The Fed reports home ownership
among families with a head of household younger than 40 years old have fallen
from about 50% from 2005 to 42% today. And home ownership among families with a
head of household age 41 years old to 61 years old has declined to 72% versus
about 77% over the same period. Of course at some level home ownership is tied
having a job and Gallup indicates the following percentage of these
generational groups in the workforce: 32% Millennials (born 1980-1994), 32% Gen
X (1965-1979) and 33% Baby Boomers (1946-1964).
The
recent potential changes coming from Fannie & Freddie, Dave Stevens,
president of the MBA, wrote; "I read with amazement the comments from a reader Saturday
taking issue with the steps made by FHFA director Watt to responsibly expand
credit marginally for the purchase market. To be clear, MBA did not support
this effort to 'please our members'. We supported, and I support, these efforts
because these are responsible moves for housing. Down payments are the single
biggest barrier to homeownership but it is not, by itself, an indicator of
ability to repay a mortgage. The move to bring back the 97% LTV will come with
higher premiums for mortgage insurance, more scrutinized underwriting
requirements, and will only raise the maximum LTV by 2% for the GSEs from 95%
to 97%. Any allusion that this is returning to the kinds of antics that led to
the housing bubble is simply ridiculous. QM eliminates no-doc, neg am, balloon,
extended term, shorter term arms, IOs, and more. Every loan must meet the
ability to repay standard. Just because the Director and the team at FHFA, as
well as the MBA, realize that many Americans do not have the luxury of wealthy
parents to provide a gift, or excess income beyond the fixed expenses of rental
costs (which are rising), consumer debt, child care, and more to save up for a
down payment as easily as others, does not mean they should miss out on what
could be the lowest interest rates we will experience in our lifetime. The
future buyers will be younger and heavily dominated by minority applicants in
this country. Responsibly letting qualified buyers take advantage of this
market by expanding LTVs by 2% is exactly the right thing to do and will help
these homebuyers but will also help the economy. Each new home built adds 3
jobs in this country and over $100k in economic stimulus, per the NAHB. The
comments of this reader may come from someone with far more privilege at a time
when responsible modification to the extreme pendulum swing to the conservative
end of credit availability is due."
Speaking
of things impacting the entire lending industry, a couple weeks ago representatives
of several independent state professional appraiser organizations met to
discuss issues affecting their membership. The network is comprised of 16
State Organizations and members include leaders from each participating state
organization. The purpose of this network is to improve and elevate appraisal
profession. Each State Organization has specific topics that they focus on,
sharing data with one another and support each other on state and national
issues. This network includes independent state level members who research and
present positions that have been assessed and approved by each state level
organization signing correspondence. This was an historic meeting because
participants, who never met face-to-face before, had collaborated and know of
no other similar national initiative, their goal is to develop representation
from all 50 states and better their profession.
Let's
catch up with the Consumer Finance Protection Bureau. The CFPB issued a
final rule to allow financial institutions (including certain nonbanks within
the CFPB's jurisdiction) that limit their consumer data-sharing and meet other
requirements to post their annual privacy notices online rather than delivering
them individually. The final rule amends Regulation P (12 CFR part 1016) and
will become effective upon publication in the Federal Register. The final
rule amends §1016.9(c) of Regulation P by adding subsection (c)(2) to provide
an alternative method for delivering annual privacy notices. As summarized in
the preamble to the final rule (pages 65-66), a financial institution may use
the alternative delivery method if it does not disclose the customer's
nonpublic personal information to nonaffiliated third parties in a way that
triggers the consumer's opt-out rights under the Gramm-Leach-Bliley Act (GLBA).
Put
another way, financial institutions that meet specified requirements will be
permitted by the CFPB to provide annual privacy notices to their customers
using an alternative online delivery method, namely they can post their annual
privacy notice on their website. The GLBA annual privacy notice requirement was
1 of 9 potential opportunities for streamlining regulations.
The
CFPB finalized amendments to its mortgage rules to include changes to help
nonprofit organizations continue to lend to underserved populations. The
CFPB has provided an alternative definition of a small servicer applicable to
501(c)(3) nonprofit organizations so they can consolidate their servicing
activities while maintaining their exemption from certain servicing rules.
Nonprofit organizations, such as Habitat for Humanity, can continue to provide
interest-free, forgivable loans, known as "soft seconds" without
regard to the 200-mortgage loan limit. The CFPB has also finalized changes to
the ATR rule to if a lender discovers after a loan has closed that it exceeded
the 3% cap on points and fees, there are certain circumstance where the lender
may be able to pay a refund of the excess amount with interest to the consumer,
to have the loan still be considered a Qualified Mortgage. The refund would
have to occur within 210 days after the loan is made. For those interested, the
CFPB's final rule is available here.
As
a reminder, the CFPB issued a proposed rule to amend the
TILA-RESPA Integrated Disclosures Rule. The first proposed amendment is to
modify the timing requirement for revised disclosures when the consumer locks a
rate after initial disclosures are provided. The CFPB is proposing that
creditors must provide a revised disclosure no later than the next business day
after the date the rate is locked. The second proposed amendment is to allow
language relating to new construction loans to be incorporated on the Loan
Estimate. The CFPB is also proposing an amendment to § 1026.36(g)(2)(ii)
of Regulation Z to add the NMLS Unique Identifier on the integrated
disclosures.
Yes,
the CFPB has come out with changes to the 2013 Mortgage Rule under TILA. The
amendments include refunding a consumer within 210 after consummation the
amount of points and fees that exceeded the 3% threshold. In doing so, the loan
would still be considered a Qualified Mortgage. The rule only allows a cure for
loans consummated on or after the rules effective date and on or before the
expiration date of January 10, 2021. The lender must also pay interest on the
points and fees overage until payment is made to the consumers.
The
final rule also established an alternative definition of small servicer to
include a nonprofit that services 5,000 or fewer mortgages, including any loan
services on behalf of associated nonprofit entities, for which the servicer or
an associated nonprofit is the creditor. The final rule also amends the
nonprofit lender exemption from ATR provisions where subordinate lien loans for
down payment assistance and other purposes that are forgivable and meet certain
conditions would not count towards the 200 annual loan limit.
Flipping
over to the markets, the yield on the 10-year ended Friday at 2.27% - certainly
higher than the 1.8-something% we saw for a day or two a couple weeks back. But
it is definitely lower than the range rates have been in for much of the year.
Meanwhile, successful LOs and companies go about their business, knowing where
rates are but not basing their entire business model on them.
We
have a big news week ahead of us. Today we have Pending Home Sales. Tomorrow is
the volatile Durable Goods number for September (one aircraft or washing
machine order can throw things off) as well as the S&P Case Shiller numbers
from back in August and Consumer Confidence. Wednesday is the MBA's application
numbers and the end of the FOMC meeting - don't look for any change to
short-term rates. Thursday is our old friend weekly Jobless Claims but also
GDP. And on Halloween we'll see, besides finding out what the shipping
department decided to dress up as, the Employment Cost Index, Personal Income
and Consumption, a series of PCE (Personal Consumption Expenditure) numbers,
the Chicago Purchasing Manager's Survey, and the Univ. of Michigan Confidence
figure. In the early going we're roughly unchanged at 2.27% as are agency
MBS prices.
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