Items of interest:
James R. Hagerty & Michael Corkery / Wall Street Journal:
How Hidden Incentives Distort Home Prices -- As the housing market slump deepens, disguised discounts are making it harder to tell exactly how much people are paying for homes.
Buyers, sellers and other market participants typically monitor fluctuating home values through sale records that legally have to be listed with county clerks. But incentives offered to buyers -- ranging from free cars or furniture to cash rebates -- are making those prices less reliable as a sign of what buyers actually paid, netting out the giveaways. And that may be misleading lenders and people shopping for homes, some real-estate lawyers and appraisers warn.
KB Home in January sold a new townhome with green siding in the Denver suburb of Parker for $196,000, according to the deed recorded with the Douglas County clerk. But a disclosure form provided to the buyer and seller of a particular property, which isn't part of the public record, shows that home builder KB paid $27,600 to another company, which made a cash payment to the buyer. Netting out that effective discount, the price was $168,400. [...]
discussion: The Big Picture
Fed Plans to Tighten U.S. Mortgage Rules After Crisis -- The Federal Reserve proposed new rules for subprime mortgages, including a ban on low- documentation loans and limits on penalties for borrowers who prepay their debts.
The plans, the Fed's biggest regulatory initiative since Chairman Ben S. Bernanke took office in February 2006, are aimed at curbing lending practices that contributed to record foreclosures. Board members unanimously voted in a hearing today to make lenders responsible for determining whether borrowers can afford their mortgages even after low starter rates expire.
``Mortgage-market discipline has in some cases broken down and the incentives to follow prudent lending procedures have, at times, eroded,'' Bernanke said at the meeting. The proposed new rules ``were carefully crafted'' to deter ``improper lending'' without ``unduly restricting mortgage credit availability,'' he said. [...]
discussion: The Big Picture -- The Fed slams the barn door shut [...]
USA Today: Fed plan reins in dicey mortgage policies
It’s A Strange Christmas In California -- Sales of Southern California houses in November fell by 43% from the year before, while median prices fell 10%. [...]
Marginal Revolution: The scope of mortgage fraud
Is Zillow in Freefall? -- Much heralded real estate search and valuation service Zillow seemed perfectly timed for the last two years, and now it seems, well .... vaguely embarrassing. [...]
Editorial / New York Times: Fed Inaction Led to Present Problems
Brian Wingfield & Liz Moyer / Forbes: The Fed's Difficult Choices
William Buiter / VoxEU: Lessons from the Recent Credit Crisis