News Flash

Last year was profitable for independent mortgage banks and the mortgage subsidiaries of chartered banks, according to new data from the Mortgage Bankers Association (MBA)

Home prices are showing no signs of falling, according to the latest data from the S&P/Case-Shiller Home Price Indices.

The S&P/Case-Shiller U.S. National Home Price Index recorded a 5.2 percent annual gain in March, down from 5.3 percent the previous month, while the 10-City Composite and 20-City Composites’ year-over-year gains were unchanged at 4.7 percent and 5.4 percent, respectively, from the prior month.

Before a seasonal adjustment, the National Index posted a month-over-month gain of 0.7 percent in March, while the 10-City Composite recorded a 0.8% month-over-month increase and the 20-City Composite posted a 0.9 percent increase in March. After seasonal adjustment, the National Index recorded a 0.1 percent month-over-month increase, the 10-City Composite posted a 0.8 percent increase, and the 20-City Composite reported a 0.9 percent month-over-month increase.

The cities with the year-over-year gains in annual price increases were Portland (12.3 percent), Seattle (10.8 percent) and Denver (10 percent).

“Home prices are continuing to rise at a five percent annual rate, a pace that has held since the start of 2015,” says David M. Blitzer, managing director and chairman of the Index Committee at S&P Dow Jones Indices. “The economy is supporting the price increases with improving labor markets, falling unemployment rates and extremely low mortgage rates. Another factor behind rising home prices is the limited supply of homes on the market. The number of homes currently on the market is less than two percent of the number of households in the U.S., the lowest percentage seen since the mid-1980s.”


The latest industry data offered a classic case of yin-yang, with good news and bad news in an equal balance.


The latest Weekly Mortgage Applications Survey issued by the Mortgage Bankers Association found mixed results in housing market for the week ending March 4. The Market Composite Index increased by a scant 0.2 percent on a seasonally adjusted basis and one percent on an unadjusted basis from the previous week. The seasonally adjusted Purchase Index increased four percent its highest level since January 2016, while the unadjusted Purchase Index increased six percent compared with the previous week and was 30 percent higher than the same week one year ago. The Refinance Index, however, decreased two percent from the previous week while the refinance share of mortgage activity decreased to 56.7 percent of total applications from 58.6 percent one week earlier.


Among the government loan programs, the FHA share of total applications remained unchanged at 12 percent from the week prior, while the VA share of total applications increased to 12.6 percent from 12.1 percent and the USDA share of total applications increased to 0.8 percent from 0.7 percent.


Another good news/bad news data report came via Zillow’s Negative Equity Report, which noted that while the negative equity rate fell to 13.1 percent during the fourth quarter of 2015, six million homeowners were still in negative equity during this period while more than 820,000 underwater homeowners owed over twice as much on their mortgages as their homes are worth.


"Even though the number of underwater homeowners has fallen significantly since the peak of the housing crisis, negative equity persists in many markets as it fell at its slowest pace in a year," said Zillow Chief Economist Svenja Gudell. "Things are moving in the right direction, but some owners are still deeply underwater. As we move into the home shopping season, inventory is already low, and negative equity is keeping potential additional stock from becoming available."


Among the major metro areas, Las Vegas had the highest rate of fourth-quarter negative equity at 20.9 percent, followed by Chicago with 20.5 percent, while San Jose only had 2.8 percent of mortgaged homeowners that were underwater.


Still, homeowners with negative equity still have a roof over their head—and fewer people facing the prospect of foreclosure. CoreLogic’s latest National Foreclosure Report found the U.S. foreclosure inventory declined by 21.7 percent and completed foreclosures declined by 16.2 percent on a year-over-year basis, while the volume of completed foreclosures nationwide decreased year over year from 46,000 in January 2015 to 38,000 in January 2016.


As of January, the national foreclosure inventory included approximately 456,000, or 1.2 percent, of all homes with a mortgage—its lowest level since November 2007. In January 2015, the national foreclosure inventory covered 583,000 homes, or 1.5 percent of all mortgaged residences. The five states with the highest number of completed foreclosures for the 12 months ending in January—Florida (74,000), Michigan (49,000), Texas (29,000), California (25,000) and Ohio (24,000)—accounted for almost half of all completed foreclosures nationally.


"In January, the national foreclosure rate was 1.2 percent, down to one-third the peak from exactly five years earlier in January 2011, a remarkable improvement," said Frank Nothaft, chief economist for CoreLogic. "The months' supply of foreclosure fell to 12 months, which is modestly above the nine-month rate seen 10 years earlier and indicates the market's ability to clear the stock of foreclosures is close to normal."


Separately, Equifax’s latest National Consumer Credit Trends Report found the total balance of outstanding first mortgages in January was more than $8.3 trillion, an increase of 2.1 percent from same time a year ago. The severe delinquency rate for first mortgages in February was 1.75 percent, down from 2.50 percent same time a year ago.


But home equity installment activity fell 5.1 percent (from $138.5 billion to $131.4 billion) on a year-over-year basis while home equity lines of credit (HELOC) activity took a 3.7 percent (from $514.2 billion to $495 billion) year-over-year dive. Amy Crews Cutts, chief economist at Equifax, was encouraged by this data seesaw.


"Home purchase activity accelerated in 2016 as economic conditions boosted consumer confidence," she said. "When first-time homebuyers move into homeownership or existing homeowners upgrade to a larger, more expensive home, new debt is created. This trend is finally dominating the accelerated amortization from borrowers paying a little extra each month or paying their mortgages in full, and foreclosure activity is also greatly diminished. With many HELOCs hitting their recast into amortization, we are seeing increased payoffs, reducing the debt and numbers of HELOCs outstanding. About 20 to 25 percent of HELOCs active a year prior to their recast anniversary will payoff and close within the year after date. Originations of new loans are not keeping pace with the payoffs."


But another debt study suggested that the Americans are still struggling with their finances. CardHub’s 2015 Credit Card Debt Study found U.S. consumers tallied up $52.4 billion in credit card debt during the fourth quarter of 2015—which is extremely close to $57.4 billion total of credit card debt for the entire year of 2014. The fourth quarter debt numbers resulted in a $71 billion net increase in credit card debt for 2015.


“As a result, the average household with credit card debt now owes $7,879 and we’ve far surpassed $900 billion in credit card debt—a mark last breached in 2007 during the ramp up to the financial system’s 2008 collapse,” said Diana Popa, communications manager at CardHub. “If we don’t get a record-setting debt pay-down during the first quarter of the year (when consumers typically get tax refunds and annual salary bonuses) and we continue to add debt at this rate, it won’t be long before default rates begin to rise and credit availability tightens.”


Neel Kashkari

In his first speech as the new president of the Minneapolis Federal Reserve, Neel Kashkari took on a strikingly political edge by complaining about the limits in enforcing the Too Big to Fail (TBTF) aspect of a Dodd-Frank Act. Speaking this morning at the Brookings Institution in Washington, D.C., Kashkari noted that his regional Fed bank was taking aim at the issue and then challenged Capitol Hill to do the same.

“I believe the biggest banks are still too big to fail and continue to pose a significant, ongoing risk to our economy,” said Kahskari. “Enough time has passed that we better understand the causes of the crisis, and yet it is still fresh in our memories. Now is the right time for Congress to consider going further than Dodd-Frank with bold, transformational solutions to solve this problem once and for all. The Federal Reserve Bank of Minneapolis is launching a major initiative to develop an actionable plan to end TBTF, and we will deliver our plan to the public by the end of the year.  Ultimately Congress must decide whether such a transformational restructuring of our financial system is justified in order to mitigate the ongoing risks posed by large banks.”

Using language that sounded closer in spirit to Bernie Sanders than Janet Yellen—or, for that matter, either Ben Bernanke or Alan Greenspan—Kashkari offered several alternatives that would ensure the TBTF banks would not keep their current status.

“I believe we must begin this work now and give serious consideration to a range of options, including the following: Breaking up large banks into smaller, less connected, less important entities; turning large banks into public utilities by forcing them to hold so much capital that they virtually can’t fail, with regulation akin to that of a nuclear power plant; [and] taxing leverage throughout the financial system to reduce systemic risks wherever they lie.”

Kashkari also pointed to the financial services industry and its lobbyists for working to preserve the current environment regarding the TBTF banks. But he insisted their arguments were “unpersuasive” and that a flawed effort to break up these banks was better than no effort.

“If we are serious about solving TBTF, we cannot let them paralyze us,” he said. “Any plan that we come up with will be imperfect. Those potential shortcomings must be weighed against the actual risks and costs that we know exist today. Perfect cannot be the standard that we must meet before we act. Better and safer are reasons enough to act. Otherwise we will be left on the default path of incrementalism and the risk that we will someday face another financial crisis without having done all that we could to protect the economy and the American people.”

Home sales declined in September, marking the fifth month this year when sales fell year-over-year, according to new data from RE/MAX
Home sales declined in September, marking the fifth month this year when sales fell year-over-year, according to new data from RE/MAX. However, sale prices were up in September, which marked the 71st consecutive month of year-over-year price increases.
Last month saw a 4.2 percent year-over-year downturn in home sales across the 54 metro areas Sixteen of the 54 metro areas experienced an increase in sales year-over-year, with Billings, Mont., as the only market with a double-digit increase at 18.4 percent.
The median sales price for September was $225,000, down five from August but up 2.3 percent from September 2016. All but five metro areas experienced decrease increases—including, oddly, Billings, Mont., which saw a 2.2 percent price decline even while enjoying increased sales volume. Eight metro areas increased year-over-year by double-digit percentages, with the largest activity in Seattle (a 13.7 percent spike) and San Francisco (up 13.2 percent).
The average number of days on the market for homes sold in September was 49, up two days from the average in August but down seven days from the September 2016 average. The number of homes for sale in September was down 3.6 percent from August and down 14.1 percent from one year earlier. The inventory supply increased from 3.1-months in August to 3.6-months in September, but was lower than the 3.9-months’ supply in September 2016.
The number of homes for sale in September 2017 was down 3.6 percent from August 2017, and down 14.1 percent from September 2016. Based on the rate of home sales in September, the Month’s Supply of Inventory increased to 3.6 from August 2017 at 3.1, compared to September 2016 at 3.9.
“We’re not seeing any relief from the nationwide housing shortage as we enter the typically slower fall and winter selling seasons,” said Adam Contos, RE/MAXC-CEO. “Plain and simple, we need more homes, particularly at the entry-level price point. Until then, it will most likely continue to be a seller’s market with homes going from listed to sold quickly.”

NAMB has announced that former President-Elect John G. Stevens, CRMS has been appointed to the role of president
NAMB has announced that former President-Elect John G. Stevens, CRMS has been appointed to the role of presidentNAMB has announced that former President-Elect John G. Stevens, CRMS has been appointed to the role of President of the nationwide trade association. Stevens has been in the mortgage industry since 2009 and has held Board positions with NAMB since 2012. He has also been involved in the Utah County Planning Commission, and is actively involved in numerous state and local community efforts.
As President of NAMB, Stevens is spearheading the association’s overall strategies to grow the organization’s reach by expanding its membership and enhancing the opportunities it makes available to members, homeowners and the mortgage industry’s community of individual loan originators and small to midsize businesses.
“The majority of mortgages in the U.S. are originated by small- to mid-sized businesses, yet most of the industry isn’t aware of how much collective power we have when we come together as a group,” said Stevens. “My main priorities this year are to raise awareness of NAMB and NAMB’s efforts, to grow our membership, and to leverage our power to make even more positive changes for the brokers, bankers and businesses we represent, as well as for all American homeowners, loan originators and small to midsize mortgage companies.”
Stevens’ mission this year is to “Educate, Advocate and Empower.” As part of this mission, he has developed strategies to expand NAMB’s education programs and advocacy efforts, further strengthen its relationships with state “-AMB” associations, and expand awareness of the diversity of its target member base, which includes mortgage brokers, bankers and businesses.
“I’m proud and honored to be named President of this organization, and I’m excited about the changes we can make in the coming 12 months,” said Stevens. “Our goal is to make it even easier for our members to have a voice, be represented, and deliver the quality of services that protect homeowners and new homebuyers.”
The appointment of Stevens to President is the latest move by NAMB to grow the associaiton, after having recently undergone a rebranding, and naming Valerie Saunders as Executive Director.

Sen. Elizabeth Warren (D-MA) is amassing more $1 million per month in the fundraising for her 2018 re-election bid
Sen. Elizabeth Warren (D-MA) is amassing more $1 million per month in the fundraising for her 2018 re-election bid.
According to an Associated Press report, Warren’s campaign brought in about $3 million during the third quarter and approximately $3.4 million in the second quarter. Warren surprised many by announcing her re-election bid shortly after New Year’s Day, and her first quarter haul totaled $5.2 million. The campaign claims that more than three-quarters of its contributions were in sums of $25 or less.
Over on the Republican side, the effort to replace Warren includes announced candidacies from former Mitt Romney aide Beth Lindstrom, state Rep. Geoff Diehl, technology entrepreneur Shiva Ayyadurai and businessman John Kingston, who has put $3 million of his own funds into his campaign.

The Mortgage Bankers Association (MBA) has expressed concern to the Trump Administration and congressional leaders that potential changes in the tax code could create more problems than solutions
The Mortgage Bankers Association (MBA) has expressed concern to the Trump Administration and congressional leaders that potential changes in the tax code could create more problems than solutions.
In a letter to Executive and Legislative Branch leaders, MBA President and CEO David H. Stevens acknowledged that the new enthusiasm for tax reform offered a “once-in-a-generation” opportunity, and he expressed satisfaction that the recently-released “Framework for Fixing our Broken Tax Code” preserved the mortgage interest deduction and the Low-Income Housing Tax Credit. But Stevens added that many mortgage professionals were concerned over the potential limiting or eliminating of tax code provisions including the continued deductibility of business interest and the preservation of Section 1031 like-kind exchanges for investment real estate.
“MBA is also concerned that an elimination or limiting of business interest deductibility would have far-reaching and damaging impact on many industries, including real estate finance, as changes of this sort will inevitably increase the cost of financing, make debt more expensive (for all businesses), and, in turn, limit real estate activity,” he wrote. “We strongly advocate that the provision of current law that allows businesses to deduct interest payments be preserved in its entirety.”
Stevens added the current utilization of Section 1031 provides “benefits that help to promote ongoing investment patterns within local real estate markets, which, in turn, is a boon to continued economic growth.”
Stevens’ letter was sent to House Speaker Paul Ryan, Senate Majority Leader Mitch McConnell, House Ways and Means Committee Chairman Kevin Brady, Senate Finance Committee Chairman Orrin Hatch, Treasury Secretary Steve Mnuchin, and National Economic Council Director Gary Cohn.

Federal housing vouchers for low-income renters are too low to cover the market rent in many of the nation's job centers, according to a data analysis from Zillow
Federal housing vouchers for low-income renters are too low to cover the market rent in many of the nation's job centers, according to a data analysis from Zillow.
In its study, Zillow focused on the Department of Housing and Urban Development (HUD) Housing Choice Voucher program, which is designed provide renters with enough funding to cover 40 percent of the rentals in their market. The value of the vouchers is set according to HUD's Fair Market Rent index (FMR). However, Zillow's research determined that this threshold is not being met in 75 of the 100 largest counties, while in 15 counties the voucher holders could only rent less than 10 percent of available rentals.
Zillow added that low-income renters across the country can expect to spend more than 45 percent of their monthly income on rent, which is far higher than the 30 percent level suggested by federal policy. Zillow also noted that HUD's FMRs have not increased at the same rent as rising rents in many markets.
"Many markets with strong rent growth tend to also have the types of jobs that could help renters climb the socioeconomic ladder," said Zillow Chief Economist Svenja Gudell. "However, many low-income households, even those with a voucher, are increasingly being priced out of these markets, unable to find affordable housing options near these jobs. If rents and HUD's Fair Market Rents continue to move at different paces, this affordability crisis will only worsen for low-income renters." 

California’s home sales and median price is expected to increase in 2018, albeit at a slower pace, according to a new forecast issued by the California Association of Realtors (CAR)
California’s home sales and median price is expected to increase in 2018, albeit at a slower pace, according to a new forecast issued by the California Association of Realtors (CAR).
CAR predicts a one percent uptick in existing single-family home sales next year that will reach 426,200 units, up slightly from the projected 2017 sales figure of 421,900. The 2017 figure was 1.3 percent higher when compared with the 416,700 homes sold in 2016.
Also, the California median home price is forecast to increase 4.2 percent to $561,000 next year, following a projected 7.2 percent increase in 2017 to $538,500. The average for 30-year, fixed mortgage interest rates bump up to 4.3 percent in 2018, up from four percent in 2017 and 3.6 percent in 2016. However, CAR noted this remains low by historical standards.
"Solid job growth and favorable interest rates will drive a strong demand for housing next year," said CAR President Geoff McIntosh. "However, a persistent shortage of homes for sale and increasing home prices will dictate the market as housing affordability diminishes for buyers struggling to get into the market." 

The nation’s political environment seems to be impacting its housing markets, according to a new data analysis from Redfin
The nation’s political environment seems to be impacting its housing markets, according to a new data analysis from Redfin that found 7.4 percent more people moved out of politically blue counties than to them during the first half of this year. In comparison, politically red counties saw about one percent more people moving in than moving out while so-called purple counties, where there’s a more balanced share of Democrats and Republicans, found 3.9 percent more people moving in than out.
Within swing states, the move away from blue was more pronounced. The blue counties lost 9.2 percent more people than they gained, while Republican-focused red counties gained 2.3 percent more than they lost.
However, President Trump cannot accept all of the credit or blame: Redfin noted that high housing costs in blue counties were the primary cause of this situation, with the average home in a blue county costing around $360,000, which is more than 62 percent more than the $223,000 average cost of homes in red counties.
“As blue counties are becoming increasingly less affordable, we see a great number of residents moving to red counties where they can afford the lifestyle they want,” said Redfin Chief Economist Nela Richardson. “At Redfin, we see this as a sign of hope for a less divided country, where people with differing views gain better understanding and tolerance of each other through sheer proximity.”
The nation’s political environment seems to be impacting its housing markets, according to a new data analysis from Redfin