FTC announces settlement agreement with Wisconsin MLS

U.S. Federal Trade Commission officials today announced a settlement agreement over policies adopted by Multiple Listing Service Inc., an MLS based in Wauwatosa, Wis., that the federal agency deemed anticompetitive.

The FTC charged that MLS Inc. withheld benefits from members of its Metro MLS from consumers who chose to enter into a nontraditional form of listing contract with real estate brokers, and that the MLS rules blocked these "nontraditional, less-than-full-service listings from being transmitted (by the) MLS to popular Internet Web sites, but provided this important benefit for traditional forms of listings."

Inman News reported that Metro MLS last year withdrew its policy that prevented a category of property listings from display on popular public-facing property-search sites, such as Realtor.com and WiHomes.com, and the consent order would formalize the rule change and prevent the MLS from adopting similar rules in the future.

The FTC on Oct. 12, 2006, announced a series of actions targeting similar policies adopted by other MLSs across the country. In Wisconsin, those actions led to an FTC complaint and settlement agreement with the Realtors Association of Northeast Wisconsin Inc.

Of the seven MLSs targeted in the FTC sweep last year, five agreed to settle the investigations by entering into consent agreements, and two MLSs fought the charges. One of those MLSs later settled the charges before the case proceeded before a federal administrative judge, and a decision by an administrative judge is expected to be made public soon in the lone case that did proceed to a formal hearing. That outstanding case involves an FTC complaint against Realcomp II, an MLS in Michigan that is affiliated with a group of local Realtor associations.

Peter Shuttleworth, executive vice president for MLS Inc., which operates in the Milwaukee area and has about 6,500 members, was reportedly out of the office today and was not available for comment.

Alan H. Deutch, a lawyer representing the MLS, said today that the matter "was part of a national effort by FTC relative to rules on exclusive agency. The particular orders sought by the FTC were not of any real consequence in Milwaukee, as it concerned less than one-quarter of 1 percent of the MLS listings and did not concern any rule which was enforced in Milwaukee."

He added, "The matter was actually resolved in April and we have no idea why they waited so long to issue a press release."

"Homeowners should be able to lawfully contract with a broker on the terms that they choose, without facing interference by the broker's competitors," said Jeffrey Schmidt, director of the FTC's Bureau of Competition, in a statement. "The commission action today reconfirms our commitment to ensuring that consumers can freely enter into any kind of lawful listing agreement with home sellers."

In its complaint, the FTC charged that MLS Inc. adopted a rule in 2001 stating that "All active listings of all participants are eligible for Internet publication unless ... the listing is subject to an 'exclusive agency' contract," which is a type of listing agreement in which the owner of a property is not obligated to pay a commission to the broker if the owner locates a buyer without assistance from the broker. More commonly, sellers enter into exclusive-right-to-sell agreements that provide that the listing broker will receive a commission if and when the property is sold.

The FTC maintains that exclusive agency agreements are more likely to be used when home sellers do not wish to purchase a full range of brokerage services.

"The Web site policy restricted competition by inhibiting the use of exclusive agency listings in the Southeast Wisconsin Area," the FTC alleged in the complaint, and "There is no cognizable and plausible efficiency justification for the Web site policy."

Corey Scholtka, founder of BuyHomes.com, a company that offers low-cost real estate services in Wisconsin, said he was in agreement with the policy not to allow exclusive agency listings to appear on the Web sites, though he said he found it was difficult in trying to work with MLSs officials to adapt his own business model to operate under exclusive right to sell listings contracts.

"I felt like the rule was in place for me to lose the benefit of the Internet," he said.

A consent order, which was approved by the commission in a 5-0 vote and is subject to public comment until Jan. 14, prohibits the MLS from adopting or enforcing any rules or policies that deny or limit the ability of participants to enter into exclusive agency listings or other lawful listing agreements with property sellers.

The MLS will be bound to comply within this order within 30 days of its finalization, and the MLS is required to notify its members of the order, which will expire 10 years after its adoption.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

source: lendinguniverse.com

Lenders score points by keeping consumers up-to-date

Consumers ranked Wachovia, SunTrust and Bank of America as the best mortgage loan originators in terms of customer satisfaction, with First Franklin, Washington Mutual and American Home Mortgage Co. among those scoring below the industry average.

That's according to 4,378 consumers polled by J.D. Power and Associates for the firm's 2007 Primary Mortgage Origination Study.

The study measured customer satisfaction with four aspects of mortgage origination -- application approval; interaction with loan representatives; closing; and problem resolution.

Despite this year's turmoil in the lending industry, the industry average score -- 750 on a 1,000-point scale -- was consistent with last year's results, J.D. Power said in a press release.

The study found consumers were more satisfied and experienced fewer problems when they worked directly with a mortgage lender instead of a mortgage broker or online service.

Lenders scored points with consumers when they provided time frames for approvals and updates on the status of their loan. When applications were delayed because lenders requested more information from borrowers, overall customer satisfaction scores dropped an average of 95 points, the study found. Lenders asked for more information, such as bank statements, paycheck stubs, or tax forms on about one-third of applications.

Lenders also lost points when their initial estimates of monthly payments and closing costs didn't pan out. About 17 percent of borrowers said their monthly payments turned out to be more than expected, which led to a 159-point drop in overall satisfaction. Roughly 12 percent of customers were surprised to have additional closing fees, which resulted in an average 220-point reduction in satisfaction scores.

J.D. Power released the following scores for lenders: Wachovia (827); SunTrust Mortgage (818); Bank of America (760); National City Mortgage (759); CitiMortgage (753); Chase (752); Wells Fargo (749); Countrywide Home Loans (745); GMAC Mortgage (744); ABN AMRO Mortgage (740); American Home Mortgage Corp. (736); Washington Mutual (733); and First Franklin (595).

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

source: lendinguniverse.com

Foreclosures.com sees 93% rise in foreclosure filings

Initial foreclosure filings rose 93 percent from January through November compared to the same period last year, foreclosure research company Foreclosures.com reported this week, and the number of homes that ended up as bank-owned properties rose 41 percent.

An estimated 1.08 million homes, or 14.8 of every 1,000 households, entered the foreclosure process nationwide in the first 11 months of the year. And 526,936 households, or 6.6 homes out of every 1,000 households, reverted to lender ownership.

An estimated 72,101 homes nationwide were repossessed by lenders in November alone, up 31.8 percent compared to October. Bank-owned properties are also known as real estate-owned, or REO, properties.

The Foreclosures.com statistics are based on an analysis of the number of formal notices filed against a property in the foreclosure process. The company noted that depending on the location and laws, there can be two to three filings per property, including notice of default and/or notice of foreclosure auction, and notice of REO or bank-owned real estate, which happens after a foreclosed property fails to sell at auction and reverts back to the lender.

Not all pre-foreclosures end up as REO properties because some homeowners may avoid foreclosure through short sales or other workouts with lenders, for example.

The Mortgage Banker Association reported earlier this month that the rate of foreclosure starts and the percentage of loans in foreclosure during the third-quarter reached record highs, and the delinquency rate on all loans rose 47 basis points from the second quarter to 5.59 percent -- the highest level since 1986.

And foreclosure data company RealtyTrac reported that nationwide foreclosure filings jumped 94 percent in October compared to October 2006.

Alexis McGee, president of Foreclosures.com, said in a statement that there are "pockets of actual drops in the number of foreclosure and pre-foreclosure filings from a year ago," despite the national increase.

"More foreclosures isn't an unexpected trend as greater numbers of overextended homeowners facing tightened credit run out of options to foreclosure," she stated. "The housing financial crunch could ease a bit, but only time will tell just how much of an effect and how many homeowners will be helped by the various workout options to be made available."

The company reported statistics for REOs by region, per capita, in January-November 2007 compared to the same period in 2006:

* In the Midwest (Illinois, Indiana, Michigan, Minnesota, Missouri, Ohio and Wisconsin) there was a rate of 8.8 foreclosure filings per 1,000 households, up 23.9 percent.

* In the Southwest (including Arizona, California, Colorado, Nevada, New Mexico, Oregon, Texas and Washington), the rate was 8.3 filings per 1,000 households, up 72.9 percent.

* In the Southeast (including Alabama, Arkansas, Florida, Georgia, Kentucky, Mississippi, Tennessee and Virginia): the rate was 7.1 filings per 1,000 households, up 31.5 percent.

* In other states (including Alaska, Hawaii, Idaho, Montana and Utah) the rate was 6.2 REOs per every 1,000 households, down 1.6 percent.

* In the Northeast (includes Connecticut, New Jersey, New York, Massachusetts, Maryland, Pennsylvania and Washington, D.C.), the rate was 1.4 filings per 1,000 households, up 7.7 percent.

REOs by the top-10 states per capita in January-November 2007 vs. the same period last year:

* Nevada had 16.7 filings per 1,000 households in January-November 2007 vs. 6.2 for every 1,000 households during that period in 2006.

* Colorado had 16.3 filings per 1,000 households during that period in 2007 vs. 20.9 for every 1,000 households during that period in 2006.

* Michigan had 15.4 filings per 1,000 households during January-November 2007 vs. 10.2 during that period in 2006.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

source: lendinguniverse.com

Senate Democrats propose new restrictions on mortgage lenders

Senate Democrats have rolled out a bill that, like legislation passed by the House last month, is aimed at preventing mortgage brokers from steering borrowers into higher-cost loans in order to collect bigger fees, and bars prepayment penalties on subprime and high-cost loans.

The Homeownership Preservation and Protection Act of 2007, introduced Wednesday by Sen. Chris Dodd, D-Conn., would require loan servicers to implement loss mitigation strategies before initiating foreclosure proceedings against borrowers.

The Senate bill would also require lenders to follow existing federal guidelines for subprime and nontraditional mortgage loans, and lower the threshold for loans to fall under even stricter requirements for high cost mortgages as defined by the Home Ownership Equity Protection Act, or HOEPA.

But like legislation approved by the House Nov. 15, Dodd's bill would limit the "assignee liability" of investors who buy securities backed by mortgage loans, protecting them from class-action suits by borrowers.

And while the House bill, HR 3915, would create a national registration system for all mortgage originators requiring background checks, fingerprinting, education and testing, Dodd's Senate bill includes no such provision.

Absent from both bills is language advocated by mortgage lenders and the Bush administration that would create uniform national standards for mortgage originators preempting state laws, in order to eliminate what critics say is a patchwork of regulations that varies from state to state. Without a uniform standard, states would be allowed to adopt stricter rules for lenders not regulated at the federal level.

Mortgage Bankers Association Chairman Kieran Quinn said several provisions of the Dodd bill "concern us deeply," including "duty of care" and assignee liability requirements.

Although investors in mortgage-backed securities would not be subject to class-action lawsuits, they could still be sued by individual borrowers if they did not take steps to ensure the loans they invest in are originated in accordance with the bill's restrictions.

The bill would institute a "duty of good faith and fair dealing" for all mortgage originators, both lenders and brokers, and establish a fiduciary duty for brokers to represent the interests of borrowers in arranging loans.

Quinn also expressed disappointment that the bill would not create uniform national standards that preempt state laws, but said in a statement that the bill's introduction "is an important development, as it will jumpstart the debate in the Senate over how to prevent a reoccurrence of the current troubles facing the mortgage market."

Dodd's bill was immediately endorsed by consumer advocacy groups including the Center for Responsible Lending, the NAACP, the Consumer Federation of America, the National Fair Housing Alliance, and the National Community Reinvestment Coalition.

High-cost mortgages

The bill would trigger consumer protections, including a ban on yield spread premiums, prepayment penalties, and the financing of points and fees on loans defined as "high cost" under HOEPA, and would tighten the definition of loans that fall within the scope of HOEPA.

First mortgages with annual percentage rates (APRs) exceeding Treasury securities of comparable maturities by 8 percent would be considered "high cost." The threshold for second mortgages would be 10 percent.

Subprime and nontraditional mortgages

Existing federal guidelines for subprime and nontraditional mortgages, such as those establishing that a borrower can repay an adjustable-rate mortgage (ARM) loan at the fully indexed rate, would become law. Escrow accounts for taxes and insurance would be required for such loans.

Prepayment penalties and yield spread premiums would be banned on subprime and nontraditional loans.

The bill would define subprime mortgages as those with interest rates 3 percentage points higher than Treasury securities of comparable maturities for first mortgages and 5 percentage points for second mortgages. Nontraditional mortgages would be defined as those that allow the payment of interest or principal to be deferred, such as interest-only and payment-option ARM loans.

All mortgages

Originators of all loans would owe a duty of good faith and fair dealing to borrowers, and make "reasonable efforts to make an advantageous loan to the borrower," in light of the borrowers circumstances.

Mortgage originators would be prohibited from steering borrowers to more costly loans than they are qualified for. Yield spread premiums -- to be banned altogether on high-cost, subprime and nontraditional loans -- would be allowed only on "no-cost" loans. Brokers receiving yield spread premiums would be barred from receiving other compensation from any other source and prepayment penalties would be prohibited.

The bill would also establish good faith and fair dealing requirements for appraisers and loan servicers.

Appraisers would be required to obtain bonds equal to 1 percent of the value of the homes appraised. And in cases where appraisals exceed the market value of a home by 10 percent or more, borrowers would have legal cause of action against the lenders and would be allowed to collect damages from the appraiser's bond.

Loan servicers would be required to credit all payments on the day received, collect only reasonable fees for services actually required, and attempt loss mitigation strategies before initiating foreclosure proceedings.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

source: lendinguniverse.com

Overnight real estate rates higher

Long-term mortgage interest rates were up Wednesday, and the benchmark 10-year Treasury bond yield climbed to 4.09 percent.

The 30-year fixed-rate average rose to 5.79 percent, and the 15-year fixed rate gained to 5.39 percent. The 1-year adjustable rate was up at 5.58 percent.

The 30-year Treasury bond yield edged up to 4.54 percent.

Rates and bonds are current as of 7:15 p.m. Eastern Standard Time.

Mortgage rate figures are according to Bankrate.com, which publishes nightly averages based on its survey of 4,000 banks in 50 states. Points on these mortgages range from zero to 3.5.

In other economic news, the Dow Jones Industrial Average rose 41.13 points, or 0.31 percent, finishing at 13,473.9. The Nasdaq was up 18.79 points, or 0.71 percent, closing at 2,671.14.

Stock figures are current as of 7:30 p.m. Eastern Standard Time.

Real Estate Designers offers totally innovative solutions for your software development, Internet programming, real estate web design and hosting needs. Our service includes domain name registration and real estate web design. Real Estate Designers provides the complete solution including design, application development and marketing.

source: lendinguniverse.com