EWSFLASH l MAY 2015 l NMP NEWSFLASH l MAY 2015 NMP NEWSFLASH l MAY HAMP and HARP Extended for One More Year
MAY 2015 n National Mortgage Professional Magazine n
NationalMortgageProfessional.com
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The Federal Housing Finance Agency (FHFA) is not ready to pull the plug on either the Home Affordable Modification Program (HAMP) or the Home Affordable Refinance Program (HARP). In a speech delivered in Los Angeles before the Greenlining Institute’s 22nd Annual Economic Summit, FHFA Director Mel Watt announced that HAMP and HARP were extended for another year and will run through the end of 2016. “Although the number of new borrowers entering these two programs continues to decline, in part because many eligible borrowers have already taken advantage of them and in part because of recovering house prices, lenders and servicers are continuing to approve new HAMP modifications and HARP refinances,” said Watt. “Extending HAMP and HARP through the end of 2016 will provide real relief for borrowers who continue to face challenges either paying their mortgage or refinancing their loan.” Watt insisted that the programs “were never intended to be permanent programs” and stated this extension will be the final one.
NAR: Homeownership Decline Fuels Income Inequality Divide The often rancorous political debate over the widening gap of income inequality detoured into the housing market, as new research by the National Association of Realtors (NAR) determined that “the continued decline in homeownership means the gains are going to fewer people and likely leading to worsening inequality in the U.S.” In an analysis of 2010 to 2013 homeownership rates, single-family median home price fluctuations and the Gini index measure of inequality across 100 major metropolitan markets, NAR found
that all but seven of these metro areas experienced declining homeownership rates amid rising home values and stagnant wages. The situation was most acute in the area with the homeownership rates, most notably the expensive housing markets of Los Angeles, New York and San Diego. “Homeownership plays a pivotal role in the U.S. economy and has historically been one of the primary sources of wealth accumulation for middle class families,” said Lawrence Yun, NAR’s chief economist. “Unfortunately, due to an underperforming labor market, insufficient housing supply and overly-stringent underwriting standards since the recession, homeownership has plunged to a rate not seen in over two decades. As a result, the country has become more unequal as the number of homeowners has fallen while the number of renters has significantly risen.” Yun added that the situation was exacerbated because many renter households cannot make the financial leap into homeownership and, thus, are unable to enjoy the financial rewards of rising home values and declining mortgage rates. “Changes in wealth during this period are especially profound in high cost metro areas that have seen robust price growth,” said Yun. “For instance, a typical homeowner in San Jose, Calif., enjoyed an increase of $210,671 in housing wealth while renters were left behind and likely exposed to annual rent increases.” NAR also analyzed the 100 major markets against the Gini Index, which is often used by economists to measure income inequality. According to its data, NAR found 93 out of the 100 reviewed metro areas were burdened with a growing level of inequality; Connecticut’s Bridgeport-Stamford-Norwalk corridor plus New York, Miami and New Orleans were identified as having the most unequal distribution of income. “The decline in homeownership has serious implications for our economy and is currently leading to a more
unequal America,” said Yun. “Although better economic conditions should eventually open the door for more prospective buyers, improving access to mortgage products to creditworthy borrowers and ramping up new home construction–especially to entry-level buyers–will help ensure the opportunity is there for more American households to enjoy the potential wealth benefits and long-term stability homeownership provides.”
SWBC Mortgage Makes Generous Donation to MBA Opens Doors Foundation SWBC Mortgage Corporation has made a sizable donation to the MBA Opens Doors Foundation in Washington, D.C. Opens Doors is a non-profit organization run by the Mortgage Bankers Association (MBA) and dedicated to providing assistance to families with a critically ill or injured child by making their mortgage or rent payment. “Opens Doors has an important mission, and we were honored to make a serious contribution to that mission,” said Susan Stewart, chief executive officer of SWBC Mortgage. “When a family has to care for a child in a critical medical condition, they should be able to do so without fear that they will lose their home.” SWBC Mortgage Corporation is a wholly-owned subsidiary of SWBC, a diversified financial services company providing a range of insurance, mortgage and investment services to financial institutions, businesses and individuals. “On behalf of everyone working with the MBA Opens Doors Foundation, I want to thank Susan Stewart and the entire SWBC Mortgage team for this generous donation,” said Debra Still, chairman of the MBA Opens Doors Foundation, and president and chief executive officer of PulteMortgage. “Every penny of this significant contribution will go towards keeping families in
their homes during one of the worst personal crises anyone can imagine and allow those families to focus one hundred percent of their energy on getting their child healthy again.” The MBA Opens Doors Foundation was developed as an industry association model for utilizing both expertise and resources to help individuals and families facing housing challenges associated with the significant cost of care for a seriously ill child. Opens Doors is currently able to pass 100 percent of the donations it receives on to families in need of assistance. The Foundation’s ongoing relationship with Washington, D.C.’s Children’s National Medical Center provides a partner organization to help identify potential grant recipients.
Fannie Mae Reaps $1.9B Q1 Harvest The first quarter of this year was very, very good for Fannie Mae: The government-sponsored enterprise (GSE) reported net income of $1.9 billion–up from $1.3 billion in the fourth quarter of 2014–and comprehensive income of $1.8 billion–also up from $1.3 billion in the previous quarter. Fannie Mae’s positive net worth of $3.6 billion as of March 31 resulted in a dividend obligation to U.S. Department of Treasury of $1.8 billion, which it expects to pay in June 2015. “This was another quarter of strong financial performance,” said Timothy J. Mayopoulos, Fannie Mae’s president and chief executive officer. “We continued to have solid revenues. While we experienced some interest rate volatility again this quarter, we expect to remain profitable on an annual basis for the foreseeable future, we continued to make progress against our goals, and we are managing the company on a basis that produces good economic value for the taxpayer. We are focused on delivering value to our business partners and making it simpler and easier for lenders to serve the housing market safely, efficiently and profitably.” However, on a year-over-year basis, Fannie Mae is far below its first quarter 2014 levels of $5.4 billion in net income