Sellers are cutting prices and buyers are coming back

🧨 Hi! It's July — and the second half of the year kicks off. Here's what we've got for you today in 869 words, a 3.5-minute read.

Programming note: This newsletter will be dark on Friday for the holiday. We'll be back in your inboxes on July 6.

1. VA updates appraisal rules and adjusts fees to speed up VA loans

The VA has revised its Minimum Property Requirements, removing the full radon-gas requirement and relaxing standards around pre-1978 properties — including a rule that required any chipped or peeling paint to be repainted before closing. That requirement was widely viewed as cosmetic and a common deal-killer.

Appraisal fees are being adjusted upward in select regions, with LOs reporting an average increase of about $50 on a base fee of roughly $700. Borrowers can now also negotiate rush fees directly with appraisers, a new option that wasn't previously permitted. Changes are effective immediately.

The VA framed the changes as part of a broader effort to address a long-standing industry complaint: that VA loans are harder to place because the appraisal criteria are more demanding than conventional loans.

2. Sellers are cutting prices and buyers are coming back

Asking prices fell 2.5% year over year in June — the largest drop since Realtor.com began tracking in 2017 and the eighth straight month of annual declines. At the same time, pending sales rose 3.7% for a seventh consecutive month, with active inventory up 1.9% to more than 1.1 million homes.

The two trends aren't contradictory. Sellers are pricing realistically from the start rather than listing high and cutting later, and buyers are responding. Homes spent a median 53 days on market in June, unchanged from a year ago and ending a 26-month streak of properties taking longer to sell than the prior year.

Price reductions are actually running below last year's levels despite the broader price declines, and contract cancellations remain below year-ago levels — both signs that the market is functioning rather than breaking down.

3. More Nuggets

💼 Startup lender accuses rival of using government as a weapon. (NMN)

🏡 How the rules that once helped Americans buy their dream home could now leave them in debt. (NYPost)

🤖 Why trust will define the next phase of Mortgage AI. (NMP)

⏸️ Supreme Court blocks Trump's attempt to fire Federal Reserve Governor Lisa Cook. (BBC)

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4. Saving for a down payment takes 65 years in New York — and 4 years in Detroit

A Rocket Mortgage analysis of 49 major metros found a typical household would need 65 years to save the median first-time buyer down payment in New York City. San Francisco buyers put down $400,000 on average, requiring 57 years of saving. In Detroit, the median down payment is $7,600, and buyers get there in under 4 years.

The gap isn't just about home prices — it's about buyer behavior. Coastal buyers put down far more than minimum requirements because larger down payments help them qualify on debt-to-income ratios for high-priced homes. That's a financing strategy, not a requirement.

For LOs, the takeaway is clear: many buyers believe they need 20% down when they don't. Rocket's Bill Banfield put it directly: "The idea that you need 20% down is simply a myth in many markets." Connecting buyers to 3% conventional, 3.5% FHA, VA, USDA, or DPA programs could move deals that buyers think are years away.

5. Hometap hit with four class action lawsuits over home equity contracts

Four federal class action complaints have been filed against Hometap this year, with two landing in June. Plaintiffs accuse the company of violating TILA by failing to treat its shared-appreciation contracts as mortgage loans — a classification Hometap disputes, arguing its product creates no debt and extends no credit.

The core allegation: Hometap's contracts function like reverse mortgages without the consumer protections. One pair of New Jersey plaintiffs received $98,000 through a 10-year contract. If Hometap exercises its option today, they say they'd owe $177,000 — and that Hometap could force foreclosure to collect.

Hometap is pushing cases into arbitration. Plaintiffs say TILA bars that in mortgage agreements. A hearing is set for late July. The company also faces a pending suit from the Massachusetts AG, and Maine recently signed a law effectively banning these products statewide.

☀️ You’re all caught up. See you on Monday!

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