Time for Office of #National Housing Policy & Is the #Mortgage Rate Party Over

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December 15, 2016

It’s Time for an Office of National Housing Policy

by Collingwood Vice Chairman Brian Montgomery,  former FHA Commissioner 

B.Montgomery_-_Head_Shot.jpgOn Jan. 20, 2017, four military aides will accompany the sitting president and vice president (and their successors) on a one-way motorcade to the U.S. Capitol. After the Oath of Office has been administered, a seamless handover of military power will occur, and the combined military command will report to President Donald Trump. Americans can be comforted by the near-perfect transfer of the commander-in-chief role from the outgoing, to the incoming president.

To the detriment of the nation’s homebuyers, no such unified and detailed plan involving our nation’s housing finance system currently exists. The Executive Office of the President should create a new office, aptly named the Office of National Housing Policy, to be tasked with developing a unified and collaborative approach to our nation’s housing policy, including homeownership and subsidized rental housing.

The prevailing view within the mortgage industry is there is little collaboration within the federal government in relation to housing policy and rules promulgation.

Despite the government controlling 90% of the residential mortgage market (and almost the entire subsidized rental market), the next president will inherit a tangled web of agencies that provide market liquidity, offer mortgage insurance and ensure regulatory oversight.

Roles and responsibilities of the current, disparate housing-related agencies are distinct and exist in silo-based structures. No unified command in our housing sector exists; to the contrary, one portion of the government heaps new rules onto the lending community, while others wait in the wings ready to pounce and prove their enforcement prowess.

To address competitive overlap amongst government entities this country could use a Housing Policy Czar — a person (and office) charged with developing, disseminating and enforcing a coordinated, collaborative housing policy and finance strategy that considers the capabilities and strengths of each independent agency.

The creation of policy experts known as “czars” with a singular focus began as far back as the Woodrow Wilson administration, but was greatly expanded during World War II under President Franklin D. Roosevelt (and subsequent presidents).

The ever-expanding regulatory burden has resulted in notable market contraction — with fewer small, community-based banks and fewer borrowers served — a predictable outcome. The government’s fragmented approach to regulatory reform and consumer protection in the aftermath of the housing crisis has today resulted in homebuyers with higher credit scores, who have higher income and are disproportionately white.

Rather than a well-synchronized plan for active warfare, the mortgage market battle plan offers a variety of competing, overlapping entities. Perhaps developing a well-coordinated “plan of attack” could start with the obvious intersection between the Federal Housing Administration and the government-sponsored enterprises.

At some level, the GSEs and FHA compete for the same customers with the ultimate risk either borne through Ginnie Mae, Fannie Mae or Freddie Mac, and at some level the private mortgage insurers. Yet, alignment of the capital standards, which would appropriately establish more appropriate pricing levels for the distinct entities to best serve their target consumer markets, doesn’t occur.

Of primary concern is to determine the future role of the GSEs since conservatorship is not a permanent state. Of equal importance would be a review of the impact of regulatory compliance on mortgage lenders which has pushed the cost of originating a mortgage loan in 2015 to $7,046 (up from $4,500 in 2008).

Of equal concern is the use of the False Claim Act by the Justice Department to punish FHA lenders for what were often administrative errors. The overreach of the FCA by the Department of Justice has driven FHA’s top producing lenders such as JPMorgan Chase, Bank of America and Citi Mortgage largely out of the nation’s flagship home buying program.

A prudent reassessment of Dodd-Frank, the future of the GSEs, fair housing, increasing homeownership rates and addressing rental housing demand all warrant a comprehensive strategy and definitive performance metrics. An independent ombudsman-type approach to housing policy, specifically denationalizing housing finance and promoting risk-sharing with the private sector, is needed and long overdue.

The objective of this approach would be to monitor systemic risk, reduce uncertainty, end competitive overlap and eliminate the duplication of efforts among agencies. The existing disjointed structure is antiquated and has not worked well.

read more: http://www.nationalmortgagenews.com/news/voices/its-time-for-an-office-of-national-housing-policy-1092844-1.html?utm_campaign=daily%20briefing-dec%2014%202016&utm_medium=email&utm_source=newsletter&ET=nationalmortgage:e8364326:445827a:&st=email&eid=40a7a8a241e4195f539d9531365f9f34

The Mortgage Party is Over: Fed Raises Rates

The Federal Reserve increased its key interest rate by 0.25% on Wednesday. Rising rates will affect millions of Americans, including home buyers, savers and investors.

Fed officials raised its target for short-term interest rates by 0.25 percentage points to a range of 0.50% and 0.75%.

It was just the second time in a decade that the Fed has raised rates. 

“Economic growth has picked up since the middle of the year,” said Janet Yellen, the Fed’s chair. “We expect the economy will continue to perform well.”

Yellen indicated that the Fed’s role in the economy is starting to recede and that Congress will start taking over that job of helping stimulate the economy.

Fiscal policy is “not obviously needed to provide stimulus,” she said.

Yellen clarified that it didn’t mean she was “trying to provide advice to the new administration or Congress,” but said that her staff has been in touch with transition team of President-elect Donald Trump.

The move could be the first of more. Some economists believe the Fed will need to raise rates more often — and perhaps at higher levels — if President-elect Donald Trump spends big on infrastructure.

Most Fed officials now project three or more additional rate hikes in 2017. 

Even before the Fed Move: Mortgage Applications Fell as Interest Rates Rise

Mortgage applications fell 4 percent on a last week from the previous week, according to the Mortgage Bankers Association

Applications to refinance a home loan fell 4 percent, seasonally adjusted, and average refinance loan size also declined.

The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,000 or less) increased to its highest level since October 2014, 4.28 percent, from 4.2. The average rate for larger, jumbo loans, rose even higher.

“While jumbo 30-year fixed rates have been a bit slower to increase compared to overall fixed rate mortgage rates in recent weeks, they increased 7 basis points last week to an average of 4.29 percent. At the same time, the average five-year ARM rate declined by 11 basis points to 3.28 percent, which may provide an alternative outlet for jumbo borrowers,” said Lynn Fisher, MBA vice president of research and economics.

BOOM: Average Manhattan Apartment Price Tops $2 Million for First Time

The average sales price of an apartment in Manhattan is expected to top $2 million this year for the first time, but prices are seen leveling off in 2017 after nearly doubling over the past decade.

Prices were pushed higher by a jump in sales of condominiums valued at $10 million or more, which skewed results, CityRealty, a real estate listings and data website for New York City, said on Wednesday.

The opening of 432 Park Avenue, a 96-story tower marketed by developers as the tallest residential building in the Americas, had an outsized effect on prices, said CityRealty research director Gabby Warshawer.

Fifty-two of the 75 units sold at the tower overlooking Central Park fetched more than $10 million, she said. Some units are priced at more than $40 million.

An increase in new developments and a rise in the price of existing units also lifted the market, Warshawer said.

Prices have climbed every year since 2011 but are expected to flatline next year. A lack of expensive, large new buildings will act to keep prices in check in 2017, CityRealty said.

read more: http://www.reuters.com/article/us-usa-property-manhattan-apartmentprice-idUSKBN1430DD

BUST: Warning: Before Moving to NYC

An idea from de Blasio’s former spokeswoman Karen Hinton, in the Daily News: New York City leaders should consider a public awareness campaign that lets people know that staying put, moving to a city with more affordable housing or doubling up with relatives may be a much better solution than entering a housing-shelter system bursting at the seams.


Banks Fight to Block Crisis-Era Lawsuits From Continuing

Big banks are fighting tens of billions of dollars of potential legal costs linked to at least a dozen pending lawsuits arising from the financial crisis. Now they want the Supreme Court to weigh in, arguing that regulators took too long to file their claims.

A handful of banks, including Wells Fargo, Credit Suisse and Deutsche Bank, have asked the Supreme Court to review a lower court decision that said the regulators filed their claims on time despite a Depression-era securities law that gave them only a three-year window.

The Justice Department is pushing back. In a brief submitted last week, it says the banks’ argument lacks merit and asked the court not to take up the case.

Damages related to some $37.5 billion in securities are at stake in the pending lawsuits, the banks say, in addition to billions of dollars in disputed prejudgment interest. That sum includes nearly $32 billion for cases in the Court of Appeals for the Second Circuit, which most commonly decides securities cases. The banks say these lawsuits should have been barred under the strict three-year window and extensions should not have been allowed. The Second Circuit voted 2-to-1 against the banks last May.

“In terms of financial crisis litigation, the stakes are enormous,” said Robert Giuffra, a partner at Sullivan & Cromwell and lead attorney for the banks. “If there’s a future downturn and the federal banking agencies want to start bringing lawsuits, they would get the benefit of this favorable decision.”

read more: http://www.nytimes.com/2016/12/13/business/dealbook/big-banks-fight-to-block-crisis-era-lawsuits-from-continuing.html?smprod=nytcore-ipad&smid=nytcore-ipad-share&_r=0

Wells Fargo Sanctioned for ‘Living Will’ Deficiencies

U.S. regulators slapped embattled Wells Fargo & Co. with new sanctions Tuesday, concluding the bank had failed to devise an adequate blueprint for avoiding a taxpayer bailout if it were on the brink of bankruptcy.

The rebuke over the bank’s so-called “living will” submission surprised executives and was another black eye for a bank that is still reeling from a scandal over its creation of bogus customer accounts. Even more stinging: the news was akin to failing a make-up test as the San Francisco bank had failed an initial test in April.

The bank’s executives raced to figure out what went wrong and immediately began “doing a post-mortem,” a person familiar with the matter said. In response to the announcement – and the amount of detail released by regulators – the bank on Tuesday also released more detail about work it has done since resubmitting its living will, this person said.

This is the first time the Federal Reserve and Federal Deposit Insurance Corp. have imposed penalties on a bank under the living-wills process created by the 2010 Dodd-Frank financial-overhaul law. As a result, Wells Fargo is now barred from creating new international banking units or acquiring any nonbank subsidiaries. If regulators aren’t happy with the bank’s response to Tuesday’s findings to be submitted by March 2017, they could cap growth at the bank and, in two years, force it to divest itself of certain assets under Dodd-Frank.

read more: http://www.wsj.com/articles/u-s-regulators-sanction-wells-fargo-declaring-living-will-deficiencies-1481664744

America’s Best and Brightest Are Headed to Boulder

The industrial city of Cumberland, Maryland, tucked in the Appalachians, illustrates the economic despair that helped Donald Trump win the U.S. presidency — as well as efforts to alleviate it.

Cumberland tops the Bloomberg Brain Drain Index, which tracks metropolitan areas with the greatest loss of advanced-degree holders, white-collar jobs and earnings generated by employment in computer, engineering and science occupations. Once a thriving coal-mining and manufacturing center — two sectors of the economy Trump pledged to revive — Cumberland has struggled to draw new businesses.

“We are no longer defining ourselves as what we used to be,” said Shawn Hershberger, executive director of the Cumberland Economic Development Corp., which has worked to attract technology and tourism employers.

At the other end of the spectrum, Boulder, Colorado, a tech incubator and home of the University of Colorado, leads the 2016 Bloomberg Brain Concentration Index. It measures per-capita concentration of residents working in science, technology and engineering occupations or who have science and engineering college degrees or post-graduate degrees. Key industries in the metro area include aerospace, bio-science and renewable energy, along with information technology and software. It also is home to federal laboratories such as the National Institute of Standards and Technology.

“The public-sector presence contributed to the brains,” said Clif Harald, executive director of the Boulder Economic Council.

The two indexes illustrate the difficulty cities such as Cumberland face in creating new jobs, with modern manufacturing and mining driven more by technology than human muscle. A brain drain also reduces a city’s tax base, needed to maintain infrastructure, education and services to lure new businesses.

read more: https://www.bloomberg.com/news/articles/2016-12-14/in-trump-country-the-brain-drain-takes-a-toll-bloomberg-index

Still Ahead


  • NAHB Housing Market Index for December, 10 a.m ET


  • HUD/Census Bureau New Residential Construction Report for November, 8:30 a.m. ET
The Trump Transition

Inside Word From @realDonaldTrump Economic Team Meeting

rood cnbc december-697494-edited.jpg

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.”

tim carson.jpg

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

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.


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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