What's New?
9316-A Old Keene Mill Road
Burke, Virginia 22015-4285
(F) 703-584-7746
[A Virginia Professional Limited Liability Company]

    December 4, 2018

    Take Action to Prevent Wire Transfer Fraud

    By Abigail White, American Land Title Association News -- Over the past several years, wire transfer fraud has increased
    exponentially year over year. Unfortunately, the scams with which title companies and real estate agents are slowly growing familiar
    continue to morph and modify themselves, producing new and innovative ways to stay ahead of the curve.

    Business Email Compromise (BEC) has been on the FBI’s radar since 2010 when it began receiving complaints regarding these
    scams. Over the last eight years, hackers have started to focus on real estate transactions as a simple way to defraud people of
    hundreds of thousands of dollars.

    According to the FBI, fraudsters stole $5.3 billion through wire fraud schemes from October 2013 through December 2016. This is
    growing exponentially. In 2017, online crime resulted in losses of $1.4 billion.

    Previously, scammers hacked into the email accounts of title companies and real estate agencies. From there, they would gather
    information about closing dates and times, property addresses, seller names, and sensitive personal information about customers.
    Then, they would email or call the title company pretending to be the property seller, and provide their own wire transfer instructions.
    The title company would then wire the closing funds out of their escrow accounts, straight into the hacker’s account, which may even
    have been opened in the property seller’s name. Often that money was then immediately withdrawn and transferred into a second
    account, never to be seen again.

    Similarly, hackers have also been taking advantage of money mules and their mule accounts. Often, foreign-born hackers will enlist
    the help of an American who has access to an American bank account. Once the money has been wired to this American bank
    account, the mule then transfers the funds directly to the foreign bank account, where it’s difficult to trace.

    When title companies, real estate agents, and the FBI started to catch on to these specific BEC crimes, the hackers evolved. They
    started to change their scams in small ways so that they were still tapping into the real estate market, but stealing the monies from a
    different side of the transaction.

    Because title companies have started to take preventative measures, including in-depth education of employees, hackers have set
    their sights on the unassuming and innocent homebuyers. And although the buyer is typically sending less money than the title
    company is wiring, thanks to a mortgage, hackers have discovered that buyers are much less educated about the process than title
    companies, and much easier to scam. In addition, the title industry is largely educated on this issue, while the 5.5 million home buyers
    each year are not.

    According to the BuyerDocs’ market surveys, 52.2 percent of 200 recent homebuyers are completely unaware of wire fraud in real
    estate. On top of that, 74 percent of those surveyed believed their title company or bank can recover funds that are wired to the
    wrong account.

    Fraudsters are using social engineering to trick property buyers into wiring their money to the wrong accounts. By copying email
    signatures and using realistic-looking fake email addresses (think jvv@realtor.com instead of jw@realtor.com), hackers are having an
    easy time of tricking naïve home buyers into wiring their money to the wrong account. And, again, the outward-bound money is
    immediately withdrawn or transferred to a second account, making it difficult to reverse the transaction. Remember, for the hacker, it
    doesn’t matter which account they hack (Realtor, title company, lender, etc.), it only matters that they get the information. So, a title
    company could have the most robust email security in the world, but if the Realtor is hacked, it doesn’t matter. The chain is only as a
    strong as the weakest link.

    The weak link can come from many places. According to ValueWalk, about seven out of 10 people use the same passwords for their
    social media accounts as for their corporate email. If a hacker can get into your employee’s Facebook or Twitter account, it’s
    extremely likely the criminal can then log in and gain access to your email system. Along that same note, in 2015 more than 160,000
    Facebook accounts were compromised each day. Over the last few years, 160 million LinkedIn accounts have been hacked, and 71
    million Twitter accounts have been infiltrated, according to ValueWalk’s study.

    In addition to vulnerabilities due to employee social media accounts, businesses haven’t been near vigilant enough when it comes to
    internet security enforcement. Despite most attacks against small to medium business being web-based, 59 percent of businesses
    polled have zero visibility or access into their employee password practices, according to a study by Ponemon Institute. To make
    matters worse, 65 percent of these businesses have a password policy—which they don’t bother to enforce—the study found.

    Even though hackers are attacking unsuspecting homebuyers more frequently, all hope is not lost. There is still plenty of action the
    real estate world can take in order to protect this industry from escalating BEC and social engineering attacks. You may not be able
    to educate and train each homebuyer extensively, but you can be proactive and teach them to stay on the offensive. Continue to
    educate your employees—the more they know, the more knowledge they can pass on. Obtain the services of a company focused on
    protecting title companies and homebuyers from social engineering and email hackers.

    Simple policies to follow:

  • Implement a password policy and then back it up
  • Use dual-factor authentication for password updates
  • Use your email client’s audit logging features so you can track any data breaches which do occur
  • Employ the services of a company which can monitor the dark web and alert you if your employees’ identities or credentials are
  • Use firewalls, anti-malware software, phishing detection and a secure internet gateway.

    These easy-to-implement and relatively inexpensive steps will allow you to protect your company even when the ball is in the
    homebuyers’ court. By taking the initiative and arming yourself with the proper knowledge and business tools, the hackers’ ever-
    evolving schemes will become a thing of the past, while your brain and business can rest easy.

    Abigail White is cofounder and vice president of business development of BuyerDocs, which provides a platform to securely send wire
    transfer instructions. She can be reached at abigail@buyerdocs.com.

    November 21, 2018

    Appraisers accuse federal regulators of recreating housing crisis conditions

    Appraisal Institute blasts proposal to eliminate appraisal requirement on certain home sales

    By Ben Lane, Housing Wire --  As one might expect, appraisers are none too pleased about the Federal Deposit Insurance Corp.,
    the Office of the Comptroller of the Currency, and the Board of Governors of the Federal Reserve proposing to eliminate the
    appraisal requirement on certain home sales of $400,000 and below.

    Earlier this week, the FDIC, OCC, and Fed proposed increasing the appraisal threshold from $250,000 to $400,000, meaning that
    some home sales of $400,000 and below would no longer require an appraisal.

    According to FDIC data, increasing the appraisal threshold from $250,000 to $400,000 would have exempted an additional 214,000
    mortgages from the agencies’ appraisal requirement in 2017.

    And while that would mean that there would be 214,000 fewer appraisals, and therefore 214,000 fewer appraisal fees for appraisers,
    that is not the appraisal industry’s chief concern.

    According to Appraisal Institute President James Murrett, the newly proposed rules would add significantly more danger to the lending
    environment and harken back to the way things were just before the financial crisis.

    “The Appraisal Institute strongly objects to the FDIC’s proposal to raise residential appraisal thresholds,” Murrett said in a statement
    provided to HousingWire.

    “Congress just considered establishing a residential appraisal exemption and instead chose to enact a vastly different allowance
    involving appraisers in rural areas,” Murrett continued. “This proposed rulemaking flies in the face of this action, and recreates the
    same type of environment that led to the housing crisis.”

    Murrett said that increasing the appraisal threshold will “threaten the vital role” that appraisers have in real estate deals.

    “This action would undermine the crucial risk mitigation services that appraisers provide clients and users of appraisal services,”
    Murrett said.

    “Raising the threshold means more evaluations will be allowed in place of appraisals. The Appraisal Institute anticipates that will result
    in a return to the loan production-driven environment seen during the lead-up to the financial crisis, where appraisal and risk
    management were thrust aside to make more – not better – loans,” Murrett continued. “Apparently, the FDIC has learned nothing
    from that experience.”

    According to Murrett, reducing regulations may make some sense early on, but “the FDIC’s announcement raises significant safety
    and soundness concerns that the Appraisal Institute finds deeply disturbing.”

    November 15, 2018

    Congressman Asks Fed to Consider Payee Matching Requirements on Wire Transfers

    Title News Online, American Land Title Association -- With losses due to wire transfer fraud continuing to rise, a member of
    Congress raised an important question during a hearing Nov. 14 before the U.S. House Financial Services Committee.

    U.S. Rep. Brad Sherman (D-Calif.) posed the question about payee matching requirements for banks and other financial institutions
    to Randal Quarles, a member of the Board of Governors of the Federal Reserve and the vice chairman for Supervision. Sherman
    started by sharing some background and startling figures about the growing threat of wire transfer fraud.

    Since October 2013, the FBI reported losses of $2.9 billion in the U.S. due to business email compromise (BEC) or Email Account
    Compromise (EAC). Since 2013, global losses due to these fraudulent fund transfers has totaled $12.5 billion. According to the FBI,
    the number of BEC/EAC victims involved in the real estate transactions has increased more than 1,100 percent while there was a
    2,200 percent rise in reported monetary loss.

    “These scams are effective because there's no requirement that the name of the individual intended to receive a wire transfer
    actually matches the name on the account that the funds are deposited into,” Sherman said. “Has the Federal Reserve considered
    requiring banks and other financial institutions to apply payee matching when initiating a wire transfer?”

    Quarles responded by saying the Federal Reserve payments system group is considering that requirement among several other
    active efforts regarding wire transfer fraud.

    “Well, I hope you’d go back and light a fire under them because this is important,” Sherman interjected.

    ALTA Past President Dan Mennenoh ITP, NTP offered the same solution about payee matching requirements last year during a
    Congressional hearing on data security.

    “This simple authentication step can be the single biggest deterrent,” Mennenoh said during the hearing.

    To help raise awareness, ALTA has produced a two-minute video and an infographic that provide tips on how consumers can protect
    their money and offers advice on what to do if they have been targeted by a scam. In addition, title agents are encouraged to join the
    free ALTA Registry, which serves as an effective countermeasure to wire fraud.

    November 5, 2018

    Former owner of foreclosure rescue business gets 14 years for stealing borrowers' homes,

    Company offered "Keep Your Home" program that targeted struggling homeowners

    By Ben Lane, Housing Wire --  The former owner of a California foreclosure rescue business will spend the next 14 years in prison
    after admitting in court that he used the business to steal struggling borrowers’ homes during the housing crisis.

    Earlier this year, Sergio Barrientos pleaded guilty to conspiracy to commit wire fraud affecting a financial institution and bank fraud.

    According to court documents, from about September 2004 through February 2008, Barrientos and co-conspirators Zalathiel Aguila
    and Omar Anabo operated a business in California called Capital Access.

    The company offered a “Keep Your Home” program that targeted borrowers who were struggling with their mortgages and facing
    foreclosure. The program offered a temporary rescue plan where “qualified investors” would assume a borrower’s mortgage while the
    borrower paid rent and worked toward rebuilding their credit.

    But the program was a lie.

    According to court documents, Barrientos, Aguila, and Anabo convinced the struggling borrowers to sign over the titles to their
    homes, then stole and spent any equity those homeowners had in their homes.

    Barrientos, Aguila, and Anabo then used straw buyers to defraud financial institutions out of millions of dollars in loans obtained
    under false pretenses.

    The equity the trio stripped out of the distressed borrowers’ homes was used for the scheme’s operational expenses and for the trio’s
    personal expenses.

    According to the U.S. Attorney’s Office, a number of homeowners in California lost their homes and savings as a result of the scheme,
    while the targeted lenders lost an estimated $10.47 million from the fraud.

    And now, after pleading guilty, the 64-year-old Barrientos will spend 14 years in federal prison.

    October 31, 2018

    Moody’s: Mortgage lending is getting riskier and that’s a problem

    “The five C’s of credit” are relaxing

    By Jacob Gaffney, Housing Wire -- The credit ratings agency, Moody’s Investors Service, just released a report citing deterioration
    in overall loan quality in the mortgage lending market.

    And, the analysts there think the problem might get worse, before it gets better.

    “Further weakening would heighten the risk of performance deterioration, a credit negative for certain financial institutions and
    residential mortgage-backed securities,” the report, led by senior analyst Jody Shenn, states.

    Bear in mind that in its role as a CRA, Moody’s job is to call things risky and give it a measure. Mortgage bonds are no different,
    though the approach of this research is in that it mentions “the five C’s of credit” that are relaxing:

  1. Character is relatively strong. Components of credit quality related to character, such as credit scores, are the strongest
    feature of originations currently, and have weakened little over the past few years.
  2. C\apacity is strong, but weakening quickly in some ways. Elements of origination quality related to the capacity of borrowers to
    afford payments on their loans, such as income verification and the use of loan products with variable payments, are strong but
    loans with high debt-to-income ratios (DTIs) have been increasing.
  3. Collateral offers modest support for credit quality. Support for origination quality from practices related to collateral, such as
    loan-to-value (LTV) ratios and appraisal quality, is at moderate levels.
  4. Capital is at moderate levels. Factors related to capital, such as borrower reserves, appear to be at generally moderate levels,
    based on our review of guidelines and policies, and discussions with originators.
  5. Conditions have become riskier. Origination quality is not receiving much support from the conditions surrounding the granting
    of loans. In particular, the risk of a weaker macro environment during the initial years after loan origination is building.

    For the most part, new mortgages are solid, especially considering the high credit scores; improved documentation and appraisal
    practices; and few loans with variable payments — regulatory restrictions on loan officer compensation arrangements would also help
    prevent riskier lending, Moody's claims.

    The problem is deeper than this, as "sources of potential vulnerability include lenders' comfort with high debt-to-income and loan-to-
    value ratios, and elevated levels of first-time homebuyers."

    "In addition, the broad conditions under which loans are being granted have grown less favorable for future mortgage performance.
    For instance, home prices are no longer very affordable and rising interest rates are reducing refinancing incentives and
    prepayments," the report states.

    "Similarly, although the U.S. economy is broadly strong and strengthening, mortgages being originated today appear more likely to
    face a stressed environment within only a few years, differing from loans originated earlier during this long period of economic
    growth," the analysts conclude.

    October 26, 2018

    Expedia dives headfirst into short-term rentals, acquires Pillow and ApartmentJet

    Two tech companies allow for more short-term rentals in multifamily properties

    By Ben Lane, Housing Wire --  Expedia Group, the online travel giant that includes Hotels.com, trivago, Orbitz, Travelocity, Hotwire,
    and more, also has two of the biggest names in short-term rentals under its umbrella: HomeAway and VRBO.

    But those companies trail the short-term rental industry’s biggest player, Airbnb. Now, Expedia wants to do something about that by
    working with the multifamily industry to make it easier to use units as short-term rentals.

    Expedia announced this week that it is acquiring Pillow, a San Francisco-based startup that helps apartment owners work with their
    long-term residents to turn their occupied units into short-term rentals, and ApartmentJet, a software company that enables
    multifamily property owners to turn units into guest suites.

    According to Expedia, the acquisitions will “help unlock urban growth opportunities that, over time, will contribute to HomeAway’s
    ability to add an even broader selection of accommodations to its marketplace and marketplaces across Expedia Group brands.”

    The agreement with Pillow is interesting, considering that last year Airbnb and Pillow inked a deal that made Pillow the preferred
    partner for landlords enrolled in Airbnb’s Friendly Buildings Program, which allows landlords and tenants to share the revenue
    generated by home sharing.

    Through Pillow, landlords and residents work together to use apartments as short-term rentals, giving both parties more information
    and control over the short-term rental arrangement without violating lease terms.

    ApartmentJet, on the other hand, allows property owners to set up and rent out guest suites at their properties.

    “Both solutions enable owners to set limitations on short-term rentals in their buildings, such as limiting the number of total rental
    nights per year for units or for an entire building,” Expedia said in a release. “Both make it easy for multifamily owners to know exactly
    who is staying in their buildings and when.”

    According to Mark Okerstrom, the president and CEO of Expedia Group, Expedia views these acquisitions as “foundational” for the

    “Demand for short-term rentals in U.S. urban destinations has been growing impressively over the past several years. In order to be
    able to deliver our customers what they are asking for while at the same time promoting responsible renting, Expedia Group is
    committed to delivering solutions that give urban building owners, managers and communities control and transparency over short-
    term rentals,” Okerstrom said.

    “Our acquisitions of Pillow and ApartmentJet are important and foundational investments in the Expedia Group platform,” Okerstrom
    added. “Through the acquisition of these innovative companies, we gain technologically advanced solutions that will help us give
    travelers new options for great places to stay in popular destinations while benefitting residents, owners, managers and local tourism.”

    Unsurprisingly, the leaders of both Pillow and ApartmentJet are thrilled to be acquired by Expedia and are looking forward to the

    “Pillow was founded to connect the world and spread the joy of travel through short-term rentals, and I’m incredibly proud of the
    impact we’ve had by making that possible in a way that works for the multifamily industry,” Pillow CEO Sean Conway said.

    “We are ecstatic to continue our growth among the millions of multifamily units worldwide with Expedia Group and HomeAway,”
    Conway continued. “Together, we will continue to collaborate with and serve owners, managers and residents by opening their doors
    to new opportunities.”

    ApartmentJet CEO Eric Broughton shared similar sentiments.

    “Our goal has always been to develop pioneering solutions for the multifamily industry, and for years, we’ve helped property owners
    strategically leverage the short-term rental market,” Broughton said. “We are thrilled to join forces with Expedia Group, whose
    resources and expertise will accelerate our ability to deliver innovative technologies and services, and we look forward to helping
    communities and travelers reap the full benefits of multifamily accommodations together.”

    Financial terms of the acquisitions were not disclosed.

    October 12, 2018

    Wells Fargo mortgage originations tumble amid rising interest rates

    Mortgage banking income on the rise, despite declining originations

    By Ben Lane, Housing Wire --  As interest rates have risen over the last several months, mortgage originations appear to be
    trending down, especially in the refinance space.

    Wells Fargo reported Friday that it originated $46 billion in mortgages in the third quarter, which is down 22% from last year’s total of
    $59 billion during the same time period.

    The overall total isn’t the lowest in recent memory for Wells Fargo though. Back in the first quarter, the bank originated only $43
    billion in mortgages. But the trend line for Wells’ mortgage business is heading south, with originations falling from $50 billion in the
    second quarter to $46 billion in the third quarter.

    And there doesn’t appear to be much of a light on the horizon, considering interest rates just hit a seven-year high and don’t seem to
    slowing down on their way up.

    According to Wells Fargo, its first mortgage applications also fell by 22% in the third quarter, compared to last year.

    Overall, Wells’ mortgage applications are also trending down. In the third quarter of 2017, Wells received $73 billion in mortgage
    applications. That figure fell to $63 billion in the fourth quarter, fell again to $58 billion in the first quarter, rose back up to $67 billion
    in the second quarter, but fell back again to $57 billion in the third quarter.

    Wells’ pipeline of unclosed mortgage applications is also on the decline, falling from $29 billion at the end of the third quarter last year
    to $22 billion at the end of this year’s third quarter.

    The bank doesn’t identify specifically what is causing the decline, stating simply that the declines are due to “seasonality.”

    Regardless, the bank is definitely seeing far less refinance applications and refi originations than it has in the recent past.

    In the first quarter of this year, Wells’ originations were 65% purchase and 35% refi. In the third quarter, the refi share has fallen
    significantly to just 19% of Wells’ originations, compared to 81% in purchase mortgages.

    Overall, Wells Fargo is also making less money in mortgages. Wells’ mortgage banking income fell from $1.05 billion in the third
    quarter of last year to $846 million in the third quarter of this year, a decline of approximately 20%.

    On the positive side of things, Wells’ mortgage banking income was up over the second quarter, when the bank reported $770 million
    in mortgage income.

    Although, the bank’s third quarter net mortgage servicing income was $390 million, down from $406 million in the second quarter. On
    the other hand, servicing income was up from $309 million during the third quarter of last year.

    Wells credits an “improvement in secondary market conditions” for the rise in mortgage income over the second quarter.

    One secondary market improvement is the bank’s recent foray back into mortgage securitization. Earlier this week, it was revealed
    that Wells plans to securitize a series of mortgages for the first time since 2008.

    And it appears it won’t the last time.

    Wells Fargo said that it is holding $249 million of non-conforming mortgages on its books for now, with the loans designated as held
    for sale in anticipation of the future issuance of residential mortgage-backed securities.

    Overall, Wells Fargo’s third quarter net income and revenue were both up compared with last year. Wells’ net income rose from $4.5
    billion last year to $6 billion this year, while its revenue rose from $21.8 billion to $21.9 billion during the same interval.

    “In the third quarter, we continued to make progress in our efforts to build a better Wells Fargo with a specific focus on our six goals:
    risk management, customer service, team member engagement, innovation, corporate citizenship and shareholder value. We are
    strengthening how we manage risk and have made enhancements to our risk management framework. We also continued to make
    progress on customer remediation, which is an important step in our efforts to rebuild trust,” Wells Fargo CEO Tim Sloan said in a

    “Our focus on shareholder value included progress on our expense savings initiatives, and we returned a record $8.9 billion to
    shareholders through net common stock repurchases and dividends in the third quarter,” Sloan added. “I’m confident that our efforts
    to transform Wells Fargo position us for long-term success.”

    September 26, 2018

    Federal Reserve hikes interest rates again

    As expected, the Federal Reserve pushed rates up an additional .25% to stymie inflation

    By Jeremiah Jensen, Housing Wire -- The Federal Reverse raised interest rate for the third time this year, pushing rates up by .
    25% to 2.25%.

    Strong economic growth and a booming job market have led to the eighth rate hike since 2015, as the Fed tries to rein in the
    acceleration of inflation.

    A growing base of experts expect the Fed to continue raising interest rates incrementally as long as employment growth keeps
    surging to prevent the economy from overheating. With today's rate hike, the Fed has raised the target range for the federal funds
    rate to 2% to 2.25%, according to its statement.

    Some experts, however, are saying there is merit to leaving interest rates alone as long as inflation doesn’t increase meaningfully
    beyond the 2% target. This opinion is unconventional, but in a speech reported by the Wall Street Journal, Fed Chairman Jerome
    Powell expressed a willingness to consider breaking from tradition to avoid unnecessarily quashing economic momentum in the U.S.

    Though rising interest rates typically foment anxiety over the strength of homebuyer demand, First American Chief Economist Mark
    Fleming says the strength of the economy should mitigate any negative effects on homebuyer demand due to rising interest rates.

    “The gross domestic product grew at a 4.2% annualized rate in the second quarter of 2018, the strongest pace of growth since 2014.
    The economy has added jobs every month for 94 consecutive months, producing the lowest unemployment rate since 2000.
    Additionally, the housing market is facing a wave of Millennial first-time home buyer demand. In fact, more than 50 percent of all
    homes purchased in the second quarter of 2018 were bought by first-time home buyers,” Fleming said.

    “The boost from the strong economy and first-time home buyer demand should overcome any downward pressure from rising rates
    on home sales. While the pace of sales may initially slow, home buyers typically adjust to the new rate environment,” he added.

    September 18, 2018

    Single-family rental giant bets big on house flipping market

    Amherst Holdings is putting up $1 billion to fund the launch and expansion of a house flipping operation
    called Bungalo

    By Jeremiah Jensen, Housing Wire --  Amherst Holdings, one of the largest single-family rental entities in the U.S., is putting up $1
    billion to back a platform it can use to sell off homes it has flipped.

    According to an article from Bloomberg by Patrick Clark, Amherst owns and/or manages roughly 20,000 single-family rentals and is
    launching a subsidiary called Bungalo to flip properties, selling them at no-haggle prices in the hopes of attracting buyers who want a
    simpler home buying experience.

    The company has already dropped $225 million on Bungalo’s launch this year and has plans to put up an additional $1 billion in
    funding to float Bungalo’s expansion efforts.

    The service launches this week with 25 homes listed for sale in Dallas and 10 more in Tampa, Florida.

    “A lot of the distress in the U.S. housing market right now is not necessarily people upside down in mortgages,” Amherst Residential
    President Drew Flahive said in an interview.

    “It’s really the fact that a lot of these assets have a significant amount of deferred capex. An individual who wants to live in that home
    knows they have to come up with a down payment and a repair budget,” he added.

    According to Bloomberg’s report, confidential sources close to Amherst said the company is raising another roughly $1 billion to
    purchase more rental properties. Could it be that this is a play to offload older stock at a premium so it can reload its rental stock with
    newer assets?

    Time will tell.

    So far, Bungalo has more than 250 homes under repair and plans to expand into “markets people want to live in and are moving to,”
    according to Bungalo COO Greg Stewart.

    This news comes as house flippers profits have gone down in the past seven quarters, according to Daren Blomquist, senior vice
    president at Attom Data Solutions.

    “As it becomes increasingly competitive, we’re seeing the margins on home-flipping profits squeezed,” Blomquist told Bloomberg.

    “The traditional home-flipping model is to buy property at a steep discount, add value by rehabbing and sell for a premium because it’
    s fixed up. These days, it’s tougher to get that discount on the front end.”

    A decreasing profit margin in a market where mom-and-pops operate usually signals that competition is too intense in the space for
    them to continue on and that the advent of a mature market in which institutional investors, like Amherst, are willing to start playing
    ball is nigh.

    Amherst's play here could be an early indicator that institutional investors are about to take over the house flipping market.

    September 14, 2018

    What may provoke the next financial meltdown, according to six experts

    By Rebecca Ungarino and Natalie Zhang, CNBC -- As Wall Street reflects on the state of the financial system one decade after the
    financial crisis, six former federal officials and prominent financial leaders discuss with CNBC the lessons learned and where new risks
    may lurk.

    Roger Altman, founder and senior chairman of Evercore, told "Squawk Box" on Monday that financial crises have occurred "more
    frequently" over the course of the last three to four decades, and said "each one tends to come from a new place."

    "You think you're going to fight the last war, like one always thinks, and a crisis comes from a completely different place, and the next
    one likely will," Altman said.

    Daniel Tarullo, a professor of law at Harvard and former Federal Reserve Board member from 2009 to 2017, was instrumental in
    implementing financial regulations in the wake of the crisis. He told CNBC's "Squawk Box" on Monday that the rise of so-called shadow
    banking, or lending and other financial activities by unregulated bodies, is a concern of his.

    "As everyone says, and I think it's true, it's very unlikely that we're going to have a financial dislocation or crisis because of subprime
    mortgages. It's going to be from some other source," Tarullo said, adding the Dodd-Frank Act did little to address shadow banking
    "insofar as the big banks have been involved with it."

    Sheila Bair, who was chair of the U.S. Federal Deposit Insurance Corp. during the financial crisis, told "Squawk Box" on Monday that
    regulators ought to tighten, not loosen, regulations at this stage in the economic cycle.

    "Corporations have taken on a lot of debt, and that's going to be harder to refinance as rates go up, and whether they've prepared
    for that, we don't know yet," Bair said.

    Joseph LaVorgna, chief economist of the Americas at Natixis, told CNBC's "Squawk on the Street" on Monday that he's concerned the
    Federal Reserve might hike interest rates in reaction to "an inflation threat that's not there."

    Ray Dalio, founder of Bridgewater Associates, the world's largest hedge fund, told "Squawk Box" on Tuesday that he's also
    concerned about the rise of shadow banking in recent years. He said credit crises are, in a way, inevitable because "there's never the
    perfect balance between lending and borrowing."

    Dan Gallagher, commissioner of the SEC from 2011 to 2015 under President Barack Obama, lamented Tuesday on "Squawk Box"
    about the Dodd-Frank Act. He believes it will not protect the U.S. from the next economic downturn.

    "I've said it once, I've said it a thousand times. Dodd-Frank is a disaster. Dodd-Frank purported to be the response to the financial
    crisis. It unfortunately was, and is, still the law of the land and this notion that it's going to protect us from the next one is completely
    misplaced," he said.

    August 24, 2018

    Wells Fargo to lay off 638 mortgage lending employees

    Layoffs impact employees in four states

    By Alcynna Lloyd, Housing Wire -- From being ordered to pay more than $2 billion for allegedly lying about the quality of subprime
    and Alt-A mortgages, to publicly admitting the incorrect denials of customer mortgage modifications that could have potentially
    prevented 400 foreclosures, it’s safe to say Wells Fargo is having another tough year.

    The big bank announced this week it is laying off 638 mortgage employees in California, Colorado, Florida and North Carolina,
    according to an article written by Hanna Levitt for Bloomberg.

    The bank’s latest earnings report indicated it continues to struggle following its fake accounts scandal. Not only did the bank report a
    lower net income, its latest earnings report shows that although originations are increasing, it is still struggling with mortgage banking

    Affected employees were informed of the upcoming layoffs on Thursday. Employees will be eligible to receive pay and benefits
    through Oct. 21, the company said.

    However, employees unable to find another position within the company may be eligible to participate in the Wells Fargo salary
    continuation plan for separation benefits based upon the number of years of service with the bank, according to Wells Fargo's SVP of
    Consumer Lending Operations Tom Goyda.

    “Those [employees] were primarily retail fulfillment and servicing team members, and the reductions reflect ongoing declines in
    application volume and in the number of customers in default who need assistance,” Goyda told HousingWire in a statement.  

    Among the layoffs, approximately 55 employees from a home mortgage call center located in Colorado Springs, Colorado will be laid

    The call center primarily focused on staffing processors, underwriters and “others” to aid borrowers looking to access their home
    equity, according to an article by Wayne Heilman for The Gazette.

    From the article:

    In an email statement from Denver-based spokeswoman Nicole Schwab, the San Francisco-based financial giant attributed the
    cutbacks to “continuing market changes” that have resulted in “several team member staff reductions in various markets since
    the beginning of 2018. We continue to adjust capacity within our lines of business to meet customer needs — and to ensure we’
    re operating as efficiently and effectively as possible.”

    These layoffs are not the first round of layoffs for the big bank's mortgage business this year. Earlier this year, Wells Fargo
    announced it was laying off 100 employees at a Fort Mill, North Carolina-based mortgage office, and 63 more mortgage employees at
    a Frederick, Maryland-based office.

    Not only is the company shrinking the number of its mortgage employees, but it is following through on its promises to reduce its retail
    bank branches by about 5,000 by the end of 2020 through consolidations and divestitures.

    As previously reported, Flagstar Bancorp announced the acquisition of 52 Wells Fargo company branches in June. Flagstar extended
    job offers to 490 team members to branches located in Indiana, Michigan, Ohio and Wisconsin.

    August 1, 2018

    CoreLogic: June home price increases thwart prospective millennial buyers

    By Francis Monfort, MPA Magazine --  Home prices increased on month-over-month and year-over-year bases in June, with
    millennials increasingly identifying affordability as their biggest hurdle to homeownership, according to the CoreLogic Home Price
    Index (HPI)

    The HPI increased nationally by 6.8% from June 2017 to June. On a month-over-month basis, prices increased by 0.7%.

    "The rise in home prices and interest rates over the past year have eroded affordability and are beginning to slow existing home
    sales in some markets,” CoreLogic Chief Economist Frank Nothaft said. “For June, we found in CoreLogic public records data that
    home sales in the San Francisco Bay Area and Southern California were down 9% and 12%, respectively, from one year earlier.
    Further increases in home prices and mortgage rates over the next year will likely dampen sales and home-price growth.”

    CoreLogic President and CEO Frank Martell said there remains a lot to be done to help first-time buyers become homeowners, noting
    that one-third of millennial renters say they feel they cannot afford a down payment to buy a home.

    “With home prices rising quickly over the past few years and supplies low, first-time homebuyers face ever-growing challenges to find
    and buy affordable entry-level homes,” Martell said.

    Meanwhile, CoreLogic expects the national home-price index to continue to increase by 5.1% on a year-over-year basis from June
    2018 to June 2019, according to its HPI Forecast. On a month-over-month basis, home prices are expected to be flat from June to
    July 2018.

    July 17, 2018

    Anatomy of a Business Email Compromise Scheme

    TitleNews OnLine, ALTA  --  Last month, federal officials announced a recent effort to disrupt business email compromise (BEC)
    schemes designed to intercept and hijack wire transfers from businesses and individuals.

    Operation Keyboard Warrior resulted in the arrest of eight individuals for their roles in a widespread, Africa-based cyber conspiracy
    that allegedly defrauded U.S. companies and citizens of approximately $15 million since at least 2012.

    Here’s a look at how the BEC was carried out:

    According to the indictment returned by the U.S. District Court for the Western District, the criminals allegedly gained access to a
    Memphis-based real estate company’s email server in June and July 2016 through phishing scams. This is one of the dangers of
    using public email domains such as Gmail.

    Two weeks ago, Crye-Leike confirmed it was the targeted company but denied its servers were hacked “in any sale where buyers or
    sellers lost any funds.” Crye-Leike’s servers are maintained in Memphis and the firm has 115 offices with more than 3,000 licensed
    sales associates over a nine-state area.

    Steve Brown, president of residential sales for Crye-Leike, told the Daily News in Memphis that the real estate company contacted the
    FBI when agents and customers noticed suspicious emails.

    “This resulted in Crye-Leike assisting the FBI with its investigation into criminal cyberattacks targeting the real estate industry in the
    United States. We are very pleased that the FBI was able to identify suspects and take actions resulting in the recent news release
    relaying their success.”

    Brown went on to say that “Crye-Leike immediately took all the necessary steps to block attacks and Crye-Leike has not discovered
    nor been made aware of any smuggling or theft of data from its servers”.

    The indictment said the criminals used sophisticated anonymization techniques—including the use of spoofed email addresses and
    Virtual Private Networks—to identify large financial transactions, initiate fraudulent email correspondence with relevant business
    parties, change wiring instructions and then redirect closing funds through a network of U.S.-based money mules to final destinations
    in Africa.

    Prosecutors in the case allege the compromise began with an email message that appeared to be legitimate. According to the
    indictment, “The bogus email usually contains either an attachment or a link to a malicious website. Clicking on either will release a
    virus, worm, spyware or other program applications, also known as malware, that subsequently infects the employee’s email account
    and/or computer.”

    After that, the malware can spread through a company’s computer network and harvest sensitive information. Using spoofed emails,
    those behind a BEC can send what seem to be legitimate emails that include altered wiring instructions that direct money to a
    fraudulent account.

    In addition to BEC, the Africa-based defendants are also charged with using various romance scams, fraudulent-check scams, gold-
    buying scams, advance-fee scams and credit card scams. The indictment alleges that the proceeds of these criminal activities were
    shipped and/or transferred from the United States to locations in Ghana, Nigeria and South Africa through a complex network of
    individuals who had been recruited through the various Internet scams. The defendants are also charged with concealing their
    conduct by, among other means, stealing or fraudulently obtaining personal identification information and using that information to
    create fake online profiles and personas.

    July 7, 2018

    Homebuyers’ Demand Rises Despite High Prices

    By Radhika Ojha, The Mortgage Report --  Home prices are on the rise, both on a year-over-year as well as a month-over-month
    basis. The latest CoreLogic Home Price Index (HPI) reported a 7.1 percent appreciation in home prices from May 2017 to May 2018.
    Month-over-month, they rose 1.1 percent from April 2018 to May, CoreLogic reported.

    But they don’t seem to have deterred homebuyers from looking for homes this summer as the long-term desire for homeownership
    keeps the demand high despite rising prices, CoreLogic said citing a research it conducted along with RTi Research. The research
    revealed that the desire for homeownership was much stronger among renters in markets that had the highest home-price growth.

    Lagging supply in many of the high-priced markets has continued, the research found, as fewer current homeowners considered
    putting their homes on the market. Over the next 12 months, 31 percent of renters were considering buying while only 11 percent of
    homeowners considered selling over that same period.

    “The CoreLogic consumer research demonstrates that, despite high home prices, renters want to get out of their rental property and
    purchase a home,” said Frank Martell, President, and CEO of CoreLogic. “Even in the most expensive markets, we found four times
    as many renters looking to buy than homeowners willing to sell.” Until more supply becomes available, we will continue to see soaring
    prices in cities such as Denver, San Francisco, and Seattle.”

    In fact, according to CoreLogic’s Market Conditions Indicators (MCI) released with the HPI, found that 40 percent of metropolitan
    areas had homes that were overvalued. In May, 26 percent of the top 100 metropolitan areas were undervalued and 34 percent were
    at value, CoreLogic said. When looking at the top 50 markets, the MCI data indicated that 52 percent of the markets were overvalued,
    14 percent were at value, and 34 percent were undervalued.

    “The lean supply of homes for sale is leading to higher sales prices and fewer days on market, and the supply shortage is more acute
    for entry-level homes,” said Dr. Frank Nothaft, Chief Economist for CoreLogic.

    Rising mortgage rates were another reason that Nothaft said was affecting the supply of homes. “During the first quarter, we found
    that about 50 percent of all existing homeowners had a mortgage rate of 3.75 percent or less,” Nothaft explained. “May’s mortgage
    rates averaged a seven-year high of 4.6 percent, with an increasing number of homeowners keeping the low-rate loans they currently
    have, rather than sell and buy another home that would carry a higher interest rate.”

    Learn more about CoreLogic's Home Price Index findings in April:  Home Values Gain Momentum.

    July 5, 2018

    The Resurgence of Urban Housing

    By Alison Rich, DS News -- While many homebuyers aspire to acquire their own piece of the provincial pie, a growing share are
    sticking close to the city, so proclaims a new Urban Land Institute (ULI) report. In fact, the population of urban neighborhoods in many
    metros is burgeoning as swiftly or almost as swiftly as that of suburban communities, it notes. The research analyzes how this growth
    has “accompanied the evolution of different types of urban neighborhoods, and how demographic and economic trends have shaped
    development in these areas,” ULI says.

    This growth, it continues, echoes ongoing consumer demand—most notably among younger cohorts—for living environments near
    jobs, transit, and urban perks, and that also rank high in walkability.

    A major finding: For the first time in decades, population growth in urban neighborhoods in the nations’ 50 biggest metropolitan
    statistical areas (MSAs) is nearing suburban growth rates. Between 2010 and 2015, urban locations recorded a 3.4 percent growth
    rate, compared with 3.7 percent for suburban areas. These numbers contrast dramatically to 2000–2015, when the growth rate for
    urban enclaves was 1 percent, compared with 13 percent for suburbia.

    The study categorizes urban neighborhoods as such:

    Economic center–heavy clusters of employment, often historic urban cores, formerly 9-to-5 locales that are becoming 18-
    hour if not 24-7 neighborhoods.

    Emerging economic center–former single-family or low-density commercial areas evolving into new urban cores.
    Mixed-use district–high-density housing often dotted with upscale retail.

    High-end neighborhood–upscale single-family and multifamily housing, usually in historic areas with easy access to
    shopping and dining.

    Stable neighborhood–historically working-class neighborhoods with diverse housing types.

    Challenged neighborhood–areas with lower home values and apartment rents and minimal new development, often skirting
    former industrial and manufacturing districts.

    Some key discoveries: Seattle has the largest percentage of residents (13 percent) residing in economic centers, trailed by
    Washington, D.C., and San Francisco (each at 10 percent). Jacksonville, Florida, boasts the highest population (12 percent) in
    emerging economic centers, followed by Birmingham, Alabama (11 percent). New York City chalks up the largest number (26 percent)
    in mixed-use districts, followed by Chicago (23 percent). Seattle registers the heftiest percentage of residents (53 percent) in high-
    end ’hoods, followed by Austin (43 percent). San Jose tallies the largest number (82 percent) in stable neighborhoods, followed by
    San Antonio (71 percent). Hartford, Connecticut, records the most residents (68 percent) in challenged neighborhoods, with Detroit
    tagging just a point behind (67 percent).  

    While central hubs are enticing homebuyers, a swirl of both urbanities and surbanites in a city is actually a good sign, ULI notes.
    “Healthy metro areas will continue to feature a wide range of urban and suburban neighborhoods," the report said.

    June 20, 2018

    Flat-fee real estate company Home Bay expands to Arizona and Virginia

    Growing company keeps on growing

    By Ben Lane, Housing Wire --  Home Bay, a growing flat fee real estate company, is set to grow again.

    The company announced this week that it is expanding to Arizona and Virginia.

    The news comes just a few weeks after Home Bay announced that it is expanding into the title and settlement services business by
    acquiring a 50% stake in OTC National, a title insurance provider that operates under the name OnTitle.

    Beyond that expansion into title, Home Bay, which started in California, now offers real estate services for a flat fee in Florida,
    Georgia, Illinois, Texas, Colorado, California, and now Arizona and Virginia as well.

    Instead of charging its customers 3% commission on the buy or sell side, Home Bay charges between $2,000 and $3,500, which the
    company claims can save borrowers thousands of dollars.

    According to the company, by combining its team of licensed real estate agents with a proprietary technology platform, it can save
    consumers an average of $16,000 per transaction.

    And now, the company is expanding into Arizona and Virginia at an “ideal” time.

    “With Arizona and Virginia home prices on the rise, now is the ideal time for Home Bay to have a presence in these two states,” said
    Ken Potashner, chairman and CEO of Home Bay. “Residents shouldn't be forced to pay large real estate commissions when homes
    move so quickly into escrow.”

    According to the company, it plans to continue adding states throughout the rest of this year and beyond.

    June 8, 2018

    The cost of originating a mortgage just got ridiculous - again

    Lenders go negative for first time since 2014

    By Kelsey Ramírez, Housing Wire -- The cost of originating a mortgage hit all-time highs back in 2013 and 2014, but now, those
    costs are up once again and much like before, hitting all-new highs.

    Lenders continue to struggle in the rising mortgage rate environment, reporting negative profits for the first time since Dodd-Frank
    compliance brought down profits in 2014.

    Back at the Mortgage Bankers Association’s National Secondary conference in New York City, MBA Chief Economist Mike Fratantoni
    predicted loan officers would report negative profits in the first quarter of 2018.

    As it turns out, his prediction was correct.

    Independent mortgage banks and mortgage subsidiaries of chartered banks reported a net loss of $118 per loan originated in the
    first quarter of 2018, according to the MBA’s Quarterly Mortgage Bankers Performance report. This is down from a gain of $237 per
    loan in the fourth quarter of 2017.

    “In the first quarter of 2018, falling volume drove net production profitability into the red for only the second time since the inception of
    our report in the third quarter of 2008,” said Marina Walsh, MBA vice president of industry analysis. “While production revenues per
    loan actually increased in the first quarter, we also reached a study-high for total production expenses at $8,957 per loan, as volume

    “For mortgage bankers who held mortgage servicing rights, higher per-loan servicing revenues and gains on the valuation of
    servicing helped overall profitability,” Walsh said.

    The only other quarter when lenders reported a negative profit margin, the first quarter of 2014, saw a loss of $194 per loan as
    mortgage originators struggled to cope with compliance costs due to the recently passed Dodd-Frank reform.

    After drastically tumbling in the fourth quarter of 2013, profits in the first quarter of 2014 not only got worse for banker profits but also
    traveled into negative territory.

    The average production volume decreased in the first quarter to about $450 million per company, down from $505 million in the
    fourth quarter. This came out to about 1,866 loans in the first quarter versus 2,059 loans in the fourth, the survey showed.

    Working against lenders was the total loan production expenses such as commissions, compensation, occupancy, equipment and
    other production expenses and corporate allocations, which increased to a survey high in the first quarter. These expenses increased
    to $8,957 per loan in the first quarter, up from $8,475 per loan in the fourth quarter.

    Historically, from 2008 to 2018, loan production expenses have averaged about $6,224 per loan.

    Competition also continues to increase, and productivity decreased to 1.9 loans originated per production employee per month in the
    first quarter. This is down from 2 per employee in the fourth quarter.

    Mortgage interest rates also continue to play a significant role in lender profits. At the Secondary conference in New York City,
    Fratantoni explained that as interest rates rise, refinances are falling. This is making lenders more vulnerable to seasonality changes
    as the home-buying fever dies down in the fall and winter months.

    So what’s the solution? As of yet, there isn’t one. While the MBA expects lenders to report a profit for the full year 2018, increased
    seasonality could continue to be a growing problem for the foreseeable future.

    Fratantoni suggested some lenders could start looking to seasonal hiring, but said right now there is no real solution.

    Many lenders hope that utilizing digital mortgages will help cut back on costs as competition rises. Freddie Mac talks more about that
    in this podcast.

    Even the largest mortgage lenders are struggling under the challenging environment. And Movement Mortgage recently announced it
    laid off 100 of its employees today across four locations as it faces lower originations and slower growth than it expected. This is the
    second time this year that Movement has trimmed its staff. Back in February, Movement laid off about 75 employees.

    And Wells Fargo, the largest mortgage lender according to 2016 Home Mortgage Disclosure Act data, admitted its mortgage profits
    are struggling amid increased competition.

    June 6, 2018

    Lenders react to removal from Ginnie Mae VA loan programs

    Responses couldn’t be more opposite

    By Kelsey Ramírez, Housing Wire --  Friday evening, Ginnie Mae announced it was booting several lenders from its Department of
    Veterans Affairs securities programs. Now, lenders are reacting, but their responses couldn’t be more opposite.

    Back in April, Ginnie Mae booted NewDay USA and Nations Lending from its primary mortgage bond program.

    After being booted from the program, Nations Lending submitted a response letter to Ginnie Mae providing a detailed description of
    the steps it had taken to address its prepayment speed issue and was therefore reinstated to the program. Continued access to
    Ginnie Mae II multi-issuer pools is conditioned in part on Nations Lending maintaining compliance with the prepayment speed

    NewDay USA, however, remains restricted and was joined by Freedom Mortgage and SunWest Mortgage last week.

    Now, the lenders are responding.

    “NewDay is proud of its established track record in providing veterans access to their VA home loan benefits,” the company said in a
    statement to HousingWire. “NewDay will continue to issue Ginnie Mae MBS in custom pools. Our record is absolutely clear – NewDay
    does not churn veteran loans. We have been an outspoken supporter of measures to end the shameful practice of loan churning.”

    But NewDay doesn’t stop there. It goes on to claim that policy changes recommended by Ginnie Mae will do nothing to stop loan

    “Policy changes recommended by Ginnie Mae will do virtually nothing to stop the unprincipled practice of veteran loan churning but in
    all likelihood, will force the elimination of much-needed benefits and financial services for tens of thousands of veterans – especially
    those veterans struggling with poor credit,” the company said.

    Freedom Mortgage also expressed its views on loan churning, saying it stands strongly against it and is committed to acting in the
    best interest of veterans. However, unlike NewDay, Freedom said it welcomed the increase in transparency.

    “We welcome the increased transparency for MBS investors, and are completely aligned with GNMA in this pursuit,” the company said
    in a statement to HousingWire. “Over the last several months, we have been working closely and cooperatively with GNMA to make
    sure that Freedom’s prepay speeds are in line with other market participants.”

    The company expressed its support for slower prepay speeds and even commended Ginnie Mae for its diligence.

    “At Freedom Mortgage, we know the value of MBS investors to our industry and have a great appreciation for the importance they
    bring to the mortgage system,” the company stated. “Fortunately, the new legislation signed by President Trump last week has
    significantly leveled the playing field for both MSR investors and MBS investors, whose interests in slower prepay speeds are now
    completely aligned. We support the new legislation and commend Ginnie Mae for their diligence in protecting the MSR and MBS

    NewDay, however, offered several suggestions to Ginnie Mae which it says could virtually end loan churning, but says those
    suggestions have not been acted upon.

    Here are some of the changes NewDay suggested:

  • End loan origination fees charged on the VA Interest Rate Reduction Refinance Loan program. These unnecessary fees
    represent a substantial cost, thousands of additional dollars, to veteran families.
  • Only allow lenders the ability to refinance a borrower using the IRRRL program once a year. Under existing rules, these loans
    can be refinanced after just six months.
  • Ensure veterans have a tangible benefit when they refinance their home loans. Negligible reductions in interest payments don’t
    help them.

    April 25, 2018

    Mick Mulvaney and the long, slow death of the CFPB

    Long live the BCFP?

    By Ben Lane, Housing Wire -- The Consumer Financial Protection Bureau is dead. Did you know that?

    No, the agency that everyone in the financial services industry loves to hate isn’t totally gone, at least not yet… but the CFPB as you
    knew it is dead.

    The bureau’s cause of death? Mick Mulvaney.

    Ever since taking over as the interim director of the CFPB last year, Mulvaney has made his intentions clear about the agency that he
    once called a “sick, sad joke.” It seems that Mulvaney wants the CFPB to disappear and he’s doing his damnedest to make sure that

    Mulvaney has already moved to substantially alter the operations of the CFPB by laying out a new mission for the bureau and asked
    Congress to significantly reduce the CFPB’s authority and independence.

    Just yesterday, Mulvaney told the American Bankers Association’s conference that he’s considering putting an end to the public’s
    access to the CFPB’s controversial consumer complaint database.

    Mulvaney also told the CFPB’s employees that the agency was ending regulation by enforcement, adding that the agency works not
    only for consumers, but also for the companies it supervises.

    Mulvaney also reportedly stripped the bureau’s Office of Fair Lending of its enforcement powers, announced that the CFPB would
    “reconsider” its payday lending rules, and defanged the changes in Home Mortgage Disclosure Act reporting that were to take effect
    this year, just to name a few of his actions so far.

    According to Mulvaney, the overarching philosophy of his moves at the bureau is to hold to the standards established in the Dodd-
    Frank Wall Street Reform and Consumer Protection Act.

    “If there is one way to summarize the strategic changes occurring at the bureau, it is this: we have committed to fulfill the bureau’s
    statutory responsibilities, but go no further,” Mulvaney said earlier this year. “By hewing to the statute, this strategic plan provides the
    bureau a ready roadmap, a touchstone with a fixed meaning that should serve as a bulwark against the misuse of our unparalleled

    Mulvaney seems committed to keeping the lights on at the CFPB merely because he is required by law to do so.

    The piece de résistance of Mulvaney’s assault on the CFPB is purely cosmetic and frankly, somewhat childish.

    According to Mulvaney, there is no CFPB. There never was. So he’s done with the CFPB. That agency doesn’t exist anymore.

    The agency isn’t shutting down though, sad as it may be to Wells Fargo and others.

    The bureau is still there, but it’s not called the CFPB anymore. Instead, Mulvaney has taken to calling the agency the Bureau of
    Consumer Financial Protection instead.

    The name change effort began somewhat informally, with Mulvaney stating that Dodd-Frank established that the name of the agency
    is actually the Bureau of Consumer Financial Protection not the Consumer Financial Protection Bureau.

    So, in keeping with Mulvaney’s “hewing to the statute” ethos, he started calling the CFPB the BCFP, or simply “the bureau.”

    The name change became more official when official communications began coming from the Bureau, rather than the CFPB.

    As our Kelsey Ramírez noted earlier this month, when Mulvaney appeared before Congress, his testimony referred to him as the
    acting director of the Bureau of Consumer Financial Protection.

    The bureau also recently released its first official seal, which refers to the agency as the Bureau of Consumer Financial Protection as

    What really broke the camel’s back in my view was the bureau’s announcement last week that it was fining Wells Fargo $1 billion for
    mortgage lending and auto insurance abuses.

    A little inside baseball: In the past, whenever the CFPB issued official communications or announcements, the announcements always
    featured the bright green logo of the bureau at the top of the announcement.

    But the Wells Fargo announcement was different.

    This one didn’t come from the CFPB and it didn’t have the bright green CFPB logo. This one had the Bureau of Consumer Financial
    Protection seal on it.

    And the communication referred to the agency as the Bureau of Consumer Financial Protection, not the Consumer Financial
    Protection Bureau.

    In my four-plus years with HousingWire, I’ve received more than 400 official communications directly from the bureau, and as far as I
    can tell, this was the first time that the bureau had ever been referred to as the Bureau of Consumer Financial Protection in an official

    In his official response to the bureau’s action against Wells Fargo, House Financial Services Committee Chairman Jeb Hensarling, R-
    Texas, also referred to the agency as the Bureau of Consumer Financial Protection.

    Hensarling being in lockstep with Mulvaney is no surprise though. The two were frequent bashers of the bureau when they both
    served on the House Financial Services Committee.

    But that’s not all. The bureau has also apparently asked the Associated Press, the organization that provides news articles to
    thousands of news outlets all over the world, to change its official style guide to call the bureau the BCFP, not the CFPB.

    Calling the bureau by a different name, even if it is the one that’s statutorily mandated in Dodd-Frank, is just another poke at the
    CFPB’s defenders.

    The whole thing is very childish. It’s like a kid who grabs a toy from one of their friends and then rubs it in other kid’s face. Nah-nah. I’
    ve got the toy now and I can do whatever I want with it.

    Mulvaney has the CFPB now and he can apparently do whatever he wants. And he seems to take pleasure in gloating about his shiny
    new toy.

    Yes, changing the name of the bureau is a small change when measured against asking Congress to reduce the agency’s
    independence or argue that the agency shouldn’t exist altogether, but it’s still a change that de-emphasizes the bureau’s mission of
    protecting consumers.

    And it eliminates whatever brand recognition the CFPB has built up over the last few years. I would hazard a guess that most “normal”
    people haven’t heard of the CFPB. And no one has heard of the BCFP.

    And that’s apparently what Mulvaney wants.

    Mulvaney doesn’t think the bureau should exist and is killing it, piece by piece by piece.

    When Mulvaney took over at the CFPB, I heard a rumor about one way the Trump administration was considering to deconstruct the
    CFPB. I couldn’t ever substantiate it, but I heard that they were considering moving the CFPB from Washington, D.C. to another city.

    The idea being that by moving the bureau to another city, many of its employees would quit rather than relocate. So by moving the
    CFPB to St. Louis or New York City or wherever, you could effectively eliminate half (or more?) of the agency’s brainpower in one fell

    The Los Angeles Times must have gotten a whiff of similar rumors as well, as back in December, it wrote about the Trump
    administration potentially moving agencies to other cities, but that article made no mention of the CFPB.

    Consider that the nuclear option.

    But instead of going nuclear, Mulvaney is opting for death by a thousand cuts.

    Each move that he makes brings the CFPB one step closer to extinction. And thanks to the powers granted to him by Dodd-Frank,
    there’s not much that CFPB defenders can do to stop him.

    So, I guess it’s RIP for the CFPB.

    Long live the BCFP? Don’t hold your breath.

    April 2, 2018


    By Jann Swanson, Mortgage News Daily -- Who's afraid of growing up? Apparently not Generation Z. The post-Millennial crops of
    kids, those born in 1995 and later, are already moving into homeownership.

    Maria Lamagna, writing for MarketWatch says just shy of 100,000 members of Gen Z, whose ages top out at 23, have a mortgage.
    Their average loan balance is $140,000.

    Millennials have been notorious late bloomers, lagging earlier generations in marrying, starting families, and buying homes. For Gen
    Z it is very early in the traditional homebuying cycle, but TransUnion reports they already held 99,000 mortgages in the 4th quarter of
    2017. This was dwarfed of course by the 12 million Millennials, but members of the much smaller Generation X had 24 million
    mortgages, as did nearly 27 million baby boomers and 5.1 million members of the Silent Generation.

    Lamagna quotes Rob Dietz, chief economist of the National Association of Home Builders who said he was a little surprised to see the
    ownership numbers for Gen Z as large as they are. "The traditional life cycle is to rent, especially for younger consumers who might
    have student loans," he said.

    Dietz continued, "It's all the more impressive given the strong housing market. The existing home inventory is "tight, and the cost of
    single-family homes is rising faster than incomes. Given those conditions, it's possible even more members of Generation Z could own
    homes, but the prices might be too high at this moment," he said.

    They might be young, but these buyers seem to take homeownership seriously. Just 1.2 percent are more than 60 days past due on
    their mortgages while the average for Millennials is 1.6 percent. Mortgages held by Generation Xers are running 2.3 percent non-
    current and baby boomers have a 60-day delinquency rate of 1.6 percent.

    April 10, 2018

    Inventory Shortage Continues to Trouble the Housing Market

    By Radhika Ojha, MReport --How is the housing market poised at the end of the first quarter of 2018 and what can one expect in the
    near and long-term future? A webinar about The State of the U.S. Housing Market by Carrington Mortgage Holdings hosted by Rick
    Sharga, EVP, Carrington Mortgage Holdings looked at the various indicators that are affecting the housing market today and how
    they would impact it in the future.

    Starting off with an overview of the overall U.S. economy, Sharga said, “Inflation is something that people are watching more closely.”
    The solid numbers posted by the economy have meant that the Fed is now watching for inflation to get to a certain level and put
    brakes on the economic stimulus to keep it there. The strong job numbers have also helped boost the overall economic indicators as
    more workers are re-entering the workforce.

    Moving on to the housing market, Sharga pointed out that existing home sales were off to a weak start in 2018. “Existing home sales
    are still well away from the record numbers we saw during the housing boom of 2006,” Sharga said. While existing home sales
    stagnated at 5.4 million by the end of 2017, we should be closer to 6 million existing home sales by the end of 2018.

    The culprit? Inventory shortage. According to Sharga, existing home sales inventory was a little under four months’ supply at present.
    “A significant percentage of existing home sales inventory is not for sale right now, which is driving inventory shortage,” Sharga said,
    citing various factors such as a psychological hangover where people were afraid to put their homes on the market because they
    wouldn’t be able to sell it for enough to buy a new home, and the fact that homeowners were staying in a home for a longer period of
    time, with the average being 10-11 years today, compared to 6-7 years in the previous years.

    This scarcity was also driving prices higher, with Black Knight’s HPI estimating a 6.6 percent home price appreciation in 2017 and a
    median home price of around $283,000. Despite these price increases, Sharga said that affordability was better than what people
    thought. “The prior peak was reached in 2006, and since then we’ve had 12 years of wage appreciation and even with the higher
    interest rates today, we still have lower mortgage rates than we had in 2006 which was in the 6-7 percent range,” Sharga said.

    While the inventory crisis is not as acute for new homes, sales for these were also lagging in the first quarter of 2018 according to the
    report, as labor, capital issues, and regulatory constraints continued to restrict builder activity leading to weak housing starts.

    The market might be finally putting the foreclosure crisis behind it according to the report. “We are seeing foreclosure activity falling
    rapidly with the activity concentrated only in a handful of states,” Sharga said.

    Citing data from Black Knight’s recent Mortgage Monitor Report the report said that delinquencies and foreclosures starts were
    declining with total U.S. delinquency rates at 4.3 percent and total U.S. foreclosure inventory rate falling to around 0.65 percent. The
    total delinquency rates were a little higher than expected due to the natural disasters of 2017 but they were showing a decline on a
    month-over-month basis. “There simply won’t be many distressed properties going around by this time next year,” Sharga said. “You
    won’t see many people in foreclosure until late 2019 or early 2020.”

    March 27, 2018

    High Home Prices Are Here to Stay

    By Radhika Ojha, MReport -- Home prices continued to rise in January reporting an annual growth of 6.2 percent according to the
    latest S&P CoreLogic Case-Shiller Home Price Index that was released by S&P Indices on Tuesday. The index, which consists of the
    National Home Price NSA Index, A 10-City Composite Index, and a 20-City Composite Index, reported price growth on all these indices.

    While the 10-City Composite recorded an annual increase of 6 percent, the 20-City Composite posted a 6.4 percent year-over-year

    “The home price surge continues,” said David M. Blitzer, Managing Director and Chairman of the Index Committee at the S&P Dow
    Jones Indices. “Since the market bottom in December 2012, the S&P CoreLogic Case-Shiller National Home Price index has climbed
    at a 4.7 percent real—inflation-adjusted—annual rate.”

    “Our first glimpse into Case Shiller home price data in 2018 confirms high prices are here to stay,” said Danielle Hale, Chief
    Economist at Realtor.com. “In fact, if we continue to see a steady stream of buyers and owners remain largely uninterested in selling,
    we can expect prices to continue to rise.”

    The City Composite indices were once again dominated by some of the hottest markets in the country with Seattle, Las Vegas, and
    San Francisco recording the highest price appreciation at 12.9 percent, 11.1 percent, and 10.2 percent respectively.

    “The hottest housing markets are once again dominated by the West, led by double-digit annual growth in Seattle, Las Vegas, and
    San Francisco,” said Cheryl Young, Senior Economist at Trulia. “Seattle shows no signs of cooling anytime soon as it recorded its
    25th consecutive month of double-digit year-over-year price growth. This is the first time since January 2016 that San Francisco is
    back into double-digit price growth territory, sounding alarm-bells in a city where median home prices hover around $1.3 million.”

    “Despite the high prices, homes don’t sit long before being snatched up in these areas, which suggests these markets remain tipped
    in favor of sellers as we head into spring,” Hale said.

    A low inventory and a low vacancy rate among owner-occupied housing are two factors supporting these price increases according to
    Blitzer. “The current months-supply—how many months at the current sales rate would be needed to absorb homes currently for
    sale—is 3.4; the average since 2000 is 6 months, and the high in July 2010 was 11.9. Currently, the homeowner vacancy rate is 1.6
    percent compared to an average of 2.1 percent since 2000; it peaked in 2010 at 2.7 percent,” Blitzer said.

    Tian Liu, Chief Economist at Genworth Mortgage Insurance agreed. “The Case-Shiller Home Price Index continues to support our
    view that today’s housing market is driven by a mismatch of demand and supply. There is a robust demand by first-time homebuyers
    for affordable homes, and equally robust supply for higher-end homes,” he said.

    For those citing affordability issues in housing, Blitzer said that despite limited supplies, rising prices, and higher mortgage rates,
    affordability is not a concern. “Affordability measures published by the National Association of Realtors show that a family with a
    median income could comfortably afford a mortgage for a median-priced home,” he said.

    But where are those homes? “First-time home buyers, however, will continue to struggle to find homes within their price range as
    prices climb higher amid low inventory,” Young said. “Starter buyers continue to shoulder the greatest burden of unaffordability as low
    inventory and escalating prices grip the housing market.”

    March 21, 2018

    After Fed Hike, Mortgage Rates Could Rise Again

    By Radhika Ojha, MReport -- On Wednesday, after Jerome Powell's first Federal Open Market Committee (FOMC) meeting as Fed
    Chair, the Federal Reserve announced that it had increased the Fed funds rate by a quarter point at a target of 1.5 percent to 1.75

    Powell had provided an upbeat assessment of the economy and inflationary trends during his Congressional testimony in the run-up
    to the meeting and the statement released by the Fed shortly after the meeting reflected the central bank's positive stance on the

    "In view of realized and expected labor market conditions and inflation, the Committee decided to raise the target range for the federal
    funds rate to 1-1/2 to 1-3/4 percent. The stance of monetary policy remains accommodative, thereby supporting strong labor market
    conditions and a sustained return to 2 percent inflation," the bank said in its statement.

    These rate hikes impact the housing market as mortgage rates, which have been rising steadily since the beginning of the year are
    expected to surge further on the back of this hike. The Fed has also been missing on its targets for mortgage holdings which could be
    another blow for mortgage rates.

    “The Fed has been meeting its target on the treasuries but missing on the mortgage holdings,” said Tendayi Kapfidze, Chief
    Economist at LendingTree. “Treasuries are down $41.2 billion since October but mortgages are actually up $2.0 billion. Thus the Fed
    has actually been detrimental to mortgage rates on the one hand by reducing its holdings of treasuries, but providing some support
    given that its mortgage holdings are not declining.”

    “In today’s competitive housing market, rising rates are another hurdle for first-time buyers who don’t have a lot of cash to work with.
    To date, realtor.com has found the impact of higher home prices has so far dwarfed the impact of higher mortgage rates from a year
    ago. But with today’s announcement, it looks like this may be changing. As rates move higher, we expect to see their direct impact on
    buyers grow,” said Danielle Hale, Chief Economist at Realtor.com.

    According to Kapfidze the Fed’s balance sheet normalization plan is set to have its second increase in April, which could raise the
    treasury security target to $18 billion a month and the MBS target to $12 billion a month. “Upward pressure on treasuries should
    increase and mortgage rates could see more upside in Q2 following the recent leveling off in rates. If the Fed begins to meet its MBS
    target, that would result in a further upward pressure,” he said.

    February 22, 2018

    IRS: Interest paid on home equity loans is still deductible under new tax plan

    But not in every case

    By Ben Lane, Housing Wire -- The country’s new tax laws, ushered in by President Donald Trump and his Republican counterparts
    late last year, will bring many changes to the mortgage industry.

    Namely, the Tax Cuts and Jobs Act reduces the available mortgage interest deduction from $1 million to $750,000.

    But what’s the impact of the tax plan on home equity loans, home equity lines of credit, and second mortgages?

    Citing the “many” questions it’s received from taxpayers and tax professionals, the Internal Revenue Service issued a bulletin this
    week that sheds some light on how home equity loans, HELOCs, and second mortgages will be treated under the new tax plan.

    The headline news: The interest paid by borrowers on home equity loans, HELOCs, and second mortgages will still be deductible
    moving forward, but not in every case.

    According to the IRS, the Tax Cuts and Jobs Act states that interest paid on home equity loans and lines of credit is still deductible, as
    long as they money is used to “buy, build or substantially improve” the taxpayer’s home that secures the loan in question.

    But if the money is used to pay other expenses, the interest is not deductible.

    The IRS explains further: “Under the new law, for example, interest on a home equity loan used to build an addition to an existing
    home is typically deductible, while interest on the same loan used to pay personal living expenses, such as credit card debts, is not,”
    the IRS stated. “As under prior law, the loan must be secured by the taxpayer’s main home or second home (known as a qualified
    residence), not exceed the cost of the home and meet other requirements.”

    Besides being required to use the money for home improvements and the like, there are other limits on the home equity loan interest

    As stated above, beginning this year, taxpayers are only allowed to deduct interest on $750,000 of “qualified residence loans.
    Additionally, the mortgage interest deduction limit for a married taxpayer filing a separate return is $375,000.

    As the IRS notes, these figures are down from the previous limits of $1 million, or $500,000 for a married taxpayer filing a separate

    The limits apply to the combined amount of loans used to buy, build or improve the taxpayer’s main home and second home, meaning
    a borrower may only deduct the mortgage interest on a total of $750,000 in loans, whether the loans are first mortgages, second
    mortgages, or home equity loans.

    The IRS bulletin provides three examples to further demonstrate how the mortgage interest deduction works now:

    Example 1: In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home with a fair market value of
    $800,000. In February 2018, the taxpayer takes out a $250,000 home equity loan to put an addition on the main home. Both
    loans are secured by the main home and the total does not exceed the cost of the home. Because the total amount of both
    loans does not exceed $750,000, all of the interest paid on the loans is deductible. However, if the taxpayer used the home
    equity loan proceeds for personal expenses, such as paying off student loans and credit cards, then the interest on the home
    equity loan would not be deductible.
    Example 2: In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home. The loan is secured by the
    main home. In February 2018, the taxpayer takes out a $250,000 loan to purchase a vacation home. The loan is secured by
    the vacation home. Because the total amount of both mortgages does not exceed $750,000, all of the interest paid on both
    mortgages is deductible. However, if the taxpayer took out a $250,000 home equity loan on the main home to purchase the
    vacation home, then the interest on the home equity loan would not be deductible.

    Example 3: In January 2018, a taxpayer takes out a $500,000 mortgage to purchase a main home. The loan is secured by the
    main home. In February 2018, the taxpayer takes out a $500,000 loan to purchase a vacation home. The loan is secured by
    the vacation home. Because the total amount of both mortgages exceeds $750,000, not all of the interest paid on the
    mortgages is deductible. A percentage of the total interest paid is deductible.

    January 8, 2018

    Zombie Homes: The Problem That Just Won’t Die

    By David Wharton, Housing Wire -- The issue of so-called “zombie homes” is a problem for any major city. “Zombie homes” is a
    colorful name for an old problem, and one that continues to be widespread as the nation gains more distance from the housing crisis
    and the Great Recession. Zombie homes are created when the foreclosure process begins, the homeowner moves out, but then the
    foreclosure is canceled for one reason or another, leaving the home unoccupied—and often falling into disrepair. The issue—and
    misunderstandings surrounded it—is highlighted in a new story about how Portland, Oregon, is tackling the problem.

    The Portland Tribune reported recently that Portland Mayor Ted Wheeler has reversed a policy put in place by his predecessor that
    was designed to crack down on zombie homes, threatening foreclosure on the properties in order either to force landlords to attend
    to the homes’ upkeep or get them into different hands. However, while former Mayor Charlie Hales pushed the Portland City Council
    to crack down on zombie properties, Wheeler considers the problem less of a priority.

    Wheeler told the Tribune, "The obstacles for government to take away someone's property are formidable. It's a very expensive, multi-
    year process. I'm not sure that's the best use of our resources."

    Of course, the problem with typical zombie properties is that there isn’t anyone in the house to be forced out. With the properties
    trapped in something like limbo, it’s hard to find a good solution for any of the parties involved, from the bank or mortgage company
    left holding the property, to the city governments tasked with fighting urban blight. As evidenced in Portland, even when one party
    comes up with a plan to address the issue, that plan can crumble in the wake of budget cuts or political change.

    Would Hales' plan have worked in the longer term? According to the Tribune, Portland only used the threat of foreclosure to force
    landlords to take care of their derelict properties in 10 cases during the previous 18 months. Of those 10 properties, the Tribune
    reports that “Landlords for eight of them paid off the liens before the auctions were set. The ninth was paid off just before the auction.
    The 10th was paid off after it failed to sell at the first auction but before the second auction was held.”

    With Wheeler reversing course on Hales’ policy, the city is now effectively back where it was before that policy was put in place ... and
    the city's zombie homes still remain.

    Several American cities have been trying to fast-track foreclosures in recent years as a means of combating blight and zombie
    properties. Fast-track foreclosure laws are already on the books in Ohio and Maryland, with states such as Illinois, Pennsylvania, and
    New York possibly following suit. Some municipalities are also trying to combat the individual symptoms of blight, such as in the case
    of Ohio’s banning of the use of plywood on vacant properties. In November 2016, Fannie Mae announced it would allow mortgage
    servicers to use clearboarding on vacant homes in pre-foreclosure, striking another blow against one of the tell-tale visual signs of
    zombie homes and urban blight.

    In part three of a three-part series earlier this year, Robert Klein, Founder and Chairman of Safeguard Properties and SecureView,
    told DS News, "It’s all about keeping people in their homes as long as possible, but, once abandoned, a house becomes a liability.
    Fast-tracking enables the mortgage servicer to get possession of the property before it deteriorates. This directly leads to on-time
    conveyance and faster rehab and sale.”

    Fast-tracking foreclosures—or even threatening to do so—can be one effective way to combat the zombie home plague, but
    evidenced by Portland’s problems, it isn’t always a politically popular approach.

    January 3, 2018

    Tax reform could cause Fed to speed up rate hikes

    Fed minutes show most on board with raising federal funds rate

    By Kelsey Ramírez, Housing Wire

    Minutes released Wednesday by the Federal Reserve showed that the Federal Open Markets Committee could move at a quicker
    pace due to tax reform.

    Just before Christmas, President Donald Trump signed the tax reform bill into law which some economist predict could spur economic
    growth over the next few years.

    While the Fed forecasts a median growth of 2.5% in 2018, the minutes showed most members will raise their expectations due to tax
    reform, according to an article by Akin Ayedele for Business Insider.

    From the article:

    Lower taxes means Americans will extra cash to spend, which would be good for the economy. Just how much more they decide
    to spend is still uncertain for the Fed. On the corporate side, business owners who were surveyed said some companies would
    use the extra cash to expand their businesses, but most would likely use it to pay down debt or buy back their stock.

    The Fed announced its final rate hike of 2017 on Wednesday at the end of its December FOMC meeting, but implied more rate hikes
    are still to come in 2018 and beyond. After increasing the federal funds rate 25 basis points to a target rate of 1.25% to 1.5%, the
    Fed projected it would raise rates three times in 2018.

    However, experts then predicted the Fed will later revise its rate hike forecast from three times in 2018 to four after they increased
    their GDP estimates.

    One expert confirmed he continues to expect the Fed to increase its forecast for rate hikes in 2018.

    “Overall, Fed officials re-affirmed at this meeting that they anticipate raising interest rates three times in 2018, matching the tightening
    in 2017, but we still anticipate that a slightly faster than expected rebound in core inflation will mean we eventually see four rate hikes
    in 2018,” Capital Economics Chief Economist Paul Ashworth said.