Monday Morning Cup of Coffee takes a look at news coming across HousingWire’s weekend desk, with more coverage to come on larger issues.
The Consumer Financial Protection Bureau is conducting a further investigation into Zillow’s compliance with the Real Estate Settlement Procedures Act, or RESPA, as it has for the past two years.
Under RESPA, lenders, mortgage brokers, or servicers of home loans are required to provide borrowers with pertinent and timely disclosures regarding the nature and costs of the real estate settlement process. The act also prohibits specific practices, such as kickbacks, and places limitations upon the use of escrow accounts.
A blog post in the Consumer Finance Monitor by Ballard Spahr attorney Richard Andreano explained that the industry long questioned if allowing real estate agents or loan officers to engage in co-marketing on Zillow Group applications and websites were a possible RESPA violation.
From the blog:
The industry may soon know the answer, as Zillow Group advised in recent prepared remarks on first quarter earnings that “Over the past two years, the Consumer Financial Protection Bureau, or CFPB, has been reviewing our program for compliance with the Real Estate Settlement Procedures Act, or RESPA, which is a regulation designed to protect consumers.”
The blog post noted that the reason behind this latest disclosure is that the CFPB requested additional information and documents from Zillow as part of their evaluation which dates back to 2015.
This is taken from the latest Zillow earnings report:
In April 2017, we received a Civil Investigative Demand from the Consumer Financial Protection Bureau (“CFPB”) requesting information related to our March 2017 response to the CFPB’s February 2017 Notice and Opportunity to Respond and Advise (“NORA”) letter. The NORA letter notified us that the CFPB’s Office of Enforcement is considering whether to recommend that the CFPB take legal action against us, alleging that we violated Section 8 of the Real Estate Settlement Procedures Act (“RESPA”) and Section 1036 of the Consumer Financial Protection Act.
They later add they believe they fully comply with RESPA:
We believe our response to the NORA letter addresses the CFPB’s concerns related to our co-marketing program under which a lender pays us to appear in advertising alongside a real estate agent. We are continuing to cooperate with the CFPB in connection with their most recent request for information. We continue to believe that our acts and practices are lawful and that our co-marketing program allows lenders and agents to comply with RESPA.
But even as the CFPB continues to execute its typical day-to-day requirements, such as enforcement and regulations, its entire existence is currently being questioned in the court and government.
One of the biggest proponents behind this is House Financial Services Committee Chairman Jeb Hensarling, R-TX, who introduced an act last year in attempts to replace the Dodd-Frank Wall Street Reform and Consumer Protection Act, which established the CFPB.
Now a year later, the Republican-led Financial CHOICE Act, H.R. 10, is on its way to the full House of Representatives for a vote. And while it’s not the only part in the act, the CFPB does face some of the most drastic changes.
But advocates for the bureau won’t let it go without a fight.
According to an article in Market Watch by Maria LaMagna, a group of consumers and advocates met with members of Congress on this week to oppose laws that would weaken the Consumer Financial Protection Bureau. This includes the Financial CHOICE act.
From the article:
More than 100 members of organizations including the Consumer Federation of America, an association of nonprofit consumer organizations, Consumers Union, the public policy arm of the news organization Consumer Reports and the nonprofit Americans for Financial Reform, met with government officials of both parties and their staffs to lobby against several laws proposed recently. On Wednesday, the advocates went to about 160 meetings collectively, said Michael Best, a senior policy advocate for the Consumer Federation of America.
The advocates do not want to see the CFPB “neutered,” said Christina Tetreault, a staff attorney at Consumers Union. “The CFPB is the one financial regulator that’s charged with putting the consumers’ interests first,” she said. If it were disbanded, “It would leave consumers vulnerable to the types of scams and rip-offs that happened in the times leading up to the financial crisis.”
Dallas is one of the hottest housing markets in the country, with bidding wars the new normal and homes constantly selling way above asking price.
But what’s fueling the growth? According to an article in The Dallas Morning News by Steve Brown, one big driver behind all the growth is Toyota, along with a handful of other top companies moving to the city.
From the article:
If you’re having trouble finding a house, blame it on Toyota — and State Farm Insurance, Boeing, Kubota Tractor, McKesson Corp. and dozens more corporations moving tens of thousands of workers to North Texas.
Each year, more than 60,000 people come to the Dallas-Fort Worth area to fill thousands of jobs; Toyota alone is bringing almost 4,000.
That’s made the D-FW area one of the hottest home markets in the country, driving up prices to unheard of levels.
And consequently, housing inventory in the city is quickly disappearing.
The strong demand for housing has also created one of the biggest home shortages in decades. It’s a tough time to buy, both for the people moving here and longtime residents.
The article quoted Mary Frances Burleson, CEO of Dallas’ Ebby Halliday Realtors, who said her firm has classes twice a year to educate its agents on working with corporate move buyers.
“If you go into Collin County — Frisco, McKinney, Prosper — it’s a big part of our business,” she said in the article. “Corporate America has found us, and they like it.”
For those who happen to live in Dallas, or cities just as hot, and are reading this, there are some strategies to make sure you or your clients can lock in a home.
An article from the National Association of Realtors gave five tips for buyers in a tight housing market.
Here’s tip No. 1:
Determine and stick to a budget. Before beginning the house hunting process, prospective homebuyers should receive preapproval from one or more lenders to verify the amount of money they are qualified to borrow. Then, after taking into account additional costs of ownership such as taxes, utilities and insurance, buyers should determine a final budget they can comfortably afford. When listings are scarce, bidding wars can drive up prices, so buyers must be prepared to walk away if the asking price surpasses their budget.
As it stands, home prices are on the rising and don’t show signs of decreasing anytime soon.
The latest report from CoreLogic showed that home prices nationwide, including distressed sales, increased year over year by 7.1% in March 2017 compared with March 2016.
Here’s another wise tip from the piece. Check out the article for the full five.
Be ready to make a decision quickly. In a seller’s market, homes rarely stay on the market long, so when a house that is in their budget and checks off all of their needs come along, buyers should not hesitate. Buyers should be ready to submit an offer quickly, or they may risk missing out on the home altogether.
And for added help, here’s a sample cover letter for reference on how to write up your own to give to sellers in order to stand out from others who are bidding.
Feel free to leave your own tips on how to secure a home in the comments below. Did a cover letter work for you? Also, stayed tuned for more info on the CFPB’s possible investigation into Zillow.
Have a great start to your week from the HousingWire team.
