It is so sad that America ranks
25th in the world in math. But at least we're still in the top 10. Speaking of
math, the Census Bureau tells us that the wealthiest 10% of American
households own 80% of all US stocks (12.1 million households out of 121
million). Since the total market capitalization of the US stock market is
roughly $23 trillion, it suggests that $18.4 trillion of stocks is owned by
just 12.1 million households or an average of $1.5 million of equities for
every wealthy household.
The
last time I used a travel agent was in 1986, when I was grappling with five
weeks through the South Pacific (including New Guinea). The travel agent
occupation has suffered due to computers, the internet, and consumers going
directly to the carrier. Is the LO occupation at risk? Does a company
like Bank of America or Wells Fargo really need 8-10,000 of them - each? One
can make that argument, and this Bloomberg article
mentions LOs specifically.
It's been said that living in
major metropolitan areas isn't easy; as one person I know who lives in the
heart of San Francisco put it, "you have to want to live here, nothing is
easy; from parking to buying groceries, it's always difficult." It's a
life-style choice for sure, one which can exclude home ownership, especially
for first time buyers who face median home prices in SF of $925k. However, San
Francisco recently announced a program to promote homeownership within the city
limits - DAPs are not dead, and open doors for would-be transplants. The
city is now willing to lend certain first-time home buyers up to $200,000
toward the down payment on their first house or condominium. SF Gate writes, "The
program provides down-payment help in the form of a loan to first-time buyers
of market-rate homes who make up to 120 percent of the area's median income.
The city runs similar programs for people buying below-market-rate homes and
for others such as police officers and firefighters." When the
homeowner sells or refinances, the loan has to be paid off along with a
percentage of the property's appreciation, depending on how much of the
purchase price the city covered.
Whether
it is San Francisco, or Phoenix, or Miami, there are plenty of rentals out
there. Reuters has an article on securitizing rental properties: a potential
Colony Capital securitization of
single-family rental properties. Colony Financial owns approximately 25% of the
equity in Colony American Homes, which comprises approximately 33% of CLNY's
equity. Many analysts view securitization as a positive catalyst as it provides
a source of low-cost capital and mechanism for investors to "get credit
for" home price appreciation. For example, assuming a 6% unlevered cash
flow yield, we believe returns on equity could exceed 15% (depending on
execution, including the advance rate and cost of funds). This would be the
second such securitization in the sector following Blackstone's Invitation
Homes securitization in October, which was well-received. According to the
article, JP Morgan and Credit Suisse may begin marketing approximately $500
million of securities today and into next week.
I know a lot of workers around
the country are blocked from watching YouTube videos while at work. While the
temptation is too great for some not to watch, the rest of us use the medium
for its intended purpose: to keep abreast of CFPB field hearings and bureau
educational videos. The CFPB's page currently has over seventy videos
ranging from introductory compliance videos, to messages from Director Cordray.
Generally,
'open source' refers to a computer program in which the source code is
available to the general public for use and/or modification from its original
design. Contrary to programs you may purchase and run on your desktop, which
are normally 'closed source', 'open source' software is at the opposite end of
the spectrum. The source code is included with the compiled version and
modification or customization is actually encouraged (Linux operating system is
an example of open source). I bring this up due in large part because the
CFPB has published open source code to allow lenders to integrate the web-based
tool into lender applications or websites, in the hopes banks will build
and customize web-based tools for consumer use. Ballard Spahr writes, "In
the press release, the CFPB notes that the web-based tool can be used to find
the 10 closest HUD-approved housing counselors to a consumer's location and
print or save the results...Also, the press release states that lenders can use
the tool to comply with housing counseling requirements under Dodd-Frank."
As Ballard points out, it is unclear at the moment whether using this tool
would bring about compliance, or "safe harbor", for lenders who
utilize the source code to build the tool into their websites or applications. The CFPB on GitHub.
As
a reminder, the CFPB announced it will begin the rulemaking process for
changes to the reporting requirements under the Home Mortgage Disclosure Act
(HMDA). The agency will assemble a Small Business Review Panel, seeking
early feedback on ways to improve HMDA requirements; however, early-on, it is
apparent that HMDA data will ultimately become a greater area of focus with
regulators in the future. The announcement included possible changes to the
following areas: making lenders report information that will help regulators
gauge access to credit in the mortgage market (explaining rejected loan apps,
whether the lender considered the loan to be a Qualified Mortgage,
borrower's DTI); requiring lenders to report additional information that can
alert regulators to problems in the industry (length of the loan, total points
and fees, length of any teaser or introductory interest rate, applicant or
borrower's age and credit score); requiring financial institutions to report
additional underwriting and pricing information; streamlining HMDA reporting to
align with existing data collection methods already used by the mortgage industry
to collect information on processing, underwriting, loan pricing, and secondary
market sales. For the agency's official news visit HMDA.
Plenty
of folks in the industry are waiting for the CFPB to level financial penalties
on originators, since they, in simple terms, are viewed as being responsible
for their company's compensation plans. As a reminder, back in December, the
CFPB ordered GE CareCredit to refund $34.1M for deceptive health-care credit
card enrollments. CareCredit offers personal lines of credit for
health-care services, including dental, cosmetic, vision, and veterinary care.
So who is the primary driver of this finance, you ask? Well, doctor and dentist
offices, of course...Timeo Danaos et dona ferentes. Currently, the product is
sold by more than 175k enrolled providers across the country, and there are
approximately 4 million active cardholders. According to the CFPB, roughly 85
percent of CareCredit borrowers were placed in a deferred-interest financing
plan. Under this "no interest if paid in full" plan, consumers make
monthly payments while CareCredit assesses 26.99 percent annual interest on a
consumer's balance throughout a promotional period, which can range from six to
24 months. If any portion of the balance has not been paid when the promotional
period ends, the consumer becomes liable for all of the accrued interest. The
bureau claims that such lending programs, have deceptive enrollment processes,
inadequate disclosures, and poorly trained staffs. So the CFPB, keeping in-line
with their belief that an educated consumer creates low market volatility (ok I
just made that up, but it's not too far off) has posted "What's the deal
with health care credit cards?"
Sliding
over to the markets, it is becoming harder to argue that the jobs market is
flailing. The number of Americans filing applications for unemployment benefits
held last week near the lowest level in almost four months, a sign the labor
market continues to strengthen. That was enough to push rates higher, and
agency MBS prices were pressured most of the day. Analysts continued to
ruminate, and act on, thoughts that Fed Chair Yellen saying rate hikes could
start six months after the end of QE. That is quite a shift from today's
environment in which the New York Federal Reserve Bank is buying $2.16 billion
per day of agency MBS.
For
numbers, agency MBS prices were worse than Wednesday by about .125; the yield
on the U.S. 10-yr T-note ended Thursday at 2.77%. While the Malaysian airplane
disappearance is setting records for a news story that has no news, not much
happened overnight in the financial markets. In the early going we're
unchanged from Thursday's closing levels
No comments:
Post a Comment