Pipeline

1M Homes Missing?

The analytics firm CoreLogic took aim at the National Association of Realtors in a report Tuesday that claims the trade group overestimated home sales last year by 15%-20%.

Mark Fleming, CoreLogic's chief economist, said there is a significant discrepancy — of at least 1.3 million home sales — between his firm's sales estimates and those of the Realtor group that can be attributed to their vastly different methodologies.

CoreLogic estimated that home sales totaled 3.6 million last year, down 12% from 4.1 million in 2009.

The real estate agents' group said home sales fell 5% last year, to 4.9 million.

CoreLogic counts filings at county record offices nationwide and benchmarks the changes in ownership against data from the Mortgage Bankers Association, the Census Bureau and from bank filings that comply with the Home Mortgage Disclosure Act.

The Realtors' sales data comes from a sample of 40% of Multiple Listing Service data, said Walter Molony, a spokesman for the trade group.

In the last two months, the Realtor group has been consulting with outside housing economists, academics and government officials and is undertaking a "re-benchmarking using independent sources," Molony said.

The trade group expects to release revisions to its seasonally adjusted annual sales rates and to the month's supply of inventory for the past three years on Feb. 28.

"There has been a notable increase in nontraditional sales outside the MLS's such as bulk transactions by investors," Molony said. "We disagree with CoreLogic's assumptions and think they were premature in putting their numbers out."

The disparity is more pronounced when looking at the monthly supply of unsold homes on the market, which often is used as a key determinant of health.

CoreLogic, of Santa Ana, Calif., estimates the 16-month supply of homes in November was the highest level since February 2009. The Realtor group estimates there was an eight-month supply of homes during the same period. A normal market has a six- to seven-month supply, Fleming said.

Lawrence Yun, the Realtor group's chief economist, said last month that home sales were on an uptrend and the market was "getting much closer to an adequate, sustainable level."

Fleming said the upcoming spring selling season will determine whether the market gets out of its doldrums.

"Our data tells us there are fewer homes being sold relative to the inventory level," Fleming said. "Moreover, there will be increased headwinds on borrowers' abilities to obtain financing, because loans will become more expensive as the market normalizes and begins to more appropriately price for risk."

Making It Official

The Federal Housing Finance Agency has put down on paper the alternatives it is considering for how Fannie Mae and Freddie Mac should compensate mortgage servicers in the future.

In a 28-page report released Tuesday, the agency made no specific recommendations. Instead, it suggested that alternative servicing models could be "used as a starting place to generate thinking and to explain concerns with the current compensation system."

As American Banker reported last month, the various alternatives include a fee-for-service structure for nonperforming loans and reducing or eliminating the minimum mortgage servicing fee for performing loans. Before Tuesday's report, Fannie, Freddie and their conservator, the FHFA, had discussed these ideas in private with analysts but provided little public detail.

Currently, a servicer's compensation is generally based on a minimum servicing fee that is part of the mortgage rate. But that reduces the flexibility needed during tough times like these when nonperforming loans cost far more to service.

The current servicing model also has some inherent problems because it results in the creation of a mortgage servicing right asset, which the FHFA said "is difficult to manage and separate from a servicer's core competency of servicing mortgage loans."

An overhaul of servicing compensation is expected to improve service for borrowers, reduce financial risk to servicers, and provide flexibility for guarantors to better manage nonperforming loans.

The Gap Is Back

Lending to blacks and Hispanics has fallen more than 60% since the housing market collapsed, according to a study based on Federal Reserve data.

The study found that white and Asian borrowers have better access to lower-cost mortgages than blacks and Hispanics, who generally pay more to own or refinance a home — if they can obtain a mortgage at all.

The study found that lending to Hispanics dropped 63% from 2004 to 2009, while lending to blacks fell 60% and lending to whites fell 17%. Asians fared the best, with virtually no change.

The study was by Maurice Jourdain-Early, founder and managing director of Compliance Tech, an Arlington, Va., consulting firm that advises companies on fair-lending practices. It used Home Mortgage Disclosure Act data to gauge the change in overall lending from 2004 to 2009.