Appraisers up next for 'Wall Street Reform' brand of regulatory do-over

Click back for 'text neck' cures

The interim final rule for appraisers, part of the massive "Wall Street Reform" federal regulatory overhaul, is designed to keep appraisers independent, free from third party pressure, honest and fairly compensated.

by Broderick Perkins
© 2010 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Tolling the death knell for the Home Valuation Code of Conduct (HVCC), the Federal Reserve Board recently announced final regulatory orders for real estate appraisers.

The interim final rule for appraisers, part of the massive federal regulatory overhaul known as "Wall Street Reform" (officially, the Dodd-Frank Wall Street Reform and Consumer Protection Act), is designed to keep appraisers independent, free from third party pressure, honest and compensated fairly.

We'll see.

Appraisers have been heavily pressured for years -- before, during and after the boom -- to do the home valuation bidding of mortgage lenders, real estate agents, even buyers, sellers and refinancing homeowners who needed home values based on risky assumptions rather than true worth factors.

Bowing to pressure to over-value homes was one of the factors contributing the housing market crash that spawned the greatest recession since the Great Depression.

Amid howls from appraisers and other real estate industry quarters, the Federal Housing Finance Agency (FHFA) implemented HVCC in May 2009, after the housing bust, purportedly to improve the independence of appraisers by prohibiting lenders and third parties from influencing appraisers' work.

Unfortunately, the code of conduct cut deeply into appraisers' income and, as the housing market floundered, it worsened working conditions for honest, hard working appraisers, who have since been looking forward to new regulations.

Appraisers deemed the HVCC as a bogus effort to clean up the industry, because it didn't focus enough on appraiser competency; it undercut professional relationships between honest appraisers and reputable mortgage professionals; it increased the influence of bottom-line oriented appraisal management companies; and it encouraged the use of glossed-over appraisals that didn't reflect the true value of a property.

By and large, for those and other reasons, real estate agents, new home builders, even mortgage brokers and others likewise detested HVCC.

In advance of the new interim rules, Fannie Mae, working FHFA and Freddie Mac released its own Appraiser Independence Requirements -- new rules for mortgage companies selling loans to the government-sponsored enterprises -- which also overwrite HVCC rules.

Fannie's rules are in line with the new federal regulations, but all conventional, single-family mortgage loans must still be in compliance with HVCC until the release of the final Federal Reserve rules, effective April 1, 2011. A public comment period on the new rules ends in December, but the interim rules will likely take hold with few changes.

The Fed's interim final rule:

• Prohibits coercion and other similar actions designed to cause appraisers to base the appraised value of properties on factors other than their independent judgment.

• Prohibits appraisers and appraisal management companies hired by lenders from having financial or other interests in the properties or the credit transactions.

• Prohibits creditors from extending credit based on appraisals if they know beforehand of violations involving appraiser coercion or conflicts of interest, unless the creditors determine that the values of the properties are not materially misstated.

• Requires that creditors or settlement service providers that have information about appraiser misconduct file reports with the appropriate state licensing authorities.

• Requires the payment of reasonable and customary compensation to appraisers who are not employees of the creditors or of the appraisal management companies hired by the creditors.

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© 2010 DeadlineNews.Com

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New disclosures help mortgage consumers manage risk

Busty Barbe Q back on the block

"Consumers need the proper tools to determine whether a particular mortgage loan is appropriate for their circumstances." - Federal Reserve Chairman Ben S. Bernanke.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - The Federal Reserve is gearing up with more consumer protection on the home loan front, as it continues its overhaul Regulation Z.

Regulation Z is the wide-reaching Consumer Protection provision of Truth In Lending law enforced by the Federal Deposit Insurance Corporation.

The ever-evolving regulation mandates certain detailed disclosures by financial institutions in the realm of home loans and regulates certain credit card practices and credit billing disputes.

Disclosures help consumers determine if a given borrowing transaction is right for them. The greatest collapse in the housing and mortgage market in 70 years was due, in part, to consumer ignorance that caused them to buy homes they couldn't afford.

Kid has stars, egg on her face

"Consumers need the proper tools to determine whether a particular mortgage loan is appropriate for their circumstances," said Federal Reserve Chairman Ben S. Bernanke in a prepared statement.

"It is often said that a home is a family's most important asset, and it is the Federal Reserve's responsibility to see that borrowers receive the information they need to protect that asset," he added.

Effective for applications on or after July 30, 2009, first and second home loan customers, as well as those refinancing have a slew of new benefits.

• Lenders must provide you initial truth-in-lending mortgage cost disclosures within three business days of your application. If not, you can back out.

• Until you receive the initial disclosure, lenders can't collect any fees, except for a credit check. Lenders and brokers previously collected appraisal, credit and other charges at the onset of the application.

• A final truth-in-lending disclosure is due three business days before closing.

• Lenders must give you a copy of the real estate appraisal three business days before the scheduled closing. Lenders often failed to informe a consumer of his or her right to a copy of the appraisal. If you never see an appraisal, you have no idea if the home is worth what you are paying.

It's the Nadya Suleman Show!

• The lender can't close the loan until at least seven-days after applicants have or mailed the initial disclosure. That gives consumers more time to mull over the transaction.

• If there's a change that makes the annual percentage rate rise beyond a set level, say because of rising rates or inaccurate initial information, creditors must provide an additional loan cost disclosure and give you an additional three-business-day waiting period before closing the loan.

Round two

Days before the July 30 provisions took effect, the Fed pushed another round of regulatory upgrades into the public comment pipeline, this time for so-called "closed-end mortgages" and home equity lines of credit "HELOC" consumers.

A closed mortgage is a home loan that can't be paid off until its maturity date -- without substantial prepayment penalties.

A HELOC is a line of credit drawn against the equity in your home. You pay back only what you use, unlike an equity loan which grants you a fixed amount upfront and you must begin paying back immediately.

Proposed provisions for these two types of mortgages will be under discussion for at least four months and may not become law until late this year or early next.

Closed-end mortgage disclosures will focus on potentially risky features including adjustable rates, prepayment penalties, and negative amortization (a feature that can cause a loan's balance to rise).

Lenders would have to:

• Improve the disclosure of the annual percentage rate (APR) so it captures most fees and settlement costs.

• Show how the consumer's APR compares to the average rate offered to borrowers with excellent credit.

• Provide final truth-in-lending disclosures so that consumers receive them at least three business days before loan closing.

• Show consumers how much their monthly payments might increase, for adjustable-rate mortgages.

Disclosures, however, aren't always sufficient to keep mortgage consumers out of hot water. Closed mortgage rules would also

• Prohibit payments to a mortgage broker or a loan officer that are based on the loan's interest rate or other terms. Yield spread premiums, mortgage brokers obtained for steering consumers to higher cost mortgages, are targeted by this provision.

• Prohibit a mortgage broker or loan officer from otherwise steering consumers to transactions that are not in their interest in order to increase the mortgage broker's or loan officer's compensation.

For HELOCs the Fed wants to do away with generic disclosures an mandate more specific information about a HELOC that summarizes both the basics and risks at application. Shortly after application, consumers would receive new disclosures that reflect the specific terms of their HELOC.

The proposed rules for HELOCs would also

• Prohibit creditors from terminating an account for payment-related reasons, unless the consumer is more than 30 days late in making a payment.

• Provide additional protections related to account suspensions and credit-limit reductions, and reinstatement of accounts.

During the housing crisis, even consumers with excellent credit had HELOC accounts closed or limits reduced or frozen.


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© 2008 DeadlineNews.Com

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New Fed Rules Effectively Codify Mortgage Squeeze

New federal rules to protect consumers from bad loans do little more than codify steps lenders are already taking, but borrowers may feel a tighter pinch.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation -- a federal crime

Deadline Newsroom - Paramount in new federal regulations approved to foster more responsible mortgage lending, are the implications for consumers shopping for a home loan.

The Federal Reserve Board's new rule amends the "Truth In Lending Act," Regulation Z under the "Home Ownership and Equity Protection Act (HOEPA)".

HOEPA was originally passed in 1994 to target abusive practices in home equity lending. The Fed's new move extends protections to home purchase loans.

Critics complain the rule is long over due because unfair, abusive and deceptive home mortgage lending practices get much of the blame for the current housing crisis that has already put millions of properties in foreclosure and former owners on the street.

Also, most lenders long ago curtailed many of the practices now forbidden by the new regulations, critics say. The horse is already out of the barn, so to speak, and the new regulations will do little to corral the market's downward stampede.

However, the new rules should help prevent future runs on bad loans by helping remove them from the market. Perhaps more important, key provisions in the new rules will give consumers cause to pause before shopping for a mortgage.

Effective October 1, 2009, the new rule's four key provisions (along with how each will impact consumers), for a newly defined, but yet to be detailed category of "higher-priced mortgage loans," include protections that will:

• Prohibit a lender from making a loan without regard to borrowers' ability to repay the loan from income and assets other than the home's value.

This forces lenders to more closely scrutinize a borrower's debt-to-income ratio, looking for less debt, more income and savings, larger down payments and other liquid assets the borrower can fall back on. Consumers may have to take more time saving and paying off debt before buying a home.

• Require creditors to verify the income and assets they rely upon to determine repayment ability.

This provision will make it especially tough for home-based business owners, self-employed people, contract workers and others who don't get a regular pay stub. Lenders were already asking many of these borrowers for a CPA's or other tax professional's certified profit-and-loss statement to reveal income viability.

• Ban any prepayment penalty if the payment can change in the initial four years. For other higher-priced loans, a prepayment penalty period cannot last for more than two years.

Without this lender risk-reducing tool they are more likely to offer a narrower variety of loans, forcing some consumers out of the market and more of them to spend more time shopping around. Shopping around, of course, is a smart practice.

• Require creditors to establish escrow accounts for property taxes and homeowner's insurance for all first-lien mortgage loans.

This means borrowers will have to figure on paying more each month than just the home loan's principle and interest (or interest only, where available). This is actually a useful tool for borrowers, especially those who procrastinate and gamble they'll have the lump sum cash when the insurance premium or property tax comes due. Financial counselors have always advised spreading out the cost of insurance and taxes over 12 monthly payments is much easier to fit into a household budget than the lump sum risk.

In addition to rules for higher priced home loans other rules include:

• Creditors and mortgage brokers are prohibited from coercing a real estate appraiser to misstate a home's value.

• Companies that service mortgage loans are prohibited from engaging in certain practices, such as pyramiding late fees. Servicers are also required to credit consumers' loan payments as of the date of receipt.

• Creditors must provide a good faith estimate of the loan costs, including a schedule of payments, within three days after a consumer applies for any mortgage loan secured by a consumer's principal dwelling, such as a home improvement loan or a loan to refinance an existing loan. Currently, early cost estimates are only required for home-purchase loans.

• The rules also specifically outlaws seven deceptive and misleading advertising and requires more extensive information about rates, monthly payments and other loan features.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the new Deadline Newsroom, DeadlineNews.Com's news back shop. In both cases, it's where all the news really hits home.

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Mortgage Rate Locks Critical

Use a mortgage interest rate lock to put the brakes on the interest rate roller coaster ride and be sure your mortgage remains affordable until you sign on the dotted line.

by Broderick Perkins
© 2008 DeadlineNews.Com

Unauthorized use of this story is a copyright violation - a federal crime



Deadline Newsroom - An interest rate lock is always a good idea in any market.

But it becomes a better idea when it's crucial to lock in an interest rate and other loan costs at a level you can afford.

A changing market -- especially when the change is for the worst -- is one of those crucial times.

During the first half of 2008, nearly a full percentage point separated the high of 6.45 percent in recent weeks and the low of 5.48 percent in January, according to Freddie Mac.

Get off the interest rate elevator ride with an interest rate lock.

A traditional rate lock is a lender's guarantee that your mortgage will come with a specific interest rate, points, other costs and terms.

Most locks are designed to protect home buyers from rising rates, but those refinancing can also benefit.

Mortgage news that really hits home!

A rate lock's terms include a specified period for the lock. If you fail to complete your home purchase or refinance before the clock runs out, and interest rates rise, brace yourself for higher costs.

Those higher costs could come in the form of more up front cash to keep monthly payments in line with what you can afford or what you lender will allow.

With a refinance, if your home ownership isn't at stake, you have more wiggle room and can wait out the market, take less cash out or otherwise cope.

Of course, those refinancing to stave off foreclosure could also find higher rates, without a rate lock, to be just as problematic as for home owners.

In an up-and-down interest rate market, falling interest rates are another strong reason for a rate lock.

If interest rates fall during the lock period you can't take advantage of the lower rate unless you rewrite the lock at additional cost or include a "float down" provision in the original lock.

The "float down" option grants you a lower rate if rates fall within a given window of time. Again, unless specified otherwise, float downs stick you with the higher rate if rates rise during the lock period.

All these rate lock variations underscore the importance of being sure the language of the lock contract gives you the options you need, for a sufficient term.

Get it all in writing. It's difficult to enforce a verbal agreement.

The contract should lock should lock in the interest rate, points and other costs, where possible. The agreement should include your name; the lock's effective date; lock cost; what terms are locked; the lock's expiration date and time; and any post-lock options.

Lock as soon as you see the desired rate or "on application" -- when you first apply for the mortgage -- so that your rate is locked as you spend time getting the application approved. That's particularly important if you barely qualify at today's rates, and an increase would make buying unaffordable.

Of course, you can choose to set the lock on approval, especially in markets where loan applications are prolonged due to heavy demand for housing.

In any event, the lock period should be long enough to allow for settlement, contingencies, and other potential delays. Locks average 30 days, but can range from 15 to 60 days.

Also consider:

• Locks cost money. Shop around for both the terms of the lock contract and its cost, which varies from lender to lender. Some lenders want up-front lock fees. Others take them at settlement. There are non-refundable fees, flat fees, and fees based on a percentage of the mortgage, among the variations.

• Before choosing a lock-in period, determine the average time for loan processing. Ask your lender to estimate the time necessary to process your loan and verify the information with other realty professionals. If the loan doesn't close on time, lenders can extend your lock for free, charge more for the extension or charge an additional percentage of the loan amount.

• Once you lock-in a rate, if you haven't already, quickly submit the application and other required documents. You should have previously checked your credit report, prepared income, job, debt, asset and other documents to back up your application information.

• If you have a floater, it's your job to keep an eye on the market.

• The Federal Reserve's A Consumer's Guide To Mortgage Lock Ins" offers more information.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews Group -- DeadlineNews.Com, a real estate news and consulting service and Web site and the new Deadline Newsroom, DeadlineNews.Com's news back shop. In both cases, it's where all the news really hits home.

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Home Equity Stakes Stumped

Americans' home equity stake, a victim of over-use, low and no-down payment financing and declining home prices, is at the lowest level since World War II.

by Broderick Perkins
© 2008 DeadlineNews.Com



Deadline Newsroom - The equity stake in Americans' most important asset has dropped to its lowest level since the end of the second World War.

Home owners' home equity slipped to 46.2 percent in the first quarter this year, the fifth consecutive quarter the rate was below the 50 percent market, according to the Federal Reserve's first quarter Flow of Funds report.

Home equity is the market value of a property, minus the mortgage debt. For example, if a property is worth $300,000 and the mortgage debt is $150,000, the equity stake is $150,000 or 50 percent.

Home equity levels declined steadily even during the housing boom when consumers cashed in on cash-out refinancing, home equity borrowing and 100 percent financing.

Now, home values are falling, taking a bigger slice out of the home equity pie.

The decline in values has left many home owners with negative equity or what's called an "upside down" mortgage where the mortgage is larger than the home's value.

At the end of March, some 8.5 million home owners, 16 percent of those with a mortgage, had negative or no equity in their homes, according to Moody's Economy.com.

In some hard hit areas like California, Florida, Michigan and Nevada, more than half the home owners who purchased homes in 2006 live with upside down mortgages, according to Zillow.com.

Other than quickly paying down the mortgage or otherwise shelling out cash for equity-saving home improvements, there's little many home owners can do to hold onto or increase their equity.

Experts expect equity nationwide to decline further as falling home prices erode home prices, plunging more home owners into upside down mortgages.

Economy.com is forecasting home prices to decline by as much as 24 percent from the peak of the market. By June 2009 Economy.com estimates the number of home owners with zero or negative equity will increase to 12.2 million, or about 25 percent of all home owners with a mortgage.

Home owners with zero or negative equity are those most likely to default on mortgage payments and walk away from their mortgages. The trend will exacerbate the housing down turn by leaving the market with more foreclosures.

The good news is that one out of every three home owners have no mortgage at all and own their home free and clear with a 100 percent equity stake.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Fed Cuts Deep On Blue Tuesday

The latest effort to resuscitate a near comatose economy suffering from a housing market hangover, finds the Feds pushing interest rates down again, this time with one of the deepest cuts in Fed history.

by Broderick Perkins
© 2008 DeadlineNews.Com

Deadline Newsroom - The Federal Reserve reduced its benchmark federal funds interest rate by three-quarters of a percentage point on Tuesday, to 2.25 percent, one of the deepest single cuts in Fed history, but less than investors hoped for.

Why?

Not adverse to more cuts, the Fed said, "Recent information indicates that the outlook for economic activity has weakened further. Growth in consumer spending has slowed and labor markets have softened. Financial markets remain under considerable stress, and the tightening of credit conditions and the deepening of the housing contraction are likely to weigh on economic growth over the next few quarters."

Some believe the nation's economy is already in a recession, but that won't be official until after two quarters of negative growth.

The Fed has reduced the federal funds rate, six times since September -- twice in January alone.

The Fed also cut by the same 75-basis-points, the discount rate leaving at 2.5 percent.

"Today’s policy action, combined with those taken earlier, including measures to foster market liquidity, should help to promote moderate growth over time and to mitigate the risks to economic activity. However, downside risks to growth remain. The Committee will act in a timely manner as needed to promote sustainable economic growth and price stability," the Fed reported.

There remains frustration that Fed actions, including pumping billions of dollars into an anemic economy, has done little to rescue the housing sector from its deepening coma.

Even as the economy sleeps, the dollar is weaker than ever and inflation moves ahead, spurred largely by record oil prices and more expensive food.

How does this impact you?

See: Bankrate.com's Fed Watch.

© 2008 DeadlineNews.Com

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Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Lenders Turning The Screws On Mortgages

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – If you are sitting on the fence waiting for mortgage lenders to open the flood gates on the dammed up flow of home loans, get comfortable.

Lenders may not be finished turning the screws on home loans.

For borrowers, that means continued higher costs for some home loans and tougher qualifying requirements for approval.

Risky lending and borrowing habits during the last housing boom left too many homeowners with mortgages they couldn't afford.

That forced lenders to end the boom with the sound of the door on risky loans being slammed shut to lock out losses from failed home loans.

Forty percent of loan officials said their institution tightened lending standards on prime, nontraditional and subprime home loans in the past three months, according to the October Senior Loan Officer Opinion Survey on Bank Lending Practices.

That's three times as much as the 15 percent that reported tightening lending standards in the July report, says the Federal Reserve, which conducts the quarterly survey.

The Fed said 52 domestic banks and 20 foreign banking institutions participated in the latest survey.
Forty percent of loan officers surveyed said standards for prime loans had tightened, but the percentages were higher when only nontraditional or subprime loans were considered.

Of the 40 banks originating nontraditional residential loans, 60 percent in the October survey, reported tightening lending standards on nontraditional loans, up from 40 percent in July.

Five of the nine banks writing subprime loans -- 55 percent -- said they tightened lending standards on subprime loans over the past three months. A similar percentage in July said they had tightened standards, according to the survey.

As a result of the tightening, demand for home loans has weakened.

Overall, about half of the domestic loan officers indicated that demand for prime, nontraditional, and subprime residential mortgages had weakened over the past three months, compared to three months prior. Lenders reporting weaker demand for prime and nontraditional mortgage loans increased notably compared with the July survey. Those reporting weaker demand for subprime loans was only slightly larger than in July, the Fed said.

By loan type, demand for home loans was weaker during the last three months (when compared with the previous three months) at 59.2 percent of lenders offering prime mortgages, at 55 percent of lenders offering nontraditional mortgages and at 50 percent of lenders offering subprime loans.

The Fed's survey also found tighter lending standards and less demand for jumbo loans -- those larger than the $417,000 conforming loan level -- over the past three months.

Most, 84.4 percent of lenders, said over the past three months the size of jumbo loans remained the same while 15.6 said tighter restrictions were placed on the size.

The cost of jumbo loans rose at 48.9 percent of lending institutions, remained the same at 48.9 percent of lenders and declined at 2.2 percent of lenders.

The minimum down payment necessary to qualify for a jumbo loan rose at 35.6 percent of the lenders in the survey, but remained the same at 64.4 percent of the lenders.

Also the minimum credit score necessary to land a jumbo rose at 28.9 percent of the lenders and remained the same at 71.1 percent of those surveyed.

Greater income and asset documentation was required at 51.1 percent of lenders while the level of documentation remained the same at 48.9 percent of lenders, the Fed reported.

The tougher restrictions pushed the share of jumbo loan originations down at 55.4 percent of lenders surveyed, the share remained the same at 34 percent of lenders and the share of jumbo originations rose at 10.6 percent of lenders.

The squeeze is also on for commercial real estate loans used for construction and land development. Nearly 52 percent of lenders said credit standards had tightened for commercial realty loans and 48 percent said demand was down over the past three months, according to the Fed's survey.

• Foreclosures Undercutting Social Benefits of Homeownership
• Media Still Not Responsible For Housing Woes
• APR Not a Good Judge of Mortgage Character
• Silicon Valley Bullish on Buying, Not Selling
• Mortgage Confusion Chronic

© 2007 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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Blue Notes From the Beige Book

by Broderick Perkins
© 2007 DeadlineNews.Com

Deadline Newsroom – Using perhaps the gloomiest language yet this year, realty market sources on the ground around the nation found little cheer in a housing market that appears on the verge of hibernation.

Anecdotal evidence from the Federal Reserve's 12 banking districts suggests further that this winter's housing market could get slammed into a deep freeze that likely won't thaw in the spring.

As the housing market cycles down into what's traditionally the slowest buying season of the year, the seventh of the Federal Reserve's eight Beige Books a year tells the tale of a tired and trying housing market.

Tight credit and higher energy prices are the primary culprits blamed for turning previous market froth into a frosty precursor of what could become a Big Chill.

Adding commentary rather than statistical evidence about the nation's housing market, the Beige Book gathers anecdotal information on a variety of economic indicators, from agriculture, consumer spending and energy, to employment, industry performance and wages.

Comments are solicited from representatives of the reserve's dozen district branch banks as well as from economists, market experts and other sources in those districts.

District-by-district, from the October 17, 2007 Beige Book, here's what sources in the field had to say about the residential real estate market since August.

• Boston, First District -- There was some positive August-to-August data from state real estate associations showing increases in sales and median prices for homes and condos, but the Book reported that data conflicted with more comprehensive information that included foreclosure sales, for sale by owner listings, and new home sales. Sources say, overall, prices and sales are down in Connecticut, Massachusetts, New Hampshire and Rhode Island. Unfinished condominium developments (some with only 10 percent to 15 percent of units sold) are in "very bad shape" as talk heated up over converting condos to rentals.

• New York, Second District -- Housing markets were mixed with New Jersey home builders reducing construction levels. Builders "all but ceased seeking approvals" for new developments. New home prices fell 10 percent as new home and existing home sellers tried to get ahead of the market by pricing properties more realistically. New York State real estate associations said both sales of existing single-family homes and prices were down. Conversely, the Manhattan market remained steady and "relatively strong" with condo and co-op sales rebounding more than 60 percent from a year ago. Likewise some Manhattan rents were up 15 percent from a year ago due to a dearth of available units.

• Philadelphia, Third District -- A source said flatly, "the middle is dead" in the district's new and existing home markets with little more activity in the high and low ends. Builders reported making "large price reductions with little effect on sales." Exiting home sales declined since August in nearly all corners of the district. Sources did not expect a turnaround any time soon, due also to large inventories. Several sources said they expected housing demand to "remain subdued for some time." Buyers will "recognize a deal, if you give the houses away," said one source.

• Cleveland, Fourth District -- Sources said a late summer surge in sales was considered a seasonal adjustment rather than a trend. New homes sales were down compared to the same period last year, builders discussed reducing workforces, and cancellations and price discounts were up, but inventories were shrinking somewhat. Sources remained uncertain about the timing of a turn around.

• Richmond, Fifth District -- Area real estate agents reported "generally sluggish home sales," with two advising sellers "just sit and wait" and "stay where you are unless you absolutely have to sell." Scattered reports said conditions were improving and expectations were growing for improved home sales in the coming months. Home price appreciation was "very modest." Rents were reported as "firm" with vacancy rates "unchanged."

• Atlanta, Sixth District -- Home builders and real estate agents said new and existing sales remained well below year-ago levels in September as the pace of new home construction "continued to decline sharply" as inventories rose.

• Chicago, Seventh District -- "Residential construction and home sales continued to weaken in most areas of the District." Tightening credit for jumbo mortgage loans was specifically mentioned as contributing to the declines in local housing markets. Builders added price discounts and incentives, but showroom traffic became more sporadic and many customers were forced to withdraw from contracts after failing to sell their own home.

• St. Louis, Eighth District -- Home sales weakened more throughout the District. Compared with the same period in 2006, August 2007 year-to-date home sales increased 1.4 percent in Louisville, but declined 3 percent in Little Rock, 7.4 percent in greater St. Louis, and 13 percent in Memphis. Residential construction continued to decline. August 2007 year-to-date single-family housing permits fell in all major metro areas compared with the same period in 2006.

• Minneapolis, Ninth District -- Residential construction remained slow. The value of permitted units in the Minneapolis-St. Paul area was down 38 percent in August from a year earlier. In contrast, a representative of a western Montana builders' association described recent activity there as consistent with recent strong years. In Sioux Falls, the value of new residential construction in September was down slightly from the previous year.

• Kansas City, Tenth District -- Residential real estate activity declined further, home sales weakened in September and were expected to slow further with flat home prices and rising inventories. Demand for low- to mid-priced homes remained strong, but sales of higher-priced homes were weak.

• Dallas, Eleventh District -- Lower priced homes felt most of the market softening as builders curbed construction and took the edge off inventories. Sources pushed out their forecast for recovery of the housing sector to 2009. Apartment demand picked up, and rental rates increased, causing sources to reveal optimism. There was concern that competition from rental housing will increase when the peak of adjustable rate mortgages reset in 2008.

• San Francisco, Twelfth District -- Tighter lending standards for home mortgages took greater tolls on sales of new and existing homes in most areas. Title and escrow sources said sales activity "fell as much as 40 percent" in some areas during the last few months. The reduced pace of home sales restrained price growth, particularly for lower-priced homes, which have been most affected by changing credit terms and conditions in the subprime-mortgage market.

• New Wave Optimism Means Calling An End To Housing Slump
• Economy 'Certainly Close' To Realty-Made Recession
• Beige Book: Lackluster Housing Market
• Homeownership Rate Slides Again
• State of the Real Estate Union: Beige
• Federal Reserve's Grim Real Estate Report


© 2007 DeadlineNews.Com

Broderick Perkins, an award-winning consumer journalist of 30 years, is publisher and executive editor of San Jose, CA-based DeadlineNews.Com, a real estate news and consulting service, and the new Deadline Newsroom, DeadlineNews.Com's new backshop. In both cases, it's where all the news really hits home.

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