The Nationwide Mortgage Licensing System and Registry launches NMLS Consumer Access Website

The Office of Consumer Affairs and Business Regulation announced that the Nationwide Mortgage Licensing System and Registry (NMLS), a mortgage licensing system operated by state financial regulators including the Massachusetts Division of Banks, launched the “NMLS Consumer Access”. There hope is that it will help protect mortgage shoppers from unscrupulous loan originators.

NMLS Consumer Access is a fully searchable single-source consumer access website that allows the public to verify state-licensed mortgage lenders, brokers and individuals currently licensed through NMLS. Future updates to NMLS Consumer Access will provide a record of applicable disciplinary actions taken against a licensee by any jurisdiction in the country.

The NMLS Consumer Access website was finally launched in January 2010 and the NMLS Resource Center, claims the website will bring greater transparency to the mortgage industry and compliance with provisions of the SAFE Act.

The database of companies and individuals will be updated nightly and will tell consumers whether the person they're working with has had their license suspended or revoked in another state, and will list any aliases the individual has used since the age of 18. It will also seek to discover whether that person is engaged in other sidelines and what that person’s license status is in other jurisdictions.

You can download a .PDF pamphlet of Information about NMLS Consumer Access prepared by the NMLS Resource Center.

Is Your Real Estate Agent a Spy?

Is your agent a spy? What kind of question is that; it's an important question spawned by the constant controversy and confusion about AGENCY. Who does an agent represent and how do they represent them? The answer to that question can mean thousands of dollars in or out of a buyer's pocket.

I try my best to illustrate the nuances and various types of Agency to consumers on my website, but no matter how I explain the differences, I find most people just don’t get it. However, I really don’t blame them because it is the real estate industry that prefers to keep the smoke screen smoldering to allow for maximum personal gain.

The organization I belong to, The National Association of Exclusive Buyer Agents (NAEBA), continues to lobby for a clearer definition or distinction and separation between those agents that proclaim loudly that they can represent buyers as exclusive buyer agents, yet under their breath slide in the disclaimer or, more appropriately, the caveat, “with the right to transition to dual agency”. That is where the true distinction lies and dual agency is the problem. Attorneys and those in the know think dual agency is a double standard and fertile ground for suspicion and potential favoritism ultimately resulting in litigation. Some states already prohibit the practice of dual agency.

I was reading an article in a trade news publication where a consumer was buying a home and wanted to know how the process would work if the home she was interested in was being offered by a real estate agent who would be working as what the buyer ironically called a “double” agent? In other words, working for both the buyer and the seller. What was really interesting was the choice of words since what she was talking about was a “dual” agent. Subconsciously, she viewed the agent as a double agent. The definition of double agent is “A person pretending to work as a spy for one government (company, etc.) while actually working as a spy for another government (company, etc.).

To pull this back into the real estate vernacular let’s look at this as what is called single-agent dual agency, that being a relationship where one agent represents (?) both the buyer and the seller in the same transaction. That agent can no longer offer the same fiduciary responsibilities to either party as if they were representing one exclusively. The dual agent cannot provide Undivided Loyalty. This is an important point because as a client fiduciary an agent representing a buyer or a seller exclusively is sworn to treat the client’s best interests above their own. Other obligations that cannot be met in a dual agency arrangement are Obedience, Reasonable Care and Diligence and Full Disclosure. The dual agent is required not to disclose any confidential information about both parties. But let me ask you this; in 99% of cases, who do you think the (seller) agent has had the longer term relationship with? You, the buyer or the seller they have the listing agreement with? As a buyer, did you tell your agent the maximum amount you are willing to pay for the property or any other tidbits you would not want to the seller to know about you? Do you think the seller told their agent what their bottom line is or why they are selling? If the agent divulges any of that privileged confidential information without authorization, it is an actionable offense. There is one important point to note and that is that you as a buyer have the right to say no to dual agency when signing an exclusive buyer agency agreement, but that means your buyer agent cannot show you properties listed by their broker agency. The same holds true for a seller.

Most people entering into the Martha’s Vineyard real estate market do not live here and are usually from another part of the country. They know nothing about this market and if they are wise they realize they will need help, not just with looking for the right property or formulating a negotiation strategy, but most importantly with all the due diligence that is essential between the Offer to Purchase and the day of Closing. They need to be exclusively represented 100% of the time.

NAEBA continues to advocate for a clearer explanation of the differences so the public can be better protected. I was speaking to a web advertising sales representative yesterday and asked him why they cannot change the category headings in the real estate agency listing section to read SELLER AGENCIES and BUYER AGENCIES, instead of SALES AGENCIES and BUYER AGENCIES. Wouldn’t that make a little more sense? I doubt we will ever see two distinct categories --- BUYER AGENCIES and EXCLUSIVELY BUYER AGENCIES, because the National Association of REALTORS® continues to allow for the oxymoron labeled as Exclusive Buyer Representation with the right to transition to Dual Agency, but Brokers who believe in my business model will continue to educate the public about the advantages of being represented “Exclusively”.

If You Don't Buy a House Now, You're Stupid or Broke

Interest rates are at historic lows but cyclical trends suggest they will soon rise. Home buyers may never see such a chance again, writes Marc Roth for Business Week.

Great News for Martha's Vineyard Home Buyers!

First-Time Home Buyer Tax Credit

President Obama signed the Homebuyer Tax Credit into law after overwhelming votes for it in Congress. The credit takes effect as of November 6, 2009. To be eligible, a purchase contract must be signed by April 30, 2010, and close on or before June 30, 2010. This is a very narrow window of opportunity so pay attention and don't miss out.

Not only is the existing $8,000 tax credit for first-time homebuyers extended but a new "Homebuyer Tax Credit" of up to $6,500 for some existing homeowners has been added. The reduced credit would be available to all homebuyers who have been in their current residence for a consecutive five-year period in the past eight years.

The qualifying income limits are being raised to $125,000 for single taxpayers and $250,000 for joint taxpayers, from the current $75,000 and $150,000.

Martha’s Vineyard Land Bank “M” Exemption

In an effort to stimulate home sales to first-time home buyers, the Martha’s Vineyard Land Bank has increased the credit amount of the “M” Exemption. The “M” Exemption is a credit given only to eligible first-time home buyers toward the Land Bank Fee of 2% of the purchase price of real estate on Martha’s Vineyard.

Prior to September 1, 2004, the “M” exemption was $100,000 and in order to qualify all parties on the deed may not have ever owned real property at any time, not just on Martha’s Vineyard but anywhere. Subsequently, it was increased to $300,000 and the exemption was available to first-time purchasers of real estate who will domicile on the property within two years and hold the property for at least five years from the date of transfer. In the case of spouses, either spouse can have owned or possessed an interest in real property prior to the time of purchase, but not both spouses. As of October 27, 2009, per a recent amendment to the land bank law, first time purchasers may now claim a $400,000 "M" exemption. All of the other requirements of the "M" exemption are unchanged.

Mortgage Interest Rates Remain Below 5%

Although inflation is an assumed and anticipated part of our future economic recovery, the Fed anticipating continued slow growth during the next few months voted the status quo for interest rates with their announcement this week that "economic conditions are likely to warrant exceptionally low levels of the federal funds rate for an extended period." Rates will stay where they are for now because the Federal Reserve group believes that even with economic growth ahead, it will be at a manageable pace.

On Martha’s Vineyard, for loans up to $417,000 you can get a 15-year fixed rate mortgage for 4.5%, with no points and a 30-year fixed with one point for 5.1%. 30-year loans are actually down by an eighth of a point at maturity.

Martha's Vineyard Real Estate --Then and Now

I was thinking about how this recession compares to the last one. The unemployment rate in Massachusetts was 9% in the early 90’s, and today it is about 6%. We also had about three times as many properties on the market here on the Vineyard.

If you are sitting on the fence, knowing in your heart that this is your chance of a lifetime to own property here but reluctant to get into the game because you think the market will go down more, you may be right. But you may regret it. If this is really your dream, do yourself a favor. Calculate exactly what your savings would be if you bought that perfect property you’ve been watching now, versus perhaps waiting until the market drops another point and you have to settle for something else. We all know the old saying, 'don't let life pass you by'.

Is the Martha’s Vineyard Housing Market really that Bad? I Don’t Think So

Looking at the overall picture of the housing crisis, perspective and understanding has been lost as a result of what is essentially a localized crisis in 4 states: California, Nevada, Florida, and Arizona. According to statistics from City-Data.com, 54 of the 101 cities with the largest population increase from 2000 - 2006 are located inside California, Nevada, Florida, and Arizona - the four states most affected by sharply decreasing home values. These four states saw the largest population influx between 2000 and 2006 triggering the need for more housing supply and with that demand, prices started to go up at 15% or more annually.

Anyone who has been in the real estate investment business knows that what goes up must come down. Many mortgage lenders bolstered by the above average appreciation rate year after year irresponsibly let their guard down, lowering lending standards and granting all sorts of exotic loans they should have known could not be repaid. Opportunity and greed propelled builders, real estate licensees, lenders and investors to push the envelope until the bubble burst. Today there are 15 states struggling to correct themselves; that is 30% of the country with 37% of the population and approximately 4 million problem mortgages. That breaks down to 7 percent of all mortgages owned in the U.S. Sure, you hear numbers reported by RealtyTrac, a foreclosure reporting service, stating one in every 464 U.S. households were served with a foreclosure filing in July --- 272,171 households, but the deepest concentration of those foreclosures are in California, Nevada, Florida, and Arizona. In Cape Coral-Fort Meyers, Florida alone, one in every 64 households received a foreclosure notice in July. On Martha’s Vineyard, RealtyTrac is reporting only 34 properties in Pre-foreclosure, Foreclosure or REO status. There are approximately 14,000 households on Martha’s Vineyard. The current inventory of properties for sale is less than 800 properties. Does anyone remember the early nineties? This is nothing compared to back then, but business is so much more difficult today because everyone is afraid of doing the wrong thing. Most of the public continues to believe the media, and the media continues to fuel the fear factor because, “misery sells newspapers”.

Not having a clear picture of the market has resulted in a lack of movement stalling the market, except for those buyers who ignore the media negativity and know how to read the numbers. I believe we are about to see a significant paradigm shift being expressed in two ways. Frustrated sellers are finally taking a hard look at their pricing realizing that their past strategy has not worked and has done them more harm than good. They are listening to their seller agents and cutting prices to the bone, well below assessed value in many cases. Sellers who have refused to price their properties realistically for today’s market and were never really sincere about selling, are taking their properties off the market. They think the market is about to turn around and prices will start to inch back up within the next 4 to 9 months. They can wait. I think this will paint a clear uncluttered picture for consumers who have been anxiously waiting with pent-up desire to get into this market but have been unsure and confused. They will finally realize now is the time to buy. They want to buy!

This fall, mortgage rates are forecasted to go up as much as a quarter percentage point according to Jim Vogel, an analyst at FTN Financial Capital Markets. This prediction is a result of Fannie Mae reporting a second-quarter loss of $2.3 billion and their prediction of more heavy losses resulting from the home-mortgage defaults and price declines centered primarily in California
(-28%), Florida (-17%), Nevada and Arizona. Fannie Mae has already said they will stop buying alt-A loans by the end of 2008. Fannie Mae and Freddie Mac are going to be limited in their ability to buy and guarantee home loans, and they will increase fees to borrowers seeking LTVs of 75-80 percent. Increases in the cost of borrowing will reduce the pool of homebuyers with the expected result that buyers with strong liquidity and solid credit will be in the catbird seat. As of today, mortgage rates are still very attractive. Martha’s Vineyard local Island banks understand our market and are excellent at helping qualified buyers to create a loan package that suits their needs. Now is the best time to buy, waiting will only create memories of what could have been your dream come true.