The Trump Effect: #Mortgages Hit New 2016 Highs

Posted on in Economy, FHA, Government, GSE, Housing, Industry, Mortgages, TV Appearances
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December 9, 2016
TGIF

The Trump Effect: Mortgages Hit New 2016 Highs

Freddie Mac reports average fixed mortgage rates moving higher for the sixth consecutive week, to their highest rate of the year. Expect even higher mortgages to follow if as forecast the Fed moves to hike rates next week.

  • 30-year fixed-rate mortgage (FRM) averaged 4.13 percent with an average 0.5 point for the week ending December 8, 2016, up from last week when it averaged 4.08 percent. A year ago at this time, the 30-year FRM averaged 3.95 percent. 
  • 15-year FRM this week averaged 3.36 percent with an average 0.5 point, up from last week when it averaged 3.34 percent. A year ago at this time, the 15-year FRM averaged 3.19 percent. 
  • 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.17 percent this week with an average 0.5 point, up from last week when it averaged 3.15 percent. A year ago, the 5-year ARM averaged 3.03 percent.

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Brian Montgomery, Vice Chairman and Co-Founder of The Collingwood Group and former FHA Commissioner says, “I hope both the Trump Administration and Congress include on their ‘priority list’ how to bring some stability and certainty to our nation’s housing finance system, which will give lenders some comfort that widening the mortgage credit aperture won’t later invite regulatory intrusion. Equally important are finding solutions to the shortage of affordable rental housing in particular for very low income families and the elderly.”

We’re Worth More

The net worth of U.S. households increased in the third quarter as U.S. stock prices and real estate values continued to flourish, a report by the Federal Reserve showed on Thursday.

Household net worth rose to $90.2 trillion over the quarter, up from a slightly downwardly revised $88.6 trillion in the previous period.

Wealth has been aided by rising stock prices, as indexes continue to hit new records.

Household borrowing rose at a 4.0 percent annual rate, the report also showed, down from a downwardly revised 4.3 percent growth rate in the second quarter of 2016.

The U.S. unemployment rate dropped last month to 4.6 percent, its lowest level in nine years and consistent with a nation at full employment. The housing market also continues to strengthen.

Flipping Out on Home Flipping

Home flipping dipped in the third quarter as the chronically low inventory and higher prices plaguing the housing market made it more challenging to buy real estate cheaply enough to turn a nice profit.

There were 45,718 single family homes and condos flipped during the quarter, according to Attom Data, down 7% compared with a year ago. In the second quarter, flipping — defined as a property that is sold in an arms-length sale for the second time within a 12-month period — had touched a nine-year high.

Flippers, like most real estate buyers, are finding that the supply of homes is tight and prices are high. But flippers focus on a particular metric that most traditional buyers overlook, according to Attom Vice President Daren Blomquist — the discount to estimated market value of each property.

Gone Missing: 1.1 Million Loans

Analysts from the Urban Institute recently put a hard number on tight credit.  The company says that lenders failed to make about 5.2 million mortgages between 2009 to 2014 because of rigid underwriting standards.  An additional 1.1 million mortgages could have been processed in 2015 “if reasonable lending standards had been in place.”  All in all, 6.3 million mortgages that might have been disappeared over that six-year period.

UI says that since the 2008 housing crisis, borrowers with less than stellar credit have found it hard to obtain a mortgage. Purchase mortgages declined from 4.6 million in 2001 to 3.5 million in 2015 because of exceptionally high standards. Among the strictures facing less creditworthy borrowers are:

“Overlays” or additional restrictions, above and beyond FHA and GSE requirements, that lenders put on borrowing because of concerns they may be forced to repurchase failed loans from guarantors.

The high cost of servicing delinquent loans

Concerns about potential litigation over imperfect loans.

“Flashy markets that are in the news,” like Phoenix, Las Vegas, and Miami, still haven’t recovered from the hits they took in the housing crash, Blomquist said in an interview. But the purchase price discount is only 15% in those cities, according to Attom data.

In what flippers consider secondary and even tertiary markets, the discount is much steeper. Flippers can get discounts of about 44% in markets like metro Rochester, N.Y., Baltimore, Md., and Cincinnati, Ohio.

read more: http://www.mortgagenewsdaily.com/12072016_credit_access.as

The Trump Transition

Inside Word From @realDonaldTrump Economic Team Meeting

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Collingwood Group Chairman Tim Rood met in New York with President Trump and his economic team including Treausry Secretary-designate Steven Mnuchin and Chief of Staff Reince Preibus.  Rood came away from the meeting impressed that the team wants to cut through red-tape and regulation to help fix housing and mortgage industry problems.  There was also talk of the future for Fannie Mae and Freddie Mac, public housing and more.

Many important business leaders were also in attendance  including that “My Pillow” guy.

 >CLICK HERE:   Collingwood’s Rood explained this and more in an appearance on CNBC Power Lunch 

Carson Conundrum

Reaction flooding in to President Elect Donald Trump’s choice, tapping Ben Carson as his nominee for Housing Secretary.

Collingwood Group Chairman Tim Rood on Fox Business’s Cavuto said, “Dr Carson is an intelligent, impassioned, and empathetic individual.”

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As for his lack of experience in the housing arena that may be a positive, Collingwood’s Rood says, “Sometimes the very best policy makers are those who listen; and sometimes, good leaders who are not steeped in the subject matter are better listeners than those who believe they have all the answers.”

>Click Here for Collingwood Chairman Tim Rood’s full interview on FBN’s Cavuto

B.Montgomery_-_Head_Shot.jpgCollingwood Group Deputy Chairman Brian Montgomery tells Westwood One’s First Light radio show, “There is little doubt President-elect Trump greatly admires and respects Dr. Ben Carson and felt strongly about him joining his Cabinet.

Having spent almost eight years in the Executive Office of the President, I speak from experience in saying a Cabinet Secretary who has the ear of the President is a positive for that agency and individual.  In this instance, I think Dr. Carson will be able to “elevate” the issue of Housing within the Trump Administration.  The fact Dr. Carson is a household name I believe will provide him a larger platform to articulate his vision for how best to help tackle any number of issues within the housing arena: shortage of affordable rental housing, the impact of new regulations which have constricted the mortgage market, and the growing senior population and how best to address their housing need.,”

sharga tv.jpg“Dr. Carson’s nomination is an indication of the tremendous respect that President-Elect Trump has developed for his former rival,” says Ten-X EVP Rick Sharga.Sharga adds “Dr. Carson has spoken out in the past about the need to revitalize many of the country’s urban areas, so it wouldn’t be a surprise if he focuses on doing that, and trying to find solutions to the growing problem of affordable housing. Since Dr. Carson has also discussed the unintended consequences of over-reaching government regulations, it’s possible we may also see some streamlining, or regulatory relief as well.”

By the way, Fannies’ stock price ended the day down 5 percent, Freddie’s is down 6 percent, and both were going even lower in after-hours trading

-“The Trump Effect” on Housing, The Collingwood Group Chairman Tim Rood on Fox Business’s Cavuto: https://www.youtube.com/watchtim chicago.jpg?v=TqPcoYyJuo

-Rood on the National Business Report  >CLICK HERE TO WATCH: https://youtu.be/nxQu7fxkyOg-Collingwood Group’ Chairm

-Collingwood’s Rood on Business First AM >CLICK HERE TO WATCH: https://youtu.be/6OKQyEQ-bpo

-Rood with the trifecta, a third television interview from the Chicago Board of Trade >CLICK HERE: https://www.youtube.com/watch?v=vU0MXC8vRRo

Will Trump Tackle Housing Finance Reform?

Housing was the talk of the campaign two presidential elections ago, but it stayed under the radar in the 2016 race, leaving plenty of room to speculate about President-elect Donald Trump’s likely mortgage policy for the next four years.

On the one hand, without a crisis, observers said there is little incentive for him to move quickly on the issue.

But the unresolved question of what to do with Fannie Mae and Freddie Mac – both in conservatorship since before Barack Obama’s election – will loom large over the future Trump administration.

Exactly how Trump would address the issue is a complete mystery. The issue was never raised on the campaign trail.

“If you read the republican party platform, it is pretty obvious the Republicans are for less government in housing,” said Brian Montgomery, vice chairman of The Collingwood Group and a former Federal Housing Administration commissioner.

But no one expects sweeping action because other issues are higher priority, such as health care reform.

“If you ask most lenders, the market works today,” says Patrick Sinks, the chief executive of MGIC Investment Corp. and the chairman of U.S. Mortgage Insurers, a trade group for the private mortgage insurance industry.”A lender wants to originate a loan, insure that loan and turn around and sell that loan to the GSEs and replenish their capital and start the process over again. That works. And it keeps humming along.”

As long as that remains true, the incentive to make big chances won’t be there.

“The bigger issue is what the right role for government in housing is,” Sinks said. “That’s going to take legislative action and [lawmakers in either party] just don’t seem to be in a hurry to resolve it.”

read more: http://www.nationalmortgagenews.com/news/compliance-regulation/will-trump-tackle-housing-finance-reform-1090481-1.html

Industry Insight: The Opportunity for Change in Housing Policy

DS News covered what the future of loss mitigation will look like after the expiration of HAMP on December 31, 2016. To explore the topic further, DS News sat down with Meg Burns, Managing Director of The Collingwood Group, to discuss the opportunities that come from pairing a new administration with housing policies such as loss mitigation, regulatory compliance, and more.

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Burns joined The Collingwood Group in 2014, and as Managing Director, supports the firm’s Business Advisory and Business Development practices. Prior to Collingwood, Burns served as the Senior Associate Director of the Office of Housing and Regulatory Policy at the Federal Housing Finance Agency (FHFA). There, she managed various policy and regulatory initiatives involving single-family and multifamily finance and loss mitigation strategies, as well as insurance-related activities of the government-sponsored enterprises. As such, she was actively involved in industry-wide discussions regarding the role of the federal government in addressing the mortgage crisis.

With the end of HAMP drawing close, what is to come for loss mitigation?

The fact that the sunset of HAMP coincides with the arrival of a new leadership team in Washington is a great opportunity because there is a chance for a really fresh policy dialogue. The good news is that the industry has a lot of work that has been underway for quite sometime now to put forward a good plan for a new set of loss mitigation strategies including a particular set of modifications. It is a very cool time for HAMP to be expiring in some respects and I think that what we will see are some programs that really do reflect the lessons that have been learned. I also think that the reason a new leadership team in Washington is so helpful is because we can have really honest discussions and assessment of what those lessons learned are. It is often a lot easier for a new group of policy leaders to embrace the policy achievement of the team before them but also to acknowledge program flaws without feeling defensive or like they were integrally associated with them. At its core, what was reaffirmed through the HAMP experience was something that most good policymakers know very well which is that complicated program rules generally translate into fewer program beneficiaries. In the HAMP space there was an extended period where they were really striving for perfection and precision both in the data collection aspect and some of the calculations to determine who was eligible. One of the lessons learned in HAMP is that striving for that perfection and precision really rendered  fewer distressed borrowers eligible. I think that what we will see are the modifications that replace HAMP will be modifications that follow some basic rules rather than complex calculations.

Aside from HAMP, what other policy changes might be impacted by the entrance of a new administration?

I think there is tremendous opportunity across the board and I think that the new leadership team has certainly publicly acknowledged a concern with the heavy-handed nature of the regulatory framework in Washington D.C. today. If the new team begins their policy discussion from that perspective, there is a chance that we will see some of the very aggressive enforcement activity move into a space where those who are responsible for monitoring the leading communities activities will start to identify problems and issues but more for the purpose of addressing them and resolving them as opposed to taking very stringent enforcement actions. That type of enforcement outcome clearly has resulting in less lending activity and stifled access to credit. There is a huge opportunity for the Trump Administration to revisit the way rules have been enforced and to take a more relaxed approach not to identifying problems, but to how those problems get resolved. That should make a big difference for lending activity in the country and help more consumers.

Do you think that taking a relaxed approach will possibly improve homeownership?

I do. I think that the nature of the regulatory expansion over the past eight years has affected home sales. The cost in certain parts of this country to build homes has increased so substantially that it’s almost impossible in certain communities to construct starter and affordable homes. I think there is certainly a good opportunity for this new administration to take a look at ways to reduce some of that regulatory activity to the extent that the federal government has a role. This will also impact the lending space where there have been a lot of new regulations put in place as a result of Dodd-Frank in part. They have had a suffocating effect on the ability of lenders to reach the population of borrowers who are most in need of affordable financing options.

read more: http://www.dsnews.com/commentary/11-18-2016/industry-insight-opportunity-change-housing-policy

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Have a productive day and a great weekend!


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