PPP forgiveness plan disappoints, OnDeck fire sale, GSE liquidity: Top stories of the week

Bankers are left wanting after details on PPP forgiveness plan emerge; why OnDeck is being sold on the cheap; Fannie, Freddie to face banklike liquidity standards starting Sept. 1; and more from this week’s most-read stories.
Source: American Banker

Julian Castro on Trump’s AFFH tweet: “It’s a naked ploy to drum up racial fears and white resentment”

Early on, the Trump administration signaled it would target regulations related to the Fair Housing Act for changes, first delaying implementing the Affirmatively Furthering Fair Housing provision of the Act — put in place under President Obama — then proposing changes, and finally, last week, abolishing the AFFH rule altogether.

In the week since the rule was abolished, both HUD Secretary Ben Carson and President Donald Trump have commented officially and through social media about their reasons for abolishing the rule. I sat down with Julian Castro, HUD Secretary under Obama from 2014-2017 — to talk about the AFFH and what future he sees for it.

Sarah Wheeler:  Let’s talk about the AFFH provision of the Fair Housing Act, which President Trump struck down last week. What was the original intent of that provision?

Julian Castro:  We implemented AFFH as a piece of unfinished business of the Fair Housing Act of 1968. The intent was to hold communities across the country more accountable for ensuring fair housing opportunities for everyone — no matter what they looked like.

Unfortunately,  even in the 21st century, so many years removed from the Fair Housing Act, people still face discrimination in the housing market and we wanted to address that and provide greater opportunity for people.

SW: When Secretary Carson announced HUD was abolishing AFFH, the reasons he listed included that the AFFH regulation was “unworkable and ultimately a waste of time for localities to comply with.” What was your experience with communities as they worked under the rule? Did they find it difficult?

Castro: The process of coming up with AFFH involved a tremendous amount of outreach to communities throughout the U.S. to get their input to make this a workable, pragmatic but effective rule. So we did a lot of work making sure that this was something communities could comply with, that’s why I don’t put much stock in Secretary Carson’s view.

SW: After the formal announcement, Secretary Carson tweeted out that the AFFH rule was “a ruse for social engineering under the guise of desegregation.” What do you make of that?

Castro: That’s all about ideology and fear-mongering. What we were looking for was a partnership with local communities to create a better and more equal housing opportunity for everyone. AFFH was about allowing communities to come up with stronger plans to ensure fair housing opportunities — not about the federal government telling communities how they had to achieve better opportunities, but allowing them to come up with their own strong plans and evaluating that.

SW: President Trump went even farther, tweeting two days ago: “I am happy to inform all of the people living their suburban lifestyle dream that you will no longer be bothered or financially hurt by having low income housing built in your neighborhood…Your housing prices will go up based on the market, and crime will go down. I have rescinded the Obama-Biden AFFH Rule. Enjoy!” What was your reaction to that statement?

Castro: Trump sounds like a small-town sheriff or mayor from 60 years ago. It’s a naked ploy to drum up racial fears and white resentment about people of color a couple of months before an election that Trump knows he is losing. He is losing the suburbs to Biden and this is his embarrassing ploy to try and get people back on his side — acting like it’s 1950 instead of 2020. Although this racism may appeal to some people, I think the vast majority of people are going to reject it.

SW: What are we missing if we don’t have neighborhoods that have a mix of housing types?

Castro: Millions of American families are being blocked from living in higher-opportunity areas with access to better jobs, schools, healthcare — it runs the gamut. Research done by Raj Chetty offers a powerful analysis of the benefits of living in a higher-opportunity area. This should inform our policy going forward, as right now a lot of people are losing opportunity simply because they earn a lower income.

Q: You launched a PAC this year called People First Future. What is the goal for that organization?

Castro: We’re committed to helping build a strong progressive bench of policy-makers at federal, state and local levels by supporting programs and candidates in 2020 elections. It was motivated by the realization that it’s not enough to only have progressives at one level, in the House or Senate for instance. We need people that are district attorneys, who want to work on criminal justice reform, we need mayors and state attorneys general. So we are identifying and supporting fantastic progressive candidates that will create a bench of lawmakers that have a vision of serving the most vulnerable Americans. We announced a new round of people yesterday, so we’re now supporting a total of 22 people.

SW: Anything else you’d like to add?

Castro: One of the first orders of business for the next HUD secretary is to get the AFFH back on track, beginning Jan. 20, 2021.

SW: You’ve already served as HUD secretary… If Biden wins, is there another role you would like to work in?

Castro: Right now my focus is on doing what I’m doing, which is supporting other people. I’m not aiming for any office.

The post Julian Castro on Trump’s AFFH tweet: “It’s a naked ploy to drum up racial fears and white resentment” appeared first on HousingWire.

Source: HousingWire Magazine

How a pragmatic approach to eClosings helps lenders succeed during COVID-19 and beyond

Many lenders are thinking about digital closings in a way that’s preventing them from achieving the ROI they want. Many have been solely focused on Remote Online Notarization (RON), since RON is seen as the quickest solution to the immediate challenges that COVID-19 has created.

However, as lenders try to conduct business remotely and keep up with high loan volumes while switching from fully paper closings to completely digital RON closings, they experience firsthand how difficult this is.

Lenders need to have a digital closing strategy that’s successful in any environment and in every state, regardless of the speed with which individual states and stakeholders adopt new technology or change their policies.

After onboarding dozens of lenders, we’ve learned that there are two concepts that are fundamental to success.

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The post How a pragmatic approach to eClosings helps lenders succeed during COVID-19 and beyond appeared first on HousingWire.

Source: HousingWire Magazine

Mortgage forbearance rate drops to a three-month low

The U.S. mortgage forbearance rate dropped to a three-month low of 7.7% this week as more Americans were able to pay their loans on time, Black Knight said in a report on Friday.

It was the lowest share of mortgages with suspended payments since late April, when New York was the center of the COVID-19 pandemic. That share represents 4.1 million loans that remain in forbearance as of July 28, Black Knight said.

The data was released on the same day as the expiration of the $600 per week federal unemployment benefit, part of the CARES Act passed by Congress to keep jobless Americans current on their bills.

Typically, unemployment insurance only replaces about 50% of a person’s former salary. Forbearances could begin to increase again because of the lapse of the enhanced beneft, according to Lawrence Yun, chief economist of the National Association of Realtors.

“The number of requests for forbearance could rise,” Yun said. “Whether it’s one percentage point or two percentage points, I couldn’t say.”

Applications for unemployment benefits climbed last week for the second consecutive gain as COVID-19 infections surged in some of the nation’s biggest states.

The Senate adjourned for the weekend on Thursday night without reaching an agreement on extending the enhanced unemployment benefits. The House of Representatives passed the Heroes Act in May that extends the $600-a-week benefit through January.

The Senate began considering COVID-19 relief earlier this week and has proposed a HEALS Act that hasn’t yet been released in full or been voted on. It would reduce the enhanced jobless benefit to $200 a week, according to Majority Leader Mitch McConnell.

White House Chief of Staff Mark Meadows asked the Senate to pass a week-long extension of the $600 benefit so it wouldn’t lapse before they could find a solution, but couldn’t get a deal done, Beacon Policy Advisors said in a note to clients.

Many Republicans, including Treasury Secretary Steven Mnuchin, want to reduce the unemployment benefit to 70% of an unemployed person’s former salary, though state agencies that oversee the benefit have said it would take up to five months to upgrade their systems to be able to do that.

The post Mortgage forbearance rate drops to a three-month low appeared first on HousingWire.

Source: HousingWire Magazine

State regulator group, others back lawsuit against OCC fintech charter

The Conference of State Bank Supervisors, banking law scholars and consumer advocacy organizations filed amicus briefs siding with the New York State Department of Financial Services in its court battle with the federal regulator.
Source: American Banker

House passes appropriations amendment to fund postal banking

The measure would release $2 million in funding for the U.S. Postal Service to launch pilot programs to provide basic services such as checking accounts and bill payment.
Source: American Banker

House bill aims to rein in pricey small-business loans

The legislation proposed by Rep. Nydia M. Velázquez, D-N.Y., goes further than recent state efforts to require better disclosures for high-cost lenders, but it would face an uphill battle in the GOP-controlled Senate.
Source: American Banker

UWM now offering 15-year fixed mortgage rate as low as 1.875%

The average interest rate for a 15-year fixed mortgage currently sits at approximately 2.5%. However, customers of the nation’s second-biggest lender could soon receive an interest rate below 2%.

United Wholesale Mortgage announced Friday that it is rolling out a new loan program that offers borrowers an interest rate as low as 1.875% for both purchase mortgages and refinances — a record low.

UWM is both the nation’s biggest purchase mortgage lender and the largest wholesale lender, meaning it doesn’t lend directly to borrowers. UWM works directly with mortgage brokers, who can in turn offer low rates to their customers.

“United Wholesale Mortgage is proud to provide some of the best rates, service and technology to borrowers exclusively through independent mortgage brokers while closing loans in 15 days or less,” said Mat Ishbia, president and CEO. “We’re proud to offer great rates for borrowers for 15-year mortgages just like we have been on our 30-year mortgages as well.”

Those eligible for a conventional mortgage are eligible for the rate, according to Ishbia.

In May, UWM rolled out a new loan program that offered borrowers an interest rate as low as 2.5% for both purchase mortgages and refinances.

Then in June, UWM announced a new VA loan program that offered borrowers mortgage rates as low as 2.25% for both purchases and refinances.

The post UWM now offering 15-year fixed mortgage rate as low as 1.875% appeared first on HousingWire.

Source: HousingWire Magazine

Small-business owners are leaning on credit cards to survive

This personal funding has blurred the line between personal and business finances more than ever.
Source: American Banker

BofA defers $7.7 billion of commercial loans amid pandemic

Current economic conditions will have “a continued adverse effect on our businesses” if they persist or worsen, Bank of America warns.
Source: American Banker