Calabria's out at FHFA, Biden extends mortgage relief, HUD calls for reinstating fair-lending rule & more of the week's top news
June 25, 2021 5:55 PM
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President can fire FHFA director at will, Supreme Court says
The Supreme Court on Wednesday ruled that the leadership structure of the Federal Housing Finance Agency is unconstitutional, delivering at once a win for the Biden administration and a blow to current FHFA Director Mark Calabria, who was appointed by former President Donald Trump.
In a split decision written by Justice Samuel Alito, with several of the other justices concurring and dissenting on several components of the case, the court also dismissed a claim brought by shareholders of Fannie Mae and Freddie Mac, who argued that a 2012 profit sweep agreement between the FHFA and the U.S. Treasury violates the law.
The plaintiffs had also argued that the provision in the 2008 law establishing the FHFA, which said a president can only fire the director for cause, was unconstitutional. While the court left in place the so-called net worth sweep in Wednesday’s opinion, the justices agreed that a sitting president should have the ability to fire the FHFA director at will. Previously, a president had only been able to fire the director “for cause.”
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In a split decision written by Justice Samuel Alito, with several of the other justices concurring and dissenting on several components of the case, the court also dismissed a claim brought by shareholders of Fannie Mae and Freddie Mac, who argued that a 2012 profit sweep agreement between the FHFA and the U.S. Treasury violates the law.
The plaintiffs had also argued that the provision in the 2008 law establishing the FHFA, which said a president can only fire the director for cause, was unconstitutional. While the court left in place the so-called net worth sweep in Wednesday’s opinion, the justices agreed that a sitting president should have the ability to fire the FHFA director at will. Previously, a president had only been able to fire the director “for cause.”
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<i>Bloomberg</i>
Biden fires FHFA director Mark Calabria
President Joe Biden fired Federal Housing Finance Agency Director Mark Calabria, following a Supreme Court ruling issued Wednesday that determined the leadership structure of the agency is unconstitutional.
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Graeme Sloan/Bloomberg
Biden administration launches new round of distressed mortgage relief
The Biden administration on Thursday extended the foreclosure moratorium for federally-backed mortgages to July 31 while also announcing that the Federal Housing Administration, the U.S. Department of Agriculture and the Department of Veterans Affairs will expand borrower relief next month.
The Centers for Disease Prevention and Control also extended the eviction moratorium through the end of next month, and the White House announced that the ban for properties with federally-backed apartment loans in particular will be enforced. (The courts have delivered varying opinions on the legality of the CDC’s ban. The matter is still in litigation.) The Biden administration will also push to distribute $42 billion in federally-authorized rental assistance through state housing agencies.
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The Centers for Disease Prevention and Control also extended the eviction moratorium through the end of next month, and the White House announced that the ban for properties with federally-backed apartment loans in particular will be enforced. (The courts have delivered varying opinions on the legality of the CDC’s ban. The matter is still in litigation.) The Biden administration will also push to distribute $42 billion in federally-authorized rental assistance through state housing agencies.
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Blend Labs makes its IPO registration statement public
Blend Labs took the next step in becoming a publicly-traded company with the San Francisco-based mortgage technology outfit's registration statement going live.
Back in April, the company disclosed it had filed a confidential registration statement , indicating it was planning to launch an initial public offering.
The Securities and Exchange Commission filing does not include any amounts except a placeholder number for the size of the offering. However, Blend disclosed it is establishing a multiclass structure for its common stock that will give the Class B stock, which only company co-founder and Chair Nima Ghamsari will hold, 40 votes per share.
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Back in April, the company disclosed it had
The Securities and Exchange Commission filing does not include any amounts except a placeholder number for the size of the offering. However, Blend disclosed it is establishing a multiclass structure for its common stock that will give the Class B stock, which only company co-founder and Chair Nima Ghamsari will hold, 40 votes per share.
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Why a multifamily foreclosure tsunami is unlikely
Distressed debt buyers will have some opportunity to pick up multifamily loans in the aftermath of the pandemic, but given the strong market for rental housing, a large wave of foreclosures is unlikely, observers generally agree.
Until now, most of the distressed debt funds for commercial mortgages raised early in the pandemic have remained on the sidelines because few packages have come to market. When multifamily forbearance programs end, the spigot could open, but only so much.
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Until now, most of the distressed debt funds for commercial mortgages raised early in the pandemic have
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Biden appoints Sandra Thompson acting FHFA director
President Joe Biden named Sandra Thompson as acting director of the Federal Housing Finance Agency late Wednesday, hours after removing Mark Calabria as head of the agency in the wake of a Supreme Court ruling that said the FHFA's leadership structure was unconstitutional.
Thompson, who was most recently the deputy director of the FHFA’s Division of Housing and Mission Goals, has been at the agency since 2013. Before joining FHFA, she worked for 23 years at the Federal Deposit Insurance Corp., ultimately serving as the director of risk management supervision.
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Thompson, who was most recently the deputy director of the FHFA’s Division of Housing and Mission Goals, has been at the agency since 2013. Before joining FHFA, she worked for 23 years at the Federal Deposit Insurance Corp., ultimately serving as the director of risk management supervision.
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Why servicers may not need to staff up for forbearance outcomes
With some distress from the waning pandemic likely lingering, and servicers expected to shift focus to costly workouts and away from handling payment suspensions , there have been questions about whether companies will need to budget for increased staffing.
However, a recent Fitch Ratings’ analysis of first-quarter residential mortgage-backed securities servicing trends suggests that so far companies are primarily planning on using roughly the same number of employees as they shift from handling forbearance to assessing borrowers who have seen long-term declines in their incomes.
The average number of full-time equivalent workers employed by banks that are Fitch-rated servicers was down slightly at 2,949 in the first quarter, compared with 3,004 the previous quarter, according to the rating agency’s U.S. RMBS Servicer Metric Report. For nonbanks, there was only a small increase to 1,006 from nearly 928.
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However, a recent Fitch Ratings’ analysis of first-quarter residential mortgage-backed securities servicing trends suggests that so far companies are primarily planning on using roughly the same number of employees as they shift from handling forbearance to assessing borrowers who have seen long-term declines in their incomes.
The average number of full-time equivalent workers employed by banks that are Fitch-rated servicers was down slightly at 2,949 in the first quarter, compared with 3,004 the previous quarter, according to the rating agency’s U.S. RMBS Servicer Metric Report. For nonbanks, there was only a small increase to 1,006 from nearly 928.
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Critical defects in mortgage files highest in years
The critical mortgage loan file defect rate for 2020 was the highest since Aces Quality Management started tracking this data in 2016. Loan documentation findings played a significant role in the increase, the audit technology provider found.
Such issues, which are indicative of manufacturing process errors, were second last year to income and employment as sources of critical defects found in post-closing reviews of mortgage files conducted by Aces. Loan documentation problems were found in 16.6% of the files examined, up from just under 15% for 2019.
This increase was driven by pandemic-related difficulties and are symptomatic of manufacturing-related defects overall, Aces said.
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Such issues, which are indicative of manufacturing process errors, were second last year to income and employment as sources of critical defects found in post-closing reviews of mortgage files conducted by Aces. Loan documentation problems were found in 16.6% of the files examined, up from just under 15% for 2019.
This increase was driven by pandemic-related difficulties and are symptomatic of manufacturing-related defects overall, Aces said.
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Serious delinquencies fall as foreclosure ban decision looms
The number of mortgages that would normally be on the verge of foreclosure dropped another notch in May, but it remains relatively high, and that could factor into federal officials’ decisions related to when collections can move forward and whether to add additional housing relief.
There were almost 1.67 million mortgages that had gone unpaid for 90 days or more in May, down from almost 1.77 millionthe previous month , according to Black Knight’s First Look report. The May number, which includes payments temporarily suspended up to 18 months for pandemic-related hardships, is up from just 631,110 the same month a year ago; but it is still a far cry from its 2009 peak in the wake of the Great Recession when it approached 3 million. In addition, there were more than 2 million home loans in foreclosure at that time. (In May, there were less than 148,000 loans in foreclosure due to the bans, which generally allow only vacant properties to move forward in that process.)
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There were almost 1.67 million mortgages that had gone unpaid for 90 days or more in May, down from almost 1.77 million
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Mortgage execs begin lobbying FHFA to lift lender sales cap
Jesse Van Tol, CEO of the National Community Reinvestment Coalition urged the next director of the FHFA to “act immediately to revisit a number of recent policies that undermine the role of the GSEs the market, mortgage rates and mortgage products, including the December rule around their capital requirements and the program and product restrictions included in the January amendments to the FHFA-Treasury Preferred Stock Purchase Agreements."
Immediately after Thompson’s appointment, Community Home Lenders Association’s executive director Scott Olson sent a letter to her and Treasury Secretary Janet Yellin calling for the suspension of the January amendments. The CHLA, which consists primarily of small and mid-sized nonbank mortgage lenders,previously questioned several moves the agency made, contending they were consequences of the January revisions to the PSPAs.
“The Administration has made as a centerpiece of its housing policy the pursuit of racial equity in homeownership,” Olson wrote. “The PSPA volume caps are completely contradictory to this policy.”
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Immediately after Thompson’s appointment, Community Home Lenders Association’s executive director Scott Olson sent a letter to her and Treasury Secretary Janet Yellin calling for the suspension of the January amendments. The CHLA, which consists primarily of small and mid-sized nonbank mortgage lenders,
“The Administration has made as a centerpiece of its housing policy the pursuit of racial equity in homeownership,” Olson wrote. “The PSPA volume caps are completely contradictory to this policy.”
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More home buyers used cash rather than taking financing last year
The fact that more recent home purchasers used cash rather than finance their transaction quantifies how competitive the market has been since the pandemic started.
Approximately 43% of all respondents to a ServiceLink survey said they used cash on hand or savings to purchase their home, while 42% went to a traditional lender to finance it. That gap widens when the question was asked of those who purchased in the last year, to 50% using cash or savings, and 32% financing from a traditional lender.
Among all respondents, 14% said they went to a digital or online lender; that increased to 32% among those that bought in the last year.
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Approximately 43% of all respondents to a ServiceLink survey said they used cash on hand or savings to purchase their home, while 42% went to a traditional lender to finance it. That gap widens when the question was asked of those who purchased in the last year, to 50% using cash or savings, and 32% financing from a traditional lender.
Among all respondents, 14% said they went to a digital or online lender; that increased to 32% among those that bought in the last year.
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National remote online notary bill reintroduced in Congress
A bill that would permit immediate nationwide use of remote online notarization was reintroduced in the current session of Congress, after failing to gain traction last year.
A number of states have had RON available for several years. Then as the pandemic made physical real estate transaction closings difficult , several jurisdictions permitted it on a temporary basis as they looked to keep commerce going when face-to-face contact was discouraged. Further expansion and movement from a transitory fix to permanent status may take a back burner now that large numbers of Americans have been vaccinated and the pandemic is subsiding.
Use of RON increased 547% during 2020 compared with 2019, an American Land Title Association vendor survey found.
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Use of RON increased 547% during 2020 compared with 2019, an American Land Title Association vendor survey found.
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Acting CFPB Director Dave Uejio nominated for HUD post
President Biden has nominated Dave Uejio, the acting director of the Consumer Financial Protection Bureau, to be an assistant secretary at the Department of Housing and Urban Development.
Uejio remains the CFPB’s acting director until Rohit Chopra, the president's nominee to lead the bureau, is confirmed by the Senate. Uejio, who would become assistant secretary for fair housing and equal opportunity if confirmed by the Senate, was on a list of White Housenominees sent to the chamber on Thursday.
That Uejio was nominated to HUD could be an indication that Chopra will be confirmed soon by the Senate. Chopra sits on the Federal Trade Commission, and some analysts have attributedthe delay in his confirmation to work that still needs to be done at the FTC under newly confirmed FTC Chairwoman Lina Khan.
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Uejio remains the CFPB’s acting director until Rohit Chopra, the president's nominee to lead the bureau, is confirmed by the Senate. Uejio, who would become assistant secretary for fair housing and equal opportunity if confirmed by the Senate, was on a list of White House
That Uejio was nominated to HUD could be an indication that Chopra will be confirmed soon by the Senate. Chopra sits on the Federal Trade Commission, and some analysts have attributed
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Biden nominates Julia Gordon to be FHA commissioner
President Biden has nominated Julia Gordon to serve as the commissioner of the Federal Housing Administration, an agency housed within the Department of Housing and Urban Development that traditionally supports first-time homebuyers as well as minorities and lower-income earners.
Gordon’s nomination, which must be approved by the Senate, is one of many moves the Biden administration has made this week in its effort to chart its own path on housing policy. Biden on Thursday also nominated acting Consumer Financial Protection Bureau Director Dave Uejioto be an assistant secretary at HUD . A day earlier, following a Supreme Court ruling, Biden removed former Federal Housing Finance Agency Director Mark Calabria and installed Sandra Thompson as acting director.
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Gordon’s nomination, which must be approved by the Senate, is one of many moves the Biden administration has made this week in its effort to chart its own path on housing policy. Biden on Thursday also nominated acting Consumer Financial Protection Bureau Director Dave Uejio
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Loan modifications are up for the first time in a year, FHFA finds
Although the average borrower that suspended payments for pandemic hardships is most frequently choosing to resume their original obligations and pay owed amounts later , loan-term change requests for affordability reasons have now grown for the first time in a year.
There were 11,434 loan modifications as 130,014 deferred payments in the first quarter, as compared to 9,347 and 185,112 (respectively) during the previous fiscal period, the Federal Housing Finance Agency reported Tuesday. Mods haven’t been this high since the first quarter of 2020, when they totaled 16,773.
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There were 11,434 loan modifications as 130,014 deferred payments in the first quarter, as compared to 9,347 and 185,112 (respectively) during the previous fiscal period, the Federal Housing Finance Agency reported Tuesday. Mods haven’t been this high since the first quarter of 2020, when they totaled 16,773.
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Homeowners are staying put for longest stretch in 20 years
Another rise in borrower purchasing power helped offset the historic lack of housing supply caused by “homebodies” who are holding onto their properties rather than listing them, according to First American.
Actual home sales outpaced the company’s Potential Home Sales Model by 4.3% in May, the equivalent of about 272,588 units. The model had predicted a0.8% increase in sales from April , a 23% jump from the throes of the May 2020’s pandemic conditions and 18% boost from May 2019.
The sales increase drove the seasonally adjusted annualized rate of existing home sales to 6.34 million from April’s 6.31 million. Gains in household income andmortgage rates hovering below 3% for most of the month added $7,100 in average home-buying power to the market, up from $6,900 the month prior.
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Actual home sales outpaced the company’s Potential Home Sales Model by 4.3% in May, the equivalent of about 272,588 units. The model had predicted a
The sales increase drove the seasonally adjusted annualized rate of existing home sales to 6.34 million from April’s 6.31 million. Gains in household income and
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