Monday Morning Cup of Coffee takes a look at news crossing HousingWire's weekend desk, with more coverage to come on bigger issues.
Analysts from Bank of America Merrill Lynch (BAC) are sounding an alarm about the future. An incredibly serious and concerning alarm.
In the Securitization Weekly Overview, BofAML analysts Chris Flanagan, Matthew Carr and Gregory Fitter write that the “scars” of the financial crisis and its direct correlation to mortgage finance are still being felt today and that there’s no reason to expect the steady decline in the rate of homeownership to abate any time soon.
The analysts note that June 2014 marks the 10-year anniversary of the peak of homeownership rate in the United States. In June 2004, the rate of homeownership was 69.2%. At the end of 2014’s first quarter, the homeownership rate was 64.8%.
“Whether this represents a generational shift in attitudes towards owning a home is of course debatable, but at a minimum, the net, roughly 10% decline in the homeownership rate from the peak to what may well be 40-50 year lows will be nothing short of historic,” the analysts write.
Stay tuned to HousingWire this week, as we will explore this issue in much more depth.
A significant discussion in the mortgage business lately has been the denial rates for African-American borrowers. The short version is that about a month ago, a Twitter fight broke out among industry leaders on whether African-American borrowers are denied at about 32% (within the historic norm) or as high as 56%, as claimed by the head of the largest mortgage banking trade association.
On Friday, HousingWire’s Trey Garrison provided a breakdown of the entire issue, highlighting that it may be even worse than initially thought.
A story in the Los Angeles Times touches on another racially charged housing issue and its impact on those searching for house. At issue is whether home search sites, like Zillow, Trulia, and Movoto should be allowed to include the racial and ethnic composition of a home’s surrounding neighborhood.
Here’s the core of the issue, from the Los Angeles Times article:
Some civil rights advocates cite the Fair Housing Act and say absolutely not: Connecting racial data with home sale transactions is barred by federal law, they argue, whether it's done by a real estate agent or posted on a website.
But companies whose websites offer neighborhood-level racial, ethnic, linguistic and similar demographic details strongly disagree. Much of their data, they say, come from government sources such as the Census Bureau. It's all public information and already available to anyone who makes an effort to find it, so how could its dissemination in connection with property searches possibly violate federal law?
No matter how this particular issue resolves itself – and the resolution won’t be easy or simple – issues of race are and will continue to be deeply ingrained in the housing industry.
On the decidedly lighter side, Forbes has a breakdown of the ten most costly mistakes that homeowners make when they’re trying to sell their house. Among the list are: Mispricing the home, refusing to remover your clutter when showing the home, neglecting necessary repairs prior to the sale, and even using “lousy” photos with the listing.
And on the bright side, at least getting a mortgage is a little easier here in the US than they are in England. According to The Daily Mail, banks in England have made it much harder to secure a mortgage and it could get even worse.
Here’s the Daily Mail’s breakdown:
Controversial new ‘affordability rules’ mean everything from student loans, gym memberships, the money you spend on clothes, magazines and haircuts can be deducted from your income before lenders decide how big a mortgage you will be offered.
If lenders think you are spending too much on non-essential items – even if you agree to cut them all out if your mortgage payments go up – then they can refuse you a mortgage.
The Daily Mail also suggests that England’s banks may reintroduce “old-fashioned salary caps,” meaning that banks would not issue a loan for more than four times the borrower’s yearly salary. That’d make it nearly impossible to buy a home in England considering the rising cost of a home in the country.
Closer to home, the Federal Deposit Insurance Corp. closed two banks last week, bringing the total for 2014 to 11.
Valley Bank in Fort Lauderdale, Florida and Valley Bank in Moline, Illinois were closed on June 20. The Florida bank was acquired Landmark Bank and Great Southern Bank acquired the Illinois bank.
