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Economics

Inside story on FTC action on CoreLogic’s proposed acquisition of DataQuick

When CoreLogic announced they would be acquiring DataQuick, it appeared they would be controlling the national public data registry, so a lone company joined forces with the FTC to keep fairness alive, and data pure.

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ftc complaint

Nearly a year ago, the gears began turning on the $661 million acquisition by CoreLogic of DataQuick and Marshall & Swift/Boeckh from the Decision Insight Information Group, set to close in the final quarter of 2013, until the Federal Trade Commission (FTC) stepped in with concerns that the acquisition would reduce competition in the real estate information market.

The FTC alleged that the combination of CoreLogic and DataQuick’s national assessor and recorder bulk data businesses would increase the risk of anti-competitive coordination between the only two remaining market participants, with Black Knight Data & Analytics (formerly Lender Processing Services (LPS)) being the second half of what would have been the new duopoly had the FTC not gotten involved.

The FTC timeline

The initial complaint was filed with the FTC in January, the Commission interviewed the complainant and gathered information on the case, ultimately creating a proposed settlement order which lists required remedies CoreLogic would need to satisfy, namely that their national assessor and recorder bulk data (and other DataQuick data) must be re-licensed to Renwood RealtyTrac LLC for a minimum of five years, effectively creating a third competitor in the market.

The FTC order notes that the data licensed to RealtyTrac must be the same scope, quality, and speed as what was generated by DataQuick prior to the proposed acquisition, and CoreLogic can’t restrict RealtyTrac’s licensing or marketing of the licensed historical data. Further, the Commission has appointed a Monitor to keep tabs on the execution of the order.

The proposal was open for public comment through April 24th, and now, the FTC is creating a final order based on that commentary, which we suspect will mirror the current version of the order, especially given that in March, a CoreLogic spokesperson spoke positively of the “anti-trust clearance” they had received as a result of the order. The current order makes sense as it keeps competition in the market, and CoreLogic as a data provider probably welcomes the competition for the sake of data purity, so even though there is a delay in the acquisition, all parties win here.

The FTC offers anonymity

When the FTC gets involved in an acquisition, it is typically because someone has alerted them to the potentially restricted market the acquisition would create, and the government offers anonymity to the party who is bringing the matter to their attention.

That party is never required to come forward, and typically they don’t, but in this case, the complainant is making themselves known to Realuoso, even though the FTC offers no protections.

Unmasking the data defenders

Enter real estate information systems company, iMapp, which offers tax roll data, parcel maps, and integrated MLS information. They are customers of DataQuick, and although they don’t rely on DataQuick data exclusively, they do use it to enhance their historical data sets, and became concerned about the potential for anti-competitive coordination between LPS and CoreLogic.

Instead of beating their chest and rallying other DataQuick customers, associations, and concerned professionals, they bravely stepped up to bat with high profile D.C. lawyers (that they paid for out of pocket) to file the complaint, asserting that with only two companies charged with this tremendous amount of data, CoreLogic and LPS could pick and choose who they sell data to and for how much, and could even cut off some companies altogether.

Instead of choosing the publicity and limelight of being data defenders, they quietly took on the battle themselves, and haven’t spoken publicly on the topic until today.

Why come forward?

iMapp CEO, Bill Rovillo tells Realuoso, “Had this acquisition been allowed to proceed unnoticed and unchallenged, CoreLogic would have had the ability to control and limit the access to a vast database of historical public record data. It would be cost prohibitive for a company to recreate an historical database of this magnitude.”

Rovillo added, “The FTC created a viable remedy for a lot of companies, but from our standpoint, the big winner is REALTORS who can now be assured that their many choices for real estate data applications continues.”

It is fascinating to watch a lone company take on huge conglomerates, and even more fascinating that they never pat themselves on the back for this David/Goliath style battle. Further, they are at risk of retaliation now that they are unmasked, but they stepped forward anyhow, because this acquisition is so much bigger than CoreLogic going on a shopping spree; it is critical that data remain free flowing, untainted, and accurate.

The iMapp team feels that they are defending the real estate industry and fighting for quality data, a noble cause that real estate professionals will get behind, now that they know the reason behind David facing Goliath.

Lani is the Chief Operating Officer at The Real Daily and sister news outlet, The American Genius, and has been named in the Inman 100 Most Influential Real Estate Leaders several times, co-authored a book, co-founded BASHH and Austin Digital Jobs, and is a seasoned business writer and editorialist with a penchant for the irreverent.

Economics

Why it’s about to get more expensive to get a mortgage

(FINANCE) Borrowing money is getting more expensive, especially for those looking to get a mortgage. But why?

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bonds and mortgages

Although there have been some blips, bonds have grown substantially in value since the 1980s. They’ve performed extremely well for a number of reasons, not least of which is the big slowdown in inflation over that time period.

The result, for investors, has been that anything “bond-lik,e” i.e. capable of paying a regular income – like a high-dividend stock or even a property like your home – has shot up in value. A reversal of bond prices would mean less support for such investments.

That’s what the economy is currently experiencing. According to Financial Times, American worker wage growth is hastening the sell-off of bonds by the US government, which is decreasing the overall price of bonds. As bond prices go down, the interest rates that they offer new investors go up. That rate jumped to 2.85 percent last Friday, the highest level since 2014.

Since the rates at which banks lend their money are largely based on the interest rates offered by bonds, regular folks looking to take out a mortgage or a loan are facing higher costs.

How does this work?

If we’re talkin’ bond prices, we’re talkin’ yield. When the price of a bond goes up, the yield of that bond goes down! Let’s say you’re getting paid $5 each year. If you pay $50 for that right, then you’re making a 10% “yield” (5/50 = 10%). But if you pay $100 for that right, then you’re making a 5% “yield” (5/100 = 5%).

It’s the same thing with the price of a bond because the amount a bond investor gets paid (usually) is fixed. And so, when the bond goes up in value, the “yield” goes down – and vice versa.

For realtors, its important to help clients shop for the best rates to improve their confidence in this market. Leveraging the right online and local financing resources can help potential buyers get the best deal. Explaining broader market context is also critical. Historically, a three percent interest rate is still very low.

According to Investopedia, mortgage rates averaged 7.81% in 1996 and 10.19% in 1986. Instilling confidence with information will put buyers and sellers in the right place to make moves.

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Economics

How does this soft jobs report impact the housing market?

(REAL ESTATE NEWS) When we see a soft jobs report, does that hurt or help the housing market? We talk to two economists about it.

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In a year of political uncertainty, the release of any jobs report is polarizing. Political figures and armchair policy wonks will read into the data as they wish, but not housing economists.

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That’s who we look to in these times, because we all know that jobs is the cure-all for a recovering economy, but payroll growth slumped in September as the U.S. Labor Department reports that employers added only 156,000 jobs.

This fell short of the 172,000 originally projected by economists surveyed by Bloomberg.

Hidden positives in the report

Dr. Ralph McLaughlin, Chief Economist at Trulia said, “While the September jobs report came in below expectations, the continued addition of jobs to the US economy will help buoy demand for homes, both on the for-sale and rental side of the market.”

He observed another positive hidden in the Labor Department result. “In addition, wage growth kicked up again, which will help bolster the savings of first-time homebuyers trying to scrape together a downpayment.”

Real estate remains unchanged

“Given no major surprise in the data, the national outlook for real estate market remains essentially unchanged, with home sales expected to squeak out slight gains in 2016 and 2017 while commercial building vacancy rates should continue to fall,” said NAR Chief Economist, Dr. Lawrence Yun.

Yun adds that “we should note that men have been underperforming as 68.4% of adults have jobs, down from historic norm of around 75%. Meanwhile, 55.8% of women have jobs, roughly matching the historic norms.”

Pointing out that the data is being “digested” through the perspective of the upcoming election, Dr. Yun notes that, “among men, those with a college degree 72% of adults are working while only 54% of those with only a high school degree are working.”

Dr. Yun observes, “There will surely be a big divergent voting patterns among men versus women and among those with college education and those without in November.”

#jobsVhousing

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Economics

Mortgage companies hiring time travelers to uncover missing documents?

(MORTGAGE NEWS) – Mortgage companies are hiring for an interesting new position that may speak to their role in the economic crash of 2008.

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During the Great Recession of 2008, it’s been estimated that around seven million Americans lost their home. Many of the homes that went into foreclosure did so because people lost their jobs, and just gave up on their home. In some, people got kicked out based on false documentation, faulty paperwork or just downright illegal mortgage servicing. Numerous lawsuits have been filed and won by homeowners who were wrongfully evicted.

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In California, in Yvanova v. New Century Mortgage Corporation, the California Supreme Court ruled that plaintiffs held the right to contest foreclosures when documentation (in this case, a mortgage transfer that was allegedly void) was not handled correctly. The Court didn’t determine validity of the document in Yvanova’s case, just that she had the right to contest the foreclosure.

New jobs in mortgage documentation

According to David Dayen, who wrote Chain of Title, this phenomenon has brought new jobs to the market. Career Builder lists a job for a “Default Breach Specialist” posted by a recruiting firm in Jacksonville, Florida. The primary characteristics for this position:

“The Default Breach Specialist responsibilities include ensuring all breach letters are issued as required by investors, insurers and/or State Law.  Responsible for ordering title, reviewing title and all security documents to identify missing assignments needed to complete the chain of title prior to foreclosure referral.”

Seeking time travelers

According to Dayen, all the assignments of mortgage should have been prepared and recorded at the time of the sale or transfer. He questions why any mortgage company would need to order these documents.

In Yvanova’s case, it’s alleged that the mortgage was not converted into the trust in a legal fashion. In many of the cases involving foreclosure, third parties were hired to produce the paperwork that conveyed a mortgage into the trust. Dayen alleges that many of these companies “mocked up” documentation.

Although it is possible that the mortgage company is simply looking for someone to make sure everything is in the case file, it’s also possible (some would say highly likely) that some documents may never be found because they don’t exist.

The failure to follow the law as it pertains to property records is so bad that companies are now hiring chain of title specialists to manage the problem. This does not put the real estate industry in the best light.

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