2021 Finishes Strong, But Inflationary Concerns Weaken 2022 Projections

The Fannie Mae Economic and Strategic Research (ESR) Group boosted its expectation for full-year 2021 economic growth to 5.5% in its December commentary, up 0.7% from November’s projection. The group cited “stronger-than-anticipated consumer spending and inventory investment data” as the reason for its revised projection. Total home sales are now expected to increase 7.1% in 2021 rather than 5.3%. Total mortgage originations are expected to be $4.5 trillion, up from $4.4 trillion. But it also revised its 2022 expectations, downgrading its 2022 growth forecast from 3.7% to 3.2%. Though recent data appears strong, the group noted it “likely reflects a pull-forward of activity from the first half of 2022 and is unlikely to be sustained.” Inflation is the primary reason…

Analysts Respond To FOMC Tapering Announcement

The Federal Open Market Committee (FOMC) announced it will double the pace of tapering its pandemic asset purchase program, and signaled it would likely raise interest rates next year. This would be its first rate hike since March 2020. The move comes in response to concerns about rising inflation. At its November meeting, the FOMC said it would reduce its purchases of Treasury securities from $80 billion to $70 billion and from $40 billion to $35 billion for mortgage-backed securities. Since then, inflation has reached a 39-year high and become a major sticking point for the American public. As to how this announcement affects the mortgage and real estate industries, analyst response has focused on rising costs. “Increasing mortgage rates…

Industry Responds To Thompson Nomination

President Biden will nominate Sandra Thompson to become the permanent director of the Federal Housing Finance Agency (FHFA), the White House announced in a statement on Tuesday. Thompson is the current acting head of the FHFA, having taken over the position in June when Biden replaced Mark Calabria. She would serve a five-year term after her approval by the Senate. Though Thompson has held the position since June, her nomination was at one point in question. Biden faced criticism in September when rumors spread that he was considering nominating Center for Responsible Lending President Michael Calhoun. Thompson maintained support among Democratic politicians focused on housing, especially House Financial Services Chair Maxine Waters, which may have solidified her position. “We will…

OCC: Serious Delinquencies Down YOY At Major Banks

Seriously delinquent mortgages dropped by more than half year-over-year (YOY) at seven national banks, according to a report from the Office of the Comptroller of the Currency. Though the findings are optimistic, the banks in the study– Bank of America, Citibank, HSBC, JPMorgan Chase, PNC, U.S. Bank, and Wells Fargo– were handling almost 1,900 fewer loans YOY, complicating the final picture. Overall, the banks serviced about 12.5 million first-lien residential mortgage loans, totaling $2.59 trillion in unpaid principal balances. This is 23% of all U.S. residential mortgage debt. In Q3 2020, $2.866 trillion or 14,393 loans. The share of mortgages that were current at the end of Q3 2021 was 95.6%, up from 92.5% in Q3 2020. The seven banks…

CFPB Singles Out Mortgage-Related Violations In New Report

Delinquency fees charged to forbearance-holders, payment handling violations, and pricing discrimination are among the mortgage-related violations highlighted by the Consumer Finance Protection Bureau’s (CFPB) latest Supervisory Highlights report. “Today’s report reveals that irresponsible or mismanaged firms harmed Americans during the COVID-19 pandemic,” said CFPB Director Rohit Chopra. “We will continue to supervise firms to halt harmful practices before they become widespread.” The report, which did not name particular companies, outlined illegal actions the CFPB claims to have observed in the first half of 2021. The CFPB supervises banks with assets of more than $10 billion and some non-banks, including mortgage companies, private student lenders, and payday lenders. The report called out mortgage lenders for the following: charging delinquency-related fees to…

Are Million-Dollar Conforming Loan Limits A Market-Crash Flashback?

By KIMBERLEY HAAS Mortgage giants Fannie Mae and Freddie Mac have raised their limits on government-backed loans to $647,200 in most of the country and nearly $1 million in some high-cost American communities.  Does that mean lenders are repeating the same mistakes which led to the 2008 crash? This 18% hike in the size of conforming loans is the highest single jump since at least 1970, outpacing the 15.9% increase seen in 2006. Two years later, on Dec. 30, 2008, the Case-Shiller home price index reported its largest drop in history. The credit crisis and housing bubble burst that followed led in part to the Great Recession in the United States. Now some observers fear U.S. markets are moving back to…

SitusAMC: Insurance Premium Hikes Coming As Natural Disasters Intensify

Both homeowners and lenders may be underestimating the rising cost of insurance following a growing number of natural disasters, according to a SitusAMC white paper titled “Weathering the Storm: Burgeoning Insurance Costs for Real Estate.” The paper found that natural disasters have impacted residential property nationwide, not just in areas with highly publicized disasters such as California and Florida. The states with the most natural disasters were Texas (where winter storms accounted for 40% in total insurance market losses in 2021), Virginia, and South Dakota. As the number of disasters rises and their severity intensifies, insurance companies will face more risk, leading to higher insurance premiums and reductions in coverage for property owners. “The growing number of climate events has…

Economist: Build Back Better Will Put Downward Pressure on Housing Prices

By SCOTT KIMBLER The House version of President Biden’s “Build Back Better” plan includes about $170 billion for affordable housing and people are asking what that means. Biden’s spending plan includes $65 billion to preserve and rebuild public housing and another $15 billion to help build or preserve more than 150,000 rental properties for lower-income families. It’s part of the administration’s goal to build or preserve 1 million affordable homes. The bill is almost certain to change drastically in the U.S. Senate. But if the housing policies remain unchanged, what would this spending splurge mean for the overall housing market, at a time when prices are high and supply is low? The Mortgage Note spoke with Tom Smith, Ph.D. of…

Mortgage Industry Reacts To Powell Renomination

After weeks of waiting, President Biden announced Monday he is renominating Federal Reserve Chairman Jerome H. Powell to another four-year term. Now analysts are asking what impact another Powell term will mean to mortgage rates and the housing market. The move has been characterized as a return to the status quo in which the Fed chairman is reappointed regardless of their political identity, a tradition former President Trump bucked when he appointed Powell. The Fed chairman question has been on many industry watchers’ minds in the last two weeks. Much was made of Biden’s sit down with Fed Governor Lael Brainard, seen as the most likely candidate if Biden chose to make a change. Brainard has instead been nominated as…

CFPB Announces Stepped Up Enforcement

The Consumer Financial Protection Bureau (CFPB) released a joint statement with other government agencies to mortgage servicers announcing a return to enforcement of protections for families and homeowners. The statement cited an April 2020 decision not to take “supervisory or enforcement action” regarding the timing requirements of the Regulation X mortgage servicing rules during the pandemic. The decision would last indefinitely “as long as the servicers made good faith efforts to provide those required notices or disclosures and took the related actions within a reasonable period of time. “ Wednesday’s statement from the CFPB walked back that flexibility, saying mortgage servicers have had plenty of time to adapt their operations to the ongoing challenges of Covid-19. The agencies will return…