Happy Monday, Happy Spring
Click here for MUSIC to get you in the mood while you read along
Spring officially sprung at 6:29 AM ET this morning
….and a young persons’ fancy turns to: housing and mortgages (with apologies to Tennyson).
The key spring home-selling season is officially underway as we get housing numbers for the final winter months in the week ahead.
Here are stories you need to know about as the birds begin chirping:
Jobs Boom Fuels Bidding War on Record-Low Home Supply as Spring Buying Season Blooms
Real estate frenzy spreads to ‘unlikely’ cities in heartland
Rising mortgage rates and prices add sense of buyer urgency
The winning bidder of a Grand Rapids, Michigan, house has been offered almost $20,000 to hand his purchase contract to another buyer. An agent in Nashville, Tennessee, got a property for his client by cold-calling local homeowners. Near Columbus, Ohio, it took a teacher five tries to secure a deal.
It’s the 2017 U.S. spring home-selling season, and listings are scarcer than they’ve ever been. Bidding wars common in perennially hot markets like the San Francisco Bay area, Denver and Boston are now also prevalent in the once slow-and-steady heartland, sending prices higher and sparking desperation among buyers across the country.
“Homebuyers are going to find this spring that, in a lot of markets, the inventory of homes priced and sized at price levels they were hoping for will be very limited,” said Thomas Lawler, a former Fannie Mae economist who’s now a housing consultant in Leesburg, Virginia. “Unlikely places are getting significantly tighter.”
Buyers are clamoring as an improved job market and growing confidence in the economy collide with rising mortgage rates — yet there’s little new inventory for them to purchase. Housing starts remain well below levels before the last recession, and builders have focused on higher-end properties out of reach for many people. Homeowners have become even more reluctant to sell because, after all, where are they going to move?
Homes are moving fastest in Denver, Seattle and Oakland, California — areas where heated competition have become status quo in recent years because of soaring job growth, particularly in the technology industry. But fourth on Redfin’s list is Grand Rapids, Michigan’s second-largest city, in a reflection of strengthening employment across even the slower-growing center of the country. Buyers are also struggling in cities such as Boise, Idaho; Madison, Wisconsin; and Omaha, Nebraska.
read more: https://www.bloomberg.com/news/articles/2017-03-17/job-surge-fuels-bidding-wars-for-record-low-supply-of-u-s-homes
Home Purchases Up, FICO scores Down, with March Madness Ahead
Home purchase loans jumped to a 57 percent share of all mortgage originations in February, up from 53 percent in January. Data from the latest Ellie Mae Origination Insight Report indicate while this share is up by 5 percentage points from the previous February, it remains well below the recent high for purchase mortgages of 65 percent in June 2016.
Ellie Mae says closing times were way down in February, dropping from 51 days in January to 46 days for all loans. Refinances took an average of 47 days compared to 53 and purchase loans fell to 45 from 48 days.
Conventional loans had a 63 percent share of the market, compared to 66 percent in January. FHA increased its share by 2 percentage points and VA by 1 point to 23 percent and 10 percent respectively.
FICO scores for closed loans eased slightly, down from 722 in January to 720. The average FICO score was 11 points lower than last year’s high reached in August and September but was up one point from the beginning of 2016. Ellie Mae said 67 percent of all closed loans, 70 percent of purchase mortgages, and 64 percent of refinance borrowers had scores of 700 or more.
Closing rates for all loans decreased from 72.2 percent in January to 70.6 percent. The rate for purchases decreased from 76.8 percent to 75.9 percent and for refinancing from 67.9 percent to 65.4 percent. Ellie Mae computes closing rates on a sampling of loan applications initiated 90 days earlier, in this case November 2016.
Trump Administration Targets Consumer Watchdog CFPB Over Mortgage Case
The Trump administration took aim at a consumer finance regulator created after the 2008 financial crisis, backing a legal effort to have the structure of the Obama-era agency declared unconstitutional.
The Justice Department, now under Trump administration leadership, filed court papers on Friday opposing the Consumer Financial Protection Bureau, an independent regulator, asking a federal appeals court to order the restructuring of the agency.
The CFPB is fighting to keep its current setup, which gives its director protection from political interference from the White House. The administration in February said that President Donald Trump believes the bureau as currently organized is unaccountable to the public.
The dispute stems from a case in which the CFPB alleged PHH Corp., a New Jersey mortgage lender, violated the Real Estate Settlement Procedures Act by accepting kickbacks from mortgage insurers.
The Democratic-controlled Congress that created the CFPB after the 2008 financial crisis gave the agency power over the markets for consumer-finance products and an unusual amount of independence. It is headed by a single director who can be removed by the president only for cause, such as negligence or malfeasance.
The six-year-old bureau has been criticized by Republicans since its inception for what they see as heavy-handed and unnecessary regulation of firms that sell loans, credit cards and other financial products.
CFPB Director Richard Cordray has defended the bureau’s independent structure and mandate as an enforcement agency, saying it has helped consumers across the country.
The Justice Department said the CFPB’s structure creates separation-of-powers problems under the Constitution because the bureau director isn’t sufficiently answerable to the president.
“There is a greater risk that an independent agency headed by a single person will engage in extreme departures from the president’s executive policy,” the department said in the brief, filed with the U.S. Court of Appeals for the District of Columbia Circuit. The president should be able to fire the director at will, the department said.
The CFPB declined to comment. It is due to file a new legal brief in the case by the end of March.
read more: https://www.wsj.com/articles/justice-department-files-brief-arguing-cfpbs-structure-is-unconstitutional-1489780968?mod=djemalertNEWS
HUD Sec Ben Carson Champions Program Trump Budget Aims to Kill
Secretary of Housing and Urban Development Ben Carson was not in Washington, D.C., last week defending his administration’s new budget proposal. Instead, he was touting a program that President Donald Trump’s budget aims to obliterate.
Carson was in Detroit, listening to citizens and visiting the city’s HUD field office. He stopped for lunch at a restaurant funded by Motor City Match and tweeted that the program “is a wonderful example of community revitalization at work.”
Motor City Match is a program that pairs businesses in Detroit with available real estate options. It helps businesses locate and thrive in Detroit by providing competitive grants, loans and counseling to building owners and business owners, according to its website. Motor City Match is run by the city but funded in part by HUD’s Community Development Block Grant program — the $3 billion program that the Trump administration’s FY 2018 budget cuts entirely.
“They’re not showing any results,” said Mick Mulvaney, director of the Office of Management and Budget at a Thursday White House press briefing.
The 42-year old Community Development program has garnered bipartisan support since President Gerald Ford signed it into law in 1975. Roughly $150 billion has been allocated to a growing number of “entitlement communities” — generally larger cities and counties, as well as states, according to HUD. Today, roughly 1,200 cities, counties, and states participate.
read more: http://www.cnbc.com/2017/03/16/hud-sec-ben-carson-champions-program-trump-budget-aims-to-kill.html
#Fintech: Banking On The Cloud
The financial sector’s acceptance of cloud computing is so strong that last month’s network outage at Amazon Web Services barely registered among big banks as an event, according to Reuters. “The benefits are so unquestionable that last month’s outage caused by an employee who typed in a wrong code was barely a bump on the road to the cloud and merely a reminder that no technology is foolproof, financial executives, Silicon Valley vendors and analysts” told Reuters’ Anna Irrera.
Those benefits are measured in terms of metrics that matter, including money, time, security, resiliency, the ability to scale up and down and keep up with technology. “Calculations performed for Reuters by research firm IDC Financial Insights show the biggest global banks saving $15 billion by 2019 from cloud adoption, cutting technology infrastructure costs by 25 percent,” she says. Moreover, “developing an application on the cloud can help reduce the time it takes to launch from 89 days to 15 days,” Reuters says, citing McKinsey & Company.
The move to the cloud goes well beyond banking and is changing the way many companies do business. As the corporate mainstream moves beyond the data center, it takes on the agile, services-oriented mindset of the tech sector. Judson Althoff, executive vice president of the worldwide commercial business at Microsoft Corp., said last week at the WSJ CIO Network that Land O’ Lakes Inc. fed massive amounts data on corn crops and farmlands into the cloud, which enabled it to program semi-autonomous tractors to plant crops with greater efficiency. The end point for a growing number of companies is a digitally enabled business.
A new study by LendingTree said that Pittsburgh tops the list of cities for millennial homebuyers with 48.4 percent of all purchase mortgage requests coming from that demographic. Pittsburgh was followed by Washington, DC, and Des Moines. The average loan amount requested by young borrowers in those three cities is $201,921, $381,110 and $173,439, respectively.
The company took a look at mortgage requests and offers for borrowers aged 35 years and under between August 1, 2016, and February 1, 2017, along with requests from the total population of mortgage-seekers based on the location of the property to be mortgaged. The city rankings are generated from the percentage of total purchase-mortgage requests LendingTree received from millennial borrowers.
The average loan amount requested from this age group is $175,180, compared to an average of $191,157 for those over 35. Boston, St. Louis, Minneapolis, Cincinnati, Chicago, San Francisco and Omaha rounded out the top 10 list.
- Existing Home Sales (February) 10am ET
- Collingwood Group Chairman Tim Rood dissects Home Sales and More 12pm FBN’s Cavuto
- New Home Sales (February) 10am ET