Today's the Big Day!

Effective July 30, 2009, there are new rules regarding Truth in Lending (TIL) disclosures. These rules, which affect all lenders, are contained in the Mortgage Disclosure Improvement Act (MDIA). The MDIA is intended to protect consumers and make it easier for them to understand TIL disclosures. You can look at the rules by visiting the federal reserve printing at http://www.federalreserve.gov/reportforms/formsreview/RegZ_20090519_ffr.pdf

The primary purpose of the Truth in Lending Act (TILA), 15 U.S.C. 1601 etseq., is to promote the informed use of consumer credit by requiring disclosures about its terms and cost. This is the so called 'fine print rule', which attempts to explain all the microscopic caveats on the forms so you know, in plain numbers, what it all means. (From my perspective, this is like taking birthing clasess. You know, but you really don't know!)

The MDIA is likely to cause some delicious delays in the process now, as everyone becomes accustomed to new timetables, new steps leading to the closing table, etc. Until MDIA has been in effect for some period of time, its real impact on lending practices will be muddled by the frustration these new processes and inherent delays will create. However, the good thing to take away from this is that we are scrubbing clean the mess that was made during the heady days of the real estate boon. Once done, and with some necessary fits and starts, the achievement of homeownership will mean something again, the professionals who work in all aspects of our industry will deserve some respect again, and the 'truth' will be rightfully returned to its place in the process.

And that is some good news.

The News Is Good (Sort Of)

U.S. New-Home Sales Climb 11%, Most in Eight Years
By Courtney Schlisserman - July 27 (Bloomberg)

Purchases of new homes in the U.S. climbed 11 percent in June, the biggest gain in eight years, underscoring evidence that the deepest housing slump since the Great Depression is starting to stabilize.

That was the news being sent around yesterday. Whoopee! Good news! Rarer than diamonds in this business nowadays, good news is greeted with relief and some air of triumph. "This is it," the guilty-smug smiles tell you. "We rode it out!" We try not to congratulate ourselves, but we're so desperate we can't help ourselves.

We used to congratulate ourselves for much loftier accomplishments - market share, million-dollar sales awards, multi-million dollar development listings. Aaaah the good 'ol days. No more. Today's mantra is "If I ride it out, at the end of the storm I will be stronger and better than ever!" Translate that as: "If I can hang on without losing my dignity I'll be the only one left when its over!" Clinging to dignity has become perilous in this market, no doubt, but I consider it my version of "Survivor".

Of course, that strategy is completely counterintuitive to all the training you've gotten, which has told you that each challenge is an opportunity for success. But when chasing down the status of a short sale turns into a real-time exercise in "Who's on first?" the training-manual ideas seem ridiculous. Today, the formulas for success that get stamped on binders and re-printed in handouts are dated, irrelevant and comical, from my point of view. I can't chase around my homeowners for referrals when a good chunk of them are on the brink of losing their own homes. I can't throw parties with branded merchandise when I'm trying to figure out how to pay for my kids' birthday party with dollar-store cups and plates. My sphere of influence is panicking, just like everyone else.

So, of course, when the good news comes along, I'm eager to share it, take some completely undeserved credit for it, and convince myself I can treat my family out to dinner because of it. But, as with all things, good news is not all it seems on the surface. And this is the sentence in the above-referenced article that woke me from my sugar-induced euphoria.

"The number of houses on the market dropped to the lowest level in more than a decade."

You've seen it yourself. There are less signs on the street in many Chicago neighborhoods. Looks less frantic. Good, yes? Maybe. But what, really, does it mean?

Yes, we've done a good job clearing out alot of the bottom-dwellers in the market, but there's plenty more where that came from. Yes, we've made significant headway in removing at-risk homesellers from the inventory through the influx of short-sales, but who isn't short these days? And yes, some homesellers have decided to pull back and wait for a better selling season. My kingdom to know when that'll be.

When you're looking at numbers, stand in the center and look around. Then stand in every corner of the room and look inward. Make sure you understand what's good and bad in the statistics. No question that increased sales and diminished inventory will be indicators of improvement. The fact that we're looking at those now instead of consistent downward slides is, indeed, good news. But because we didn't sink in one tragic misstep, we won't be redeemed in one cathartic leap forward. Instead, we'll struggle forward in fits and starts, with some good days and some bad days. The challenge is to continue forward. We do.

As for the hope promised in the article from Bloomberg? I think suggesting an overall start toward stability may be a Jordan-esque reach toward that evasive moment in the cycle when we can really claim triumph, pat each other on the back, and pay un-borrwed cash for that meal out with the family. I'm going out to dinner anyway. We got some really good news yesterday.

I can't stand it any longer

I was recently made privy to a story about a well-known agent in our town who’d been interviewed for a magazine article on real estate. She felt her remarks had been misconstrued and took the real story directly to the people through her blog. I read it. It was very triumphant. Cape flapping in the wind, you’d imagine. (I should say at the outset - she’s a badass. Awesome. Top of every list you could think of. God bless her. I wish her nothing but luck for continued success. ) But I’ve got to say that her perspective offers a very limited spectrum for shared experience.

The essence of it was that she felt her area should not be described as ‘troubled’ based on her remarks. She then combated the numbers and statistics in the featured article with her own numbers, more current numbers and different points of view about the old numbers.

Seriously? That kind of silliness is what contributed significantly to the terrible trouble we are in. We’re in trouble. So is she. And so are all the people in her area. No one is immune. To suggest otherwise is a lie, no matter how hard you try to sell it. Other than to establish that no one is immune, broad characterizations about either the health or decline of the real estate market provide false premises upon which we can no longer stand. And on that one point, we should all agree. The truth is necessary.

The honest truth is the residential real estate market is suffering, loudly and with flapping ARMs. Some things are getting better, some things may get worse before they improve. There's a mixed bag. Any professional worth his or her salt in this business must tell the truth about the whole thing, good and bad, in order to further the remedy.

Until then, I can’t stand by any longer and allow myself to be affiliated with the puff and circus-pants (as my daughter once characterized ‘pomp and circumstance’) about the state of our business. I encourage you to join me. Provide your stories, good ones and not so goods. Laugh at me, fume at me, I welcome it all. Let’s get it all out there and tell the truth. I’ve heard that kind of thing can be very freeing.