HUD reinstates fair housing rule, hot housing market shows signs of cooling off & more of this week's top news
June 11, 2021 4:32 PM
HUD restores fair housing rule
The Department of Housing and Urban Development moved to reinstate a key fair housing rule rolled back under the Trump administration, and pledged to undertake a separate rulemaking to improve equal housing opportunities in local communities.
The “affirmatively furthering fair housing rule” was drafted by the Obama administration in 2015. It was meant to encourage local governments and communities to meet obligations under the Fair Housing Act to provide affordable housing options and avoid housing discrimination.
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The “affirmatively furthering fair housing rule” was drafted by the Obama administration in 2015. It was meant to encourage local governments and communities to meet obligations under the Fair Housing Act to provide affordable housing options and avoid housing discrimination.
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Hot housing market on the verge of cooling off
While Black Knight data revealed that home prices grew at a record pace in April due to both the housing inventory shortage and low interest rates, a separate report from Redfin found indicators of the housing market starting to cool in May.
Residential home prices grew by 14.8% in April, the highest annual growth rate in the nearly 30 years that Black Knight has been tracking this metric. Single-family properties actually had higher price appreciation, at 15.6% on an annual basis, while condominium prices rose by 10%.
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Residential home prices grew by 14.8% in April, the highest annual growth rate in the nearly 30 years that Black Knight has been tracking this metric. Single-family properties actually had higher price appreciation, at 15.6% on an annual basis, while condominium prices rose by 10%.
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Groups seek to keep mortgage origination, securitization rules aligned
A coalition of mortgage, housing and banking organizations on Monday urged regulators to avoid a disconnect between certain pending standards for home loans sold to consumers and those in securitized pools.
The groups sent the letter to six federal regulators in response to the upcoming end of a periodic review done to determine whether the boundaries of the risk-retention exemption for securitized loans are adequate. Securitizers must retain at least 5% of the credit risk from loans pooled to create bonds unless all the mortgages involved meet certain standards. Risk retention was put in place in the wake of the Great Recession’s housing crash to incentivize securitizers to pool loans that would perform well even after the bonds were sold.
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The groups sent the letter to six federal regulators in response to the upcoming end of a periodic review done to determine whether the boundaries of the risk-retention exemption for securitized loans are adequate. Securitizers must retain at least 5% of the credit risk from loans pooled to create bonds unless all the mortgages involved meet certain standards. Risk retention was put in place in the wake of the Great Recession’s housing crash to incentivize securitizers to pool loans that would perform well even after the bonds were sold.
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CAROL T. POWERS/CAROL T. POWERS FOR BLOOMBERG NE
Brian Montgomery rejoins Radian's board
Brian Montgomery, the former No. 2 official at the Department of Housing and Urban Development, has returned as a director of The Radian Group.
He became a director again on June 7 when Radian's board voted to expand the membership by one and named him to the seat.
Between 2012 and 2017, before a second go-round as Federal Housing Commissioner — where he oversaw Radian's government-run competitor — Montgomery served on the private mortgage insurer's board.
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He became a director again on June 7 when Radian's board voted to expand the membership by one and named him to the seat.
Between 2012 and 2017, before a second go-round as Federal Housing Commissioner — where he oversaw Radian's government-run competitor — Montgomery served on the private mortgage insurer's board.
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Home buying sentiment takes a tumble
Fewer and fewer consumers found May’s home purchase conditions palatable given sky-high prices and sparse inventory.
After the segment of borrowers who thought it was a good time to buy dropped to a Fannie Mae Home Purchase Sentiment Indexall-time low of 47% in April , it tumbled even further to 35% in May. A 56% share said May was a bad time to buy a home, dropping the net percentage to -21% from -1% in April and 13% a year ago. It represents only the second time in the survey’s 10-year history the buying sentiment skewed to a pessimistic majority.
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After the segment of borrowers who thought it was a good time to buy dropped to a Fannie Mae Home Purchase Sentiment Index
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Incenter units to help mortgage nonbanks offer student loans
A pair of Incenter companies are teaming up to offer nonbank mortgage firms the opportunity to earn incremental fee income at a time when origination volume is expected to decline.
CampusDoor , which is a white-label technology provider for education loans, and Incenter Mortgage Advisors are coming out with Student Loan in a Box, a product that lets mortgage lenders generate revenue from student loans without having to hold them on their balance sheets.
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Munshi Ahmed/Bloomberg
MSR problem in Biden tax plan will likely be avoided
There’s an aspect of the Biden tax plan that looks worrisome for mortgage servicing rights , but analysts at Keefe, Bruyette & Woods said in a report Sunday that it’s a practical issue policymakers will likely resolve.
The proposal, which imposes a 15% alternative minimum tax on corporations with more than $2 billion in net income, could threaten a deferral that has been allowed on non-cash mortgage origination income from retained MSRs, the researchers said.
But they think the plan will likely be adjusted such that the deferral of taxes will be allowed to continue because it eliminates a logical timing issue whereby cash income from servicing would otherwise be taxed at origination, before it’s actually received.
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The proposal, which imposes a 15% alternative minimum tax on corporations with more than $2 billion in net income, could threaten a deferral that has been allowed on non-cash mortgage origination income from retained MSRs, the researchers said.
But they think the plan will likely be adjusted such that the deferral of taxes will be allowed to continue because it eliminates a logical timing issue whereby cash income from servicing would otherwise be taxed at origination, before it’s actually received.
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Staff retention, volume fluctuation among top lender worries for 2021
With most expecting this year’s lending volume to come in lower than 2020’s record-breaking totals, lenders are recalibrating in a number of areas to get ready for whatever comes next, according to a survey from The Mortgage Collaborative.
An 88.2% share of 598 lending executives surveyed saidretaining staff was either very important or critically important for this year, according to The Mortgage Collaborative’s inaugural Pulse of the Mortgage Industry report. Regarding their biggest concerns this year, about 86.2% said enhancing customer experience at the point of sale and 84.9% said modernizing loan originating processes to insulate against volume fluctuations .
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An 88.2% share of 598 lending executives surveyed said
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Mortgage rates fall for a second week
The average 30-year fixed-rate mortgage remained under 3% for a third consecutive week, as economic data sent mixed signals about which direction rates might head in the near term.
The 30-year average rate fell to 2.96% for the weekly period ending June 10, according to Freddie Mac’s weekly Primary Mortgage Markets Survey, down three basis points from 2.99%the previous week. One year ago, the rate stood at 3.21%.
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The 30-year average rate fell to 2.96% for the weekly period ending June 10, according to Freddie Mac’s weekly Primary Mortgage Markets Survey, down three basis points from 2.99%
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Mortgage volumes fell during holiday week
Mortgage volumes fell during a short holiday week in which purchases were up, but refinancing activity cooled off from early spring levels, according to the Mortgage Bankers Association.
The MBA’s weekly Market Composite Index, which measures mortgage volume based on the association’s survey of lenders, dropped a seasonally adjusted 3.1% week over week for the period ending June 4.The weekly change factored in adjustments made for the Memorial Day holiday. On an unadjusted basis, applications were down 13% compared to the week prior. Total seasonally adjusted mortgage activity was 17.7% lower from the same period one year ago, when volumes spiked after the lifting of COVID-19-related restrictions in many parts of the country.
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The MBA’s weekly Market Composite Index, which measures mortgage volume based on the association’s survey of lenders, dropped a seasonally adjusted 3.1% week over week for the period ending June 4.
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Mortgage delinquency levels reach pandemic low
March's mortgage delinquency rate was at its lowest point since the pandemic-driven economic upheaval began approximately one year ago, CoreLogic's Loan Performance Insights Report found.
The 4.9% overall delinquency rate was still 1.3 percentage points higher than March 2020's delinquency rate of 3.6%, but on a month-to-month basis, the delinquency rate fell 80 basis points from February's 5.7%. InJanuary , the rate was 5.6%, while in December, it was 5.8%.
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The 4.9% overall delinquency rate was still 1.3 percentage points higher than March 2020's delinquency rate of 3.6%, but on a month-to-month basis, the delinquency rate fell 80 basis points from February's 5.7%. In
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Mortgage lenders remain negative on profits, citing competition
Mortgage lenders were extremely bearish on their profitability outlook in the second quarter, issuing the largest negative net share differential in the seven-year history of Fannie Mae's Mortgage Lender Sentiment Survey.
Over two-thirds of the respondents, 69% said their profits will decrease over the next three months, while just 11% expected them to increase, for a negative net differential of 58%. Net share measures the difference between the percentage that believes profits will be higher and those that said they will be lower. That makes three consecutive quarters in which lenders were pessimistic about their profitability.
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Over two-thirds of the respondents, 69% said their profits will decrease over the next three months, while just 11% expected them to increase, for a negative net differential of 58%. Net share measures the difference between the percentage that believes profits will be higher and those that said they will be lower. That makes three consecutive quarters in which lenders were pessimistic about their profitability.
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Borrowers gain decade-high levels of home equity in first quarter
The feverish home buying of the past year led to skyrocketing values and the largest amount of owner equity in at least a decade.
On an annual basis, homeowners with mortgages collectively compiled over $1.92 trillion in equity in the first quarter of 2021, good for an average gain of $33,403 per borrower, according to CoreLogic. These compared to $1.58 trillion and $26,512 the prior quarter and $665 billion and $12,188 a year ago.
The growth also dropped the negative equity share by 24% annually to the lowest rate since at least 2009. The share of underwater borrowers fell to 2.6% with an aggregate unpaid principal balance of $273 billion from 2.9% and $281.1 billion in the fourth quarter of 2020 and 3.4% and $286.3 billion year-over-year.
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On an annual basis, homeowners with mortgages collectively compiled over $1.92 trillion in equity in the first quarter of 2021, good for an average gain of $33,403 per borrower, according to CoreLogic. These compared to $1.58 trillion and $26,512 the prior quarter and $665 billion and $12,188 a year ago.
The growth also dropped the negative equity share by 24% annually to the lowest rate since at least 2009. The share of underwater borrowers fell to 2.6% with an aggregate unpaid principal balance of $273 billion from 2.9% and $281.1 billion in the fourth quarter of 2020 and 3.4% and $286.3 billion year-over-year.
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Why GSEs may be pacing multifamily buying
Lenders are likely to run up against fewer underwriting restrictions when selling multifamily loans to the government-sponsored enterprises this year, but they might receive less favorable pricing due to GSEs’s caps on the number of such loans they’ll purchase.
“There’s a return to pre-pandemic credit parameters,” said Debby Jenkins, executive vice president of Freddie Mac’s multifamily division. “Debt service reserves, and things of that nature, are being rolled back.”
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“There’s a return to pre-pandemic credit parameters,” said Debby Jenkins, executive vice president of Freddie Mac’s multifamily division. “Debt service reserves, and things of that nature, are being rolled back.”
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FHFA veteran reflects on 20 turbulent years in housing finance
During prolonged upheaval in how the government regulates Fannie Mae and Freddie Mac, a constant at the Federal Housing Finance Agency for more than a decade was its top lawyer.
Alfred Pollard, who has been at the forefront of housing finance issues for 20 years, retired in April as the FHFA's general counsel. He had held the the job since 2008, when the agency was established, and was previously the top lawyer at its predecessor agency, the Office of Federal Housing Enterprise Oversight.
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Alfred Pollard, who has been at the forefront of housing finance issues for 20 years, retired in April as the FHFA's general counsel. He had held the the job since 2008, when the agency was established, and was previously the top lawyer at its predecessor agency, the Office of Federal Housing Enterprise Oversight.
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