The Week Ahead
The House and Senate have returned home for a district work period through July 20.
- WHF, Homelessness, 7/23
- Digital Mortgage, 9/14
- MBA Annual, 10/18-21
- NCSHA Annual, 10/24-27
- NEXTDC20, 11/10
Biden and Sanders Camps’ ‘Unity Platform’
This week, former presidential candidate and U.S. Senator Bernie Sanders (D-VT) endorsed a ‘Unity Platform’ negotiated with representatives of the Biden campaign.
The document is significant because it solidifies the progressive wing of the Democratic Party’s endorsement of Biden for President and it includes a number of ‘left of Obama’ policy positions. The Biden camp’s acceptance of Sanders’ terms is a tacit acknowledgment of the importance of voter turn-out in a contest where polling shows 67 percent of democrat voters prefer ‘anyone but Trump.’
The Unity Platform covers a number of important housing policy positions that will be considered at the DNC convention including:
“Democrats will enact a new Homeowner and Renter Bill of Rights to protect families from abusive lenders and landlords. This new Bill of Rights will prevent mortgage brokers from leading borrowers into loans that cost more than their credit history demands, prevent mortgage servicers from advancing a foreclosure when a homeowner is in the process of receiving a loan modification, and give homeowners opportunities to seek financial redress from mortgage lenders and servicers that violate these protections. And Democrats will provide legal support to fight wrongful evictions.”
Warning Signs of ‘Tsunami of Evictions’ Risk
Of the 110 million Americans living in rental households, 20 percent are at risk of eviction by September 30, according to an analysis by the Covid-19 Eviction Defense Project, a Colorado-based community group.
The crisis among renters is expected to deepen this month as the enhanced unemployment benefits that have kept many afloat run out at the end of July.
Meanwhile, enforcement of federal moratoriums on some types of evictions is uneven, with experts warning that judges’ efforts to limit access to courtrooms or hold hearings online because of Covid-19 could increasingly disadvantage elderly or poor renters.
Taskforce Publishes Progressive Blueprint
A joint effort by former Vice President Joe Biden and Vermont Sen. Bernie Sanders to unify Democrats around Biden’s candidacy has produced a 110-page policy wish list to recommend to the party’s presidential nominee.
Throughout the Democratic primary, Biden stuck to a more moderate platform, while Sanders, Massachusetts Sen. Elizabeth Warren and much of the rest of the crowded field courted progressives and advocated for broader structural changes. But as the United States faces a growing pandemic and unemployment rates at the highest levels in generations, Biden has been talking more and more about a presidency that approaches Franklin Delano Roosevelt’s, with bold progressive ambitions.
The policy document — the work of six joint task forces appointed by Biden and Sanders in May — would give the former VP a road map to that goal.
“When I talked to Joe a while back, he said that he wants to be the most progressive president since FDR,” Sanders said. “Do I believe that Biden believes that now is the time for bold action to protect the working class and lower-income people in this country? Yes, I do believe that’s the case.”
MCAI Stuck at 6-Year Low
Mortgage credit availability fell in June for the fourth consecutive month, remaining at a six-year low, according to a new report from the MBA.
The MCAI fell by 3.3 percent to 125.0 in June, its lowest level since April 2014.
The Conventional MCAI decreased by 4.1 percent, while the Government MCAI decreased by 2.8 percent. Of the component indices of the Conventional MCAI, the Jumbo MCAI decreased by 7.3 percent, and the Conforming MCAI fell by 1.0 percent.
“Mortgage credit supply dropped again in June, as investors further reduced their willingness to purchase jumbo loans and those with lower credit scores,” said Joel Kan of MBA. “Lenders are navigating a gradual economic and housing market recovery that is still facing headwinds from the ongoing COVID-19 pandemic.”
BC Studies C-19 Effect on Retirement Crisis
The Boston College Center for Retirement Research published a study this week titled: How Widespread Unemployment Might Affect Retirement Security.
The Boston College paper documents the ongoing challenge of COVID-19 on the unemployment rate that has been driven by the pandemic’s effect on the economy and its deepening impact to the American retirement crisis, which the paper observes will only increase in severity the longer that unemployment at this scale continues.
The study finds that this crisis will affect retirement security in a very different way than the Great Recession because the destruction is occurring more through widespread unemployment and less through a collapse in the value of financial assets and housing.
To measure the impact of unemployment as driven by the pandemic on the prospect of American retirement, the Boston College researchers employ the National Retirement Risk Index (NRRI) which measures the share of working-age households which are at risk of losing the ability to maintain their pre-retirement standard of living into their post-working lives.
Widespread unemployment would increase the NRRI from 50.2% to 54.9% of all working-age households, resulting in an additional 4.7% of households at risk in retirement. The results for the 30% of households that experience the job loss are much more dramatic. The NRRI for this group increases from 54.4% to 75.4%, a 21-percentage-point jump.
Ensuring retirement security for an aging population was one of the most compelling challenges facing the nation before the onslaught of COVID-19. The unemployment associated with the pandemic has made the situation worse across the board.
The NRRI has most likely increased from 50% to 55%, and changes in asset prices and further declines in the interest rate would only make the increase larger. Finally, the NRRI does not fully capture the harm done to a population with so many households already at risk, as the pandemic has made the savings gap larger.
Faith’s Corner: Housing Payment Crisis
According to a new report from Apartment List, re-openings of the economy in June did little to ease the ‘housing payment crisis.’ Despite some Americans getting back to work in June, the rate of missed housing payments actually increased.
July brought a continuation of several trends observed over the previous three months. Renters continue to struggle more than homeowners, however both groups are widely affected; this month, 36 percent of renters and 30 percent of homeowners failed to make full on-time payments.
Younger and lower-income households have more trouble than older and wealthier ones; for those under 30 years old and those making less than $25,000 annually, the missed payment rate exceeded 40 percent in July. Missed payments also remain correlated with population density, and in medium- and high-density areas where the early spread of the virus compounded the existing stress of high housing costs.
While eviction protections today vary dramatically from place to place, our survey shows widespread and growing concern about housing insecurity. From June to July, the share of renters who are either “very” or “extremely” concerned about being evicted rose from 18 percent to over 21. Similarly, the share of homeowners concerned about foreclosure ticked up from 14 percent to 17 percent.
Looking forward to July, the majority of states have either paused or are reversing their scheduled re-openings. If local displacement bans are allowed to expire before local economies begin to recover, the missed payments could lead to a wave of downgrade moves as renters and homeowners seek more affordable housing.
Public/Private Approaches to Homeless
With alarming indicators flashing of looming rental evictions leading to an increase in homelessness, we are moderating a public policy discussion on homelessness on 7/23.
Yasmin Nelson of Senator Kamala Harris’ (D-CA) office will join Lee Raagas, CEO of Skid Row Housing Trust as panelists in a one-hour discussion hosted by WHF. Please register now and join us for this important discussion on homeless solutions.
Purchase Apps Up 33%
Mortgage applications to purchase a home rose 5% for the week and were a remarkable 33% higher than a year ago, according to the Mortgage Bankers Association’s index, which was seasonally adjusted, including for the Fourth of July holiday.
Buyer demand has been incredibly strong since mid-May, after the coronavirus shut down most housing activity in April. The only thing standing in the way of more sales is the record low supply of homes for sale.
Home prices gains continue to accelerate, so low mortgage rates are giving buyers much-needed help.
Editor’s note: This is a compilation of industry periodicals (including American Banker, Bloomberg, Mortgage Bankers Association media, Politico and the Wall Street Journal among others) and is intended solely for the use of the addressee and not for further distribution without the sender’s permission.
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Faith Schwartz is the owner of Housing Finance Strategies, a professional services firm founded in 2016 to provide Strategic Advisory Services, Government and Industry Relations, Public Policy Expertise, Roundtable and Event Management and Professional Speaking Services.