U.S. mortgage debt hits record as housing market shows signs of weakness

A dubious milestone was announced last week as new data from the Federal Reserve Bank of New York showed that mortgage debt in the U.S. reached a record high in the second quarter of 2019. Meanwhile, in a separate report also released last week, the Federal Reserve Bank of New York described U.S. home sales as “soft,” “anemic,” and “lackluster.” As several recent reports have shown, despite very low mortgage rates in the past few weeks, the housing market remains weak. Many point to a lack of affordability as the culprit. “Rates are low, but does it matter if you can’t find anything you can afford?” said Nela Richardson, an investment strategist with Edward Jones, in an MarketWatch article. 

FHFA publishes rule on credit score models

The FHFA sent its final rule on third-party credit score models that can be used by Fannie Mae and Freddie Mac to the Federal Register last week. “One of my priorities is to ensure that the American people have a safe and sound path to sustainable homeownership, which requires tools to accurately measure risk,” said FHFA Director Mark Calabria in a statement. “The final rule we are publishing today is an important step toward achieving that goal.” The rule is a reversal from the FHFA’s previous stance, which would have blacklisted VantageScore, one such third-party model, because of conflicts of interest with the company’s backers. Consumer advocates praised the final rule since the scoring model the GSEs currently rely on, FICO, weighs things like medical debt against consumers.

FHA issues new rules on condominiums

The FHA published its final regulation creating a new condominium approval process last week, ensuring more condominium phases will be eligible for lower-down payment loans. The rule is aimed at opening up the condo market to first-time buyers, since FHA-backed loans require only a 3.5 percent down payment. “This is greatly going to expand the ability of people to get into the housing market at a low-price level,” HUD Secretary Ben Carson told Lou Dobbs on his Fox Business show. The National Association of REALTORS® applauded the rule, with NAR President John Smaby saying it “will help reverse recent declines in condo sales and ensure the FHA is fulfilling its primary mission to the American people.” Some, however, questioned the timing of the rule. “FHA is already a higher-risk program,” former MBA President David Stevens told the Wall Street Journal. “Layer that on top of a higher-risk product called the condominium, and you definitely have to prepare yourself for the fact that in the next correction you’re going to take more losses at FHA than anywhere else.”

Otting visits Atlanta to tout CRA benefits

Comptroller of the Currency Joseph Otting recently visited Atlanta to tour neighborhoods that have benefited from the Community Investment Act (CRA). Otting also highlighted areas where CRA could be improved, saying, “We can modernize CRA regulations to encourage banks to do even more by clarifying what counts for CRA credit, updating where activity qualifies, making evaluations of bank CRA performance more objective, and reporting results in a more timely and transparent manner.” Specifically, Otting discussed his desire to prevent banks from getting CRA credit for loans to wealthy borrowers, remarking “CRA mortgage lending should be to [low- and moderate-income] people.” Also last week, Shelterforce published an op-ed by National Community Reinvestment Coalition Senior Advisor Josh Silver on the importance of homeownership in CRA reform.

House Financial Services Committee holds a field hearing on homelessness in Los Angeles

The House Financial Services Committee held a field hearing on the homelessness crisis in Los Angeles at the California African American Museum on Wednesday. Witnesses included Los Angeles Mayor Eric Garcetti, Margarita Lares of the Housing Authority of the City of Los Angeles, and Joe Horiye of the Local Initiatives Support Coalition. In her opening remarks, Chairwoman Maxine Waters said, “We cannot ignore that our homelessness crisis is directly linked to the affordable housing crisis. Too many people cannot afford to keep a roof over their heads, as wages have not kept pace with rising rents.”

Farm Service Agency holds listening session on heirs’ property

The Farm Service Agency (FSA) held a listening session on Wednesday to hear about the struggles of land loss in poor, predominantly black rural areas. The session focused on provisions in the federal farm bill co-sponsored by Senator Tim Scott (R-S.C.) that would help owners of heirs’ property. The session comes after ProPublica, the Washington Post, and the Atlantic all recently took deep dives into the issue of land loss among black families in the rural South. “I’m glad that USDA is finally shining a light on the issue of heirs’ property. It’s an issue that has gone unaddressed for far too long,” Senator Doug Jones (D-Ala.) told Reuters, describing the listening sessions as “first steps towards progress that is essential for the generations of African Americans who have had their land unfairly taken away.”