ALTA Comments on Dodd-Frank's Ability to Repay Rule
Last week marked the first anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act and I couldn't miss the irony of marking the date by sending the Federal Reserve five pages of paper, all of it commenting on the Fed's ability to repay rule and qualified mortgage safe harbor.
In its letter, ALTA President Anne Anastasi told the Fed, "The ability to repay requirement is one of the pillars of Dodd-Frank's effort to address the causes of the residential housing bubble. While this provision recognizes the value of examining the borrower's financial history, the history of the legal title to the collateral also needs to be examined. Prudent underwriting of a borrower's ability to repay would require that a creditor evaluate the title to the collateral to determine what outstanding debts will need to be satisfied before the creditor can obtain the first lien mortgage."
One of the most important aspects of the rule is the way it interacts with the qualified residential mortgage rule (QRM). Dodd Frank requires the definition of the QRM to be "no broader than" the definition of "qualified mortgage." ALTA staff and the Government Affairs Committee will be working on ALTA's QRM comment letter this week. The letter is due to regulators August 1st.
ALTA Responds to Bankrate Study on Closing Costs
ALTA sent this letter to Bankrate.com outlining significant problems and concerns with how title insurance costs are calculated and portrayed in their 2011 study. "Because Bankrate's survey takes its numbers from online GFEs, it provides an inaccurate picture of the true costs homebuyers actually pay at the closing table," said Michelle Korsmo, ALTA's Chief Operating Officer. Due to these concerns about Bankrate's methodology, ALTA has reached out to the online mortgage information provider to offer its help in developing a more accurate study in 2012.
Conforming Loan Limits Extension
ALTA, the Mortgage Bankers Association and the National Association of Realtors jointly went to Congress this past week to urge a one-year extension of the current mortgage loan limits set to expire on September 30, 2011. Without Congressional action, loan limits in high costs areas (New York, Washington, Los Angeles) would drop to $625,500 from $729,950 on October 1. Our efforts got a boost this week when Congressman Barney Frank (D-MA) announced that he believes the Obama Administration will reverse course and support an extension.
Consumer Financial Protection Bureau
On the same day that the CFPB officially opened for business, the House of Representatives passed H.R. 1315, the Consumer Financial Protection Safety and Soundness Improvement Act of 2011, by a vote of 241-173. The bill would change the governing structure of the CFPB by establishing a 5-member bipartisan panel of commissioners in lieu of one all-powerful director and strengthen the review authority of the Financial Stability Oversight Council (FSOC) over regulations the new bureau issues by providing for a simple majority rather than two-thirds vote to overturn CFPB regulations.
As you know, reigning in the CFPB has become a political cause among conservatives. Consequently, no Republicans voted against the bill, and although 10 Democrats crossed the aisle to vote in favor, all represent right-trending swing districts: Reps. John Barrow (D-GA), Dan Boren (D-OK), Bill Owens (D-NY), Nick Rahall (D-WV), Ben Chandler (D-KY), Henry Cuellar (D-TX), Mike McIntyre (D-NC), Jim Matheson (D-UT), Mike Ross (D-AR) and Kurt Schrader (D-OR).
Meanwhile in the Senate, Richard Shelby (R-AL), the ranking member on the Senate Banking Committee reemphasized that he will filibuster the President's nominee to lead the CFPB, former Ohio Attorney General Richard Cordray, until the White House agrees to the reforms in HR 1315. So they will either cut a deal to get the forms done in return for nominating Cordray, or the CFPB will be without a Director for the foreseeable future.
The Return of Robo-signing
Despite the market dislocation caused by last October's robo-signing fiasco, two press outlets are reporting that some servicers have still not cleaned up their act. In stories from both the AP and Reuters, reporters analyzed recently recorded mortgage assignments for evidence of robo-signing. The reporters worked with county recorders to locate thousands of documents they believe have been robo-signed.
In talks with congressional offices, ALTA has urged caution and reminded staff that we need more facts before we know if anyone's property rights have been violated. Also of concern to ALTA is the suggestion in the stories that country recorders offices are reviewing signatures and possibly denying recordings based on their belief that the document was robo-signed. Recorders offices typically do not have the authority to deny a recording if it meets the technical requirements (formatting, seals, etc.), and the practice could obviously harm consumers if legitimate filings are being rejected.
Meanwhile a settlement by the large banks with the state Attorneys General over robo-signing continues to move slowly. The holdup appears to be an understandable push by banks to obtain broad liability releases from additional state and federal claims over their mortgage practices as part of agreeing to a settlement.
Levin Bill on Tax Lien Simplification
Senators Carl Levin (D-MI) and Mark Begich (D-AK) have introduced legislation (S. 1390) that would require the IRS to file tax liens in a centralized electronic database instead of in the local property records office. As the Senators envision it, the electronic registry would be accessible by the public and free to search and would index liens by "at a minimum, taxpayer name, the State of the taxpayer's address as shown on the notice of lien, the type of tax, and the tax period." The Senators argue that this bill would save $150 Million a year and help reduce the amount of time necessary to release a tax lien down from 30 days to 20 days.
ALTA staff has already reached out to ALTA's Government Affairs Committee for their thoughts. Most of which were in opposition, and is developing a one-page lobby "leave-behind" on the issue. We are aiming to meet with Levin's and Begich's staffs in the coming weeks. If you have any thoughts on how this proposal would actually reduce efficiency for title processes please forward them to Kelley Williams ALTA Manager of Government Affairs at firstname.lastname@example.org.
Last week ALTA lobbyists met with Rep. Lee Terry (R-NE), Rep. John Sullivan (R-OK), Rep. John Carney (D-DE), Rep. Dan Boren (D-OK), Rep. Joe Donnelly (D-IN), Rep. David Scott (D-GA), Sen. Tom Carper (D-DE) and Sen. Bob Corker (R-TN). ALTA lobbyists also met with staff from Rep. Judy Biggert (R-IL), Rep. Michael Grimm (R-NY), Rep. Shelley Moore Capito (R-WV), Rep. Sam Graves (R-MO), Rep. Spencer Bachus (R-AL), Sen. Ben Nelson (D-NE), and Sen. Dick Lugar (R-IN)
Housing Policy & Data
Rates for 30-year fixed-rate conventional mortgages inched up 1 basis point last week to 4.52%.
New-home construction reached a five month high in June, surprising economists in a good way for once with a 15% increase over May (projections were for 2.7% increase). All regions of the country saw a pickup in new construction in both single and multi family homes as builder confidence continues to improve. This was the first month since January 2006 that saw an increase in the total number of homes under construction, meaning more new homes were being started than being completed. A faster pace of home-building could translate to a broader pickup in the economy although it will be 2013 or 2014 before starts of single-family homes, which accounted for about 70 percent of June's 629,000 housing starts, reach a more normal level of 1.2 million per month.
Sales prices for existing homes also appear to have begun to stabilize with an increase of 0.8% in June according to the Realtors. However while prices were up slightly, total sales were down due to an unusual number of contract cancellations. For the second straight month home prices rose according to FHFA's Housing Price Index. Still the agency's U.S. index remains 19.6 percent below its April 2007 peak.
According to a recent Morgan Stanley report the US may be headed to a "rentership society". The national homeownership rate, which currently stands at 66.4 percent, would be at 59.7 percent if you subtracted the 7.5 million delinquent homeowners who may be forced into renting, reasons the study. Myself, I'm not buying it yet. Homeownership still seems too deeply engrained in the American psyche, and it is most often the case that new immigrants are eager to buy a piece of their new country as soon as they can afford to.
Mortgage applications spiked 15.5% for the week ending July 15th according to the Mortgage Bankers Association, the largest increase since early March. The gain is primarily a result of refinance activity which rose from 65.6% of applications to 70.1%. The increase is likely a result of borrowers locking in fixed rate financing ahead of the impending decreases in the conforming loan limits and the lowest interest rate levels of the year. Meanwhile, hard-money mortgage lending activity is growing rapidly although still a tiny slice of the mortgage market. Some borrowers are turning to these loans to fill a void in the market even as they bear 14% interest rates.
Last Sunday and Monday, over 21 large agents from across the country met for the Title Agents Executive Conference July 16 - 18 in Park City, Utah. Attendees heard a presentation from Craig Haskins of Knight-Barry Title on E & O Insurance, a discussion on CPL issues led by Frank Pellegrini of Prairie Title and an agent roundtable discussion led by Diane Evans of Land Title Guarantee Company.
TIPAC has broken the 300 contributors mark! Currently, TIPAC has received $205,500 from 310 contributors. Our goal this year is $300,000. If you have any questions about TIPAC, please contact Kelley Williams at email@example.com.
Finally, I've got a piece of personal news to share. I have informed ALTA's Board of Governors of my intention to leave the CEO post here to pursue a new opportunity. I have loved my three and a half years at ALTA, which made the decision difficult. But I have every confidence that with your support, ALTA will continue to be a force in shaping policy in our nation's Capital. It has been my privilege to represent you in Washington DC.