BREAKING NEWS: Trump Picks Ben Carson as HUD Secretary
BREAKING NEWS: Trump Picks Ben Carson as HUD Secretary
President-elect Donald Trump has just announced his intent to nominate Ben Carson to serve as Secretary of the Department of Housing and Urban Development.
“Ben Carson has a brilliant mind and is passionate about strengthening communities and families within those communities,” Trump said in a press release. “We have talked at length about my urban renewal agenda and our message of economic revival, very much including our inner cities. Ben shares my optimism about the future of our country and is part of ensuring that this is a Presidency representing all Americans. He is a tough competitor and never gives up.”
Brian Montgomery, Vice Chairman and Co-Founder of The Collingwood Group and former FHA Commissioner says, “I hope the Trump Administration will 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.”
Last week, Crson said on Facebook that “after serious discussions with the Trump transition team, I feel that I can make a significant contribution particularly to making our inner cities great for everyone.” Carson dropped out of the Republican presidential race in March, and threw his support behind Donald Trump.
>The Collingwood Group Chairman Tim Rood talks about this and more Wednesday on CNBC Power Lunch at 1pm ET
Not What You Thought: Suburbs Outstrip Cities in Population Growth
Big cities may be getting all the attention, but the suburbs are holding their own in the battle for population and young earners.
That is the thrust of a study of population trends and housing set to be released Monday by the Urban Land Institute’s Terwilliger Center for Housing, a nonprofit real-estate research group.
Property developers and urban-policy experts have trumpeted the influx of young, affluent professionals into big central cities in recent years. The shift has transformed downtown areas, sparking a historic boom in luxury-apartment construction and retail development.
That, in turn, has fueled affordability concerns in cities as diverse as Cleveland and Dallas. Median home values in the urban areas studied were $365,000, compared with $305,000 in the suburbs.
But research shows that suburbs are continuing to outstrip downtowns in overall population growth, diversity and even younger residents.
The suburban areas surrounding the 50 largest metropolitan areas make up 79% of the population of those areas but accounted for 91% of population growth over the past 15 years, according to the study. What’s more, three-quarters of people age 25 to 34 in these metro areas live in suburbs.
Stockton Williams, executive director of the Terwilliger Center, said suburbs will continue to play a key role in helping cities, by providing lower-cost alternatives, tackle their affordability challenges.
Regulator to Start Issuing Bank Charters for Fintech Firms
Firms offering online loans, smartphone payments and other financial-technology products would get new flexibility to expand and further shake up the U.S. banking industry under a proposed new federal policy.
A top regulator said Friday that his agency would for the first time start granting banking licenses to “fintech” firms, giving them greater freedom to operate across the country without seeking state-by-state permission or joining with brick-and-mortar banks.
The move could open the door to more competition between the old and new financial firms, and provide a bigger opening for some large tech companies to consider new ways to offer digital payments or other services.
The announcement by Thomas Curry, head of the Office of the Comptroller of the Currency, was a significant move by regulators struggling to strike a balance between encouraging innovation while extending traditional protections to new financial products that have boomed since the financial crisis.
“It will be much better for the health of the federal banking system and everyone who relies on those institutions, if these companies enter the system through a clearly marked front gate, rather than through some back door,” Mr. Curry said at a conference Friday at Georgetown University Law Center.
Firms that receive the OCC charter would still not be able to accept government-insured deposits without separate approval from the Federal Deposit Insurance Corp.
The proposed move was cheered by the tech sector that had long been seeking such an imprimatur, but jeered by financial institutions, some consumer groups and state regulators who see threats in the upending of the old order. Small banks in particular worry about new competition, while consumer advocates and others raised the specter of weaker protections for borrowers.
Real Estate Stock Sector Slumps in Debut
The S&P 500’s newest sector is also its worst-performing.
Real estate has lagged behind the broader market since splitting off from financials and becoming its own stock grouping in September. The sector—which includes shares of real-estate investment trusts and real-estate management companies—fell 7.9% from the close of its first day of trading on Sept. 19 through Friday, making it the worst-performing sector out of 11 over that period.
The S&P 500 climbed 2.5% and financial shares gained 17% since the sector split.
It’s a case of bad timing for an investment that has been one of the top performers for more than a decade. S&P Dow Jones Indices spun off the new sector when the conditions that made REITs’ steady payouts attractive for so long—ultralow interest rates—were under threat.
Because REITs have special tax status, they are required to give most of their taxable income to shareholders, making them attractive to income-seeking investors. But the Federal Reserve has signaled it wants to raise interest rates before the end of the year. And many investors expect the policies of President-elect Donald Trump to stoke growth and inflation, which could make dividend-paying stocks less attractive if investors can get better returns elsewhere. Real-estate stocks lost 2.8% from their close on Election Day through Friday.
With the formation of the S&P 500’s 11th sector, investors who want to scoop up real-estate stocks without adding exposure to financial firms like banks and insurance companies can make purer bets through sector-tracking funds.
AirBnb Waves White Flag in London, Amsterdam
Airbnb Inc. is showing a willingness to place curbs on its home-sharing business, a nod to regulators globally who have besieged one of the world’s most valuable startups with potentially crippling restrictions ahead of an inevitable initial public offering. The company agreed for the first time to limit the number of nights a year a host can rent out a home in two of its biggest European markets, London and Amsterdam. The concessions could provide a template for how Airbnb operates in nearly 200 countries around the globe, including major cities such as New York and its hometown of San Francisco where it faces bitter fights over some of the toughest rental laws in the world.
read more Wall St Journal http://on.wsj.com/2fLQvoM
-“The Trump Effect” on Housing, The Collingwood Group Chairman Tim Rood on Fox Business’s Cavuto: https://www.youtube.com/watch?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
The Trump Whisperer is Big into Real Estate
As a gangly high school student, Jared Kushner did what most long-limbed kids of his size did: He joined the basketball team. The Frisch School, a well-known private school in Paramus, New Jersey, took pride in its athletic prowess and had a coach who took losing personally.
In Kushner’s senior year, after a particularly bad home loss, the head of the team seemed on the verge of desperation. It had been a middling season for the Frisch Cougars, and the players had performed particularly poorly that night. During a team meeting, the coach lost it.
“He went crazy and started yelling, saying he hated us,” recalled Arik Lifshitz, a real estate developer who was Kushner’s teammate at the time. As the clock ticked past 9 p.m., he announced that he was quitting.
Then Kushner’s father intervened. A regular at his son’s games and a big fish in local Jewish and real estate circles, Charlie Kushner was known as the Don Corleone of the community, a man who aspired to be a Jewish Kennedy, according to a 2009 New York magazine article. That evening, the elder Kushner strode into the room and talked the hot-headed coach off the ledge, gently reasoning with him, with his young son watching all the while.
“I’m not saying Charlie is the reason he didn’t quit, but I do recall Charlie leading the conversation,” Lifshitz said. “I kept looking at the clock hoping we could finish up and I wouldn’t get in trouble for getting home so late on a school night.”
Fast forward to 2016. Jared Kushner, who declined to comment for this story, has taken the mantle of diplomatic advisor to a plane and place that few, even his smooth-talking father, could have imagined. As the son-in-law to the famously volatile and moody president-elect, the 35-year-old real estate scion and media mogul has been portrayed as the most trusted consigliere in the campaign.
Indeed, in the waning days before the election, when the candidate was reported as being edgy and nervous about the outcome, Donald Trump sought out reassurance from those in his inner circle. The New York Times notably reported that he preferred “the soothing, whispery voice of his son-in-law.”
“We don’t have kings and queens in America, so we treat our presidents and first ladies like kings and queens,” Jeff Greene, the billionaire real estate mogul, recently told The Real Deal. “Jared will be the prince.”
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.”
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.
What might housing policy look like under the new Trump administration, and how will Trump work with Congress on housing policy?
In the limited moments that Trump has shared his thoughts on what he would do with the housing market, he stated that one of the big issues facing the housing industry is regulation.
In his speech at the National Association of Home Builders’ 2016 Midyear Board of Directors Meeting in Miami, Florida, Trump said, in particular, there is no group regulated harder than the housing industry. Trump said these regulations kill not just the small businesses but jobs in general. Trump shared that he plans to eliminate these regulations and instead implement a method of creating jobs without regulation.
Likewise, in an interview with Reuters in May, Trump said he plans to overhaul the controversial Dodd-Frank Wall Street Reform and Consumer Protection Act that was passed in 2010 in response to the crisis.
“Dodd-Frank has made it impossible for bankers to function,” said Trump. “It makes it very hard for bankers to loan money for people to create jobs, for people with businesses to create jobs. And that has to stop.”
A lack of priority for housing in Congress is something those in the industry hope to see change with this newly elected house.
“It’s amazing that something so vital as housing to the overall health of the American economy and the average American – is something Congress still can’t rally in support of resolving – especially when the risks associated with continued failure to do so are potentially so serious,” says Brian O’Reilly, The Collingwood Group President. “The facts are that housing is a critical component of overall economic health in the US. Thus, continued failure by Congress to address housing reform is reckless and irresponsible.”
Collingwood’s Montgomery adds that he hopes both sides will heed the words of Franklin Roosevelt, who on the eve of his re-election in 1936 while citing the amount of work to be done said, “we will keep our sleeves rolled up.”
Have a productive day and a great week ahead!