New Real Estate Loan Tax Hitting Market Now, by Brett Reichel, Brettreichel.com


To pay for a two month extension in the payroll tax, Congress (both sides of the aisle), and the President have decided to tax real estate loans for the next ten years. This was voted in recently, and will now start affecting real estate transactions.

It’s not been publicized as a tax because it’s been identified as an increase in the agency’s “Guarantee Fee”. But the money does not go to the agency’s, it goes directly to the US Treasury. The fee is only 10bps(bps stands for “basis points” which means 1/100th of a percent, or .1%). But, when market factors come into play(like lock term, etc.), it will be more. The largest US mortgage lender said recently that some programs will be affected as much as 80 bps.

This will not be an additional fee on the Good Faith Estimate, but will be factored into pricing. Industry estimates conclude that the typical borrower will pay approximately $4,000 more during the life of their loan.

Let’s face it, this is a tax. A couple interesting thoughts come to mind when considering this new tax.

First, since Fannie Mae and Freddie Mac are now a funding source for the US budget this works against the goal of both parties to “wind them down”, or eliminate them and replace them with private funding sources.

Second, for those of you who will immediately jump on this as “liberal” spending….the “conservatives” were also in favor of this new tax, despite their signing of the “no new taxes” pledge.

Third, housing has led the economy out of recession historically. Housing is still hurting nationally. The Federal Reserve has kept interest rates low to stimulate the economy and just last week wrote a letter to Congress expressing the importance of housing in revitalizing the economy. It makes you wonder why all these “job creators” in Washington, D.C. are for this tax that will serve as an additional barrier to stimulating housing and create jobs.

It would appear that the Nation’s leaders have other priorities. What they are, who knows

 

 

Brett Reichel
Brettreichel.com

 

Coming Next: The Landlord’s Rental Market, by A.D. Pruitt, Wall Street Journal


Apartment landlords appear to be among the only commercial property owners able to sign new tenants amid the sluggish economy.

But the strength of the multifamily sector is itself related to the troubled economy. There has been an “abnormal slowdown in household formation in recent years,” Lawrence Yun, chief economist for the National Association of Realtors, says in a new report. “Many young people, who normally would have struck out on their own from 2008 to 2010, had been doubling up with roommates or moving back into their parents’ homes.”

NAR, using U.S. Census data, says that household formation was only 357,000 last year, compared with 398,000 in 2009. That’s way below 1.6 million in 2007. But Mr. Yun said young people have been entering the rental market as new households in stronger numbers this year.

NAR expects vacancy rates in multifamily housing will drop from 5.5% to 4.6% in the third quarter of 2012. Vacancies below 5% generally are considered a landlord’s market, the trade group noted.

Minneapolis has the lowest multifamily vacancy rate at 2.5% followed by 2.8% in New York City and 2.9% in Portland, Ore.

But conditions aren’t as rosy in the rest of the commercial property market with the tepid economy poised to slow demand for space, according to the report.

For the office market, the vacancy rate is forecasted to fall from 16.6% in the third quarter of this year to 16.3% in the third quarter of 2012.  The markets with the lowest office vacancy rates include Washington, D.C. at 8.6%, New York City at 10.1% and Long Island, N.Y at 13%.

Retail vacancy rates are projected to decline from 12.9% in the third quarter this year to 12.2% in the third quarter of 2012. San Francisco led with the lowest vacancy rate of 3.8% followed by Northern New Jersey at 6.1%. Los Angeles; Long Island, N.Y.; and San Jose, Calif tied for third place at 6.4% each.

Report: Residential market hits double dip, by Wendy Culverwell, Portland Business Journal


The U.S. residential real estate market experienced a dreaded “double dip” in April, according to Clear Capital, as a leading index dropped below the prior, post-recession market low set in March 2009.
Truckee, Calif.-based Clear Capital monitors the residential real estate market. It found that nationwide home prices dropped 5 percent in April compared to one year ago and are down 11.5 percent over the prior nine months, a rate of decline not seen since 2008.
Clear Capital’s Home Data Index for Portland dropped 10.1 percent compared to a year ago while Seattle prices dropped 12 percent in the same period.
Clear Capital also said distressed properties, including foreclosures, represented 34.5 percent of the market in April.
Locally, distressed properties represented 31.1 percent of the Portland market and 27.4 percent of the Seattle market, it said.
“The latest data through April shows a continued increase in the proportion of distressed sales that are taking hold in markets nationwide,” said Alex Villacorta, director of research and analytics. “With more than one-third of national home sales being (distressed), market prices are being weighed down as many markets have not regained enough footing to withstand the strain.”
Clear Data said the nation’s five best markets are Charlotte, N.C., Washington D.C., Tucson, Ariz., Dallas and Philadelphia.
The five worst markets were Detroit, Hartford, Conn., Milwaukee, Wisc., Cleveland and Chicago.

Read more: Report: Residential market hits double dip | Portland Business Journal
http://www.bizjournals.com/portland

Wendy Culverwell
wculverwell@bizjournals.com

Broker Compensation Rule Delay Not Good for Business, by Michael Dolan, Broker Pro Mortgage


Some mortgage brokers were happy Friday that a law suit against a Federal Reserve rule, scheduled to take effect that day, had been stayed 5 days. I wasn’t. The rule controlled how to price mortgages. Here’s what I posted on a major mortgage broker discussion site (It got noticed):

This stay is terrible news for our industry because it further delays necessary clean up. I agree the new compensation rule itself is counterproductive and redundant.

But that’s not our biggest problem. The first problem is that exploitive and greedy hiring practices caused the need for government intervention. Too many broker companies treat employed LOs [Loan Originators] like crap: no training, no decent pay schedule. This exploitation in turn pressured LOs into decisions that were not in the interest of homeowners.

Second, our industry representation is ineffective and even embarrassing. Suing is the tactic of those who do not understand how the system works and cannot produce effective compromise. Industry leaders have responded like children who have lost a candy bar. They go to Washington, DC and are not professional enough to wear a suit and tie. They don’t even realize they are announcing to the world they are untutored rubes. Then we hear nutty over-statements like “we have the best lawyers in the country.” It wasn’t until about the last month they realized that complaining about their jobs is bad politics. So – too late – they began to contend the new compensation rule was bad for homeowners but never really made a compelling argument.

Today’s result: confusion. You know what, the rule is bad. But it’s not that tough to figure out. “Oh my God! How can an industry survive if you have to pay branch managers a salary?” Complaining about how the rule hurts your business makes you seem greedy and self centered. Look around. Who agrees with industry groups? Who is with us? Nobody!

After five losing seasons, you fire the coach. The current professional organizations and the people running them need to step aside and make way for educated professionals who can work with regulators, build coalitions, and explain what we are doing for homeowners.

Michael Dolan
BrokerPro Mortgage, LLC
1001 SW 5th Ave #1100
Portland, OR 97204

503-895-5428 (NEW)

425-998-0191
800-843-9010
mobile: 503-287-4876

http://www.BrokerProMortgage.com

License # 114972