National Association of Realtors

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Hedging, Client Retention Tools; STRATMOR on the ICE 24 Event; MBA on the NAR Settlement; Dual Compensation

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Hedging, Client Retention Tools; STRATMOR on the ICE 24 Event; MBA on the NAR Settlement; Dual Compensation

By:
Rob Chrisman

7 Hours, 19 Min ago

I saw a sign recently: “Psychic Fair Cancelled Due to Unforeseen Circumstances.” No one can see into the future, or can read minds, and communication is always a good thing. But if I had to predict something, mortgage-related fees (what is disclosed, and how, at closing) will be something in which the CFPB would become increasingly interested. The CFPB believes that “junk” fees are driving up housing costs, and wants to hear from you. Regarding costs, many lenders are wondering about the proposed NAR settlement, its costs, and even dual licensing. Will we see an increase in the number of dual licenses with the recent NAR settlement, and what about the states that do not allow a person to maintain both NMLS licenses and Realtor Licenses simultaneously? Attorney Brian Levy addressed dual compensation in one of his Musings. (Found here, this week’s podcast is sponsored by Visio Lending. Visio is the nation’s premier lender for buy and hold investors with over 2.5 billion closed loans for single-family rental properties, including vacation rentals. Today’s has a roundtable discussion from the ICE conference in Vegas with Brett Brumley, Matt Kovac, Justin Demola, and Rob Chrisman on automation and its benefits to lenders and vendors.)

Lender and Broker Services, Products, and Software

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With the recent commissions’ settlement, loan officers must now reevaluate their engagement strategies with their agent network. The key ingredient in long-term success boils down to something so simple, yet very impactful: building closer relationships with homeowners. That’s why loan officers are turning to the Milestones “Super App,” a powerful platform that delivers white-labeled portals to manage the home, build wealth, and everything in between. The value loan officers can bring to homeowners NOW, in close partnership with their agent network, can help them build profitable, long-term relationships for years. Want to start serving your homeowners better? Talk to Sales.

STRATMOR on Customer Experience

When it comes to customer experience, STRATMOR Group covered all angles this week at ICE Experience 24 in Las Vegas. STRATMOR advisors were a common sight on the conference stages, with Brett McCracken sharing his characteristic bombshell secret shopping insights, Mike Seminari revealing some eye-opening truths about the critical importance of having a clean and simple loan process, Sue Woodard challenging tech vendors to look for ways to add value not only to the lender, but the borrower as well, and Garth Graham encouraging lenders to take a hard look at their compensation models to make sure they “get what they pay for.” Looking to refine your organization’s strategies? Contact STRATMOR today.

MBA’s Role in NAR Settlement

No one wants to harm the fragile first-time home buyer, or further dampen the activity in real estate sales and inventory. The Mortgage Bankers Association weighed in on last week’s announced proposed National Association of Realtors’ settlement. Remember that, despite the furor of news and conjecture, the Settlement is subject to court approval although the MBA states we’re likely see changes to go into effect mid-July 2024. “There is also a possibility that the Department of Justice may weigh in on whether the settlement goes far enough, which could result in changes, delays, or abandonment of the settlement. NAR will continue to update its site with the latest information.

“The MBA will work with NAR and other trade associations to limit possible disruption from the settlement and ensure that its provisions are not overly disruptive to home financing. It is important to understand how a change to buyer paid commissions might impact seller contribution limits and we have already advocated for the Department of Veterans Affairs (VA) to lift its prohibition on veterans’ payment for the buyer side agent.

“The proposed nationwide class of home sellers has reached a $418 million joint settlement with NAR that will resolve claims in some of the antitrust class actions against NAR. The Settlement with NAR is in addition to prior settlements (totaling $208.5 million) reached with defendants Anywhere Real Estate, RE/MAX, and Keller Williams.

“Under the terms of the Settlement, NAR will be responsible for paying $418 million in four annual installments along with interest, for the benefit of home sellers across the United States, as well as $3 million toward settlement notices. It also provides for far-reaching changes to NAR’s rules governing real estate broker compensation and the MLS system.

“NAR’s release does not cover agents affiliated with HomeServices of America and its related companies as they are still litigating. And firms that have a total transaction volume of $2 billion or above are not covered by the Settlement. However, the Settlement creates a framework for these larger firms to opt-in to the Settlement to resolve actual or potential claims against them. A firm that wishes to opt-in to the settlement route must deposit into an escrow account an amount equal to 0.0025 multiplied by its average annual ‘Total Transaction Volume’ over the most recent four calendar years and agree to not to engage in the certain prohibited practices. It is unclear at this stage whether the larger firms will in fact opt-in to the Settlement. A similar opt- in provision exists for independent MLS, with the payment being 100 multiplied by their 2023 subscribers.

“In the Settlement, NAR has agreed to various practice changes which are to begin 120 days after the plaintiffs seek preliminary approval of the Settlement. It will eliminate and prohibit any requirement by NAR and NAR MLSs that listing brokers or sellers must make offers of compensation to cooperating brokers or other buyer representatives, and prohibit and eliminate any requirement that such offers, if made, must be blanket, unconditional or unilateral (effectively, eliminating its rules requiring “cooperative” commissions as a condition of listing a home on the MLS).

“It requires MLS participants working with a buyer enter into a written agreement before the buyer tours a home with the following: (a) specify and conspicuously disclose the amount or rate of compensation to be received or how the amount will be determined, (b) the amount of compensation must be objectively ascertainable… It cannot be open-ended such as ‘buyer broker compensation shall be whatever amount the seller is offering to the buyer,’ (c) MLS participants may not receive compensation for brokerage services from any source that exceeds the amount or rate agreed to in the agreement with the buyer.”

The language, “Prohibits NAR MLS participants, subscribers, other real estate brokers, other real estate agents, and sellers from making offers of compensation on the multiple listing service to cooperating brokers or other buyer representatives (either directly or through buyers) or disclosing on the multiple listing service listing broker compensation or total brokerage compensation. It eliminates and prohibits any requirements conditioning participation or membership in a NAR MLS on offering or accepting offers of cooperative compensation.

“Agree not to create, facilitate, or support any non-MLS mechanism for listing brokers or sellers to make offers of compensation to cooperating brokers or other buyer representatives. Require NAR MLS participants acting for sellers to conspicuously disclose to sellers and obtain seller approval for any payment or offer of payment that the listing broker or seller will make to another broker, agent, or other representative acting for buyers. And require MLS participants to disclose to prospective sellers and buyers in conspicuous language that broker commissions are not set by law and are fully negotiable.”

The MBA warned that cooperative commission is not banned; listing brokers and sellers can continue to offer compensation for buyer broker services, just not through the MLS. And the Settlement does not prevent sellers from offering seller concessions through the MLS (e.g., for general buyer closing costs), so long as such concessions are not limited to or conditioned on the use of or payment to a buyer broker.”

The settlement does nothing, unfortunately, to address incompetent, inexperienced real estate agents that do little to promote professionalism, often a complaint from the agent representing the opposite side of the transaction.

Capital Markets

As we mark four years since the big shake-ups caused by the COVID-19 pandemic, the mortgage industry continues to navigate its aftermath, especially in the MBS market. Despite the challenges, there’s been remarkable progress and resilience shown. Vice Capital Markets is one company that has stood firm in the face of adversity, consistently providing steadfast support and innovative strategies to its clients throughout these uncertain times. The company recently shared this video reflecting on the tremendous impact of the pandemic on our industry. If, like me, you’ll be on-site next week at TMC’s The Mane Event in Louisville, Vice Capital President Troy Baars will be on hand to chat about all things capital markets. Drop him a line if you’d like to meet.

Yesterday granted market participants more time to digest the results of this week’s Federal Open Market Committee meeting. As a reminder, the Fed maintained the fed funds rate at current levels and signaled that it would begin cutting this year, which kicked off a post-meeting rally in markets. There’s now more confidence that rate cuts are coming in the second half of the year than there was prior to the meeting. The revised “dot-plot” continues to show the majority of the committee believes that three 25 basis point cuts is the most likely outcome before we close the books on 2024. That said, there were more votes for two 2024 cuts than there were in December.

As far as economic releases, yesterday’s release of flash Manufacturing and Services PMI reading from major economies showed that most pointing to a continued contraction in both sectors. The U.S. was an outlier as both Manufacturing and Services PMI readings indicated an ongoing expansion. Those reports contributed to the early pressure, as did another solid jobless claims reading and a strong existing home sales report.

But existing home sales easily beat expectations and rose 9.5 percent during February. Although historically slow, the 4.38-million-unit pace marks the strongest pace since February 2023, and is likely due to the dip in mortgage rates that occurred at the beginning of the year. Inventory remains tight, but a small swell of new supply hitting the market was another factor driving the faster sales pace.

There is no notable data scheduled for release today but plenty of Fed speakers no doubt reinforcing the message from earlier this week: Chair Powell, Governor Bowman, Fed Vice Chair Jefferson, Fed Vice Chair for Supervision Barr, and Atlanta Fed President Bostic are all scheduled to deliver remarks. We begin the day with Agency MBS prices better .125-.250 than Thursday night, the 10-year yielding 4.22 after closing yesterday at 4.27 percent, and the 2-year at 4.60.

Jobs

“At Evergreen Home Loans, we’re proud of our strong female leadership, with 68 percent of our team being women, including 11 branch managers. We’re on a mission to expand our team with talented Loan Officers who are eager to work in an empowering, supportive environment. Here, you’ll join a group of industry-leading professionals who thrive under the guidance of skilled women leaders. We offer a nurturing space for growth, innovation, and success. If you’re a Loan Officer aspiring to excel in a company that values diversity and leadership, Evergreen Home Loans is your destination. Join us and shape a brighter future in the mortgage industry. To view all job listings, visit Mortgage Jobs.”

“Looking to thrive in the mortgage game? Northpointe Bank has been crushing it for 25 years, leading the charge with a robust product line of traditional, non-QM, and portfolio loans. We’re looking for loan officers and sales teams to join our retail lending team nationwide. Why us? Because we’re not just any bank! Northpointe is like finding a unicorn in the mortgage world: a bank with home lending at its core. Plus, since we’re a bank, there’s no need for loan officers to deal with pesky state licensing. You can originate in all 50 states on day one! Ready to join our winning team? Contact Cody Archer today to hear why Northpointe Bank should be your home.”

As mentioned in yesterday’s Commentary, AmeriHome’s Chief Operating Officer John Hedlund is leaving the company. Also effective April 7, Chief Risk Officer Mark Miller, and Chief Information Officer Dave Andersen, will also be leaving AmeriHome. AmeriHome (the nation’s largest bank-owned correspondent investor) has promoted the following, effective today: Anthony Ho, Managing Director, Chief Credit Officer, Greg McElroy, Managing Director, Chief Operations Officer, Steve Kolker, Managing Director, Correspondent Sales, and Peter Roeske, Managing Director, Retail Lending. AmeriHome Mortgage is a Western Alliance Bank company.

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Source: mortgagenewsdaily.com

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Existing-home sales jumped unexpectedly in February to the highest monthly increase recorded in a year, according to the National Association of Realtors (NAR).

Total existing-home sales — which includes previously owned single-family homes, townhomes, condominiums and co-ops — increased 9.5% from January to a seasonally adjusted annual rate of 4.38 million in February. But sales are still down 3.3% from last year, when 4.53 million were recorded for February 2023, a NAR report released Thursday said.

“Additional housing supply is helping to satisfy market demand,” said NAR chief economist Lawrence Yun. “Housing demand has been on a steady rise due to population and job growth, though the actual timing of purchases will be determined by prevailing mortgage rates and wider inventory choices.”

Home prices have surged 25% since President Biden took office in January 2021.

While Americans may want to buy houses, scarce supply, inflated prices and high mortgage rates have made home ownership unaffordable for many. Housing inventory in 2022 dipped to its lowest point since the Federal Reserve began tracking the data in 2016, while housing costs reached record highs.

AMERICANS ARE MAKING A MASS EXODUS FROM BIG CITIES ACCORDING TO CENSUS BUREAU DATA

A data table showing existing home sales, prices, mortgage rates and mortgage payments in January and February for the years 2019-2024.

Home prices and associated costs have followed the same inflationary trend as the rest of the economy since President Biden assumed office in January 2021.

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Compared to three years ago, the median price for existing-home sales has increased 25%, from $307,400 in January 2021 to $384,500 in February 2024, according to NAR data.

Existing home sales were 6.6 million when Biden took office and have since fallen to 4.38 million, according to Thursday’s report — a 34% decrease.

Not only are house prices up and supply down — home loan costs have skyrocketed. As of February, the monthly mortgage payment on an existing home was $2,001, according to NAR. That compares to a January 2021 reading of $1,009 and represents a walloping 98% increase.

US HOMEBUILDER SENTIMENT UNEXPECTEDLY RISES TO HIGHEST LEVEL SINCE JULY

Mortgage rates, which were an average 2.79% in January 2021, are now 6.78%.

For those who can’t afford a home or don’t wish to purchase one, rent is also more expensive. The average monthly rent for a two-bedroom apartment in the U.S. was $1,132 in January 2021. Now the average rent for an apartment that size has climbed 20% to $1,363 per month, according to data from apartmentlist.com.

The median sales price for existing homes has increased from $307,400 in January 2021 to $384,500 in February 2024.

Housing costs are expected to keep rising so long as there is strong demand and limited supply.

“Home sales dipped in February compared to a year earlier because not enough homes were on the market to meet demand,” explained Holden Lewis, a home and mortgage expert with NerdWallet.

HOW IT STARTED … HOW IT’S GOING: INFLATION UNDER BIDEN DRIVES UP COSTS FOR BREAD, BUTTER, CHICKEN

The average monthly mortgage payment on a $400,000 home with a 20% down payment has increased from $1,349 in January 2021 to $2,129 in February 2024.

According to the NAR report, total housing inventory at the end of February — the number of homes listed for sale — was 1.07 million units, a 5.9% increase from January and 10.3% surge from 970,000 units one year ago.

“Just 1.07 million existing homes were for sale at the end of February. In the same month five years earlier, before the pandemic, there were 1.63 million homes on the market. Consequently, many more homes were sold back then,” Lewis said. “Because demand exceeds supply, buyers are competing with each other and driving up prices.”

Regional sales climbed in the West, South and Midwest, but remained unchanged in the Northeast, the report said. Year-over-year sales declined in all regions.

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Housing became more expensive in all major U.S. regions as well, according to NAR. The median existing-home price for all housing types in February was $384,500, an increase of 5.7% from February 2023, according to NAR.

“Due to inventory constraints, the Northeast was the regional under-performer in February home sales but the best performer in home prices,” Yun said. “More supply is clearly needed to help stabilize home prices and get more Americans moving to their next residences.”

Original article source: How it Started… How it’s Going: Home sales down, housing prices, mortgage rates up since Biden took office

Source: finance.yahoo.com

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March mortgage rate forecast

Mortgage rates are expected to go down sometime in 2024, but the decline probably won’t start in March. Instead, mortgage rates are likely to remain about the same because the economy hasn’t cooled off enough yet to cause them to fall.

When the economy grows robustly, and plenty of jobs are created, prices tend to go up. And when those three factors coexist, they combine to push interest rates higher. That’s what happened in February, and it’s unlikely that we’ll see a reversal of those trends in March.

A strong February leads into March

Rates went up in February, with the average rate on the 30-year mortgage at 6.78% in Freddie Mac’s weekly survey, up from 6.64% in January.

The culprit was a collection of strong economic data, released in February, that showed that the economy was running hot in late 2023 and into January. The overall economy grew at a 3.2% annual rate in the final three months of 2023. In January, the economy created a net 353,000 jobs and the core consumer price index accelerated. These signs of stronger-than-expected economic growth caused mortgage rates to rise in February.

Mortgage rates are unlikely to fall until there are unmistakable signs, for a few months in a row, that the economy is slowing down. We almost certainly won’t see those signs in March, despite two years’ toil by the Federal Reserve.

Eyes on the Fed

In an effort to slow the economy and get inflation under control, the Federal Reserve raised the overnight federal funds rate by 5.25 percentage points from March 2022 to July 2023. Inflation declined, as intended. The core CPI fell from 6.6% in September 2022 to 3.9% in January.

But inflation hasn’t fallen enough. The Fed’s goal is to reduce inflation to a 2% annual rate. The central bank will keep a floor under interest rates until inflation is unambiguously on the way to that 2% target. The Fed isn’t eager to cut the federal funds rate anytime soon.

This commitment was underscored by the title of a speech given Feb. 22 by Fed governor Christopher J. Waller: “What’s the Rush?”

Waller, who is a member of the Fed’s rate-setting Open Market Committee, said in his speech that the central bank must wait to verify that inflation is genuinely cooling off, “and this means there is no rush to begin cutting interest rates to normalize monetary policy.”

Usually Fed policymakers speak enigmatically, but sometimes they make themselves perfectly clear. That’s what Waller did with that speech. He sent an unmistakable signal that the Fed wouldn’t cut the federal funds rate at its March 20 meeting. With a rate cut off the table, there’s not much room for mortgage rates to fall in March.

Waller did say that he expects the Fed to cut short-term rates this year, but added, “the risk of waiting a little longer to ease policy is lower than the risk of acting too soon and possibly halting or reversing the progress we’ve made on inflation.” Therefore, there’s no rush.

Other mortgage rate forecasts

Fannie Mae, the Mortgage Bankers Association and National Association of Realtors predict that mortgage rates will gradually descend in 2024, to around 6% in the final three months of the year.

However, if the Fed keeps the federal funds rate unchanged through the first half of the year, don’t be surprised if forecasts are revised upward.

Looking back at February’s prediction

At the beginning of the month, I predicted that “mortgage rates might not change much in February.” Contrary to the prediction, mortgage rates did change in February: They started to rise in the first week and kept going up most of the month.

But the forecast served a purpose if it persuaded anyone to avoid waiting in vain for mortgage rates to fall in February.

I explained that rates “might remain relatively unchanged until markets believe the Fed is about to loosen monetary policy by cutting the federal funds rate.” That didn’t happen in February and it’s not going to happen in March.

Source: nerdwallet.com

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Unstable borrowing conditions and a lack of affordable properties kept homeownership out of reach for many Americans in 2023. However, as the spring buying season approaches and signs that the market is recovering emerge, buyer sentiment is shifting. According to the National Association of Realtors®, national existing home sales in January 2024 were up year-over-year by 1.3%. Housing supply is also improving, with national inventory up by 3.1% year-over-year and 2% month-over-month. 

These positive changes are setting the stage for an active spring market in the US. But as competition increases, so do home prices. The national median price for a single-family home in the US increased by 5.1% year-over-year in January to $379,100. This begs the question: where can prospective homebuyers find the best deals this spring? 

To better understand where homebuyers can find pockets of affordability, Zoocasa analyzed home prices in 50 metropolitan statistical areas across the country to determine which are below the national median and where the most growth is happening. Median single-family home prices were sourced from the National Association of REALTORS® and are from Q4 2023, except the national median home price which is from January 2024. 

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It’s usually said that the further outside of an urban center you go, the more affordable the home price. But of the 33 metropolitan statistical areas with a median home price below the national median, 15 have populations above 2 million, and five have populations above 5 million. The largest urban center with a median home price below the national median is Chicago, IL with a median home price of $343,300 in Q4 of 2023. Despite the city experiencing year-over-year price growth of 6.2%, Chicago’s median home price is still $35,800 below the national median. 

Of the 50 markets we analyzed, Cleveland, OH came out on top for affordability. Cleveland’s median home price of $190,700 is an impressive $188,400 below the national median and is one of the few areas on our list where the median home price dropped from last year. Other markets where the median home price fell from last year include Myrtle Beach, SC, Houston, TX, San Antonio, TX, and Memphis, TN. Alabama’s capital, Montgomery, was the only other market on our list besides Cleveland with a median home price below $200,000. Homebuyers here can snag a home for approximately $185,700 below the national median. 

It’s worth noting that five out of the six markets that experienced year-over-year price growth of more than 9% have home prices below the national median. These markets include Rochester, NY, Hartford, CT, New Haven, CT, Oklahoma City, OK, and Cincinnati, OH. This means that homebuyers of all price ranges, including those purchasing lower-priced homes, can still expect to build a significant amount of equity. 

Markets that have experienced significant year-over-year price growth also present good investment opportunities. For instance, single-family homes in Philadelphia, PA have experienced year-over-year price growth of 7.2% and are still $20,100 below the national median price, making this sought-after city a good option for first-time investors. Kansas City, MO is an emerging market that would make a great first-time investment location. The city garnered a lot of media attention last year thanks to the city’s football team and frequent Taylor Swift visits, resulting in the median home price rising by 5.9% year-over-year. Despite its growing popularity, the median home price in Kansas City remains one of the lowest on our list at $315,800. 

Homebuyers with their hearts set on a particular destination, especially one of the largest and most sought-after cities in the US, would benefit from considering smaller markets relatively close to their dream location. While the Big Apple might be out of reach for the average buyer, with a median home price of $659,200, New York’s second and third-largest cities still maintain affordable prices. Buffalo and Rochester have median home prices of $243,500 and $230,500 respectively. This is nearly $150,000 less than the national median, compared to New York City, where the median home price is more than $280,000 above the national median. 

Though San Francisco, CA, and Los Angeles, CA have notoriously high home prices, at $1,251,000 and $884,400 respectively, California homebuyers still have affordable options. At just $26,600 above the national median, Fresno’s median home price is one of the more affordable options in California. But for savvy buyers looking for a deal in California, Bakersfield presents the best option with a median home price of $11,800 below the national median. 

In Florida, motivated buyers on the hunt for affordable prices will have to look outside of the vibrant Miami market, which has a median home price more than $200,000 above the national median. Tampa’s median home price exceeds the national median by just $30,900, while Daytona Beach and Tallahassee offer more affordable housing, with median prices $16,700 and $57,100 below the national median, respectively.

Planning to enter one of these markets this spring? It’s important to speak with a local realtor who is familiar with your local real estate market. Give us a call today to discuss your home-buying plans. 

Ready to join the spring market?

Our experienced agents can help!

Source: zoocasa.com

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Washington, DC
CNN
 — 

Amid a housing shortage and an affordability crisis, US homebuilding heated up in February as builders anticipate demand for new homes to stay strong.

One sure way to improve affordability is to increase the availability of apartments to rent and homes to buy. In areas of the country where there has been robust homebuilding, rents and home price increases have been more moderate.

The pace of new housing starts soared by 10.7% in February from the month before, after slumping in January, according to data released Thursday by the Census Bureau and the Department of Housing and Urban Development.

Starts rose to a seasonally adjusted annual rate of 1.521 million units last month, beating analysts’ estimates of 1.425 million. The pace rebounded from January’s revised pace of 1.374 million and was 5.9% above the 1.436 million pace a year ago.

Meanwhile, the pace of new building permits was up 1.9% from January, which was up 2.4% from a year ago.

Homebuyers look to new construction for much-needed inventory

While the number of existing homes on the market remains historically low, new construction has provided a critical alternative for homebuyers.

Mortgage applications for a newly constructed home were up a whopping 15.7% in February from a year ago, according to the Mortgage Bankers Association; and up by 1% from January. The average loan size jumped to its highest level since last March at almost $406,000, but it was still below the record high of more than $436,000 in April 2022.

“It is possible that we could see more wiggle room on pricing in the coming months, as the inventory of existing homes begins to expand,” said Lisa Sturtevant, chief economist at Bright Multiple Listing Service, in a statement.

Prospective homebuyers who are looking at new construction are still finding some builders offering concessions, upgrades, or favorable financing terms, she said.

But, according to the NAHB, fewer builders are offering price cuts.

Homebuilders are preparing for when rates are lower

The much lower mortgage rates that many homebuyers expected have yet to materialize, but builders want to be ready for when that does happen.

Mortgage rates have come down from their highest levels of last year — 7.79% in October — and are now about a full percentage point below that, at 6.74%.

“Lower mortgage rates are likely to bring buyers to the market in larger numbers, and builders are ramping up supply to meet this demand,” said Kelly Mangold of RCLCO Real Estate Consulting, in a statement.

While existing home inventory has ticked up lately, as is typical this time of year, there is still a historically low number of homes on the market as owners see the gap between their ultra-low rate and prevailing rates as still too wide.

That creates an opportunity for homebuilders who can provide inventory.

“Homebuilders continue to be bullish about the spring market as homeowners are still reluctant to list their homes for sale and new homes account for an outsized share of the active inventory,” said Sturtevant.

Homebuilder confidence improved this month even as mortgage rates climbed, according to a survey from the National Association of Home Builders released Monday.

The lack of existing inventory that continues to push buyers toward new home construction led homebuilder sentiment index to the highest level since July and marked the fourth consecutive monthly gain for the index.

Addressing the housing shortage

Housing affordability amid high inflation and elevated interest rates remains a hot-button issue for the White House as well as the Federal Reserve.

President Joe Biden is set to address the housing shortage Tuesday in a speech from Las Vegas, where the cost of rent has increased 30% from before the pandemic and the cost to buy a home has risen by over 40% since then.

Biden is expected to call on Congress to pass legislation that he says could result in the building and renovation of more than 2 million homes to close the housing supply gap and lower housing costs.

Housing experts agree there are not enough homes available to rent or own compared to the demand. But the size of that gap ranges from a shortfall of 1.5 million units (according to National Association of Home Builders) to 5.5 million units (according to the National Association of Realtors) or as many as 7 million (according to the National Low Income Housing Coalition and Realtor.com), depending on who is calculating it and what assumptions about housing are being made.

Source: cnn.com

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Dual licensing is one of the opportunities being opened to the mortgage industry by the National Association of Realtors’ (NAR) pending nationwide settlement of commission lawsuits, according to Bob Broeksmit, president and CEO of the Mortgage Bankers Association (MBA). 

“There will be market reactions to this settlement, and it will create openings for other business models where we want the buyer represented, but the seller may not want to pay 3% for a buyer’s agent,” Broeksmit said on Tuesday morning during the MBA’s National Advocacy Conference in Washington, D.C. 

“One of those models could be that you, as lenders, license your loan officers as real estate agents and offer the buying agent service for less than a 3% fixed fee point. And some of you will say I want nothing to do with that. Others of you will say that is a great retention opportunity for my loan officers and the market will figure all this out,” Broeksmit added.

On Friday, NAR announced a settlement that includes a $418 million payment for damages, along with a ban on rules that allow a seller’s agent to set compensation for a buyer’s agent.

The settlement also includes eliminating fields that display broker compensation on Multiple Listing Services (MLSs) and ending the blanket requirement that agents subscribe to an MLS to offer or accept compensation. In addition, buyers’ agents must have written agreements.  

If approved by a court, the changes will go into effect in mid-July.

On Friday, HousingWire reported that Absolute Home Mortgage is testing out a dual-licensing structure. Matthew VanFossen, CEO of the New Jersey-based lender, said in an interview that loan officers may start getting real estate licenses, and/or buyer agents may become licensed LOs.

It would “bridge the gap in lower commission” by these professionals “starting to take both sides of the deal,” VanFossen said. But if real estate agents transition to becoming lenders, the dual-license trend would also have an “unintended consequence” for marketing servicing agreements (MSAs) between mortgage companies and real estate brokerage firms.

Tax credit, ‘junk fees,’ Marcia Fudge 

Broeksmit was critical of President Joe Biden’s housing plan announced during the 2024 State of the Union address on March 7. He said the proposals would “stimulate demand on the single-family side.” 

“Any lender in the audience knows that they have a huge list of people who are qualified and able to buy a house; there’s just no inventory. So, we really need to focus on the supply,” Broeksmit said. 

During the State of the Union address, Biden called for a $10,000 tax credit for first-time homebuyers and people selling their starter homes. 

Broeksmit said that people selling their homes would buy another, so the tax credit would not be enough to improve supply. In addition, people sell houses based on their own circumstances, not because of government tax incentives.

“So, you’re giving money to people who would have sold anyway,” Broeksmit said. “I think a smarter thing to do would be to raise the exemption for the capital gain when you sell your house.”

Broeksmit also reacted to the decision by the Consumer Financial Protection Bureau (CFPB) to closely scrutinize what it described as “junk fees” imposed on borrowers when closing a mortgage. 

A recent CFPB blog post stated that families closing a mortgage “often get an unwelcome surprise: closing costs that all too often are full of junk fees.”

According to Broeksmit, the CFPB can only review fees by reopening the TILA-RESPA Integrated Disclosure (TRID) rules, which the industry spent $1 billion to implement. “There’s no such thing as a surprise at closing,” Broeksmit said. 

Regarding the resignation of U.S. Department Housing and Urban Development (HUD) Secretary Marcia Fudge, Broeksmit said it’s not unusual for a cabinet secretary to leave before the end of a four-year term. In this case, “it’s a grueling job,” he added.

Source: housingwire.com