can be quoted to shoppers with impunity because shoppers can't say, "Yes, I'll take it," until the information upon which the price is based has been confirmed, by which time the market will have changed.
Valid mortgage price quotes meet all of the following conditions:
They come from the internal pricing system of the lender, which I call their "posted prices," with no intermediation from loan officers. Loan officers are not bound to quote posted prices, and it is common for them to quote prices below the posted price, called "lowballing," in order to induce shopping borrowers to commit to them.
They are fully adjusted for all loan features that affect the price, such as credit score, type of property, purpose of loan, down payment, etc. The list is a long one. If anything that affects the price is left out, the lender assumes whatever generates the lowest price, which may or may not hold up.
For example, many lenders price loans without asking whether the borrower wants to escrow taxes and insurance. If in fact the borrower does not want to escrow, the price will have to be raised.
They include all price components. This means not only the interest rate and points but also other lender fees that are often left out of price quotes.
They are current as of the time of the quote, not as of the day before. The borrower shopping several lenders must do so on the same day, and to be safe within the same hour of the day, since prices are sometimes adjusted during the day.
Valid price quotes are available on the Internet if you know where to look. Every mortgage lender has a website, but few provide valid prices on them. Most are designed to entice shoppers to identify themselves so that they can be contacted by a loan officer who will give them a sales pitch.
But some lenders provide valid prices on their sites while allowing shoppers to remain anonymous until such time as the shopper elects to contact the lender. These include the seven Upfront Mortgage Lenders that I identify on my website. Shopping them is doable, if a bit of a chore, because each site is programmed differently and the shopper must visit each on the same day to extract the desired price data.
Much the better way to shop is on a multilender website where the site maintains valid prices for multiple lenders, which it presents in one single format for easy comprehension and comparison. There are three of those: mortgagemarvel.com; zillow.com; and mtgprofessor.com, which is mine.
Don't confuse multilender sites with lead generation sites, such as lendingtree.com and lowermybills.com, which do business with hundreds of lenders. These sites do not collect price data from lenders. Rather, they collect financial information including Social Security numbers from shoppers, which they sell as leads to lender clients.
These lead generation sites first identify the lenders who have indicated an interest in the particulars of a lead, and they sell the lead to the three or four lenders who will pay the most for it. The shopper then gets sales pitches from three or four loan officers who are under strong pressure to lowball the price because that is often the way to win the deal.

Shy Shinalt
Keller Williams Tyler
903.533.8114
www.shyshinalt.com

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Getting first dibs on HUD foreclosures

Nonprofits have window of opportunity to buy properties

By Shy Shinalt, Friday, April 1, 2011.

Like most government agencies, the U.S. Department of Housing and Urban Development, which administers the Federal Housing Administration, doesn't get a lot of credit for doing things right. Which is probably why, when it does get on track and offers the kinds of programs that are useful to the marketplace, the agency often escapes notice. Besides, it's easier to criticize than it is to commend.
The FHA's First Look is one those programs that gets overlooked, but it shouldn't because it successfully helps to restore homeownership to communities badly hurt by the ongoing recession, deep unemployment and rampant foreclosures.
In 2008, HUD established the Neighborhood Stabilization Program (NSP) to help communities that had suffered from foreclosures and abandonment. Using NSP funds, states, local governments and nonprofits purchase and redevelop abandoned and foreclosed residential properties that will eventually be put in the hands of new owners.
Good programs, whether government, corporate or individual, aren't static -- they evolve as situations change, and this has been the case with the NSP, which in July 2010 aligned with the FHA's First Look Sales Methods to provide NSP grantees an exclusive option to buy HUD homes before they are marketed to other purchasers.

The alignment was formalized under the appellation, First Look, and the concept was to more hastily confront property abandonment in struggling communities hurt by the foreclosure crisis.

"First Look gives communities participating in NSP an opportunity to purchase bank-owned residences in particular neighborhoods so these properties can either be rehabilitated, rented, resold or demolished."

In September 2010, First Look evolved once more to become the National First Look Program as it became a public-private partnership. In collaboration with Fannie Mae and Freddie Mac, First Look gives communities and nonprofits participating in NSP an opportunity to purchase bank-owned residences in particular neighborhoods so these properties can either be rehabilitated, rented, resold or demolished.
By the end of the 2010, First Look transferred more than 3,000 homes back to private ownership, said Sarah Greenberg, senior manager for community stabilization with The NeighborWorks America (NWA), a Washington, D.C.-based nonprofit housing group that supports a network of 235 independent nonprofits. NWA, itself, has been an active participant in First Look, having transferred about 1,000 homes through its network.
We all tend to look at the mortgage/housing crisis as acts of individual heartbreak or folly depending on how cynical we are, but individual neighborhoods, many of them in low-income areas, were particularly plagued by the housing crisis. Cities, many working with nonprofits, have been diligently working to restabilize these neighborhoods and do so by gaining ownership, rehabilitating and then selling homes to selected new buyers.
When the NSP was unveiled, problems immediately arose. The most serious being the homes check-marked by nonprofits and cities were also being targeted by investors and flippers, whose ownership, often brief, wasn't going to bring stabilization to neighborhoods. Hence, the need for communities to get a "first look."
I know what you're thinking: another boondoggle by government agencies and do-gooders that keeps potential investments out of the hands of free enterprise investors. That's not the case. It does no one any good for a foreclosed home to sit around while some bureaucracy decides its fate. NSP grantees have 24 to 48 hours to express an interest in pursing a specific property and five to 12 business days to conduct inspections, establish costs to repair, and make an offer.
This tight time frame has forced even the notoriously slow decision-making nonprofits to act in real-investor time.
"First Look is a good program," said Lautaro Diaz, vice president for housing and community development at the National Council of La Raza in Washington, D.C. "The problem was for the nonprofits to get their sequencing, to be able to participate quickly enough. You have to act or the property will pass through to someone else ready to buy.
"That orchestration, a nonprofit's ability to do the analytics and purchase, has been the constraint on this program. The nonprofits didn't need five days -- they needed 25 days. But, real estate has to move -- you don't want to impede, you want to support."
La Raza has recently established corporate partnerships to acquire and rehab REOs, and is actively going through the First Look lists, seeking opportunities to convert the REOs into affordable housing.
It's not a complicated system, NWA's Greenberg said. "Our network uses a simple data system called REOMatch (developed by the National Community Stabilization Trust). All the local groups have to do is log into that system on a daily basis and they will see a listing of properties in their target areas. They'll know what the properties will cost; they can go out and take a look; and then there's a short window to let the trust know they are interested."
Homes are purchased directly from the servicers, and much of NWA's network uses local brokers to get the transactions accomplished.
The Great Lakes Capital Fund of Lansing, Mich., has been involved low-income housing for the past 18 years, mostly as a nonprofit syndicator involving low-income housing tax credits. In addition, it also has a number of nonprofit subsidiaries that act as pass-through entities for the First Look program.
"As the name implies, we do get a first look," said Tom Caldwell, an underwriter with GLCF. "The idea behind it is to try and get these properties out to nonprofit organizations that aren't looking to flip them. The nonprofits are seeking to find a property, get it renovated using NSP funds, and put it back into homeownership so that it will stabilize the community."
GLFC has been working the First Look program in such medium-sized Michigan cities as Grand Rapids, Kalamazoo, Lansing, Muskegon and Ypsilanti.
"The homes are mostly in urban core neighborhoods," Caldwell said. "A lot of the properties we've seen had subprime mortgages. If the homes can be turned around with good, solid homeownership -- which is what our buyers/partners want to see happen -- it is a big win for the neighborhoods."

Shy Shinalt
Keller Williams Tyler
903.533.8114
http://www.shyshinalt.com/

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Investors return to affordable housing

How housing finance agencies are incentivizing in the face of a weak bond market

By Shy Shinalt, Friday, May 11, 2012.

Newly built affordable housing image via Shutterstock.

What got me interested in the state of state housing finance agencies (SHFAs) was a small news story at the start of the year about Fitch Ratings issuing a statistical report for the tax-exempt housing sector.
The one sentence that caught my eye read: "In comparing fiscal 2011 results with those from fiscal 2010 for the 34 SHFAs, Fitch found that total assets decreased by 5.4 percent, while total debt decreased by 7.5 percent, reflective of the overall decline in bond issuance."
While the sentence seems straightforward, I was confused because I wasn't sure if the decline in total assets and debt was a good thing or a bad thing.
I decided to call Barbara Thompson, the executive director of the National Council of State Housing Agencies (NCSHA),

 

"We don't want to see assets decline," Thompson said, "but the reason is just as Fitch put it: The overall market (for housing bonds) is bad in terms of activity."
To which she added, "The Fitch numbers are almost a little reassuring that it's not larger than that."
A little background is needed. SHFAs are state-chartered, independent organizations that were established to meet the affordable housing needs of the residents of their states. The housing agencies operate under the direction of a board of directors appointed by each state's governor.
SHFAs run a number of different housing programs, but the two core ones are the low-income-housing tax credit, which produces low-income rental housing, and the tax-exempt, private-activity bond program that raises money for various state housing programs.
As I wrote in a column last year, the low-income housing credit program works this way: Each state is awarded a set amount of tax credits based on census information. Then in a competitive process, for-profits, not-for-profits, housing authorities, etc., apply for an award of credits for their projects, which, if won, flow to the developer entity for a period of 10 years or until the project is completed. The actual financing comes from the selling of credits to investors, generally for less than they are worth.
Big corporations buy the credits to offset profits
The SHFAs and partners have produced nearly 2 million rental homes with equity provided by the housing credit, according to the NCSHA.
During the recession when corporations were bleeding dollars they didn't need credits, and this program floundered until it was rescued by a combined Obama administration and congressional effort.
"There were two programs that basically allowed housing agencies to convert credit to cash because there was no market for credit," Thompson said. "These programs did what they were designed to do -- bridge the most difficult period, from 2008 into 2011. Then what we all hoped would happen, happened: the market returned. There is greater investor interest, pricing is up, and there is a lot of interest in production. The program has really returned."
Unfortunately, the housing bond market has not come back.
State and local governments sell tax-exempt housing bonds, also known as mortgage revenue bonds (MRBs) and multifamily housing bonds (MHBs), and use the proceeds to finance low-cost mortgages or the production of affordable rental housing. According to NCSHA data, MRBs have made first-time homeownership possible for more than 2.6 million lower-income families, approximately 100,000 every year, while MHBs provided financing to produce nearly 1 million "affordable housing" apartments.
Before the Great Recession, the average SHFA bond issuance was around $15 billion to $22 billion, according to Garth Rieman, director of housing advocacy and strategic initiatives for NCSHA. He breaks it down this way: In 2004, there was $9.6 billion in bonds issued for single-family and $5.58 billion for multifamily; in 2007, those numbers rose to $17.8 billion for single-family and $4.9 billion for multifamily.
In addition, bond issuance is the way most SHFAs generate revenues to keep operations going. Although some SHFAs are attached a little more directly to state governments, very few get operational support through state funding. For the most part, they are self-sufficient, maintaining operations through earnings off their bond programs.
The Obama administration again stepped in with a program to unfreeze this bond market, but that could end at the beginning of this year.
"Once that is over, the states probably still won't see a lively bond market," Thompson said pessimistically. "The municipal bond market in general has been hit hard and there is little activity for the housing sector."
This isn't to say that some SHFAs have not been successful. One of the most salubrious has been the Pennsylvania Housing Finance Agency (PHFA), run by Brian Hudson, its executive director and CEO.
"The bond market is not in the best of shape," Hudson said. "Investors want more yield. Anything that has the word housing attached to it means investors want to be paid handsomely. You can't offer an attractive mortgage rate when you're funding capital with higher yields."
To get around this impasse, PHFA became a direct Ginnie Mae seller/servicer.
"We use some of our own funds to warehouse mortgages until we can package them into a Ginnie Mae mortgage-backed security," Hudson said.
In the normally quiet winter months, Hudson said his agency was doing about $7 million a week in mortgages.
In the heart of the Great Recession, PHFA stayed active, doing about 4,000 loans with a value of $413 million in 2009, and 7,727 loans valued at $821 million in 2010.
How have those mortgages performed? In short, exceptional.
"Our foreclosure rate is around 1 percent," Hudson said.
The secret sauce in regard to PHFA's success is a combination of factors, including full underwriting, documented income and counseling. Also, since most homeowners can afford a mortgage but don't have the money for a down payment, PHFA provides $4,000 in what Hudson calls "closing cost assistance."
And Thompson noted, "SHFAs are spending a lot of time retooling and coming up with new lending executions that they, perhaps, have not used in the past."

Shy Shinalt
Keller Williams Tyler
903.533.8114
http://www.shyshinalt.com/

Switching apartments triggers suprise fee

Switching apartments triggers surprise fee

Rent it Right

By Shy Shinalt, Friday, June 15, 2012.

House built from paper money image via Shutterstock.

Q: After my lease was up, I asked to move to a different apartment in the building. Management charged me a $200 fee for repainting and new carpeting. But I didn't pay this fee when I initially moved in, and new tenants at this time don't pay it either. Is this legal? --Judith M.

A: Management has charged you a "move-in fee," which is a one-time fee that's intended to reimburse the landlord for costs associated with processing a new tenant. Typically, they include new keys, the value of management's time spent processing the lease and introducing the tenant to the property, and so on.

It's unusual to see such a fee include refurbishing costs, such as new paint and carpet. Normally, if a rental needs these due to abnormal use by the prior tenant, the landlord deducts the cost from the prior tenant's security deposit. If the paint and carpet need to be refreshed due to normal wear and tear, the landlord simply does the work -- this is known as upkeep, and while tenants indirectly pay it through their rent, they are not usually charged separately for normal upkeep.

Let's assume that new paint and carpet are needed only because the old has run its course -- normal wear and tear has resulted in the need to paint and recarpet. Your landlord is trying to avoid paying "the cost of doing business" by charging you separately for the expense. But this may not be legal, depending on the law of the state where you live.

 

California legislators, for example, got wise to this landlord ploy and amended the security deposit statute to require any upfront payments to be refundable, no matter what they were intended to cover (fees to run a credit check are exempted). The law specifically allows landlords and tenants to agree that the tenant will pay for alterations or improvements, but only if these are at the tenant's request, and only if these improvements are not for repairs or cleaning for which the landlord could have charged the previous tenant. (Calif. Civil Code Section 1950.5.)

You'll need to check your state's security deposit statute to see whether your legislators have taken similar steps. If nonrefundable fees are allowed in your state, you may be out of luck.

Q: Is there any downside to sending notices to my tenants via email, and not bothering with a hard copy sent through the mail? It would make life a lot easier. --Jeff B.

A: It's certainly tempting to do business with a keystroke. Under federal law, you'd be able to introduce the notice into court as evidence -- a court would not automatically deny it simply because it was sent electronically. But that's putting the cart before the horse -- you might need to be able to prove that your tenant received the notice, and that's something else entirely.

How do you counter the argument that the email "got sent to spam" or just never appeared? The only certain way to prove receipt is to use an expensive service, such as rpost.com, that allows you to send tamper-proof attachments and gives you reliable proof of receipt. This type of service won't be economically feasible for landlords who send only a few notices a month.

Relying on text messages is even riskier. Evidence of receipt isn't possible unless you undertake an exhaustive records search of the recipient's service provider, something that would never be reasonable in a typical landlord-tenant dispute concerning notice of, say, a raise in the rent.

It's far better to stick with a traditional mail delivery system. To be extra careful, mail your notice and do it "return receipt requested."

Shy Shinalt

Keller Williams Tyler

903.533.8114

shyshinalt.com



3 unexpected upsides of homeownership

Mood of the Market

By Shy Shinalt

Homeowners painting wall image via Shutterstock.

Lately, I've been surprising myself at how often I hear myself reference an event that happened 20 years ago or describe a dear friend as having been my "bestie" for the last decade. But there was no denying that I'm a bona fide grown-up when last year I got a note in the mail announcing my 10-year reunion -- for law school, not high school!

Having moved to the San Francisco Bay Area specifically to go to law school, this means that I'm staring down my 15th year in the area; and having bought my first home just months after graduation, I'm looking at my 10th year of homeownership -- though I've owned three different homes in that time, they've all been within the same metro area.

And it strikes me that, besides the obvious tax and long-term financial advantages of homeownership, I've become conscious of some of the less obvious, unintended advantages of owning a home in the same area for a relatively long period of time. I'd like to share some of them with you:

1. New, deeper relationships. I have relationships with neighbors, with local vendors and even with the natural beauty of my area that I likely would not have if I hadn't owned my home and stayed in the same place for so long. I say this is an unexpected upside of homeownership because homeownership, especially given the down market of the last few years, has meant staying put, and because many of these relationships only deepen after years and years; I'm finding new depth in them, even now, that I didn't have two or three years ago.

 

Some of these things seem relatively trivial, like the fact that I know that my tailor's Maltese, Momo, leaves her brood at home while she gets to come to work with her mom every day. I know that every May, the private school campus across the street from my house dresses itself up as Hogwarts. I can count on Vernon, the park ranger at the lake, to keep me honest on how many laps I've run on any given day -- and to gently relocate any snakes I happen to encounter en route.

Angelina at my favorite restaurant? She knows my order as soon as I give my name on the phone: No. 64 -- no tomatoes, no onions.

Collectively, these sorts of relationships, not to mention those with my neighbors, are not trivial; in fact, they are part of what makes home feel like home. So are all the nooks and crannies of my street, the hidden spots and stairs and secret spaces that took me years to discover. And I'm not saying that a very long-term renter could never develop such relationships or have such discoveries, but I know these people are part of my commitment to the area that is intertwined with my experience of homeownership.

2. The ability to customize your home with your personality and your life as they change. When you own a home, you can tailor it precisely to whatever is going on in your life at any given time. The same backyard in which your kids' playhouse and ball games take place when they're 10 can quickly be repurposed for your vegetable garden and outdoor living room when they go to college. You can morph your family's den into a chic dedicated office or yoga room as your needs change -- or your man cave can convert into a nursery, as the facts require. To some extent, renters can put different furniture in rooms over time as they need to, but most (wisely) prefer not to invest serious cash into truly converting or remodeling rooms in homes they don't own.

3. The ability to leverage your space. I'm not talking about refinancing, pulling cash out or flipping your home when the market goes up. Rather, I'm talking about how, if push comes to shove (or if you just have extra space), you can rent a room, a floor or the whole place out, for a night, a season or a year.

I'm talking about the writer I know who dog-sits while she works, letting her little canine charges run amok in their homes and yards and earning a side income at the same time.

I'm talking about the ability to put a pin in your place in the market, continuing to grow your equity and harvest your homeowner tax advantages, while you explore adventures by renting out your home or even trading it with another homeowner across the country (or the globe).

Owning a home is not for everyone, and it has definite pros and cons. But as I embark on my 10th year of homeownership, I wanted to share some of the unexpected upsides I've encountered with you.

Shy Shinalt

Keller Williams Tyler

903.533.8114

shyshinalt.com

Tyler Homes / Tyler Home loans

Mortgage rates halt 6-week slide

Demand for purchase loans highest in 6 months

Mortgage rates finally found a bottom this week, following six consecutive weeks of declines, but remained near record lows as worries about the European debt crisis continue to make bonds that fund most mortgages look like a safe bet to investors.

Rates on the 30-year fixed-rate mortgage (FRM) averaged 3.71 percent with an average 0.7 point for the week ending June 14, up from 3.67 percent last week but down from 4.5 percent a year ago, Freddie Mac said in releasing the results of its weekly Primary Mortgage Market Survey. Last week's rate for 30-year loans was an all-time low in Freddie Mac records dating to 1971.

For 15-year fixed-rate loans, rates averaged 2.98 percent with an average 0.7 point, up from 2.94 percent last week but down from 3.67 percent a year ago. Last week's rate for 15-year loans was a low in records dating to 1991.

Rates on the five-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 2.8 percent with an average 0.6 point, down from 2.84 percent last week and 3.27 percent a year ago. Rates on five-year ARMs hit 2.78 percent during the week ending April 19, an all-time low in records dating to 2005.

For one-year Treasury-indexed ARMs, rates averaged 2.78 percent with an average 0.5 point, down from 2.79 percent last week and 2.97 percent a year ago. Rates on one-year ARMs hit an all-time low in records dating to 1984 of 2.72 percent during the week ending March 1.

A separate survey by the Mortgage Bankers Association showed demand for purchase loans for the week ending June 8 was up a seasonally adjusted 13 percent from the week before, and up 4 percent from a year ago.

Although requests to refinance accounted for eight out of 10 mortgage applications, demand for purchase loans was at the highest level in more than six months, the MBA said.

Mortgage rates are near historic lows in part because global investors see mortgage-backed securities guaranteed by Fannie Mae, Freddie Mac and Ginnie Mae as a safe haven from turmoil in financial markets.

Fears that heavily indebted countries like Portugal, Italy, Greece and Spain will default on those debts, disrupting eurozone trade and plunging the global economy into another recession, continue unabated this week.

Moody's Investor Service downgraded Spain's sovereign credit rating Wednesday, and Greek banks have seen a run on deposits as customers prepare for the possibility that parties opposed to austerity measures will prevail in elections scheduled for Sunday, Reuters reports.

The impact a eurozone meltdown would have on the U.S. economy is unclear. The 17-nation eurozone was America's largest trading partner in 2011, Yahoo Finance economics editor Daniel Gross notes. But Canada, Mexico and Latin America, Asia and Africa have become increasingly important trading partners in recent years.

Trade isn't the only issue at stake, Gross said, "There are several other channels of contagion."

Central banks around the globe are making plans to protect their currencies and economies from the impacts of an exodus of capital from eurozone countries, Reuters reports. Demand for U.S. dollars strengthens the currency's value, which can hurt exports by making U.S.-made goods more expensive to foreign buyers.

Shy Shinalt

Tyler Property Management

903.533.8114

easttexasrentals.com

Supreme Court Ruling favors Real Estate Brokerages

Good News: Supreme Court Ruling Favors Real Estate Brokerages

On June 1, 2012,         

 

Late last week, the U.S. Supreme Court ruled favorably on a case involving unearned fees under Real Estate Settlement Procedures Act (RESPA). While the ruling was about mortgage lending, it has direct implications for real estate brokerages and the transparency of settlement service fees.
In short, here are the key points to the cases that led to the Supreme Court ruling and the implications for real estate brokerages:
What did the Supreme Court rule?
In Freeman v. Quicken Loans, Inc., the Supreme Court held that there is a violation of RESPA only when a settlement service fee is shared, or split, with a third party.
For even more details about the ruling, check out this blog post from Speaking of Real Estate.
What was the original case?
It all started when three married couples received mortgage loans from Quicken Loans. The couples filed three separate lawsuits against Quicken, contending that Quicken had charged fees for which no services were provided and therefore the fees violated RESPA. One such charge was labeled a “loan processing fee” and another charge was called a “loan discount fee.” It was alleged Quicken had not provided a discount in exchange for those fees.
What was the couples’ basis for their argument?The three couples relied on a 2001 policy statement issued by U.S. Housing and Urban Development, or HUD, that interpreted RESPA to prohibit the collection of unearned fees in real estate settlement services even when the charges are not shared with a third party. They argued that any of Quicken’s charges that didn’t relate directly to service provided were a violation of RESPA, regardless of whether the fees were shared with another party.
Quicken argued that it had not violated RESPA, since it did not split any fees with a third party.
The couples’ lawsuits were consolidated and went to federal circuit court. This court ruled in favor of Quicken. Then the couples appealed, and the case went to the Supreme Court.
What else did the Supreme Court find?
The Supreme Court easily recognized that HUD’s own policy statement was inconsistent with the plain language of the statute. In other words, HUD was interpreting the statute to mean that a fee split with a third party doesn’t need to take place in order for a RESPA violation to have occurred when, in fact, the statute itself states that a RESPA violation involves a fee split.
In addition, prior to the Supreme Court’s ruling, federal circuit courts throughout the country differed in what they considered a RESPA violation. Some agreed with HUD’s policy statement prohibiting any unearned fees, while others required a third party fee split for a RESPA violation to occur. Fortunately, the Supreme Court resolved this difference.
What was NAR’s role?NAR filed a brief in the Supreme Court to emphasize the importance of this issue to the real estate brokerage industry. NAR’s brief informed the Court about several prior cases that had held brokers liable for RESPA violations for charging “administrative fees” even though those fees were not split with other parties.
What does this decision mean for real estate brokerages?
Because of the unanimous Supreme Court ruling, administrative fees charged by a brokerage in addition to a percentage-based commission do not violate RESPA unless the broker splits it and pays a portion of it to a third party outside of the brokerage firm who provides no services in exchange for the fee.

Shy Shinalt
Keller Williams Tyler
shyshinalt.com
903.533.8114

Overcome mortage obstacles / Tyler Homes / Tyler Real Estate market

Overcome mortgage obstacles when relocating

REThink Real Estate

By Shy Shinalt, Thursday, June 14, 2012.

Relocating homebuyers image via Shutterstock.

Q: My husband and I are planning to relocate up north and change jobs and our environment. Should we get preapproved before changing places of employment, or would it be all right to take another job as long as it is the same type of work? What steps would you advise us to take?
Relocating can be a little tricky, from a mortgage perspective. It's always advisable to get preapproved for a mortgage before you make a major move like a job change, but lenders are pretty good about scrutinizing all the details these days.
If you get approved for a home loan while you live and work in one town, then try to use that loan to purchase a home more than 25 miles away from your job, chances are good that your lender will require some sort of note from your existing job documenting that they understand you are moving and will allow you to have some sort of long-distance working arrangement, or will want to see proof of a new job in your new town.
To your point, though, by "new" job, lenders are looking for you to have a job in the same field as you're currently working in. They don't want you experimenting with entirely new lines of work on their dime, in case things don't work out and you find yourself with the new mortgage but without any job at all.

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Keeping those things in mind, I recommend you take the following course of action:
1. Find your local real estate and mortgage pros in your new home town. Get referrals from folks you know in your soon-to-be neck of the woods and ask questions of agents on the active Q-and-A pages of the big national real estate listing websites to develop a short list of agents to meet with.
Ask these agents to refer you to local mortgage professionals. Although most lenders are national, local mortgage brokers and bankers know what local financing challenges may exist; they know local appraisers; and they also know about opportunities like city and state down payment assistance programs.
Contact them, make appointments, then take a day trip to your intended hometown and meet with these folks face to face to find a great personality fit. When you feel like you've created a good connection with one real estate pro in particular, you might even ask him to give you a tour of a number of homes that are currently on the market, so you can get a real-time reality check on what price range of homes you'll be aiming for.
2. Explain every part of your financial and job situation to both of your pros. Well before you quit your job, perhaps even while you're meeting with these agents and mortgage pros, explain your financial, job and timing situation to them. Don't miss out on the expert knowledge these professionals have, as well as their up-to-date experience of what lenders will want and will require from you. Talk with them about what specific paperwork you'll need to produce in order to document that your next job is in the same line of work as this one. And keep all of these things in mind as you execute your relocation, your home purchase and your job hunt.
3. Work with your chosen real estate and mortgage pro to put an intentionally sequenced action plan in place. With so many moving parts in the air, don't be surprised if some advise you to get a job, move and then rent a place on a month-to-month lease while you house hunt. Others may tell you to try to time it all perfectly, house and job hunting at the same time.
Personally, I'm inclined to eliminate any intense time pressures from the house-hunt experience whenever possible to minimize panic-based (i.e., bad) decision-making, so I would encourage you not to create a situation in which you have to close a home purchase by a certain date in order to have a place to live when you start your new job or have similar pressures in that vein

Shy Shinalt
Keller Williams Tyler
903.533.8114

Why Apple should buy facebook / Tyler Homes

Why Apple should buy Facebook

Such a deal would let the social network's investors cash out at something close to what they were expecting.

The biggest "tell" in what was otherwise a pretty boring Apple WorldWide Developers Conference Monday came during the iOS6 portion of the presentation, when Apple (AAPL +0.23%) announced full integration with Facebook (FB +0.37%).

Unlike most of what happened at the event, this went beyond what was rumored. A system for letting developers integrate their own apps with Facebook is also coming out, and it's now accessible directly from inside the App Store.

All of which got me to thinking:

At its Monday close Facebook is now worth "just" $58.4 billion, a long way from the estimated $100 billion figure talked about before the IPO. It's still pricey -- a price/earnings ratio of 87 -- thus unlikely to hit those heights any time soon.

Some of the investors who came in before the initial public offering, who could sell their shares once the "lockup" period expires, are either underwater or may perceive themselves to be.

Apple still lacks a social network. Its "cloud" is not a cloud at all, but a data center.

Facebook has been building a real cloud, using open source tools, for some time and it has engineers who really understand the need to save money on cloud installations if you want them to last.

My guess is Facebook's investors would jump at a bid of $80 billion. That's a huge premium from the current price.

As of March, Apple had a cash hoard estimated at $97.6 billion. It's continuing to accumulate cash, and its plans for a dividend are not expected to make a significant dent in the hoard. The company's market cap is $534 billion.

So Apple could easily do a half-cash bid for Facebook, acquiring a fast-growing asset with significant cloud presence for less than one-tenth its common stock and less than half the cash it has on hand.

Apple's biggest problem is that, insofar as its cash flow is concerned, it's mainly a manufacturing company. That's where its money comes from. That's where its growth comes from. That's why it sports a P/E of "just" 14.5 as against more than 17 for Google (GOOG -1.05%).

Facebook is everywhere Apple isn't. It has a big lead over Google in social networking, and in terms of raw cost may become close to competitive in cloud. (Its assets are newer, thus there may be some efficiencies there.)

Selling to Apple would let Facebook's investors cash out at something close to what they were expecting. Mark Zuckerberg would go from having about $1 billion in cash to much more. Apple CEO Tim Cook could negotiate enough autonomy to make the move seriously interesting. Facebook would give Apple the advertising presence it lacks, and this is a deal only Apple could do so there is unlikely to be a second bidder.

It may be about the only really big thing Apple could do that wouldn't draw scrutiny from the U.S. Justice Department, because the two companies are in completely different businesses. And that problem of Facebook lacking a mobile strategy? Solved.

What is most disappointing to Apple bulls is how "normal" a company Apple has become under Tim Cook. It is, as I wrote last year, like Elvis being replaced with Jackson Browne. It is evolving into just another big tech, on a larger scale than anyone could have imagined at the start of this century but, still, just another big tech.

Buying Facebook would instantly make Apple younger, it would give Apple an ad presence, it would give Apple a better cloud story. It would give Facebook cash, access to capital and a real shot at competing with Google, which is currently more than two times its size in terms of market cap.

People call Zuckerberg the new Steve Jobs. When the mothership in Cupertino is ready for occupancy, he will have been trained to take over the bridge. He'll still be in his 30s when Cook is ready for retirement.

Tyler Homes / Shy Shinalt

903.533.8114

Tyler Homes

Low Inventory Helps Push Prices


Already home prices are turning up. Though many economists have been calling for no price gains or only very minimal gains over the next several years, a surprise upside looks to be quickly developing.
First, let’s review the data. NAR’s median price of all homes transacted in April showed a monthly gain of 7.6 percent. However, the median price is not a good reflection of genuine price appreciation of a person’s home because it is influenced by which types of homes are getting sold during that period. If only the upper-end is moving, then the median price will be high. If only the lower-end, then the median price will be low. Also, April is the time when families with children start to buy and they typically purchase a larger-sized home that tends toward the higher price points. The median price, though it may not genuinely reflect an appreciation of a person’s home, is nonetheless vital information for computing GDP contribution from home sales.
There are many price indices that try to measure the price appreciation of a typical person’s home. All have slightly different computation methods. But all are beginning to say the same story: that the worst is over and the prices are stabilizing or rising. The following table shows home price changes in the latest available month and what it would be if the monthly gains can be sustained over the next 12 months.

REALTORs® well understand that all real estate is local. Unlike commodities that can be easily shipped to any place, one cannot simply lift a home in Detroit and fly it over to San Francisco to exploit a price arbitrage. Local market variations therefore clearly exist, which REALTORS® need to explain to their clients.
Note that the latest available data is not June, the current month, because of the lag time in data collection process. It is worth noting that home price has an additional special lag that arises from the nature of the home buying process. The March data, for example, was the price negotiated and agreed to in November or December, if not earlier. So the most current house price information that is being flashed across newspapers and TV screens actually reflects what happened six or more months ago, when inventory conditions could have been measurably different than conditions now.
What is occurring now is that inventory shortages are developing in increasingly more markets. The total number of homes with a ‘for sale’ sign in April was 2.54 million. This figure is the lowest April tally since 2005. Recall that the housing market was booming and bubbling in 2005. We are not in a boom because one important difference between now and then is that housing demand is about one-third lower. Nonetheless, the current supply and demand dynamics is such that we are essentially back to normal. Historically 6-months supply of inventory is the norm and that is what we have been consistently experiencing for several months. Because the total inventory count do not measurably rise from April levels as we proceed through the rest of the year, the 6-months supply will stick and a 5-months supply is not out of the question. Such conditions imply home prices will be rising 3 to 5 percent annually.

In addition to the falling inventory of existing homes, there is a dearth of newly constructed home inventory. The latest is only at 146,000 new homes for sale, it is at the lowest since the data was collected 50 years ago. The difficulties in obtaining construction loans by small-sized homebuilders are restraining growth in the industry despite the falling inventory conditions. The big builders like Lennar and Toll Brothers can issue bonds and tap Wall Street capital, but not the small homebuilders. The current rate of housing starts is less than half of historical annual average, and this low construction activity has been persistent from late 2008. Therefore, the pipeline of new home inventory is already very thin and is not filling in any notable way. This lack of new home construction will also play a bigger role in lifting home prices faster for at least the next 2 years than most analysts expect.

Finally, what about the shadow inventory – those homes not yet on the market but that will surely land there given the large number of delinquent mortgages. There is clearly a shadow, but the current number of seriously delinquent mortgages (at least 3 months late or in foreclosure process) is smaller than what it was one year ago. One year ago, the shadow was smaller than two years ago. In other words, even the shadows are no longer a threat to home price growth. Based on steadily thinning out delinquent mortgages, the number of distressed property sales will fall to about one-quarter of all transactions by the year end from the current one-third. This time next year, distressed sales could comprise maybe only 15 percent. Therefore, the falling share of distressed sales over time will be another factor that lifts home prices. There is no reason to shop for a shadow inventory costume for next Halloween because it is no longer scary.
In my view, the absolute low point in home prices has already passed in many markets. Home price measurements, due to lag time, will confirm that in the upcoming months. But given the rock bottom low mortgage rates and continuing low home prices, it is still a dandy time to be a homebuyer.


Shy Shinalt
Keller Williams Tyler
903.533.8114