“NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., clarified that several factors are restraining a housing recovery, even with great affordability conditions. “We’ll likely see some impact from the foreclosure moratorium in the months ahead, but overly-tight credit is making it difficult for some creditworthy borrowers to qualify for a mortgage, and we are continuing to deal with a notable share of appraisals coming in below a price negotiated between a buyer and seller,” he said.
“A return to common sense loan underwriting standards would go a long way toward achieving responsible, sustainable homeownership. In addition, all home valuations should be made by competent professionals with local expertise and full access to market data — there remains an elevated level of appraisals that fail to provide accurate valuation, which is causing a steady level of sales to be cancelled or postponed,” Phipps said.
A parallel NAR practitioner survey shows 10 percent of Realtors in October report they had a contract cancelled as a result of a low appraisal, and 13 percent report they had a contract delayed; 16 percent said a contract was negotiated to a lower sales price as a result of a low appraisal.”
According to FHFA, Fannie- and Freddie-backed mortgages that were recently originated show an outstanding performance, even better than during the pre-housing bubble years.
“A review of recently originated loans suggests that they have overly stringent underwriting standards, with only the highest creditworthy borrowers able to tap into historically low mortgage interest rates. There could be an upside surprise to sales activity if credit availability is opened to more qualified home buyers who are willing to stay well within budget,” Yun added.
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