August 23, 2016

In Case You Missed It: A Look at Recent National Housing Policy News

Delinquency Rates Hit 10-Year Low

Delinquency rates for mortgage loans on one- to four-unit residential properties fell to their lowest
level since 2006, while foreclosure rates fell to their lowest level in 16 years, the Mortgage Bankers Association reported. The MBA National Delinquency Survey for the second quarter said the delinquency rate decreased by 11 basis points to a seasonally adjusted rate of 4.66 percent of all loans outstanding at the end of the second quarter, the lowest level since second quarter 2006. From a year ago, the delinquency rate fell by 64 basis points. MBA said the delinquency rate was lower than the historical average of 5.36 percent from 1979 to the present. MBA said the percentage of loans on which foreclosure actions started during the second quarter fell to 0.32 percent, down by three basis points from the first quarter and by eight basis points from a year ago. This foreclosure starts rate was at its lowest level since second quarter 2000.

Tighter Underwriting Rules Cut Portion of Mortgages to Blacks, Report Says

Blacks made up smaller share of originations in 2014 vs. 2004, African-American trade group finds
Mortgage lending to African-Americans has declined since the last housing boom, a direct result of tightened underwriting standards that persist eight years after the meltdown, according to a new report. Black borrowers accounted for a smaller share of mortgage originations in 2014, at 5%, than in 2004 when they were 7%. By contrast, white borrowers accounted for 69% of mortgages in 2014 versus 58% 10 years before then. That is based on an analysis of the most recent Home Mortgage Disclosure Act data in a report commissioned by the National Association of Real Estate Brokers, or NAREB, a trade group of African-American real-estate agents and brokers.

Growth of Senior-Care Facilities Presents Opportunity for Lenders

United Community Banks in Blairsville, Ga., is the latest bank to focus on baby boomers, but not in the business that most people relate to that generation. Most talk about banking baby boomers has centered on wealth management as that generation ages and starts looking to transfer wealth to their children. Another growing area of business, however, centers on senior care, and that is where United is making its move. After a lengthy pursuit, the $10.4 billion-asset company hired a four-person team from Community & Southern Bank in Atlanta that specializes in financing senior care facilities.

How Land Use Regulations are Zoning Out Low-Income Families 

Social mobility and geographical mobility have historically gone hand-in-hand in America: people move to places with greater opportunity. But such moves have become steadily more difficult, in part because of the growing regulation of land use. Zoning ordinances that limit density are a particular problem, reducing the availability of affordable housing. By using local government powers to zone out lower-income families, upper middle class Americans protect the value of their homes. Federal policy helps, of course, by regressively supporting richer home owners through mortgage interest deductions. NIMBYism is motivated by a rational desire to accumulate financial capital by enhancing home values. But for parents, it is also about helping their children accumulate human capital by controlling access to local schools. Given the powerful vested interests involved in exclusionary zoning, reform will require some serious political determination.

Industry throws wet blanket on the digital mortgage revolution

GSE survey results show reality of mortgage business
Over the last few years, publications just like this one spilled a significant amount of ink, whether the old-fashioned kind or the digital kind, on the digital mortgage revolution, that is the effort to take the cumbersome, paper-intensive mortgage process online. To gauge the mortgage industry’s view on the adoption of digital mortgages (or eMortgages, in the government-sponsored enterprises’ parlance), Fannie and Freddie reached out to 130 “key industry stakeholders,” which included lenders, technology solution providers, warehouse banks, servicers, and title/settlement providers, to discuss their perceived obstacles/barriers to broader industry adoption of eMortgages. The survey identified a number of concerns that many companies in the mortgage business share, including:

  • Acceptance by a limited number of investors
  • Warehouse line availability
  • Lack of key stakeholder readiness (servicers, document providers, custodians, title/settlement agents, etc.)
  • Implementation complexity
  • Inadequate return on investment based on industry volumes
  • Lack of uniform adoption of eNotarization and eRecording
  • Resource/financial constraints
  • GSE policy alignment

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