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FHFA’s New Guidelines Should Aid Recovery’s Momentum

The housing market is seeing signs of recovery, and this recovery may be bolstered by the new representation and warranty framework the ""Federal Housing Finance Agency"":http://www.fhfa.gov/(FHFA) announced Tuesday, according to Fitch.

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Relying on signing offers and home tours as a future indicator of home sales, Redfin, a technology-driven real estate broker, predicts the market improvement seen this summer will continue into the fall.

Offers fell 4 percent in August, while home tour requests fell 6 percent, Redfin reported Tuesday. However, these declines are smaller than declines reported in August 2011 when offers declined 13.6 percent and home tour requests decreased by 6.2 percent.

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""Housing market activity typically slows throughout the summer, yet the number of home offers in August declined much less dramatically than in 2011,"" Redfin stated.

Redfin predicts winter sales volume will outpace last year's sales.

""The market isn't booming, but it's building steadily in ways that have surprised many economists,"" stated Glenn Kelman, CEO of Redfin.

Meanwhile, Fitch takes the FHFA's new approach to representations and warranties as a good sign, believing it ""will potentially have a positive impact on both the mortgage lending and housing markets,"" according to a statement released Wednesday.

The increased focus on quality control as Fannie Mae and Freddie Mac are urged to review loans earlier in the process and the expiration of repurchase claims after loans have reached certain numbers of consecutive on-time payments will provide more certainty for lenders, thus leading to increased credit availability.

Of course, several other issues loom overhead preventing widespread clarity in the market, including the future of the GSEs and housing reform, impacts from Basel III, and regulatory uncertainty as the Consumer Financial Protection Bureau continues to take shape, according to Fitch.

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