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NAR: HOME PRICE INCREASE HAS DOWNSIDES AS INVENTORY DWINDLES prices, but buyer choices are stifled in an increasing number of markets, the National Association of Realtors (NAR) reports. The association's latest quarterly report Limited inventory may be boosting home showed that the median existing single-family home price increased during Q2 in 110 out of 147 metropolitan statistical areas (MSAs) when compared to the same period in 2011. Of the remaining 37 MSAs, 34 posted price declines, and three were unchanged. The national median existing single-family declined steadily. The end of the second quarter saw 2.39 existing homes available for sale, a 24.4 percent drop from the same time in 2011. According to NAR president Moe Veissi, Since the summer of 2007, inventories have mortgage rates and historically low prices have increased buying power dramatically. The in- ventory in the lower price ranges needs to keep up with demand, he said. "What we need now is additional inventory home price was $181,500 in Q2, up 7.3 percent from the same time in 2011. It's the strongest year-over- year increase since the first quarter of 2006. The second quarter's results illustrated a marked improvement over the first quarter, which showed year-over-year price gains in only 74 MSAs. Lawrence Yun, chief economist for NAR, FORMER FANNIE MAE CEO FACING SEC CHARGES himself facing charges of misleading investors about the GSE's loans, brought by the Securities and Exchange Commission (SEC). According to a complaint filed in the U.S. A former Fannie Mae executive now finds District Court for the Southern District of New York, ex-CEO Dan Mudd, along with two other defendants, allegedly misled investors into thinking the company had far less exposure to risky loans than it actually had. The SEC accuses Mudd, former chief risk in the lower price ranges, so we hope banks will be releasing more foreclosure inventory into the market, Veissi said. "With gains apparent in all of the price measures, banks also should have more confidence in expanding mortgage credit to homebuyers using safe but sensible standards." The national median family income in said the organization expects prices to continue to rise in the future. "It's most encouraging to see a growing number of metro areas with rising median prices, which is improving the equity position of existing homeowners," Yun said. "Inventory has been trending down, and home- builders are still under-producing in relation to growing demand." Yun pointed out that price increases can also be attributed partially to a decreasing share of sales in low price ranges, where inventory tight- ened. Distressed homes accounted for 26 percent of Q2 sales, down from 33 percent in Q2 2011. Drastic discounts from distressed sales usually work to bring the median home price down. VERBOSITY "We think there is a 70% chance that Congress will reach a last minute deal to prevent the $600bn of tax hikes and spending cuts that form the fiscal cliff from kicking in at the start of 2013." —Capital Economics 38 the second quarter was $61,000. To purchase a home at the national median price, a buyer making a 5 percent down payment would only need an income of $39,000. "Because the income required to buy a typical home is very manageable by historical standards, any further decline in mortgage interest rates will have little effect. Changes in underwriting guidelines would have a far greater impact," Yun said. Existing-home sales varied from region to region in the second quarter, rising 1.3 percent in the Midwest and South but slipping 0.6 percent in the Northeast. In the West, tight inventory brought existing-home sales down 5.3 percent as the median home price jumped 13.4 percent. "Inventory is pretty tight in all price ranges in officer Enrico Dallavecchia, and former EVP Thomas Lund of creating "materially false and misleading statements regarding Fannie Mae's exposure to subprime and Alt-A loans" between 2006 and 2008. The complaint cites a February 2007 public filing in which Fannie Mae reported that subprime loans made up approximately $4.8 billion of its book of business as of the end of 2006. In this estimation, the company allegedly left out Expanded Approval (EA) loans, which were targeted at borrowers with weak credit histories and made up approximately $43.3 billion of Fannie Mae's book at the end of 2006. "Fannie Mae's exclusion of loans such as EA from its subprime disclosures was particularly misleading because EA loans were exactly the type of loans that investors would reasonably believe Fannie Mae included when calculating its exposure to subprime loans," the SEC said in its complaint. "In addition, all of the defendants knew most of the West except for the upper end, which accounts for the sharp price gain," Yun explained. that EA loans had higher average serious delinquency rates, higher credit losses, and lower average credit scores than the loans Fannie Mae included when calculating its disclosed subprime loan exposure." Following a rejected attempt by the defendants to dismiss the case, U.S. District Judge Paul Crotty wrote that the defendants "must have known that Fannie Mae's disclosed subprime and Alt-A exposure calculations were materially misleading." James Wareham, an attorney for Mudd, wrote in an email that the evidence proving the adequacy of the company's disclosures is "overwhelming" and called the case "shameful." KNOW THIS Banks repossessed more than 1 million homes in 2010 and more than 800,000 in 2011 and are on track to repossess another 700,000 in 2012, according to RealtyTrac.

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