February 2017 - Making Millennials Move

TheMReport — News and strategies for the evolving mortgage marketplace.

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TH E M R EP O RT | 9 MONTH IN REVIEW 1 The Consumer Finance Protection Bureau (CFPB) an- nounced its fair lending priorities for the year. In an effort to protect consumers from discrimination and to expand credit access, CFPB will increase its focus on redlining, mortgage and stu- dent loan servicing, and small business lending. Patrice Ficklin, Fair Lending Director at the CFPB, said the Bureau chose to focus on these areas due to the 500,000 consumers who have experienced discrimination by lenders. 2 Fannie Mae's latest Economic and Housing Outlook showed that long-term interest rates are still on the climb and that more aggressive Fed funds rate projections stemming from December's Federal Open Market Committee meeting are likely to push mortgage interest rates to their high- est point in more than two years. This, Fannie Mae said, will create "head- winds for housing." Home price ap- preciation has remained strong, and bullish investors have helped push eq- uity prices higher, buoying household net worth and providing support to consumers, the report stated. Rising oil prices have also helped reduce drags on the energy sector. 3 Freddie Mac forecasted $1 trillion in refinance originations for the full year of 2016, the highest amount in four years. Cash-out refi volume was up by $10 billion for the first three quarters of 2016 when compared to 2015. However, Freddie Mac predicted the higher interest rates will take their toll on refi volume in the coming years, as the refinance share of originations is expected to fall to 28 percent in 2017 and 20 percent in 2018. 4 The National Association of Realtors' Q4 2016 Housing Opportunities and Market Experience survey revealed that affordability is weakening confidence and expecta- tions for the 2017 housing market among potential homebuyers. However, respondents' confidence in their financial situation increased to 59.8 in December from 58.6 in September. The report also found that existing home sales are forecasted to grow roughly 2 percent—to around 5.52 million this year. 5 Members of the Federal Open Market Committee (FOMC) were in agreement at their latest meeting that it was time to raise the funds target rate by 25 basis points for the first time in a year. According to the minutes, the FOMC participants expect the economy to continue to expand at a moderate pace and for the labor market to strengthen further; about half of the participants assembled their economic forecasts for 2017, assuming a more expansionary fiscal policy. The Fed has forecasted three more rate hikes of 25 basis points each in 2017, based on expectations of a more expansionary fiscal policy. 6 TOM Data Solution's 2017 Rental Affordability Report, based on data from the U.S. Department of Housing and Urban Development, the Bureau of Labor Statistics, and public record sales deed data from RealtyTrac, found that buying is more affordable than the fair market rent on a three- bedroom property in 66 percent of U.S. markets. The counties housing Chicago; Phoenix; Miami; Las Vegas; Detroit; San Antonio; Philadelphia; Fort Worth, Texas; and San Bernardino, California, were the leading major metro markets where buying was a better option. 7 Elie Mae's Millennial Tracker re- port announced the most popular metro areas for millennial homebuy- ers. Minneapolis topped the list as the most popular metropolitan area for homes purchased by millennial buyers with Philadelphia, St. Louis, Chicago, and Detroit rounding out the top five cities. Florida and California were the states that housed the least popular cities for millennial homeowners, which are Miami, Los Angeles, San Francisco, San Diego, and Tampa. 8 The Office of the Comptroller of the Currency's (OOC) latest ruling, which became effective January 19, has set a framework for placing un- insured national banks into receivership. The final rule applies to all uninsured national banks regulated by the OCC. The final rule will not apply to federal savings associations, all of which are insured. The final rule describes the appointment of a receiver and required federal notice, process for submitting claims against the receivership, order of priorities for payment of administrative expenses and claims, powers and duties of the receiver, payment of dividends on claims, sources of funds for payments and claims, and status of fiduciary and custodial assets and accounts. 9 The U.S. Department of Housing & Urban Development raised the bar for housing counselors partici- pating in HUD-approved programs. Counselors must be certified in order to offer services to consumers; the new certification requirements call for coun- selors to pass a standardized written exam and work for a HUD-approved counseling agency. HUD will offer train- ing and study resources in both English and Spanish to help counselors prepare for the examination, and HUD has targeted spring 2017 as the publication date for the actual certification test. 10 The Federal Reserve has adopted a final rule requiring the country's largest bank holding com- panies to hold more long-term debt in order to reduce the systemic impact of bankruptcy on the U.S. financial sys- tem and therefore protect taxpayers. Under the new final rule, investors— not taxpayers—would bear the losses if a bank should fail. The rule will apply to those bank holding companies the Fed has termed as "globally systemic important banks" or GSIBs—JPMorgan Chase, Bank of America, Citigroup, State Street, Bank of New York Mellon, Morgan Stanley, Wells Fargo, and Goldman Sachs. What Goes Up Must Come Down (and Up Again) Affordability, bankruptcy reduction, fair lending, and refinance originations were some of the highlights from this month. With interest rates steadily increasing, the industry is anticipating a decrease in affordability but hoping potential buyers get bit by the housing bug and are ready to purchase homes.

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