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Brexit unlikely to roil U.S. real estate sector, experts say

11 Jul

July 10, 2016 USA Today

The turmoil roiling the United Kingdom real estate market since the surprise Brexit outcome is unlikely to trigger similar impact for the U.S. real estate sector, industry experts predict.

In fact, some predict U.K pain ultimately could mean U.S. gain.

The June 23 referendum in favor of breaking ties with the European Union has raised uncertainty about some U.K real estate prices. UBS analysts tentatively project commercial property values could fall 20% for London offices, 15% for U.K. retail and 5% to 10% for London retail and U.K. industrial locations, FTAlphaville reported Friday.

The Brexit fallout also prompted a wave of redemption requests at U.K. property funds. Unable to sell properties immediately to raise cash, at least six of the funds blocked retail investors from withdrawing their money amid a wave of redemption requests.

The decisions represent a nearly one-month lock on an estimated $12 billion in U.K. commercial real estate investments.

“There’s no indication of anything like that happening in the U.S.,” said Jim Costello, senior vice president of Real Capital Analytics, a data firm focused on commercial real estate investment.

Instead, sovereign wealth funds and other large institutional funds that were drawn to London real estate investments may now shift some of that capital to properties in the U.S. market, said Costello.

“The fundamentals of U.S. real estate are positive,” said Cedrik Lachance, director of U.S. REIT research at Green Street Advisors, a California-based real estate research firm. “That seems unchanged to us.”

An average publicly traded U.S. real estate investment trust (REIT) has outperformed the Standard & Poor’s 500 index by approximately 2.5% since the Brexit vote, said Lachance. However a group of roughly 10 U.S. REITs with more exposure to Europe in general have underperformed their peers, he said.

As U.K. property investors reconsider their holdings, publicly traded U.S. REITs “could be one of the beneficiaries” in the long term, said Michael Grupe, ofNAREIT (National Association of Real Estate Investment Trusts).

Investor uncertainty about the global economy, partly driven by the Brexit outcome, has driven down U.S. Treasury yields to record lows. In turn, that has sent mortgage rates toward record lows too. The 30-year fixed rate mortgage averaged 3.41% for the week ending July 7, down from the 3.48% average a week earlier and 4.04% lower than the average for the same time last year, mortgage giant Freddie Macreported Thursday.

The lower rates “could provide a boost for lower-income U.S. buyers” hoping to enter the real estate market, said Lawrence Yun, chief economist for the National Association of Realtors.

Uncertainty over the London real estate market could prompt U.S. and overseas companies with offices in the British financial center to shift those offices to the U.S., further boosting the domestic real estate sector, said Yun.

Nonetheless, Yun and other U.S. real estate experts see a few potential weak areas.

National Association of Retail data show that U.K. buyers accounted for $1.6 billion in April 2015-March 2016 residential housing purchases in Florida, which has a large vacation home market. The post-Brexit decline of the British pound relative to the U.S. dollar could dry up similar sales for the immediate future, Yun said.

Investors have already battered the stocks of U.S.-based real estate services giants CBRE Group (CBG) and JLL (Jones Lang LaSalle) (JLL) amid the Brexit fallout. Both have significant U.K. business operations.

CBRE shares are down 12.7% since the referendum, part of a 24.2% year to date fall. The stock closed up 6.4% at $26.20 Friday. JLL shares have fallen 15.1% since Brexit and are down 37.6% year to date. The stock rose nearly 8.9% Friday to $99.70.

Follow USA TODAY reporter Kevin McCoy on Twitter: @kmccoynyc


1 Jul

Read the full report here:


NEW YORK, June 28, 2016 – S&P Dow Jones Indices today released the latest results for the S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices. Data released today for April 2016 shows that home prices continued their rise across the country over the last 12 months. More than 27 years of history for these data series is available, and can be accessed in full by going to Additional content on the housing market can also be found on S&P Dow Jones Indices’ housing blog:
The S&P/Case-Shiller U.S. National Home Price Index, covering all nine U.S. census divisions, reported a 5.0% annual gain in April, down from 5.1% the previous month. The 10-City Composite posted a 4.7% annual increase, down from 4.8% in March. The 20-City Composite reported a year-over-year gain of 5.4%, down from 5.5% from the prior month.
Portland, Seattle, and Denver reported the highest year-over-year gains among the 20 cities with another month of annual price increases. Portland led the way with a 12.3% year-over-year price increase, followed by Seattle at 10.7%, and Denver with a 9.5% increase. Nine cities reported greater price increases in the year ending April 2016 versus the year ending March 2016.
Before seasonal adjustment, the National Index posted a month-over-month gain of 1.0% in April. The 10-City Composite recorded a 1.0% month-over-month increase, while the 20-City Composite posted a 1.1% increase in April. After seasonal adjustment, the National Index recorded a 0.1% month-over-month increase, the 10-City Composite posted a 0.3% increase, and the 20-City Composite reported a 0.5% month-over-month increase. After seasonal adjustment, 15 cities saw prices rise, two cities were unchanged, and three cities experienced negative monthly prices changes.

28 Jun

happy 4th back of card

CFPB Is Urged to Change How Title Insurance Premiums Are Disclosed Under the TRID Rule

20 Jun

While lenders continue to struggle with various aspects of the TILA-RESPA Integrated Disclosure Rule (“TRID Rule”) that became effective last year, one of the more troublesome issues has been the disclosure of title insurance premiums. As a result, an effort is underway in Congress to have the Consumer Financial Protection Bureau (“CFPB”) change the way such premiums are disclosed.

Pursuant to the current TRID Rule, the amount disclosed for the lender’s title insurance policy on the Loan Estimate (“LE”) and Closing Disclosure (“CD”) is the amount of premiums without any adjustment that might be made for the simultaneous purchase of an owner’s title insurance policy and a lender’s title insurance policy, even if there is a discount offered for the simultaneous purchase of both insurance policies. The premium for an owner’s title insurance policy for which a special rate may be available based on the simultaneous issuance of a lender’s and an owner’s policy is currently calculated and disclosed by using the full owner’s title insurance premium, adding any simultaneous issuance premium for issuance of lender’s coverage, and then deducting the full premium for the lender’s coverage.

The CFPB has explained that the purpose of this calculation method is to ensure that the lender’s title insurance premium would not increase if the consumer declines an owner’s title insurance premium. The CFPB stated in the preamble to the TRID Rule that the “clear disclosure of the required cost for the lender’s title insurance alone, and the additional incremental cost to be paid by the consumer for the optional owner’s title insurance premium outweighs the benefit of a technical disclosure of the owner’s and lender’s title insurance premiums.”

Following the CFPB’s April 28, 2016 announcement that it will be issuing a Notice of Proposed Rulemaking (“NPRM”) to clarify certain aspects of the TRID Rule, 74 members of Congress signed a letter to the CFPB dated May 31, 2016 requesting that the CFPB “fix the rule’s requirement that is causing consumers to receive incorrect title insurance premium disclosures.” The letter states that consumers in the majority of states are not receiving an accurate disclosure of their title insurance premiums because the CFPB is not allowing for the calculation of a discounted rate known as “simultaneous issue.” The lawmakers have urged the CFPB to address this issue in the upcoming NPRM in July.

We will provide further updates of this issue once the CFPB has issued the NPRM.

From JDSupra Business Advisor 6/17/16

How Are Home Prices Doing In New York?

15 Jun

From the National Association of Realtors Existing-Home Sales

Latest News

Despite low inventory and faster price growth, existing-home sales continued to rise for the second consecutive month.

The Existing-Home Sales data measures sales and prices of existing single-family homes for the nation overall, and gives breakdowns for the West, Midwest, South, and Northeast regions of the country. These figures include condos and co-ops, in addition to single-family homes.

View or print the single family summary for April here:


Title Agents Press CFPB to Change Title Fee Disclosures

8 Jun

from National Mortgage News/Brian Collins June 6, 2016

A bipartisan group of lawmakers is urging the Consumer Financial Protection Bureau to change how it calculates title insurance fees as part of the new integrated mortgage disclosures.

Seventy-four members of Congress signed a letter to CFPB Director Richard Cordray arguing that consumers are receiving “incorrect” title insurance premium disclosures.

At issue is how the Truth-in-Lending Act/Real Estate Settlement Procedures Act integrated disclosures, or TRID, defines title insurance fees. The rule does not allow for the calculation of what’s known as the “simultaneous issue,” the rate title insurance companies provide to consumers when they purchase a lender’s and owner’s title insurance policy at the same time. In many cases, the consumer receives a discount on such transactions, but would not see that reflected on the mortgage disclosure form.

The CFPB’s recent proposal asking for feedback on TRID “is a great opportunity to fix this issue and ensure that your new forms serve as a credible source of accurate information about the true costs of buying a home for consumers,” the lawmakers said in the letter, which was signed by Reps. Dennis Ross, R-Fla., and Ed Perlmutter, D-Colo., among others.

The letter is being pushed by the American Land Title Association, which says the CFPB’s calculation is confusing.

“We do not think that showing the consumer the actual number they will pay and putting a totally different number on the disclosure is accurate or fair to the homebuyer who already has questions about the transaction,” said Wayne Stanley, a spokesman for the group.

CFPB declined to comment on the title insurance issue. But the agency is working on a TRID mortgage disclosure rule that it expects to issue in July.

“We remain engaged with stakeholders on implementation of the ‘Know Before You Owe’ mortgage disclosure rule and are conducting listening sessions with groups of stakeholders to gather additional insight into concerns,” a spokesman said. “We look forward to receiving all comments on the matters discussed in the proposal once it has been issued.”

Meanwhile, ALTA has created a grassroots network of more than 12,000 title agents who are “prepared to send letters and emails to CFPB staff to let them know what they are seeing around closing tables across the country,” Stanley said.

6 Jun

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