Posts Tagged ‘market’

Whether it’s a buyer’s market or a seller’s market, all homebuyers have one thing in common: they don’t want to get ripped off. But how do you know if you’re getting a fair deal on the home you’re prepared to place an offer on? Read on to find out how to evaluate the price of any home so you can make a sound investment decision.

1. Research Recently Sold Comparable Properties

A comparable property is one that is similar in size, condition, neighborhood and amenities. One 1,200-square-foot, recently remodeled, one-story home with an attached garage should be listed at roughly the same price as a similar 1,200-square-foot home in the same neighborhood. That said, you can also gain valuable information by looking at how the property you’re interested in compares in price to different properties. Is it considerably less expensive than larger or nicer properties? Is it more expensive than smaller or less attractive properties? Your real estate agent is the best source of accurate, up-to-date information on comparable properties (also known as “comps”). You can also look at comps that are currently in escrow, meaning that the property has a buyer but the sale is not yet complete.

2. Check Out Comparable Properties That Are Currently on the Market

In this case, you can actually visit other homes and get a true sense of how their size, condition and amenities compare to the property you’re considering buying. Then you can compare prices and see what seems fair. Reasonable sellers know that they must price their properties similarly to market comparables if they want to be competitive.

3. Look at Comparables That Were on the Market Recently but Didn’t Sell

If the house you’re considering buying is priced similarly to homes that were taken off the market because they didn’t sell, the property you’re considering may be overpriced. Also, if there are a lot of similar properties on the market, prices should be lower, especially if those properties are vacant. Check out the unsold inventory index for information about current supply and demand in the housing market. This index attempts to measure how long it will take for all the homes currently on the market to be sold given the rate at which homes are currently selling.

4. Consider Market Conditions and Appreciation Rates in the Area

Have prices been going up recently or going down? In a seller’s market, properties will probably be somewhat overpriced, and in a buyer’s market, properties are apt to be underpriced. It all depends on where the market currently sits on the real estate boom-and-bust curve. Even in a seller’s market, properties may not be overpriced if the market is on the upswing and not near its peak. Conversely, properties can be overpriced even in a buyer’s market if prices have only recently begun to decline. Of course, it can be difficult to see the peaks and valleys until they’re history. Also consider the impact of mortgage interest rates and the job market on the economy.

5. Are You Buying a For-Sale-by-Owner Property?

A for-sale-by-owner (FSBO) property should be discounted to reflect the fact that there is no 6% (on average) seller’s agent commission, something that many sellers don’t take into consideration when setting their prices. Another potential problem with FSBOs is that the seller may not have had an agent’s guidance in setting a reasonable price in the first place, or they may have been so unhappy with an agent’s suggestion that they decided to go it alone. In any of these situations, the property may be overpriced.

6. What Is the Expected Appreciation for the Area?

The future prospects for your chosen neighborhood can have an impact on price. If positive development is planned, such as a major mall being built, the extension of light rail to the neighborhood, or a large new company moving to the area, the prospects of future home appreciation look good. Even small developments like plans to add more roads or build a new school can be a good sign. On the other hand, if grocery stores and gas stations are closing down, the home price should be lower to reflect that, and you should probably reconsider moving to the area. The development of new housing can go either way – it can mean that the area is hot and is likely to be in high demand in the future, increasing your home’s value, or it can result in a surplus of housing, which will lower the value of all the homes in the area.

7. What Is Your Real Estate Agent’s Opinion?

Without even analyzing the data, with years of experience, your real estate agent is likely to have a good gut sense of whether the property is priced appropriately or not and what would be a fair offering price.

8. Does the Price Feel Fair to You?

If you’re not happy with the property, the price will never seem fair, even if you get a bargain. Even if you pay a little over market value for a home you love, in the end, you won’t really care.

9. Test the Waters

Even in a seller’s market, you can always offer below list price just to see how the seller reacts. Some sellers list properties for the lowest price they’re willing to take because they don’t want to negotiate, while others list their homes for higher than they expect to earn because they expect to negotiate downward or they want to see if someone will make an offer at the higher price. If the seller accepts your price or counteroffer, you’ll get an indication that the property probably wasn’t worth what it was listed for and you have a good chance at getting a fair deal. On the other hand, some sellers may underprice their properties in the hope of generating lots of interest and sparking a bidding war. Unlike on eBay, however, the seller doesn’t have to simply sell to the highest bidder: sellers can reject any and all offers that don’t meet their expectations. If you have your heart set on the property, be warned that some sellers may be offended by lowball offers and refuse to work with you if you chose to employ such a tactic. Also, when you offer less than the list price, you may increase your risk of being outbid by another buyer.

10. Get an Appraised Value and a Home Inspection

Once you’re under contract, the lender will have an appraisal of the property done (usually at your expense) to protect its financial interests. The lender wants to make sure that if you stop making your mortgage payments, it’ll be able to get a reasonable amount of its money back when it forecloses (FCL) on your home. If the appraisal comes in at considerably less than your offering price, you may not be getting a fair deal. In fact, the lender may not even let you purchase the home unless the seller is willing to bring the price down. A home inspection, which is completed after you’re under contract, will also give you a way to gauge your offering price. If the home needs many expensive repairs, you’ll want to ask the seller to make the repairs for you or discount the purchase price so you can make them yourself.

Conclusion

When you’re shopping for a home, it’s important to understand how homes are priced so you can make a sound investment and reach a fair agreement with the seller. Using these tips, you’ll be able to make a confident and well-informed offer on any home in any market.

Amy Fontinelle is a freelance writer and editor with clients located across the United States and in Canada. She has written over 300 published articles and blog posts for a variety of national and local publications and websites on topics including travel, restaurants, food and drink, fitness, budgeting, credit management, real estate, investing and historic preservation. Her articles have been featured on the homepage of Yahoo! and on Yahoo! Finance, Yahoo! HotJobs, several local news websites and Forbes.com.

You can read more of Amy’s personal finance articles at Two Pennies Earned, her own personal finance website, and at PF Advice, one of the web’s leading personal finance blogs.

Posted at Yahoo.com

Volatility attacks!

Home loan borrowing costs rose about as much as they could yesterday without having it negatively impact CURRENT MARKET Best Execution Mortgage Rate quotes.

Unfortunately borrowing costs rose further today. And the levee burst....

CURRENT MARKET Best Execution Mortgage Rates have risen. That means if you were being quoted a CURRENT MARKET "Best Execution" note rate yesterday, you will not be able to lock at the same Best Execution note rate today.

The abrupt spike in costs can be attributed to volatility in the secondary market.....

CURRENT MARKET*: The "Best Execution" conventional 30-year fixed mortgage rate has risen to 4.625%. Some lenders may still be willing to quote 4.50% but those offers are no longer widespread. Lenders quoting 4.375% are now charging at least a point.  These costs could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.    On FHA/VA 30 year fixed "Best Execution"  has jumped from 4.25% to 4.375% and potentially even 4.50% at some lenders (GNI pricing = better).   15 year fixed conventional loans are now best priced at 3.875%. Five year ARMs are best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:   As volatility continues in the secondary market, we remind rate watchers that lenders are known to price loans from a defensive stance when the broader bond market is in limbo. It might seem safer to float when lenders are defensive by default,  especially if you're able to act quickly and are somewhat flexible with respect to the risk of slightly higher closing costs, but floating is really best reserved for those operating on a longer-term timeline. This creates a buffer to allow for corrections when/if the market moves in an unfavorable direction. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before and failed to see investors commit to a sustained rally in the bond market.

CURRENT GUIDANCE:   After failing on repeated occasions to extend the two-month rally, mortgage rates are acting exhausted. That means the path of least resistance is up for interest rates, at least in the short-term. That puts us in a defensive posture for the next 10 to 20 days. We are not ready to change our outlook for lower rates by the end of the summer though. This corrective behavior happened last year too, which supports our long standing view that "history is repeating itself" in the bond market.  BEWARE: This is guidance is speculative in nature. We don't have a crystal ball, we can't predict the future, we can only share our outlook. Making the following considerations extra important........................

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

SEE A CHART OF NEW YTD RATE LOWS

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

Volatility attacks!

Home loan borrowing costs rose about as much as they could yesterday without having it negatively impact CURRENT MARKET Best Execution Mortgage Rate quotes.

Unfortunately borrowing costs rose further today. And the levee burst....

CURRENT MARKET Best Execution Mortgage Rates have risen. That means if you were being quoted a CURRENT MARKET "Best Execution" note rate yesterday, you will not be able to lock at the same Best Execution note rate today.

The abrupt spike in costs can be attributed to volatility in the secondary market.....

CURRENT MARKET*: The "Best Execution" conventional 30-year fixed mortgage rate has risen to 4.625%. Some lenders may still be willing to quote 4.50% but those offers are no longer widespread. Lenders quoting 4.375% are now charging at least a point.  These costs could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs.    On FHA/VA 30 year fixed "Best Execution"  has jumped from 4.25% to 4.375% and potentially even 4.50% at some lenders (GNI pricing = better).   15 year fixed conventional loans are now best priced at 3.875%. Five year ARMs are best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

PREVIOUS GUIDANCE:   As volatility continues in the secondary market, we remind rate watchers that lenders are known to price loans from a defensive stance when the broader bond market is in limbo. It might seem safer to float when lenders are defensive by default,  especially if you're able to act quickly and are somewhat flexible with respect to the risk of slightly higher closing costs, but floating is really best reserved for those operating on a longer-term timeline. This creates a buffer to allow for corrections when/if the market moves in an unfavorable direction. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before and failed to see investors commit to a sustained rally in the bond market.

CURRENT GUIDANCE:   After failing on repeated occasions to extend the two-month rally, mortgage rates are acting exhausted. That means the path of least resistance is up for interest rates, at least in the short-term. That puts us in a defensive posture for the next 10 to 20 days. We are not ready to change our outlook for lower rates by the end of the summer though. This corrective behavior happened last year too, which supports our long standing view that "history is repeating itself" in the bond market.  BEWARE: This is guidance is speculative in nature. We don't have a crystal ball, we can't predict the future, we can only share our outlook. Making the following considerations extra important........................

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

SEE A CHART OF NEW YTD RATE LOWS

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

Home loan borrowing costs rose about as much as they could today without having it negatively impact CURRENT MARKET Best-Execution Mortgage Rate quotes.

That means if you were being quoted a CURRENT MARKET "Best Execution" note rate yesterday, your closing costs rose a bunch today, but you should still be able to close at the same Best Execution note rate. Except if you're watching 15 year BestEx quotes. Those rose to 3.875%.

Sounds a little shocking doesn't it?  It seems like just last week we were resting peacefully at new year-to-date lows.  Now all of a sudden there's chaos?

Yep. The abrupt spike in costs can be attributed to volatility in the secondary market.....

PREVIOUS GUIDANCE:   As volatility continues in the secondary market, we remind rate watchers that lenders are known to price loans from a defensive stance when the broader bond market is in limbo. It might seem safer to float when lenders are defensive by default,  especially if you're able to act quickly and are somewhat flexible with respect to the risk of slightly higher closing costs, but floating is really best reserved for those operating on a longer-term timeline. This creates a buffer to allow for corrections when/if the market moves in an unfavorable direction. While a few sessions of continued loan pricing rallies could lead to a lower overall note rate offer, we've been here before (as recently as Friday) and failed to see investors commit to a sustained rally in the bond market (today).

CURRENT GUIDANCE:      Although today's beating doesn't break longer term positive trends, it was certainly painful enough to make us question the stability of those positive trends. We'd describe this back-up as a "breather". Beware though, it's not uncommon for these "breathers" to last a few weeks.

CURRENT MARKET*: The "Best Execution" conventional 30-year fixed mortgage rate is just barely 4.50%. Lenders quoting 4.375% are now charging at least a point for that offer. These costs could be worth it to applicants who plan to keep their new mortgage outstanding for long enough to breakeven on the extra upfront costs. 4.625% is aggressive and will likely carry no origination fees.    On FHA/VA 30 year fixed "Best Execution"  is still 4.25%.  15 year fixed conventional loans are now best priced at 3.875%. Five year ARMs are best priced at 3.25% but the ARM market is more stratified and there is more variation in what will be "Best-Execution" depending on your individual scenario. 

EXTRA PERSPECTIVE: We've been here before. Quite recently. Remember? Something similar to this "event" played out two-weeks ago (June 14th). A few days after setting YTD rate lows, loan pricing decided to throw up on itself because mortgage rates failed to commit to a sustained rally (we called it pouting).  This happened on a day when stocks managed to put together a healthy recovery rally, despite weak economic data (bond friendly data). Sounds a lot like today doesn't it? If you're not sure, the answer to that question is yes. What happened today was very similar to what happened two-weeks ago. And the market corrected shortly there-after. That provides some warmth after the beating we took place today but it doesn't mean the market will surely behave the same way it did two-weeks ago. Short-term floaters have much to lose too (gain in monthly payment), especially for higher loan amounts. We just set new YTD rate lows and now we're teetering on a shift higher in Best Execution Mortgage Rate quotes. Don't  lose your current rate quote here.  For long-term floaters, we're not ready to ring the alarm bell just yet.

What MUST be considered BEFORE one thinks about capitalizing on a rates rally?

   1. WHAT DO YOU NEED? Rates might not rally as much as you want/need.
   2. WHEN DO YOU NEED IT BY? Rates might not rally as fast as you want/need.
   3. HOW DO YOU HANDLE STRESS? Are you ready to make tough decisions?

SEE A CHART OF NEW YTD RATE LOWS

----------------------------

"Best Execution" is the most cost efficient combination of note rate offered and points paid at closing. This note rate is determined based on the time it takes to recover the points you paid at closing (discount) vs. the monthly savings of permanently buying down your mortgage rate by 0.125%.  When deciding on whether or not to pay points, the borrower must have an idea of how long they intend to keep their mortgage. For more info, ask you originator to explain the findings of their "breakeven analysis" on your permanent rate buy down costs.

*Important Mortgage Rate Disclaimer: The "Best Execution" loan pricing quotes shared above are generally seen as the more aggressive side of the primary mortgage market. Loan originators will only be able to offer these rates on conforming loan amounts to very well-qualified borrowers who have a middle FICO score over 740 and enough equity in their home to qualify for a refinance or a large enough savings to cover their down payment and closing costs. If the terms of your loan trigger any risk-based loan level pricing adjustments (LLPAs), your rate quote will be higher. If you do not fall into the "perfect borrower" category, make sure you ask your loan originator for an explanation of the characteristics that make your loan more expensive. "No point" loan doesn't mean "no cost" loan. The best 30 year fixed conventional/FHA/VA mortgage rates still include closing costs such as: third party fees + title charges + transfer and recording. Don't forget the fiscal frisking that comes along with the underwriting process.

Here we are again. History seems to be repeating itself as we head into the summer months.

The market got all excited about a speedy economic recovery following a seasonal uptick in consumer spending and positive progress in the labor market only to find that those improvements weren't sustainable in the real world where Main Street wasn't able to accumulate wealth or deleverage at a fast enough pace because only high-skilled labor is being awarded wage hikes and home buyer demand is in the toilet right along with home prices.

The same thing happened last year. Street economists upgraded quarterly growth projections only to be disappointed by unsustainable momentum down the road, which brought on downgrades and a return to "long road ahead" reality. We've described this behavior as a "false start". It can be brought on by homebuyer credits, payroll tax cuts and quantitative easing efforts or any other inorganic effort that distorts perspectives of economic reality. And it can be easily erased by unexpected events like earthquakes and floods.

History started repeating itself in December: SEE IT HERE. Signs of underlying economic weakness were then observed early and often, which we recapped HERE. Our 2.85% target was reiterated HERE,  which looked quite possible in this POST.  Then primary dealers and economists threw cold water on our outlook HERE.

Below is the 10yr chart we've shared over and over again illustrating why our long-term rally target was 2.85% (the 23% retracement of all time 10yr yield lows)...which would be followed by the 10yr note re-entering the RED internal trend before rates rose again. 

We're not all the way there yet...but there is little resistance standing in the way of 2.85% right now. Revisiting the RED internal trend is still very much up in the air as is another Quantitative Easing program.

Check out the highest FNCL 4.0 prices since December 7, 2010.

Focusing a bit more on the expected impact on loan pricing, there has been minimal activity in the secondary market so far that would imply lock desks are shifting their hedging strategies to the MBS coupons that would allow for a faster decline in mortgage rates (4.0 30yr MBS allow for 4.25% C30 pricing). Once we see secondary moving "down in coupon" with their hedges, assuming there are loans to lock,  we will be quick to alert rate-watchers of the pending transfer of the "Production Coupon Title Belt" to 30yr 4.0s. This event could gain momentum on Friday morning after the Employment Situation Report, but that no where near a sure thing.  Loan pricing is extremely aggressive. C30 Best Execution has fallen to 4.50%. This is what we're telling consumers...

CURRENT GUIDANCE:   We're now sitting at new 2011 lows. And while "The Wall" is still standing, there is now clear justification for borrowers looking to float their loan on an intermediate to long-term timeline. Further positive progress will however be slow and short-term back-ups are to be expected. From that point of view, borrowers working on a shorter lock/float timeline should remain defensive of new, lower "Best Execution" Mortgage Rate quotes. Your main goal is to protect a lower rate offer from short-term market fluctuations.  Stay tuned for further developments. This is getting exciting!

WHERE IS THE LOAN SUPPLY???? READ MORE

Realtors® attending the National Association of Realtors (NAR) mid-year legislative meetings and trade expo in Washington heard a panel of housing experts lay out the several solutions for housing finance reform.  

The six panelists discussing Fannie Mae & Freddie Mac: Obama Options and Beyond were Steve Brown, 2011 NAR first vice-president nominee; James Parrot, senior advisor for housing at the National Economic Council; Susan Wachter, a professor at The Wharton School, University of Pennsylvania; Mark Calabria, director of Financial Regulation Studies at the Cato Institute; David Katkov, executive vice president and chief business officer at The PMI Group, and Ann Grochala, vice president at the Independent Community Bankers of America.

Scott Brown laid out the official NAR stance on reforming the housing finance system and the future of the two government sponsored enterprises (GSEs) Freddie Mac and Fannie Mae.  NAR believes that reform is required and taxpayers must be protected from losses, he said.  The federal government must continue to play a role in the secondary mortgage market to ensure a steady flow of mortgage liquidity in all markets under all economic conditions.

Brown said "As the leading advocate for home owners, NAR is concerned that eliminating the GSEs without a viable replacement is not a reasonable option and will severely restrict mortgage capital and result in higher fees and costs for qualified borrowers.  Reform of the secondary mortgage market needs to be comprehensive and undertaken methodically."

James Parrot reviewed the Obama administration's recommendations which include varying levels of government backing. The Administration is looking at both the near-term and what steps should be taken to reduce taxpayer risk and make the housing market more stable but also to frame the discussion regarding the government's long-term role in housing finance.

"The government's large presence in the housing finance is unhealthy and needs to be scaled back; however, the steps we take over next few years to reduce the government's role and increase private capital will have a tremendous impact on the housing market and economy as well as the availability and affordability of mortgages," Parrot said. "The objective isn't to turn away from housing, but to make the housing finance market stronger so that families and their most important asset are better protected."

Mark Calabria restated the position of the Cato Institute which he has presented to at least one congressional committee: the government should have a very limited role in the secondary market.  He told the NAR attendees that the private capital market has the funds and capacity to absorb Fannie Mae and Freddie Mac's market share and that increased government support in the past few decades have only slightly increased America's homeownership rate. Homeownership rates in other countries, he said, are higher despite their government's limited involvement. Calabria did acknowledge that some government backstop was essential in the future, since the housing and finance markets are sensitive to booms and busts.

David Katkov countered that it would be naïve to move to a purely private market simply because it's been successful in other countries, adding that the U.S.'s housing finance system dwarfs that of other countries and is far more complex.  Ann Grochala also expressed concern that a purely private market would work against small lenders and community banks because of the heavy competition from the big banks.

Susan Wachter agreed that private capital needs to return to the housing finance market, but that most likely won't happen until the market has stabilized. "There needs to be more accountability and transparency in the secondary mortgage market," she said, "so that private investors can best assess their risk and safely get back into the market."

READ MORE FROM THE REALTORS: Existing Home Sales Still Hindered by Uber Tight Lending Regs

Realtors® attending the National Association of Realtors (NAR) mid-year legislative meetings and trade expo in Washington heard a panel of housing experts lay out the several solutions for housing finance reform.  

The six panelists discussing Fannie Mae & Freddie Mac: Obama Options and Beyond were Steve Brown, 2011 NAR first vice-president nominee; James Parrot, senior advisor for housing at the National Economic Council; Susan Wachter, a professor at The Wharton School, University of Pennsylvania; Mark Calabria, director of Financial Regulation Studies at the Cato Institute; David Katkov, executive vice president and chief business officer at The PMI Group, and Ann Grochala, vice president at the Independent Community Bankers of America.

Scott Brown laid out the official NAR stance on reforming the housing finance system and the future of the two government sponsored enterprises (GSEs) Freddie Mac and Fannie Mae.  NAR believes that reform is required and taxpayers must be protected from losses, he said.  The federal government must continue to play a role in the secondary mortgage market to ensure a steady flow of mortgage liquidity in all markets under all economic conditions.

Brown said "As the leading advocate for home owners, NAR is concerned that eliminating the GSEs without a viable replacement is not a reasonable option and will severely restrict mortgage capital and result in higher fees and costs for qualified borrowers.  Reform of the secondary mortgage market needs to be comprehensive and undertaken methodically."

James Parrot reviewed the Obama administration's recommendations which include varying levels of government backing. The Administration is looking at both the near-term and what steps should be taken to reduce taxpayer risk and make the housing market more stable but also to frame the discussion regarding the government's long-term role in housing finance.

"The government's large presence in the housing finance is unhealthy and needs to be scaled back; however, the steps we take over next few years to reduce the government's role and increase private capital will have a tremendous impact on the housing market and economy as well as the availability and affordability of mortgages," Parrot said. "The objective isn't to turn away from housing, but to make the housing finance market stronger so that families and their most important asset are better protected."

Mark Calabria restated the position of the Cato Institute which he has presented to at least one congressional committee: the government should have a very limited role in the secondary market.  He told the NAR attendees that the private capital market has the funds and capacity to absorb Fannie Mae and Freddie Mac's market share and that increased government support in the past few decades have only slightly increased America's homeownership rate. Homeownership rates in other countries, he said, are higher despite their government's limited involvement. Calabria did acknowledge that some government backstop was essential in the future, since the housing and finance markets are sensitive to booms and busts.

David Katkov countered that it would be naïve to move to a purely private market simply because it's been successful in other countries, adding that the U.S.'s housing finance system dwarfs that of other countries and is far more complex.  Ann Grochala also expressed concern that a purely private market would work against small lenders and community banks because of the heavy competition from the big banks.

Susan Wachter agreed that private capital needs to return to the housing finance market, but that most likely won't happen until the market has stabilized. "There needs to be more accountability and transparency in the secondary mortgage market," she said, "so that private investors can best assess their risk and safely get back into the market."

READ MORE FROM THE REALTORS: Existing Home Sales Still Hindered by Uber Tight Lending Regs