Consumer Protection Act of 2009
In December, the U.S. House of Representatives approved – by a vote of 223 to 202 – the Wall Street Reform and Consumer Protection Act of 2009, otherwise known as H.R. 4173. This bill proposes sweeping reforms that have the potential to profoundly impact how financial companies operate and what consumers can be offered in terms of products and services.A culmination of many months of work, the authors of the bill sought a way to protect consumers and the economy through stronger controls. While many agree that the legislation does introduce new means to achieve these goals, concern remains about the unintended consequences this bill may produce.
In its Dec. 17, 2009 public statement, the American Bankers Association said it “supports broad reform of the banking regulatory system and has expressed this view in testimony before Congress; (this includes)…the formation of a council charged with overseeing systemic risk, creation of a mechanism for the orderly resolution of systemically important non-banks, and ending too-big-to-fail. Although some improvements were made (in the bill), ABA remains opposed to this legislation as passed by the House.”
The Senate is expected to propose comparable reform legislation with some significant changes.
Financial Services Oversight
Currently, H.R. 4173 covers a comprehensive number of issues including the creation of an interagency Financial Services Oversight Council that would identify and regulate financial institutions that pose systemic risks to the country.
The bill supports heightened oversight and regulation for financial institutions and a process to dissolve firms that fail. This includes publicly identifying and subjecting financial companies to stricter standards if it is determined that the company’s performance or mix of activities could pose a threat to the financial stability of the economy. The council would be responsible for imposing a special assessment on financial companies that fail to pay for any shortfall in TARP that would add to the national debt.
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Market In Review: The Wells Fargo ViewSM
Ann Stickel
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The Best of Times and the Worst of Times: The 2009 REO Market
Ann Stickel
(Article includes comments by Ann Stickel, VP of Affiliate Services for Michael Saunders and Company)
Photo Credit: DSNews.com
The Best of Times and the Worst of Times: The 2009 REO Market
By Rick ShargaIt wasn’t all that long ago that veteran REO agents and brokers were wondering if they should be pursuing another line of work. Through the early part of the decade, foreclosure activity was at below-average levels, properties that entered the foreclosure process seldom made it as far as the foreclosure auction, and properties that made it as far as the auction were generally purchased by eager investors. As a result, very few properties became REOs, and business for REO specialists was scarce.
As it turns out, that scarcity was driven by unsustainable home price appreciation, a voracious consumer appetite for real estate investments, a seemingly endless supply of fresh capital from Wall Street and institutional investors, and lending practices that threw caution to the wind. These same forces which, through the first half of the decade, kept REO activity artificially low, eventually led to an explosion of REO activity the likes of which the industry had never before seen, and which – unfortunately – it was ill-prepared to handle.
After seeing almost 201,000 REOs in 2005, the last year before the current wave of foreclosure activity began, REO counts have spiraled upwards at a remarkable rate: Over 268,000 REOs in 2006, almost 405,000 in 2007 and nearly 862,000 in 2008. In just four years, the volume of REO activity has more than quadrupled, far outpacing the servicing industry’s ability to deal with the volume. And 2009 is on pace to set another record.
Bank properties are no longer scarce, and they’re no longer a hidden commodity. In many of the harder hit markets, especially in states like California, Florida, Arizona and Nevada, it’s not unusual for bank properties to make up more than 50% of all existing home sales. In metropolitan areas like Stockton, CA and Las Vegas, distressed properties – primarily REOs – have accounted for as much as 85% of resale activities during the first six months of 2009. Consumer interest has never been higher, either. In a recent Harris survey conducted for RealtyTrac and Trulia, almost 60% of homebuyers said they were considering the purchase of a foreclosure property.
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7 Tips for Getting a Preapproved Mortgage
Ann Stickel
With stricter qualifications and more scrutiny than previous years for securing a home loan, preapproval letters provide piece of mind for sellers in knowing that the buyer is capable of handling the purchase. The following article lends some helpful tips for homebuyers in today’s market.
Today, the first step in landing a home loan is obtaining a letter of preapproval. This means a mortgage lender has verified that you’re approved for a mortgage of a certain amount over a fixed timeframe.
Preapproval letters are prepared even before you’ve picked out your home. They remove some of the uncertainty in the home-buying process. In the current housing market, real estate agents and sellers won’t want to work with buyers unless they have one.
“Before you even get in my car, you want to get preapproved,” says Gerry Bourgeois, a real estate broker and president of Towne & Country Realtors in Leominster, Mass.
With a letter in hand, buyers know exactly how much they can borrow – and therefore how much house they can afford. A preapproval letter shows the seller and the seller’s agent that the buyer is capable of buying their house. “For most sellers, the issue is not whether they can get an offer, but whether they can close the deal,” says Tara-Nicholle Nelson, a real estate broker in Oakland, Calif.
Agents see preapproved buyers as more serious (and more valuable) because they’ve taken proactive steps to secure a preapproval. When it’s time to make an offer, a preapproved buyer will be in a better position to negotiate.
Here’s what home buyers need to know about the new rules of mortgage preapproval.
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