@FreddieMac Profit Doubles — Now Those $$$ Go to U.S. Treasury
Fannie Mae, will report its fourth-quarter results this morning after it’s sister Freddie Mac said it will pay the U.S. Treasury a dividend of $4.5 billion next month as its profit more than doubled in the last quarter.
The government-controlled mortgage company has paid the Treasury more than $101 billion in dividends since receiving $71.3 billion in bailouts from the government between 2008 and 2012.
Freddie Mac buys mortgages from lenders, packages them into bonds, guarantees them against default and sells them to investors. It does not make loans to homebuyers directly.
The McLean, Virginia, company reported net income of $4.85 billion in its fourth quarter, compared with $2.16 billion in the same period a year before.
CFPB’s Cordray Staying for Now
The Consumer Financial Protection Bureau and it’s Director Richard Cordray won a second chance to defend his independence from the political pressure of being fired at any time for any, or no, reason by President Donald Trump.
A U.S. appeals court agreed to the CFPB’s request to reconsider an October decision that stripped Cordray of his job protection, which left him at the mercy of Trump and a pro-business Republican-led Congress looking to rescind financial regulations put in place by the Obama administration after the 2008 fiscal crisis.
A CFPB spokesman declined to comment on the ruling. Ted Olson, the attorney who argued the case for PHH Corp., the mortgage company that sued the agency, was unavailable for comment after the ruling. Helgi Walker, another attorney representing PHH, didn’t reply to a telephone message seeking comment.
The do-over comes as the new president vows to repeal 75 percent of all U.S. regulations, adding to a pre-election promise to dismantle the 2010 Dodd-Frank financial reform legislation under which the CFPB was created. It also arrives amid mounting legal challenges to Cordray’s authority and that of the bureau, which was created to shield ordinary citizens from financial industry predation.
The director’s future has been uncertain ever since Trump’s surprise win in November. Republicans have repeatedly called on the president to dismiss him and Trump could still try to find grounds to fire Cordray for cause. Lawmakers are also considering legislation that would change the CFPB’s leadership from a single director to a five-person commission or shift the bureau’s funding source from the Federal Reserve to Congress, enabling them to starve it of money.
read more: https://www.bloomberg.com/news/articles/2017-02-16/cfpb-cordray-win-second-chance-to-avoid-a-trump-firing
Bad Week for Housing, Mortgages – What’s Ahead for Key Spring Home Selling
Higher interest rates already are taking a toll on the U.S. housing market.
A rise in Treasury yields since the presidential election has prompted a pickup in mortgage rates. That has reverberated across a number of housing measures, including mortgage applications and home-builder sentiment. Tracked by the Commerce Department, housing starts measure when construction of a new home begins. Economists polled by The Wall Street Journal estimate housing starts were unchanged in January from a month earlier to a seasonally adjusted annual rate of 1.23 million.
While housing starts in 2016 had their best year since 2007, they remain well below pre-crisis levels.
That lag has occurred even as home prices have recovered to their pre-crisis highs. Surging prices have left many Americans behind, including millennials. Many are still living with their parents or renting, so they haven’t benefited from the price increases.
Meanwhile, older people who already have locked in historically low mortgage rates will be more reluctant to move now that rates are rising. A new house could come with a far higher rate.
The average 30-year fixed-mortgage rate was 4.24%, up more than half a percentage point since the election, according to Mortgage News Daily. And the case for the Federal Reserve raising interest rates faster than anticipated only appears to be getting stronger.
As a result, mortgage applications for home purchases fell in the week ended Feb. 10 to a 13-week low, according to a weekly survey from the Mortgage Bankers Association, released Wednesday. And the sharp rise in home-builder sentiment immediately after the election has also waned in recent months.
read more: https://www.wsj.com/articles/a-harsh-reality-is-hitting-the-housing-market-1487191357
Mortgage Rates Fall
Freddie Mac reports mortgage rates slightly falling for the second consecutive week.
- 30-year fixed-rate mortgage (FRM) averaged 4.15 percent with an average 0.5 point for the week ending Feb. 16, 2017, down from last week when it averaged 4.17 percent. A year ago at this time, the 30-year FRM averaged 3.65 percent.
- 15-year FRM this week averaged 3.35 percent with an average 0.5 point, down from last week when it averaged 3.39 percent. A year ago at this time, the 15-year FRM averaged 2.95 percent.
- 5-year Treasury-indexed hybrid adjustable-rate mortgage (ARM) averaged 3.18 percent this week with an average 0.4 point, down from last week when it averaged 3.21 percent. A year ago, the 5-year ARM averaged 2.85 percent.
“For the last 46 years, the 30-year mortgage rate has been almost perfectly correlated with the yield on the 10-year Treasury, but not this year, says Sean Becketti, chief economist, Freddie Mac.“From Dec. 29, 2016, through today, the 30-year mortgage rate fell 17 basis points to this week’s reading of 4.15 percent. In contrast, the 10-year Treasury yield began and ended the same period at 2.49 percent. While we expect mortgage rates to fall into line with Treasury yields shortly, this just may be a year full of surprises.”
#FinTech: Chase Mortgage Goes Digital
JP Morgan Chase plans to launch a digital, self-serve mortgage platform that offers a simpler, faster, and more transparent home financing experience for consumers, from home loan application to closing. The new technology, expected to launch later this year, will allow customers to track a loan application through closing entirely online or from any mobile device.
Chase’s new platform will help empower more consumers to manage their loan application while continuing to offer the full service of Chase’s branch and call center network. Customers now have even more choice when seeking advice from a Chase loan officer at any point in the process, whether it’s in-person, on the phone, or online.
“Digital technology is reshaping the mortgage industry and is rapidly influencing how consumers make purchases today,” said Mike Weinbach, chief executive officer of Chase Mortgage. “This platform will allow us to be where more of our customers are, which is online and on their phones, while still offering the option to work with us in person if they prefer.”
Through collaboration with Roostify, a leading mortgage technology provider, the platform aims to improve the customer experience through enhanced mobile accessibility, digital updates, eSign capabilities, and direct interactions with Chase mortgage professionals. The platform will also have the ability to connect customers, loan officers, and real estate agents through a single, intuitive interface to ensure timely communication and help achieve faster closing times.
Toll Brothers to Pay Taxes on Manhattan Condos to Lure In Buyers
Luxury developer Toll Brothers Inc. has a deal for those shopping for a condo in Manhattan: buy something soon, and we’ll pay the taxes on your purchase.
The publicly traded homebuilder is offering to pay the city transfer tax and the New York state “mansion tax” — an effective discount totaling almost 2.5 percent — on deals made at three of its developments by Feb. 20, the company said in a statement Wednesday. The closing incentives apply to any apartment bought at Toll’s under-construction projects at 100 Barrow St., in the West Village, and 55 West 17th St., in Chelsea. The deal is also being offered at the Sutton, a development in the East 50s, where sales began in early 2015.
Toll’s offer comes as Manhattan developers contend with a market brimming with costly condos and buyers tepid about committing. Builders hoping to boost sales in their projects are doing what they can to attract interest without officially lowering their prices — everything from offering gift cards and upfront commission to brokers, as well as payment of transfer taxes that, in a healthier market, are passed on to buyers, said Joshua Stein, a Manhattan real estate lawyer.
“Developers like to pretend that values haven’t gone down,” said Stein, who’s not involved in the Toll Brothers projects. “Eventually you’ll see discounting off the face price. But this is a form of denial.”
Contracts for luxury homes — those at $4 million or higher — are seeing a spark of revival in the early months of 2017 as sellers fine-tune their asking prices, according to data from Olshan Realty Inc. In the first seven weeks of the year, there were 154 luxury deals, a 33 percent jump from the same period of 2016. Those properties, however, spent an average of 412 days on the market before finding a buyer. Their median asking price was $6.3 million, down 6 percent from a year earlier.
read more: https://www.bloomberg.com/news/articles/2017-02-15/toll-brothers-to-pay-taxes-on-manhattan-condos-to-lure-in-buyers
Bidding Wars Dry Up as San Francisco Housing Market Cools
The Bay Area’s frenzied housing market is cooling, making intense bidding wars a thing of the past and spurring calls for sellers to dial back their expectations, several real estate industry sources told the San Francisco Business Times this week.
read more: http://www.bizjournals.com/sanjose/news/2017/02/15/sf-bay-area-housing-market-bidding-wars-cooling.html?
I Smell a Rat
A New York City building where disease-carrying rats live has illegal apartments, the city Buildings Department has uncovered eight illegal apartments in the basement of 750 Grand Concourse in The Bronx – where one tenant was stricken by a rare rat-borne disease. ‘There is a partial vacate of the illegal SROs in the basement,’ a Buildings Department spokesman said. Three cases of leptospirosis were identified in a one-block radius of the building over the past two months, according to the city Health Department.
The rodent-infested Bronx building affected by a deadly outbreak of a rare rat-borne disease is owned by a notorious slumlord once deemed to be the worst in the city — and has a basement officials say was illegally divided into eight apartments.
Ved Parkash, whom Public Advocate Letitia James dubbed the city’s “worst landlord” in 2015, owns the decrepit building where Braulio Balbuena Flores was living in a basement apartment when he contracted leptospirosis last month.
read more: http://nypost.com/2017/02/15/building-where-disease-carrying-rats-live-has-illegal-apartments/
Sacre Bleu: Eiffel Tower to be Srrounded by Bulletproof Glass
Donald Trump isn’t the only leader building a wall, and this one is just as controversial.
The French government is constructing an 8.2-foot-high, bulletproof glass enclosure around the base of the Eiffel Tower to protect the iconic structure from a terrorist attack. But many French are offended by what they describe as a tasteless design that will be an eyesore.
“It’s pure madness!” said Bernard Thiebaut, a retired electrical engineer who lives in Paris. “It’s not just a physical barrier, it’s also a philosophical and a psychological barrier.”
After a public uproar over the $20 million project approved last month by the Paris City Council, Deputy Mayor Jean-Francois Martins defended the plan.
“The terror threat remains high in Paris and the most vulnerable sites, led by the Eiffel Tower, must be the object of special security measures,” Martins said. He added that the glass wall would allow full view of the tower while preventing individuals or vehicles from storming the attraction that draws 6 million visitors a year.
Critics said the wall, slated to go up in the fall, could undermine the French capital’s tourism industry that is already in a slump after a series of terrorist attacks that killed more than 200 people since 2015.
read more: http://www.usatoday.com/story/news/world/2017/02/15/paris-protective-glass-walls-eiffel-tower-terrorism/97952678/
>Week Ahead (2/20)
Monday– Presidents’ Day
- Markets Closed
- The Collingwood Group Chairman Tim Rood on FBN’s Maria in the Morning 7:50AM ET
- Existing Home Sales 10:00 AM ET
- Fed Minutes 2PM ET
- New Home Sales 10:00 AM ET
Have a productive day, a great (extended) weekend. Our next edition is Tuesday 2/21.