Monthly Archives: September 2016

Step to attract international home buyers

As international buyers are increasing, they are also bringing new trends to the market. For example, the Chinese influence is affecting home values for street addresses that contain the Chinese lucky number – four.

Now, even the way homes are sold may need to change. Jack Ryan, founder of REX, an online brokerage, former partner at Goldman Sachs and a onetime opponent of President Barack Obama for the Illinois Senate seat, decided to do just that.

Home prices continue to increase, a trend that will continue into 2017, according to a new report from CoreLogic.

These increasing home prices are narrowing the scope of possible buyers on luxury homes, and increasing the possibility that it will be bought by an international buyer. That is exactly what Ryan realized when he decided to turn to virtual reality to sell a $57.5 million home in Malibu, California, according to an article by James Tarmy for Bloomberg.

From the article:

“For homes like this,” Ryan said, gesturing to the house’s fireplace, “there’s a 50 percent chance that the buyer is outside the U.S., in around 15 financial capitals—London, Shanghai, Paris, Beijing.”

To reach that elusive group of the super-rich, Ryan had to get creative, which is why he decided to pay a virtual reality company to map the house and create an interactive video.

Virtual reality allows viewers to see the home as though they were really there by looking through a view piece strapped onto their head. Several different agents have begun playing with virtual reality as a tool for selling homes or condos, but is it working?

From the article:

The video, he said, has been useful, though he considers VR one of several marketing tools. “I couldn’t give tangible results, like ‘five deals closed because we had VR,’” he [Adam Greene, vice president of residential development at Forest City Ratner] said. “I think it gives the whole experience of the sales center something a little bit different.” Indeed, multiple brokers all echoed the same point: VR is presently a tool that can get buyers excited, not an actual replacement for seeing the house in person.

Fargo as bank reportedly fails fair lending requirement

The dark clouds surrounding Wells Fargo are about to get a lot darker, as the bank, which is already in hot water over its recent fake account scandal, is reportedly falling short in its fair lending requirements and faces additional sanctions.

Over the last few months, Wells Fargo has been in the crosshairs of various regulators after the Office of the Comptroller of the Currency, the Consumer Financial Protection Bureau and the city and county of Los Angeles fined Wells Fargo $185 million because more than 5,000 of the bank’s former employees opened approximately 2 million fake accounts in order to get sales bonuses.

In the fallout from the fake account scandal, Wells Fargo CEO John Stumpf lost his job, the bank lost business from several states, and the OCC slapped additional sanctions on it, including forcing the bank to ask the OCC for approval if it wants to make a change to its board of directors or its senior executive officers.

Now, according to a new report from Reuters, Wells Fargo is about to be more hot water with the OCC for reportedly failing to meet its requirements under the Community Reinvestment Act.

Under the Community Reinvestment Act guidelines, banks are legally required to meet the credit needs of low- and moderate-income communities.

From Reuters:

Wells Fargo is due to be deemed a bank that “needs to improve” under the Community Reinvestment Act (CRA), a law meant promote fair lending.

The move is a two-notch downgrade from the “outstanding” tag Wells Fargo has held since 2008 and the change would give regulators a greater say on day-to-day matters like opening new branches.

The ruling from the Office of the Comptroller of the Currency, the main regulator for national banks, is due by early January, said the sources with knowledge of the plans.

The ruling would be significant, considering Wells Fargo’s status as one of the largest (if not the largest) mortgage lenders in the country.

Reuters cautions that Wells Fargo could win an appeal of the downgrade. According to the Reuters report, that decision is still pending.

Next HUD leader divides real estate industry

Some housing experts congratulated the new nominee, and took the opportunity to say what they think the new HUD secretary should focus on.

“CHLA congratulates Dr. Ben Carson on his nomination to be HUD Secretary,” said Scott Olson, Community Home Lenders Association executive director. “We urge him to focus on continuing the strong progress in FHA’s financial health, and on ending the overcharging of FHA premiums, by taking prompt steps to cut annual premiums and end the Life of Loan premium policy instituted three years ago.”

And they weren’t the only ones to step in with their congratulations for Carson.

“Realtors know that the incoming secretary of Housing and Urban Development has a big job ahead,” said William Brown, National Association of Realtors president. “Potential homebuyers face a range of hurdles, from rising prices to mortgage credit that’s burdened by fees and extra costs.”

“We congratulate Dr. Carson on accepting this important challenge and wish him the very best of luck in meeting the task ahead,” Brown said. “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

Even the Mortgage Bankers Association joined in with their congratulations.

“On behalf of the MBA I want to congratulate Dr. Ben Carson on being chosen to be nominated as the Secretary of HUD,” MBA President and CEO David Stevens said. “Housing is one of the largest contributors to the health and success of the overall economy, and as such we must continue to recognize its significance.”

“MBA looks forward to working with Dr. Carson in helping to build out a well-rounded team of housing experts, with a deep technical understanding of the issues, at HUD, FHA and Ginnie Mae,” Stevens said. “MBA wishes Dr. Carson and the rest of the administration success as they get ready to embark upon these next four years.”

But this positive response to the nomination was not unanimous. In fact, some housing experts were highly critical of the pick.

Housing supply in Northwest reaches all time low

Pending home sales hit an all-time high in the Northwest, but new listings took a plunge, according to the latest report from Northwest Multiple Listing Service.

The report, which covers 23 counties in and around Washington state, showed that new listings added during November dropped to an 11-month low. This could increase home prices as buyers fight over the dwindling inventory, which is now at an all-time low.

“Last year’s holiday season ended up being the best time to sell a home around King County as sellers took the winter months off, but buyers remained persistent,” said Robert Wasser, Northwest MLS director and Prospera Real Estate owner/broker. “The supply of homes for sale hit a post-recession low, and so far, this year is mirroring last winter’s trends.”

Inventory decreased by 13.2% in November, but pending home sales increased 94% in the Northwest. Prices increased by 11% compared to last year.

This left a housing supply of just 1.69 months, a new low. King Country showed the lowest level of supply at just 0.96 of a month.

Pending home sales totaled 8,217 for the month, compared to the 5,779 new listings.

The cause for the sudden surge could be the oncoming winter months, but there is also another factor causing borrowers to flood the market.

“November’s pending sales for the four-county area of King, Snohomish, Pierce and Kitsap were the highest since 2005,” said J. Lennox Scott, John L. Scott Real Estate chairman and CEO.

“There were 44% more pendings than new listings,” Scott said. “Every time interest rates increase 0.5% we see these surges because buyers become anxious about increasing rates – but on a historical basis rates are still amazing.”

Real Estate market response to higher interest

November’s sudden spike in interest rates could have negative consequences for the housing market in 2017, according to Freddie Mac’s monthly Outlook.

If President-elect Donald Trump passes a fiscal stimulus plan in early 2017 which includes infrastructure spending and tax cuts, it could bring higher real economic growth. The downside, however, will be that this growth could be partially offset by a rise in interest rates, according to the report.

“Much like in 2013, we expect housing markets to respond negatively to higher mortgage rates — they will drive down homebuyer affordability, dampen demand and weaken home sales, soften house price growth, and slow the growth in new home construction,” Freddie Mac Chief Economist Sean Becketti said. “And mortgage market activity will be significantly reduced by higher mortgage rates, especially refinance originations, which are likely to be cut in half.”

However, the economy is still expected to have a better year in 2017 with growth of 1.9% year-over-year. Freddie Mac expects 2017 to end with unemployment at 4.7%, and says this year’s slower hiring rate is due to the market being at full employment.

At this point, the market is 100% sure that it will see a rate hike in December, and experts speculate over how many rate hikes will occur next year. Freddie Mac estimates that the 30-year fixed rate mortgage will hover at just over 4% at the end of 2017.

However, it stated that this increased interest rate could slow the pace of housing starts to about 1.26 million, and will decrease total home sales by 220,000 units. Through all of this, Freddie Mac predicts that home prices will continue to increase, hitting a pace of 4.7% in 2017.

House Financial Services

The halls and chambers of Congress are certainly going to look different when the 115th Congress begins its term in January.

The leadership of the House Financial Services Committee, on the other hand, will look just the same as it has in the last two Congressional terms, as Rep. Jeb Hensarling, R-Texas, and Rep. Maxine Waters, D-Calif., will again serve as the committee’s leaders.

Hensarling currently serves as chairman of the House Financial Services Committee, and will serve his third term in that role beginning in January.

In his time as the chairman of the House Financial Services Committee, especially in his most recent term, Hensarling pushed for regulatory rollback.

Earlier this year, Hensarling introduced a bill in the House that would replace the Dodd-Frank Wall Street Reform Act with a “pro-growth, pro-consumer” alternative that would bring significant reforms to the Consumer Financial Protection Bureau, and much more.

The bill, called the Financial CHOICE act, passed out of the House Financial Services Committee in September.

The bill looks to gain traction in the next Congress, as President-elect Donald Trump is already signaling that his administration plans to “dismantle” Dodd-Frank.

Recently, at the Housing America’s Families Forum hosted by the J. Ronald Terwilliger Foundation for Housing America’s Families, Hensarling called Dodd-Frank a “grave mistake” and said Republicans will work to repeal it in 2017.

“I am humbled by the support and trust of my colleagues to continue my service as chairman of the Financial Services Committee,” Hensarling said of his upcoming term.

“In the coming Congress, we will continue our important work of helping to grow the economy for all Americans, not just those at the top,” Hensarling continued.

“We will focus on ending taxpayer-funded bailouts and too big to fail. We will work to hold both Wall Street and Washington accountable, because consumers must be vigorously protected from fraud as well as the loss of their economic liberty,” Hensarling concluded. “As chairman, I look forward to working with the incoming Trump Administration to advance bold and ambitious solutions that will help make America better, stronger and more prosperous.”

Fighting Hensarling at every step of the way when it comes to dismantling Dodd-Frank will be Waters, who was recently re-elected unanimously by the Democratic Caucus to serve as Ranking Member of the House Financial Services Committee.

It will be Waters’ third term as Ranking Member.

“I am honored to have been re-elected to lead the House Financial Services Committee in the 115th Congress,” Waters said.

“We face many challenges in the years ahead, with President-elect Trump threatening to dismantle Dodd-Frank, putting our financial stability and consumer protections at risk,” Waters continued. “It is more important now than ever for Democrats to fight for what they believe in, and I will continue to lead that fight for American consumers and our most vulnerable populations.”

Executives leading mortgage industry

As the door closes on 2016, the mortgage industry is full of good news. Increasing home prices mean the vast majority of homebuyers have positive equity in their home, and the number of foreclosures continues to drop to pre-Recession levels. Millennials are starting to step into the market and both GSEs and private companies are making room for first-time homebuyers with low down payment programs and alternative credit models.

But the challenges of 2017 lie right around the corner.

Any new presidential administration signals change for our industry, but this year’s changes could be unprecedented. As the mortgage industry continues its slow but steady recovery from the financial crisis and the Great Recession, a new administration will have weighty decisions to make.

Amid the potential new direction from the president, congress and regulators, leadership in our industry is more important than ever. Understanding and planning for a changing environment will test the proficiency of mortgage lenders, servicers, investors and real estate professionals across the country.

Which is why HousingWire is proud to present the 40 winners of our 2016 Vanguard award. These leaders from all segments of the mortgage ecosphere demonstrate that our industry is more than capable of meeting the challenges that lie ahead.

Our Vanguard winners excel in a variety of skill sets, but all share the ability to energize and mobilize their employees. We asked each of our winners to answer questions about what has made them successful, and many chose to point out that their most valuable resource is not a strategic plan or a key technology — it’s the team of people they work with every day.

Strong teams under inspired leadership ensure that the future of our industry is bright indeed.

Our 2016 Vanguard winners:

David Battany

Allen Beydoun

Vladimir Bien-Aime

Jeff Bode

Jeff Bradford

David Brickman

John Button

Brent Chandler

Paul Clifford

Uday Devalla

David Gansberg

Vishal Garg

Cathleen Schreiner Gates

Nima Ghamsari

Kristi Harris

James Hecht

Jim Helfric

Blythe Hughes

Dominic Iannitti

Ty Jenkins

JP Kelly

Andrew Kernan

Frank Martell

Matt Martin

Damir Matic

Phil McCall

Gary McCarthy

Reactions to Ben Carson

Last week, as we all waited for Ben Carson to accept Donald Trump’s initiation to run the Department of Housing and Urban Development, reactions poured in from all sides about whether HUD Secretary Ben Carson is a good idea or not.

Well, now that’s officially official, with an announcement coming Monday that Carson accepted Trump’s offer, reactions are no longer based on hypotheticals about Carson as a potential choice.

Carson is Trump’s choice to run HUD.

Here’s a sampling of the reaction.

Vice President-elect Mike Pence took to Twitter on Monday to celebrate Carson’s nomination, saying that the retired neurosurgeon will help “strengthen communities” while at HUD.

While some Republicans feel that Carson is a good choice, much of the media reaction to Carson’s nomination focuses on his lack of experience in housing and urban development and the impact that will have.

Over at the Wall Street Journal, Nick Timiraos and Damian Paletta have a good recap of what HUD means for the country and what Carson is walking into on his first day.

From the article:

HUD, with a budget of $47.9 billion and some 8,400 employees, has played critical roles stabilizing the housing market after last decade’s boom and bust. The federal government currently insures one in every six new home-purchase mortgages made through the Federal Housing Administration, which is part of HUD. The department also oversees funding for some 1.2 million low-income households in public-housing units managed by some 3,300 local housing agencies.

Much of the reaction to Carson as HUD secretary tends to point out (as the WSJ does) an op-ed authored by Carson in The Washington Times in 2015.

From the WSJ:

Critics say the rules undercut local control by making it too easy to advance lawsuits questioning zoning decisions. The GOP platform approved earlier this year said the rules went beyond the government’s “legitimate role in enforcing nondiscrimination laws.”

Mr. Carson echoed the party’s stance when he called those policies “mandated social-engineering schemes” that repeated a pattern of “failed socialist experiments in this country” in a 2015 op-ed published in The Washington Times.

In the New York Times, Sheryl Gay Stolberg recaps some of why Carson’s “critics” are concerned about his nomination.

One of the critics not cited in Stolberg’s article is the Washington Post Editorial Board, which calls Carson’s selection as HUD secretary “beyond baffling.”

Americans again expect home prices to start rising

Consumers became more optimistic about the housing market immediately following the election, according to Fannie Mae’s Home Purchase Sentiment Index. What’s more, the share of Americans who expect home prices will only continue to increase grew four percentage points to 35%, reversing the three-month downward trend.

The HPSI decreased in November for the fourth consecutive month, sliding down 0.5 points to 81.2. Four of the six components of the HPSI decreased. The election created a great divide in confidence levels from before and after election day.

“The November Home Purchase Sentiment Index outcome is difficult to interpret as the data collection period occurred across the Presidential election timeline,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “The results are fairly evenly split between responses collected before and after the election, and there is evidence of an increase in consumer optimism in the immediate aftermath of the election.”

Those who said now is a good time to buy a home decreased by one percentage point to 30%, while those who said now is a good time to sell fell by six percentage points to 13% in November. Those who said now is a bad time to sell even rose two percentage points to 38%.

“However, if mortgage rates continue their recent rise, we may see a dampening in home purchase attitudes,” Duncan said. “There are clear predecessors for rapid market changes that ultimately dissipated, which urges caution in the interpretation of stability in short-term rate changes.”

Those who say mortgage rates will go down over the next twelve months decreased by six percentage points to -51%, while those who say they are not concerned about losing their job fell five percentage points to 64%.

Americans who answered their household income is significantly higher than it was 12 months ago rose 11 percentage points to 15%, reversing the decrease seen in October.

Fannie Mae forecasts only modest growth in the next 12 months.