Here in the trenches, on the front lines of real estate in Ohio, we continue to face challenges:
First, there is an oversupply of houses, and home values are still in a general decline.
Second, although the average sale price is up, we have unprecedented marketing times and nervous appraisers (or at best very conservative appraisers). With sales nearly 20 percent below the previous year, many appraisers working on behalf of banks are brought in from out of town appraisal companies. They are only familiar with the market through Internet information. As a result, we have appraisals coming in as much as $100,000 below contract sales price – effectively killing the sale.
Third, too often foreclosed homes have been left without any care by the banks that now own them and the condition is deteriorating. The impact on neighboring homes is devastating.
Fourth, mortgage approvals are taking longer than ever, not uncommonly going beyond contract dates. (So much for “time is of the essence”.)
Two recent Federal Acts: the Home Ownership And Equity Protection Act (HOEPA) and the Housing and Economic Recovery Act (HERA) are contributing to these problems. These regulations were intended to: a) provide greater financial education for consumers, thus aiding them in their financial lending choices; b) create safety checks in the lending process so consumers would not be victimized by predatory lending practices; and c) support more rigorous and transparent regulation of the real estate industry.
However, when Fannie Mae and Freddie Mac adopted the new Home Valuation Code of Conduct (HVCC) to assure appraisers would not be unduly influenced by lenders in the appraisal process, costs rose, while accuracy took a nosedive.
Although the goals are good and necessary, these laws were created and implemented without due consideration of how they would actually work for those of us who are in the “trenches.” As a result, the time delays and cost increases are hurting the very consumers they were meant to protect.
We have heard from many of you, and I assure you that we “get it”. NAR is lobbying federal legislators to correct and modify these laws. We also are pushing for a meeting with Federal Housing Finance Agency Director Lockhart to request a moratorium on the HVCC. Stay tuned for more news on this front next week.
Thankfully, the real estate industry and America’s real estate consumers have NAR to protect and defend us. In time, I hope our efforts will finally bring peace and quiet to the Midwestern front, and to the entire market. – Steve Brown, VP & Liaison to Committees