ALTA Testifying Before House Financial Services Subcommittee
ALTA has been invited to testify on mortgage origination issues on July 13th before the Housing and Insurance Subcommittee. ALTA President Anne Anastasi, who will testify on behalf of the association, will use the hearing as an opportunity to voice some of ALTA's on-going concerns about the Consumer Financial Protection Bureau's (CFPB) new draft combined mortgage disclosure.
Combined Mortgage Disclosures
Speaking of the Bureau, it has released its second draft of a combined GFE/TIL. The two forms, "Dogwood" and "Redbud" each present loan information similarly on the first page, but present closing cost information differently on the second page. There is still no word when a new HUD-1 will be developed.
This time around the CFPB is asking how consumers would use these forms to shop. Specifically:
- Would this form help consumers understand the closing costs associated with their loans?
- Could lenders and brokers clearly and easily explain the form to their customers?
- What would you like to see improved on the form? Is there some way to make things a little bit clearer?
ALTA's RESPA Task Force submitted comments through the CFPB's website explaining that while the formatting of "Dogwood" was easier to read, that they believed "Redbud" was preferable because of the itemization of closing costs which made the form more transparent to consumers who are looking to shop for settlement services. The Task Force continued to urge the CFPB to remove the loaded phrase "not required" from the description of owners title insurance and instead encourage consumers to investigate for themselves whether owners title is right for them. As with the first round of comments, ALTA will draft and submit a more detailed comment letter over the next few weeks.
The ALTA Task Force was not the only industry participant to send comments to the CFPB. Over 1,000 ALTA Grassroots Activists responded to last week's call to action on the new forms. Thank you. As always, the show of grassroots muscle is invaluable in driving our message.
Following the first round of public comments on its proposed forms, the Bureau published this "heat map" which diagrams the parts of the form that attracted the most feedback. It's probably no surprise to you that the parts of the form which estimate monthly payments/loan terms and the estimated closing costs received the most attention.
Consumer Financial Protection Bureau
Former EPA Inspector General Mark Bialek was appointed as the new inspector general for the Federal Reserve and the Consumer Financial Protection Bureau, effective July 25. Bialek will be tasked with detecting waste, fraud and abuse in the central banks' and CFPB's programs. Bialek's post will likely be a political hot seat as congressional opponents of the CFPB prod the inspector general for evidence of abuse power and process to justify a call for changes at the new agency.
On Friday ALTA will attend a meeting at the CFPB to discuss new rules for nonbank supervision. The new rule proposes to have the CFPB supervise only the larger nonbank participants in markets for select financial products including payday loans, check cashing, and debt collection (thanks to ALTA's efforts title insurance is exempt from the CFPB's oversight).
President Obama has only 16 days to nominate and obtain Senate approval (a feat that seems impossible) on a CFPB Director if he wants to have one in place before the agency gets up and running on July 21st. Today, the New York Times published an interesting profile of the search process and Professor Warren's quest for the position, seeming to suggest that there is still some possibility that President will appoint her. If so, it will have to be a recess appointment as Senate Republicans have pledged to block the confirmation of any nominee for the CFPB until the White House agrees to structural changes in the governance and oversight of the new regulator.
Debt Limit Debate
The Treasury Secretary has announced that the US will hit its statutory debt ceiling on August 2nd , putting additional pressure on congressional republicans and the President to reach an agreement. While some in Congress dispute the deadline, the Senate nevertheless cancelled its July 4 recess to continue to work on a compromise. So far, none is in sight. President Obama wants any deal to include tax increases in addition to spending cuts. Congressional Republicans remain opposed to any tax increases. Whether there is room for compromise through the elimination of tax deductions is not yet clear. One of the most expensive deductions, and thus a likely target, is the mortgage interest tax deduction which saved taxpayers $79 billion in the 2010 fiscal year and is projected to grow to a $144 billion savings 2016. If negotiators fail to get a deal by Aug. 2, we could see short term extension of the debt ceiling to allow both sides more time to talk. One thing that should not be underestimated is the importance of getting a responsible deal. In this Wall Street Journal Op-Ed, former Federal Reserve Governor, Larry Lindsey, argues that deficit is actually far worse than it looks because interest rates are abnormally low and the government is overestimating future growth.
Stayed tuned to your e-mail box for a Action Alert from ALTA as the House begins consideration H.R. 1309 - Flood Insurance Reform Act of 2011 on Thursday. ALTA supported this long term sustainable fix for the NFIP in the House Financial Services Committee. If something is not passed by the September 30th deadline, the NFIP will lapse again as it did four times in 2010.
Senate Banking Hearing on GSE Reform and Small Lenders
At a Senate Banking Committee hearing last week entitled "Housing Finance Reform: Access to the Secondary Market for Small Financial Institutions" small financial institutions argued for "equal access" to the secondary mortgage market. They've got a point, as ALTA has been driving this message on the Hill for the last six months. Several witnesses suggested that phasing out the government-sponsored enterprises (GSEs) would only disadvantage smaller institutions and further enshrine "too-big-too-fail" institutions. A complete summary of the hearing can be found here.
With the House out of town for a District Work Period, ALTA lobbyists met with Senators Richard Shelby (R-AL), Tim Johnson (D-SD), Scott Brown (R-MA), and Dick Lugar (R-IN) and staff of Representatives Harold Rogers (R-KY), Michael Capuano (D-MA), David Schweikert (R-AZ), Ed Royce (R-CA).
Housing Policy & Data
Rates for 30-year fixed-rate conventional mortgages inched up 1 basis point last week to 4.51%.
Home prices slowed their pace of decline in April as the latest Case-Shiller index showed home sales were up 0.7% from March. Another piece of hopeful news came from the National Association of Realtors whose index of pending home sales contracts increased in May by 8.2%. At Fannie Mae single-family delinquency rates also dropped more than 1% from 5.15% to 4.14% from a year ago. Interestingly, US bank portfolios hold a much higher rate of mortgages in default -- about 19.7% -- than do the GSEs; however; thanks to more stringent capital requirements and profits from other lines of business, they are surviving the delinquencies. Still overall mortgage delinquencies have fallen for 5 straight quarters.
With lower delinquency rates and fewer consumer credit defaults, credit scores have crept back up to 2006 levels. The improved credit quality gives households the ability to lift borrowing as concerns ease about rising gasoline prices, hard-to-find jobs and falling home prices.
Apartment operators have long been considered big beneficiaries of the housing bust. But they are facing some competition as investors buoyed by reports of record demand and low supply for rentals have been snapping up foreclosures and turning them into rentals, growing the market for single-family rental by 21% from 2005 to 2010.
So far 21 large agents from across the country have signed up for the Title Agents Executive Conference July 16 – 18 in Park City, Utah. This meeting is one of the better opportunities we offer to discuss market trends and how to position your company. See our web site for information and registration and check here for a current list of attendees.
Friday is the deadline to volunteer for an ALTA committee. It's through the ALTA committee structure that policies and standards are set for the industry. If you have a special area of expertise (real property records, claims, international development or industry technology, for example), or if you have a special area of interest (such as membership, government affairs, public relations, research or employee and professional education, to name a few), there is a committee on which you may volunteer to serve. If you are interested, please contact Taylor Morris at 202-296-3671 or firstname.lastname@example.org. You can see all of the committees and their responsibilities at www.alta.org/about/commserv.cfm.
TIPAC rounded out the month of June with $195,440 from 288 contributors. Our goal this year is $300,000. If you would like to know who has contributed to TIPAC check out TitleNews Online where we publish quarterly a list of all contributors. If you have any questions about TIPAC, please contact Kelley Williams at email@example.com.
Lastly, if you have time, read this report from Joint Center For Housing Studies of Harvard University on the State of our Nation's Housing in 2011. Of note is the following excerpt, "The massive echo-boomer generation will have an important but less predictable impact on housing markets. The household headship rates of young adults were sliding even before the Great Recession hit, and the downturn accelerated that decline. It is unclear how much, if at all, headship rates among echo-boomer adults will recover as they age and the economy improves. It is also unclear if net immigration will make up for the declines that occurred after the economic crisis. Even so, there is reason to believe that the echo-boomer generation will be large enough to boost the number of young adult households in 2010–20 and in turn the demand for starter apartments and single-family homes. Indeed, assuming headship rates revert to their 2007–9 average and that immigration is just half what the Census Bureau now projects, the number of households under age 35 will grow to nearly 26.5 million in the next decade. Even under these conservative immigration assumptions, minorities will account for seven out of ten of the 11.8 million net new households in 2010–20. Hispanics alone will contribute nearly 40 percent of the increase. By 2020, minorities are expected to make up a third of all US households. But with their lower average incomes and wealth than whites, more of these households will have to stretch to afford housing."