*Originally sent out Saturday, May 21st
Friends & Colleagues:
Good Morning! Week 2 of this experiment. I hope you enjoy this one as well. Thanks again for continuing to stay in touch. I had a few exchanges with different folks based on responses to last week’s items. I’ll try to figure out a way to provide a forum or include responses in future mailings. Otherwise have a great weekend…and Go Cavaliers, I suppose? #ALLin216
Of Interest: FHA looking to expand in the condo lending space. Some stats have seen FHA condo lending fall to less than a 1/3 of previous volumes over the last decade. In response, HUD is preparing changes to how FHA supports condo lending. Though Secretary Castro has been largely silent on details, it seems that upcoming reforms might focus on how FHA certification is reviewed and approved rather than major changes to the eligibility criteria as some originally thought. This would encourage associations to purse FHA approval rather than changing the standards to ensure the approval of more complexes. There is wide speculation about what the reforms might look like but it is clear some changes are forthcoming. Source: The Washington Post, Ken Harney
The Takeaway: See, HUD is persuaded by market pressure just like the rest of us. Seriously though, it could be good news for first time home buyers, anyone gravitating toward urban centers, including empty nesters, and seniors as an alternative to reverse mortgages.
Of Interest #2: The Comprehensive Consumer Credit Reporting Reform Act is the latest in a trend of articles, reports and legislative actions aimed to review/reform how consumer credit scores are treated. By now everyone is familiar with the “trended data” shift set to hit Fannie’s AUS feedback this summer and how trended data may improve a consumer’s risk position within DU. Rep. Maxine Waters (D-CA) plans to introduce this legislation calling the system “broken” in her announcement. The ambitious reform would attempt to:
- Identify “bad mortgages” and provide relief for victims of preparatory lending
- Establish clear standards for disputing issues on an individual credit report
- Limit the amount of time adverse items appear on a report
- Standardize the treatment of student and medical debt
The Takeaway: I think the bigger point here is around how data collection and analyzation, so-called “big data,” has the potential to influence all aspects of our industry. As marketplace lenders use new algorithms and social media platforms to transform how some creditors evaluate risk, vendors and regulators must react in kind. I’m not suggesting this is a direct response to SoFi or LendingClub but the industry is filled with theories of all kinds about how to use data differently. We’re still waiting to see if that means better. Bottom line is that legislators do not want to be perceived as behind the curve, particularly in the area of consumer protection, and so this legislation would give CFPB the ability to begin looking into the credit bureaus, at least as far as accurate credit reporting goes. Will be one to watch.
Have you heard? Not too often we get an article on seller financing. The Department of Financial Services, New York’s top banking regulator, sent subpoenas on Friday to firms involved with seller-financed home sales to see whether they violated New York state lending laws. The investigation is in its early stages, and this is the first time the agency has opened an inquiry into such housing transactions. (Source: WSJ, subscription required)
Got Me Thinking: In a blog post on May 13th, CFPB offered consumers the opportunity to submit questions and get “clear, impartial answers” to financial questions. On one hand, many of us know the types of questions our customers generally ask — “what’s my rate?” “what’s my payment?” and “what are my closing costs?”…at least as far as mortgages go. I’m not sure of CFPB will be able to provide the level of detail, otherwise, that consumers really need. On the other hand, CFPB has always claimed to be a data driven organization and now is wading into the subjective world of advice/opinions. I say “now,” though, some would claim that’s where they’ve been all along. From my point of view, these are the types of things that distract the Bureau’s staff and resources from the core business of (proper) regulation and oversight. Some would say, at least those libertarians in Silicon Valley would say, the private sector has already solved for this — check out WalletHub.
A Look Ahead: Another week and another article about automation or “robots” versus humans. This particular article references a somewhat casual study of QValue — a real estate service that purports to take the place of the human broker — but gives less than convincing proof. At the same time, the world is dividing into two groups of people. The first group wants everything automated and native to their mobile device so that it is easy, efficient and does not require human interaction. The second group wants concierge level service where they are treated as the company’s only customer whose every need and desire is already served. It is very difficult for companies or industries to be both at the same time. Might be time to take sides.
Sidenote: Glassdoor Inc., the website that ranks employers and allows current or former employees to post feedback, ranked the 25 best cities for jobs this year. Admittedly, this might be “clickbait” with little to no actual survey rigor attached but since Hartford and Detroit made this list I thought, science shmience. Apparently on a 0.0 to 4.0 scale (see, math), Boston and D.C. hit the top 5 with scores above 3.4, Detroit scored 2.75 and Hartford also made the Top 25 with a score of 2.6. A combination of availability, salary and life balance. The narrative is there for the taking. Source: Bloomberg
Today’s Thought: One thing that seems to be creeping into our national consciousness (at least as far as politics goes) is perception versus reality. It also appears in our businesses and our lives. At key moments, everyone must deal with wanting to be right or wanting to appear right and all the complications that flow from both of those. Ideally we’d always be both but too often we cornered into a zero sum game (or what feels zero sum) of deciding between what’s best and what plays best. It is hard to always deal in reality when it is, in fact, perception that carries the day. Reconciling perception versus reality might be the whole ballgame.
Song I’m listening to: “I Need Never Get Old,” Nathanael Rateliff & The Night Sweats