John Wagner, one of our Klinge Realty agents, brought to our attention the lawsuit mentioned in the latest CAR update.
A few years back, a few realtors started tacking on additional garbage fees like the lenders do, calling them “transaction fees” or “document compliance fees”. They justified them by saying the additional paperwork requires more people and processing, etc.
Finally, somebody had enough of it, and sued:
A broker must perform a specific settlement service to charge a $149 “administrative brokerage commission” fee under the Real Estate Settlement Procedures Act (RESPA). That was the recent decision of a federal district court in Alabama in the case of Busby v. JRHBW Realty, Inc. (Case No. 2:04-CV-2799-VEH). This decision serves as a good reminder for REALTORS® to refrain from charging unearned fees under RESPA.
In this case, a seller in Jefferson, Alabama agreed to pay the real estate broker a five percent commission. However, during the closing and settlement, the broker also charged the buyer a $149 “administrative brokerage commission” (ABC) fee in connection with a federally-related mortgage loan.
The buyer paid the $149 ABC fee, but then sued the broker and succeeded in obtaining class action status for over 30,000 consumers. The buyer claimed that the broker performed no services for the $149 ABC fee. According to HUD, RESPA prohibits an unearned fee, such as when a “service provider charges the consumer a fee where no, nominal, or duplicative work is done.”
In response to the buyer’s claim, the broker argued that the ABC fee was for an array of services, including overhead expenses, regulatory compliance, technological enhancements, and additional commission. The court, however, agreed with the buyer. The court observed that the array of services listed by the broker were not settlement services because they did not occur at or before the closing, and any direct benefit to the buyer was negligible. The court also pointed out that, as additional commission, the $149 ABC fee would be a duplication of the percentage commission already charged.
John mentioned that he has heard of agents charging $300 to $1,000 in extra fees, and their unknowing clients having to pony up, usually right at the finish line with no notice. It is wrong, and it won’t happen at Klinge Realty.
The lenders have received numerous requests for loan modifications.
But many borrowers don’t qualify, for various reasons:
1. Too far underwater.
2. Lousy financial package (make too much $$, make too little $$, incomplete pkg., etc.).
3. Not primary residence.
4. Not a qualified loan program (not Fannie/Freddie, etc.).
The lenders/servicers are having to review each package, order appraisals, and make a decision.
If the borrower is denied, they are faced with either keeping their word and making their existing payments, or throwing in the towel. The second choice means ride out the free rent while getting foreclosed, or try for a short sale.
Both options will be costly to the lender.
The lenders have the loan mod package in front of them. If denied, should they just go ahead and pre-approve the short sale?
On one hand, if they were proactive and offered a pre-approved short sale, they could efficiently resolve the case.
If part of the package included a demand that the seller had to vacate, the short sales could compete with REOs – right now the REOs are pummeling the short sales in selling efficiency.
Selling these homes faster and easier should mean more net proceeds to the sellers.
On the other hand, wouldn’t more borrowers take advantage of the system?
I think there are lenders out there that are contemplating this very question.
“Economists and real-estate agents are counting on homeowner affordability to stabilize California’s housing market mess, but Bruce Norris couldn’t disagree more. Owner of The Norris Group, a Riverside-based real-estate investor and financial broker for other real-estate investors, Norris says it’s not what a home shopper ‘can afford to pay’ that’s key in turning this market around – it’s what they’re ‘willing to pay.’”
“He’s bucking the popular belief that a 5 percent or 10 percent price drop on Inland Empire home values will usher in the market’s bottom. Think 20 percent or maybe more, he said. ‘It’s because of the 1004 MC form,’ Norris said. ‘It’s very dangerous.’”
“This ‘market conditions addendum’ for appraisers to use – enforced April 1 by the mostly government-owned mortgage investors Fannie Mae and Freddie Mac and loan insurer Federal Housing Administration – might thrust the economy’s fragile mortgage system from its depressed state to something much worse, Norris argues.”
“The new addendum says a house must be appraised at the neighborhood’s median home value instead of market value, as long as the home is located in a downward market and as long as the mortgage is a Fannie Mae, Freddie Mac or an FHA-backed loan. Median home values in certain neighborhoods are taking a beating these days because their prices are skewed by dozens of foreclosures – which means nonforeclosed homes are slated to get hit by a double-whammy price-depreciation phenomenon.”
“Norris has already seen values stated on local home appraisals drop 20 percent in the past 3 1/2 weeks. ‘If this plays out, things will get much worse,’ Norris said. ‘We’re going to devalue the loan portfolios of almost every lender in the state of California. This could crash the system – it really could.’”
CAMBRIDGE, Mass. – The nation’s housing market may begin to recover this year, ahead of the general economy, but only if a lot of “ifs” go the right way, according to a co-author of one of the most-watched housing indexes.
Karl “Chip” Case, who helped create the Standard & Poor’s/Case-Shiller Housing Market Index, struck a guardedly upbeat tone yesterday at a conference at the Lincoln Institute of Land Policy.
“I’m optimistic,” said Case, an economics professor at Wellesley College in Massachusetts. “I think we’ll see housing turn around before other people do. I think we’ll see it turn up this year or next” before the rest of the economy improves.
The conference focused on the future of cities after the recession, and the advent of the Obama administration in Washington.
Case said various indicators point to stabilizing prices, particularly at the starter-home end. If that happens, he said, the rest of the economy is likely to respond similarly.
But Case couched his sunny outlook against a cloudy set of preconditions that must be met for the housing slump to end: rising housing starts, removal of the “toxic assets” weighing down lenders and investors, and renewed trust in banks’ balance sheets.
If housing does not recover, he warned, a general economic upswing “could take a very long time happening.”
Case also said the national housing picture is somewhat distorted by conditions in what he dubbed “Flocazn” – Florida, California, Arizona and Nevada – where more than 50 percent of all resales involve auctions of foreclosure properties, versus about 12 percent in the other 46 states.
He took particular delight in needling Californians for their undying belief in ever-rising home prices. But this faith is understandable, he said, because downturns in the 1980s and ’90s were followed by robust price recoveries and the 2000-01 recession did not result in any price declines.
“People in California know it’ll come back,” Case said.
This California article of faith is shared by many outside the Golden State. He cited an economist friend who complained that he had not sold his house even after two years on the market. Case gently reminded him that if he lowered the price, it might sell.
Let’s examine the Case-Shiller Index methodology with the March sales in Carlsbad.
They only use SFRs, so the condos, mobiles, and multi-families are omitted, which is good.
Last month there were 43 MLS sales in Carlsbad, but only 20 of them would count towards the Case-Shiller Index.
The 23 that wouldn’t count:
11 – REOs
9 – Previous sale was brand new
2 – Recent sale was brand new
1 – No previous record
23 – Total
Here is the breakdown of the remaining 20 March sales:
The Case-Shiller method uses an algorithm for downweighting the older sales, which, if I’m reading it right, adjusts the data based on how far away each sale is from the first. It gives a lot of weight to the short sales and other highly motivated sellers, and discounts the how the long-timers did, but if all they want to do is measure off-peak pricing, it’s probably as good as any.
I like things simple, so I’ll just say that Carlsbad is around 2003 pricing.
Gibson, Ford, Brock, Seaver, Kaline, Morgan, Niekro, Lasorda, Sutton and now Hammerin Hank. We’ve lost some of the greatest to ever do it this year. @TommyLasorda is gonna have a hell of a roster to manage up there. #RIPLegends
Comments on December Existing Home Sales https://www.calculatedriskblog.com/2021/01/comments-on-december-existing-home-sales.html The delay in the buying season has pushed the seasonally adjusted number to very high levels. For example, this number of sales, (NSA) in July, would have given a 5.3 million, as opposed to 6.76 million SAAR.
When I was a kid, the only bat I used was his - legend: MLB: Hank Aaron dies at age of 86 https://sports.yahoo.com/mlb-hall-of-famer-braves-former-home-run-king-hank-aaron-dies-at-86-154633738.html?soc_src=social-sh&soc_trk=tw&tsrc=twtr via @Yahoo
"Where do we begin..2020 has been a year for everyone. When COVID hit and shut down both my husband and my businesses, we were left with a mortgage and very little income coming in. We were stressed, scared and felt stuck. We made the hard decision to sell our home and move out of state. We contacted the Klinges' and spent a good hour going over what we hoped we could accomplish. Jim and Donna came over with comps in hand and suggestions on improvements to get our house ready for the market. It was overwhelming to think about, but Donna was there and one step ahead in every scenario. more "
"Jim and Donna Klinge made the sale of our condo extraordinarily easy. They know the market and gave us sound advice backed by details and very considerable experience, reflected both in the initial pricing and subsequent negotiations. They work together as a team and are always available to talk. more "
"I cannot believe there are no reviews of Donna yet, ugh!! She is the secret sauce of the Jim Klinge/Donna Klinge combo! I will touch on Jim here, but Donna is why I'm so totally loyal to these two (no offense to Jim :)).
I consider myself a rather savvy buyer/seller. I've bought/sold 7 times in more "
"Jim and Donna Klinge are by far the most professional, personable and responsive realtors I have ever worked with. They provide VIP concierge level service in every area of the process of selling your home. My home was marketed so successfully that we received an offer the day after our first and only open house. Thanks to Jim's pricing and negotiating, our house is now the highest sold in our community... more "
by Ann Romanello
"Jim educated us, helped us find the perfect house, and then negotiated us a great deal. I would hate to be sitting across the negotiating table from ... more "
"Jim is thorough and will be brutally honest about the homes he shows you. He provides great service and follows through until the very end and even ... more "
"I highly recommend Jim as a buyer’s agent. Working with Jim, we closed this week on a San Diego condo. Jim prepared a list of comparable sales to ... more "