It’s been almost a week since FHFA Director nominee Mark Calabria had his confirmation hearing in front of the Senate Banking Committee.
Numerous stories have been written trying to discern the remarks from FHFA’s Acting Director Joseph Otting in front of an employee meeting, from comments made by the nominee. While Otting may have been a bit over the tips of his skis in stating a potential administrative reform plan, he certainly created a great deal of commentary. The Treasury Department took a first step to dial back some of that confusion, stating there was no imminent plan. It then followed up with a comment endorsing Banking Committee Chairman Mike Crapo’s outline for GSE reform. In Calabria’s hearing, he went even further. As American Banker wrote, “The nominee to run the Federal Housing Finance Agency appeared to lean toward having Congress reform the government-sponsored enterprises, despite recent speculation that the Trump administration was readying a plan that could be carried out without legislation.” Calabria told Senate Banking Committee members he would “carry out the clear intent of Congress” should lawmakers enact GSE reform, rather than impose his own vision. He also said he was unaware of a White House plan discussed by acting FHFA Director Joseph Otting. What happens next? Mortgage Media will be there to report it. Stay tuned.
What’s going on with mortgage volume and housing? The MBA reported that while mortgage applications are up over last month, they remain below last year for both purchase and refinance applications. Mortgage Media is wondering why? The NY Times reports that if the U.S. goes into recession, housing won’t be the cause, because it never recovered in the first place. The NYT says housing is the biggest single sector that moves the economy, followed by durable goods. But prices have risen faster than incomes, and builders are not bullish enough to infuse supply. What’s most interesting is the significant forecast gap for 2019 in mortgage volumes with Freddie Mac and Fannie Mae (see the Urban Institute January Chartbook) disagreeing on expected mortgage volumes by nearly $70 billion, leaving us wondering which path this housing market may take. Even the Property Brothers signed on for another new HGTV show, to focus on families wanting to renovate and stay, versus flip or buy. Is this a reflection of a slowing purchase market? Being on the cusp of the spring market, we look forward to any indicators to tell us how the year will develop for housing.
Whats happening at HUD? With the exodus of the Deputy Secretary and the nominee and acting GNMA President, some lenders are expressing concern about unfulfilled promises. Secretary Ben Carson received great applause when he made commitments back in 2017 that stopping the unfair use of the False Claims Act was a priority for HUD as reported here. But with Brian Montgomery now playing a dual role as the Acting Deputy Secretary and FHA Commissioner, housing stakeholders remain in wait for progress. Even the Secretary’s key projects seem to be stalling as reported by NBC. Whatever happens in the months ahead, we remain extremely supportive of a stronger HUD, and hope that the Secretary can attract new leadership for the organization to execute on its key promises.
Finally, we’ve been looking at the U.S. debt, and asking, how big a deal is it? Some suggest that we’re facing a ticking debt bomb of seismic proportions. The U.S. federal government’s debt load hit another milestone this month: It’s now a record $22 trillion in nominal terms. That’s $67,000 for every man, woman and child living in the U.S., and it’s up $2 trillion since President Donald Trump took office in 2017. As shown in the chart below, $4.5 trillion in U.S. Treasury debt must be refinanced in 2019 alone, and a whopping $11 trillion within the next 5 years. This may become one of the most closely watched stories as we look towards an uncertain global climate and the dependence on global capital to buy our debt.
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