Real Estate Association Prioritizes Re-establishing Trust
The association recently unveiled codes of ethical standards for real estate agents and loan officers. The goal is to re-establish trust between consumers and real estate professionals, to ensure that ethical standards are set and routinely practiced in the industry, and to sustain and increase the rate of Hispanic homeownership.
According to the NAHREP, Latinos are disproportionately vulnerable to predatory loan practices. Nearly 50 percent of Latinos who have a sub-prime loan would have qualified for a prime product.
Sandos says the reason that Hispanics were more exposed to predatory [lending] practices is three-fold. The first is the language barrier.
"In many instances they simply don't have the language capacity to be able to communicate [sufficiently] for the transaction," explains Sandos.
Second is the lack of understanding about the real estate industry. The third factor is the cultural difference in the way money is handled and viewed.
"First and second generation Hispanics will not have traditional credit lines that are required to get a conventional loan which is the most secure. That is because, for many, the culture has suggested that they not ever owe anybody any money. So Hispanic cultures tend to be cash-based," says Sandos.
NAHREP plans to take its ethical codes to the airwaves. Through radio and a series of print advertisements the association will show the public what they can and should expect from real estate professionals. In these same advertisements, the association will list the names of industry professionals who have signed the code and will guarantee this ethical level of service.
"That's why this is so important to state the standards and tell consumers who is providing these standards so they know who they can go to," adds Sandos.
The lending standards will include requiring a "prime-loan filter that shows a guaranteed net benefit to the customer before that particular type of loan would be offered," says Sandos.
This way the association helps to ensure that a prime-loan option is looked at for the consumer before any other type of product is considered.
On the Realtor side the code includes "that we make sure that we educate the consumer on the different consumer choices that they have for products," says Sandos.
He says too often consumers aren't completely informed about their choices about matters such as title and homeowner's insurance.
"The disclosure for title usually comes at the closing table. Well, that's when you've got a moving van packed out front and the person who gives you the disclosure that says you have a choice of title companies is the Title company that's closing the deal right then. If you say no you've got to start all over -- three week process -- so is that really a choice for a consumer? We think not," says Sandos.
The association has produced educational materials for consumers that explain these choices in English and Spanish.
While the codes are aimed at improving the way consumers view real estate industry professionals, NAHREP is also trying to do its part to protect investors.
New Market Drivers Put a Positive Tone on all the Negative
Through the first half of calendar 2007, builder revenues are down, home deliveries are off and pretax profits are well below year earlier levels. According to Fitch's new forecast for the balance of 2007, it appears likely that builders' financial pressures will continue unabated with full year revenues dropping 30 to 35 percent, on average, while pretax profits, before real estate charges, could plummet 75 to 80 percent. Yet, not unlike life, there are positive opportunities in the negative if we are looking and keeping our eyes opened for them.
"Although real estate continues to struggle, developers, civil engineers and architects can remain healthy by working creatively to stay on top of new market drivers," said Keith Mayer, president and CEO, Giffels-Webster Engineers, a civil engineering firm with a 50-year industry reputation for its vision for today's market and beyond. "Our team at Giffels-Webster has identified the trends that prove opportunities thrive beyond single-family homes in the suburbs."
FHA Home Loan Program Poised to Take Off - Big-Time
FHA-insured home mortgages -- marginalized or squeezed out of the market during the subprime loan boom years -- are poised to roar back. And if Congress passes a compromise version of FHA reform legislation, maximum loan limits for FHA could rise immediately to $417,000 -- or even a lot higher.
Last Tuesday the House overwhelmingly approved a reform bill that would cut minimum downpayments to zero, and increase loan limits in high cost areas of California well beyond $500,000. Under the House-passed bill, FHA could insure mortgages as high as 125 percent of the median home price in a market area, or 175 percent of the conforming loan limit for Fannie Mae and Freddie Mac -- currently $417,000. In addition, the HUD Secretary could raise limits by another $100,000 if local conditions required such a move.
In effect, southern California, where FHA loan applications have been almost nonexistent in recent years, could conceivably see a new wave of jumbo FHA mortgages in the $700,000 range and beyond.
Meanwhile, the Senate Banking committee last Wednesday reported out its version of an FHA reform bill, but with much tighter loan limits--$417,000 maximum—and a 1.5 percent minimum cash downpayment, down from the current 3 percent minimum. The full Senate is expected to approve the Banking committee's bill soon, sending the FHA issue to a House-Senate conference committee to work out the differences.
What's likely to emerge in the final bill sent to the president in the coming weeks? At the very minimum, Congress is now almost certain to make FHA competitive again in high-cost markets. A $417,000 limit for California would still be well below the state's median home price in the mid-$500,000s. But it would provide potentially tens of thousands of home buyers an attractive, consumer-friendly alternative to what they've got now.
The huge gap between the House and Senate loan ceilings will need to be bridged in the upcoming conference. There may also be pressure to raise Fannie's and Freddie's limits during Senate floor debate or through a separate bill -- opening the door to at least a temporary "jumbo" program for FHA, Fannie and Freddie.
There are some potential minefields facing conferees however: The House version of the bill contains a proposal from Financial Services committee chairman Barney Frank (D-Mass.) to tap into FHA premium revenues to help finance a new National Housing Trust Fund for affordable housing activities. Separate legislation from chairman Frank would also tap into revenues of Fannie and Freddie. The Bush administration opposes siphoning off FHA resources for the Fund, and the Senate did not include the concept in its bill.
Another sticky issue: The Senate bill prohibits "downpayment assistance" for FHA loans involving "anyone party to the transaction." That would presumably cut off dozens of nonprofit groups around the country that now provide such assistance. The House bill imposes some restrictions on downpayment assistance providers, but does not ban them.
The House bill authorizes FHA loan terms up to 40 years, but the Senate bill is silent on that issue. The Senate bill allows FHA to use "risk based pricing" on all loans where borrowers make less than a 3 percent downpayment -- a provision favored by the Bush Administration. The Senate bill has no language on the subject, but some Republicans are strongly opposed to allowing FHA to directly compete with private mortgage insurance firms for borrowers who present varying levels of default risk.
Floor collapse badly injured 2
Demolition company J W Ousby and Sons Ltd of Preston has been fined $15,000, with $5,000 costs, at Manchester Crown Court, for failures that permitted 2 of its employees to suffer serious injuries when a floor collapsed and they fell 4 metres at the former BAE Ordnance site on Hercules Business Park, Lostock Lane, Lostock , Bolton, on 23rd October 2002. Investigation found Ousby had failed to provide a safe system of work and provide the employees with sufficient information, instruction and supervision for safe demolition, an HSE Principal Inspector (Construction) explained: "The work being done by J W Ousby & Sons could have been carried out safely without extra cost if the planning or supervision had been adequate. The employees were seriously injured when the floor they were standing on collapsed beneath them. The long-term effects on them and their families have been devastating, as their injuries have meant neither has been able to work again. Ousbys were working to prepare the building at the BAE Ordnance site, Lostock, for conversion to a superstore. An internal concrete mezzanine floor was being demolished with a heavy-duty machine that can demolish the structure from a distance. This is a safe method of working so long as it is properly planned; the planned sequence of work takes account of the effects on the stability of the structure; and personnel are excluded from the vicinity of the work. This accident occurred because J W Ousby & Sons failed on all three of these points."