TheMReport

TH E M REP O RT | 35 O R I G I NAT I O N S E R V I C I N G A NA LY T I C S S E C O N DA R Y M A R K E T ORIGINATION THE LATEST ORIGINATION Homebuyers, Sellers Struggling to Adapt to Market Changes Buyers are gaining power, but sellers don't realize they're losing it. A s the housing recovery downshifts from last year's pace, the latest survey of real estate agents by national brokerage Red- fin finds homebuyers and sellers are having trouble getting on the same page with each other and with the new shape of the market. Examining a number of markets nationwide, Redfin's quarterly survey showed house sellers continue to lose their market advantage, with only 24 percent of agents agreeing with the statement "Sellers have all the power." In the first quarter, that share was more than one- third of agents. Most sellers don't seem to have gotten the memo, however, with 40 percent still planning to list their homes above market value, even as sales figures continue to fall compared to last year-and home price increases level off. "Typically it takes sellers six to nine months to adjust to a price change, but this latest shift is longer," said Redfin chief econo- mist Nela Richardson. "Prices have moved down and then up so much over the past five years that it's even more difficult for sellers to have a realistic baseline for what their homes are worth in the current market." Redfin cautioned sellers against overpricing homes in May, especially as shoppers regain leverage in the market. In fact, 58 percent of Redfin agents now say sellers have unrealistic expectations about the value of their homes compared to 49 percent last year. While slowly improving inven- tory levels may still push some buyers into more aggressive offers, as Richardson explained, "The de- mand side of real estate is moving from 'please take my offer' to 'take it or leave it as you please.'" Meanwhile, homebuyers ap- pear to have traded one set of problems—low inventory and economic uncertainty—for an- other: affordability and financing challenges. According to survey responses, the greatest hurdle for buyers today is declining affordability, with 43 percent of agents citing that as a common challenge. Also commonly cited were prob- lems saving for a down payment (18 percent) and difficulty getting a mortgage (16 percent). Given these concerns, 40 per- cent of Redfin agents surveyed in the second quarter said now is a good time to buy a home, down from 46 percent during last year's spring. Mortgage Choice Act Clears House Vote Industry groups laud the bill while watchdogs growl. A bill designed to amend mortgage fee calcula- tions within new industry rules cleared a major hurdle recently, passing the House despite reservations from critics who say it may reopen the door to irresponsible lending. Introduced last year by a bipartisan group of representa- tives led by Rep. Bill Huizenga (R-Michigan), H.R. 3211 (the "Mortgage Choice Act of 2013") would amend the Truth in Lending Act (TILA) to exempt fees from affiliated title compa- nies from counting toward the 3 percent point and fee thresh- old established in the qualified mortgage (QM) rule implemented earlier this year. It would also clarify the treatment of insurance and taxes held in escrow. In a speech before the House vote, Huizenga argued the cur- rent definition of points and fees used for the QM test is "confus- ing and problematic," asserting, "[M]any affiliated loans, particu- larly those made to low- and moderate-income borrowers, would not qualify as QMs [as a result] and would be unlikely to be made or would only be made available at much higher rates due to heightened liability risks." Not everyone agrees with the bill's approach. In a state- ment, the Center for Responsible Lending (CRL) said H.R. 3211 could "upset the careful bal- ance struck by the Consumer Financial Protection Bureau" in its creation of mortgage rules designed to protect consumers. "It's deeply concerning how quickly we forget the devastat- ing impact that abusive lending practices had on the housing market and the larger economy," said Kenneth W. Edwards, VP of federal affairs at CRL. "Countless houses lost, innumerable families affected—and after a long, hard- fought battle to pass the necessary reforms to protect our homes, we find ourselves here again." Still, the news garnered praise from industry groups, includ- ing the National Association of Realtors, the National Association of Federal Credit Unions, and the Mortgage Bankers Association, among others. "It's deeply concerning how quickly we forget the devastating impact that abusive lending practices had on the housing market and the larger economy." — Kenneth W. Edwards, CRL.

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