TheMReport — News and strategies for the evolving mortgage marketplace.
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the latest ORIGINATION Or ig i nat ion Backlash Begins over New Regulation D Sam Khater, CoreLogic's senior economist, commented, "Many trade-up borrowers have been locked out of the market because their outstanding loan balance is greater than the market value of their home. Current owners need to sell at prices high enough to extinguish their debt and provide equity for the next home purchase." Acknowledging the impact of recent changes to housing finance policies, CoreLogic stated that the future remains "hopeful," as rising home prices provide a "buffer against policy headwinds." Referencing cumulative statistics from 2012 to support its projections, CoreLogic reiterated that its Home Price Index appreciated by 6.3 percent year-over-year as of last October. Additionally, the company referred to increases in the market's lowest tier—those selling for less than 75 percent of the median price—stating that pricing in the sector had displayed the greatest improvement, rising 8.3 percent year-over-year as of October 2012. The company's chief economist, Mark Fleming, indicated optimism for the year ahead as he shared his perspective on housing's past 12 months, concluding, "Housing was clearly one of the past year's biggest surprises. Even without significant gains in income, housing mounted an impressive recovery in 2012." The M Report se c on da r y m a r k e t espite recent turmoil for the financial services and mortgage banking industries, CoreLogic declared 2012 a "pleasant economic surprise" in the company's most recent MarketPulse survey. Pointing out positive trends in the study's opening remarks, CoreLogic noted, "Gladly, the risk of a recession due to the shocks of 2011 has been largely averted. Job creation has fared better, certainly over the latter part of 2012." According to CoreLogic, the housing market is starting 2013 "poised for further recovery," and the firm is calling for improvements in pricing, sales, and delinquency rates. As for key components influencing growth in the year ahead, CoreLogic cited declining real estate owned sales and nationwide decreases in inventory. "Looking forward, CoreLogic expects continued market improvement, with home prices expected to rise 6 percent in 2013 due to high affordability fueling steady demand, a lower level of REO sales, and a low inventory of unsold homes," explained the organization's analysts. "Home prices will play an even more crucial role than usual in the market over the next two to three years. Rising home prices will slowly release the pent-up supply of inventory as under-equitied borrowers are unlocked and opportunistic sellers begin to provide relief to tight inventories." T raising borrower costs, and promoting the policies of 'Too Big to Fail' institutions," said John H.P. Hudson, chair of NAMB's Government Affairs Committee. "The congressional intent of the ability-to-repay rule was not to put the CFPB in a position of picking industry winners and losers," he continued. The CFPB will be seeking further comment on the qualified mortgage definitions. In the meantime, NAMB is officially calling for the bureau to convene a small business review panel to study the impact the new rule will have on small business owners, their employees, and consumers in underserved areas. "Consumers deserve protection from bad mortgage products," said NAMB President Don Frommeyer. "However, the unintended consequences of 'one size fits all' regulation will ultimately harm the very people it is meant to protect. In today's environment of historically low interest rates and an economy finally showing signs of recovery, the CFPB should continue to work with the mortgage industry to ensure that consumers still have availability to affordable credit." a na ly t ic s Citing a better-than-expected performance in 2012, CoreLogic expects the pace of recovery to pick up speed during the year ahead. he National Association of Mortgage Brokers (NAMB) is calling for a review of the Consumer Financial Protection Bureau's (CFPB) new rule on qualified mortgages, saying the provisions might drive out smaller lenders. While the association "applauds the efforts of the Consumer Financial Protection Bureau" in reaching out to the industry and finalizing a balanced rule, it expressed concern that the CFPB may have created "an uneven playing field between the 'Too Big to Fail' institutions and the thousands of small businesses originating loans today." NAMB specifically points to the new rule's cap on fees, which stipulates that a borrower is not to be charged more than 3 percent of the loan amount. In a release, the association points out that the rule may promote a bias against non-creditor mortgage companies, limiting credit access for lower loan-amount borrowers. "[A]rbitrary caps on points and fees which do not impact a consumer's ability to repay, without any clear definitions, will ultimately harm consumers by reducing competition, s e r v ic i ng Evaluating Housing's 'Economic Surprise' Joining the industry's first responders, the NAMB showed lukewarm support for the QM rule, citing its potential impact on smaller lenders. | 41