CFPB Asks for Feedback on Home Mortgage Disclosure Act

The Consumer Financial Protection Bureau (CFPB) is requesting feedback from the public on resubmission of mortgage lending data that is reported under the Home Mortgage Disclosure Act (HMDA). The federal agency finalized a new reporting requirement for the HMDA in October of 2015. Due to the new requirements, the resubmission guidelines may also need changing. This is why the Bureau is asking the public for help on what changes may be best.

The Home Mortgage Disclosure Act

Congress originated the HMDA in 1975. Enforcement fell under the Federal Reserve Board's Regulation C. in  2011. Authority to write rules for Regulation C was transferred to the CFPB when it was formed by the Consumer Protection Act of 2010 (Dodd-Frank Act). The HMDA stipulates that lenders must report data about the home loan applications they receive, purchase, and originate. This allows regulators and the public to monitor whether or not lenders are properly serving the housing needs for the communities in which they are located. It also helps with the distribution of public-sector investing and brings additional private investments when needed. One of the primary purposes of the HMDA is to prevent discriminatory lending practices by identifying any inappropriate patterns in the origination of home loans.

It is imperative that the information gathered is accurate to fulfill the purposes of the HMDA. The CFPB conducts examinations to ensure the data reported is accurate and establishes resubmission guidelines that detail when the lending institutions will correct and resubmit data.

Request for public feedback

Some have asked the CFPB if its guidelines for resubmission of mortgage lending data would be changed to reflect the additional data submission required under the new rules. The Bureau is asking the public to comment on any changes to the resubmission guidelines needed under the new regulations. More specifically, the CFPB's resubmission error thresholds and how these thresholds should be calculated. The Bureau also asks for comments on whether or not the thresholds should change according to the size of a submission or the type of data in the submission. The CFPB also would like to know public opinion on what the consequences of exceeding a threshold should be. Other points in the request for information are about how the CFPB reviews lending data, processes that can be carried out by technology, improvements to the data collection process, and any input that will help the Bureau reduce errors in the HMDA data. The request for information is open for 60 days after its publication in the Federal Register. More information about the request for information is available at the Consumer Financial Protection Bureau website.

An ongoing effort to improve the mortgage industry

Richard Cordray is director of the CFPB. He reiterated the importance of the HMDA to protect the public from discriminatory lending practices and provide accurate information about home lending in communities across the country. The purpose of the Bureau is to make regulations and guidelines clear and streamlined for consumers. In addition to protecting the public by establishing and enforcing rules for lenders, the Bureau takes complaints from consumers, promotes mortgage education, studies consumer behavior, monitors the housing and mortgage market for an new risks to borrowers and home buyers, and strives to eliminate any unfair or abusive lending practices.

The Consumer Financial Protection Bureau was established as a result of the housing market collapse. That market collapse resulted in hundreds of thousands of foreclosures and even more properties with title problems. It is essential that all home buyers are aware they can turn to the CFPB with any question or concerns and that they have a personal title insurance policy in addition to the policy required by their lender.

Technology, Walkability, and Resilience are the Key Housing Words for 2016

As building companies get back to the business of constructing houses, they find the housing landscape has changed significantly. While the economy and housing market has been sluggish, technology has surged right along. Young people embrace technology and are less inclined to seek employment working with their hands. To remain competitive, builders must not only attract young buyers, but also find ways to attract them as workers to help build homes. To do both, construction companies and builders must learn to utilize technology to their advantage. A top feature young buyers want is walkability. Another issue that is always a major concern for every home owner is how well their house can withstand inclement weather. Builders and REALTORS  must understand the issues currently relevant to home buyers and those issues that will continue being important in future years.

Technology

According to the National Association of REALTORS report "Real Estate in a Digital Age," 68 percent of first-time home buyers are Millennials. Thirty-two percent of all home buyers are between the ages of 25 and 34. These buyers begin their search online and are connected to the internet 24/7. Many older generations also rely on technology to find homes and research things like title insurance and mortgages. Even old marketing techniques like open houses that were near extinction a few years ago are finding new life thanks to technology. Savvy builders and REALTORS use Twitter and Facebook to post live updates and promotions that will entice all potential buyers in the nearby area to stop by. The QR code has little worthwhile use in many industries, but it provides a wealth of information about a home for sale to interested buyers. Every real estate agent and builder who has filled one of those little plastic information boxes with flyers, only to get an angry caller the following day complaining it is again empty, understands the value of providing pertinent information on-site at all hours of the day. Technology can do that in a variety of ways. Increasingly, buyers are expecting builders to use technology for communication and showing things like elevations, floor plans, and site maps.

Walkability

The American Institute of Architects (AIA) conducted a Home Design Trends Survey in the third quarter of 2015. Their survey found more buyers seeking a sense of community and opting to located in or near one of the many expanding metro areas across the United States. Some of the community design trends that are currently gaining strength and expected to remain popular for the foreseeable future include walkable neighborhoods, access to public transportation, multi-generational housing,  and mixed-use buildings. AIA Chief Economist Kermit Baker said there has been a significant change in driving habits of the population in recent years. More people use public transportation and want to be near their employment and other commercial activities. For single family homes, these buyers look for contemporary-style with low-maintenance features. Some traditional wants like single-story layouts and front porches remain popular. Regardless, owners still need quality title insurance to protect their investment. A growing number of households are single adults with or without children. They like smaller, simple spaces with an emphasis on aesthetics.


Resilience

Presenters at the recent BUILDER Sustainability Summit emphasized the need for community leaders to think about resiliency before disasters occur. Threats like hurricanes, tornadoes, flooding, and heavy snow can affect people in all parts of the United States. Regardless of where a home is located, it needs title insurance and must be able to withstand one or more of these natural disasters. Alex Wilson is an architect who believes resilient design doesn't have to be expensive. Wilson listed ways builders can construct houses that are better able to withstand disasters:

• Include timber framing and hurricane straps on houses in storm-prone areas.
• Improve living conditions of homes that lose power with better insulation and passive solar features.
• Limit the need for mechanical cooling by orienting homes on an east/west axis, install better windows with some shading, attach awnings, use larger overhangs, reflective roofs, and natural ventilation.
• Have flood barriers along driveways in low-lying areas.

Walkable communities are more resilient. When disaster strikes, it is much easier to provide needed services in areas that are pedestrian friendly. Just as home owners must protect their investment with title insurance, community leaders must protect their local area through resiliency planning before the natural disaster occurs.

How a Land Survey Protects Home Buyers

Purchasing a home involves a lot of different processes all taking place during the same time frame. Once a contract is executed, it puts in motion several actions that must be completed prior to the closing. All of these things take time and require professionals who are knowledgeable and experienced in their particular field. The typical home buyer is a novice to all of this. That is why they need expert counsel by a caring REALTOR who will guide them through the process and explain the importance of things like title insurance and land surveys. Without understanding the purpose of having these things, many home buyers will feel overwhelmed and opt to skip some items to save a little money upfront. Here are a few basics about land surveys and how having one done will help prevent future costs and headaches for home buyers.

What is a survey?

A survey is the official and documented opinion of a certified surveyor on the location of a property's boundaries, buildings, structures, easements, right of way and encroachments. It records projections, variations, easements, boundary lines and is a legal representation of what the home buyer is actually purchasing. A survey is crucial when purchasing title insurance to protect the home buyer.

Why do home buyers need a survey?

The housing market collapse resulted in banks, lending companies, and property management companies receiving a huge volume of properties that they never intended to own and were not prepared to handle. Attorneys and courts were overwhelmed by the number of foreclosures they had to process. For paralegals and and other people in the process, it created mountains of paperwork and massive tangles of red tape (both digital and hard copy) that they had to work through quickly and under ongoing stress. To reduce costs, many essential aspects of proper land transfer were eliminated. These led to many properties being put back on the market with encroachments and other discrepancies in the legal description. Some properties that fell into foreclosure were situated on parcels that were part of large family-owned properties. Banks that made loans to construct homes on these parcels did not always make sure there was proper legal access in place. As a result, the people who purchased the homes from the bank had a costly and tiresome legal process to set things right and have legal access.
Differences between tax maps and survey lines is also a possibility. The property taxes a home owner pays are based on the the size of the property and what is included within the property boundaries. Too often, home buyers pull up tax maps or, even worse, some other online aerial view of property to determine property lines based on fences, trees, the amount of lawn mowed, or driveway locations. This method and taking the word of home sellers, agents, or neighbors is unreliable and will almost certainly lead to confusion and disputes at some time in the future. The only way for a home buyer to know what they are really buying and to protect their purchase is to have a survey done by a certified surveyor and have their own title insurance policy that is in addition to the policy required by lenders.

The cost of a survey

Surveyors typically charge based on how much time it takes to do the survey. Factors like terrain of the property, access to records and size of the parcel all influence the cost. Some surveys do not need a printed map of the property. It reduces costs if all the buyer needs is flags and corner markers. If the buyer uses the same surveyor who did the previous survey, it is typically less costly than hiring someone unfamiliar with the property. Buyers can also reduce the amount of time a surveyor will spend doing their field work by making sure property lines are clear. Much like title insurance, the initial cost is minimal compared to the value of the protection and peace of mind a survey provides.

A Guide to Working With First-Time Home Buyers

Buying a home is exciting. It is easy for buyers to be distracted by all the things they want and to overlook many aspects of the home buying process that are important. For the mortgage company, it is all business. They make sure they are protected by things like title insurance. First-time buyers want the most home they can afford. Sometimes, they pursue more than they can comfortably afford. Without proper guidance and counsel from a knowledgeable REALTOR, these novice buyers will skip on procedures such as home inspections by a third-party professional and their own title insurance policy to try and cut their costs.

Connectivity increases vulnerability

The National Association of REALTORS states in their "Real Estate in a Digital Age" report that 68 percent of first-time buyers are Millennials between the ages of 25 and 35. They make a decent living with an average income of $84,500. Many of them witnessed the housing market collapse and have seen their parents struggle to keep a roof over their family's head. Many of these young buyers have opted to pay down their college debt before they even consider buying a home. They are connected to one another and an infinite source of information on all things (the web) practically 24 hours a day and 7 days a week. However, these accomplished and knowledgeable buyers are vulnerable in many ways. A study by Wombat Security Technologies found that young people 18 to 25 are more vulnerable to phishing attacks because they are so open to provide personal information if they believe doing so will provide additional convenience.

Working with first-time buyers requires tact

It is important to reach and work with all first-time buyers in a way they are comfortable without allowing them to make costly mistakes. These novice buyers think they know more than they actually do. Just as they are more likely to fall for phishing scams, the information they gain from doing their own research online may not be from credible sources. For example, they may stumble across a blog that advises them against purchasing their own title insurance policy because they are already paying for a policy for the mortgage company. But that is not enough to protect the home buyer's investment. Agents must be a resource of reliable information without being condescending.

Really listen and understand their priorities

Far too often, real estate agents fall into a pattern of just going through the motions. Each transaction begins to look the same, and the agent tries to do too much of the decision making for the home buyer because they think they know what is best. It is true that many first-time buyers do not have any understanding of the process, but the agent still works for them and in their best interest. Just because many new home buyers in the market are gravitating to a specific area, price range, or style, that does not mean it is right for every buyer. It is just as important to gather the right information from your buyer as it is to provide them with information.

Be clear about your role upfront

Some first-time buyers do not understand the value of REALTORS. They think agents make a lot of money without actually doing much work. Establish yourself as a resource early in in the relationship, but make sure they understand what you can and can't do. Be sure to provide them with an agency agreement and have them sign a document that explains the different types of agency relationships. Some agents avoid having uncomfortable conversations because they think it might scare potential clients away. It is better to thoroughly discuss the value you bring to them and how you are compensated early, rather than have lingering misunderstandings and conflict down the road.

Taking the time to nurture relationships with first-time buyers is challenging, but also rewarding. Just as many home buyers overlook the value of title insurance, many real estate agents choose to not invest in working with first-time buyers. Title insurance is important to protect a home buyer's investment. Working with first-time buyers is important to have future referrals and a balanced real estate business.

Home Builders are Trying to Woo Millennnials in More Ways Than One

The National Association of REALTORS report "Real Estate in a Digital Age" underscores the important roll people between the ages of 25 and 35 have in the future health of the housing market. Sixty-eight percent of all first-time home buyers are part of this vital demographic. Millennials are responsible for 32 percent of all home purchases. These home buyers have a median annual income  of $84,500 and do not have the stigma of a home foreclosure in their history like many older home buyers. Banks, real estate agents, title insurance companies, and home builders target millennials as customers and clients to maintain a balanced business and remain competitive going forward in 2016. Bloomberg reports that construction companies must add more millennials as employees to handle increased demand and have a stable future.

Companies must develop new talent

Mike Lancaster is president of Frank L. Blum Construction that is headquartered in Winston-Salem, NC. Lancaster says home builders must do more than they have in the past to attract young workers. There was a time that builders would just hire young people and place them on the job site to learn the trade own their own. According to Lancaster, construction firms must attract, appreciate, and develop young talent. Blum Construction is trying to do this by starting a mentoring program. They also put more focus on training new hires. The Winston-Salem area is among the most affordable housing markets in the United States. To be ready for the increased demand for middle-class housing, Blum Construction is improving its employee benefits package to attract and keep young workers.

Builders previously preferred experienced workers

People often take things for granted. They think if they want a new home there will always be plenty to choose from. They also think that title insurance is less important when buying a new home. But, title insurance is needed on any home, and new home construction is a good indicator of the overall health of the economy. When the housing market collapsed, over 2.3  million construction workers became unemployed. The U.S. Census Bureau reports that 900,000 of those people returned to work in the same industry between 2007 and 2010. Very few of those returning workers were under the age of 35. Companies were picky about hiring and found it less costly to choose experienced workers who would not require the added effort of training. People who have worked in construction for many years are less likely to look for employment in some other sector. But, analysts suggest that another reason for the lack of young construction workers is that recent high school and college graduates with more employment options to choose from simply opt for some job that does not involve manual labor.

Fewer young people want to learn a trade

The Associated General Contractors of America (AGC) conducted a survey in September of 2015. Their research found that 79 percent of companies are having a difficult time finding hourly workers. This is especially true for jobs like welder, carpenter, mason, and other positions that require some amount of manual labor. Additionally, 55 percent of the responding companies said they are having some difficulty filling salaried positions like project manager and supervisor. Young people are Millennials prefer to communicate, work, shop, browse homes, and do as much as possible via their tablet or smartphone. Technology often allows young people to complete required tasks from any location. If they can work remotely, they will. A skilled trade requires on-site training, hands-on experience, and that the artisan be present to get the job done. The youngest generation of the work force does not see the importance of learning a skilled trade or has not yet been adequately incentivized to seek employment that requires they use their hands for something other than manipulating a keyboard.

Just as title insurance is a vital part of purchasing a home, skilled workers are, and will continue being, a vital component of the housing market and overall economy. It is a bad idea to skip purchasing title insurance to try to save a few dollars. Perhaps home builders will need to incorporate a more direct approach to attracting young workers to construction. Just pay them more.
accustomed to using technology in their everyday lives and business practices.

What's In Store for the 2016 Housing Market?

While the constant headlines of home foreclosure numbers are now a distant memory, the housing market has still not quite returned to its pre-recession strength. New home starts spent this past spring idling in hope that millennials would soon dive full force into home ownership. But a lot of the millennials opted to continue renting and pay down some debt. The federal government enacted numerous rules and laws aimed at protecting home buyers from predatory lending. And mortgage rates remained at historic lows. One positive that has come from the housing market collapse is that more home buyers are aware of the importance of title insurance. This came from the large number of bank-owned (REO) properties that had to be reabsorbed into the market before any substantive market growth could begin. But, what do industry analysts anticipate for 2016?

Many consumers remain pessimistic

Trulia commissioned Harris Poll to survey Americans about their view of the current and future housing market. Business Insider reported the results. Their research found that 80 percent of people in the important millennial demographic hope to someday own their own home. They found that 75 percent of people in all age brackets still hold onto the American dream of home ownership. About 22 percent of respondents believe it will be more difficult to obtain a home loan in 2016 than it was in the preceding years, due primarily to rising interest rates. Thirty-one percent of those millennials say they do plan to purchase a home by 2018. Their job status and how much money they have saved for a down payment will determine whether they pursue that goal in 2016 or later.

Fannie Mae and FHA try to make obtaining a loan easier

In addition to more buyers understanding the importance of title insurance, home buyers are more cautious about getting a home loan. In an effort to draw some of the qualified buyers who are still sitting on the sidelines into the market, the Federal Housing Administration (FHA) lowered premiums on mortgage insurance below the traditional 0.85 percent to 1.35 percent. That is enough to save home buyers about $900 each year on their mortgage insurance. Additionally, Fannie Mae is also trying to make the path to home ownership smoother for buyers. Buyers qualified in other ways can get a home with as little as 3 percent down.

Another effort to make buying easier is the HomeReady mortgage program. HomeReady takes into consideration the income of other people living in the home, without these people being listed as a borrower on the mortgage. This means if a person represents at least 30 percent of the household income, their earnings can count toward the loan qualification. This program can also be used to include persons not living under the roof, like the parents of millennials who are willing to help their children with some monetary assistance.

Boomerang buyers may be coming back into market

While the first-time buyers get the most attention, it is the boomerang buyers who are likely to determine the overall strength of the 2016 housing market. The Northwestern University Institute for Policy Research estimates that  approximately seven million people across the United States lost their home to foreclosure during the recession. While the lenders may be reluctant to lend money to anyone who has a foreclosure in their past, the National Association of Realtors (NAR) says almost one million of those people who lost a home previously are looking to buy again. The housing market will never fully recover until this demographic is once again allowed to borrow money to get their American dream back.


It is important that all home buyers be more prudent with their purchase decision. This includes being sure they can comfortably afford their mortgage. They should also have a thorough home inspection, and purchase title insurance for their own protection, in addition to the title insurance that protects the lender.

Older Homes Have Hidden Value Along With Hidden Costs

 When the housing market is discussed in the news, the new home start numbers and building permit numbers are used to indicate the strength or weakness of the market. Fannie Mae predicts a strong housing market for 2016 and the increase in housing starts that many Realtors have been hoping for since the United States began pulling out of the Great Recession.

Title insurance for old and new homes

Many buyers don't understand the need for Title Insurance on new constructions. Even though they are the original owner of the home, they still need Title Insurance to protect against possible hidden problems with the land or existing liens. With older homes, the need for title insurance is more clear. These homes have had many owners and possibly fell into foreclosure at some time. But these older homes can be hidden gems that still have many benefits for buyers of every age group.

Quality construction of older homes

Someone is going to say it anytime a Realtor is showing an older home to potential buyers: "They don't build them like this anymore." It is true. Homes constructed 50 or more years ago were built with old growth trees. That wood is not in ample supply these days, and the vast majority of new homes have wood from hemlock fir hybrid trees. These trees are scientifically engineered to grow quickly. However, the wood lacks the character of the wood used in older homes and does not have the same durability. A lot of wood used in new homes is what's called "construction grade." It is designed to be covered by paint.
Construction has improved in many areas over the years. Builders began incorporating features like energy-efficient windows during the energy crisis of the 1970s. Modern windows save homeowners thousands of dollars each year in energy costs and are virtually maintenance free. These multi-pane windows are metal or vinyl clad, easy to keep clean, and easy to repair if broken.
It is possible to get the best of both worlds in an older home that has been upgraded. But, potential buyers should know that most tax credits that were available for making energy-efficient improvements to existing homes have expired.

Other difficulties with existing homes

Older homes have those tiny bathrooms and small kitchens. People like being comfortable in every room of their home these days. Even mobile homes and homes in the lower prices ranges have luxurious bathrooms and kitchens with islands, plenty of counter space and outlets for small appliances. Buyers need to consider possible structural limitations to remodeling older homes. And a complete upgrade of the electrical system is often necessary.

Some things that can't be changed

Many millennials prefer being located near the city and are willing to trade having a spacious yard for having the convenient location. The municipal parks are enough recreational space for them. For home buyers who have a large lot with existing shade trees as a top priority, older homes are probably their only option. Homes that are more than 40 years old have trees in the yard that are over 40 years old. These stately trees are a mixed blessing. They do provide a canopy of shade to keep the house cool and enhance the enjoyment of outdoor activities, but they produce a large quantity of gutter-clogging leaves and the large limbs can be a liability. Each year these old trees damage homes (and neighbor's homes) when they succumb to high winds or loose limbs due to disease. Like people, trees are more prone to disease as they get older.

Upfront savings can cost a lot over time

Many first-time buyers are anxious to get as much house as they can possibly afford. A new construction will cost about 15 percent to 30 percent more than an older home with comparable square footage. But, the new home comes with adequate insulation and a new, highly efficient HVAC system to save on monthly bills. It will have vinyl exterior that does not require painting and new appliances.
Novice buyers often take on more than they can handle when they buy an older home with the intention of doing much of the needed work themselves. According to the NAR report Real Estate in a Digital Age, 68 percent of first-time buyers are millennials and 32 percent of all home buyers are between the ages of 25 and 34. With the vast majority of first-time home buyers being young professionals with busy lives, older homes are typically the right choice for just a small percentage of buyers who understand the costs and responsibilities that come with them.