Fannie Mae is cost cutting

Just got a newsflash via my email subscription to Inman.com, a real estate industry news source.

Fannie Mae has launched a pilot program in three markets in which it's only accepting offers on properties in its real estate owned (REO) inventory when they are first submitted online by agents representing buyers.

Test markets are Orlando, Detroit and San Diego.

According to Fannie’s press release, their goal is to “provide increased transparency and efficiency in the REO bidding process by providing buyer's agents with offer confirmations and allowing them to track the status of submitted offers.”

Fannie also says the move is an attempt to stamp out "property flopping" -- a fraudulent practice in which listing agents receive multiple offers but withhold one or more of those offers in order to help an investor purchase the home at a lower price.

Frankly, I think Fannie’s stated goals are complete B.S.

When I place an offer on a Fannie Mae property for a buyer client, I already get an email or verbal confirmation the offer was received. It’s true that tracking the offer status isn’t transparent. But the buyer & I either get a “yes” or get no answer. That’s not ideal, but it is simple. I don’t know about flopping. I suppose it could be a problem.

I think Fannie Mae is trying to do one thing, and one thing only: cut their operating costs. By cutting out the listing Realtor they’re lowering their cost to sell by at least 2% or 3% per home. With Republicans marching into Washington in January to take control of the House, the clamor to dismantle Fannie and Freddie will get louder than ever. I think this is a preemptive move to help The Two F’s claim they’re not as fiscally troubled as conservatives think they are, and perhaps bolster the Obama administration’s call to replace Fannie/Freddie with another type of government backed mortgage entity.

Time will tell!

If you hate the idea of government-backed mortgage programs, it’s interesting to note this: now that Fannie & Freddie are essentially government-owned, they’re free of the profit motive. That means they don’t have to chase market share and profits, which is what got them into trouble in the first place. If they were operating in the black but not keeping up with the rest of the mortgage market, wouldn’t that be acceptable?

If you’re a conservative, answer me this:

Why shouldn’t low-income people have the chance to own a small home? Do some people not “deserve” a home? Are only the middle class and above worthy of owning a home?

For most Americans, their home is the most valuable thing they own and is the way they provide retirement income for themselves. If nobody helps low income families buy homes and build wealth, aren’t we just going to support them on the taxpayers’ dime when they’re old?

What if Fannie & Freddie morphed into a small government-owned program, that provided budgeting & home ownership classes to low-income folks and gave them a chance to become responsible homeowners someday? What if the entity providing these mortgages was a charity? Or a church? Would that change your mind? 

What if the entity providing these mortgages was a for-profit business? Would you buy stock in that business to make their business model viable? Low income folks are usually also less educated, and more easily taken advantage of. So who should decide how much profit this fictional future mortgage company can make off of the low-income housing sector? Should it be unlimited?

I’m not trying to start an argument. (altho that might be kinda cool since we never feel we have enough blog traffic)  I’m seriously trying to get conservatives to talk to me in something more detailed than talking points. I’m sick up to my eyeballs of conservative talking points.  Chime in!

Phoenix's reverse traffic lanes: vote!

Image ID 1280927 by Stock Exchange user bredmaker (image credit to Stock Exchange user http://www.sxc.hu/photo/1280927; hat tip to Downtown Phoenix Voices.org for leading me to the survey)

The City of Phoenix is offering a survey on the usefulness or danger of their “reverse traffic lanes” on 7th Avenue and 7th Street.

I personally think these reverse lanes are an innovative method of handling Phoenix’s growing rush hour automobile congestion. Other people contend they’re dangerous and should be eliminated.  Go, cast your vote.

Vote on Phoenix’s reverse traffic lanes here.

Arizona crime rates up? Not really.

Yesterday a local talk radio station aired a long interview with a local expert criminologist and a 20-year veteran Sergeant of the Phoenix Police Department.

Campaigning local politicians talking about a rash of murders in the desert, but the FBI Crime Index shows crime sharply down statewide and in Phoenix since 2005.

The FBI statistics measure two types of crime: property crime and violent crime. Violent crimes include murder, negligent homicide, rape, robbery, and aggravated assault. Property crimes include burglary, theft and car thefts.

  • In Phoenix, violent crimes are down 22% since 2005.

  • Phoenix’s homicide rate has dropped by 50% over the past 4 years.

  • Phoenix area property crimes are down 30% since 2005 while auto theft fell by 50%.

  • Statewide the numbers show a 24% drop in property crimes and a 14% drop in violent crimes.

Despite the widely perceived need for SB1070, Phoenix police have been checking the immigration status of people they arrest since 2008. A review of arrests since 2008 shows no significant increase in arrests of Hispanics, the majority of illegal immigrants in the area.

If you want facts instead of election season hyperbole, listen to the interview on Arizona’s falling crime rates.

Phoenix-area real estate coming back soon?

A client who’s also a friend emailed me through LinkedIn the other day. He said,

David: How’s the market going for you? Do you see residential real estate coming back anytime soon?

Thought our readers might be interested in my answer.

Heather: Sadly, no, I don't see it coming back anytime soon. Earlier this year I was hopeful that we'd be back on the road to normal by Fall 2010 or Spring 2011, but I'm less hopeful now.  It seems like the economic news is mostly bad, more and more people expect a double dip recession and the politicians are on hold for the summer, getting ready for a Battle Royale in November.

To top it off, Phoenix-area residential real estate often seems to be a leading indicator, and we've seen a big slowdown in the volume of residential resale homes getting sold in July. For most of 2009, about 5,500 or 6,000 resale homes sold Valleywide. March through June 2010 we averaged about 6,500 or 7,000 homes sold Valley-wide. July 2010 sales volumes were only 5,200 and August sales volumes are looking like they’ll come in at about 5,000 homes sold. But the volume of new bank owned homes hitting the market hasn’t slowed at the same rate. Same supply, less demand, simple Econ 101 says prices drop.

I'm battening down the hatches and prepping for another 3 years of sluggish creeping along the bottom, price-wise in Phoenix-area real estate.

Image ID 838145 by StockExchange user cieleke I could be totally wrong. I hope I am. But I’m battening down the hatches all the same. My new mantra is simplify, small-ify, use hand-me-downs, reduce, re-use, recycle… lather, rinse, repeat.

Are CFL bulbs dangerous?

CFL bulb from ipaa dot org slash Blog slash question mark p=301

(image courtesy of http://www.ipaa.org/Blog/?p=301)

There’s a lot of kerfluffle around the Interwebs lately about the supposedly dangerous levels of mercury released if you break a CFL light bulb.

I believe the most widely spread story crazy Internet rumor is about a woman in Maine who broke a CFL bulb in a bedroom, was quoted $2,000 for cleanup, and a month later that bedroom is still closed off with tape and plastic.

I did a little research, being the sort of library-law nerd that I am. Before I spring my findings on you, a question: how many times in your life have you broken a light bulb?** Me? Never. Not one broken light bulb in 22 years of living on my own. How about you?

On with the myth busting: The story above about the woman in Maine is only sort of true and blown way out of proportion.

The Maine resident did break a CFL bulb in her bedroom. The Maine Department of Environmental Protection says they told the woman that one option was to hire a HazMat team (at great expense, no doubt). How about that room being taped off for a month after the breakage? The homeowner did that herself.

Read the full report on Snopes.com <here>, which also includes links to the federal Department of Environmental Protection’s guidelines on handling broken CFL bulbs. In addition . . .

**If you’re old like me, you might remember when most thermometers contained mercury too. My Mom broke one once. We scooped up the mercury blobs on a piece of cardboard paper, put them inside a plastic bag, wrapped the bag in paper towels and tossed it in the trash. It was kind of fun to see the little blobs rolling around the linoleum. I actually touched one. And I’m not <very> crazy. Yet.

True, you shouldn’t lie down and roll around in the stuff, but you don’t need to panic and succumb to crazy internet rumors either.

Your Federal Government – fashionably late to the party

I gave President Obama some advice (over a year ago) on how to fix the foreclosure epidemic:

President Obama to focus on Foreclosures (published on 2/18/2009)


OButter’s Plan – the Real Solution (published on 2/23/2009)

My 2 key points, boiled down to a couple sentence each:

1. If the bailout, loan modification, or whatever you call it – if it isn’t helping reduce loan balances on upside-down houses, it isn’t solving anything.  At best it’s postponing the problems into the future, at worst it’s encouraging more people to walk away from their mortgages.

2. If the federal government wants to spend hundreds of billions of dollars helping out, why not build a government-owned REIT which could work with homeowners to rent/lease/purchase their own houses back as their credit gets repaired and at market values consistent with the changing times (up or down as the market dictates.)?

This morning it’s being reported the federal government is going to explore reducing mortgage balances.

It’s probably too little, and it’s probably too late – by the time they read my suggestions and get around to actually *helping* fix the problem, the problem will be over!  But at least they’re moving in the right direction.

Your wishes he could help govern without being in politics Realtor,

Chris Butterworth


Here’s a thought for the day, courtesy of the recent Congressional hearings on the revised plans for spending the bailout money. Some folks are recommending that bankruptcy courts be allowed to renegotiate home mortgage terms. Chris Dodd, in particular, all but said "We'll make this happen, even if we have to wait until the new Congress is in session."

Bankruptcy courts can currently renegotiate the terms of a mortgage loan on a vacation home and on a boat. They cannot renegotiate the terms of a mortgage loan on a home that is the homeowner’s primary residence.

How is it OK to work out new loan terms on a person's boat or second home but not their main residence? Doesn't that seem just a little slanted in favor of the wealthy? Hmmmm?

I actually wish someone would come here and comment, and give me a reasonable explanation why this isn't just a benefit for only people wealthy enough to own a second home or boat. In the spirit of the 52 to 48 folks, I'm ready to listen. Seriously.

The Mother of All Bailouts

Of course the federal bailout is all anyone's talking about today. I'm a smart cookie, but I don't pretend to be smart enough to understand (much less explain) all the in's and out's of what's cooking in Washington's financial stewpot.

No matter how the details shake out I think the bailout is a positive thing in the short term for regular folks. Once the bailout deal is hammered out people will at least know what they're getting. For sure, many people won't like the deal. It's impossible to craft a deal that would satisfy everybody. But in general I think fear of the unknown is worse for the local housing market (which is of course what I blog about, after all) than potential future dislike for a federal government program.