“Making You Look Good is Our #1 Priority ”
It looks like it is finally starting to look like winter. We are now close to year’s end and it is time to reflect on the past year and highs, lows and changes. We certainly saw changes with the “Know Before You Owe” or “TRID” changes! We at CSS wish all of you Happy Holidays and a Happy New Year!
Everyone is making their 2016 predictions for the housing and lending market. Below are predictions from CoreLogic and Freddie Mac.
CoreLogic: According to CoreLogic, the U.S. will enter an eighth consecutive year of expansion in the second half of next year. “Most forecasts place growth at 2 and 3 percent during 2016, creating enough jobs to exert downward pressure on the national unemployment rate,” said Frank Nothaft, senior vice president and chief economist at CoreLogic.
Nothaft predicts that housing can expect to see these five features next year:
1. Interest rates will increase
Homeowners who have adjustable-rate mortgages or home-equity loans will most likely see a rise in their interest rate because the Federal Reserve is expected to raise short-term interest rates approximately one percentage point between now and the end of 2016 and fixed-rate mortgages will also rise. Despite this, mortgage rates will remain historically low.
2. Household formations will significantly add to housing demand
More than 1.25 million new households will be formed in 2016 due to improvements in the labor market and lower unemployment rates, increasing the housing demand, specifically in the rental market.
3. Rental homes will continue to be in high demand
Rental vacancy rates are at or near their lowest levels in 20 years, and rents are rising faster than inflation. High demand for rental homes—both apartments and houses—will likely continue in 2016.
4. Home sales and home prices will likely increase
Overall purchase demand may increase 2016 home sales to the best year since 2007. Nationally, home prices will likely rise at a quicker rate than inflation, but not at the same rate as last year. This increase in home sales and home prices can be attributed to the improved economy, which has enhanced homeowners’ feelings of financial security.
5. The dollar volume of single-family mortgage originations will fall around 10%
The single-family mortgage origination decline will occur even though home equity lending is expected to rise and originations of home purchase loans will likely rise about 10% in volume next year. Single-family mortgage originations are expected to fall and multifamily originations will likely rise.
Freddie Mac: Freddie Mac does not believe that mortgage interest rate will increase immensely in 2016. Freddie Mac’s chief economist, Sean Becketti, said that interest rates should remain at “historically low levels” throughout 2016, in spite of whatever moves the Federal Reserve is expected to make.
Here are its five more housing predictions for 2016:
- Expect the 30-year fixed-rate mortgage to average below 4.5% for 2016 on an annualized basis
- Gradually higher mortgage interest rates will present an affordability challenge, but expect a strengthening labor market and pent-up demand to carry 2015’s home sales momentum into 2016
- Expect house price growth to moderate a bit to 4.4% in 2016 driven in part by the reduction in homebuyer affordability and reduced demand as a result of Fed tightening
- Housing activity will grow in 2016 despite monetary tightening. Expect total housing starts to increase 16% year-over-year and total home sales to increase 3%
- While home purchases will increase next year, higher interest rates will reduce the refinance volume pushing overall mortgage originations lower in 2016 than in 2015
Legal News and Case Law:
Flat Recording Fee: We are still following the proposed legislation for a flat recording fee. Under the proposed bill, there would be a flat $35 recording fee for documents. Many proponents of the bill believe that a flat fee of $35 is reasonable and that it enables the Registrars to process documents more quickly with less chance of rejection due to erroneous monetary remittance, and that it helps with the new TRID changes. However, there are some that are concerned with the increase in fees, as a document/lien that had always cost them $14.00 to record would now be $35.00. We will update you as we receive more information.
Restrictions: In Conlin v. Upton, the Michigan Court of Appeals heard a case regarding restrictions that an Association created affecting lots still owned by the Developer of the property development. The Developer (Plaintiff) owned 11 undeveloped lots that it wanted to sell to third party buyers. The Association (Defendant) adopted bylaws that required the lot owners to submit plans to the Association’s architectural review committee for approval prior to any new construction or renovation, but the Developer did not consent to these bylaws which included the restrictions. The Developer sued, in part, to prevent” the Association’s officers (the Defendant-Officers) and the Association “from enforcing the bylaws in a way that restricts their right to develop their lots.” The trial court issued a judgment in favor of the Defendant and the Developer appealed. The Michigan Court of Appeals vacated the judgment and remanded back to the trial court. It held that the bylaws violated the “state’s common law requirement that covenants and restrictions be unanimously approved by all the affected property owners to the extent that the bylaws impose burdens on the individual members’ real property beyond those expressly provided in the covenants recorded in 2001.” The court directed the trial court on remand to enter an order “declaring that the 2001 covenants and restrictions did not give the Association the authority to burden the lots with additional restrictions and did not give it the authority to add restrictions with less than unanimous approval.
Corporate Settlement Solutions has many Michigan branch offices to serve you—Traverse City, Suttons Bay, Elk Rapids, Charlevoix, Bellaire, and Mt. Pleasant in addition to providing services throughout the eastern United States.
Maura A. Snabes, Esq., CES®, CLTP – Sr. Underwriting & Compliance Counsel
Phone: (231) 547-5220×102/802 Bridge St., Charlevoix, MI 49720
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