The real challenge with writing about politics and real estate is that everyone takes off during the Christmas holidays. Congress has left town and won’t be back for a bit so the health care debate has died down. Tea Party revelers are face down in the egg nog and probably too cold to come out and make a fuss.
It seems that the only person who’s on the job is Dick Cheney busy reminding everyone we’re at war, damn it, and don’t you forget it. As if the parents of the returning dead and wounded can forget. Yeah, the Christmas Day bomber wannabe got people stirred up. At least Obama didn’t come to the podium and urge people to shop ’til they dropped to make things all better.
Of course, now we have new RESPA rules that include “simpler” HUD-1 sheets and the notorious and infamous Good Faith Estimate. Supposedly, this will allow the home buyer to have some good solid numbers with which to shop. My take is that it will only serve to confuse them. HUD might have done Realtors — full service Realtors — a favor, though. Someone is going to need to take the home buyer by the hand to help them make the good choices and, more importantly, settle when they’re supposed to settle even if the HUD-1 and the GFE don’t match up like they should. The $24.95 flat fee “showing agent” isn’t going to have the education, experience, internal stamina or financial incentive to deal with it.
Now, maybe the NAR will spend some of their money on marketing Realtors as professionals that can help home owners and home buyers through the increasingly complex maze of regulation. Don’t get me wrong, the Barbie doll family sitting on a fence and the model perfect “Realtor” in the “Now is the time to buy” ads are nice eye candy. It’s just that, well, they insult the intelligence of the home owner and home buyer and diminish the professionalism of the Realtor.
I’ve got a bit more to say about the NAR but I’ll save it until next week.
So…what’s your take on the new RESPA rules? Help? Hinderance?
Greg Cooper
January 3, 2010 at 11:00 am
Ken,
I was annoyed (again) when the HUD changes came wafting our way. You make a great point that it’s another reason for us to be needed and a very legit one at that. Reading your take has reminded me once again to keeping looking at the positive on added regs because at the end of the day they are all about the consumers needing good guidance from those of us are actually are watching out for them.
Dick Cheney has Janet Incompatano to thank for pushing him to the back pages. Shrieking ‘the system worked, the SYSTEM WORKED can’t be what the president wanted to hear either over the lapping of the waves in Kaanapali this past week.
Ken Montville
January 3, 2010 at 6:52 pm
Yeah, Janet sounded like John Kerry used to: The system worked before the system didn’t work. I’m not ready to call for her head, yet, but we need some answers why this guy was allowed on the plane.
joespake
January 3, 2010 at 1:05 pm
Ken, my wife, a loan originator, pulled out a lot of her hair last year trying to comply with the 2009 rules. And now new rules to further complicate the process for well-qualified, ready, willing, and able buyers to get into a home. The Washington bureaucrats and law makers don’t know the real estate business. NAR should have been more involved in the process. The asset managers and risk managers at banks don’t know the real estate business or what is happening in local markets. NAR is not doing much to educate the bank clerks that control millions of dollars worth of property and are most often the cause of failed short sale and foreclosure closings. And i won’t even get into the disintermediation happening in all facets of real estate transactions.
Ken Montville
January 3, 2010 at 6:54 pm
I don’t know what the NAR could do to educate the bank clerk who are now short sale negotiators. I do think they could have done a lot more to make sure whatever came out of HUD was a lot more “home buyer friendly” which means making the process less stressful not more so. It’s indicative of the overall NAR timidity.
Bryan Myers
January 3, 2010 at 3:44 pm
I didn’t know agents made as much as $24.95!! =)
California chose to make mortgage brokers have fiduciary duties to their clients. Now there’s a change that should have happened 10 years ago. Not that I’m complaining- it’s about time.
Ken Montville
January 3, 2010 at 6:57 pm
Fiduciary responsibility is all well and good but the mortgage folks need to feel a sense of ethical responsibility and even moral responsibility to get things right. Of course, there are scummy Realtors as well.
Doug Francis
January 3, 2010 at 8:05 pm
Within the first ten minutes when meeting with new buyers clients I pull out a simple “net sheet” to cover closing costs and expenses. I have done it that way for 15 years just so we are on the same page… and it usually takes a half-hour and is always eye-opening.
It has always seemed like a responsibility to them, and to me since the last thing I ever want is a client saying “you never covered that cost with me and I don’t have the money!”
joespake
January 3, 2010 at 8:57 pm
Doug, with the number of variables in today’s mortgage products, I feel much more comfortable having a good loan officer pre-qualify my clients and offer the appropriate products for their needs. While I can give customers “ball park” estimates, I get them to the mortgage person ASAP, usually before we even get in the car to look at neighborhoods. Making matters even more complicated are unsophisticated buyers wanting to look at nothing but short sales and foreclosures, which are loaded with financing pitfalls.
For me, a buyer’s seeing a mortgage person and exploring possibilities is a measure of their real motivation for purchasing a home.
My job in representing the client is to see that the mortgage person walks the line and perfoms as promised.
Doug Francis
January 4, 2010 at 8:58 am
I always have them meet with mortgage people before we meet, at least via phone. My experience is that people are intimidated by “the banker” and mortgage jargon that they apparently should know, but they are nervous about raising a question. My meetings are part of building a long-term relationship built on trust, and carefully explaining the expenses associated with a real estate transaction (including home inspections) helps accomplish that mission.
Ken Montville
January 3, 2010 at 9:58 pm
I think covering estimated costs with a potential buyer is a good idea. It’s always an eye opener for first time buyers to realize there may be costs *in addition* to the down payment. However, I like them to get with a mortgage person so credit can be run and I can get a closer estimate of how much home they can afford.
The new RESPA rules will make that harder since loan officers are not going to provide a GFE they’ll be committed to honoring so far in advance of a ratified contract. One of my loan officer buddies is trying to develop a spreadsheet to help but the criteria for “application for a mortgage” will make it harder to get a good fix on what potential home buyers can actually afford until Realtors have shown houses and driven around only to find out the “buyer” may not be able to buy.
joespake
January 4, 2010 at 10:39 am
Doug and Ken, I totally agree.. I think the spreadsheet, including those non-mortgage costs, like home inspections, would be very useful. I am going to get my mortgage folks on that today. It just ain’t as easy as it was in 2004, is it?