Adding to the Ranks

JK HueyOperation Homefront, a nonprofit organization dedicated to serving our military heroes after they return home from service, has recently announced the appointment of JK Huey to its Board of Directors. Huey brings over 35 years’ experience in the mortgage industry to the cause.

Recently retired from Wells Fargo, Huey will offer her expertise to Operation Homefront, specifically in helping military families obtain homeownership, but will also advise the organization on its other endeavors, including providing relief to returning veterans from Afghanistan and Iraq in the form of financial assistance for auto and home repairs, food assistance, essential home items, rent-free transitional housing, moving costs, holiday meals, and even back-to-school initiatives to provide school supplies to the children of veterans.

“Throughout her exceptional career, Huey has demonstrated her passion for helping families succeed financially, and to achieve the dream of homeownership. She also shares our collective commitment to supporting our military families so they can thrive in the communities they have worked so hard to protect,” said Brig. Gen. (ret.) John I. Pray Jr., President and CEO of Operation Homefront. “Huey is absolutely perfect for Operation Homefront and all are excited to have such an extraordinary industry leader join our very talented board. We look forward to Huey helping us do even more to support the very real and growing needs of our military families in the years to come.”

Huey has indeed led an impressive career. Before her role at Wells Fargo, she held senior management positions at IndyMac Bank and Homeside Lending, where she oversaw a variety of areas, including customer service, investor reporting, default management, retail production, and acquisitions.

“Our service men and women and their families have given so much to our country through their service, and I’ve seen firsthand what it means to a military family to finally have a place to call home thanks to Operation Homefront’s Homes on the Homefront. I am honored to accept this appointment and stand behind an organization that does so much to protect the heroes who protect us,” said Huey.

In addition, Huey boasts a broad range of accolades: such as being a Certified Mortgage Banker, an Accredited Mortgage Professional, member of MORPAC and Loan Administration Steering Committees, as well as the Chariman Emeritus of the National Mortgage Service Organization, recipient of the 2014 Five Star Lifetime Achievement Award, the 2012 Larry E. Temple Distinguished Service Award, and the 1992 Young Mortgage Banker of the Year award. In the past, she served as President of the Texas Mortgage Bankers Association, the Black Knight Mortgage Advisory Board, the Fannie Mae Customer Advisory Board, and the Freddie Mac Servicer Advisory Board.

“I am honored to welcome JK Huey to Operation Homefront’s Board of Directors, and look forward to working together with her in advancing Operation Homefront’s goals” said Ed Delgado, President and CEO of the Five Star Institute, who is also a member of Operation Homefront’s board. “Her extensive career and dedication to caring for those that protect our freedoms will be invaluable to the organization.”

Operation Homefront will provide mortgage-free homes to veterans at the Come Sail Away Military Heroes Keys for Life Dinner & Concert on Tuesday, September 19 at the Hyatt Regency Hotel in Dallas, Texas, which will be followed by a performance from the legendary rock band, Styx.

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Looking out for the Rural Communities

New legislation was pushed through the U.S. Appropriations Committee recently that would, if passed into law, force the U.S. Department of Housing and Urban Development (HUD) to recalibrate how it determines eligibility for Community Development Block Grants (CDBG).

The bill, introduced by Rep. Jaime Herrera Beutler (R-Washington), would require that HUD report any area it uses “flawed income data”—or data with a margin of error that’s 20 percent or higher—to evaluate CDBG eligibility. These reports would need to be submitted to both the House and Senate appropriations committees within 90 days of the evaluation.

Until now, HUD has calculated community income levels by averaging five-year data from the American Community Survey. HUD data from 2014 shows many towns in Beutler’s district—including Pe Ell, Vader, and Morton—have been deemed “too affluent” to benefit from CDBG grants.

According to Beutler’s office, “This requirement would impact rural communities in Lewis County [Washington] that, based on inaccurate household income data, were determined to be ‘too affluent’ to qualify for Community Development Block Grants.”

Beutler says HUD has often made mistakes when deeming a community “too affluent,” and that the agency has even used data with margins of error as high as 91.5 percent when determining eligibility.

“This agency is supposed to return tax dollars to the communities that need it most, but it has made serious mistakes in disqualifying communities like Toledo, Pe Ell, and Vader for being ‘too affluent,’” Beutler said. “It can’t cover up these mistakes if this legislation becomes law.”

This isn’t the first time Beutler has taken on HUD. She also created a provision that requires HUD to have alternative methods of measuring income levels.

“After years of pressuring for transparency, my efforts will again require HUD to make the extent of inaccuracy of its data public—and it will be held accountable for its reporting errors,” she said. “While it shouldn’t take an act of Congress to get a public agency to provide basic transparency, I’m not going to let up on this issue or the needs of our rural communities until we have a long-term solution.”

The bill was passed by the House Appropriations Committee on Tuesday, but has not been scheduled to appear in front of the House floor as of press.

 

Government-Sponsored Rental-Prise?

Freddie Mac BHFreddie Mac might be following in Fannie Mae’s footsteps, according to a recently published New York Times article, and get a hand in the single-family home-rental market, now that the Federal Housing Finance Agency (FHFA) has given the Enterprise the go-ahead to shop around.

According to the piece, the bank wants to supply up to $1 billion for affordable housing rentals to mid-sized landlords, with the possibility of bringing in nonprofits as well. Affordability is the Enterprise’s main goal, Freddie Mac VP David D. Leopold said in a statement.

Freddie’s proposed deal would be much different than Fannie Mae’s, which reached a $1 billion financing deal with Invitation Homes, one of the largest private-equity-backed landlords in the country. The firm holds 50,000 single-family rental-homes in 13 major markets, and had an initial public offering netting $1.7 billion around the time of signing.

There’s still plenty of rental homes to go around, though. The New York Times reports that there are 17 million homes rented, a figure that has grown from 11 million in 2007. Freddie Mac would like to find itself somewhere in the middle. From the article:

The vast majority of rentals are still managed by mom-and-pop operators who own a small number of homes. And Fannie Mae and Freddie Mac have long provided financing to small investors. But financing has been hard to come by for nonprofit housing groups and midsize investor landlords who have had to rely mainly on private-equity-backed firms for financing.

The goal of the move would be to add some stability to mid-sized landlords by guaranteeing loans, thereby encouraging more traditional lenders to get into this underrepresented portion of the single-family rental market. The Senate Committee on Banking, Housing, and Urban Affairs has recently been calling for reforms to the government-sponsored Enterprises, and the move to single-family rental homes could be a step in that direction when considering the future.

The FHFA will still have to approve of any financing deal Freddie Mac comes up with, though, and has only approved of Freddie and Fannie’s move to the rental market in limited quantities. The agency had previously denied Freddie Mac in 2012, when the Enterprise wanted to finance buyers of foreclosed homes, citing concerns that low cost loans would hurt the banks and encourage home flipping.

Slow Down Ahead

The share of American homeowners who are underwater has fallen by the second smallest percentage on record, according to Zillow’s Q1 2017 Negative Equity report released on Friday. Though the number of underwater borrowers is now less than a third of its 2012 peak, this significant slow down isn’t a trend to ignore.

Between Q4 2016 and Q1 2017 just over 5 million U.S. homeowners—or about 10.4 percent of all borrowers—were behind on their mortgage loans. According to the Zillow report, more than three times that—15.7 million—were underwater in 2012.In Q4 2016, 12.7 percent of borrowers were underwater, and in Q1 2012, it was 31.4 percent.

“The 0.1 percentage-point quarterly drop between Q4 2016 and Q1 2017 negative equity was the smallest since a barely noticeable drop from Q3 2014 to Q4 2014,” Zillow reported. “The Q1 2016-Q1 2017 annual change of 2.3 percentage points is the smallest on record (data dates to Q2 2011), tied with the annual drop recorded in Q3 2012 and again in Q2 2016. The annual change, spread over four quarters, is smaller than the one-quarter change recorded between both Q2-Q3 2012 and Q2-Q3 2013.”

The amount that borrowers are underwater is also of note. According to Zillow’s report, an overwhelming majority of America’s underwater borrowers are behind 20 percent or more. Another 15 percent owe twice as much as their home is worth.

“The bulk of those homeowners that remain in negative equity are very deep underwater—56.7 percent of those in negative equity were underwater by more than 20 percent as of the end of Q1,” Zillow reported.

According to the report, homeowners with “shallow negative equity”—or those who are only slightly behind on their loans—have likely caught up by selling in today’s highly appreciating market.

“Essentially, those ‘easy’ homeowners in relatively shallow negative equity have likely already or will soon re-surface as home values have grown over the past few years,” Zillow reported. “That leaves just those millions of harder cases remaining that are likely to take much longer to free.”

Read the full report at Zillow.com.

Leading the Charge: New Leadership at the American Mortgage Diversity Council

Diversity and inclusion are more than just vogue words—they’re real, complicated issues that don’t offer easy answers, ones that have far reaching implications, especially in a landscape such as the mortgage industry. Instead, these issues require the collaborative and forward-thinking efforts of many individuals and organizations to stay ahead of the curve, and the American Mortgage Diversity Council (AMDC) is doing just that in its recently announced appointment of John Golden as Executive Director. Golden has been in the mortgage industry for 16 years, and has a 27-year operational background across multiple industries bringing effectual support and direction.
“We are pleased to welcome John’s leadership to the American Mortgage Diversity Council,” said Ed Delgado, President and CEO of the Five Star Institute and Ex-Officio for the AMDC. “His experience and enthusiasm for diversity and inclusion will be vital to AMDC’s outreach efforts and educational programs, along with its future success in continuing to shape our industry for the better.”
The AMDC, founded in 2015, supports a wide range of diversity initiatives and promotes dialogue aimed at addressing key issues affecting diversity in and across the mortgage industry. With the support of its broad representation, the AMDC is currently committed to identifying the varying issues and concerns that are unique to particular geographic areas, ethnicities, genders, and races while bridging that gap through targeted, online affiliated courses. The council is also striving to diversify the mortgage industry through a mentorship program that will be developed by working subcommittees.
Other leaders in the industry recognize that Golden and the AMDC have a lot on their plate, but have no doubt their ability to overcome whatever challenges they might come across.
“Two plus years of commitment and effort has allowed the AMDC to build critical mass,” said Michael Ruiz, Director of Supplier Diversity at Fannie Mae. The hiring of John Golden as Executive Director ensures that the organization will not lose momentum, but rather continue to grow in stature and influence as a key advocate for the evolution of diversity and inclusion throughout the mortgage industry.”
Golden is looking forward to leading AMDC’s charge into this uncharted territory.
“The opportunity to support efforts in diversity and inclusion, foster a platform for the continuation of the conversation, be involved in the facilitation of meaningful education, and to take part in the advancement of an action agenda with accountability for affecting change in the industry is considered a tremendously worthy opportunity and is aligned with my own personal desire to do work that makes a positive impact for others,” Golden said.
Prior to joining AMDC, he served as VP of Quality and Compliance for a national real estate valuation management company, where his colleagues continue to speak highly of him.
“I had the opportunity to have John on my executive team at for almost five years,” said Erik Richard, Founder and CEO of Landmark Network, Inc. “Having worked closely with him for all that time gives me the upmost confidence that he will succeed in his new role with AMDC. ”
The AMDC’s next meeting will be September 18, 2017, at the Hyatt Regency Hotel in Dallas, Texas at the 2017 Five Star Conference and Expo.

One Rule—Two Outlooks

Arbitration can be looked at in two ways when it comes to the Consumer Financial Protection Bureau’s (CFPB) recent rule. In the way the CFPB looks at it, they are helping the consumer by allowing them to take banks to court when they’re wrongly charged and not given a refund, but Senators are seeing it in a completely different way and have filed a resolution disapproving of the rule.
“Members of Congress previously expressed concerns with the proposed version of the rulemaking—concerns that were not addressed in the final rule,” said U.S. Senate Committee on Banking, Housing, and Urban Affairs Chairman Mike Crapo (R-Idaho). “The rule is based on a flawed study that leading scholars have criticized as biased and inadequate, noting that it could leave consumers worse off by removing access to an important dispute resolution tool. By ignoring requests from Congress to re-examine the rule and develop alternatives between the status quo and effectively eliminating arbitration, the CFPB has once again proven a lack of accountability.”
According to Crapo, because the Bureau didn’t heed warnings from Congress, it is incumbent on Congress to overturn the ruling—and it’s not just Crapo—eight other Senators commented on the rule saying, at its basics, it just doesn’t make sense.
“If finalized, this rule would actually cost consumers more in the long run by pushing consumers into class action lawsuits as opposed to arbitration,” said Senator Mike Rounds (R-South Dakota). “According to the CFPB’s own studies, consumers receive, on average, $32 in relief through class action lawsuits compared to $5,389 in arbitration. Additionally, the Office of the Comptroller of the Currency has said that this rule could increase the risk of litigation so much that it could adversely affect the safety and soundness of the banking system – the cost of which will ultimately be handed down to consumers.”
Among Senator Crapo and Senator Rounds, Senator Corker (R-Tennessee), Senator Cotton (R-Arkansas), Senator Perdue (R-Georgia), Senator Sasse (R-Nebraska), Senator Tillis (R-North Carolina), and Senator Toomey (R-Pennsylvania) commented on the rule. Per the Congressional Review Act, Congress can overturn an agency rule within 60 legislative days after submission with a simple majority vote.
To see all comment and the co-sponsors of the bill, click here.

A Closer Look: Why the Housing Market Needs Securitization

Ideas on how to reform the housing market have been circulating for quite a while. Though the search will likely never be over, as the market is always changing, procedure put forth by the Federal Housing Finance Agency (FHFA) as the regulator for Fannie Mae and Freddie Mac, addresses the two most common steps to minimize risk, according to the Urban Institute. First, requirements regarding institutions that issue mortgage-backed securities to share most of the related credit risk with others in the private market and second, having government or government-like utility manage the infrastructure used in issuing the securities.
The brief written by the Urban Institute said the FHFA has developed a process that ensures the GSEs are sharing risk equally, but is also in the beginnings of building a platform that handles much of the securitization functions that are provided by Fannie and Freddie.
The joint venture referred to as Common Securitization Solutions to design a Common Securitization Platform (SDP) will manage all data, issuance, settlement, bond administration, and disclosures associated with single-backed security. Though Fannie and Freddie will maintain loan-level control of the loans they purchase after completion, they will still determine the types and terms of the loans they take on, including what happens if the loan goes into foreclosure.
The hope of this platform is that is will modernize the housing finance system’s securitization infrastructure, therefore lowering the costs and increasing the efficiency, according to the brief. The current reliance on Fannie Mae and Freddie Mac will shift to the technology, however, as long as the two are the only ones that can access the platform, they will fall short of reform potential because of the benefits of the improved infrastructure. The duopoly already dominates the guarantee market because of their dominance in the securitization market and they fall under too-big-to-fail, and the GSE’s being the only ones using the platform, it will further establish their dominance.
“The work that Fannie, Freddie, and the FHFA are doing on the CSP is vastly underappreciated, both for the meaningful impact that it will have on today’s system if it continues along its current course and for the much greater impact that it will have on a reformed system if its course is adjusted with that larger role in mind,” the brief said. “Their work deserves the kind of critical attention that we have given the credit risk transfer process, so that as with that process, we can finally come to understand its promise and challenges and the central role that it could play in the system of the future.”
To read the brief in full, click here.