Category Archives: Mortgage

RealPage to pay $3 million to settle FTC allegations of faulty tenant screenings

RealPage will pay $3 million in a settlement with the Federal Trade Commission, which accused the real estate tech and data company of providing landlords and property managers with faulty tenant screening results over a five-year period.

The FTC alleged that RealPage violated the Fair Credit Reporting Act by “failing to take reasonable steps” to ensure the accuracy of its tenant screening reports from January 2012 through September 2017.

According to the FTC, RealPage’s screening reports could have shown incorrect criminal records for a prospective tenant because of the company’s limited filtering system on its screenings.

The FTC claims that RealPage’s screening reports were generated using an automated system used the applicant’s first name, middle name when available, last name, and date of birth when searching for criminal records.

But, the FTC alleges, the system only required an exact match of an applicant’s last name coupled with a non-exact match of a first name, middle name, or date of birth.

So, as the FTC explains, if RealPage ran a screening on someone named Anthony Jones who was born on Oct. 15, 1967, its system could find a criminal record for people with names like Antony Jones, Antonio Jones, or Antoinette Jones, all with the same date of birth, and say Anthony Jones had a criminal record.

And because RealPage’s screening reports incorrectly associated some potential renters with criminal records, a landlord or property manager could have denied those renters housing.

RealPage denies the allegations, but said it chose to settle with the FTC to avoid the cost and “distraction” of fighting the charges.

RealPage also claims that the FTC investigation centered on a “minuscule fraction” of the company’s screening report results.

“The FTC’s investigation centered on certain ‘soft’ matching practices for consumers with common last names,” RealPage said in a statement, adding that “soft matching” is an issue for the entire screening industry.

“The FTC was unable to identify any prior industry or regulatory guidance or other clear legal precedent that RealPage should have followed,” the company said.

“We were disappointed that the FTC singled out RealPage for an issue that has confronted the entire screening industry, namely how to match applicants with common last names to public records when most courts do not make social security or driver’s license numbers available as part of those records,” RealPage continued. “While we disagree with the FTC’s assertions, we agreed to settle this matter in order to avoid the expense and distraction of litigation.”

According to RealPage, all of the issues alleged by the FTC took place before RealPage changed its matching technology in September 2017.

RealPage also noted that there were no findings of fact in the case, and said that the company does not admit to any wrongdoing.

Nevertheless, the company is choosing to settle.

According to the FTC, the settlement amount of $3 million is the largest civil penalty the FTC has obtained against a background screening company.

In addition to the financial penalty, the settlement also requires RealPage to maintain “reasonable procedures to assure the maximum possible accuracy of the information it includes about individuals in its consumer reports. RealPage is also subject to compliance and reporting requirements.

“You shouldn’t get turned down for an apartment because someone has the wrong information about you,” Andrew Smith, director of the FTC’s Bureau of Consumer Protection, said. “This case shows that, especially with today’s tight rental market, we will hold tenant screening companies responsible for the accuracy of their reports.”

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NAR: Existing home sales fall to 3-year low

After experiencing a flat August, existing home sales retreated in September, falling to the lowest level in nearly three years.

Total existing home sales, completed transactions that include single-family homes, townhomes, condominiums and co-ops, decreased 3.4% from August to a seasonally adjusted rate of 5.15 million in September, according to the latest report from the National Association of Realtors. The report showed sales are 4.1% below September 2017’s rate.

NAR Chief Economist Lawrence Yun said that the decline in regional sales can be attributed to rising interest rates and the continuing climb of home prices.

“This is the lowest existing home sales level since November 2015,” Yun said. “A decade’s high mortgage rates are preventing consumers from making quick decisions on home purchases. All the while, affordable home listings remain low, continuing to spur underperforming sales activity across the country.”

The median existing home price for all housing types increased to $264,800, surpassing last August’s $258,100. This is a 4.2% increase from September last year and marks the 79th straight month of year-over-year gains.

Total housing available for sale fell backwards from August, decreasing from 1.91 million existing homes on the market to 1.88 million in September. But it’s up from last year’s total of 1.86 million.

Unsold inventory rests at a 4.4-month supply at the current sales pace, increasing from last month’s total of 4.3. The total was 4.2 months a year ago at this time.

“There is a clear shift in the market with another month of rising inventory on a year over year basis, though seasonal factors are leading to a third straight month of declining inventory,” Yun continued. “Homes will take a bit longer to sell compared to the super-heated fast pace seen earlier this year.”

Properties stayed on the market an average of 32 days in August, moving up from 29 days in August but still down from 34 days in 2017. The report states that 47% of homes stayed on the market for less than a month.

The report states, the average commitment rate for a 30-year, conventional, fixed-rate mortgage climbed from 4.55% the month prior to 4.63% in September and the average commitment rate for all of 2017 remained at 3.99%, according to Freddie Mac.

“Rising interests rates coupled with increasing home prices are keeping first-time buyers out of the market, but consistent job gains could allow more Americans to enter the market with a steady and measurable rise in inventory,” Yun stated.

First-time buyers were 32% of sales in September, which is an increase from 31% in August and 29% in September of last year. NAR revealed that the annual share of first-time buyers remained at 34%.

“Despite small month over month increases, the share of first-time buyers in the market continues to underwhelm because there are simply not enough listings in their price range,” NAR President Elizabeth Mendenhall said.

Single-family home sales edged down from a seasonally adjusted annual rate of 4.74 million in August to 4.58 million in September 4% below 4.77 million a year ago. The median existing single-family home price was $260,500 in September, increasing 4.6% from September 2017. 

Existing condominium and co-op sales recorded a seasonally adjusted annual rate of 570,000 units in September, falling 3.4% from August and 5% from a year ago. The median existing condo price was $239,200 in September, slightly increasing 1.5% from 2017. 

Existing home sales in the Northeast fell 2.9% to an annual rate of 680,000 in September, which is a 5.6% drop from a year ago. The median price in the Northeast increased 4.1% from September 2017 and came in at 286,200.

In the Midwest, existing-home held steady from the prior month at an annual rate of 1.28 million but is still 1.5% below September 2017. The median price in the Midwest was $200,200, increasing 1.9% from this time last year.

Southern existing-home sales declined 5.4% to an annual rate of 2.11 million in September, decreasing from 2.1 million a year ago. The median price in the South was $223,900, increasing 3% from September 2017.

“Led by a 5.4% decline in the South, the drop in existing-home sales in September was likely somewhat related to the impact from Hurricane Florence,” Mortgage Bankers Association Chief Economist Mike Fratantoni said. “Beyond that, housing demand still remains strong, and is bolstered by an incredibly healthy job market.”

Existing home sales in the West fell 3.6% to an annual rate of 1.08 million in September, which is 12.2% below September 2017. The median price in the West was $388,500 increasing 4.1% from this time last year.

“With this underwhelming report, we’re seeing how strong the effects of rising prices and sagging inventory really are on the market. Normally, the existing home market is more affordable and accessible for homebuyers and can rely more on a stock of inventory when new supply is tough to come by, but even this segment has not been insulated from the housing market’s broader price and supply challenge,” TIAA Bank Executive Vice President John Pataky said.

“If inventory rises, wage growth continues to draw closer to home price growth, and the rest of the economy remains strong, the market might have the ingredients it needs to cook up a turnaround,” Pataky concluded. “Otherwise, we’ll continue to see less-than-uplifting results.”

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Refinance debt share falls behind to 2018 low

As debt rates recently hit their top indicate in 7 years, sealed refinances fell behind to their low-point of 2018, according to Ellie Mae.

The refinance share of sealed loans forsaken to 29% from 38% year-over-year, and down from August’s share of 32%. As debt rates climbed in a past month, fewer borrowers took a event to refinance, instead holding onto a expected reduce rates of their stream mortgage.

“We see refinances sojourn during a low commission of total sealed loans and squeeze register continues to be parsimonious as we pierce into a fall,” Jonathan Corr, boss and CEO of Ellie Mae, pronounced in a press release.

Ellie Mae

“We did see a initial rebate in seductiveness rates this month and with that, a commission of ARMs began to increase. However, we trust that a anniversary decrease in home shopping and continued affordability constraints will figure a squeeze market.”

Closing rates for all loans stayed immobile during 71.1%, a top commission of 2018. That rate is down from 71.6% year-over-year.

The share of sealed squeeze mortgages went behind adult to 71%, a top share available by Ellie Mae given it started tracking it in 2011. It’s adult year-over-year from 62% and adult from 68% in August, according to a latest Origination Insight report.

Last year’s squeeze share arise was 68% in June, a figure possibly met or exceeded 5 times in 2018.

January is prone to have seasonally diseased squeeze shares and has had a lowest percentages given a start of 2017 — 55% this year and 53% final year.

The adjustable-rate debt share, that tends to arise along with debt seductiveness rates, jumped to 7.2% from a 6.6% it sat during for dual uninterrupted months. ARMs represented 5.5% of all sealed loans in Sep 2017.

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