Editor’s note: The following stories, published this year by Inman News, describe some of the most momentous events impacting the real estate industry in 2008. For more news highlights, click to view "2008: The Year of the Bailout," an Inman News Special Report. (Inman News will not publish on Thursday, Jan. 1, and Friday, Jan. 2. Happy New Year’s to all of our readers.)
The Federal Reserve and federal government worked to lessen the impact of a financial disaster in 2008 through a series of unprecedented actions that included pumping hundreds of billions of dollars into banks and other financial companies and the takeover of secondary mortgage giants Fannie Mae and Freddie Mac.
Following is a list of 10 top news stories in 2008:
The federal government took over Fannie Mae and Freddie Mac in September, a drastic move intended to keep the government-sponsored entities afloat and restore some stability for the credit market.
The story noted, "The government takeover of mortgage financiers Fannie Mae and Freddie Mac could mean lower interest rates for many borrowers but is unlikely to solve one of the biggest problems of the credit crunch: the shrinking number of people who can get a loan in the first place."
After it was voted down in the U.S. House of Representatives the first time around, Congress in October approved a revised $700 billion spending bill that was intended to buy up bad assets from financial companies. Treasury Secretary Henry Paulson soon after announced a change in course for the spending plan, and proceeded to buy preferred stock in dozens of banks.
Congress’s earlier passage of sweeping reforms for the mortgage sector — in the form of HR 3221, the Housing Rescue and Foreclosure Prevention Act of 2008 — would be dwarfed by this more drastic federal legislation and other actions. HR 3221 authorized a $300 billion expansion of Federal Housing Administration loan guarantee programs, and a $7,500 tax credit for first-time homebuyers that functions as an interest-free loan, among other provisions.
U.S. home prices dropped at record rates in 2008, according to several industry gauges, as waves of foreclosures pulled down home values. The National Association of Realtors reported in December 2008 that the median price of U.S. resale homes is expected to fall 9.3 percent for the year, and rising unemployment is expected to fuel more foreclosures.
"A record one in 10 home loans were delinquent or in foreclosure at the end of September, some 2.2 million homes are expected to enter the foreclosure process in 2008, and with the economy deteriorating the outlook for next year is worse," according to the article, citing a Mortgage Bankers Association report.
The U.S. Justice Department and National Association of Realtors in May agreed to a settlement that resolves a three-year antitrust legal battle. NAR is rolling out a new policy for the operation of Virtual Office Web sites, or sites that offer up property listings information provided by multiple listing service participants.
Consolidation struck the real estate brokerage and lending industries in 2008. GMAC Home Services LLC — one of the largest U.S. real estate brokerage companies, was bought up by Canada’s Brookfield Residential Property Services, which operates the Royal LePage brand and other real estate brands in Canada.
Meanwhile, the pool of major lenders shrunk in 2008 through a series of bank deals: Bank of America acquired Countrywide Financial Corp.; JP Morgan Chase got Washington Mutual Bank; and Wells Fargo & Co. acquired Wachovia corp.
Help-U-Sell, a pioneer in flat-fee real estate services, in 2008 entered Chapter 11 bankruptcy proceedings, and few brokerage companies and real estate tech companies were immune to the impact of the meltdown in the financial markets and the dramatic housing downturn.
Despite its rapid rise as one of the most popular real estate sites since its launch in 2006, real estate valuation and information site Zillow reported in October that it was laying off 40 employees, or 25 percent of the company’s work force, in anticipation of a prolonged economic slump. High-tech brokerage company Redfin, likewise, announced that month that it laid off about 20 percent of its employees. Brokerage giant Realogy Corp. is carrying a large debt load from a heavily leveraged buyout deal last year by an affiliate of private-equity firm Apollo Group.
In a major consolidation for the title industry, Fidelity National Financial Inc. acquired LandAmerica’s underwriting companies through a bankruptcy process. The deal gives Fidelity control of about 45 percent of the U.S. title insurance business.
The U.S. Department of Housing and Urban Development proposed a series of changes to the Real Estate Settlement Procedures Act, though major industry groups are suing to block implementation of the RESPA changes.
In a landmark case at the intersection of housing-discrimination law and Internet freedoms, online classified and community site craigslist.org was deemed not liable for housing ads posted at the site that contained discriminatory language. In a separate case, a judge ruled that Roommates.com can be held liable for violations of the Fair Housing Act because of its role in collecting and disclosing information provided by users.
CALMLS, a statewide multiple listing service initiative sparked by the California Association of Realtors, brought aboard a board and a leader in 2008. The effort is one of several examples of MLS efforts to improve data-sharing across MLS boundaries. The National Association of Realtors also pushed forward in 2008 with plans to launch a nationwide database of real estate information.
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