The following is a real estate news roundup:
HUD still trying to end seller-funded loans
The Bush administration is again moving forward with a proposal to ban seller-funded down-payment assistance for FHA-backed loans, reopening the public comment period on the plan for 60 days. The Department of Housing and Urban Development was forced to reopen an administrative proceeding on the rule change after a judge ruled it did not adequately explain its reasons for reversing past policy on seller-funded loans — a practice it defended as recently as 2005 (see Inman News story).
Now HUD argues that the loans artificially inflate home prices and are three times more likely to end up in foreclosure. In a speech Monday to the National Press Club, Assistant Secretary for Housing Brian Montgomery said that HUD had $4.6 billion in unanticipated losses — mostly due to increased seller-funded loans — and could require taxpayer assistance to continue operating for the first time in its 74-year history if it is not permitted to take action to mitigate its losses. No private mortgage insurance companies back such loans, Montgomery said, which now account for one-third of FHA’s guarantee portfolio.
Nehemiah Corp. of America, one of three nonprofits that sued HUD in order to continue their seller-funded down-payment assistance programs, issued a statement saying the loans have been "enormously successful" in helping low- to middle-income families become homeowners, and calling HUD’s decision to move forward with a ban "astonishing."
Home inspectors’ group introduces ‘Bill of Rights’
The American Society of Home Inspectors has created a "Bill of Rights" that is derived from the group’s Standards of Practice and Code of Ethics, according to an announcement today.
The group, founded in 1976, announced that its Client Bill of Rights is focused on protection for members’ clients and provides that the inspector "is objective in his or her reporting and will not knowingly understate or overstate the significance of reported conditions," and that "the inspector has no financial interest in the transaction," "is not receiving compensation for the inspection from any other party," and "did not compensate the real estate agent or other party for the referral to the client."
CalPERS rolled dice on troubled housing project
CalPERS has revealed that it purchased a majority interest in the troubled company developing Newhall Ranch — a master-planned community of 20,000 homes and 5 million square feet of commercial space in Southern California — after the value of the company’s assets had dwindled but before it filed for bankruptcy. The California Public Employees’ Retirement System paid $947 million for a two-thirds interest in troubled LandSource Communities Development LLC in January, after the value of company’s assets had dwindled from $2.6 billion in late 2006, the Sacramento Bee reported.
LandSource filed for Chapter 11 bankruptcy protection Sunday, two months after defaulting on a $960 million loan. CalPERS says its investment in the project represents a small fraction of its $245.4 billion in assets. The pension fund was advised by MacFarlane Partners of San Francisco, which has also involved CalPERS in lofts in downtown Sacramento and a retail plaza in Los Angeles, the Bee said.
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