Monday, November 13, 2017

Taxes, TRID, and Cyber Threats

In the News   Presented by Prairie Title  
November 13, 2017
The Tax Plan Cometh

We have to address the elephant in the room: tax code changes and their effect on housing in 2018 and beyond. First, NAR reports that next year could see an increase in existing home sales due to an improving economy, job growth and rising confidence; however, it will be limited by continued supply shortages. NAR forecasts home sales will grow to 5.67 million in 2018, the highest point since 2006.

But, and this is a big but,  NAR also predicts that if the House tax bill or a similar version becomes law, it could act as a disincentive to homeownership and hold back strong sales activity.

NAR explains that the House tax bill could affect home sales and even home prices in 2018 and beyond, claiming that in its current form, the bill is a direct tax hike on homeowners. NAR’s analysis of the bill estimates it would cause home values to drop 10% and raise taxes on middle-income earners by an average of $815

On the bright side, Senate Republicans last week weighed in with a tax plan that would preserve the mortgage interest deduction.

We’ll see what happens over the next few months. I am very skeptical that slashing the mortgage interest deduction will have anything but a negative effect on the housing market. Let’s hope that doesn’t happen. I encourage all you to contact your representative in Congress and push to preserve the deduction.

Automation will fix TRID? The CFPB has published its final TRID amendments which, as expected, did nothing to fix the issues with fee disclosures (particularly title insurance) on the Closing Disclosure form. Beyond that, we don’t know what the future holds for CFPB as the court case challenging its constitutionality (PHH vs. CFPB) continues, the Republican Congress seems determined to de-fang if not eliminate it and Director Cordray’s term expires in June.

There is some bipartisan movement on the issue in Congress that is worth watching, but a tantalizing question is whether technology will help cure the problems in the long run regardless of what happens in Washington. A technology expert recently made just that case in Scotsman Guide. On related note, NAR recently published a good explanation of blockchain technology and its coming impact on the real estate market.

The scamming crisis. Hackers continue to scam homebuyers out of millions and it’s getting worse. I urge you to read this excellent summary of the situation by real estate writer Ken Harney, and pass the warning along to your staff and customers.

What’s your point of view? Call or email me, or write a comment here. Let’s keep the conversation going.

Tuesday, September 26, 2017

In The News

In the News   Presented by Prairie Title  
September 21, 2017
Housing Inventory Still an Issue
Prices remain high, interest rates are low, inventory is not adequate, existing home sales are sluggish  — those are the hallmarks of the residential real estate market as we enter the final quarter of this year. The news is ever-confusing and contradictory, even in the same week. Overall, it’s not a pretty picture.
For a variety of reasons, prominent among them lost equity following the recession which began nine years ago, many households that we would have expected to move up from starter and mid-range homes have stayed put, reducing available inventory. Also, many mid-life families who want to move up have been caught in the middle between second home purchasers who are not selling their homes and millennials who are slow to get into the starter home market, many of whom are held back by crushing student debt.  
Taken together, these factors combine to prolong a shortage of residential real estate inventory, which drives up prices and keeps large numbers of potential home buyers from getting into the market or moving up. There is some light in the tunnel, however. Encouraging data recently shows that move up buyers are starting to get into the market in greater numbers. At the same time, mortgages with less than 10 percent down are available now, and that may bring more millennials to get into the market.
Also on a positive note, commercial real estate remains on “sound fundamentals” NAR reports, while the National Retail Federation notes that retail store openings increasing this year. Even with new supply, solid absorption led to increases in rents,” the NAR report said. “Office demand was stable in the second quarter of 2017, fueled by higher tenant interest in technology, advertising and marketing, healthcare and life sciences sectors. Net absorption totaled 8.8 million square feet.”

An important final point: The recent Equifax data breach is yet another reminder of the critical importance of cybersecurity. In our business, building awareness about wire fraud schemes among consumers is a key component of preventing data theft – and in this case the direct theft of thousands of dollars from unsuspecting home purchasers. To help, ALTA has created both a video and an infographic that you can use with your customers to help them be vigilant.

ALTA has many other helpful tools for consumers on Be sure to point your clients to the site to answer all their questions about title insurance and closings.

What’s your point of view? Call or email me, or write a comment below. Let’s keep the conversation going.

Monday, July 31, 2017

In The News

In the News   Presented by Prairie Title  
July 31, 2017
Homes more valuable than ever. Is that a good thing?

As CNBC reported, last week Zillow said that the median value of all U.S. homes has exceeded $200,000, the highest it has ever been. Zillow also said that the inventory of homes for sale was down more than 11 percent from June 2016. Whether or not Zillow is spot on with those numbers, the fact remains that home values have risen — but at what cost?  How many potential buyers are frozen out of the market by tight inventory and the high prices that accompany a shortage of available housing?
Backing that up, NAR also noted last week that U.S. home resale volume fell more than expected in June as a “dearth of properties pushed house prices to a record high.”

High values are great if your own a home and are not looking to move up past a starter home. For the younger generation, the current shortage and high prices are clearly a deterrent.
As NAR’s Lawrence Yun put it, “The demand for buying a home is as strong as it has been since before the Great Recession. Listings in the affordable price range continue to be scooped up rapidly, but the severe housing shortages inflicting many markets are keeping a large segment of would-be buyers on the sidelines.”
Let’s hope that changes soon.

CFPB’s (and Cordray’s) Future

Much uncertainty swirls around the CFPB and its director, Richard Cordray, as Congressional Republicans and the Trump Administration seek to de-fang the agency and its powerful head. Cordray, it seems, also may be on the path to giving way to the inevitable (his term expires next June) by resigning and announcing his candidacy for governor of Ohio. In the meantime, we await the federal appeals court’s decision on the constitutionality of the CFPB’s structure in PHH vs. CFPB. The regulatory environment we face could be very drastically different by early next year.

Final thought: There have been a number of stories in the news lately about scammers stealing thousands of dollars from home buyers by sending them fraudulent wire transfer instructions. These stories are real and we are the first line of defense against these cyber thieves. Proper instructions to home buyers can prevent fraudulent activity. The American Land Title Association has just produced a two-minute video explaining the danger and what industry members and consumers alike can do to prevent it. I urge you to view the video and share it with your staff and customers.
What’s your point of view? Call or email me, or write a comment here. Let’s keep the conversation going.

Tuesday, May 30, 2017

In The News

In the News   Presented by Prairie Title  
May 30, 2017
Housing, Housing, Housing
Naturally, there’s nothing more critical to the real estate economy then the state of the housing market, and the news was positive recently as NAR Chief Economist Lawrence Yun noted on May 18 that the first quarter was the best quarterly existing sales pace in exactly a decade (5.62 million on an annual basis), and he expects activity to mostly stay on track and finish around 5.64 million. That would be the best since 2006 (6.47 million) and 3.5 percent above 2016.
“The housing market has exceeded expectations ever since the election, despite depressed inventory and higher mortgage rates,” said Yun. “The combination of the stock market being at record highs, 16 million new jobs created since 2010, pent-up household formation and rising consumer confidence is giving more households the assurance and ability to purchase a home.”   
There is a cautious note in the Chicago area, though, as Gail MarksJarvis of the Chicago Tribune reported last week that “sales of homes in the Chicago area dropped in April as potential homebuyers looked at houses but then turned away after finding disappointing choices."

Cyber-security, always
Another week, another story of a couple being scammed out of money by a hacker in a real estate transaction. This time, an Ohio couple lost $20,000 when a hacker posed as their title company and gave them fraudulent instructions on where their bank should transfer their downpayment. In this era of growing and changing use of financial technology, we must be diligent at all times about securing our vital transaction information in our systems and through the use of encrypted email. Equally important, we must be certain that our clients know to never follow instructions included in an unencrypted email.

Final thought: I was impressed by a presentation given by HUD Secretary Dr. Ben Carson to an American Land Title Association group recently. Dr. Carson’s remarks were both thoughtful and thought-provoking. Wherever you are on the political spectrum, I urge all of us to give him a chance. We might just be surprised by his capabilities in the housing arena.

What’s your point of view? Call or email me, or write a comment below. Let’s keep the conversation going.