Congressional vote on “de facto QM Patch” postponed

The House Financial Services Committee postponed a vote on H.R. 2445 on Wednesday, a bill that would fix the so-called QM Patch that’s set to expire in early 2021.

“We see postponement as disappointing as ensuring lenders can rely on GSE underwriting systems is key to keeping credit box from shrinking,” Cowen Washington Research Group said in a note to clients on Friday.

The bill, which may be considered at a future date, gives originators the option of either relying on Appendix Q in the Qualified Mortgage rule to determine a borrower’s debt-to-income ratio or on standards set by the Federal Housing Finance Agency.

“This did not get a vote though we believe it is still likely to come up for consideration later this year or early next year,” Cowen said in the note. “There is simply no reason why this bill should run into partisan opposition and every reason why consumer groups and business groups should support it.”

The Qualified Mortgage rule issued in the wake of the financial crisis has pages of limits, known as Appendix Q, on when income can count and when it must be excluded, Cowen said. It also details which debts count and which are excluded.

“Our view has long been that if forced to rely solely on Appendix Q that lenders would shrink the credit box for fear that small errors could result in mortgages losing QM status,” Cowen said. “This is why we described the bill as a de facto extension of the QM Patch.”

The QM Patch, which expires in January 2021, permits loans with debt-to-income ratios above 43% to get QM protections such as the “safe harbor” provision that makes it harder for lenders to be sued.

“We continue to believe that giving originators the ability to rely on the automated underwriting systems rather than having to interpret Appendix Q is critical for credit availability,” Cowen said. “Appendix Q is complex with many pages on when income counts and when it does not count.

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Source: HousingWire Magazine

Guaranteed Rate Affinity brings back Jon Altizer

Residential mortgage company Guaranteed Rate Affinity, a partnership created between Realogy and Guaranteed Rate, announced Friday the hiring of Jon Altizer as senior vice president of mortgage lending.

Altizer has previously worked at Guaranteed Rate for nine years. He has 20 years of mortgage lending experience.

“It’s great to have him back,” said Guaranteed Rate Founder and CEO Victor Ciardelli. “Jon has built such strong relationships with his customers and referral partners here in Chicago and throughout the Midwest, and I look forward to seeing how he can build on that momentum as a part of our platform.”

After he left Guaranteed Rate in 2017, Altizer was a senior loan officer at Compass Mortgage and after that was an originating branch manager at CrossCountry Mortgage.

Altizer has funded over $1 billion in loan volume throughout his career.

“I’m excited to return to the Guaranteed Rate family and work with Victor and the leadership team at Guaranteed Rate Affinity,” said Altizer. “With this platform and the amazing support of my team, I’m looking forward to super-charging our production and building business collaboratively with agents throughout the Midwest.”

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Source: HousingWire Magazine

Starter homes may be making a comeback

A survey by the National Association of Homebuilders this fall revealed that 80% of American households now believe the nation is suffering from a housing affordability crisis. 

Even more recent, a report last week by the National Association of Realtors revealed that more than 30% of first-time homebuyers used down payment help from family and friends.

Across the housing industry, experts are pointing to new inventory concerns. Economic research consultancy Capital Economics echoed these sentiments in its latest report.

“With volumes low, builders have concentrated on more expensive, higher-margin homes,” the report stated. “By the end of 2017, just 40% of new homes sold for under $300,000. That compares to a share of around 65% in early 2007, when overall house prices were only 7% lower.”

But change may be on the horizon. Economists at Capital Economics are anticipating a rise in new homes sold for under $300,000, from under 50% currently to about 55% by the end of 2020. According to the report, this would boost overall housing starts to 950,000 annualized.

“Tight supply of affordable homes, and a relatively large increase in their price, are encouraging builders back to the starter home sector,” the report said.

However, the report goes on to add, “a slowing economy and tighter credit conditions rule out a substantial shift to cheaper homes.”

For first-time homebuyers, this would be a welcome change. As Millennials continue to enter the housing market and Gen Z joins as well, the lack of affordable homes has been a strain on their homebuying prospects. With both generations battling an unprecedented amount of student loan debt, a comeback in starter homes would create a better chance at homeownership. 

“Admittedly, credit conditions have seen some mild tightening over the past year,” the report states. “But they are a lot more favorable compared to the post-crisis environment. Furthermore, tight supply conditions have led to relatively larger price gains for cheaper homes.”

Of course, a cheaper home could mean sacrificing some square footage.  

“Indeed, new homes have been getting smaller,” Capital Economics reported. “At 2,245 sq.ft. in the second quarter, median floor space for new SF homes was at its lowest since early 2011. Admittedly, smaller homes can be built in costly areas. But the share of new homes sold for under $300,000 hit a three-year high in September. 

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Source: HousingWire Magazine

Multifamily rents gain 3.2%

Multifamily rent growth remained positive in October, a new report from YardiMatrix said.

Multifamily rent increased by just $1, to $1,476. Year over year rent growth remained at 3.2%.

(Image courtesy of RentCafe. Click to enlarge.)

Of the 30 major markets covered in the report, 17 saw year-over-year rent growth of at least 3.3%. San Jose and Houston remained below the 2.5% long-term average.

Although the multifamily market boasts positive results, three states had bills passed to limit rent growth.

Rent control affects the multifamily sector because it puts a chill on development during a period of low housing stock, YardiMatrix said.

Although rent has topped historical growth levels, occupancy rates still remain strong.

According to RealPage, this year was the second-highest apartment leasing season ever, with 281,800 units rented. The highest leasing season was in 1997 during the tech boom.

In the third quarter this year, multifamily vacancies fell to 3.6%.

RentCafe found that in the 260 large cities it analyzed, 1% of them experienced a decrease in apartment rates since last month and 4% have seen increases, while monthly rents generally flatlined in the remaining 95%.

Essentially, renting in 65% of the cities are below the national average, while the remaining 35% are above $1,476, RentCafe said.

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Source: HousingWire Magazine

AOC and Bernie Sanders reveal green housing plan

Green New Deal policies and housing policies are beginning to merge.

Rep. Alexandria Ocasio-Cortez (D-NY) and Senator Bernie Sanders (D-VT), announced yesterday the launch of their “Green New Deal for Public Housing.”

This bill promises $180 billion over 10 years to cut carbon dioxide emissions from public housing across the country.

According to CNBC, roughly 40% of total U.S. energy consumption comes from residential and commercial buildings. The legislation could reduce public housing costs by $97 million per year and cut energy costs by $613 million.

“Representative Ocasio-Cortez introduced the Green New Deal for Public Housing Act to establish a prosperous society that provides affordable and modern housing for all,” according to Ocasio-Cortez’s website.

“This legislation serves to train and mobilize the workforce to decarbonize the public housing stock and improve the quality of life for all. It is time that our government invests in our infrastructure, our people, and our future.”

With this promise, solar panels will be added to public housing units as well as other renewable energy resources.

The bill will establish seven federal grant programs to public housing authorities to rehabilitate, upgrade, innovate and transition public housing into zero-carbon homes.

Earlier this year, Ocasio-Cortez and Sen. Ed Markey (D-MA), revealed a Green New Deal resolution, targeting climate change itself.

Sen Elizabeth Warren (D-Mass.) is also a co-sponsor of the housing legislation.

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Source: HousingWire Magazine

BB&T-SunTrust's incentive, Fannie-Freddie freedom, core vendor 'ransom': Top stories of the week

Earnings hit could be avoided if BB&T and SunTrust complete deal by 2020; Fannie and Freddie will likely exit conservatorship by 2024, Calabria says; tired of paying ‘ransom’ to core vendors, two small banks fund new one; and more from this week’s most-read stories.
Source: American Banker

Minority homeownership gains on low mortgage rates

Mortgage rates near three-year low are helping to boost homeownership rates for black and Hispanic Americans, the National Association of Home Builders said in a blog post on Friday.

The minority homeownership rate rose to 48.3% in the third quarter, up almost a percentage point from a year earlier, the post said. The 0.9% gain was higher than the 0.4% increase in the overall U.S. homeownership rate, which rose to 64.8%.

“Lower mortgage rates (at a three-year low) and a healthy job market have helped to make homeownership more affordable,” the post said. “These factors are most likely contributing to the recent upticks in the overall and minority homeownership rates.”

The average U.S. rate for a 30-year fixed mortgage declined every month of 2019 until ticking up eight basis points in October. The average was 3.69% last month, rising from a three-year low of 3.61% in September, according to Freddie Mac data. The higher rate seen in October is still more than a percentage point below the 4.83% in October 2018.

Breaking down the minority homeownership rate, the Hispanic rate gained the most in the third quarter, with a 1.6 percentage point increase to 47.9%, NAHB said.

The black homeownership rate posted the second-largest gain, up 0.8 percentage point to 43.3%. It was the largest gain in the black homeownership rate since the third quarter of 2017.

“It is important to note that this quarter’s gain stands in contrast to five out of the six prior quarters, going back to the 1st quarter of 2018, which were marked by significant declines in the black homeownership rate,” NAHB said.

The rate for black Americans fell to 40.6% in 2019’s second quarter, the lowest level ever recorded in the Census Bureau’s quarterly data going back to 1994. It was the lowest rate for black households since the 1950 decennial Census when it was 34.5%.

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Source: HousingWire Magazine

Shopping around for a mortgage really paid off for borrowers last week

Mortgage borrowers who
shopped around last week could’ve saved $48,911 on the life of a $300,000 loan,
according to LendingTree‘s Mortgage Rate Competition

The index measures the spread in the APR of the best
offers available on its website. LendingTree derives that savings claim by
comparing the amount a borrower would pay out of over the life of a loan at the
lowest available interest rate on its site versus the highest
available interest rate.

According to the company’s data, although the share of borrowers that received rates under 4% moderately edged down from last week, nearly 50% of borrowers received rates under 4%, with the index growing to 1.03 for the week ending Nov. 10, 2019. 

LendingTree indicates that for 30-year fixed-rate
mortgages, 48.2% of purchase borrowers received offers under 4%, falling from 53.5%
the previous week.

Despite the decline, the percentage is still a significant increase from 2018, when virtually no purchase offers were under 4%.

Additionally, the report highlights that across all
30-year, fixed-rate purchase mortgage applications made on LendingTree’s site, 13.1%
of borrowers were offered an interest rate of 3.75%, making it the most common
interest rate.

When it comes to 30-year
fixed-rate refinance borrowers, 48.6% received offers under 4%, retreating from
54.7% one week prior. Nevertheless, the rate is still much higher than it was
in 2018 when 0% of refinance offers were under 4%.

So, with a wider refinance
market index of 1.17, the typical refinance borrowers could have saved $55,868 by
shopping around for the lowest rate.

According to the report, across all 30-year, fixed-rate
refinance applications, the most common interest rate was 4%. This rate
was offered to about 15.5% of borrowers.

This image highlights the distribution of last week’s
mortgage fees:

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Source: HousingWire Magazine

CIT Group's digital bank adds checking

The company says it’s responding to the feedback of consumers who want online options beyond savings products.
Source: American Banker

Keller Williams to expand its iBuyer program

Back in April, Keller
announced it would begin buying and selling houses. Now it’s
expanding that program.

Following a path previously laid out by the likes of real
estate search engines Zillow and Redfin, and taking a page out of the playbook of iBuyer
platforms OpendoorOfferpad, and others, real estate agency Keller Williams began its own iBuyer program.

Now, Keller Williams
announced it will launch its iBuyer program in Birmingham, Alabama, through its
partnership with Offerpad early in the first quarter of 2020.

“Our agents are excited and ready to meet the demands of
consumers in Birmingham with our robust iBuyer offering,” said Gayln Ziegler, Keller
Offers director of operations. “And, this launch is the start of the next phase
in our expansion. This partnership enables us to provide an iBuyer offering to
more consumers, in more market sizes.”

The expansion of KW’s business model is the latest in a
series of moves meant to transform the company from a traditional real estate
brokerage into a more technologically advanced one.

That transformation was touted by the company’s co-founder,
Gary Keller, when he returned to the company as CEO earlier this year.

Last year, the company acquired startup SmarterAgent, which
allows agents to create their own branded apps, and has a platform that
connects more than 650 multiple listing services. 

Keller Offers and Offerpad’s partnership is now operational,
or will be fully within weeks, in Atlanta, Austin, Charlotte, Dallas, Houston,
Las Vegas, Orlando, Phoenix, Raleigh, San Antonio, Tampa and Tucson.

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Source: HousingWire Magazine