HOUSING MARKET AND REAL ESTATE MARKET

Obama's Home Refinance Overhaul

As his jobs plan was rejected by the Senate and now with the components of the bill being tried to put to vote in the upper chamber by frustrated Democrats, President Obama used presidential bully pulpit of "Executive Order" to issue a set of rules to help nation's beleaguered homeowners on October 24, 2011 and planning to do the same for country's students by easing the rules of federal student loans on October 26, 2011. On October 24, 2011, President Obama unveiled changes to 2-year-old Home Affordable Refinance Program (HARP) at Las Vegas, one of the worst housing markets in US. 

 *** ORIGINAL Home Affordable Refinance Program (HARP) *** 

 HARP was originally started in 2009 to let homeowners refinance their mortgages at lower rates. Borrowers could bypass the rules of having at least 20% equity in home. However, a significant constraint was that home values should not be lower by more than 25% of what the homeowners owe. This specific constraint excluded roughly 10% of the homeowners, according to CoreLogic, a real estate data firm. In some distressed areas, the home values are more than 50% underwater. According to CoreLogic, roughly 22.5% of the U.S. homeowners, or 11 million households, are underwater, or owe more than the value of the house. Also, the closing costs and other items related to refinancing under the HARP 2009 amount to thousands of dollars, thus precluding millions of households suffering from the worst recession in seven decades. As of August 31, 2011, fewer than 900,000 homeowners, and just 72,000 underwater homeowners, have taken advantage of the HARP. The eligibility for original HARP was that home loans should have been owned or backed by Freddie Mac, or Fannie Mae, which had been taken over by the government three years ago. About half of all the U.S. mortgages, or nearly 31 million loans, are backed or owned by these two agencies, now under the umbrella of Federal Housing Finance Administration (FHFA). The way Fannie and Freddie used to work was that they would buy loans from lenders, package them into bonds and sell them to investors. 

 *** ORIGINAL Home Affordable Refinance Program (HARP) *** ********** 

NEW HARP UNVEILED ON OCT 24, 2011**************** 

Under the changes to HARP announced by President Obama on October 24, 2011 at Las Vegas, FHFA would remove: * 25% threshold of how much homeowners are "underwater" to allow more mortgages to qualify * some closing fees, title insurance and lien processing According to FHFA estimates, at least 1 million additional households will get the opportunity to refinance their mortgages. Moody's Analytics estimated the figure as high as 1.6 million. However, the biggest hurdle is that this program is voluntary for lenders. Any loan that has been refinanced in the last 2 1/2 years or has not been sold to Fannie or Freddie before June 2009 is not qualified for the new program. 

 ********** NEW HARP UNVEILED ON OCT 24, 2011**************** 

President Obama took a swipe at the Congress while unveiling the new refinancing package on October 24, 2011 by retorting: "We can't wait". However, Republican National Committee Chairman Reince Priebus responded on October 24: "It's another day in the campaign life of President Obama, and he's bringing his re-election tour to Nevada, ground zero for the damaging effects of his failed economic policies".

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Class-action Lawsuit Filed against RealPage, Apartment Operators

Five renters on October 20, 2022 filed a class-action lawsuit against RealPage and seven nationally renowned property managers, accusing them of colluding and working like a "cartel" to jack up rental prices by using the property management services firm's proprietary YieldStar algorithm. The firm sells software and analytics services to rental industry. In 2021, RealPage was taken private by Thoma Bravo, one of the largest private equity firms, in a $10.2 billion deal. 

DOJ Files Antitrust Lawsuit

The U.S. Department Justice along with attorneys general of North Carolina, California, Colorado, Minnesota, Tennessee, Connecticut, Oregon and Washington filed an antitrust lawsuit against RealPage on August 23, 2024, accusing the property management software company of fixing rental prices by leveraging the proprietary data from rental operators and colluding with them. The civil antitrust lawsuit [based on Sherman Act] was filed following a two-year investigation into the rental pricing model that the firm had developed for a rental market that it had a monopoly over with an almost 80% share. The lawsuit was filed in the Middle District of North Carolina. 

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Settlement to Impact Real Estate Commission, Save Consumers Billions

A $418 million settlement by the National Association of Realtors, according to a front-page article in the March 16, 2024, edition of The Dallas Morning News, will obviate any requirement for the sales agents to split the commission with the buyers' brokers in exchange for using the MLS. At present, sellers have to pay 5% to 6% commission to their brokers to advertise their properties on the Multiple Listing Service. According to the Consumer Federation of America, the settlement is likely to save U.S. consumers $20 billion to $30 billion annually.