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2015 Housing Policy Agenda: Inertia and Competition?

by devteam January 8th, 2015 | Share

Stuart Quinn, a policy research and strategy analyst for CoreLogicrnsummarizes 2014 as a period of consumption for housing market participants whenrnit came to regulatory and policy guidance. rnThey were “digesting, interpreting, re-interpreting and implementingrnlengthy regulations to remain compliant and operationally sound.”</p

And, according to Quinn, they did have a lot to digest,rninterpret and implement during the year. rnThe Ability to Repay/Qualified Mortgage (QM) Rule, new servicing rules,rnamendments modifying the National Flood Insurance Program, and the QualifiedrnResidential Mortgage/Risk Retention rule were all on the plates of lendersrnand/or servicers.  There werernmulti-million dollar legal settlements, tighter underwriting standards,rngradually rising interest rates, and still soft employment, none of which werernparticularly good for housing markets and all while discussions continued aboutrnaccess to credit and GSE reform, .  </p

Quinn, writing in CoreLogic’s latest edition of MarketPulse,rndoes not see that a lot of progress was made last year.  He thinks the 113th Congress didrnprovide a little more certainty during the year although he does not specifyrnhow, and the economy, while growing, didn’t reach levels needed for furtherrnhousing recovery in addition to the various headwinds listed above.   </p

But it wasn’t all status quo.  He credits the Consumer Financial ProtectionrnBureau (CFPB) with introducing “very minimal disruption” other than the costsrnof compliance with its QM Rule.  The Rule’srntemporary exemption for GSE eligible loans allowed those loans to continue tornbe financed and money center banks in many cases expanded their lendingrnoperations.  The CFPB “cure policy” forrncalculating points and fees provided more clarity in underwriting and theyrncontinue to consider a similar provision for income calculations.</p

There was new leadership of the Federal Housing FinancernAgency (FHFA) and strong efforts on its part to expand the credit box throughrnauthorization of a new high loan-to-value GSE product and while it twicernmodified the GSEs’ warranties and representation policies which provided morernclarity and certainty for the transfer of risk from originators tornsellers.    </p

Lawmakers did make some stabs at comprehensive housingrnfinance reform but nothing that made it through the legislative process eitherrnbecause of a lack of compromise or because of the pressure of midtermrnelections.</p

So what might 2015 look like from a policy perspective?  Quinn tries his hand at prophecy.</p

Congress is rumored to be ready to tackle tax reform whichrnalways has the possibility of affecting the housing industry.  Quinn doubts it will get far because of therncontentiousness of the issue so close to yet another election, the number ofrnspecial interests attempting to wield influence, and other legislativernimpediments such as the need to address expiration of temporary funding forrnboth Homeland Security and the Highway Trust Fund.  </p

Two Senate bills proposed in the 113th Congressrndid provided the framework for discussion of housing finance reform and one,rnJohnson-Crapo actually made it out of committee.  Three bills (Waters, Delaney-Himes,rnHensarling) remain under consideration in the house but Quinn does not expectrnGSE reform to be in the forefront of Republican Party priorities this year and thinksrnthe debate may even be postponed until after the next election unless some “catalyticrnevent” should occur such as either Fannie Mae or Freddie Mac requiring anotherrndraw from the Treasury.</p

There are, he says, several important items already on thernagenda for the first half of this year. rnThese include the finalization of the Home Mortgage Disclosure Act by CFPB,rnimplementation of the new disclosures under the Truth in Lending and RealrnEstate Settlement Disclosures Acts, scheduled for August; new eligibility requirementsrnfrom FHFA for private mortgage insurers, and various actions from the statesrnregarding foreclosure laws.  He alsornexpects discussions of credit access, housing affordability, actuariallyrnappropriate insurance premiums, the structure of a new single GSE security,rnadverse selection, and regulatory implementation and compliance.  </p

He concludes, “With economic fundamentals back in the driverrnseat, the question now becomes, how quickly and capably can economic driversrnnavigate the new rules of the road?”

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About the Author

devteam

Steven A Feinberg (@CPAsteve) of Appletree Business Services LLC, is a PASBA member accountant located in Londonderry, New Hampshire.

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