Category Archives: Real Estate

consideration to serve as Trump HUD secretary

With future Commander-in-Chief Donald Trump set to take office in January, there are 15 seats on the president’s cabinet to start speculating about. And the one that’s closest to housing, the secretary of Housing and Urban Development, could possibly go to someone who was recently featured on the cover of HousingWire Magazine and recognized as a Women of Influence in 2013.

Pam Patenaude is currently the president of the J. Ronald Terwilliger Foundation for Housing America’s Families, but could soon be the next HUD secretary, according to a POLITICO piece.

The piece speculated that Patenaude, a former adviser to Presidents Ronald Reagan and George W. Bush, has emerged as a candidate to lead HUD.

During the George W. Bush administration, she served as HUD assistant secretary for community, planning and development.

Patenaude is also the former director of housing policy at the Bipartisan Policy Center and has more than 25 years of experience in housing, community economic development, real estate and public policy.

The J. Ronald Terwilliger Foundation for Housing America’s Families is hosting a bipartisan national Housing Forum at the George W. Bush Institute in Dallas, Texas, on Nov. 18 — which HousingWire is a media sponsor.

The forum features speakers including Matthew Desmond, author of Evicted, Carol Galante, former assistant HUD secretary and FHA Commissioner, Laurie Goodman from the Urban Institute and others from academia, government and industry trade groups.

The Housing Forum’s goal is to ensure that housing is front-and-center as the 115th Congress and the new administration begin to formulate their respective policy agendas for 2017.

This is especially important since it hasn’t been a big issue during the election season.

If selected, Patenaude would replace HUD Secretary Julián Castro.

Plan to dismantle Dodd Frank Act

Now that the dust is starting to settle from the election, a clearer picture is beginning to emerge of what types of actions President-elect Donald Trump will pursue once the “-elect” is removed from his title.

Chief among those planned actions appears to a plan to “dismantle” the Dodd-Frank Wall Street Reform Act.

Trump’s plans for the first days of his term as president are being revealed on a website launched by his transition team.

Under a section titled “Make America Great Again,” the website lists the three main tenets of Trump’s plan: Making America Secure Again; Getting America Back To Work Again; and Government for the People Again.

Each of those main sections has several subsections, and those in the financial services industry should pay close attention to the “Getting America Back To Work Again,” as it contains much of Trump’s plan for the economy.

“Financial markets are vital to the American economy. Capital markets bring investors together with creators to fund new ideas and fuel economic growth,” the website reads under a subsection entitled “Financial Services.”

“Banks and other lenders provide funding to small businesses and mortgage borrowers to help fund the American Dream,” the website continues. “Federal policy should focus on free enterprise, while protecting consumers by policing markets for force and fraud. Both Wall Street and Washington should be held accountable.”

The Trump website then goes on to discuss the impact of the Dodd-Frank Act, and how the Trump administration will work to replace it.

The website calls Dodd-Frank a “sprawling and complex piece of legislation that has unleashed hundreds of new rules and several new bureaucratic agencies,” including the Consumer Financial Protection Bureau.

“The proponents of Dodd-Frank promised that it would lift our economy. Yet now, six years later, the American people remain stuck in the slowest, weakest, most tepid recovery since the Great Depression,” the website states.

“Paychecks have been stagnant. Savings are being depleted, millions are unemployed or underemployed, and millions more have dropped out of the workforce altogether,” the website continues. “Economic growth remains below 2%, about half the historic average. The big banks got bigger while community financial institutions have disappeared at a rate of one per day, and taxpayers remain on the hook for bailing out financial firms deemed ‘too big to fail.’”

In the words of the Trump transition team, Dodd-Frank and the economy it fostered “does not work” for America.

“Bureaucratic red tape and Washington mandates are not the answer,” the website states. “The Financial Services Policy Implementation team will be working to dismantle the Dodd-Frank Act and replace it with new policies to encourage economic growth and job creation.”

One of the main issues that many have with Dodd-Frank is the amount of regulations that the law place on the financial services industry.

Trump’s website doesn’t provide any additional details on how President Trump will go about dismantling Dodd-Frank, but the website does also contain a separate section entitled “Regulatory Reform,” which is called a “cornerstone” of the Trump Administration.

According to the website, Trump’s regulatory reform effort, which he spoke about often on the campaign trail, includes: “a temporary moratorium on all new regulation, canceling overarching executive orders and a thorough review to identify and eliminate unnecessary regulations that kill jobs and bloat government.”

Americans feeling about economy

unduhan-76Consumer’s optimism towards the economy decreased yet again as they faced more uncertainty in October, according to the latest Fannie Mae Home Purchase Sentiment Index.

The index decreased 1.1 points from last month to 81.7 in October, marking the third consecutive decrease. This is a decrease of 1.5 points from last year.

The index reflects consumers’ current views and forward-looking expectations of housing market conditions.

Other measures of the consumer’s confidence in the economy are also decreasing.

The Index of Consumer Sentiment dropped to 87.2 in October, the same low recorded last September and the lowest level since October 2014, according to the Survey of Consumers conducted by the University of Michigan.

While all signs show that consumers are growing more unsettled about the state of the economy, experts from the Survey of Consumers are still not sure if this is simply a temporary drop due to the uncertainty surrounding the election.

“The HPSI fell in October for the third straight month from its record high in July, reaching the lowest level since March,” said Doug Duncan, Fannie Mae senior vice president and chief economist. “Recent erosion in sentiment likely reflects, in part, enhanced uncertainty facing consumers today.”

The largest drop came in consumers who reported a significantly higher income over the past year. These consumers decreased by eight percentage points to 8% in October to its lowest point in three years.

“Since July, more consumers, on net, have steadily expected mortgage rates to rise and home price appreciation to moderate,” Duncan said.

Those who expect home prices to continue to rise fell by three percentage points to 31% and those who say mortgage rates will drop decreased by one percentage point to 45%. Likewise, those who are confident about keeping their job also fell by one percentage point to 69%.

On the other hand, more consumers said now is a good time to buy and sell a home, which increased by two and four percentage points to 31% and 19% respectively.

“Furthermore, consumers’ perception of their income over the past year deteriorated sharply in October to the worst showing since early 2013, weighing on the index,” Duncan said.

“However, this component of the HPSI is volatile from month to month, and the firming trend in wage gains from the October jobs report, if sustained, may foreshadow an improving view in the near future,” he said.

Republicans on Dodd Frank

Just in case anyone thought that the Democratic Party intends to stand idly by while President-elect Donald Trump and the Republican Party move to undo many of the financial reforms of the last eight years, one of its most outspoken members pledged this week to fight Trump and the Republicans every step of the way.

On Thursday, Trump’s transition team began releasing some of its plans, laying the groundwork for how the Trump administration will fulfill some the promises Trump made on the campaign trail and deliberating about cabinet positions.

One of the main tenets of the Trump team’s plan is the “dismantling” of the Dodd-Frank Wall Street Reform Act, but Sen. Elizabeth Warren, D-Mass., said Thursday that she and the rest of the Democratic Party are prepared to work with the president-elect if he wants to “increase the economic security of middle-class families.

But if that’s not Trump’s plan, Warren warned that the Democrats will fight back.

“I will put aside our differences and I will work with him to accomplish that goal,” Warren said of Trump in a wide-ranging blog post on her website. “I offer to work as hard as I can and to pull as many people as I can into this effort. If Trump is ready to go on rebuilding economic security for millions of Americans, so am I and so are a lot of other people — Democrats and Republicans.”

But Warren doesn’t want to see Trump and his fellow Republicans undo much of the work done by the Dodd-Frank Act and the Consumer Financial Protection Bureau.

“But let’s also be clear about what rebuilding our economy does not mean,” Warren wrote.

“It does not mean handing the keys to our economy over to Wall Street so they can run it for themselves. Americans want to hold the big banks accountable,” Warren wrote.

“That will not happen if we gut Dodd-Frank and fire the cops responsible for watching over those banks, like the Consumer Financial Protection Bureau,” Warren continued. “If Trump and the Republican Party try to turn loose the big banks and financial institutions so they can once again gamble with our economy and bring it all crashing down, then we will fight them every step of the way.”

Warren, the chief architect of the CFPB, is a passionate supporter of banking regulation and accountability. During the Senate Banking Committee’s hearing on the Wells Fargocross-selling scandal, she called on Wells Fargo CEO John Stumpf to resign, pointing out what she said was his “gutless leadership.”

Warren acknowledged in her blog that much of Trump’s messaging during the campaign spoke to the real issues that many Americans have with how business is done in Washington.

“If we have learned nothing else from the past two years of electioneering, we should hear the message loud and clear that the American people want Washington to change. It was clear in the Democratic primaries,” Warren wrote. “It was clear in the Republican primaries. It was clear in the campaign and it was clear on election day. The final results may have divided us — but the entire electorate embraced deep, fundamental reform of our economic system and our political system.”

Warren said that Trump’s campaign tapped into the anger that many Americans feel about their station in life right now.

“The truth is that people are right to be angry. Angry that wages have been stagnant for a generation, while basic costs like housing, health care, and child care have skyrocketed,” Warren wrote.

Warren noted that Trump won the presidency “under a Republican flag,” but states that the traditional Republican way of doing business was rejected, in the primary, during the campaign and on election day.

Investors look to buy a home

unduhan-77Many investors in states with more expensive housing markets look to other states to purchase their investment properties.

As it turns out, many of those less expensive housing states are red states, that is, states that traditionally vote Republican, and many of the out-of-state investors are from blue states, or states that traditionally vote Democrat, according to a new report from ATTOM Data Solutions, a fused property database.

The report shows that 3.4 million single-family investment homes nationwide are owned by an out-of-state investor. That is about 16% of all single-family investment homes.

Here are the top 10 states with the most investment homes owned by out of state investors, where those investors are from, and if the state is red or blue – based on the most recent presidential election:

10. New Jersey

Single-family investment homes: 108,919

Where out-of-state investors are from: Pennsylvania with 42,361

9. Pennsylvania

Single-family investment homes: 1113,070

Where out-of-state investors are from: New York with 24,699

8. Michigan

Single-family investment homes: 116,137

Where out-of-state investors are from: Illinois with 22,271

7. California

Single-family investment homes: 117,139

Where out-of-state investors are from: Texas with 15,534

6. Texas

Single-family investment homes: 139,358

Where out-of-state investors are from: California with 51,069

5. Georgia

Single-family investment homes: 159,899

Where out-of-state investors are from: Florida with 39,691

4. Arizona

Single-family investment homes: 162,069

Where out-of-state investors are from: California with 55,822

3. Tennessee

Single-family investment homes: 185,116

Where out-of-state investors are from: Florida with 40,000

2. North Carolina

Single-family investment homes: 202,431

Where out-of-state investors are from: Florida with 38,045

1. Florida

Single-family investment homes: 365,959

Where out-of-state investors are from: New York with 51,967

Increased before elections

Consumers grew more confident in the economy the month leading up to the presidential election.

The Index of Consumer Sentiment increased 5% from September, according to the Survey of Consumers conducted by the University of Michigan.

The index increased to 91.6 in November, up from 87.2 in October and 91.3 last year. Current Economic Conditions increased from 103.2 in October and 104.3 last year to 105.9, and the Index of Consumer Expectations increased 7.4% from last month’s 76.8 but down 0.5% from last year’s 82.9 to 82.5.

An article by Jill Mislinski for Advisor Perspectives explains what this means historically:

The Michigan average since its inception is 85.4. During non-recessionary years the average is 87.6. The average during the five recessions is 69.3.

“The recent gain in sentiment was driven by an improved outlook for the economy,” said Richard Curtin, Survey of Consumers chief economist. “The most striking finding in early November was that both near and long-term inflation expectations jumped to 2.7% from last month’s record matching lows of 2.4%.”

“These increases must be replicated before they can be taken to indicate a troublesome development; thus far, the data has simply repeated the March 2016 peaks,” Curtin said. “Nonetheless, it may be viewed as added justification for next month’s expected interest rate hike.”

Since the election, experts have presented conflicting opinions on the probability of an interest rate hike in December.

“The expected small increase in interest rates had little impact on favorable buying attitudes, and still supports a 2.5% increase in real consumer spending during 2017,” Curtin said. “Unfortunately, the November data must be accompanied by the proviso that it was collected before the result of the presidential election was known late Tuesday.”

November’s final estimates could look very different.

“The shock victory of Donald Trump means that the final estimate of confidence reported later this month could be much lower, not least because Hillary Clinton appears to have narrowly won the popular vote,” Capital Economics Economist Andrew Hunter said.

Increase in foreclosures

Foreclosures jumped in October by the largest monthly increase since August 2007, according to the October 2016 Foreclosure Market Report from ATTOM Data Solutions, a property database company.

The report shows a total of 105,481 foreclosure filings, default notices, scheduled auctions or bank repossessions, in October. This is up 27% from September’s 129-month low, but it is still down 8% from last year.

While foreclosures increased from September, October still marked the 13th consecutive month of annual decreases.

Last month, ATTOM’s report seemed to show an end to the foreclosure crisis.

“While some states are still slogging through the remnants of the last housing crisis, the foreclosure activity increases in states such as Arizona, Colorado and Georgia are more heavily tied to loans originated since 2009 — after most of the risky lending fueling the last housing boom had stopped,” said Daren Blomquist, ATTOM Data Solutions senior vice president. “The increase in October isn’t enough evidence to indicate a new foreclosure crisis emerging in these states, but it certainly demonstrates that this housing recovery is not completely devoid of risk.”

“The loans used in this housing recovery that appear to be most susceptible to foreclosure are those such as FHA and VA with low down payments,” Blomquist said. “Our data shows FHA and VA loans combined represent 49% of all active foreclosure inventory for loans originated in the seven years ending in 2015.”

“By comparison, FHA and VA loans only represent 12% of all active foreclosure inventory among loans originated in the previous seven-year period, from 2002 to 2008,” he said.

The state with the highest foreclosure rate is Delaware, with one in every 355 housing units having a foreclosure filing, followed by New Jersey with one in every 564 housing units, Maryland with one in every 679 units, Illinois with one in every 704 units and South Carolina with one in every 801 units.

Florida could soon be joining the states with the highest number of foreclosures.

“We would expect to see an increase in Florida foreclosure activity in the coming months given the October ruling by the state supreme court there that allows lenders to re-file a foreclosure action against a homeowner in default even if a previous foreclosure case against that homeowner was dismissed and that original foreclosure case was filed more than five years ago, outside the state’s statute of limitations for foreclosure,” Blomquist said.

Completed foreclosures increased monthly in September, however it could be a good sign as foreclosure inventory actually decreased, showing that the market is clearing out the current foreclosures faster than new foreclosures begin, according to a report from CoreLogic.

Veteran homelessness

Delaware just became the third state in the U.S. to end homelessness among veterans, according to an article by Megan Pauly for Delaware Public Media.

Over the past two years, the state found homes for its 415 homeless veterans, according to the article. It now joins Virginia and Connecticut, which also ended veteran homelessness.

While this step marks a major improvement, the work to end homelessness among veterans does not end now.

From the article:

But that doesn’t mean that there will never be a veteran experiencing homelessness in the First State again: a task force continues to meet every month to make sure vulnerable veterans don’t fall through the cracks.

A master list of all homeless First State veterans was created, and is still updated every two weeks.

DSHA’s Director of Policy and Planning Marlena Gibson said one of the criteria the state had to meet to receive the certificate that they’d effectively ended veteran homelessness was that once identified as experiencing homelessness, those veterans must be back in permanent housing within 90 days.

Others within the housing industry are also looking to help veterans. For example, in special honor of Veterans Days, Home Depot created Celebration of Service, a months-long project which worked with local and national nonprofits to complete projects for aging, combat-wounded and homeless veterans.

Bank cutting back on mortgage business

Compare that to 35 prime jumbo securitizations issued in 2015, 28 issued in 2014, and 31 issued in 2013.

Well, it appears that one major player could be scaling back its mortgage securitization business.

According to a report from Reuters, Deutsche Bank is planning to reduce its securitization business, and perhaps its mortgage business altogether.

From Reuters:

Deutsche Bank is looking to cut its loan securitization business further starting with repackaged U.S. mortgages, two people familiar with the matter said, as the lender braces for a large fine in the United States for alleged mis-selling of such debt.

A final decision about this core business is set to come early next year, the people said, and securitization cutbacks could become a central part of an expected strategic overhaul at the bank, once U.S. authorities have settled on a penalty.

“We have already shrunk the business over the last two to three years,” a person with direct knowledge of the bank’s plans said. “It could shrink a lot more. Not only sales and trading, but also in origination.”

According to Reuters, one of the reasons Deutsche Bank is considering scaling back its mortgage business is due to the amount of capital banks are now asked to hold in relation to such transactions.

Pam Patenaude, who was in HousingWire’s backyard last week at the Housing America’s Families Forum at the George W. Bush Presidential Library in Dallas, is rumored to be on the shortlist to serve as the secretary of the Department of Housing and Urban Development in President-elect Donald Trump’s administration.

But Patenaude, who currently serves as the president of the J. Ronald Terwilliger Foundation for Housing America’s Families, isn’t the only name that’s being considered to lead HUD beginning in January.

According to a Friday evening report from the Washington Post, Robert Woodson, who runs the Center for Neighborhood Enterprise in Washington, D.C., is also under consideration for the top position at HUD.

According to the Washington Post article, Woodson is a close advisor for Speaker of the House Rep. Paul Ryan, R-Wisc., on poverty issues.

From the article:

If selected, Woodson, who is black, would add diversity to Trump’s team. And he would be responsible for leading education and social reforms in predominantly African American areas, which Trump repeatedly described during the campaign as “failed” and vowed to repair.

“They seem to be very serious about it,” Woodson, 79, said in an interview with The Washington Post. “I’m not job hunting, but we’re talking about how I could possibly work with him. We’re talking about how we could work with those across the aisle to do these things together.”

When asked if Trump officials have specifically discussed a potential Cabinet appointment, Woodson said, “Yes, we’re talking about HUD.”

If selected to the HUD post, it could provide an indication of how closely the Trump administration plans to work with Ryan and the established Republican base in Washington.

Again from the Washington Post:

“It’s fair to say that Paul wouldn’t mind having me there to work with them on all of this,” Woodson said with a chuckle.

As a side note related to Patenaude and the Housing America’s Families Forum, HousingWire has served as a media partner with the Terwilliger Foundation since its inception and was in attendance at the event.

Our editor-in-chief, Jacob Gaffney, posted a couple of blogs from the event. Click here and here to check those out.

Also, check out the Twitter feeds of Gaffney (click here), our digital reporter, Brena Swanson (click here), and our CEO, Clayton Collins (click here), all of whom were in attendance at the forum.

And be sure to check HousingWire this week for more highlights from the event.

Michael Burry was immortalized on the big screen by Christian Bale in last year’s The Big Short, based on the book of the same title about the investors who cashed in on the housing crash.

And Burry isn’t done with the mortgage business.

Just over a year ago, he invested in a new mortgage venture, PeerStreet, which bills itself as an online marketplace for real estate-backed loans.

At the time, CNBC wrote of PeerStreet:

PeerStreet’s mission is to open up a particular segment of the real estate market — residential, typically non-owner occupied — to a wider swath of investors, thus adding capital to the system and ultimately bringing down borrowing costs.

Burry was one PeerStreet’s first investors, but now the company is adding another big name to its roster of investors, Andreessen Horowitz, the Silicon Valley venture capital firm.

Andreessen Horowitz boasts Facebook, Airbnb, Foursquare, Lyft, Skype, and Twitter in its current portfolio.

Now, Andreessen Horowitz is leading a $15 million round of Series A funding for PeerStreet.

According to an announcement issued last week by PeerStreet, Alex Rampell, general partner at Andreessen Horowitz, led the investment and will take a seat on PeerStreet’s board.

Additionally, the Kaiser Family Foundation, Rembrandt Venture Partners, Montage Ventures and others participated in the round of funding, the company said.

“PeerStreet is one of the fastest growing marketplace lenders we’ve seen, scaling to $165 million in originated loans in a little over a year, with great returns against a secured asset,” Rampell said. “They have a unique distribution model that allows them to leverage existing lending networks to lower loss rates, and grow without direct marketing.”

The company said that in its first year of business, it brought in “thousands of investors,” and returned more than $50 million to investors; all with zero losses.

PeerStreet also said that is significantly expanded its national footprint, and now works with more than 50 lenders and offers investments in half of the country.

“I speak for the entire team at PeerStreet when I say how incredibly excited we are to include Andreessen Horowitz on the roster of stellar investors in our company,” said Brew Johnson, CEO and co-founder of PeerStreet. “This round of funding will help us further execute on our goal of building a world class investment platform for real estate debt.”

Racial discrimination in housing ads

This selective advertising is a clear violation of the Fair Housing Act, however Facebook denied any wrongdoing.

Now, the company announced that marketers placing housing, employment or credit ads will not be able to target people by ethnicity, according to an article by Sapna Maheshwari and Mike Isaac for The New York Times.

Even with the new change, Facebook still did not admit to wrongdoing, but instead stated that disabling the ability to advertise by ethnicity was a better option.

From the article:

“There are many nondiscriminatory uses of our ethnic affinity solution in these areas, but we have decided that we can best guard against discrimination by suspending these types of ads,” Erin Egan, Facebook’s chief privacy officer, said in a blog post on Friday.

The option is still available to advertisers outside of the realm of housing, employment or credit ads.

While the upcoming term of President-elect Donald Trump could bring less regulation to the industry, a new kind of regulation is emerging: cybersecurity.

Federal agencies are pushing for enhanced regulation for cybersecurity, however in New York that push became a proposal, according to an article by The National Law Review.

The proposed regulation would apply to most entities “operating under or required to operate under a license, registration, charter, certificate, permit, accreditation or similar authorization under the banking law, the insurance law or the financial services law,” according to the article.

From the article:

The scope of the Proposed New York Requirements is very broad. For example, they define “Nonpublic Information” as any information that is not public record or widely known and falls into one of four categories, including any information a person provides to a Covered Entity in connection with seeking or obtaining a product or service, or that a Covered Entity obtains in connection with providing a financial product or service. In combination, these categories likely include any information that is not already obtainable from government records or “widely distributed media.”

The Proposed New York Requirements would task covered entities to develop a Cybersecurity Program that can (1) identify internal and external risks, (2) use defensive infrastructure, (3) detect Cybersecurity Events, (4) respond to and mitigate such events, (5) recover and restore normal operations and services and (6) fulfill reporting obligations.

But regulation isn’t the only change Trump is bringing with him. The time for the new president-elect to take his place as president is rapidly approaching, and he has some decisions to make first.

Trump has 15 cabinet positions that he needs to fill, and he is already narrowing down his options.

Among those closest to the financial industry is the Treasury Secretary. Here are the options Trump’s team is considering so far, according to an article by The New York Times.

  • Thomas Barrack: Founder, chairman and executive chairman of Colony Capital; private equity and real estate investor
  • Jeb Hensarling: Representative from Texas and chairman of the House Financial Services Committee
  • Steven Mnuchin: Former Goldman Sachs executive and Trump’s campaign finance chairman
  • Tim Pawlenty: Former Minnesota governor

Trump also narrowed down his choices for Commerce Secretary, who is in charge of a diverse portfolio, including the Census and the Bureau of Economic Analysis.

  • Chris Christie: New Jersey governor
  • Dan DiMicco: Former chief executive of Nucor Corporation, a steel production company
  • Lewis Eisenberg: Private equity chief for Granite Capital International Group

So far there is only one name up for consideration for the Labor secretary, who dispenses the monthly jobs report, among other things.

  • Victoria Lipnic: Equal Employment Opportunity commissioner and work force policy counsel to the House Committee on Education and the Workforce

For a list of people being considered for all 15 cabinet positions, click here.

Among the list of possible new members in Trump’s administration is Pam Patenaude, current president of the J. Ronald Terwilliger Foundation for Housing America’s Families, who could soon be the next HUD secretary.

While housing did not get much focus during the campaign trails, Patenaude is now seeking to ensure that it gets the attention it needs during the next presidency.

This Friday, the J. Ronald Terwilliger Foundation for Housing America’s Families will host a full day national Housing Forum at the George W. Bush Institute in my hometown of Dallas, Texas, of which HousingWire is a media sponsor.

Speakers at the Forum will include top Congressional leaders and individuals likely to play prominent roles in the presidential transition process and the incoming Administration as well as key housing industry leaders and practitioners. The list of speakers includes Matthew Desmond, author of Evicted, Carol Galante, former assistant HUD secretary and FHA Commissioner and Laurie Goodman from the Urban Institute.