The new Consumer Financial Protection Bureau is working on a real estate issue that gets to the core of the agency’s purpose: Bringing clarity and better disclosures about the often opaque and costly fees that homebuyers, sellers and refinancers are hit with at closings.

One of the disclosures now under review might surprise you: appraisal charges. Why do they need clarifying? Doesn’t just about everybody who applies for a mortgage, whether it’s to buy a house or refinance, have to pay $450 to $600 — sometimes more — to find out what the property is worth? [more]

Could gloomy popular assumptions about how tough it is to get approved for a
mortgage be scaring away large numbers of people who are qualified from even
applying?

Could the same worries — I can’t come up with the big down payment I
need, my credit scores are too low, my bank account has almost none of
the “reserves” lenders want to see — put a needless damper on a housing
recovery in the new year?

You bet. Lenders and economists will tell you flat out: The lack of accurate
information about the availability of loan programs that are designed to
address special needs is discouraging far too many consumers from even
considering an application, much less shopping around. [more]

When you apply for a mortgage to buy a house, how often does the lender ask detailed questions about monthly energy costs or tell the appraiser to factor in the energy-efficiency features of the house when coming up with a value?

Hardly ever. That’s because the big three mortgage players — Fannie Mae, Freddie Mac and the Federal Housing Administration, who together account for more than 90 percent of all loan volume — typically don’t consider energy costs in underwriting. Yet utility bills can be larger annual cash drains than property taxes or insurance — key items in standard underwriting — and can seriously affect a family’s ability to afford a house. [more]

Here’s some good news for homeowners who’ve gone green and installed energy-saving features but haven’t been sure whether appraisers will credit them with higher valuations: Thanks to a new industry-issued appraisal addendum, the odds have improved that they’ll get the fairer market value they’re due.

The Appraisal Institute, the country’s largest and most influential association in its field, published the long-awaited addendum Sept. 29. It’s designed to be attached to any standard appraisal report covering a property with significant green features. Owners, sellers, buyers, refinancers and real estate agents don’t have to wait for an appraiser to use it. They can download it at no cost and ask that it be made part of the appraisal submitted to the lender. [more]

From the September issue: Home energy efficiency and sustainability have been major policy priorities for the Obama administration, but lurking in the background are two consistent, pesky questions: Beyond the documentable savings on utilities bills, do such steps add to the resale value of a home? And do they make it easier or faster to sell property? Housing groups and housing officials say that definitive statistical data covering multiple regions of the country is scarce. But some localized research projects in Oregon, Washington and California offer promising hints. In a study covering existing and new houses sold between May of last year and April 30 of this year, the Earth Advantage Institute, a nonprofit group based in Portland, Ore., found that newly constructed homes with third-party certifications for sustainability and energy efficiency sold for 8 percent more on average than noncertified homes in the six-county Portland metropolitan area. Existing houses with certifications sold for 30 percent more.
[more]

Picture a mortgage program that seems to defy many of the
lessons of the housing bust:

– 91 percent of its borrowers make zero down payments.
– Loan amounts go well into the jumbo range — to $1 million
and sometimes above, even with little or nothing down.
– Credit standards are flexible and generous. Underwriting
rules encourage loan officers to look for ways to approve
applications rather than to reject them.

– Mortgage originations are up — almost triple what they were
just three years ago and are on track this year to exceed 2010′s
volume. The rest of the loan industry, by contrast, is down by
anywhere from 25 percent to 30 percent. [more]

If you give millions of seriously underwater homeowners a new equity position in their properties by reducing their principal mortgage debt, will they keep paying on their loans and avoid foreclosure?

Call it a pipe dream or a significant model for other lenders and investors, but one company said it has found an important combination: Modify underwater borrowers’ loans so that their payments are reduced to a manageable amount, cut their principal debt over time but make the deal totally dependent on their scrupulous on-time monthly payments of the new amount plus sharing of a portion of any future profits they make on the house sale. [more]

Are medical bill collection accounts buried away inside millions of consumers’ credit files — even bills that were fully paid or settled years ago — functioning as a drag on the housing market?

That might sound far-fetched, yet some credit and mortgage industry experts say negative medical collection records are playing a little-recognized but significant role in depressing otherwise creditworthy loan applicants’ scores. Lower scores, in turn, are disqualifying borrowers from getting mortgages in today’s toughened underwriting climate or forcing them to pay higher interest rates, fees and down payments.

According to a 2008 study by the non-profit Commonwealth Fund, an estimated 28 million Americans were contacted by collection agencies on medical debt issues during a two-year period and 72 million reported difficulties in paying outstanding medical bills. [more]

What if the federal government spent years designing a tool to help consumers shop intelligently for mortgages — comparing lenders’ rates, terms and total settlement costs — but consumers ignored it or didn’t use it?

No need to speculate here; it appears to have already happened. A new survey of 1,000 American consumers suggests that the “good-faith estimate” disclosures that all homebuyers and refinancers receive at loan application to facilitate shopping are not getting the job done.

Federally mandated good-faith estimates spell out the lender’s charges, all anticipated fees for title insurance, escrow and settlement services, plus other key costs. The most recent version of the GFE, released at the beginning of last year, contains space for consumers to take one lender’s estimates and get competing quotes from as many as three others. It also requires lenders to stand behind their estimates — guaranteeing that some of them won’t increase by even a penny at closing, and others won’t increase by more than 10 percent. [more]

If you’ve been looking for a way to pay for energy improvements to your house, two little-publicized new mortgage programs could provide you the cash you need.
Both the Federal Housing Administration and mortgage investor Fannie Mae recently have launched startups in the energy conservation arena. Here’s a quick overview, with some pros and cons:
FHA’s new program is called “PowerSaver” and allows eligible owners to borrow up to $25,000 at fixed rates between 5 percent and 7 percent for as long as 20 years to finance high-efficiency windows and doors, heating and ventilating systems, solar panels, geothermal systems, insulation and duct sealing, among other retrofits.
Though officially a pilot program, HUD Secretary Shaun Donovan estimates that 30,000 PowerSaver loans will be closed in the next two years. [more]