Real estate agents can no longer show homes in person in the city of Los Angeles, leaving determined buyers to submit offers sight unseen, while others suspend their searches.

Under a revised “safer-at-home” order issued last week by Mayor Eric Garcetti, real estate transactions are considered “essential.” Buyers can still buy, and sellers can still sell. But open houses are prohibited—and shoppers can no longer venture inside the homes they want to buy.

“It’s a big change,” says real estate agent Tracy King.

The California Association of Realtors had already advised agents to stop hosting open houses. But buyers were still viewing properties. They could go in one at time by appointment. They were screened via a health questionnaire. They donned booties and gloves.

“Before the new order, I was doing self-guided tours,” says agent Angela Acuff. “I would unlock the whole place, turn on the lights, open the closet doors, and I would meet the buyer outside, then they would go in by themselves. One time, I put [a bottle of] hand sanitizer on the steps outside.”

Most buyers now are resorting to virtual tours.

It’s too early to say what impact the new restraint will have on listing prices. But the economic uncertainty generated by the rapid spread of the new coronavirus has thrown cold water on LA’s once-hot real estate market. Anecdotally, agents say they’re seeing fewer new listings and less competition.

“It’s such a stark difference,” says agent Tracy Do. “We’ve gone from 300 mph to 1 mph.”

Clamping down on how homes are shown could further strain the market, but some agents say it’s absolutely necessary to protect communities, and they’re hopeful the market will quickly rebound as soon as the order is lifted. It’s set to expire April 19—but locally, health officials have urged residents to prepare for an extension.

Agent Kendyl Young says she’s trying to dissuade her clients from buying or selling altogether right now, unless it’s critical. And she bristles at agents who are trying to circumvent the new law.

“I’m seeing a lot of dumbass real estate agents threatening the health of our society,” she says.

Acuff says she went back and forth with an agent listing a vacant home in Northeast LA who had put a lock box on the door and was letting interested buyers come through, despite the order.

“It was her assumption that having a lock box was okay,” she says.

The mayor’s order doesn’t get into specifics about when, if at all, a buyer can set foot on the property, so it’s up to brokerages and agents to make those decisions. Various aspects of the home-buying process, from appraisals to notaries, are going digital due to the pandemic.
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If someone has an urgent need to buy, Do says, they need to write an offer and be in escrow in order to get inside.
Young says she’s continuing to help a buyer right now who’s crammed into a small apartment with his family and in-laws. He found a house that he was willing to make an offer on without seeing it for himself, subject to an inspection, says Young.
“If that offer would have been accepted, I would have figured out a way to do an inspection,” she says.
Situations like these were tough before shelter-in-place orders, but now, she says, “it’s ridiculously hard.”

Source: https://la.curbed.com/2020/4/7/21206283/open-houses-los-angeles-coronavirus

After five weeks of declines, mortgage rates are at their lowest levels in 16 months.

According to the latest data released Thursday by Freddie Mac, the 30-year fixed-rate average tumbled to 3.99 percent with an average 0.5 point. (Points are fees paid to a lender equal to 1 percent of the loan amount and are in addition to the interest rate.) It was 4.06 percent a week ago and 4.56 percent a year ago. The 30-year fixed rate moved below 4 percent for the first time since January 2018.

The 15-year fixed-rate average fell to 3.46 percent with an average 0.5 point. It was 3.51 percent a week ago and 4.06 percent a year ago. The five-year adjustable rate average dropped to 3.60 percent with an average 0.4 point. It was 3.68 percent a week ago and 3.80 percent a year ago.

Several factors are exerting downward pressure on mortgage rates. Investors are anxious about the continuing irresolution of the U.S.-China trade dispute. They are worried about Brexit and European economic growth in general, which they fear could tamp down domestic growth. They are also concerned a recession may be near.

All of this is causing an increased demand for U.S. Treasurys, driving bond prices up and yields down. The yield on the 10-year Treasury fell to 2.25 percent on Wednesday, its lowest level since September 2017.

“Yields plummeted to 20-month lows in recent days as investors — who continue to weigh risks surrounding the U.S.-China trade negotiations, Brexit and slowing European economic growth — accelerated their flock to the safe haven of Treasurys,” said Matthew Speakman, a Zillow economic analyst. “The inversion of the yield curve exacerbated this behavior. Typically, this would result in sharp declines to mortgage rates but thus far their response has been fairly muted, and rates did not fall by as much as bond yield declines would predict.”

An increasing number of experts are convinced the Federal Reserve will cut interest rates later this year. But for now, many expect mortgage rates’ slump to continue. Bankrate.com, which puts out a weekly mortgage rate trend index, found that more than half of the experts it surveyed say rates will go down again in the coming week.

“While we may see a day or two correction to a market which is very much overbought, the general trend to higher Treasury prices and lower yields should continue,” said Dick Lepre, senior loan officer at RPM Mortgage in San Francisco. “We are headed toward a 2 percent 10-year yield. I do not believe that this is simply an indication of increased recession probability. This is more about lack of confidence in the economies of most of the rest of the world. The consequence is flight-to-quality buying of U.S. Treasury and MBS debt as evidenced not only by falling yields but the very strong U.S. dollar.”

Meanwhile, despite falling rates, mortgage applications pulled back. According to the latest data from the Mortgage Bankers Association, the market composite index — a measure of total loan application volume — decreased 3.3 percent from a week earlier. The refinance index fell 6 percent from the previous week, while the purchase index dipped 1 percent.

The refinance share of mortgage activity accounted for 39.7 percent of all applications.

“Purchase mortgage applications continued their impressive streak — now at 15 weeks — of year-over-year increases,” said Bob Broeksmit, MBA president and CEO. “Despite the ongoing decline in mortgage rates, however, purchase and refinance activity slipped from the previous week. Overall demand remains healthy, but prospective buyers — especially first-time buyers — still face low inventory, higher home prices and stiff competition.”

Source:https://www.washingtonpost.com/business/2019/05/30/mortgage-rates-extend-decline-sinking-month-lows/?noredirect=on&utm_term=.5ec6c7c8c046

Q: Can my broker dump my listing without notice? I found out my house was off the market by looking online. I was never notified by the broker. Is this a violation of ethics code?

A: When you hired the broker, you signed a listing agreement. Go back to the document and see what the time limit was for the listing. Sometimes listing agreements last for a year, but others have a shorter term. Let’s say your listing agreement was for a six-month term. At the end of the six months, the listing would end and the broker would have the right to take down the listing.
That said, it’s quite clear that you and your listing agent didn’t have a good working relationship. If you had, the listing agent would have kept you up-to-date on what was going on with your listing, would have suggested changes to the listing, may have suggested price changes, and would have told you about showings or interest potential buyers had with your home. You didn’t mention any of these items so we doubt that the communication between the two of you was going well.

While we get that you’re disappointed by both not selling the property and the way the broker handled it at the end, it seems like wasted energy to report the listing agent now.
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Why not move on and find a listing agent you can work with to get your home sold? If you're intent on going after the listing agent, you'll probably have to see a real estate attorney to review the documentation you have and see if the agent did anything wrong (legally vs. morally or ethically). However, you haven't given us any reason to believe that the agent did something wrong other than not communicate with you about taking down the listing.

By Ilyce Glink and Samuel J. Tamkin

​https://www.washingtonpost.com/business/2019/04/17/signs-youre-bad-relationship-with-your-real-estate-agent/?noredirect=on&utm_term=.0707a3fef3c9

The Los Angeles housing market is not a hospitable one for first-time buyers.

Less than 30 percent of all LA residents can afford a median-priced home, according the California Association of Realtors. It can be even harder for first-time buyers, who don’t have a property they can sell to cover the cost of a down payment.

But plenty of programs exist at the local, state, and federal level to help buyers purchase their first homes—and many of them provide borrowers with help to make those costly down payments.
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Home shoppers are probably already aware of resources like the U.S. Department of Housing and Urban Development’s FHA loans program, or the VA loans available to U.S. service members and veterans.

But those aren’t the only options. Below is breakdown of five options available specifically to buyers in the LA area.

To take advantage these programs, buyers must also obtain loans from private lenders, so credit limits or other financial restrictions may come into play. But it’s worth investigating these options if homeownership seems just out of reach.

California’s first mortgage programs

The state provides loans to cover closing costs and up to 3.5 percent of a down payment.The California Housing Finance Agency’s first mortgage program is available to most first-time buyers in California who meet the income limits where they live. In Los Angeles County, borrowers must make under $116,280 (for a one or two-person household) to qualify.
Through the CalPlus and MyHome programs, which are generally paired, buyers who receive conventional home loans from qualified private lenders can then obtain smaller loans from the state agency. These are available to cover closing costs and up to 3.5 percent of a home’s price in down payment assistance.

The smaller loans aren’t factored into monthly mortgage payments; instead, buyers repay them in a lump sum when selling or refinancing their home—or after paying off the entire mortgage.
The maximum price for properties purchased using these loans is $705,000, meaning buyers can get up to $24,675 in down payment assistance.

Los Angeles County’s first home mortgage program

Administered through the Southern California Home Financing Authority, a partnership between Los Angeles and Orange counties, this program is somewhat similar to those offered by the state’s Housing Finance Agency in that borrowers can get financial assistance that goes toward the cost of a down payment.

It’s available to buyers in nearly every part of both counties, with one major exception: the entire city of Los Angeles. That’s bound to be frustrating for many prospective buyers, but hey, there are plenty of nice areas to explore outside the city limits.

What to know about condos

Most loan programs for first-time buyers can be used when purchasing condos, as well as single-family homes. But units in buildings that haven’t been approved by the Federal Housing Administration are typically off-limits.

That means you may have to do a bit more research when trying to use these loan programs to buy a condo. Use this database to check whether a complex has FHA approval.

To qualify for the program, participants must earn under $116,280 for a one or two-person household, or under $135,660 for a three-person household. Purchases are also capped at $625,764, except in targeted areas where at least 70 percent of residents are considered low-income earners by statewide standards. In these areas, buyers can pay up to $764,823.

The first-time buyer requirement is also lifted in targeted areas, meaning that homeowners in those regions could take advantage of the program to trade up for a larger or more amenity-rich property.

Program participants work with participating lenders to obtain a home loan, which comes with a grant that can be used for down payment and closing costs. The grant, which buyers do not have to pay back, can be up to 4 percent of the total value of the loan.

Los Angeles County homeownership program

This program also provides financial assistance for down payment and closing costs, but the money comes out of a pool of grant funding from the federal government. That means there’s a limit to how many people can participate in the program. The county is accepting just 39 applications between now and March 2019.

Participants, who must earn under $62,000 per year (for a two-person household), can obtain loans up to $75,000 through the program. Interest isn’t charged on those loans and they don’t need to be repaid until after the buyer sells the home or pays off the mortgage.

This program also excludes the city of Los Angeles, along with many of the county’s other large cities. A list of places where participating homebuyers should focus their searches can be found here.

The county has federal grant funding to provide financial assistance for down payments and closing costs to 39 households through March 2019.City of Los Angeles homebuyer assistanceThe city of Los Angeles has two very similar programs for first-time buyers. One is for low-income buyers making under $62,000 per year (for a two-person household). The other is for moderate-income buyers earning under $116,300 (also for a two-person household).

Both programs offer loans up to $60,000 that can be used to cover down payment and closing costs. The low-income loans can only be used on purchases up to $498,750 for single-family homes and $404,700 for condos. There isn't a maximum purchase price for the moderate income program.

The loans don’t have to be paid off until buyers sell the home or pay off the mortgage, at which time the city will also collect a percentage of the home’s appreciated value, which varies depending on the size of the loan (if the loan amounts to 10 percent of the purchase price, you’ll have to pay back 10 percent of the home’s appreciated value).

The bad news is that loans are only being offered right now to low-income buyers, as the moderate income program is out of funds. Fortunately, the City Council approved an additional $2.3 million for the program in August, which is not yet available but is expected to fund an additional 33 loans to middle-income buyers.

Inglewood homebuyer assistance

​The city of Inglewood has also set aside a limited amount of money to help first-time buyers. In August, the city approved $2 million in funding for a program that will provide borrowers with up to $350,000 in financial assistance.

Not only will loans from the city cover a buyer’s down payment, they’ll also significantly lower monthly mortgage costs, making homes significantly more affordable to participating residents (to qualify for the program, participants must have lived in Inglewood for three of the last five years).
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The program’s benefits are enticing, but get in line soon—the city estimates that only five or six buyers will be able to get assistance through the program.

Source: ​https://la.curbed.com/2018/8/28/17788128/first-home-how-to-buy-los-angeles

UPDATED, May 24, 3:59 p.m.: Nearly a decade after bad real estate loans helped thrust the U.S. economy into a major recession, the House of Representatives passed a bill to roll back a number of regulations for banks. The changes, experts said, could become a catalyst for increased commercial real estate lending, opening up many new sources of funding to developers.

On Tuesday, the House voted 258-159 in favor of a bipartisan regulatory relief bill that would remove some provisions of the 2010 Dodd-Frank Act, which was created in the aftermath of financial crisis. It follows the passage of a similar Senate bill that passed in March.

The bill, which Trump signed Thursday, reduces some regulatory burdens for community and regional banks. These banks have long argued that Dodd-Frank has been too costly and unfairly burdensome, maintaining that it was Wall Street and major banks that were responsible for the toxic lending that led to the financial crisis, not smaller lenders.
The legislation will leave a dozen big banks in the U.S. under stricter federal oversight, relaxing restrictions on thousands of lenders with less than $250 billion in assets.

Changes in the bill pertaining to a type of commercial real estate loan could increase the number of banks lending to some commercial projects. In theory, this would be great news for developers who are looking to finance a restaurant or hotel since it means they have more access to capital at potentially lower rates than what is currently available.
“The number of lenders will increase and a few more banks will step into the game,” said Heidi Learner, chief economist at Savills Studley, a commercial brokerage. “In general, when there is more supply you would expect there to be lower costs.”

Learner said one major change in the bill pertains to certain type of commercial real estate loans known as “High Volatility Commercial Real Estate” loans.

These loans, which are used for the acquisition, development or construction of some real estate projects, are deemed to be riskier by regulators. As a result, banks are required to reserve more capital, which is also more costly for banks.

“It made the cost of financing those loans that much more expensive because they had to hold more capital,” Learner said.

But the new proposed rules clarify when banks are able to reclassify a HVCRE loan to a non-HVCRE loan, which have lower capital set asides. This could potentially result in cheaper rates for developers in the market for funds.

The new bill also revised a provision where commercial borrowers are required to put down 15 percent equity, which could be done through an appreciated value of a property versus a cost basis under Dodd-Frank.

Douglas Stanford, a Miami-based commercial transactions and finance attorney, said some of the new rule changes in the bill could result in banks stepping in to lend to more small commercial projects.

As some banks have backed away from lending in this space over the past few years, private equity has filled the void. Generally, however, private equity charges a higher rate than what traditional banks offer, Stanford noted.

“Many banks have been discouraged from making commercial real estate loans,” he said. “Those same players can possibly get another shake out of this…. And you might see banks getting some of the business back.”

Too big to fail
Another major revision the bill calls for is increasing the threshold at which banks are designated “systemically important financial institution (SIFI)” – also known as “too big to fail.”

The rule was designed so that regulators can keep a closer eye on large financial institutions’ capital levels, since their failure could have a ripple effect on the global economy. Under Dodd-Frank, banks with $50 billion in assets or above were deemed as a “SIFI” and faced tougher regulations, including annual “stress tests.”
But the new law would increase this threshold from $50 billion in assets to $250 billion in assets, meaning that about 40 banks between $50 billion and $250 billion in assets could lend and grow more without having to worry about increased regulations. Only 12 banks would still meet this classification, but many of them have found a back door into the commercial real estate lending game.

As a result, mid-sized banks such as Miami Lakes-based BankUnited, which has over $30 billion in assets, can grow their real estate loan portfolio without having to worry about additional regulatory burdens. So too, potentially, could Bank of the Ozarks, which with just $22 billion in assets as of 2017 is South Florida’s most active condominium construction lender and one of the most active lenders in the New York market.
For banks nearing the $50 billion in asset mark, “it eliminates one concern when looking at growth and planning,” said Russell Hughes, of the real estate data provider Trepp.
Hughes said that the changing designation “could potentially spur M&A mergers and acquisitions.” Meaning that banks that might have been concerned about growing larger could now start acquiring more banks.

While many developers will likely turn their focus on how this new bill will impact commercial real estate, local bankers also see potential implications for residential lending.

In the House’s bill, banks under $10 billion in assets will no longer have to meet some of the same stringent mortgage underwriting requirements that larger banks do.
Since the financial crisis, many banks have stopped originating mortgages, claiming that regulations have made the line of business too costly. Nonbank financial institutions, including giants like Quicken Loans and LoanDepot, originated 48.3 percent all mortgages in the U.S. in 2016, up from 30 percent in 2012, according to a recent paper by researchers from the Federal Reserve Board and the University of California, Berkeley.
But that could change if the rollback bill becomes law.

“One of the most significant reforms is on residential mortgages,” Keith Costello, CEO of Orlando-based First Green Bank, which has over $730 million in assets, wrote in an email. “Community banks will be exempt from ability to repay laws (congressional underwriting) on loans we hold in our portfolios. This will allow us to ramp up residential lending using our own standards and risk parameters for loans we hold.”

This story has been updated to reflect that the bill’s HVCRE capital requirements would not decrease by 50%, but could clarify when a bank could reclassify a HVCRE loan to a non-HVCRE loan, which have lower capital set asides.

​Source: The Real Deal - https://therealdeal.com/miami/2018/05/24/developers-could-make-bank-from-rollback-of-dodd-frank/