In a new episode of the Real Estate Insiders Unfiltered podcast, hosts James Dwiggins and Keith Robinson sit down with Pete Mills, senior vice president of housing policy and industry engagement at the Mortgage Bankers Association (MBA), to talk about housing prices. discuss the crisis. In today’s complex real estate market.
The group also discusses factors such as changes in interest rates. Changes to U.S. Department of Veterans Affairs (VA) Loan Programs Following National Association of Realtors Commission Litigation Settlement. Buyer Agent Compensation for Interested Party Contributions (IPCs) through Fannie Mae and Freddie Mac. Kamala Harris’ housing project. and general financial issues that plague buyers and sellers in the market. Mills also provides insight into how local governments are combating inventory shortages and slow home sales.
The trio begins the conversation by diving into Mills’ background and experience. Mills graduated from the University of California, Berkeley with a degree in economics. After graduating from college, I worked in the Research and Economics Division of the Federal Reserve Board in Washington, DC. Mr. Mills was assigned to lead the Mortgage and Consumer Finance division, which began his 40-year journey in the industry. This was followed by a career path in the private sector, including California MBA and Countrywide Financial.
The first topic of discussion will consider the difference between concessions and stakeholder contributions, and whether the compensation is built into the offer or paid during the closing process. Mr. Mills confirms that if the seller pays the buyer’s agent commission throughout the closing process, the IPC will be largely unaffected. Robinson then asked Mills if he would allow the buyer to cover the agent’s fees. Mills explains that buyers will face higher loan costs, loan-to-value ratios and mortgage insurance premiums.
“Their initial capital position is being eroded, and that’s going to increase the cost of foreclosure and default through the system,” Mills said. “So there are a lot of challenges in this area, and until we see a really compelling need to do something in that area, we don’t know if it’s a good option.”
Mills points out that buyers still need an agent, whether they can afford it or not, and the trio agrees that sellers should pay buyer agent fees. Still, they point out that veterans, ethnic minorities and low-income buyers could suffer under the new system.
Robinson explains that if a seller chooses to accept a financed down payment rather than a standard cash offer, they are technically still financing the fee. Dwiggins also points out that sellers can save money by asking buyers to set their own commission rates, since buyers cannot exceed the fees stated in the buyer representation agreement. In any case, the trio agrees that fee financing should be uniquely tailored to an individual’s sales.
Next, the conversation turns to the Federal Reserve’s recent interest rate cuts. Robinson asks how rate cuts create more opportunities for buyers and sellers in terms of pent-up demand and lock-in effects. Following September’s rate cut, Mills expects there will be two more cuts by the end of the year. Current homeowners will begin to get out of low-interest mortgages, freeing up inventory for buyers in the market. Mills said more supply is needed to address the inventory shortage, and local governments are becoming more receptive to building homes in their communities.
The conversation ends with Mills sharing his thoughts on Kamala Harris’ preliminary housing plans. He said the plan focuses on increasing supply, with $25,000 down payment assistance for first-time homebuyers and more assistance for first-generation homebuyers. I love being accepted. Mills doesn’t think targeted supply (which refers to specific housing types, such as luxury homes or starter homes) is a problem, as long as more inventory comes to market and homeownership opportunities increase.
