FHA wants added flexibilities for borrowers renting out a bedroom

The Federal Housing Administration (FHA) on Wednesday posted a proposed Mortgagee Letter (ML) that would add flexibility for people receiving rental income from “boarders” who pay for space in an existing dwelling when considering them for an FHA-insured mortgage.Borrowers receiving rental income from “boarders,” a term referring to “individuals who rent space in borrowers’ homes” according to the Single Family Housing 4000.1 Handbook, would have less stringent underwriting requirements for documenting and calculating this form of income when seeking a new FHA-insured loan, according to the proposal.“FHA remains committed to extending affordable housing opportunities to its core constituency of first-time and low- to moderate-income homebuyers, including those in underserved communities,” the agency said in its announcement of the proposal. “In doing so, it recognizes that rental income received from individuals renting space in borrowers’ homes is a stable and viable source of income that increases housing affordability and allows borrowers to better manage housing costs.”The first two elements of the proposal include a reduction in the “acceptable rental income history” from 24 to 12 months for income earned from boarders; and an allowance for borrowers with a 12-month rental history to qualify for an FHA-insured mortgage, “provided the income has been received for at least nine of the most recent 12 months, is currently being received, and is averaged over a 12-month period.”The proposal would also establish that rental income from boarders used in a qualifying decision “cannot exceed 30% of their total monthly effective income;” and the ML would also expand acceptable income verification documentation for boarders to “include bank statements, canceled checks, and/or deposit slips showing rental payments received.”The proposed ML is now available to review on the Single Family Drafting Table, an online portal where proposed U.S. Department of Housing and Urban Development (HUD) single-family policies can be reviewed prior to going into full effect.The agency encourages all stakeholders to thoroughly review the proposed document and to provide feedback on it, which can be done through Dec. 10.Depending on the amount of feedback received, HUD will have limited time to implement the proposal if current Biden administration leaders plan to see it through. The incumbent president’s term expires at noon EST on Jan. 20th, at which point President-elect Donald Trump will be administered the Oath of Office by Chief Justice John Roberts.

HSBC commits $25M to NCRC partnership following redlining allegations

HSBC has agreed to direct $25 million over the next four years to support underserved communities in an agreement with the National Community Reinvestment Coalition (NCRC) following allegations of redlining, the parties announced on Wednesday. In August 2023, the bank disclosed it was under investigation by the Department of Housing and Urban Development (HUD) after the nonprofit organization filed a complaint alleging violations of the U.S. Fair Lending Act. According to the document, HSBC allegedly engaged in discriminatory lending practices in majority Black and Hispanic neighborhoods in six U.S. metropolitan areas from 2018 through 2021. It included New York (NY), Seattle (WA), Orange County (CA), Los Angeles (CA), Oakland (CA), and the Bay Area (CA). NCRC withdrew the complaint in the spring, and talks toward the agreement began shortly thereafter. The new partnership begins in January and aims to expand economic opportunities in low—and moderate-income, diverse and underserved communities through loan subsidies, grants and donations.“What began as a dispute turned into a conversation that will now expand a powerful bank’s work on behalf of lower-income communities, communities of color and other places that the whole banking industry has historically overlooked,” Jesse Van Tol, president and CEO of NCRC, said in a statement. The HSBC US and Americas CEO Michael Roberts added that the partnership “reflects our shared commitment to fostering economic resilience and opportunity in communities across the U.S., and we are honored to support these efforts through our loans, investments and grants.”HSBC has committed $10 million in loan subsidies, including $3.5 million to certain California markets. Another $4 million will be directed to grants to Community Development Financial Institutions (CDFIs) and community-based nonprofit organizations, $6 million will be donated to NCRC and $1 million will go towards community engagement initiatives. According to the mortgage tech platform Modex, HSBC originated about $3.5 billion in mortgages in the last 12 months, most of them purchases (77% of the total) and conventional (90%) loans. California and Washington are the bank’s main markets. The Nationwide Multistate Licensing System (NMLS) shows 87 registered mortgage loan officers as of Wednesday.

76% of home sellers say real estate agents are absolutely worth it

Nearly three quarters of recent American home sellers said in a Clever survey that using a traditional real estate agent is the best way to sell. " data-medium-file="https://img.chime.me/image/fs/chimeblog/20241121/16/original_430e7754-d2d3-4152-b98d-ab2441f3afc3.jpg?w=300" data-large-file="https://img.chime.me/image/fs/chimeblog/20241121/16/original_430e7754-d2d3-4152-b98d-ab2441f3afc3.jpg?w=1024" tabindex="0" role="button" src="https://img.chime.me/image/fs/chimeblog/20241121/16/original_430e7754-d2d3-4152-b98d-ab2441f3afc3.jpg?w=1024" alt="nearly-three-quarters-of-recent-American-home-sellers-say-using-a-real-estate-agent-is-the-best-way-to-sell" class="wp-image-494104" srcset="https://img.chime.me/image/fs/chimeblog/20241121/16/original_430e7754-d2d3-4152-b98d-ab2441f3afc3.jpg 1200w, https://img.chime.me/image/fs/chimeblog/20241121/16/original_430e7754-d2d3-4152-b98d-ab2441f3afc3.jpg?resize=150,84 150w, https://img.chime.me/image/fs/chimeblog/20241121/16/original_430e7754-d2d3-4152-b98d-ab2441f3afc3.jpg?resize=300,169 300w, https://img.chime.me/image/fs/chimeblog/20241121/16/original_430e7754-d2d3-4152-b98d-ab2441f3afc3.jpg?resize=768,432 768w, https://img.chime.me/image/fs/chimeblog/20241121/16/original_430e7754-d2d3-4152-b98d-ab2441f3afc3.jpg?resize=1024,576 1024w" sizes="(max-width: 1200px) 100vw, 1200px" />Nearly three quarters of recent American home sellers said in a Clever survey that using a traditional real estate agent is the best way to sell. As real estate agents adjust to sweeping changes brought by the commission lawsuit settlement, a new report from discount brokerage Clever Real Estate reveals one thing hasn’t shifted: Americans still overwhelmingly trust full-service agents to sell their homes. Nearly three-quarters (73%) of recent home sellers say agents are the best way to sell, with 77% opting for traditional full-service agents—outpacing all other methods, including FSBO and iBuyers, by a wide margin. Clever’s finding was aggregated by a survey of 1,000 Americans who have sold a home in the past five years. Of the 73% who said they preferred using agents, 67% believe traditional real estate agents are still the best option and 6% favor discount agents.Of the surveyed pool, 42% have sold since late 2022 as rising mortgage rates cooled the post-pandemic market. The majority of recent home sellers overwhelmingly prefer traditional full-service real estate agents, with 77% choosing this method for their sale — nearly eight times more than those who opted for a ‘For Sale By Owner’ (FSBO) transaction (10%). Not only is this method popular, but it’s also well-regarded; 76% of sellers who worked with an agent felt their services were worth the cost. That’s despite a recent research report from the Atlanta Fed that found the vast majority of real estate agents achieve similar price outcomes. Although there are agents who consistently outperform on price relative to others, they are very rare, Atlanta Fed researchers found.The Clever survey comes out as agents and brokerages adjust to seismic changes in real estate, namely the National Association of Realtors (NAR) commission lawsuit and related business practice changes, as well as several down years for existing home sales. In August, directly after the NAR settlement went into effect in most markets, Redfin reported that the typical U.S. home seller paid a 2.55% commission to the real estate agent hired by their buyer, down from an average of 2.62% in January. At the end of October, the narrative changed; Redfin reported that commissions paid to real estate agents representing buyers remained essentially unchanged. Some agents and brokers told HousingWire that their buy-side commission splits have increased since the announcement of the settlement.The changes haven’t materially had an impact so far on NAR membership or projections of 2025 membership. NAR Treasurer Greg Hrabcak assured members during the NAR NXT conference that the organization remains on solid footing, with no planned dues increases and a maintained reserve level.Hrabcak credited budget reductions across NAR for minimal impact on services and a “disciplined approach” to fulfilling settlement obligations. Membership numbers also remain strong, with 1.526 million reported in October — the fourth-highest ever — and a forecasted 1.4 million members in 2025, at 8% smaller decline than many had expected.Corporate cash buyer, iBuyer DistrustOnly 3% hired discount agents, 5% sold to cash buyer companies, and just 2% used iBuyers like Opendoor or Offerpad. Recent sellers have a much less favorable view of cash buyer companies, with 38% considering them the worst way to sell. About 35% of those who sold to cash buyers and 33% of iBuyer users would choose a different method if they could do it over. Almost two-thirds of respondents (61%) go as far as calling cash buyer companies “scams.” Some sellers (65%) touted that their cash buyer experience led to them closing within a month and 31% sold without listing their home. Cash buyer companies appeal to sellers with property issues, the report pointed out, as 54% avoid expenses like repairs or staging. While 74% would consider this option, motivations differ: 36% prioritize the highest offer, 8% value speed, and 27% see it as a last resort.Nearly 1 in 4 sellers (24%) view the polarizing FSBO method as the worst way to sell a home. While 46% believe FSBO is the most profitable and 51% see it as the least expensive option, it comes with significant challenges. Two-thirds (66%) say it’s the hardest method, and 55% call it the slowest. “[RealTrends] found [in polling] that well over a third of all sellers considered using for sale by owner before they went with an agent,” Steve Murray, the founder of RealTrends and a HousingWire consultant, said in September. “Why would they do this? It turns out that people perceive that using an agent to deal with the complexity and possibility of making a stupid mistake is better than if they did it themselves.”Per the Clever survey, traditional real estate agents are considered the easiest (58%) and often the fastest (40%) way to sell, despite being seen as the most expensive by 69% of sellers.Despite their popularity, real estate agents face some criticism: 36% of sellers feel pressured to accept lowball offers, 12% report agent mistakes during the sale, and 13% found their real estate agent more of a hassle than a help. While traditional and discount agents offer similar services, the difference between them matters significantly to sellers. About 76% would consider a traditional real estate agent for their next sale, compared to just 25% for a discount agent.However, 60% of sellers are open to trading some traditional real estate agent services for cost savings. Many are willing to forgo hosting open houses (26%), pricing strategy and market analysis (13%), or negotiation support (11%). Still, concerns about marketing support linger, with 71% believing discount brokers provide less than traditional agents, though this varies by individual agent.Despite these perceptions, most sellers who’ve used both would recommend them: 83% for traditional agents and 56% for discount brokers.