The Week Ahead

Upcoming Hearings

Upcoming Conferences

  • NRMLA Eastern Regional, 5/19
  • MBA Secondary, 5/19-22
  • SIFMA Regional, 6/12
  • Ginnie Mae Summit, 6/13-14
  • NEXT #Summer19, 8/26-27
  • MBA Risk Management, 9/15-17
  • Digital Mortgage, 9/23-24
  • MBA Annual and Expo, 10/27-30

Department of Labor Opines on Contractors

This week, the Department of Labor’s Wage and Hour Division issued an Opinion Letter which concludes that workers who provide services to consumers [through this specific company’s virtual platform] are independent contractors, not employees of the
company.

The Opinion Letter addresses whether a service provider for a virtual marketplace company is an employee of the company or an independent contractor under the Fair Labor Standards Act.

“An important role of the U.S. Department of Labor is to ensure that employers who want to do the right thing have clear compliance assistance,” said Keith Sonderling, Acting Administrator of the Department’s Wage and Hour Division. “Today, the U.S. Department of Labor offers further insight into the nexus of current labor law and innovations in the job market.”

The opinion letter follows on steps the Trump Administration took immediately after taking office to rescind former President Obama’s published guidance that took the position that these workers were employees.

FHA, VA and the GSEs are reviewing the DOL guidance for underwriting applicability.

FOMC Meets and Holds Rates Steady

The Federal Reserve Open Market Committee met this week and announced unanimous agreement to hold the benchmark interest rate steady at a target range of 2.25% to 2.5%.

The Fed’s decision not to change rates affirmed the March meeting’s economic projections signaling no rate changes for the rest of 2019.

In minutes from that meeting, the Fed said low measures of inflation, concern over global growth, and tightening financial conditions warranted pausing on interest rate hikes while policymakers reassess the data.

Waters Seizes Opening on Housing Infrastructure

On the day President Trump met with Speaker Nancy Pelosi (D-CA) and Senate Minority Leader Schumer (D-NY) to discuss an Infrastructure plan, HFSC Chairwoman Waters (D-CA) held a full committee hearing on infrastructure.

As President Trump indicated a willingness to spend on Infrastructure, Chairwoman Waters outlined her own housing infrastructure plan including:

  • $70 billion for existing public housing;
  • $5 billion in block grants to states;
  • $5 billion for natural disasters;
  • $1 billion for rural housing;
  • $1 billion for Native American housing; and
  • $10 billion in new money for CDBG.

The legislative effort appears to have bipartisan legs as both sides of the aisle have interest in spending on housing programs in rural and urban districts.

“Our public housing system, which houses 2.6 million Americans, is … in dire need of investment to repair kitchens, elevators, baths, doors, windows and roofs. Neglecting our housing infrastructure hurts our economy,” said HFSC Chairwoman Maxine Waters (D-CA).

Applications Fall Again

Mortgage applications fell for the fourth straight week even as interest rates dropped, the MBA reported in its Weekly Mortgage Applications Survey for the week ending April 26.

The Market Composite Index decreased by 4.3 percent on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the Index decreased by 4 percent compared to the previous week.

The FHA share of total applications decreased to 9.5 percent from 9.9 percent the week prior.

Some industry observers claim recent changes FHA made to tighten its TOTAL scorecard are having a significant impact on new business volume.

However, the MBA discounts those industry assertions on FHA volume as premature given the tightening of the TOTAL scorecard has just recently occurred.

S&P Case Shiller Report Shows Slowing HPA

The Standard & Poor’s CoreLogic Case Shiller Indices showed home price increases across the U.S. continued to slow in February, suggesting that the transition from a seller’s market to a buyer’s market is underway.

“The pace of increases for home prices continues to slow,” says David M. Blitzer, Managing Director and Chairman of the Index Committee at S&P Dow Jones Indices. “Homes began their climb in 2012 and accelerated until late 2013 when annual increases reached double digits. Subsequently, increases slowed until now when the National Index is up 4% in the last 12 months.

Sales of existing single family homes have recovered since 2010 and reached their peak one year ago in February 2018. Home sales drifted down over the last year except for a one-month pop in February 2019. Sales of new homes, housing starts, and residential investment had similar weak trajectories over the last year. Mortgage rates are down one-half to three-quarters of a percentage point since late 2018.

“The largest year-over-year price increase is 9.7% in Las Vegas; last year, the largest gain was 12.7% in Seattle. Regional patterns are shifting. The three California cities of Los Angeles, San Francisco and San Diego have the three slowest price increases over the last year. Chicago, New York and Cleveland saw only slightly larger prices increases than California. Prices generally rose faster in inland cities than on either the coasts or the Great Lakes. Aside from Las Vegas, Phoenix, and Tampa, which saw the fastest gains, Atlanta, Denver, and Minneapolis all saw prices rise more than 4% — twice the rate of inflation.”

“While we may not be in a buyer’s market quite yet, some states are showing signs of becoming one very soon. Change is on the horizon,” said Ralph McLaughlin, CoreLogic deputy chief economist and executive of research and insights.

McLaughlin added given persistent affordability constraints along the Pacific Coast over the past several years, “it’s quite possible that March or April’s numbers could bring the first markets to see price declines since December 2012.”

Faith’s Corner: Executive Interview Series

This week I am pleased to announce the publication of our inaugural Women in Leadership Executive Series interview featuring the Federal Housing Finance Agency’s Elizabeth (Liz) Scholz.

FHFA’s Scholz is leading the June 3, 2019 roll-out of the FHFA’s industry transformational Uniform Mortgage Backed Security (UMBS) initiative that changes how Fannie Mae and Freddie Mac deliver MBS.

As we grow our consulting practice, and alliance with NEXT, we are broadening our base by sharing critical news and events through multiple channels including the lens of women executives in housing finance. Kicking-off our Women in Leadership Executive Interview Series with Liz Scholz is case in point. My interview provides detail on the forthcoming UMBS launch as well as an inside look at what makes Liz such an impressive leader.

In an excerpt from the interview, Liz Scholz said: “The UMBS is one of the most significant changes to the mortgage-backed security marketplace to take place in decades. When fully implemented, the UMBS will help create a more liquid, fungible and transparent security, which will be good for the housing finance market and the public at large.”

In addition to the insight on the UMBS project, I asked Liz about her career path and what advice she has for others as they pursue corporate advancement.

To view the full interview and first installment of the Women in Leadership Executive Series with FHFA’s Liz Scholz, please visit the Housing Finance Strategies website or click here.

NEWCO Launches Innovative Leaseback

A new leaseback program offers owners the opportunity to sell their homes and receive their equity upfront while maintaining occupancy for 1 to 10 years.

Contrary to traditional resale home offerings, sellers immediately receive their equity but have none of the expenses or hassles of moving. Sparrow provides the additional benefits of maintaining the home and paying insurance, property taxes and HOA fees.

OCC Seeks Fintech Input

The OCC has opened a 45-day public comment period on a proposed Fintech Innovation Pilot Program.

The program is intended for banks and their vendors to test innovative financial products.

The program would be voluntary and designed to provide eligible entities with regulatory input early in the testing of innovative activities that could present significant opportunities or benefits to consumers, businesses, financial institutions and communities.

Comments on the proposed program should be sent by email to pilotprogram@occ.treas.gov by June 14, 2019.

 

More info on Housing Finance Strategies

Housing Finance Strategies Services (PDF)

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