|LLOYD MARTIN PLC
|LLOYD MARTIN PLC
9316-A Old Keene Mill Road
Burke, Virginia 22015-4285
|[A Virginia Professional Limited Liability Company]
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.