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New home sales surge 18.9 percent in September, highest level in 10 years

  • New home sales soared 18.9 percent in September.
  • Economists surveyed by Thomson Reuters anticipated new home sales falling 0.9 percent for the month.
  • New home sales unexpectedly fell 3.4 percent in August.
A new home is constructed on July 26, 2017 in Miami, Florida.
Getty Images
A new home is constructed on July 26, 2017 in Miami, Florida.

Sales of new U.S. single-family homes unexpectedly rose in September, hitting their highest level in nearly 10 years, offering hope that the housing market was regaining speed after appearing to stall in recent months.

The Commerce Department said on Wednesday new home sales surged 18.9 percent to a seasonally adjusted annual rate of 667,000 units last month amid an increase in all four regions. That was the highest level since October 2007 and followed August’s upwardly revised sales pace of 561,000 units.

The percent gain was the largest since January 1992. August’s sales pace was previously reported at 560,000 units.

 

Economists polled by Reuters had forecast new home sales, which account for 11 percent of overall home sales, falling 0.9 percent to a pace of 555,000 units last month.

New home sales, which are drawn from permits, are volatile on a month-to-month basis. Sales soared 17.0 percent on a year-on-year basis in September. The housing market has trod water for much of this year, amid shortages of homes available for sale, skilled labor and suitable land for building.

Activity was also hampered by Hurricanes Harvey and Irma, which weighed on homebuilding in September and hurt sales of previously owned homes in the South. Housing is expected to have been a drag on economic growth in the third quarter.

In September, new single-family homes sales raced to a more than 9-1/2 year high in the Northeast. Sales in the South hit their highest level since July 2007. There were also strong gains in the West and Midwest last month.

More than two-thirds of the new homes sold last month were either under construction or yet to be started.

With sales surging in September, the inventory of new homes on the market was unchanged at 279,000 units. At September’s robust sales pace it would take 5.0 months to clear the supply of houses on the market, down from 6.0 months in August.

A six-month supply is viewed as a healthy balance between supply and demand.

‘Nonprime has a nice ring to it’: the return of the high-risk mortgage

Rows of houses in Las Vegas.

Jacob Kepler | Bloomberg | Getty Images
Rows of houses in Las Vegas.

It was about a decade ago that Dan Perl chucked it all in to go surfing in Mexico. As a veteran underwriter of subprime mortgages, he’d seen enough by April 2007 to know that there was serious trouble ahead. So he pulled down the shutters, took an extended break in Baja, California, and then lay low for a few years, trading loans for a New York firm, Carl Marks & Co.

But now he is back in the game, leading a small band of lenders making subprime loans once more. Or “nonprime”, as they prefer to call it these days. The sector is on course to produce about $10bn this year — a tiny slice of America’s $1.6tn overall home-loan market but one that’s growing rapidly.

Plenty of people told Perl, 68, that he couldn’t bring this stuff back so soon after the global financial crisis, and after regulators all over the US radically tightened rules on mortgages. People said he was risking his net worth, that he’d “be sued into oblivion”.

“How many times we hear that, Kyle?” he asks, turning to his protégé, 39-year-old Kyle Gunderlock, who was a VP of sales at Perl’s old firm and is now president of the new one, known as Citadel Servicing Corp, based in Irvine, California.

“‘You guys are going to get f***ing arrested,’ is the one I always remember,” says Gunderlock.

The way Perl and his peers see it, there’s nothing shady or menacing about the business of subprime. On the contrary, they say, specialist lenders in this area are performing a vital service for the world’s largest economy. For every comfortably off professional who could walk into a branch of Chase or Wells Fargo and get a home loan without any fuss, they argue, there are many more who would struggle. People who are self-employed or on variable incomes, for example, may not check all the boxes a big bank needs. Ditto new immigrants with thin credit histories, or people with a few scratches and dents in their files.

“Making credit available to borrowers who are subprime is national policy and it is an important part of economic growth,” says Julian Hebron, head of sales at RPM Mortgage in Alamo, California. “It’s untrue to call it a scourge.”

But what’s worrying some economists is a feeling that we’re on a slippery slope; that the same forces which fed the crisis last time round — rampant demand for yield among investors, skewed incentives on Wall Street and a government determined to relax regulatory restraints — could feed another.

Under President Donald Trump, for example, agencies are under orders to review just about every financial rule that emerged under Barack Obama. In June, the Treasury department put out a report saying that tight underwriting standards were partly to blame for “anaemic” growth in housing, which accounts for almost one-fifth of GDP.

The market for securitising subprime loans is picking up, too, spreading the risk of default in much the same way as before. Fitch, the credit rating agency, expects $3bn of issuance of nonprime mortgage-backed securities (MBS) this year, up from about $1bn over the previous 18 months. (Back in January, it was predicting $2bn for the year.)

Meanwhile, some old characters are re-emerging, including a few who gained a certain notoriety a decade ago. Kyle Walker, the former head of Fremont, a big mortgage firm that was rapped by federal regulators for “unsafe” practices in March 2007, is back running a nonprime shop called HomeXpress in Newport Beach, California. Dan Sparks, a former Goldman Sachs trader mentioned more than 500 times in a Senate report on the mortgage meltdown, is now buying low-grade loans from a hedge fund up in Stamford, Connecticut. (Walker did not respond to requests for comment and Sparks declined to comment.)

All of this is happening without a proper reckoning from the last time around, says Richard Bowen, a former chief underwriter at Citigroup, which ranked as America’s top subprime lender in 2007. Bowen says he tried to raise the alarm internally about rampant fraud in mortgage applications, before being stripped of underwriting responsibilities. He left the group in 2008. He draws a contrast with the savings and loan crisis in the US in the 1980s, after which about 800 senior bankers went to jail. The running total from the crisis that began in 2007? Zero. Even though it was “many, many, many” times worse, says Bowen, “no one has been held accountable. And I can assure you it’s not because of a lack of evidence.”

On the morning I meet Perl, on a blazingly hot day in June, he’d been up the hills behind his house in San Juan Capistrano with his white Labrador Ella. Now he’s showered and holding court in his office, dressed in jeans, loafers and a checked shirt.

He was born in Brooklyn to a conservative Jewish family but grew up in Sherman Oaks, a relatively spacious suburb of Los Angeles, and Santa Monica. After a degree from UCLA and an English teaching job at Santa Monica High, he formed a loan brokerage in the mid-1970s with his college pal Bill Ashmore, who now runs Impac, another mortgage firm based a few miles up the San Diego Freeway from Citadel.

After the crash of 1987, Perl-Ashmore parted ways; Perl into subprime (or “Bs and Cs”, as lower-grade loans were called then) and Ashmore into “Alt-A”, slightly classier yet not quite prime. In the 1990s Perl’s business grew strongly, partly on the back of a loan he invented called the NINA — aimed at customers with “no income, no assets”. He was known as the Big Kahuna.

But by 2005, says Perl, it was clear that things were slipping out of control. His outfit, then known as First Street, was a top 20 underwriter nationwide, in a sector which produced about $1tn of subprime mortgages — about one-third of the total US mortgage market — that year. Also clustered in Orange County were some of the best-known subprime shops in the country, such as New Century, Ameriquest and Fremont.

But margins were shrinking and loans were being written that should never have been written. At one point New Century had a 2 per cent error rate, meaning that one in every 50 of its borrowers never made a single payment. The company’s collapse in early April 2007, owing $8.4bn to banks including Morgan Stanley, Barclays and UBS, was one of the defining moments of the crisis.

Mike Fierman, managing partner and co-CEO of Angel Oak of Atlanta, Georgia, was also in the thick of it back then, running a firm called SouthStar Funding. He says he had no choice: if he wanted to compete, he had to drop standards. Like Perl, he bailed in April 2007, after Goldman and Lehman Brothers said they’d had their fill of subprime. But until that point they and other investment banks had hoovered up everything he’d offered them. They’d then wrap it up into MBS, on which credit rating agencies — competing between themselves to win the most business — would typically slap an attractive rating.

“Everyone was complicit,” says Fierman. “You felt trapped; investors were demanding more loans than could be produced in a responsible way. The only way to produce that kind of volume was to be irresponsible.”

Brokers were going after “gardeners and serving maids and house cleaners and gas-station attendants and strippers on poles,” says Perl. “That’s not lending. That ain’t the way you do it.”

He got out about 18 months before the collapse of Lehman brought the world economy to the brink of ruin. “Honest to God, Ben, do you ever just get a bad vibe?” he asks me. “Do you ever walk down a dark hall and say, ‘This is not a place I should be?'”

This time it’s different, say the lenders. Thanks to the Dodd-Frank Act of 2010, the nonprime loans being written now bear little relation to the sludge that stunk up the system a decade ago.

Perl and Gunderlock say they spent weeks going through the 800 pages of Dodd-Frank that was relevant to mortgages, as they looked to crank up the machine again. There were all kinds of proscriptions on funding and closing and servicing a loan, says Perl, but in the end it came down to this: “People have to be relatively reasonable about how they treat borrowers. You can’t lie, you can’t cheat, you can’t steal.”

Gone, as a result, are some dubious features that caused trouble last time round, such as zero deposits or low teaser rates that adjusted sharply higher in two or three years. Gone, too, are the negative amortisation loans that allowed borrowers to pay less than the interest due, so that the loan balance actually grew.

There’s no more “stated income” either: whatever the borrower declares, the lender has to check by looking at pay stubs and tax returns, rather than assuming it’s the truth.

Granted, standards in nonprime are generally looser than those that apply to mortgages eligible to be bought by government agencies such as Fannie Mae. Such loans are known as “qualified mortgages”, or QM, and they account for the vast majority of America’s home-loan market.

But today every mortgage has to conform to an overarching standard known as ATR, or “ability to repay”. Unless a lender can be convinced in eight separate ways that the borrower has the means to pay the thing back, it can be sued down the track if the loan goes bad.

The new regulatory framework is “actually pretty rational”, says Matt Nichols, founder and CEO of Deephaven Mortgage, who set up the Charlotte, North Carolina-based firm in 2013 after more than a decade running Goldman’s residential mortgage business. So far he’s bought about $1bn of nonprime loans from a network of 100 or so brokers, and has resold about half of that into the MBS market.

In a $250m MBS deal in June, more than 40 per cent of borrowers who got mortgages bought by Deephaven had had a prior “credit event” such as a bankruptcy, foreclosure or short sale, according to Kroll, a credit rating agency. The deal was roughly six times oversubscribed, nonetheless.

“Ability to repay, as a rule, is common sense,” says Nichols. “You’ve got to rely on something other than their word for it, right?”

Perl and others note that investors in these new classes of nonprime MBS have extra degrees of comfort. Under Dodd-Frank reforms that took effect in 2015, sponsors of a deal need to retain an interest of at least 5 per cent of the aggregate credit risk of the assets they’re turning into securities. It’s known as “skin in the game”: if originators are on the hook for losses, the theory goes, they’ll take a lot more care over what they’re producing.

Before the crisis, there was no minimum ownership, resulting in mortgage firms simply flipping all kinds of dross at Goldman or Merrill or Bear Stearns. “This is not an originate-to-sell model; it’s an originate-to-own model,” says Fierman of Angel Oak. His firm, which buys nonprime loans from other brokers as well as originating its own, has been the most active of MBS issuers, completing four deals since 2015 worth a total of $630m. He says that Angel Oak has gone well beyond the basic 5 per cent threshold, owning as much as 10 per cent of its MBS deals at various points. “Trust has to be built with investors,” he says. “They’re watching us closely.”

Some of the big names on Wall Street have already tiptoed back in. Pimco, the world’s biggest bond house, has 25 per cent of the equity in Perl’s Citadel, according to a person familiar with the ownership structure. Blackstone, the private equity giant, has a cluster of nonprime investments, including a stake in Bayview Asset Management, a firm which buys mortgages from Coral Gables, in Florida.

Will the big US banks get back into subprime? Inevitably, says Guy Cecala, CEO and publisher of Inside Mortgage Finance, the industry bible. He notes that overall mortgage originations in the US have slipped about one-fifth this year, mostly because a rise in interest rates has caused refinancing business to drop.

“At the end of the day, every lender out there, unless they want to see their business decline, has to look at alternative products,” he says.

In the meantime, other banks are taking supporting roles. Credit Suisse and Nomura, for example, are supplying lines of credit to originators and underwriting securitisations of subprime mortgages. Fitch, DBRS and Kroll, the credit rating agencies, have given their stamps of approval to a succession of securitisation deals.

Even Standard & Poor’s, which paid $1.4bn in 2015 to the US Department of Justice to resolve a probe into ratings inflation, is back on the scene, rating five deals this year. (Moody’s, which settled with the government in January this year, has yet to re-appear.)

Some investors, for their part, are reluctant to dive in. Tracy Chen, a fund manager at Brandywine Global in Philadelphia, says she’s tempted, but wants the MBS market to increase to about $20bn in total before she would feel comfortable trading in and out of positions. “The market is still not very transparent, and there’s not much trading volume. I need to wait for it to scale up before I enter.” The caution is understandable: she was at UBS in the run-up to the crisis, when the Swiss bank took tens of billions of dollars of losses on its subprime portfolio.

But even the more cautious investors may change their minds, in time. As long as interest rates stay near historic lows, “anyone will scramble for what yield they can find”, says Bowen, the ex-Citigroup whistleblower, who now lectures on ethics.

He cites the sale of junk bonds in August by Tesla, the trendy carmaker that is still consuming much more cash than it is earning. The $1.8bn deal, which lacks restrictions to stop Tesla issuing more debt whenever it wants to, is “insane”, he says.

For now, loan books are in good shape. At Impac, just a handful of non-QM loans written over the past three years are more than 60 days delinquent, says Ashmore, the CEO. Only one loan is in foreclosure, among about 2,200 in total.

He expects the total nonprime market to increase to $100bn before long. “I believe if I can deliver superior risk-adjusted returns, there’ll be more than enough capital.”

At Citadel, which normally aims a notch or two below the typical Impac customer, in terms of credit score and debt-to-income ratios, there are seven foreclosures among 3,500 or so loans. That has prompted Perl to push out the boat a bit. In August he launched a new loan called “The One”, allowing a self-employed borrower to qualify based on one month’s bank statement rather than the usual 12.

The move has “got everyone a little nervous”, he admits, despite a long list of safety features. But he reckons he has another four to five years of “clear sailing” before the market starts to turn once more.

One regret? Not trademarking “nonprime”, which he thinks he coined five years ago.

As for “subprime”, he never liked it.

“It sounds kind of Neanderthal, doesn’t it? It sounds almost like you’re a monkey and humans are better. But nonprime has a nice ring to it.”

 

Courtesy: Ben McLannahan

GSEs usher in appraisal-free loans

For decades, home appraisals have been a standard feature in a home sale. Now a borrower may no longer need one when buying a house with the nation’s most popular loans.

The government-sponsored enterprises (GSEs) Freddie Mac and Fannie Mae have announced they won’t require a traditional appraisal in some home-purchase deals beginning next month. The enterprises will use big data and their automated tools to confirm the value of select properties.

appraisalsThe GSEs, which finance roughly half of all home loans made by lenders, have accepted automated appraisals in some home refinances. It will be possible to skip a full-blown appraisal in a home purchase for eligible properties after Sept. 1. 

Fannie and Freddie’s initiatives are similar in a number of ways. Sales involving single-family homes and condominiums, including second homes, could be eligible to skip the appraisal. A number of property types won’t be eligible, such as investment properties, two- to four-unit homes, or homes located in previous disaster areas.

To be eligible for an appraisal waiver, borrowers also will have to chip in a healthy downpayment of at least 20 percent on the home.

A new controversy? 

The move could prove to be controversial, however. 

“We have significant concerns about it,” said Jim Amorin, president of the global trade group, the Appraisal Institute. “We think it is going to result in a race to the bottom, create a lot more risk for taxpayers and be a significant issue for the taxpaying public in the not-too-distant future,” he told Scotsman Guide News.  

Amorin said the GSEs have gone down this road before to bad results. In 1994, bank regulators exempted loans sold to Fannie and Freddie from requiring a full-blown appraisal. The GSEs ultimately loosened their standards, and granted appraisal waivers on a significant number of the loans purchased by the enterprises up to the time of the last housing crash and financial crisis, when the GSEs were bailed out and taken into conservatorship.   

“Fannie and Freddie did this in the 2000 timeframe, which led up to the last crisis,” Amorin said. “It is as if everyone forgets the past.”   

Post-financial crisis, the GSEs have required a traditional appraisal on nearly all purchase loans. Since the crisis, new federal rules on the industry have tightened standards to ensure the accuracy of an appraisal, and have kept appraisals at an arm’s length from lenders.

Amorin said Freddie has indicated to the trade group that it could grant waivers on up to 35 percent of its loans, whereas Fannie has been more conservative and less than 10 percent of its loans will be eligible. He said that the industry will continue to push the GSE regulator, the Federal Housing Finance Agency (FHFA), to clamp down on the use of appraisal-free mortgages in property sales. 

“They should be very concerned about using appraisal waivers on purchase-money mortgages,” Amorin said. “If they want to continue to do that on refinancing where there is an established credit history for the borrower… that probably makes some sense,” Amorin said. “On the purchase of a new home, we think it is an incredibly risky venture, when the markets are starting to approach their peak, or beyond their peak. FHFA is doing a disservice to the American taxpayer by allowing this.”

In a June letter to the FHFA, the Appraisal Foundation, which establishes federally-mandated standards for professional appraisers, said it was “a step 180 degrees in the wrong direction.” The organization also said the moves are poorly timed. Fannie and Freddie are rolling out these programs at a time when homes may already be overvalued.  

“Frankly, using ‘backward-looking’ data to project a property’s value based on transactions that occurred at the height of a market creates a recipe for disaster,” the Foundation letter says. 

The Foundation asserted that while live appraisers do use historical data, their expertise is needed to recognize market shifts. The Foundation also expressed concern that Fannie and Freddie don’t appear to have adopted identical criteria to allow for a waiver.  

Appraisal experts told Scotsman Guide News in June that automated appraisals using computer modeling will likely become more common in housing sales. The current technology, however, tends to yield accurate results only for newer houses in neighborhoods with similar property values. These tools are not as successful in evaluating older properties, or in neighborhoods with a lot of variation in the housing stock. Also, automated valuations aren’t likely to work in rural and remote areas with sporadic property sales, where it often is difficult even for a live appraiser to get a handle on the property’s worth. 

Karen Mann, the owner of Mann & Associates and a working appraiser in Discovery Bay, California, said a number of factors that determine a property’s value can be easily missed by statistical modeling, such as if a school district boundary moves. 

“I happen to live in a unique property on the water with my boat floating in the backyard in the Sacramento delta area in a custom home,” Mann said during a telephone interview Wednesday. “Every house in my development is completely different, and one of the contributions to value is how close you are to the area where you don’t have to go 5 miles an hour [in a boat]. We call it fast water. So, how do the statistics account for things that are not identical?” 

Mann, who spoke to Scotsman Guide News on behalf of the American Society of Appraisers, said that the GSEs have been able to do this now because the market has been on an upswing.  

“The appraisers main job is to be the eyes and ears of the lending institution, and we are supposed to blow the whistle if we see issues,” Mann said. “Where many of the lenders are now, there are so few issues. They are not worried about it.  And if they are Ok with [appraisal waivers], well, I guess the appraisers shouldn’t get too upset about it, but we kind of take our job seriously.” 

In a news release on Friday, Freddie said it will use its automated-collateral evaluation tool to determine whether a property is eligible. That system sorts through multiple listing data, historical sales and public records to determine whether the value is in line with a lender’s estimate.

Freddie said that it could save borrowers up to $500 and cut down on closing times by seven to 10 days.

“By leveraging big data and advanced analytics, as well as 40-plus years of historical data, we’re cutting costs and speeding up the closing process for borrowers,” said David Lowman, executive vice president of Freddie Mac’s single-family business. “At the same time, we’re providing immediate collateral representation and warranty relief to lenders.”

This story was updated from the original version to include comments from the Appraisal Institute and American Society of Appraisers. 

Fannie Mae Just Increased What You Can Borrow

Government-sponsored mortgage giant Fannie Mae will raise its debt-to-income limit from 45 percent to 50 percent on July 29, 2017. This would increase the pool of approvable borrowers for home sellers, and allow homebuyers to spend more.

The decision came on the heels of a study that concluded higher DTI ratios don’t increase the rate of mortgage default. Fannie Mae researchers examined over 15 years of data from borrowers with DTI ratios between 45 and 50 percent. They found that many of these borrowers had good credit and were not likely to default.

This change is a big deal, because according to the Washington Post, a too-high DTI is the most common cause of mortgage denial.

Your debt-to-income ratio compares your gross (before tax) monthly income to your total monthly debt payments on all debt accounts. Accounts include auto financing, credit cards, and student loans, plus the projected payment for the new mortgage.

How DTI Affects Your Loan Amount
If you earn $4,000 a month, previous guidelines allowed you to have total payments of $1,800 per month. If you had accounts totaling $700, your housing expense, including mortgage principal, interest, taxes and insurance (PITI) couldn’t exceed $1,100 per month.

After July 29, you’d be able to have payments totaling half of your gross income. If you earn $4,000 a month, you can have bills and housing payments up to $2,000 a month. If your other payments equal $700, you could qualify for a PITI of up to $1,300 a month.

How Much More Can You Borrow?
The new change will let some applicants with DTI ratios over 45 percent borrow more. How much more? That depends on your income and monthly debt.

You can see how allowing higher DTIs would increase what people can borrow. The borrower in the example above, earning $4,000 a month, can spend up to $1,100 a month for housing. Under new guidelines, the borrower can spend up to $1,300 a month.

Assuming that taxes and insurance come to $250 a month, this homebuyer can pay $850 a month for PITI under the old guidelines, and $1,050 under the new ones.

At a four percent mortgage rates, you could borrow $178,000 under the old rule. And $220,000 under the new one. That’s a loan amount over 20 percent higher!

Who Qualifies For Larger Loans?
To qualify for a mortgage with high debt-to-income ratios, you’ll need a strong application. That usually means a substantial down payment, or really great credit scores. Another plus is having savings after you close on your loan — enough to make several months’ mortgage payment if your income stops temporarily.

You’ll know if you qualify in seconds, once your loan officer or broker submits your file for automated underwriting.

That’s the beauty of Fannie Mae’s Desktop Underwriter software. You can get a decision quickly. In addition, your lender can run the program again and again. You can try out several scenarios until you find a way to get approved.

What Are Today’s Mortgage Rates?
Current mortgage rates edged up slightly after James Comey testified and the White House didn’t burn down. Political and economic uncertainty in Europe has been affecting interest rates here, but investors have remained optimistic about US markets.

Stocks ended yesterday with mixed results, changes that you’d not expect to warrant a major change in mortgage rates.

 

by GINA POGOL

 

Fannie Mae announces new programs to break through student loan roadblock

Cash-out refinance, new debt-to-income calculations spur homeownership

Confirming what sources told HousingWire yesterday, Fannie Mae this morning announced a significant expansion of its student loan cash-out refinance program and introduced new policies to help borrowers with student loan debt get qualified for mortgage loans.

“We understand the significant role that a monthly student loan payment plays in a potential home buyer’s consideration to take on a mortgage, and we want to be a part of the solution,” said Jonathan Lawless, vice president of customer solutions at Fannie Mae. “These new policies provide three flexible payment solutions to future and current homeowners and, in turn, allow lenders to serve more borrowers.”

The level of student debt in the U.S. has spiraled over the last decade to $1.4 trillion, effectively locking out millions of potential homebuyers from the market. The new Fannie Mae programs address specific roadblocks that these borrowers face, providing a jump-start to a whole generation of homebuyers.

Fannie Mae’s new solutions include:

  • Student loan cash-out refinance: Offers homeowners the flexibility to pay off high interest rate student debt while potentially refinancing to a lower mortgage interest rate.
  • Debt paid by others: Widens borrower eligibility to qualify for a home loan by excluding from the borrower’s debt-to-income ratio non-mortgage debt, such as credit cards, auto loans, and student loans, paid by someone else.
  • Student debt payment calculation: Makes it more likely for borrowers with student debt to qualify for a loan by allowing lenders to accept student loan payment information on credit reports.

The new student loan cash-out refinance option expands a program Fannie Mae rolled out with SoFi in November. Lawless said the overwhelmingly positive reaction to that program convinced Fannie Mae to broaden its scope.

“We were really testing market reception and we got a lot of interest from consumers and a lot form interest from lenders who wanted to have access to this same type of program. The market reception was such that we were really confident this was needed,” Lawless said.

Fannie Mae created the new programs to help counter the stifling effect student debt was having on the housing market, Lawless said. Many potential borrowers have been unable to get past the debt-to-income threshold to buy their first house, while parents who helped pay for education have also been hit.

“We arrived at these product ideas after seeing the size of student loan debt, which is $1.4 trillion. But there’s another number to pay attention to — $8 trillion in home equity,” Lawless said. “There is enough housing equity in California alone to pay off the student debt of the entire nation. We wanted to find a way to unlock that equity.”

The cash-out refinance allows homeowners to pay off not only their own student debt, but any debt they took on for their kids’ education.

“By tapping into their equity, parents could directly free up the next generation of homeowners,” Lawless said. 

And the change in the debt-to-income calculation is going to be a huge benefit to the industry, Lawless said.

“We spent a lot of time with our customers, who are lenders, hearing their frustrations and looking for new opportunities,” he said. “The biggest challenge today is being able to qualify people with student debt for mortgage loans. It’s exciting to make it easier for lenders and help more people become homeowners.” 

 

Credit: HOUSINGWIRE – Sarah Wheeler

Real estate regulators crack down on individual agent, team branding

California Real Estate Commission warns agents pretending to be brokers

Key Takeaways
State agency cautions agents not to represent themselves as “independent” and reminds brokers to supervise agent advertising.

California’s real estate regulator appears to be getting fed up with agents who mislead consumers into believing they are brokers — and with the brokers that support the practice — and it’s not alone.

What constitutes misleading consumers? It could be as simple as an agent using a fictitious business name ending in “Real Estate” or an agent branding him- or herself as an “independent” real estate professional.

In March, the California Bureau of Real Estate (CalBRE) issued a licensee alert warning that agents who violate these laws — and brokers who let their agents engage in such activities — risk significant fines, license revocations and even criminal prosecution.

Other states are also contending with the gray area of agent branding, and this latest advisory indicates that the issue will continue to be a regulatory focus in the Golden State and beyond.

This year, a South Carolina bill banning the use of “real estate,” “realty” and related terms in agent team names went into effect, while a bill that makes many real estate signs prominently featuring agents (rather than the brokerage) illegal in Michigan was signed by the governor in January.

In general these regulations are designed to protect consumers from getting duped into thinking agents or teams are brokerages, but other stakeholders say these types of rules represent a nationwide push by traditional brokerages to curb the growth of teams and argue that they stifle the personal touch that an agent’s individual branding can convey.

Massachusetts-based broker-owner Gary Rogers, however, expressed his understanding of such legal boundaries: “I do see a lot of illegal signs promoting a team brand and little and sometimes zero mention of the office they work for,” he commented in a related real estate industry Facebook thread.

“Sometimes there’s only one agent on that team, which cracks me up.”

What’s the context for California?

The alert from CalBRE was “supplemental” — it was preceded by a similar September 2015 alert penned by California Real Estate Commissioner Wayne Bell.

Wayne Bell
The second alert was also authored by Bell, along with Special Investigator Mark Tutera, and made clear that the agency was not happy to have to repeat itself by pointing to continued “bad practices” identified in the original alert.

“CalBRE has taken notice of the use by some real estate salespersons of names and designations (and attendant Internet and marketing materials) that suggest to the public — and mislead consumers into falsely believing — that such salespersons are real estate brokers,” the alert said.

They explained that under California’s two-tired licensing system, “real estate salespersons cannot provide — or advertise that they can provide — real estate services independently of their responsible brokers.” Salespersons must also be affiliated with and “reasonably supervised by … a responsible broker in order to engage in real estate licensed activities in California. The law provides no exceptions.”

Supervision includes broker review of the advertising used by the broker’s agents, they added.

Where agents can go wrong

CalBRE specifically outlined two unlawful scenarios the agency said it had seen repeatedly. The first is that an agent, say John Doe, uses a fictitious business name such as “Doe Real Estate” that would lead consumers to incorrectly believe that the business is run by a real estate broker.

“Doe advertises using that business name, and the advertisements are connected to, or accompanied by, a webpage and other materials that extol the virtues of Doe Real Estate,” CalBRE said.

“The public would not think that Doe is a salesperson who must be supervised by another, and would most certainly conclude that Doe Real Estate is a real estate broker or brokerage. And the above practices are unlawful.”

Secondly, many agents continue to brand and identify themselves as “independent” real estate practitioners and practice and advertise as such, the agency said.

Unless those agents are operating as teams and in compliance with state laws governing teams, representing themselves as independent is also unlawful, the agency added.

Teams must disclose the name of the responsible broker, and the team name must include the surname and license number of at least one of the licensee members of the team and use the terms “team”, “group” or associates,” according to CalBRE.

Team names cannot include terms that would lead consumers to believe that the team offers brokerage services independent of a broker, including terms such as “real estate broker,” “real estate brokerage,” “broker,” or “brokerage.”

Industry reactions across states

A petition against the Michigan bill, which requires the brokerage name to appear as 100 percent of the size of an agent’s name on any and all advertising, has gained over 1,000 signatures.

“This law actually decreases competition by putting more emphasis on the broker and less on the agent,” Jackson, Michigan-based Realtor Tim Creech commented on the petition.

“All agents are 1099 self employed and creating brand and image is critical in building our personal identity. This law is unfair and serves no purpose other than creating larger companies controlling business and hurting small business.”

Shaun Simpson, a Realtor from the Midwest, noted on a Facebook thread that Ohio also has an equal prominence rule, but in practice, the regulation isn’t clear cut.

“It is very difficult to define and many violate it,” Simpson wrote. “With DBAs (doing business as) and the like as well as logos, not many have a good understanding. I think equal is difficult for signage and it ends [up] making the signs look more confusing.”

In Tennessee, a bill revised in January requires that all advertising clearly show the brokerage’s firm name and telephone number.

Nashville-based Kathryn Royster of Houselens indicated that the disruption such laws bring to agents’ business is temporary. “It caused some significant but one-time headaches for a number of our customers who had to redo their business cards, signs, etc.,” she noted.

BY: ANDREA V. BRAMBILA

Disciplinary Advisory to Real Estate Salespersons Who Mislead Consumers into Falsely Believing that They are Brokers

In September 2015, the California Bureau of Real Estate (CalBRE) issued an advisory which was captioned “Disciplinary Warning to Real Estate Salespersons Who Act, Conduct Themselves, and/or Advertise as ‘Independent’ Real Estate Professionals — and a Simultaneous Caution to Brokers Who Allow or Support Such Practices”.  

(http://www.calbre.ca.gov/files/pdf/adv/Independent%20Real%20Estate%20Professionals.pdf)

Licensees of CalBRE are well advised to review that prior advisory since we continue to see some of the same bad practices identified in that writing.

This discipline “advisory” is being issued as a supplement to that prior warning since CalBRE has taken notice of the use by some real estate salespersons of names and designations (and attendant Internet and marketing materials) that suggest to the public – and mislead consumers into falsely believing – that such salespersons are real estate brokers.

A scenario that we have repeatedly seen is the use by a salesperson (who for this illustration we will identify as John Doe) of a fictitious business name that would lead members of the public to incorrectly believe that the business is operated and managed by a real estate broker. In this example, salesperson Doe conducts business using the name Doe Real Estate.  Doe advertises using that business name, and the advertisements are connected to, or accompanied by, a webpage and other materials that extol the virtues of Doe Real Estate.  The public would not think that Doe is a salesperson who must be supervised by another, and would most certainly conclude that Doe Real Estate is a real estate broker or brokerage.  And the above practices are unlawful.

In addition to the above, many salespersons continue to brand and identify themselves as “independent” real estate practitioners, and they practice and advertise as such.  Unless those salespersons are operating as “teams”, in full compliance with the California laws and rules pertaining to teams (e.g., the disclosure of I.D numbers and the name of responsible broker, and the surname of at least one of the licensee members of the team along with the use of the terms “team”, “group” or associates” with regard to the team), that is unlawful as well.

Further, and depending on the specific language employed with respect to the name(s) and designation(s) used by the real estate salespersons, there might be a violation of the law relative to the use of fictitious names.  Please see the prior guidance given by CalBRE on the proper use and licensing of fictitious names.

As was also stated in the prior warning, under California law, with its two-tiered licensing system, real estate salespersons cannot provide – or advertise that they can provide – real estate services independently of their responsible brokers. 

Likewise, salespersons must be associated or affiliated with, and be reasonably supervised by (which supervision includes broker review of the advertising used by the broker’s salesperson or salespersons pursuant to Commissioner’s Regulation 2725(e)) a responsible broker in order to engage in real estate licensed activities in California.  The law provides no exceptions.

CalBRE will take appropriate disciplinary action (including the imposition of significant fines, and  – where appropriate – the revocation of licensure) against real estate salespersons who engage in the unlawful activities discussed above, and against real estate brokers who permit their salespersons to engage in such activities.

 

By Wayne S. Bell, California Real Estate Commissioner and

Mark Tutera, Special Investigator

Mega-mansions in this L.A. suburb used to sell to Chinese buyers in days. Now they’re sitting empty for months

The mansion on Fallen Leaf Road in the secluded Upper Rancho neighborhood of Arcadia has all the trappings a wealthy buyer from China could want: a crystal chandelier in the entryway, marble floors, a home theater outfitted with a dozen reclining leather chairs and, naturally, a fortuitous eight bedrooms and eight bathrooms.

At $9.8 million, the recently built property is a relative bargain. A similar-sized home in Beijing would cost twice as much.

 

Other real estate agents in the area report luxury homes geared toward Chinese buyers taking up to half a year to unload.

“All agents are crying that the money isn’t coming,” said Sanne Lee, an agent for A + Realty & Mortgage in Rowland Heights.

At the same time, high-end home seekers who plan to take out loans now have a fighting chance as they compete against a smaller pool of cash buyers.

The turnaround in activity, industry officials say, is directly linked to policies in China.

The San Gabriel Valley, long the destination of Chinese home buyers looking to provide their families a better living environment as well as safeguard their wealth in American assets, is feeling the effects of Beijing’s crackdown on capital flight.

Chinese citizens, wary of a faltering economy, have been pouring money abroad, fueling a buying spree of overseas assets in recent years that has pumped up property values from London to Los Angeles.

Though Chinese policymakers generally favor diversifying the country’s wealth into foreign holdings, they were unprepared for the magnitude and speed of the outflows. In order to invest overseas, Chinese citizens must dip into the country’s foreign exchange reserves. Those reserves peaked at $4 trillion in 2014 but have since dwindled by a staggering $1 trillion.

That has left the nation’s cache of foreign currency at its lowest level in almost six years — troubling a government in Beijing that needs the money to stabilize its currency and maintain good standing with the International Monetary Fund.

To defend against capital flight, Chinese regulators allow citizens to take out only $50,000 a year. But that’s been largely ignored and circumvented, often by asking dozens of friends and family to exercise their quota on someone else’s behalf. 

“It’s like ants moving rice,” said Helen Chen Martson, a San Gabriel Valley real estate agent for Keller Williams.

The deluge in Chinese money made it exceedingly hard for local buyers to compete. 

It took Yeling Tsai, a doctor with a private practice in Alhambra, three years to buy a house after looking all over the San Gabriel Valley. He and his wife grew deflated after attending crowded open houses in Arcadia and San Marino, where Mandarin-speaking competition almost always made all-cash offers. The couple had five bids rejected.

“It was really frustrating,” said Tsai, 44, a Taiwanese immigrant who ended up paying $200,000 over asking price for a $1.5-million home in South Pasadena. “I think I make a good living. But even being a doctor, I couldn’t afford some of these houses because people were buying them like Starbucks coffees.”

But starting in 2015, Chinese banks began scrutinizing requests for foreign currency to ensure transactions were being used for legal business purposes. Regulators also increased their enforcement efforts given the many creative ways money is siphoned out — be it by forging trade invoices, smuggling jewelry and luxury watches out or even faking legal disputes to get cash into the hands of overseas lawyers.   

Then on Dec. 31, China’s State Administration of Foreign Exchange, which swaps Chinese yuan for dollars, issued some of its strictest guidelines yet. Customers now have to pledge not to invest in foreign property and provide a detailed account of how foreign funds will be used. They also prohibited customers from taking foreign currency out for someone else.

The rules could have broad implications around the world for any city exposed to Chinese real estate investment such as Vancouver, Sydney and more recently, Seattle.  

Few, of course, are as exposed as Southern California, where Chinese home buyers have expanded their reach beyond the San Gabriel Valley in the last decade to Orange and Riverside counties.

“Chinese policymakers realize that, without significant capital controls, the foreign reserves will continue depleting,” said William Yu, an economist at UCLA. “But those controls mean the Southern California real estate market, especially for luxury homes, will be less active because that money is stuck in China.”

Even before the new guidelines, signs were pointing to a slowdown in the kind of exuberant Chinese buying activity that sparked a frenzy in the San Gabriel Valley three years ago.

Cash purchases of homes — a loose proxy for wealthy Chinese buyers because they tend to pay in full — fell to 344 in Arcadia last year from 461 in 2014, according to real estate data firm CoreLogic. 

In San Marino, cash sales stood at 86 last year, down from 103 in 2014. And in Alhambra, cash purchases have fallen from their peak of 208 in 2015 to 130 in 2016.

All told, cash sales in the San Gabriel Valley declined 17% between 2014 and 2016. In L.A. County, cash sales fell 12% over the same period.

The declines come even though all home sales grew by 5.7% in the San Gabriel Valley and 6.9% in L.A. County during that time.

Median home prices have dropped in Arcadia to $930,000 at the end of last year from about $1.1 million at the start of 2015. In San Marino, the median price for a home was $2.5 million as recently as the second quarter of last year before tapering to $2.2 million by the fourth quarter.

The slowdown isn’t necessarily a bad thing, said Ann Sung, founder of Chateau Group, a luxury developer headquartered in Arcadia, who believes the pace of sales in 2014 was unsustainable.

“Cash sales in two weeks with 15-day escrows is abnormal,” Sung said. “People were buying blindly. The market is now normalizing.”

The drop in cash sales has also allowed more traditional home buyers with loans to crack into exclusive markets such as San Marino, local agents say.

“Domestic buyers can now purchase here and not get blown out of the water” by Chinese money, said Brent Chang, who works alongside his mother, Linda Chang, a real estate agent in San Marino since the 1970s.

The duo say the slowdown in buyers from China began at the end of 2014. Houses that used to get 15 offers now get about half that. Prospective Chinese buyers have recently asked for six-month escrow periods rather than the usual 30 days to accumulate funds. The hope is that their all-cash offers are enough to entice sellers to wait.

Those long waits are also taking place in Arcadia, a city of 60,000 (60% of whom are Asian) that  epitomizes the Chinese mansionization phenomenon.

Across the city, 1940s ranch-style homes were sold, torn down and replaced with hulking, multimillion-dollar European-style mansions designed by a handful of Chinese American firms. The emergence of the new properties became so divisive, the City Council introduced regulations last year limiting the size of new homes. 

“We ended up with a bunch of homes purchased with no one living in them,” said former Arcadia Mayor Mickey Segal, echoing concerns that some of the properties were merely intended for investment to the detriment of the community.

Today, agents say the city is left with a surplus of luxury properties whose sellers could face pressure to reduce prices. One agent said her client had to drop his asking price for a property in Arcadia last summer to $8.3 million from $10 million because it drew no interest for three months. 

Chou, the agent for the Fallen Leaf Road mansion, is more optimistic. It’s only a matter of time, she said, before Chinese buyers overcome the new capital controls in the perpetual cat-and-mouse game with regulators. The desire to invest abroad is an unstoppable force as many Chinese with means worry about their country’s slowing economy, weakening currency and oversaturated real estate market. 

Moreover, her clients feel an obligation to relocate their spouses and children to the U.S. for better educational opportunities and to escape the pollution that envelopes much of China. 

“Rich people,” said Chou, an immigrant from Taiwan who has lived in Arcadia for more than 30 years, “will always find a way to get their money out.”

 

Courtesy: David Pierson  LA Times

Remodel or replace? Top 10 ROI opportunities in popular home improvement projects

  • ‘Greige’ (subtle yet powerful) improvements pay off the best.
  • This year’s report reflects continued optimism for the housing market.
  • Replacements beat remodels and exteriors beat interiors.
The 2017 Cost vs. Value report by Remodeling magazine documents the national and regional costs and ROI (return on investment) for 29 popular home improvement projects.

Overall, these 29 improvements paid back 64.3 cents on the dollar in resale value.

What that says to the homeowner is that spending money to sell a home requires research.

The goal of improvements from a seller’s standpoint is to attract buyers and achieve top dollar on a listing. But finding the balance between updates and return isn’t that simple.

In a seller’s market, spending (significant amounts of) money on improvements for resale may not translate to added value. As the tide turns to a buyer’s market in the next year or so, agents will need to carefully track ROI numbers to advise sellers.

Those surveyed about the return on remodeling projects were licensed agents, so Remodeling Editor-in-Chief Craig Webb says the report is a reflection of confidence in the industry:

“I think that this year’s Cost vs. Value report actually reflects the general optimism that both remodelers and Realtors have about the state of the housing economy. We are building more and more homes, slowly in this country, but that’s rising. Remodeling activity is as active as it’s ever been in history. And so, consequently, the prospects are good for everyone involved in the process: the consumer, the remodeler, the Realtor.”

Remodeling 2017 Cost vs Value Report. Graphic by Maci Hass, Redefy

Why the top 10 doesn’t matter

National numbers don’t really mean anything to the individual homeowner.

Improvements that pay off (or not) depend on the same three factors that affect home prices: location, location, location.

Agents should drill down to regional or city numbers in this study to find more applicable ROI numbers.

“There’s variation by projects and variations by the cities,” Webb explained. “Sometimes it’s labor and sometimes it’s the perception of Realtors.”

That being said, there are some interesting national trends that may impact homeowners locally. Note that these projects are broken down into mid-range and upscale categories to account for building materials and finishes.

Subtle changes pay off

The No. 1 trend in this year’s numbers is that the subtle changes make for the biggest return on investment.

Remodeling compared these minor improvements to painting with “greige” — the popular mix of gray and beige that’s a subtle but wildly popular color this year.

The two highest percentage returns nationally came from low-ticket improvements under $2,000: attic insulation came in no. 1 at 107.7 percent, followed by entry door replacement (steel) at 90.7 percent.

Look outside first

Projects that spoke to curb appeal had overall larger returns than improvements inside the home.

Garage doors garnered 76.9 percent ROI for mid-range and 85 percent for upscale replacements.

Entry door replacements in both mid-range and upscale (fiberglass) received greater than 77 percent ROI.

Windows at both levels gained at least 73 percent ROI. Siding was also a winner at 76.4 percent.

The bronze medalist in the top 10 is stone veneer — because it’s become so authentic-looking for a fraction of the cost of the real stuff.

Replacements win

Projects that involved a total replacement — such as windows and doors — scored high among the real estate professionals surveyed.

The takeaway for homeowners is that a broken or seriously outdated door should probably be replaced, even if the return is not 100 percent.

The same goes for old single-pane windows. This speaks to curb appeal as well as the first impression of a well-maintained home.

Biggest losers

Year over year, the trends show that mid-range and upscale additions (except decks) saw less than 62-percent returns overall.

This doesn’t make one of these projects a “loser,” per se, if it makes life in your home better. Just don’t expect to make big money here.

There are two reasons to add on regardless of return.

First, the homeowner simply needed more room well before they were prepared to sell.

Second, the home was disproportionate to those around it (for example, a one-bath in a neighborhood full of two- and three-bath homes).

The biggest low-return project was a $12,860 backup power generator at 54 percent ROI. (It seems there are few believers in the Zombie Apocalypse.)

The second-runner-up loser is a $51,935 backyard patio at 54.9 percent ROI; the project includes 20×20 flagstone patio, sliding door, stone-veneer-surround outdoor kitchen, a gas-powered firepit, pergola and lighting. (Perhaps the lack of hot tub for that spend was the deciding factor.)

Surprise! (Not surprised)

If you were to guess what buyers want, I’d put money down that most people would say updated kitchens and bathrooms.

What’s surprising here is that a minor kitchen remodel at $20,830 could make the Top 10, but a minor bathroom remodel, which cost $18,546, had a surprisingly low 64.8 percent return.

A closer look reveals that in the kitchen, the cabinets were simply refaced, but all the appliances were replaced with stainless, energy-efficient models.

In the bathrooms, the replacements were pretty standard fare.

Both the bathroom and kitchen remodels with spends over $50,000 returned less than 65 percent (not surprised). Because these rooms are highly personal, spending a lot on one specific style could actually turn off buyers.

New trend: Multi-generational living

One new project that didn’t make the Top 10 but may become a growing attraction is a “universal design bathroom.” This bathroom includes such features as a walk-in shower, support bars and a wheelchair-accessible sink.

“Baby boomers are getting older and they’ve decided, for the most part, that they don’t want to move,” said Webb.  “That means that they’ve asked themselves ‘Well, what does it take to live here?’ and ‘What do we want to do to change?’ Sometimes it’s putting the bedroom on the first floor, or putting in a walk-in shower.”

Pew Research census analysis showed that 60.6 million people are living with multiple generations under one roof, the highest percentage since 1960.

It’s not unreasonable to speculate that the rising cost of housing and care will see more boomers and Gen-Xers bringing aging parents into their homes; at the same time, millennial children loaded with student loan debt are moving back in to save for their own homes.

Getting what you paid for

Although all but one project on this Cost vs. Value report showed a profit-generating ROI, you could argue that not updating key rooms such as bathrooms, kitchens and front exteriors produces a greater negative result. How many buyers wants a “handyman special”?

As housing prices start to dip, this will come into play even more.

It’s a difficult lose-lose for some sellers who can’t afford significant updates but need to make money on their house. They’ll need some expert guidance to make strategic and cost-effective choices.

Best ROI by region

Regional patterns have remained the same year over year. The nation’s hottest market is the Pacific region, with overall returns at 78.2 percent and 10 projects with at least 90 percent ROI.

Conversely, slow markets in the Midwest brought in the lowest overall returns at 54.9 percent and no paybacks over 80 cents on the dollar.

“If you go to San Francisco, 21 of the 29 projects have a return over 100 percent,” Webb said.

“But if you go to Indianapolis, or the entire states of Wisconsin, Michigan, Iowa, Illinois, Nebraska and Kansas, there’s not a single project over 100 percent. However, all 29 projects returned over 100 percent in at least one region of the country.”

Chris Rediger is the co-founder and president of Redefy Real Estate. Learn more about Chris and Redefy on Twitter or Facebook.

Email Chris Rediger.

 

Strengthen Your House 2017 HOMEOWNER REGISTRATION IS OPEN.

CLICK HERE TO REGISTER NOW.

 Would you like to receive up to $3,000 toward an earthquake retrofit of your house? The Earthquake Brace + Bolt (EBB) program provides homeowners up to $3,000 to strengthen their foundation and lessen the potential for earthquake damage.

Many homeowners will decide to hire a contractor to do the retrofit work instead of doing it themselves. A typical retrofit may cost between $3,000 and $7,000 depending on the location and size of the house, contractor fees, and the amount of materials and work involved. If the homeowner is an experienced do-it-yourselfer, a retrofit can cost less than $3,000.

The EBB program relies on adherence to the California Building Code, Appendix Chapter A3. Chapter A3 is a statewide building code that sets prescriptive standards for seismic retrofits of existing residential buildings.

Chapter A3 allows:

  1. the building department to approve the retrofit for a house with a 4-foot or shorter cripple wall, without requiring plans prepared by a registered design professional (architect or engineer).
  2. retrofits for houses with cripple walls higher than 4-feet with plans prepared by a registered design professional.

Surrounding the crawl space under the first floor, many houses have a short wood framed wall (“cripple wall“) that needs to be strengthened to prevent the house from sliding or toppling off of its foundation during an earthquake. Strengthening involves adding anchor bolts and plywood bracing in the crawl space.

More information on qualifying retrofits.

CRAWL SPACE VIEW

 

 

EBB is limited to funding residential retrofit expenses in the crawl space that:

  • Bolt: add anchor bolts and sill plates in the crawl space to improve the connection between the wood framing of the house and its concrete foundation to help keep the house from sliding.
  • Brace: strengthen the cripple walls in the crawl space with plywood will help keep the house from toppling off of the foundation during an earthquake. Strengthening cripple walls enables them to function as shear members, significantly protecting the house from collapsing.
  • Strap and Brace the Water Heater: properly strap and brace the water heater to reduce the likelihood of water and fire damage, and to protect the water supply.

Houses that meet Chapter A3 specifications are typically:

  • wood-framed construction built before 1979
  • built on a level or low slope
  • constructed with a 4-foot (or less) cripple wall under the first floor OR
  • constructed with a cripple wall between 4 feet and 7 feet (requires an engineered solution) 
  • have a raised foundation
 

HOMEOWNER REGISTRATION IS OPEN NOW

 

SELECTION AND NOTIFICATION PROCESS

Homeowners will be notified via email if they have been selected or if they are on the wait list. Selected homeowners will receive detailed information and next steps for participation in EBB. To register, scroll back to the top of the page and click the “Register” button to begin the process.

 

APPLYING FOR THE EBB PROGRAM

 Registration is no longer open. Once registration is reopened, Homeowners interested in participating in EBB must:

  • Own a house located in a designated ZIP Code
  • Create an online account and complete registration as a homeowner
  • Only one registration per house
  • Ensure your house is eligible by answering all qualification questions and reviewing the Program Rules.
    • Your house must have less than a four-foot cripple wall to use a prescriptive plan set
    • If your house has a cripple wall between 4-feet and 7-feet you must use an engineered solution. 

 

SELECTION AND NOTIFICATION PROCESS

When Registration is closed participating homeowners will be selected through a random drawing.

Homeowners will be notified via email if they have been selected or if they are on the wait list. Selected homeowners will receive detailed information and next steps for participation in EBB.