|LLOYD MARTIN PLC
|LLOYD MARTIN PLC
9316-A Old Keene Mill Road
Burke, Virginia 22015-4285
|[A Virginia Professional Limited Liability Company]
April 4, 2019
Average home listing price reaches all-time high
By Alcynna Lloyd, Housing Wire -- In March, the average American home listing price reached $300,000 for the first time ever,
according to Realtor.com’s Housing Trend Report.
“The typical U.S. home list price has set a new high right on the cusp of the spring homebuying season, and despite a slowing growth
rate, home prices will likely continue to set new records later this year,” Realtor.com Chief Economist Danielle Hale said.
Unfortunately, Hale does not expect housing inventory to set records, especially as supply continues to lag.
“Heading into spring, U.S. prices are expected to continue to rise and inventory is expected to continue to increase, but at a slower
pace than we’ve seen the last few months as fewer sellers want to contend with this year’s more challenging conditions,” Hale said. “A
buyer’s experience will vary notably depending on the market and price point they’re targeting.”
In fact, according to Realtor.com’s analysis, entry-level inventory scarcity continues as homes priced $200,000 or below decreased
That being said, inventory of for-sale homes priced over $750,000 rose by 11% from the previous year.
There were 56,000 additional homes were for sale in March compared to last year, amounting to a 4% increase year-over-year,
according to the report. Realtor.com attributes this growth primarily to the nation’s 50 largest markets, which grew by 9% from the
The number of newly listed properties hitting the market declined by 0.4% from 2018, suggesting that although buyers may have
more options, the share of “fresh properties” for sale has not increased, according to the company.
March 25, 2019
World’s biggest banks accused of price-fixing Fannie Mae, Freddie Mac bonds
By Ben Lane, Housing Wire -- More than a dozen of the world’s largest financial institutions conspired to fix the prices on more than
$485 billion in bonds issued by Fannie Mae and Freddie Mac over a five-year period, according to a new blockbuster lawsuit.
The lawsuit was filed this week by the state of Pennsylvania, which claims that Bank of America; Barclays Capital; BNP Paribas;
Citigroup; Credit Suisse; Deutsche Bank; Deutsche Bank Securities; First Tennessee Bank; FTN Financial Securities; Goldman
Sachs; JPMorgan Chase; J.P. Morgan Securities; Merrill Lynch; and UBS Securities conspired to both overcharge and underpay
investors on debt bonds issued by Fannie and Freddie between 2009 and 2014.
The lawsuit, filed by Pennsylvania Treasurer Joe Torsella, is a class action lawsuit that claims that the state invested in the bonds but
was financially harmed by the financial institutions alleged actions.
The lawsuit seeks to have other aggrieved parties join it, but the lawsuit states that the groups’ supposed conduct may have harmed
“at least thousands” of other investors.
It’s important to note that the bonds in question are not mortgage bonds. They are bonds issued by the government-sponsored
enterprises to support their operations. The bonds are traded “over the counter,” which means that investors work with the bond
trading desks at the named institutions to buy and sell the bonds.
Since the bonds are not traded on a public exchange, the broker wields more control over pricing, as comparative bond trading is not
made public. Bond values must then be derived based on a price the buyer is willing to pay and what the seller is willing to sell for;
known as derivative trading.
The lawsuit claims that the named institutions conspired to fix the prices on those bonds, which allowed them to underpay sellers and
“Because the FFB market is an opaque, OTC market, Defendants were able to charge fixed prices without revealing their conspiracy
to their customers,” the lawsuit claims.
According to the lawsuit, the named financial institutions controlled more than 64% of the total underwriting of Fannie and Freddie
bonds during the time in question, with each institution underwriting at least $28 billion in bonds.
“Defendants have consistently been the 10 largest FFB underwriters in the United States, and each underwrote more than $28 billion
in FFBs during the Class Period,” the lawsuit claims. “Thus, Defendants as a bloc dominated control of FFB supply and were well-
positioned to use that dominant position to fix the prices of FFBs charged to their customers, the Commonwealth Funds and the
And the lawsuit isn’t the only trouble those institutions are facing in this regard. According to the suit, the Department of Justice is also
investigating the companies for price-fixing the GSE bonds, which was reported by Bloomberg last summer.
From the lawsuit:
collusion among dealers to fix FFB prices.
These confidential sources revealed that the investigation concerns the prices that dealers in the FFB market charged to
investors, such as the Commonwealth Funds and the Class. Specifically, the investigation focuses on illegal activities of bank
traders suspected of coordinating to benefit the institutions they work for. Sources said prosecutors from the Justice
Department’s antitrust division and criminal division are working on the investigation into the dealers’ behavior in the secondary
And the lawsuit states that market data shows conclusively that a conspiracy was indeed in effect.
“Consistent with the DOJ Antitrust Division’s investigation, empirical, economic price data and other market facts demonstrate that
Defendants used their control over FFB supply to fix the prices of these instruments, causing the Commonwealth and the Class to
pay too much (when buying FFBs) and receive too little (when selling FFBs) on their FFB transactions during the Class Period,” the
According to the lawsuit, Torsella’s office obtained the pricing data for more than 13,117 unique FFBs and a total of 1.6 million FFB
transactions. The lawsuit states that the data shows “highly anomalous” pricing on the Fannie and Freddie bonds, including highly
inflated, “supracompetitive” prices on newly issued bonds.
Additionally, the lawsuit claims that the financial institutions inflated the prices of older bonds in the days leading up to the sale of new
bonds to establish a higher benchmark, which then allowed them to sell the new bonds at higher prices to earn “excess, unlawful
Also, the lawsuit claims that evidence shows that the institutions, rather than competing with each other for Fannie and Freddie bond
business, “agreed to inflate the prices at which they sold FFBs to investors (the “ask” price), or deflated the price at which they
purchased FFBs from investors (the “bid” price), or both.”
According to the lawsuit, a comparison of the pricing of the bonds during the time period in question against the pricing of bonds after
2014 shows prices “markedly decreased” after that time “for no other apparent economic reason.”
The lawsuit claims that the questionable conduct appeared to “statistically diminish” in April 2014, when government regulators began
looking into banks’ trading business after the LIBOR scandal first became public knowledge, wherein banks were accused of
manipulating the LIBOR interest rate for profit.
According to the lawsuit, before April 27, 2014, the prices charged for new Fannie and Freddie bonds were eight times higher than
what was charged after that date.
Torsella’s office claims that an initial analysis shows that four Pennsylvania Treasury funds lost “millions” as a result of the alleged
price manipulation by the named institutions.
“Time and time again, we have witnessed Wall Street institutions enrich themselves at the expense of Main Street investors with little
to no consequence,” Torsella said. “When I believe that Pennsylvania taxpayers have been taken advantage of, I intend to stand up
and fight, and recover for Pennsylvanians what is rightfully theirs. It’s long past time that the big Wall Street institutions remember that
the rules apply to them and that breaking them has consequences.”
To read the full lawsuit, click here.
March 20, 2019
Supreme Court makes it harder for borrowers to fight foreclosures in non-judicial states
By Jacob Gaffney, Housing Wire -- Law firms, mortgage lenders and servicers were just awarded more protection in serving non-
judicial foreclosures, according to a recent Supreme Court ruling.
The ruling is a victory for the mortgage industry in its fight to retrieve property from delinquent homeowners. One attorney claims the
ruling may eliminate thousands of similar homeowner lawsuits.
In the case of the Obduskey v. McCarthy & Holthus decision from earlier today, the homeowner tried to fight his non-judicial
foreclosure in Colorado.
Each state differs in foreclosure requirements, but generally fit into two category: foreclosures that get to be decided by the courts or
foreclosures that are not — a non-judicial foreclosure. Colorado is a non-judicial foreclosure state.
Homeowner Dennis Obduskey alleged that once he received a foreclosure notice from law firm McCarthy & Holthus, he invoked
protection under the federal Fair Debt Collection Practices Act.
This act protects consumers and maintains that: "a 'debt collector' must 'cease collection' until it 'obtains verification of the debt' and
mails a copy to the debtor," the Supreme Court ruling states.
However, McCarthy & Holthus is not a debt collector by definition, as it only pursues non-judicial foreclosures, the Court ruled.
From the ruling:
homeowner would understand as an attempt to collect a debt. Here, however, the notices sent by McCarthy were antecedent
steps required under state law to enforce a security interest, and the Act’s (partial) exclusion of “the enforcement of security
interests” must also exclude the legal means required to do so.
"This decision essentially gives law firms and lenders more protection in non-judicial foreclosure states,” said David Scheffel, partner
at law firm Dorsey & Whitney.
“In these jurisdictions, homeowners and borrowers will no longer be able to file lawsuits under the Fair Debt Collection Practices Act
(FDCPA) against law firms who are pursuing foreclosures,” he added.
“This essentially eliminates a heavily used practice by plaintiffs' attorneys," Scheffel added. "Ultimately, this should have the effect of
reducing the cost that lenders/servicers bare in terms of getting to a final foreclosure in these states as the FDCPA lawsuits delay this
process significantly. At the end of the day, this decision will eliminate thousands of these lawsuits in non-judicial foreclosure states
like Massachusetts, California, Colorado, and Minnesota.”
March 12, 2019
Class-action lawsuit takes aim at buyer broker compensation rules
Home seller claims NAR, MLS providers have conspired in violation of anti-trust laws
By Jessica Guerin, Housing Wire -- A class-action lawsuit filed last week by a Minnesota home seller is taking aim at the big four
multiple listing services that have transformed the real estate business.
The suit alleges that the National Association of Realtors has driven up costs to sellers and has stifled competition by requiring
brokers to offer buyer broker compensation when listing a property on an MLS site.
Filed against the NAR, Realogy, HomeServices of America, RE/MAX and Keller Williams, the suit alleges that the MLS providers
conspired with NAR to require sellers to pay buyer’s broker’s fees at inflated rates in violation of anti-trust laws.
“The conspiracy has saddled home sellers with a cost that would be borne by the buyer in a competitive market,” the complaint
states. “Moreover, because most buyer brokers will not show homes to their clients where the seller is offering a lower buyer broker
commission, or will show homes with higher commission offers first, sellers are incentivized when making the required blanket, non-
negotiable offer to procure the buyer brokers’ cooperation by offering a high commission.”
The suit goes on to allege that the conspiracy has kept buyer brokers’ commissions in the 2.5-3% range despite their diminishing role
in the transaction, as “a majority of homebuyers no longer locate prospective homes with the assistance of a broker, but rather
independently through online services.”
The suit states that it will represent any sellers who paid a broker commission during the sale of their property in the last four years in
areas covered by regional MLS sites, which includes sellers in Texas, Maryland, North Carolina, Ohio, Colorado, Michigan, Florida,
Nevada, Wisconsin, Minnesota, Pennsylvania, Arizona, Virginia, Utah and Washington, D.C.
A spokesperson for NAR told HousingWire that suit was unfounded.
“The complaint is baseless and contains an abundance of false claims. The U.S. Courts have routinely found that multiple listing
services are pro-competitive and benefit consumers by creating great efficiencies in the home-buying and selling process,” The
spokesperson said. “NAR looks forward to obtaining a similar precedent regarding this filing.”
February 25, 2019
Mortgage prepayments near 2-decade low
By Kelsey Ramírez, Housing Wire -- While interest rates fell in recent weeks, January’s prepayment rate neared a two-decade low,
according to the latest First Look report from Black Knight.
The prepayment rate in January fell to its lowest level since November 2000 – an 18-year low, according to the report. This is down
more than 10% from December 2018 and down more than 25% from January 2018.
The report showed seasonal reductions in home sales outweighed any interest-rate-driven increase in refinance incentive.
With January dropping even year over year, lenders may need to brace for a slower home buying season this year, especially if
interest rates once again begin to rise.
And Black Knight’s report isn’t the only one showing a slowdown. In January, new home sales fell 8% on an annual basis, declining
the most in western housing markets, according to the latest data from Redfin.
However, Black Knight explained that housing turnover typically bottoms out in January and February, and that prepayments could
pick up again if mortgage rates remain low through the early spring home buying season.
The First Look report also showed the national delinquency rate dropped 3.5% from December and 13% from last year in January.
Foreclosure starts rose slightly month over month, about 8.4%, but are still down 19.4% from January 2018. The number of loans in
active foreclosure continued to decrease, falling by 6,000 properties from December to January, and by 72,000 properties from
January 2018 to January 2019.
February 18, 2019
Only half of houses for sale are affordable for the average buyer
By Jessica Guerin, Housing Wire -- Housing affordability continues to hover near a 10-year low, and the National Association of
Home Builders is urging policymakers to do something about it.
Of the new and existing homes sold in the fourth quarter of 2018, just 56.6% were affordable for those earning the country’s median
income of $71,900, according to the NAHB/Wells Fargo Housing Opportunity Index.
This is up just barely from the previous quarter, as a slight increase in interest rates offset a small decline in home prices, the report
The national median home price was $263,000 in Q4, down from $268,000 in Q3.
But at the same time, the average mortgage rate is increasing, up 17 basis points to 4.89% in Q4 from 4.72% in Q3. This marks the
fourth-straight quarter of rate hikes and is the highest level since 2011, the report noted.
NAHB Chairman Randy Noel housing is an early indicator of overall economic health, urging officials to take action.
"Builders are finding it increasingly difficult to build at price points most consumers need because they are struggling with
burdensome regulations, higher material costs and shortages of lots and labor," said Noel. "Historically, housing has been the canary
in the coal mine, and these ongoing affordability woes should serve as a wake-up call to policymakers to take immediate action."
NAHB Chief Economist Robert Dietz said home price appreciation has outperformed wage growth, and that is stifling housing
"To keep housing moving forward, policymakers at all levels of government should make it a priority to address affordability concerns
that are hurting homebuyers and home builders alike," Dietz said.
The report also highlighted the most and least affordable markets across the country.
Youngstown-Warren-Boardman, Ohio-Pennsylvania, was the most affordable major housing market, with 92.7% of homes sold in Q4
affordable for those earning the area's median income of $60,100.
For the fifth-straight quarter, San Francisco was the nation's least affordable major market, with just 6% of the homes sold in Q4
affordable for those earning the area's median income of $116,400.
February 13, 2019
Google reveals plans to invest $13 billion in real estate across U.S.
Will create more than 10,000 new construction jobs as it builds data centers and offices
By Jessica Guerin, Housing Wire -- Google announced plans Wednesday to invest $13 billion in real estate across the U.S. in the
coming year to build data centers and offices.
In a blog post authored by Google CEO Sundar Pichai, the company announced its plans to grow in 2019, which includes expanding
into 14 states, bringing its total footprint to 24 states.
“These new investments will give us the capacity to hire tens of thousands of employees, and enable the creation of more than
10,000 new construction jobs in Nebraska, Nevada, Ohio, Texas, Oklahoma, South Carolina and Virginia,” Pichai wrote.
Pichai added that 2019 will mark the second year that the company has grown more outside the Bay Area than in it.
The tech giant will open new data centers in Nebraska, Ohio, Texas and Nevada, and will expand existing centers in Oklahoma and
South Carolina, Pichai said. It will also make significant renewable energy investments as it builds.
Google also plans to double its workforce in Virginia and Georgia, and to build new offices in states that include Washington,
California, Massachusetts, Texas and Maryland.
Google has invested more than $9 billion in real estate over the past year, including a $1 billion deal inked in November to expand its
Mountainview headquarters and the purchase of a building in New York City’s Chelsea Market for $2.4 billion.
Click here to view a map provided by Google depicting the locations of its planned investments:
Study assesses long-term financial impact of living in your parents' basement
More young adults are living with their parents, and it's not improving their homeownership prospects
By Jessica Guerin, Houwing Wire -- The image of a Millennial living in their parents’ basement or childhood bedroom while dishing
out tech advice is perhaps a cliché, said the Urban Institute, but the numbers give it some weight.
The number of young adults ages 25 to 34 living with their parents increased from 12% in 2000 to 22% in 2017, according to a new
study released by the institute, amounting to an additional 5.6 million Millennials who are shacking up with their parents.
Student debt, the high cost of rent, tight credit conditions and a stagnant labor market all play a role in this trend, the institute wrote.
But presumably, young adults who are saving money by failing to leave the nest will be in a better position to save money for a down
payment on their future home, right? Wrong.
According to the study, this life choice has long-term consequences. Those who opted to stay with their parents did not stash away
enough cash to put down a larger down payment, and they were less likely to become homeowners 10 years later, than whose who
ventured out on their own earlier.
And, for those who did eventually buy their own home, they did not buy more expensive homes or take on lower mortgage debt than
those who moved out earlier.
Moreover, those who pursued homeownership later in life were worse off in the long run than their counterparts who jumped to it
Research shows that those who buy homes earlier in life amass the greatest amount of housing wealth in their later years, with
homeowners 25 and younger seeing the greatest return on their investment. This means that delaying homeownership could have a
negative impact on your wealth in the long term.
The data prompted the Urban Institute to conclude that moving in with Mom and Dad might not be the best choice for your financial
“Living with parents does not better position young adults for homeownership, a critical source of future wealth, and may have
negative long-term consequences for independent household formation,” the researchers wrote.
January 24, 2019
Massive data breach involving millions of mortgage documents just got much worse
Original mortgage documents found on separate exposed server
By Ben Lane, Housing Wire -- The massive data breach involving more than 24 million mortgage and banking documents just got
much, much worse as an investigation unearthed a separate unprotected server that provided access to some of the original
documents to anyone who happened upon it online.
The details of the expanded breach come again from TechCrunch, which has done yeoman’s work on exposing this incredible breach
in mortgage and banking security.
In the original breach, digital files were located on an unprotected server that contained the information from 24 million mortgage and
banking documents, but the data was scraped from the original documents using OCR, a computer process that converts paper
documents into electronic documents.
The original mortgage documents were converted into digital files that were not easily readable, but people’s highly sensitive personal
information, including names, addresses, dates of birth, Social Security numbers, and other information was accessible in the
database for at least two weeks.
But Thursday, the problem worsened, as TechCrunch now reports that an investigation found a separate unprotected and exposed
server that housed some of the original mortgage and banking documents themselves, including mortgage applications and W-9
From the latest TechCrunch report:
data and analytics company, Ascension. When reached, the company said that one of its vendors, OpticsML, a New York-
based document management startup, had mishandled the data and was to blame for the data leak.
It turns out that data was exposed again — but this time, it was the original documents.
Diachenko found the second trove of data in a separate exposed Amazon S3 storage server, which too was not protected with
a password. Anyone who went to an easy-to-guess web address in their web browser could have accessed the storage server
and see — and download — the files stored inside.
According to the report, the database contained 23,000 pages of PDF documents that contained borrowers’ highly sensitive personal
information, the type of information that they would typically provide for obtaining a mortgage.
It’s unknown at this time how long the documents were left exposed or who may have accessed them during that time.
For more on the story, click here.
January 10, 2019
Only 71% of young adults say buying a home is essential to the American dream
By Alcynna Lloyd, Housing Wire -- Trulia’s end-of-year survey shows that the idea of homeownership is part of the American dream
is shrinking most among younger adults and the group's pessimism about home buying is increasing.
While the share of Americans that say homeownership is, in fact, part of the American dream increased from 72% to 73%, those aged
18 to 34 beg to differ.
In this age group, just 71% of younger adults said buying a home was a part of the American dream, according to the survey. This is
a significant drop from 2015, when 80% said homeownership was an important part of the equation.
“Last year marked a break from the unrelenting and accelerating home price growth that characterized the market for several years
straight – growth fueled by high demand, limited inventory and cheap financing,” Trulia Senior Economist Cheryl Young said.
“But while that break may ultimately prove beneficial to some, the shifting dynamics seem to be giving many buyers, sellers and
renters pause as we enter a new year: Younger would-be buyers are more pessimistic on the value of homeownership; financial
obstacles are proving stubborn to overcome; and sellers are less bullish," Young concluded.
The report explained that pessimism from young adults can be attributed to financial concerns, as 30% cited not having a job was a
burden, followed by 26% that said student debt was an obstacle to homeownership.
Although financial woes appear to be a large deterrence for young adults, Trulia highlights this issue impacts every age group.
In fact, 95% of U.S. renters wanting to enter the housing market said financial concerns were a barrier to homeownership. Of these
renters, 53% said saving enough for a down payment was a hurdle, followed by 33% that cited bad credit and 29% that said
qualifying for a mortgage was a hindrance.
To make matters worse, Trulia notes that continual home price growth is also frustrating potential homebuyers. According to their
analysis, 36% of renters who want to purchase a home said one of their biggest obstacles was rising prices.
Additionally, mortgage interest rates have impacted potential buyers, as 19% of renters cited rising mortgage rates as one of their
biggest hurdles to owning a home. This is a 6% increase from spring 2017 when the percentage sat at 13%.
ATTOM Data Solutions’ latest Home Affordability report showed that the index fell to 91 in the fourth quarter of 2018, marking the
least affordable level since the third quarter of 2008 when affordability fell to 87.
This lack of affordability has contributed to a slowdown in the housing market, and Trulia’s data indicates that sellers are becoming
less than optimistic.
“With slowing home price appreciation, Americans appear to be more circumspect about the benefits of selling this coming year,"
Trulia writes. "More continue to think this year will be a better year to sell than 2018 was, but the gap between those thinking next
year will be better and those thinking it will be worse has significantly narrowed.”
December 14, 2018
FHA loan limits to increase in most of U.S. in 2019
Limits increase in more than 3,000 counties
By Kelsey Ramírez, Housing Wire -- The Federal Housing Administration announced its new loan limits for 2019, and it looks like
most of the country will see an increase.
In high-cost areas, the new FHA loan limit ceiling increased to $726,525, up from $679,650 in 2018. The FHA will also increase its
floor to $314,827, up from 2018’s $294,515.
These new loan limits will be effective for FHA loans assigned on or after January 1, 2019.
FHA is required by the National Housing Act, as amended by the Housing and Economic Recovery Act of 2008, to set single-family
forward loan limits at 115% of median house prices, subject to a floor and a ceiling on the limits. FHA calculates forward mortgage
limits by Metropolitan Statistical Area and county.
FHA’s 2019 minimum national loan limit, or floor, of $314,827 is set at 65% of the national conforming loan limit of $484,350. This
floor applies to those areas where 115% of the median home price is less than the floor limit.
Any areas where the loan limit exceeds this floor is considered a high-cost area, and HERA requires FHA to set its maximum loan limit
"ceiling" for high-cost areas at 150% of the national conforming limit.
Click here for a chart below shows the number and share of counties where FHA loan limits are at the ceiling, floor and somewhere in
Each year, the FHA continues to increase how many counties see an increase in the FHA loan limits. Back in 2016, the FHA
increased loan limits for just 188 counties; in 2017, this number jumped to 2,948 counties, then to 3,011 counties for 2018. In 2019,
the U.S. Department of Housing and Urban Development will raise FHA loan limits in 3,053 counties.
Click here to read the FHA’s letter on 2019 forward mortgage limits.
December 10, 2018
Fannie, Freddie conforming loan limits increase in nearly every part of the U.S.
Here are the FHFA's new conforming loan limits for 2019
By Ben Lane, Housing Wire -- After not increasing the maximum conforming loan limits on mortgages to be acquired by Fannie Mae
and Freddie Mac for 10 years, the Federal Housing Finance Agency has now increased the conforming loan limit for the third straight
The FHFA announced Tuesday that it is increasing the conforming loan limit for Fannie and Freddie mortgages in nearly every part
of the U.S.
According the FHFA, the conforming loan limits will rise from this year’s total of $453,100 to $484,350 for 2019. That’s an increase of
6.9% from this year’s loan limit to next year’s.
As stated above, this marks the third straight year that the FHFA has increased the conforming loan limits after not increasing them
from 2006 to 2016.
Back in 2016, the FHFA increased the conforming loan limits from $417,000 to $424,100. Then, last year, the FHFA raised the loan
limits from $424,100 to $453,100 for 2018.
And now, the FHFA is doing it again, increasing the loan limit from $453,100 to $484,350 for 2019.
The conforming loan limits for Fannie and Freddie are determined by the Housing and Economic Recovery Act of 2008, which
established the baseline loan limit at $417,000 and mandated that, after a period of price declines, the baseline loan limit cannot rise
again until home prices return to pre-decline levels.
But, as the FHFA noted earlier Tuesday, home prices are still on the rise, which necessitates a third straight yearly increase in the
conforming loan limit.
The FHFA’s third quarter 2018 House Price Index report, which includes estimates for the increase in the average U.S. home value
over the last four quarters, showed that home prices increased 6.9%, on average, between the third quarters of 2017 and 2018.
Therefore, the maximum conforming loan limit in 2019 will increase by the same percentage to $484,350.
Loan limits will also be increasing in what the FHFA calls “high-cost areas,” where 115% of the local median home value exceeds the
baseline loan limit.
Under HERA, the maximum loan limit in those “high-cost areas” is calculated as a multiple of the area median home value, while
setting a "ceiling" on that limit of 150% of the baseline loan limit.
According to the FHFA, median home values “generally increased” in high-cost areas as well in 2018, which drove an increase
maximum loan limits in many areas. The new ceiling loan limit for one-unit properties in most high-cost areas will be $726,525, which
is 150% of $484,350.
Per the FHFA, special statutory provisions establish different loan limit calculations for Alaska, Hawaii, Guam and the U.S. Virgin
Islands. In those areas, the baseline loan limit will be $726,525 for one-unit properties.
“As a result of generally rising home values, the increase in the baseline loan limit, and the increase in the ceiling loan limit, the
maximum conforming loan limit will be higher in 2019 in all but 47 counties or county equivalents in the U.S.,” the FHFA said.
For a county-by-county breakdown of the 2019 conforming loan limits, click here.
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
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 email@example.com instead of firstname.lastname@example.org), 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:
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 email@example.com.
November 21, 2018
Appraisers accuse federal regulators of recreating housing crisis conditions
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,”
“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
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,
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
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
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:
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
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.
Single-family rental giant bets big on house flipping market
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
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
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
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:
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
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
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 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
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
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
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:
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
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
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.
Lenders react to removal from Ginnie Mae VA loan programs
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:
are entitled to receive,” NewDay said in its defense. “When veterans cannot access their VA financial benefits, they are forced to pay
much higher credit card interest rates or use extremely high-interest, payday lenders.”
May 7 2018
Homeowners Are Bullish About Housing—Buyers Not So Much
By Radhika Ojha, The MReport -- Inventory and affordability squeeze aside, consumer sentiment about the housing market rose in
April going into the home buying season, according to the latest Fannie Mae Home Purchase Sentiment Index (HPSI) on Monday. The
HPSI rose 3.4 points in April to 91.7 marking a new all-time high, Fannie Mae said.
Out of the six components that make up the survey, only one—the number of respondents who said that now is a good time to buy a
home—decreased, falling three percentage points to 29 percent, compared with March. On the other hand, the net share of
respondents who said that now was a good time to sell a home increased 6 percentage points on a month-over-month basis, to 45
percent, reaching a new survey high, the report said.
Homebuyer sentiment was likely affected by the lack of for-sale inventory as well as rising home prices, that are likely to remain a
challenge for home sales for the rest of the year too, according to Doug Duncan, SVP and Chief Economist at Fannie Mae.
“High home prices and good economic conditions helped push the share of Americans who think it's a good time to sell to a fresh
record high,” said Duncan. “However, the upward trend in the good-time-to-sell share seen since last spring has done little to release
more for-sale inventory. The tightest supply in decades, combined with rising mortgage rates from historically low levels, will likely
remain a hurdle for mobility and a persistent headwind for home sales.”
According to the HPSI, the net share of respondents who said that home prices would go up in the next 12 months increased 7
percentage points to 49 percent in April, while the net share of consumers who said mortgage rates would fall over the next 12
months increased 4 percentage points during the month to 48 percent.
The factors that spurred these positive sentiments among consumers included an increased sense of job security and a higher share
of Americans reporting that their income was significantly higher than it was 12 months ago.
“The latest HPSI reading edged up to a new survey high, showing that consumer attitudes remain resilient going into the
spring/summer home buying season,” Duncan said.
May 1, 2018
Housing Inventory Shortages Hitting This Sector Hard
By Krista Franks Brock, DSNews -- If the market feels a little competitive this spring, it’s not just your imagination. Home values are
rising, inventory is continuing on a downward spiral, and, according to Zillow, “This year’s home-shopping season will be one of the
most competitive ever recorded.”
Home values ascended 8 percent year-over-year in March, while the number of homes for sale dropped by nearly 9 percent,
according to data released by Zillow. The sparse inventory that is available is concentrated at the high end, pricing out many first-time
Alongside these prohibitive market metrics, rental rates across the nation are also on the rise, climbing 2.7 percent year-over-year in
March, according to Zillow.
"This year's home-shopping season is shaping up to be even crazier than last, and sadly, the group that will have the hardest time is
first-time and lower-income homebuyers," said Zillow Chief Economist Svenja Gudell.
The markets that experienced the greatest increases in home values year-over-year in March were San Jose, where home values
jumped 25 percent to a median home value of more than $1.25 million; Las Vegas, where values climbed 17 percent to $260,161;
and Seattle, where values are up 15 percent to a median $492,227. These values compare to a national median home value of
Nine of the 35 largest metros in the United States experienced double-digit home value growth over the past year, according to Zillow’
s Home Value Index.
Helping drive this ascension in home values, of course, is declining inventory, which has been ongoing since early 2015, according to
Not surprisingly, the greatest home value increases took place in the same markets where inventories experienced their steepest
declines. San Jose posted a 26 percent drop in inventory over the year, followed closely by Las Vegas with a 23.5 percent descent in
These declines were outpaced only by Washington D.C., which led the nation with a 27.3 percent descent.
In all, inventory deteriorated more than 20 percent in six of the 35 largest metros. After Washington, D.C., San Jose, and Las Vegas
were Indianapolis; Columbus, Ohio; and Dallas.
More than half—about 51 percent—of homes available for sale are what Zillow considers “high-end,” and only 22 percent are what
Zillow considers “entry-level.”
In 13 of the 35 largest metros in the United States, at least 50 percent of housing inventory is considered “high-end.”
Buyers at the low end of the market “will be competing for the few entry-level homes on the market, which are also the ones
appreciating the fastest because of extremely high demand,” Gudell said.
She sees signs of relief down the road, saying, “There are some signals a shift may be coming—construction activity is at its highest
point in a decade—but buyers shouldn’t hold their breath.”
April 25, 2018
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.
Protection seal on it.
And the communication referred to the agency as the Bureau of Consumer Financial Protection, not the Consumer Financial
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.
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
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
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.
MOVE OVER MILLENNIALS, GEN Z IS ALREADY BUYING HOMES
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
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
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
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:
$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
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:
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.