The Week Ahead

Upcoming Hearings

Upcoming Conferences

  • MBA IMB, 2/3-6
  • SIFMA AML, 2/5-6
  • NAR Policy Forum, 2/6
  • MBA Servicing, 2/23-26
  • SFIG Vegas, 2/23-26
  • NEXT Winter, 2/24-25
  • MBA Advocacy, 4/21-22
  • NEXTDC20, 11/9-10

HUD Kicks-Off ‘Barrier Busting’ Bus Tour

HUD Secretary Carson announced this week that the Department will lead a bus tour across the nation focused on removing barriers to affordable housing. 

In each Republican Administration, driving down regulations has been a central tenet of the less government philosophy. Given the continued rising costs of housing and dearth of inventory, this typically republican battle cry is garnering the interest of affordable housing advocates across the country, including Los Angeles.

After decades of exclusionary single-family-only zoning, California has a deficit of 3.5 million homes. This scarcity creates poverty, homelessness, sprawl, and pollution⁠—all while eroding the stability of the middle class. The California state legislature appears poised to defeat Senate Bill 50, the More Homes Act, but its prominence speaks to the resonance HUD is capturing in its promotion of removing barriers.

The HUD tour—Driving Affordable Housing Across America—will begin in Louisville, Kentucky, this week before stopping in different communities for events and discussions on affordable housing. HUD says the tour is part of Carson’s work as the Chair of the White House Council on Eliminating Regulatory Barriers to Affordable Housing. The Council’s eight-member agencies are engaging with governments at the local, state and tribal level.

NMHC Publishes Student Housing Study

This week, the National Multifamily Housing Council released a far reaching report outlining the current state of student housing and noting that more than 22 million students are now enrolled in post-secondary educational institutions including both two-year and four-year colleges and universities.

NMHC finds that the student housing market is now facing significant changes, both on the demand side in terms of student diversity and growth patterns and on the supply side in terms of evolving building formats and amenities as the market evolves. The report estimates that student housing rentals represent approximately seven to twelve percent of the total US rental housing market.

CC’s Otting on CRA Hot Seat at House Hearing      

After proposing an update to the Community Reinvestment Act, the OCC’s Joe Otting testified before the House Financial Services committee.

During the Hearing, committee member Gregory Meeks (D-NY) was critical of Otting saying “Your proposal decouples CRA from outcomes for intended communities, discounts the value of direct lending in mortgages to low and moderate-income communities and communities of color, cuts out community organizations that work directly with these targeted communities, and is just not supported by data.”  

Otting, in response to the accusations against his proposal, said his intent is to strengthen the CRA, not weaken it. He said this proposal can achieve that by utilizing four metrics: Clarify what counts, clarify where it counts, measure CRA performance and make reporting transparent and timely. 

“Nothing in modernizing CRA regulations encourages or legalizes redlining. Nothing in the proposed rule limits agency authority to examine for compliance with and enforce fair lending laws,” said Comptroller of the Currency Joseph Otting.

Purchase Apps Surging

Loan applications to purchase U.S. homes increased to an 11-year high last week as Americans took advantage of a drop in mortgage rates to their lowest since late 2016.

The MBA’s purchase index climbed 5.3% in the week ended Jan. 24 to 313.7, the best reading since the beginning of 2009. The contract rate on a 30-year fixed loan fell to 3.81% from 3.87%.

Cheaper borrowing costs reflect a decline in Treasury yields as the coronavirus outbreak prompted investors to reduce equity exposure for the safety of government securities. The MBA data follow other recent reports showing strength in the housing market as well as robust earnings from home builders.

The MBA’s measure of refinancing applications also climbed, to the highest level since mid-August. The group’s overall gauge of mortgage applications was the strongest since June 2013.

BC: Aging Population More Likely to Tap Equity     

According to a paper published by the Center for Retirement Research at Boston College, ARE HOMEOWNERSHIP PATTERNS STABLE ENOUGH TO TAP HOME EQUITY?, as retirees live longer, spend more on medical care, and get less income replaced by Social Security, many may need to tap their home equity to be comfortable in retirement. The most direct way to access home equity is downsizing, but few choose this option.

The alternative is withdrawing equity through a reverse mortgage or a property tax deferral, but few households use these options either. A potential reason that homeowners are reluctant to borrow against their house is that, if they do decide to move, they have to pay back the loan with interest, which could leave them with inadequate resources at a vulnerable time in their life. This paper assesses how likely households are to move as they age to see if borrowing against one’s home is a viable financial strategy.

The analysis uses the Health and Retirement Study (HRS) to analyze three cohorts: the HRS cohort (ages 50-54 in 1992), the AHEAD cohort (ages 70-74 in 1993), and a synthetic cohort covering the whole lifespan from age 50 to death. The analysis identifies typical housing trajectories in retirement and explores how often, and for whom, tapping home equity would be a viable strategy.  The paper found that:

  • Seventy percent of households have very stable homeownership patterns, even over several decades. They either stay in the home they own in their 50s (53 percent) or purchase a new home around retirement and stay (17 percent).
  • The 30 percent of households that do move consist of two distinct subgroups. Frequent movers (14 percent) appear to face labor market challenges. Late movers (16 percent) look like a slightly more affluent version of the households that never move, but then face a health shock that forces them out of the home that they owned into a rental unit or a long-term services and supports facility.
  • Overall, the findings largely support the narrative from prior research that most people want to age in place and move only in response to a shock.

Faith’s Corner: On the Ground in Iowa

With all the trappings of a photo-finish, the Democrat candidates for President are set to square-off next week in the first presidential event in Iowa. And I’m joining them this weekend as a volunteer on the ground. What an exciting time!

Politics strategy firm FiveThirtyEight reports that former Vice President Joe Biden, Sen. Bernie Sanders (D-NH), former South Bend, Indiana, Mayor Pete Buttigieg (D-IN) and Sen. Elizabeth Warren (D-MS) are all clustered within about 8 percentage points of each other in an average of the state’s polls, with Sanders and Biden at 22 percent, Buttigieg at 17 percent and Warren at 14 percent.

The data suggests that this year’s caucuses may be the most competitive and crowded Iowa has ever had. There are more candidates polling within 10 points of the leading contender than in any race since 1980 and a record-tying number of candidates are polling above 15 percent, with another just below that mark. Whether one candidate will get a late boom or bust remains to be seen, but with just days to go, no candidate is close to being a clear favorite.

 Sanders, whose Iowa polling average is just a hair ahead of Biden’s, is not polling that high for a front-runner. At 22.6 percent, he has the second-lowest polling average for a leading candidate one week before the caucuses.

Since the start of the modern primary era there has never been a major-party contest in Iowa where more than three candidates won at least 15 percent of the vote statewide. I’ll report in next week on how it goes in Iowa and what the results mean for housing issues.

Independent Mortgage Bankers Conference

We are off to New Orleans next week for the MBA’s IMB conference. The gathering of senior leaders offers our team a chance to share our perspective on key issues.

In addition to our meetings, we look forward to sitting in on the general session panel called “Housing Finance Reform: What it Means for Independent Mortgage Bankers,” featuring Ginnie Mae’s Acting EVP, Michael Drayne and other leaders from HUD.

Ginnie is Double YoY   

Issuance of Ginnie Mae I MBS for single-family housing in December 2019 totaled $380 million—more than double December 2018’s $148 million. 

Ginnie Mae announced that issuance of its MBS was $54.74 billion in December, which provided financing for more than 214,999 homeowners and renters. 

Of the $54.74 billion, $2.56 billion was Ginnie Mae I MBS with the remainder being Ginnie Mae II MBS. 

The reported outstanding principal balance is $2.11 trillion, which is an increase from December 2018’s $2.04 trillion.

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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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