Market Matters

Houses are about to get really, really smart Source: CNBC Improvements in smart technology have allowed homeowners to control their utilities, their temperature, even their security from hand-held devices outside the home, and experts say that in the next five years, home technology could learn to sense a person’s patterns so everything is automated and operating at maximum efficiency. Read the full story

California second least affordable state for renters, study says Source: LA Times   The National Low Income Housing Coalition released a report that found California renters must earn more than triple the minimum wage to afford a two-bedroom apartment. The report states that an estimated 61 percent of California renters cannot afford a two-bedroom. In the Bay Area, a worker needs to earn $37.62 an hour to comfortably afford a two-bedroom apartment. Read the full story

Home prices fall in January but continue double-digit yearly gains Source: The Hill   The Standard & Poor's/Case-Shiller 20-city home price index revealed that prices declined 0.1 percent in January, which is the third straight month of decline. However, there were healthy double-digit gains year over year, with a 13.2 percent increase from January 2013. Read the full story

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Market Matters

SoCal housing supply expands in February, Realtors say Source: LA Times According to new figures from the CALIFORNIA ASSOCIATION OF REALTORS® (C.A.R.), the number of homes on the market jumped in February as supply expands ahead of the spring buying season. C.A.R.’s chief economist, Leslie Appleton-Young, commented, “It’s a sign we’re getting back to a more normal market, certainly.” Read the full story

U.S. Criticized for Lack of Action on Mortgage Fraud Source: New York Times The Justice Department’s inspector general, the department’s internal watchdog, released the results of an investigation and audit of efforts to address mortgage fraud. The department is facing scrutiny for closing hundreds of mortgage fraud cases after little or no investigation and making the crime a low priority. A lack of accountability after the collapse of the financial and housing markets has bolstered criticism that there has been a lack of action on mortgage fraud. Making sense of the story The report shows that the F.B.I. considered mortgage fraud to be its lowest-ranked national criminal priority. However, the F.B.I. received $196 million from the 2009 to 2011 fiscal years to investigate mortgage fraud. The number of pending cases and agents investigating mortgage fraud dropped in 2011, despite the availability of funds, as new staff were not always used to exclusively investigate mortgage fraud. Data was reported to the public that wildly overstated the government’s results. For example, it had been reported in 2012 that 530 people had been charged with fraud when in actuality only 107 people were charged. It took months of review to clarify the data. The inspector general report also indicates that it was falsely reported that cases that had cost homeowners more than $1 billion had been addressed by authorities. This was a highly inflated number, as in reality it was $95 million. The report calls on the Department of Justice to “implement a methodology for properly soliciting, collecting, and reviewing information before publicly reporting results.” The department is also called on to develop a method to capture additional data that will allow it to better understand the results of its efforts in investigating and prosecuting mortgage fraud and identifying the position of mortgage fraud defendants within an organization. Read the full story

Market Matters

California's vanishing distressed housing market Source: The Record Searchlight The CALIFORNIA ASSOCIATION OF REALTORS® reports that California's distressed housing market is a shadow of what it was at the height of the Great Recession. In January 2009, nearly seven of every 10 homes sold in California were a short sale or foreclosure. This January, that number had shrunk to 15.6 percent. Read the full story

Plan for Mortgage Giants Takes Shape Source: Wall Street Journal Senate Banking Committee Chairman Tim Johnson (D-SD) and Ranking Member Mike Crapo (R-ID) have reached an agreement on winding down the government-sponsored enterprises Fannie Mae and Freddie Mac. The bipartisan proposal would replace the U.S.-owned mortgage financiers with government bond insurance that would kick in only after private capital suffered losses of at least 10 percent. Fannie Mae and Freddie Mac currently own or guarantee 60 percent of all U.S. home loans. Kevin Brown, the president of the CALIFORNIA ASSOCIATION OF REALTORS®, commented, “Whether it's called Fannie and Freddie or reconstituted as something else, it's clear we need a government guarantee.” Making sense of the story Under the proposal, a new agency called the Federal Mortgage Insurance Corp. (FMIC) would charge fees to issue a government guarantee on bonds. This guarantee would only be issued after investors suffer losses of at least 10 percent. The agreement would aim to promote a smooth and stable transition from the old system to the new system by providing specific benchmarks and timelines to guide the FMIC and market participants. The FMIC would be modeled in part after the FDIC, including its regulatory authority. The senators’ plan would require strong underwriting standards that mirror the definition of “qualified mortgage,” and set down payment requirement at 5 percent (except for first-time homebuyers at 3.5 percent). Affordable housing goals would be eliminated and instead, housing-related funds would be established to ensure housing is available for all types of borrowers and renters. These funds would be financed through a user fee on lenders that seek FMIC backing. Current conforming loan limits will be maintained under the agreement so that mortgage credit continues to be available in high-cost areas. The plan also states that the new system will monitor consumer and market access to credit, and provide market based incentives and transparency to serve underserved areas. Read the full story