Just like New England weather, the real estate market changes. Across the state of Massachusetts, markets vary. As a nonprofit member organization, MABA is committed to being the voice, the advocate, for the home buyer in Massachusetts. From first time home buyers to seasoned home owners now downsizing into their dream retirement home, we are committed to helping the home buyer.
This section is updated with press releases, MABA members being quoted or referenced in publications and the MABA perspective on the monthly real estate statistics released on the residential real estate market.
MABA President Comments on April Housing Numbers
Comments from Massachusetts Association of Buyer Agents:
"April's numbers reveal a trend that many analysts have been predicting for a while. As the Echo Boomers stabilize their employment and move into the housing market, the demand for first-time homes has continued to increase, which has increased condo prices to the point that they are fairly competitive with single family homes in some markets. At the other end of the spectrum, the development of pricey higher end condo projects designed to appeal to Empty Nesters has also pushed the average price of a condo up over the past few years. Many of the buyers from both demographic groups prefer to live in areas that are less car-dependant, which has pushed the demand up in those areas that are more densely populated, have more amenities and developed with condos. We expect to see further pressure in this market segment over the next few years.
It is important to note what Tim Warren said about April's home sale numbers reflecting homes and condo closings that were primarily negotiated in February and March during a time of challenging weather conditions that kept many sellers from putting their homes on the market. Due to a severe shortage of inventory in many communities at the beginning of the year, homes that were realistically priced and marketed were snatched up by buyers at a lightning fast pace, many with multiple offers, due to pent up buyer demand that carried forward from 2013.
The numbers are historic and report a generally healthy real estate market. At this time, some MABA members are reporting that they are seeing indications that more buyers are holding the line on the amount of their offers and aggressively priced properties are not receiving quite as many offers as they were earlier this year. We are also seeing that many of our buyer-clients are paying more attention to sales comps than they were last year. With overpriced inventory sitting on the market a bit longer and more inventory coming on this Spring, we may be seeing very early hints that the market may be starting to get a bit more favorable to buyers, especially in areas that are not as desirable for typical Echo Boomer and Empty Nester buyers."
Thinking About a Condo? Know What You're Buying - And Know What You're Buying Into, Cautions Mass Association of Buyer Agents
Boston, MA - July 31, 2012 – As with single-family homes, sales of condominiums here in Massachusetts remain strong; some recent reports show June condo sales up nearly 30 percent over the same period last year. While many of these buyers understand the nature of condominiums and the distinct differences they present to owning a stand-alone home, some do not, according to the Massachusetts Association of Buyer Agents (MABA), and later come to regret their decision.
"We see it all the time," says Sam Schneiderman, president of MABA. "People want to buy a condominium because 'it's all taken care of.' Many don't understand the concept that when they purchase the condominium they become part of a condo association. They are partners in a business and the business is the maintenance and operation of the building. Condominium living can be great but it's critically important for buyers to understand this before purchasing one – or they are likely to be disappointed."
Know What You're Buying
"First things first," says Schneiderman. "Figure out exactly what you're buying." That, he says, means going through all of the building documents, floor plans and relevant municipal records to determine the precise square footage of the unit, where the boundaries are between the units and common space, and who owns the decks, porches, and other exterior spaces – if there are any. Likewise, if there are parking spaces, are they permanently deeded or assigned to the units?
Schneiderman recounts how a few months back he was representing a couple who were interested in a condo unit in a three-family building in Brookline. The unit consisted of the condo itself and a back porch that had been converted over ten years ago into heated living space with an additional bathroom. When he set about to verify the square footage of the condo, what he found surprised even him. The back porch was not legally converted to living space and was still owned by the association. While marketed as some 1,800 square feet, without the "addition" the unit was less than 1,600 square feet and considerably overpriced.
"Next," says Schneiderman, "you'll want to have a complete assessment made of the building itself. Hire the best inspector you can find – one who knows condominium buildings and what to look for in the way of problems and defects," says Schneiderman. If there are problems, you'll need to know their full extent as they will impact on your negotiations with the seller and, ultimately, on your decision whether to buy the property or not.
Know What You're Buying Into
"Understanding what you're buying into is just as important as understanding what you're buying," says Schneiderman. "You need to find out about the people who live in the building – are they tenants or owners with a long-term stake in the building – and the association that runs the building."
"Try to meet some of the folks who live in the building – especially if it's a small building," says Schneiderman. "A condo building is a community – they'll be living next door to you and, in all likelihood, co-trustees with you in the association. Best to know who you're dealing with going in. If they don't want to meet with you, that tells you something, too. It would certainly give me pause."
You'll also need to take a good, hard look at the association, of course, prior to purchasing a condominium. Here, according to MABA, are some of the some of the key questions you'll need answered.
- Who are the trustees and what is their general approach in terms of taking care of the building (and your investment)?
- Is the building self-managed or is there an outside firm involved in building management? What is the financial condition of the association? Is it solvent and are there adequate reserves – or do they depend on special assessments to maintain the building?
- What are the condo fees for the unit you’re considering buying?
- What is the history of assessments? Are there any assessments in the works?
- Does the association have a long-term plan for maintenance and/or upgrades to the building?
- In addition to the master deed and bylaws, are there any rules and regulations currently in place or being contemplated?
Based on the answers to these questions, you'll need to determine if the building and the association are right for you. "If you go into a large, luxury building paying $1,400 a month in condo fees and living first class, if that's not part of your value structure and you can't justify paying it out, you're never going to be comfortable there," says Schneiderman. "Same thing at the other end of the spectrum; you may not be happy in a small building where you're paying special assessments and having to pull teeth to get any work done."
"Buying a condominium is complex and time-consuming," says Schneiderman. "There are a lot of moving parts. When you're looking to purchase a condo, you need to find a good buyer's agent who understands condominiums and how to determine exactly what you're buying - and buying into. Not all buyer's agents have the expertise to guide you through this process. Spend the time and interview agents until you find one who you are confident can meet your needs. Otherwise, you're either going to overpay for the unit or end up in a situation that's not right for you."
Mass. Association of Home Buyers Takes Issue with New CFPB Proposal on Mortgage Disclosures
As a non-profit organization, the Massachusetts Association of Buyer Agents (MABA) monitors and comments on proposed legislation that affects home buyers. The Consumer Financial Protection Bureau (Bureau) is currently proposing changes to mortgage rules that MABA has reviewed and has comments on to affect the proposed regulations. To assist home buyers in understanding these proposed regulations, below is a summary of the MABA position as released to the press and an overview of the new rules.
The following proposed CFPB rules are referenced in the MABA news release below. Developed in large part to address issues that helped contribute to the 2008 financial crisis, the new rules are aimed at bringing greater transparency and accountability to the mortgage marketplace. In addition to the summaries provided, PDFs of the complete proposals are available to download.
MABA News Release
MASS ASSOCIATION OF BUYER AGENTS TAKES ISSUE WITH NEW CFPB
PROPOSAL ON MORTGAGE DISCLOSURES
Changing Disclosures without Changing Timelines Won't Help
Consumers Looking to Shop for the Best Deal
Boston, MA – October 16, 2012 – While generally supporting the Consumer Financial Protection Bureau's (CFPB) new proposals aimed at simplifying the mortgage application process and protecting consumers, the Massachusetts Association of Buyer Agents (MABA) has gone on record criticizing the bureau's new proposal on mortgage disclosures – the so-called "Know Before You Owe" proposal.
"In and of itself, changing the disclosures will do little to help consumers looking to comparison shop prior to locking in a mortgage," said MABA's board of directors. "The fact of the matter is that unless buyers can get information on loan costs, such as interest rates, monthly payments, and closing costs earlier in the transaction process, it's all for naught because there is rarely enough time to shop for a better deal the way things are currently set up." According to the CFPB, this was one of the primary drivers for overhauling the mortgage disclosures – that is, to make shopping for a mortgage easier and more efficient.
The board's statement continues: "As things now stand, lenders can't provide a good faith estimate of loan costs until they have an application in hand, which means there needs to be a property with an accepted offer or purchase and sale agreement. In order to give buyers time to comparison shop, that needs to change, as does the timeline for mortgage contingencies – typically made tight to protect the seller's interest. Consumers need more information sooner in order to effectively shop for a loan. In short, they need to be able to get disclosures in a meaningful way – at a meaningful time. There needs to be a way to get a buyer a binding good faith estimate earlier in the process – perhaps based on certain conditions, such as a single-family up to a certain price and/or a certain credit score range."
The MABA board also weighed in on two other CFPB proposals – one pertaining to loan origination fees, the other designed to prevent mortgage servicer mistakes. Here, the MABA board was more supportive of the CFPB's efforts to bring clarity to the mortgage marketplace and prevent the kind of abuses that contributed to the 2008 financial crisis, though it did offer some additional criticisms – and recommendations.
A key element of the new loan origination rules requires lenders to offer a no point, no fee option. According to the CFPB this, again, is being done to help consumers to mortgage shop. However; as the MABA board sees it, the real issue here is that many consumers don't understand how loans are really structured and, thus, have a hard time making comparisons. "Consumer-friendly lenders can easily calculate the costs of any product to include a no point, no closing cost option. Some do it all the time. The problem is that most consumers don't understand how mortgage pricing works. By helping with mortgage pricing, a good buyer's agent can add value to the process."
Regarding the proposed new rules on mortgage servicers, the board said: "Fundamentally, these rules are designed to protect homeowners from surprises and costly servicer mistakes. It's a good step in the right direction. One question not answered, though, is what happens if the lender does not follow the correct steps and forecloses on a homeowner." The board recommends that there be a requirement that lenders present proof that all procedures were properly followed in a timely manner before they would be able to complete a foreclosure. "The bottom line: none of these rules will work unless there are timelines attached to them and penalties or incentives that will get the lenders to follow them."
The MABA board of directors plans on submitting its comments to the CFPB shortly for its review. The public has been invited to comment on the new CFPB proposals at its website – www.consumerfinance.gov/notice-and-comment. The CFPB will review and analyze all comments prior to issuing final rules in January 2013.
Integrated Mortgage Disclosures under the Real Estate Settlement Procedures Act (Regulation X) and the Truth in Lending Act (Regulation Z)
Sections 1032(f), 1098, and 1100A of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) direct the Bureau to issue proposed rules and forms that combine certain disclosures that consumers receive in connection with applying for and closing on a mortgage loan under the Truth in Lending Act and the Real Estate Settlement Procedures Act. Consistent with this requirement, the Bureau is proposing to amend Regulation X (Real Estate Settlement Procedures Act) and Regulation Z (Truth in Lending) to establish new disclosure requirements and forms in Regulation Z for most closed-end consumer credit transactions secured by real property. In addition to combining the existing disclosure requirements and implementing new requirements in the Dodd-Frank Act, the proposed rule provides extensive guidance regarding compliance with those requirements.
Truth in Lending Act (Regulation Z); Loan Originator Compensation
The Bureau of Consumer Financial Protection has issued a proposed rule amending Regulation Z (Truth in Lending) to implement amendments to the Truth in Lending Act (TILA) made by the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act). The proposal would implement statutory changes made by the Dodd-Frank Act to Regulation Z's current loan originator compensation provisions, including a new additional restriction on the imposition of any upfront discount points, origination points, or fees on consumers under certain circumstances. In addition, the proposal implements additional requirements imposed by the Dodd-Frank Act concerning proper qualification and registration or licensing for loan originators. The proposal also implements Dodd-Frank Act restrictions on mandatory arbitration and the financing of certain credit insurance premiums. Finally, the proposal provides additional guidance and clarification under the existing regulation's provisions restricting loan originator compensation practices, including guidance on the application of those provisions to certain profit-sharing plans and the appropriate analysis of payments to loan originators based on factors that are not terms but that may act as proxies for a transaction's terms.
2012 Truth in Lending Act (Regulation Z) Mortgage Servicing
The Bureau of Consumer Financial Protection (the Bureau or CFPB) is proposing to amend Regulation Z, which implements the Truth in Lending Act (TILA), and the official interpretation of the regulation. The proposed amendments implement the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act or DFA) provisions regarding mortgage loan servicing. Specifically, this proposal implements Dodd-Frank Act sections addressing initial rate adjustment notices for adjustable-rate mortgages (ARMs), periodic statements for residential mortgage loans, and prompt crediting of mortgage payments and response to requests for payoff amounts. The proposed revisions also amend current rules governing the scope, timing, content, and format of current disclosures to consumers occasioned by the interest rate adjustments of their variable-rate transactions.