Taking the Bait

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Th e M Rep o RT | 51 O r i g i nat i O n s e r v i c i n g a na ly t i c s s e c O n da r y m a r k e t LocaL Edition mortgage servicing pretax loss was $270 million. Occ counsel addresses regulatory complaints from community Banks Small bankS concerned over regulatory preSSure. Washington D.C. // During her testimony before the House Financial Services Committee, the Office of the Comptroller of the Currency's (OCC) chief counsel, Amy Friend, addressed issues regarding the regulatory burden faced by small banks. In a prepared statement, Friend noted that, "Although regulations implementing the Dodd-Frank Wall Street Reform and Consumer Protection Act have focused generally on larger institutions, certain provisions of the act affect the entire banking sector. These changes can strain the more limited resources of community banks." Friend's analysis lends cre- dence to a survey recently pub- lished by the Mercatus Center, a research center at George Mason University aimed at studying markets. The survey reports that smaller banks are less able to deal with the more regulation- heavy Dodd-Frank Act, leading to changes in some small bank's core businesses. "Of the surveyed banks, nearly 6 percent already discon- tinued residential mortgages and an additional 10 percent antici- pate doing so. Although those numbers may seem small in the scope of the national mortgage market, discontinuations will ripple through the communities these small banks serve," the center's survey found. The testimony by Friend before the Financial Services Committee offered a concilia- tory nod to the plight of smaller banks while noting particular ways the OCC addresses smaller banks' particular grievances with the Dodd-Frank Act. "We recognize that community banks have different business models and more lim- ited resources than larger banks, and, to the extent underlying statutory requirements allow it, we factor these differences into the rules we write and the guid- ance we issue," Friend said. Friend continued, citing specific examples of how the OCC at- tempts to minimize the regulato- ry burden on smaller institutions: "Explaining and organizing our rulemakings so these institutions can better understand the scope and application of our rules, providing alternatives to satisfy prescriptive requirements, and using exemptions or transition periods are examples of ways in which we tailor our regulations to accommodate community banks while remaining faithful to statutory requirements and legislative intent." Friend also cited an issue from June 2013 when the OCC responded directly to commu- nity bank concerns when final- izing the revised lending limits rule, which "now exempts from the lending limits calculations certain securities financing trans- actions most commonly used by community banks." She also noted that un- derstanding large volumes of information can be difficult for smaller institutions. Friend commented that the OCC, when transmitting a new regulation or supervisory guidelines, provides community banks with a box that allows them to quickly as- sess whether the issuance applies to them and, if so, the impact of the new guideline. Friend concluded, "Although the institutions we supervise continue to face challenges, the state of the national bank and federal thrift system is strong. The OCC will continue to look for opportunities to minimize burden, wherever possible." chicago ranks as nation's most affordable market Home affordability HigH in tHe Windy city. illinois // As other reports harbor grim news about the state of housing affordability today, a new release from bro- kerage and tech firm ZipRealty finds there are still metros where homeowners can live without breaking the bank. The company released its list of the top 10 most affordable housing markets of 2014, ranking Chicago as the No. 1 affordable metro. Based on median home sales price data and estimated family income, ZipRealty calcu- lated an Affordability Index of 2.2 for the Windy City, meaning homes are available for just more than twice the annual average household income ($72,400 against a median price of $160,000). Among other areas surveyed, Philadelphia ranked second with an index of 2.4, followed by Orlando, Florida, and Richmond, Virginia, each at 2.6. Unsurprisingly, the country's most expensive markets can be found in California: Orange County, the San Francisco Bay Area, and Los Angeles topped the list. The average home in each of those areas sells for 11.8, 8.7, and 7.4 times the local family income, respectively. Prices in the region tend to range higher than the rest of the country, in part because of the desirable location and in part due to its far lower inventory. "While the cost of a home is still a very significant expendi- ture for families everywhere, it's interesting to see these regional differences in affordability," said ZipRealty CEO Lanny Baker. "The cities at the top of our list are far more affordable than other places, particularly the larger California metros." SERVICING Fannie Mae anticipates a continued rise in mortgage rates over the year, with the 30-year fixed-rate ending the year at 4.6 percent.

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