Reg Z Hits the Fan on July 30th
Just when you thought closings couldn’t get any more dysfunctional…
New Truth in Lending Act (TILA) federal disclosure rules for lenders take effect tomorrow, July 30, and closings could take longer as a result. The changes to “Reg. Z” add borrower review periods and require lenders to notify borrowers of any annual percentage rate (APR) changes of more than 0.125 percent. Borrowers then get an additional review period.
It will be interesting to see the affect of this new policy. Hopefully, it will be less than it sounds.
HVCC: Let Appraisers Know of Errors, FHFA Says
Communication with appraisers about errors, missing information, and unprofessional conduct are all permissible under the new home valuation code of conduct (HVCC), the Federal Housing Finance Agency makes clear in a notice released last week. Secondary mortgage market companies Fannie Mae and Freddie Mac updated HVCC FAQs to clarify similar points. These clarifications are helpful, but more is needed to ensure sales aren’t unnecessarily harmed by HVCC
Pending home sales show a sustained uptrend, rising for four consecutive months with very favorable housing affordability and a first-time buyer tax credit boosting activity, according to the latest survey. The Pending Home Sales Index increased 0.1 percent to 90.7 from an upwardly revised reading of 90.6 in April, and is 6.7 percent higher than May 2008 when it was 85.0. The last time there were four consecutive monthly gains was in October 2004. Lawrence Yun, NAR chief economist, cautions that there could be delays in the number of contracts that go to closing. “Closed existing-home sales have improved but are coming in lower than expected because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” he said. “Rises in contract activity show buyers are becoming more active even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”
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View the video >
View Pending Home Sales Index >
Where Are We Now?
The pace of home purchases in the Charlottesville area continues to improve from the dismal 4th quarter of 2008, but sales lag well behind compared to last year. The sale of homes has been increasing month to month for six months in a row. The steady improvement is easy to predict with the seasonal upswing the market naturally experiences this time of year, but based on pending sales in the MLS, we may continue to see sales increase beyond the seasonal selling season. For the first time in many months, the number of contracts in June was up from the previous year. It will be interesting to see if this trend continues.
Fueling these homes sales is the significant decrease in real estate prices. This report will detail some statistics that indicate that home prices have fallen steeply (20% or more) and this has resulted in an increase in sales. There is some evidence that sellers are starting to embrace the current market environment and price their home accordingly. The average Days on Market (DOM) has been dropping in recent months, and the median time a property takes to sell is now only 75 days. That indicates that many homes – likely the ones priced correctly – are selling quickly.
Read the remainder of the report
NAR’s forward-looking pending home sales index, released today for May, posted its fourth consecutive monthly gain, suggesting sales could be poised for an uptrend. The index is based on signed contracts and increased 0.1 percent to 90.7 from an upwardly revised reading of 90.6 in April, and is 6.7 percent higher than May 2008, when it was 85.0. “Closed existing-home sales have improved but are coming in lower than expected because some contracts are falling through from the application of appraisal rules for many transactions,” says NAR Chief Economist Lawrence Yun.
Learn more in a video interview with Yun on REALTOR.org.