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Justin Fitzhugh

The Mortgage Industry Weekly Review: FHFA for a Single Security, Economy On Track, and More

Wednesday, August 20, 2014 - Article by: Justin Fitzhugh - Nations Lending Corporation - Message

Despite the fact that Congress is in recess, and that some of us may take it easier on a sandy beach, at the heart of this summer Federal Housing Agencies miss no opportunity to report the economy is on track, propose new regulations, an FHA Official announces a step down, and HUD settles with another Company to resolve discrimination allegations. Is this summer?

ECONOMY ON TRACK

Last August 12th, 2014, The Department of Housing and Urban Affairs Development releases the July Housing Scorecard which includes key housing market data. Analysis of last Months data indicated an overall positive trend in the housing market, lead by an increase in sales of existing homes, and a reduction in foreclosure filings. Downbeats were lead by an unexpected decrease in new home sales, and a slowing down of home price increases FULL REPORT HERE (Could it be this hot hot summer?). Meanwhile, August 13th, 2014, Freddie Mac released its U.S. Economic and Housing Market Outlook with an optimistic short to mid term economic growth forecast. Freddie Macs chief economist abbreviates the story:

"We are getting closer to a more normalized economy, and now we are expecting to see housing driven by fundamentals, and in fact, we've already seen this in some markets. The economic growth and labor market gains we saw in the second quarter of this year are projected to continue, strengthening household formations and the housing sector. A recovering housing sector will sustain the rally in homebuilding despite likely increases in long-term interest rates. Increased construction activity will further accelerate the improvement in labor markets and fuel even more household formations and more housing demand. The result is an economy that gradually recovers back towards its potential."

Relevant data revealed that:

  • Labor added 230K new jobs from January through July
  • There was a total 458K household formations for the year
  • The number of persons per household increased from 2.69 to 2.76
  • Monthly mortgage payment-to-rent ratio is at its lowest in 35 years

Economic growth for 2015 is forecasted at 3.3%, with a projected decline in the employment rate, a continued increase of household formation, and an increase of 1.3 million housing starts, a 28% increase over 2014 statistic

POLICY MAKING

On August 11th, the Department of Housing and Urban Development, HUD, proposed the requirement of standard application process for Housing Counseling Agencies that want to pursue HUDs Approved Status. The Approved Status is intended to signal to the public that a given Housing Counseling Agency is equipped with the appropriate knowledge and resources to provide housing related advice. You may submit your input through the Federal Registers website: https://www.federalregister.gov/articles/2014/08/11/2014-18946/30-day-notice-of-proposed-information-collection-hud-housing-counseling-program-application-for

ON August 12th, the Federal Housing Finance Agency, FHFA, issued a request for input from stakeholders on its proposed Single Security. The Security would replace current Fannie Mae and Freddie Mac mortgage securities. A single security would promote more liquidity in the secondary mortgage market, and at the agency level, it would help improve operation administration performance. You may submit your input through here: https://www.fhfa.gov/AboutUs/Contact/Pages/Request-for-Information-Form.aspx

PEOPLE

On August 11th, ,commissioner at the Federal Housing Administration, FHA, Carol Galante announced she will step from her post and go into an academic position. Binian Gebre, currently general deputy assistant secretary for housing, will take the post. Mrs. Galante served as FHAs commissioner for over three years, and during this time, she performed independent actuarial studies of the agency. Her work identified the ensuing financial storm that was brewing at the FHA which prompted the agency to request funds from the Federal Government. The FHA raised guaranteed fees, and it appears this years it will show number on the black.

LEGAL

On August 13th, HUD announced it reached an agreement with Freedom Mortgage Corporation, headquartered in Mt. Laurel, NJ, to resolve allegations of discrimination. According to HUDs press release, the company implemented different underwriting policies and practices for people with disabilities; this class of borrowers were required to submit doctors notes and letter from the Social Security Administration stating the continuation of disability income for at least 3 years. The company cooperated during HUDs investigation, in which it was found 69 applicants were subjected to these practices.

A CHEER FOR THE CONTINUED EFFORTS by Federal Housing Agencies and by those lenders who understand the importance of interdependency between borrowers and creditors, and promote and implement risk mitigation and foreclosure prevention actions. It is clear that as rents increase, and the unemployment rate little by little continues to decrease, more people are teaming up for community living (spare the reality shows, I doubt most people wear makeup to power-struggle with their roommates... ). On Washington, the agencies are busy structuring an environment conducive to promote the growth of the housing market. Thou shall not discriminate, this was the second disability related settlement in two weeks... and with this lets get back our busy hives, and lets have a productive week

1) http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2014/HUDNo_14-097

2) http://freddiemac.mwnewsroom.com/press-releases/freddie-mac-august-2014-u-s-economic-and-housing--otcqb-fmcc-1137533?feed=429e0be3-9aef-4a3a-9775-43f8e470d510

3) http://www.freddiemac.com/finance/pdf/August_2014_public_outlook.pdf

4) http://www.fhfa.gov/PolicyProgramsResearch/Policy/Pages/Single-Security.aspx

5) http://www.reuters.com/article/2014/08/11/usa-housing-fha-idUSL2N0QH18D20140811

6) http://online.wsj.com/articles/top-obama-housing-official-carol-galante-to-step-down-sources-say-1407768922

7) http://www.infobytesblog.com/hud-announces-disability-income-fair-housing-conciliation-agreement/

8) http://portal.hud.gov/hudportal/HUD?src=/press/press_releases_media_advisories/2014/HUDNo_14-098

We offer mortgage branch opportunities in 47 states. We are looking to partner with seasoned branch managers who want to focus on production. We are not a net branch company. Nations Lending Corporation allows you to broker deals for which we have no products. Better than net branch opportunities, NLC offers all government sponsored products.

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