Have Regulators Made a Mess of the Mortgage Market?

Newsletter – August 2017

There has been a lot of discussion over the last six months about whether mortgage-industry regulations and the Consumer Financial Protection Bureau (CFPB) are doing more to help consumers or hurt the economy.

Let’s set aside the rhetoric for a moment and look at the hard numbers – namely this one: 615.

That is the number of pages in the average mortgage loan today.

Yep, you read that right – 615 pages.

It wasn’t always like this…

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Zero-Down Mortgages – Ghosts of the Housing Bust – Return

Newsletter – July 2017

They’re ba-aaaaack!

Zero-down mortgages, which were some of the biggest losers for everyone · lenders, investors and borrowers · during the housing bust, are making a comeback.

And while there are significant differences between the no-down-payment mortgages of a decade ago and the ones being offered today, mortgage risk analysts are asking:

Are we courting disaster?

Today’s no-down-payment programs aren’t technically “zero down” like VA loans, where 100% of the loan is financed. These borrowers actually START with a 3% equity stake in their mortgage.

Top 10 retail home lender Movement Mortgage has introduced a financing option that gives eligible first-time buyers a grant of up to 3%, allowing borrowers to qualify for a 97% loan-to-value ratio conventional mortgage.

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Weighing the Pros and Cons of the Financial CHOICE Act

Newsletter – June 2017

After passing through the House Financial Services Committee last month, the Financial CHOICE Act is headed to the House floor, where lawmakers could vote on it as soon as this month.

We thought now would be a good time to weigh both sides of the bill.

The CHOICE Act was introduced by Texas Republican Jeb Hensarling as a replacement for the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, which was created in response to the financial crisis of 2008.

Republicans argue that Dodd-Frank has created costly regulations that have suffocated economic growth by crushing small banks and limiting the little guys’ access to capital.

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Newsletter – May2017

Striking a Regulatory Balance in the Battle over Dodd-Frank

When Donald Trump met with a group of CEOs early last month, he addressed once again his plans to dismantle at least some of the Dodd-Frank Wall Street Reform and Consumer Protection Act:

“We want strong restrictions,” he told the group. “We want strong regulation, but not regulation that makes it impossible for banks to lend to people that are going to create jobs.”

Trump complained that the regulators, not CEOs, are running the banks. Bank CEOs are “petrified of the regulators,” he said. “They’re petrified. They can’t move.”

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Newsletter – April 2017

Are FHA Loans the Canary in the Coal Mine, or Sounding a False Alarm?

Potentially concerning news:

From Q3 to Q4 in 2016, delinquency rates among all types of mortgages increased, marking a hike from the lowest overall level since 2006.

But at the center of the trend are FHA loans, with a delinquency rate increase of more than twice that of VA or conventional loans.

Typically issued to lower-income or first-time home-buyers, FHA loans allow for down payments as low as 3%.

FHA loans made up 22% of all single-family home purchases in 2016, up from 17.8% in 2014.

This is at least partly because home prices are increasing faster than wages, leaving few buyers able to afford a 20% down payment. (Home prices have been increasing about 5% a year since 2014.)

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