Census data shows the national homeownership rate was 65.9% as of second-quarter 2023, up a full 3 percentage points since 2016. But challenges remain. The National Association of Realtors found that the gap in the homeownership rate between Blacks and whites is the biggest in a decade.

“When 30-year mortgage rates were in the 3% range, it was easier to overlook mortgage practices that harmed consumers.”

And a report this past June from the National Association of Homebuilders showed that while wage gains boosted affordability at the start of this year, the trade group’s first-quarter 2023 affordability index was still significantly lower than one year earlier.

When 30-year mortgage rates were in the 3% range, it was easier to overlook mortgage practices that harmed consumers. But now that interest rates have skyrocketed, protecting people from glitches in consumer protections should be more of a priority than ever.

This past summer, the Community Home Lenders of America released its Consumer Mortgage Bill of Rights. This document identifies specific areas where consumer protections need to be strengthened. Mortgage professionals should advocate for these positions to ensure a fair and thriving mortgage market.

Pricing policies

One consumer right should be robust competition in the mortgage services market. For instance, the opposition of the Federal Trade Commission (FTC) to the Intercontinental Exchange (ICE) purchase of Black Knight was a meaningful step. One company with quasi-monopoly power over mortgage origination software services should not increase its market share.

The divestitures of Black Knight’s Empower and Optimal Blue platforms were designed to win FTC approval and helped to ease the deal’s many problems. The merger approval facilitates vertical integration of mortgage origination and servicing tasks.

There are ways that a company like ICE with such a large market share can impose anti- competitive measures on the mortgage industry. For instance, it charges so-called “user seat” fees based on the number of loan originators who use its software. By increasing these fees as originator numbers go up but not reducing them as numbers go down artificially inflates the costs of the mortgage process.

“Consumer protection is not just about pricing policies but also about safeguarding borrowers from abusive practices.”

Pressuring lenders into buying discretionary services (what’s known as tying and bundling) just to continue using the basic mortgage origination software service also increases costs. The same goes for charging junk fees — so-called “click fees” — to electronically access various vendor information such as the appraisal, credit report, title insurance and flood certification.

Inflated fees caused by these practices will inevitably be passed along to consumers. These practices should be scrutinized as a merged ICE-Black Knight entity grows. For example, the Consumer Financial Protection Bureau (CFPB) should monitor and address consumer mistreatment.

A different area that includes not only a dominant market power, but an actual monopoly, is credit scores. In November 2022, FICO raised its fees for credit scores by 400% — with the exception of an arbitrary and select group of about 50 mortgage lenders. The lenders pay these fees directly, but they’re ultimately passed along to borrowers, since a credit score is a required element of a mortgage. Underserved borrowers are hurt the most. This creates a disincentive for mortgage originators to work with and improve the scores of underserved borrowers with credit blemishes, since the 400% price hike will be compounded over multiple credit pulls.

The long-term solution is to create competition. Sandra Thompson, director of the Federal Housing Finance Agency, is trying to do this by initiating a process for conforming lenders to use VantageScore. Until there is real competition, however, FICO should rescind its 400% price hike and scale it back to something that resembles its true inflationary costs.

Abusive practices

Consumer protection is not just about pricing policies but also about safeguarding borrowers from abusive practices. So, another right should be the option for consumers to say no to trigger lead solicitations. Too often, when a loan originator pulls a credit report on a mortgage application, the borrower is immediately inundated with an avalanche of intrusive texts, emails and phone calls.

There are powerful financial forces that will fight any effort to end or limit trigger lead solicitations. A simple solution would be to create a credit-reporting portal so that consumers can be given the power at the time of the loan application to decide whether or not they want to receive trigger lead solicitations.

Another non-price-based consumer protection deals with so-called “dual compensation,” in which an individual acts as both the agent on the purchase or sale of a home and as the loan originator on the purchase mortgage for that home. Reasonable people disagree on whether this is a good or bad idea, but no one should disagree on basic protections for consumers.

Consumers should have three basic protections in regard to this practice. First, an individual representing the property seller should not simultaneously serve as the loan originator for the buyer. Second, there should be uniform nationwide disclosures. Third, a loan originator who also makes money from the real estate transaction should be licensed.

In fact, this licensing requirement should be universal for all registered mortgage originators. The CFPB should use its authority under the Dodd-Frank Act requirement that all loan originators must be “qualified.” This would close the loophole under which bank-based originators do not have to pass the Secure and Fair Enforcement (SAFE) for Mortgage Licensing Act test, pass an independent background check or complete eight hours of continuing education each year.

Uniformity of rules should also apply to the loan originator compensation requirements under the Truth in Lending Act. This rule prohibits originator compensation to vary from borrower to borrower, but independent brokers can evade it by using different channels to charge different fees to similar borrowers who utilize the same type of loan. This loophole should be closed or enforced as appropriate.

Unfair premium

Finally — and yes, this may not technically be a consumer protection — but borrowers should have the right to have their mortgage insurance premiums canceled when their loan-to-value ratio reaches 78%.

This right actually exists in the 1998 Homeowner Protection Act statute, but not for loans through the Federal Housing Administration (FHA). The agency used to adhere to this, but in 2013 it changed the policy and the FHA now charges premiums for the life of the loan (unless the borrower made a downpayment of at least 10%).

Ten years ago, this might have made sense as a temporary step to help the FHA build up capital after the 2008 housing crisis. But the FHA is now flush with capital, and with today’s skyrocketing mortgage rates, the exit option to refinance with Fannie Mae or Freddie Mac has closed for many homeowners. ●

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The recent groundswell for help to control rents has been building for the past few years across the country. According to a 2021 report by the Urban Institute, more than 200 U.S. municipalities have enacted some form of rent regulations, but rent control remains illegal in most states. In 2019, Oregon became the first state to implement a statewide rent-control program.

“If these buildings are regulated to the point of economic ruin, who is going to lend property owners money to keep up the buildings?”

– Michael Tobman, director of membership and communications, Rent Stabilization Association

Some municipalities that have recently joined the movement include Minneapolis and neighboring St. Paul, where voters passed rent-stabilization measures in November 2021. While St. Paul moved forward this year with a modified plan, the Minneapolis City Council has been unable to develop a consensus around its own policies. In March 2023, the Boston City Council passed a rent-stabilization plan that has reportedly run into roadblocks in the Massachusetts Legislature. Seattle officials recently voted down a rent-control proposal but are discussing other options.

Even the Biden administration is getting involved. This past January, federal officials released “The White House Blueprint for a Renters Bill of Rights,” a white paper that lays out a statement of principles that includes renters having access to safe, quality, accessible and affordable housing.

The paper notes that the Federal Housing Finance Agency (FHFA) will increase affordability by classifying certain multifamily loans as “mission driven” if they include covenants that restrict rents at levels affordable to households earning between 80% and 120% of the area median income. This year, the FHFA is requiring at least half of all Freddie Mac and Fannie Mae multifamily loan purchases to be tied to mission-driven properties. If these loans are granted at last year’s rate, this would equate to an investment in 700,000 affordable housing units.

Even if cities continue to fight over the details, it’s easy to see why the recent rent-control push has been so popular. The U.S. has recently seen dizzying increases in rents that far outpace inflation. According to the federal white paper, more than 44 million households — or about 35% of the U.S. population — live in rental housing. These families are facing rents that are rising much faster than incomes. The national median rent jumped by 17.4% during the year ending in January 2022, according to Realtor.com. And renters are demanding relief.

How to get this relief, however, is the subject of much debate. The commercial real estate industry has long held that rent controls don’t work, claiming that they stall new development, reduce supply, lower property values and, over time, harm the local economy. The National Association of Realtors says that while rent control may help some tenants for a short time, these programs increase rents for units outside the controlled area. Developers may be forced to leave an area that has rent controls or turn apartments into condominiums, which exacerbates the shortage of rental units.

Michael Tobman is experiencing the rent-control issue up close. Tobman is the director of membership and communications for the Rent Stabilization Association, an advocacy organization that represents more than 25,000 landlords who own more than 1 million apartments in New York City that are subject to rent-control measures.

Tobman says that rent increases aren’t keeping up with the rising costs of insurance, utilities and property taxes. He maintains that the city’s rent-stabilization program suffers from being politicized and is not means-tested. New York has many examples of wealthy people, even celebrities, living in rent-controlled apartments. One of his main frustrations is that the state’s Supreme Court has determined that rent stabilization is a public benefit. But this public benefit is being provided by private owners.

“Providing affordable housing should be a function of the government,” Tobman says. “And yet the government in New York state has shirked their responsibilities and moved it onto the shoulders of private owners.”

The FHFA recently sent out a request for information concerning the agency’s proposed actions to promote renter protections and limit “egregious rent increases for future investments,” according to the White House. Some 18 real estate trade associations joined together to provide feedback. As expected, the agency got an earful. In a press release, the industry coalition warned that rent-control mandates disincentivize multifamily investments across markets and will exacerbate housing affordability issues, including the fact that supply has not kept pace with the nation’s population growth. Whether coalition efforts can blunt the growing power of the rent-control movement is unclear.

“What we are seeing in certain cities and states is that press-savvy activists have turned this issue into a sort of political organizing cry,” Tobman says. “They are doing this without really discussing the broader economic impact of the policies they are trying to enact. Rent is income from buildings. If these buildings are regulated to the point of economic ruin, who is going to lend property owners money to keep up the buildings?” ●

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The Mortgage Bankers Association (MBA), the National Association of Home Builders (NAHB) and the National Association of Realtors (NAR) filed the brief — in which interested parties that aren’t directly involved in a case offer relevant expertise — in Community Financial Services Association of America v. Consumer Financial Protection Bureau. In that case, which the court will consider in its fall term, a payday lending trade group challenged a CFPB ruling that restricts some of the industry’s lending practices. The rule was upheld, but an appeals court eventually found the CFPB’s funding mechanism to be unconstitutional, leading the CFPB to petition the Supreme Court to review the appeals court’s finding.

The amicus brief’s statement of interest noted that all three undersigned groups have “a strong interest in maintaining the stability of the mortgage and real estate markets” and “safeguard[ing] the legal rights and business interests of their members.”

The real estate groups don’t take a side on whether or not the CFPB is actually constitutional, but they assert that the guidance that the bureau has provided since its establishment in 2010 is too fundamental to the health of the residential mortgage industry (and the economy as a whole) to throw into limbo. If the Supreme Court upholds the ruling of the appeals court and deems the CFPB unconstitutional with too broad a brush, it would potentially erase years of regulatory structure and plunge many financial markets, including real estate, into uncertainty. In the case of the mortgage industry, for example, it would mean suddenly leaving lenders and servicers in the dark about how to issue and service loans in full compliance with federal law.

The brief warns that if the Supreme Court rules for the payday lending group, “it must be careful to issue a circumscribed ruling that does not call into question other crucial regulations issued by the CFPB over the past years.” The groups reminded the court that, in a previous case ruling that the CFPB’s single-director format violated the separation of powers, it acknowledged that “undoing the CFPB’s actions across the board ‘would trigger a major regulatory disruption’ and do ‘appreciable damage to Congress’ work in the consumer finance arena.’”

Therefore, the brief stated, any ruling provided by the high court must take care not to call current CFPB regulations into question or risk “immediate and intense disruption to the housing market, harming both consumers and the broader economy.”

Notably, Community Financial Services Association of America v. Consumer Financial Protection Bureau has several amicus briefs attached, many of which are in defense of the CFPB. One in particular, filed by 90 state and local nonprofit organizations, notes that many state agencies nationwide mirror the CFPB in their funding structure. Since state courts follow the appropriations jurisprudence of the Supreme Court, that brief stated, a ruling that disapproves the CFPB’s own funding structure could “hobble agencies throughout the states.”

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People can debate the impact of the federal law for banks — whether it has any teeth or whether it makes any difference with respect to mortgages. What seems clear, however, is that it makes no sense to try to adapt the same law — which was specifically designed for banks with branches and deposits — for independent mortgage banks (IMBs). This is the epitome of trying to fit a square peg in a round hole.

The Community Reinvestment Act was designed to prevent banks from taking federally insured deposits from underserved communities and diverting them to provide credit in wealthier communities. But independent mortgage banks don’t have access to insured deposits, to Federal Home Loan Bank advances or to the Federal Reserve’s discount window.

“Year after year, (independent mortgage banks) decisively outperform banks in originating mortgages to minorities.”

Independent mortgage banks don’t take money out of underserved communities. They bring mortgage credit into underserved communities by accessing Ginnie Mae mortgage- backed securities, cash windows from Fannie Mae and Freddie Mac, or by selling loans to aggregators. Unlike banks, only a small fraction of the mortgage business for these institutions is generated through physical offices.

Most importantly, there is no evidence that IMBs fail to work with underserved and minority borrowers. Year after year, these financial companies decisively outperform banks in originating mortgages to minorities (e.g., see the annual reports from The Greenlining Institute) and to underserved borrowers (e.g., see the monthly reports from the Urban Institute).

Unlike banks, independent mortgage banks generally do not impose credit overlays, or additional guidelines to prevent default, which in effect limit loans to wealthier borrowers. And unlike correspondent lenders such as Wells Fargo, independent mortgage banks don’t exit the mortgage market when times get tough.

Simply put, CRA statutes for independent mortgage banks are solutions in search of problems. Still, with states like New York and Illinois joining Massachusetts in adopting legislation, this seems to be a trend. So, let’s take a look at what these states have done and what the likely impact will be.

Massachusetts experiment

Advocates of CRA for independent mortgage banks point to Massachusetts, which adopted its law in 2007. Let’s take a look at how this turned out. Home Mortgage Disclosure Act data for Massachusetts since it adopted CRA for nonbanks (2020 versus 2008) showed that growth in nonbank lending within the state significantly trailed the national average.

When Massachusetts adopted its CRA, the 26% independent mortgage bank share of mortgages in the Bay State in 2008 was above the national average of 24%. Twelve years later, however, the IMB share of mortgages in Massachusetts (55%) had fallen significantly below the national average of 63%.

In these 12 years, the IMB share of mortgages to low- and moderate-income borrowers in Massachusetts increased from 27% in 2008 to 62% in 2020, while the national average of IMB lending to such borrowers increased at a faster pace, from 29% to 67%. The IMB share of mortgages to borrowers of color in Massachusetts increased by the same percentage (from 27% in 2008 to 62% in 2020). But the national average of IMB lending to minority borrowers increased even more rapidly, from 33% to 71%.

You can’t pinpoint cause and effect here. But clearly, the Massachusetts experiment has not lived up to its billing. And it is possible that the Massachusetts CRA was a factor in discouraging IMBs from coming into the state to make mortgages.

Plaguing questions

New York’s CRA law was enacted in 2021 and went into effect one year later on Nov. 1, 2022. It directs the superintendent of the New York Department of Financial Services (DFS) to assess the performance of a mortgage banker in helping to meet the credit needs of their entire community, including low- and moderate-income neighborhoods.

Specific factors to consider in this assessment include efforts taken by the mortgage banker to ascertain the needs of their community; marketing to members of their community; community outreach and educational programs; participation by management; any practices intended to discourage applications; and the geographic distribution of loan applications and denials. The New York state law also requires DFS to monitor the mortgage banker’s record of opening and closing offices; its participation in government-insured, guaranteed or subsidized loan programs; and the mortgage banker’s ability to meet community credit needs based on their company’s financial condition, size, legal impediments and local economic conditions.

The law provides for the assessment and all communications by DFS to be available to the public upon request. Furthermore, the superintendent may conduct public hearings when an objection to an application has been submitted. Therefore, in addition to the normal risks associated with noncompliance, there is a substantial reputational risk for failure to meet the department’s standards.

A fundamental question raised by this law is what constitutes the “community” of the mortgage banker. Under the federal Community Reinvestment Act, regulators such as the Office of the Comptroller of the Currency have defined the assessment area of a bank based in part on the location of its principal office, branch office or another deposit-taking facility. 

A mortgage banker who is licensed in New York is not required to maintain an office in the state — and many do not. What is the “community” in New York for an out-of-state mortgage banker? The industry will look to DFS for clarity in areas such as this, as this is the sort of question that plagues any state-based effort to apply CRA to independent mortgage banks.

Recipe for retreat

The Illinois CRA was signed into law in March 2021. In December of last year, the state released draft regulations on how to implement the law. This draft exemplifies the problems of applying CRA to independent mortgage banks. The proposed regulations show a fundamental lack of understanding of these financial companies’ business models.

For example, one assessment criteria is “innovative or flexible lending.” So, will an independent mortgage bank that overwhelmingly originates Federal Housing Administration (FHA) or U.S. Department of Veterans Affairs (VA) loans — which include low- or zero-downpayment terms designed for underserved and first-time homebuyers — be penalized because they are not “innovative” or “flexible”?

“For states determined to adopt CRA, it matters how they do it. There should be appropriate volume-exemption levels to avoid deterring nonbanks in nearby states from deciding to lend in that state.”

The same goes with requirements for loss mitigation. Independent mortgage banks predominately originate FHA, VA and conventional loans that have the strongest loss-mitigation requirements — much stronger than banks typically have. As long as an IMB follows these requirements, it makes no sense to have an additional test.

The regulations show a bias toward banks and against IMBs. They disallow credit for loans that independent mortgage banks originate and sell to banks, if a bank claims federal CRA credit for the same loan. This is backward. The loan would not have been made if the IMB didn’t originate it. And if a specific bank didn’t buy an FHA, VA or conventional loan, another bank would have done so.

Finally, like in New York, the Illinois regulations are unclear as to whether they impose a requirement that if a lender enters a state, it has to serve all geographic parts of the state. Combined with low loan threshold for CRA applicability, and new CRA exam costs and burdens, this is a recipe for discouraging lenders in adjoining states from expanding into Illinois.

Sensible alternatives

There are more effective ways for states to encourage mortgage lending to minority and underserved borrowers. For example, one way to generate more mortgages to minority borrowers is simply to have more minority loan originators. 

The Secure and Fair Enforcement for Mortgage Licensing (SAFE) Act creates high qualifications standards for independent mortgage bank originators. This is fine, even though for some reason the standards are much lower for bank-based originators.

But states should also look at ways to lower the hurdles for a nonbank originator to become licensed. States should waive SAFE Act exam fees and subsidize these courses for minority and low-income originator candidates. Additionally, states should not deny licenses to loan originators who have blemishes on their credit reports, which have nothing to do with their qualifications to be an originator.

For states determined to adopt CRA, it matters how they do it. There should be appropriate volume-exemption levels to avoid deterring nonbanks in nearby states from deciding to lend in that state.

The CRA process should be streamlined with appropriate safe harbors. If an IMB has loan statistics showing they are adequately serving low- and moderate-income borrowers, they should not have to undergo extensive and costly exams. And these institutions should not be forced to contribute to community development funds of nonprofits, because that is not their mission.

Finally, to other states considering the adoption of CRA for independent mortgage banks, consider one thing: Look before you leap. This all sounds like a good idea. But you will discourage the very thing you want to encourage. ●

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With job loss often comes housing distress. We needed a financial bridge to stabilize families’ financial health, at least until the unemployment benefits kicked in.

The solution would be to provide borrowers with forbearance. Not forgiveness. They would be able to “press pause” on their monthly payment. The missed payments would be added to the loan balance, so they would eventually have to be repaid. We hoped that borrowers would be back on their feet within a few months, or that they would have started to receive unemployment insurance, the very purpose of which was to help workers meet their expenses, including for housing.

In March 2020, we were still learning about COVID-19’s transmission. We did know that evictions and foreclosures often rely on personal interactions. For the households that go through a judicial process, a cramped courtroom could easily become a super-spreader event. Evictions and foreclosures entail other interactions as well, such as having a sheriff’s deputy oversee the process onsite or spending hours at a legal aid clinic or homeless shelter. All of these were possible transmission risks. While not as directly critical as the health care inventions, keeping families in their homes would reduce spread while also giving the health care community additional time to develop mitigation tools.

Enormous gamble

As a front-row observer of the 2008 crisis, I am convinced that much of the federal response was poorly structured, especially the Home Affordable Modification Program (HAMP) and the Home Affordable Refinance Program (HARP). A major influence on my decision-making was the intention to not repeat the design flaws of HAMP and HARP.

I wanted to avoid one of the biggest mistakes of the Great Recession: structuring assistance in a way that would discourage work. The Great Recession witnessed the weakest job growth of any post–World War II recession. A major reason for this weak recovery was the design of HAMP and HARP, which created large reductions in mortgage relief for any increase in borrower earnings.

Another problem of the 2008 mortgage crisis was the paper chase associated with HAMP and HARP. For borrowers to be eligible, a substantial amount of paperwork was required. There were countless stories of such papers being lost or rejected. In some instances, forms were being submitted with false information.

One reason for a stringent application process for mortgage assistance during the Great Recession was to determine how much assistance to grant. The Great Recession programs were means-tested, with benefits being reduced as one’s income grew. There is a logic to such a requirement. We should limit, or target, government resources to those most in need. That said, any income information would be stale. With the rapid rate of job loss, the use of last year’s tax return would likely not offer an accurate picture of a borrower’s current need.

We would take borrowers at their word. Servicers would orally inquire whether a borrower requiring assistance had suffered a financial hardship as a direct result of COVID-19, such as a job loss. I recognized this was a big gamble. It could easily have been taken advantage of by borrowers not needing assistance, potentially overwhelming the mortgage market. But we needed a system that was quick and clean.

Stunning success

Ultimately, about 8 million borrowers, roughly 1 in 10 homeowners, entered COVID mortgage forbearance. By 2022, over 90 percent would exit forbearance, getting back on their feet. In fact, more than half would be in forbearance for three months or less. Fifteen percent would take forbearance for only a single month.

About a fifth of those borrowers would continue to make their monthly payments, despite having entered forbearance. Another fifth would repay their missed payments in one lump sum. I must admit I was surprised at how often Fannie and Freddie borrowers would send in a check for three or four months of missed payments. Over a fourth paid off their entire mortgage, usually by taking advantage of the record low rates to refinance.

Mortgage forbearance offered during COVID-19 was a success, especially compared with the efforts of 2008. That outcome was not guaranteed. Almost by coincidence, my obsession with the 2008 response became an asset. There would be an opportunity to do it right this time.

The parameters of the COVID-19 mortgage response, however appropriate for a pandemic, might not be the best response for next time. And there will be a next time. Most likely, it will match the historical trend of a monetary-induced increase in mortgage rates leading to a decline in housing demand, followed by weakness in housing prices, which when mixed with a spike in unemployment leads to mortgage distress.

The precedents set during COVID-19 that are likely to be useful next time include: basing duration of forbearance on a fixed window in time, not on changes in income or employment; allowing borrowers to attest to hardship first, with servicers verifying eligibility later; and requiring that missed payments be paid back but not all at once. Be quick and clean. Directly address the issue at hand. ●

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The central bank announced the change after Wednesday’s meeting of the Federal Open Market Committee (FOMC), which is responsible for setting national fiscal policy. The new target range is the highest level set by the Fed since 2007.

The latest rate hike is the Fed’s eighth consecutive anchor rate increase — and in all likelihood not its last. A statement released after the FOMC meeting indicated that “ongoing rate increases … will be appropriate” to further corral inflation, which the Fed said “has eased somewhat but remains elevated.” The announcement disappointed some market observers, who were hopeful that the Fed would signal no more rate increases moving forward.

“We think we’ve covered a lot of ground and financial conditions have certainly tightened,” Federal Reserve Chair Jerome Powell said at a post-meeting press conference. “I would say we still think there’s work to do there. We haven’t made a decision on exactly where that will be. I think we’re going to be looking carefully at the incoming data between now and the March meeting, and then the May meeting.”

Still, it’s the second consecutive pullback when it comes to the size of the Fed’s rate increase, coming after the Reserve raised rates by 50 basis points in December. The 25-bps increase is the smallest increase to the federal funds rate since March 2022.

“Today’s more moderate rate increase is a clear signal to markets that, while the Fed may need to raise rates somewhat higher this year, it is getting closer to its terminal rate in this rate cycle as inflationary pressures continue to ease,” said Marty Green, principal at mortgage law firm Polunsky Beitel Green.

Wells Fargo economist Jay H. Bryson projected that the FOMC will raise its benchmark rate by another 25 bps at each of its next two policy meetings.

“That said, we do not have a high level of conviction regarding the exact amount of tightening that the committee will need to deliver,” Bryson wrote in Wells Fargo commentary. “The committee is in the fine-tuning stage of its tightening cycle, and the number of remaining rate hikes will depend on incoming economic data in coming weeks and months. We have a higher degree of conviction, however, in our belief that the FOMC will not be quick to ease policy.

“Committee members appear to be united in their view that inflation remains too high, and that policy will need to be restrictive in order to bring inflation back to the FOMC’s target of 2% on a sustained basis. … In that regard, we do not look for rate cuts to begin until early 2024.”

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While Chopra himself has acknowledged that there’s a lot to do, many critics would quickly riposte that he’s already done enough.

Ambitious director

Progressive agenda

Expansive mandate

The post Flexing Its Might appeared first on Scotsman Guide.

If the Fed says your portfolio is riskier than others, we would like to find out why.

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The increase still moved the Fed’s policy rate to a range of 4.25 to 4.5%, the highest it has been since 2007. And while the Fed eased off slightly from its recent hawkishness in using interest rates to combat inflation, it reiterated that it would continue to be both vigilant and diligent in using its tools to stay on the offensive, even with the turbulence its aggressive moves have helped to stir up.

“I’d like to underscore for the American people that we understand the hardship that inflation is causing,” Fed Chair Jerome Powell said following Wednesday’s meeting of the central bank’s Federal Open Market Committee (FOMC).

Powell made it clear, however, that the Fed will continue to wield the tools in its arsenal to rein in stubborn inflation.

“We have more work to do,” he said. “Reducing inflation is likely to require a sustained period of below-trend growth and some softening of labor-market conditions.

“We are seeing the effects [of Federal Reserve interest rate hikes] on demand in the most interest-sensitive sectors of the economy, such as housing. It will take time, however, for the full effects of monetary restraint to be realized, especially on inflation.”

Powell acknowledged that some factors, such as normalizing consumer demand and supply chain progress, are helping to quell inflation. But other headwinds, including strong wage growth, are still fueling the rampant rise of prices.

Indeed, the statement released by the FOMC pointed to “ongoing increases in the target range” in order to bring inflation back to the Fed’s 2% target. New economic projections issued Wednesday by the central bank revealed that officials now anticipate inflation to close this year at 4.8%, gradually dwindling back to 3.5% in 2023 and falling to 2.5% in 2024.

Federal Reserve projections also foresee the benchmark rate peaking at 5.1% next year, up 50 bps from its most recent forecast of 4.6% in September. Furthermore, the forecasts have rates settling to 4.1% in 2024, somewhat higher than prior predictions. The Fed’s statement also indicated that it will continue to reduce its debt holdings (including agency mortgage-backed securities) at its current pace.

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If there’s one point that Bell wants to get across, it’s that VA loans offer remarkable benefits for veterans. “If you’re not making a VA loan to a veteran that qualifies, you’re costing them money,” Bell said. “If you’re a lender, why aren’t you offering it? Because we still see that it’s the best product out there for our vets.”

We know that rising rates don’t necessarily kill the market. Rising rates with declining appreciation, that could cause issues.

How is the cooling market affecting VA loan borrowers?

Why did the numbers decline?

That changed?

Do you think this trend will continue?

Can you talk about the efforts to modernize the VA loan process?

The modernization efforts aren’t on the front end with borrowers, but the back end with lenders and the secondary markets?

What are the issues surrounding the restoration of entitlement through refinancing?

When do you foresee the VA potentially getting an automated underwriting system?

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