Growing wages combined with flat mortgage rates handed homebuyers' increased affordability with a 2.4% boost in purchasing power for February, according to First American Financials Real House Price Index.
"While household income rose steadily in 2018, rising mortgage rates offset any affordability benefit for home buyers, as illustrated by 11.1% year-over-year growth in the RHPI," Mark Fleming, First American's chief economist, said in a press release. "However, the first quarter of 2019 has been friendly to potential homebuyers, as declining mortgage rates, ongoing household income growth and moderating unadjusted home prices has boosted affordability."
Wages jumped 2.8% year-over-year, almost on par with the home price index's 2.9% annual gain — the lowest annual increase since January 2018's 2.5%. Prices actually decreased month-over-month, falling 0.4% — a continued trend from November when real home prices had the largest monthly decline since 2016.
By refocusing the Consumer Financial Protection Bureau on supervision instead of enforcement, Director Kathy Kraninger says she wants to prevent consumer harm. But skeptics say the new approach could have the opposite effect.
In an April speech laying out her priorities, Kraninger demonstrated how the agency continues to move away from the enforcement actions, large fines and public shaming that were the hallmark of her Obama-appointed predecessor, Richard Cordray.
Instead, Kraninger said, the agency is emphasizing preventive measures. “Supervision is the heart of this agency,” she said.
Observers say while a stronger focus on supervision could benefit consumers more than enforcement in certain cases, civil fines will continue to plummet and a more private process to resolve regulatory matters instead of public disclosure of transgressions may let companies off the hook.
“You might see change come about more quickly through supervision than years of litigation,” said Gerry Sachs, a partner at Venable, and a former CFPB senior counsel for enforcement policy and strategy. “The question is, will the CFPB be able to focus on confidential supervisory processes and procedures while also avoiding the pitfalls of regulatory capture. That has yet to be determined.”
Continued demand and rising interest rates put constraints on the housing market in 2018, making it a difficult year for buyers trying to claim their spot in the housing market. These hot housing market conditions had an indirect effect on lenders, who saw the risk of mortgage application fraud increase by 10% last year, according to CoreLogic.
While the rise in fraud was attributed to genuine buyers trying to qualify for a mortgage (albeit with questionable verification sources), the trend is nonetheless worrying for the industry, which faces increasingly tight margins. As we make our way into 2019, what are the most common risks for lenders to consider? How can we, as an industry, tackle this changing mortgage fraud landscape effectively? The answers lie not in adding more steps to the already lengthy underwriting process, but in understanding the risks associated with mortgage fraud and the options currently available to mitigate those risks.
360 Mortgage is bringing back the no-income, no-asset loan, but says its $1 billion pilot's guidelines differ from those of the NINA loans that contributed to the financial crisis.
The program is not being sold to an agency, but is being underwritten to guidelines based on Fannie Mae's. The first phase is aimed at non-owner-occupied properties, explained 360 Mortgage Group Chief Operating Officer Andrew WeissMalik.
NINA loans — and similar products like stated-income, stated-asset, no-document and low-document mortgages — were cited as a source of fraudulent underwriting practices; Freddie Mac stopped purchasing them in November 2007 because of deteriorating credit quality.
Non-qualified mortgage-backed securities record issuance in the first quarter puts it on pace to top full-year volume predictions, according to a Keefe, Bruyette & Woods report.
Securitized non-QM loans totaled $5.7 billion for the first quarter, approximately half of 2018's total volume and "easily the most active quarter in the market since the first transaction was priced in 2015," the report by Eric Hagen, Bose George and Thomas McJoynt-Griffith said.
Estimates for 2019 non-QM securitization volume range from $14 billion to nearly $20 billion.