Nothing ruins your Friday like
realizing it is only Wednesday! I lose track of what we're celebrating this
month: I was all geared up for the Irish, but the Census Bureau reminds us that
it is Women's History Month. A good thing, too, as there are 161 million women
living in the U.S. (compared to 156 million men) and by age 85 women outnumber
men 2 to 1 (4 million to 2 million). The median annual earning for women 15 or
older who worked full-time in 2013 was $39,157 compared to $50,033 for men and
female workers earned 78 cents for every dollar their male counterparts earned.
More women are graduating from college than men, with women accounting for 56%
of all college students. In 2014, there were 5.2 million stay-at-home
mothers compared to 211,000 stay-at-home fathers.
What is going on around the
nation? You can't go to a conference without someone discussing urban price
appreciation, rents skyrocketing, and every Realtor licking their chops waiting
for a bunch of 24 year olds to buy a house.
The
U.S. Census Bureau published 2014 fourth quarter residential vacancy and
homeownership rates, with the national vacancy rate at 7 percent for rental
housing and 1.9 percent for homeowner housing. The national homeownership rate
of 64 percent was 1.2 percentage points lower than a year before. The rental vacancy
rate was highest in the South at 9%, then the Midwest at 7.5%, followed by the
Northeast at 5.8% and the West at 4.8%. The homeowner vacancy rate in the South
was 2.2%, the Northeast was 2%, the Midwest was 1.7% and the West was 1.4%. Approximately
87% of housing units were occupied in the Q4 of 2014, with owner-occupied
housing units making up 56% of total housing units and renter-occupied units
making up 32% of the inventory in the fourth quarter of 2014. Homeownership
rates were highest in the Midwest at 68.3 percent and lowest in the West at
58.5 percent. In regards to homeownership demographics, homeownership rates
were highest among householders 65 years old and older (79.5 percent) and
lowest for those under 35 years old (35.3 percent). Homeownership rates among
non-Hispanic White householders was 73.2 percent, All Other Races householders
was 55.4 percent and African American householders was 42.1 percent. For a more
in depth look at the U.S. Census Bureau's report, click here.
For
those who have given up on the dating life, a recent article published by the
Collingwood Group suggests that half of U.S. adults are single. The share of
singles have also impacted the homeownership rate, which declined in Q4 of 2014
to 63.9%, the lowest level over the past two decades and is expected to drop
even further this year. The percentage of renters who want to become homeowners
has also declined to 75%, which is lower than the 80% confidence rate seen five
years ago. In order to attract this sector of potential homeowners, it's
necessary to market to single adults, explaining how owning a home is more
beneficial and often more affordable than renting.
Respondents
say it is important to have sufficient reserve capital and/or private mortgage insurance
in place to protect taxpayers from the next business cycle downturn. Some
suggested combining Fannie Mae and Freddie Mac into a single entity or moving
to a single security. The vast majority (85%) of survey respondents agree that
Fannie Mae and Freddie Mac should be doing more risk sharing transactions.
These transactions allow private market participants to invest in the credit
performance of Fannie Mae and Freddie Mac's single-family book of business.
Most survey respondents indicated that they support these transactions because
they help fuel the private securitization market and limit taxpayer risk while
the GSEs are in conservatorship.
I
often remind folks that while the huge majority of banks in this country are
exempt from direct examination by the CFPB, they are subject to the rules and
regulations of the CFPB. And regarding decisions and enforcement actions,
attorneys have always looked to agency decisions (to the extent they are
available) to discern what possible enforcement posture would be taken by
regulators. Attorney J. Steven Lovejoy reminded me that, for example, HUD used
to publish Consent Orders on its RESPA page. Those were very helpful in
interpreting a rather opaque statute and regulations. It's the same as looking
up cases with precedential value. But there is less predictability with a new
agency like CFPB and its approach to enforcement is a bit different.
Acknowledging that they are both prosecutor and judge, for purposes of
settlement, there is precious little negotiation. Instead they ask "tell
us what you want us to know about the violation and the violator and we will
determine an appropriate penalty.
Last
month many in the industry began to believe that reverse mortgages will be the
next target on the CFPB's list, as the bureau has recently released a report that is a
snapshot of reverse mortgage complaints from December 2011 to December
2014, which encompasses 1200 reverse mortgage complaints that the agency
received during that time period. The top reverse mortgage complaints include
problems when unable to pay (38%), making payments (32%), applying for the loan
(18%), signing the agreement (10%) and receiving a credit offer (3%). The CFPB
cited that many consumers were frustrated over the requirements of reverse
mortgages and did not fully comprehend the loan product or how the amount of
available equity will decrease due to accrued interest on the loan. Other
complaints include challenges paying off the loan once it became due,
difficulty obtaining information from servicers and unresponsiveness from
servicers when trying to avoid a foreclosure. These findings will more than
likely lead the CFPB to enact new requirements for reverse mortgages and the
bureau has already posted a consumer advisory on their
website to address concerns that arose from the complaints.
I
know I am playing some catch up, but the American Bankers Association (ABA)
released a response to the CFPB's proposal regarding mortgage relief for some
community banks. Bob Davis, the executive vice president of mortgage markets
for the ABA, praises the CFPB for listening to community bankers and taking the
ABA's recommendations into consideration to expand the definitions of 'rural
area'. The proposed changes would ensure certain bankers meet the mortgage
credit needs within their communities and the changes could allow many
communities to enjoy more choice and expanded competition for mortgage credit.
To read the ABA statement regarding the CFPB proposal, click here.
And
the American Land Title Association (ALTA), the national trade association of
the land title insurance industry, released the following statement in response
to CFPB Director Richard Cordray's testimony before the House of
Representatives Financial Services Committee. "'In 150 days, new
disclosure forms for real estate transactions will completely change the home
buying process as it's known today,' said Michelle Korsmo, ALTA's chief
executive officer. 'As our member companies work to implement these new
forms on Aug. 1, we strongly urge Director Cordray to announce a five-month
restrained enforcement period so that new business processes can be
adjusted to comply with these regulations. As with previous regulatory reform,
only when the new forms are in practice will many issues and defects be
discovered. A restrained enforcement period helps our members, and the broader
real estate industry, make the changes needed to their business processes and
collaborate with industry and regulators to ensure the consumer has a positive
experience at the closing table.'
"'Unfortunately,
we're already aware of one major problem with the new CFPB forms,'
Korsmo stated. 'The Bureau's Closing Disclosure, which replaces the current
HUD-1 Settlement Statement, inaccurately discloses the fees associated with
title insurance premiums for consumers. State law and regulation in half of the
United States dictates that consumers must pay title insurance rates that are
different than how the CFPB requires industry to inaccurately disclose these
fees to the consumer. Every homebuyer should be well-informed about the
accurate costs of homeownership-including what they pay for each service during
the real estate closing process. For many consumers, buying a home is the
single largest investment they will make in their lifetime. It's critical that
Director Cordray and the CFPB staff adjust the disclosure forms prior to Aug. 1
to ensure consumers receive accurate information about their mortgage costs.
ALTA and our member companies stand ready to help the Bureau ensure consumers
are neither confused nor misled at the closing table.'"
Turning
briefly to the markets, since "brief" is all they deserve, as the
commentary noted yesterday, if there is peace and quiet overseas then,
everything else being equal, rates may be inclined to go up because our economy
is doing pretty well. ThomsonReuters noted that, "Supply appeared to have
been a bit elevated again, and based on earlier indications was on track to
reach $2 billion; the same as Monday and up from an average of $1.7 billion
last week. Overall, however, supply is generally trending lower at current
mortgage rate levels that are over 3.90%."
This
morning, care of the MBA, we've seen what 75% of the retail lenders did last
week for application numbers: apps +.1%, refis +.5% and were 62% of apps, and
purchases were -.2%. We've also had the February ADP Employment Report.
Expected +225k it was +212 - close enough.
Later
we will have some non-market moving figures like the Markit Services PMI and
February ISM Non-Manufacturing PMI, but also the Fed's Beige Book at 2PM EST.
Tuesday we had a 2.12% close on the good ol' 10-yr with agency MBS prices
finishing worse by nearly .250 versus Monday afternoon) and in the early
going we're at 2.12% and agency MBS prices are roughly unchanged from Tuesday's
close.
No comments:
Post a Comment