Happy New Year! This year is going to be momentous, on both policy and personal fronts.
On the policy side, several recent developments give me hope for some significant policy changes in 2012. One of the biggest developments is President Obama’s recess appointment of Richard Cordray as Director of the Consumer Financial Protection Bureau. Even Senate Republicans who refused to confirm him because of ideological opposition to the agency itself have acknowledged that Cordray is eminently qualified for the job. Cordray is already reaching out to consumer leaders across the country, continuing the agency’s culture of inclusion and cooperation. And CFPB is wasting no time using its power to regulate non-banks. For example, the CFPB released Mortgage Origination Examination Procedures for both banks and non-banks on January 11, 2012, and is already investigating PHH, the nation’s largest private mortgage company, for improper reinsurance payments. The CFPB has also launched field hearings on payday lending, starting with one today in Birmingham, Alabama.
Another bright spot is the Federal Reserve Board’s white paper on “The U.S. Housing Market,” released January 4. As the Fed notes, “continued weakness in the housing market poses a significant barrier to a more vigorous economic recovery.” Without attempting to list all of the Fed’s suggestions, a few are particularly worth noting:
• Creation of a large-scale, government-supported REO-to-Rental program for foreclosed and surrendered properties and new Fed guidance for banks and examiners regarding rentals;
• Increased government funding for land banks to return foreclosed properties to productive use;
• Removal of barriers, such as imposing credit score limits higher than FHA requirements, that prevent creditworthy homebuyers from accessing mortgage credit;
• Expansion of HARP or a new program for homeowners with high Loan-to-Value (LTV) ratios but whose mortgages are not guaranteed by the Government-Supported Entities (GSEs), Fannie Mae and Freddie Mac;
• Expansion of HAMP to include homeowners where the first lien payment is less than 31 percent of income and allowing payment deferrals for temporarily unemployed borrowers;
• Allowance of large-scale mortgage principal reduction by the GSEs;
• Reduction or elimination by FHFA of loan-level pricing adjustments (LLPAs); and
• A host of mortgage servicer improvement ideas and a call for a national lien registry.
Woodstock and advocates across the country have been advocating for many of these ideas for years. See our recent blog post for Woodstock’s suggestions that complement the Fed policy recommendations.
On a related note, the current heads of Fannie Mae and Freddie Mac have announced their intentions to step down in 2012 and the current head of FHFA is an acting director who could be replaced, so it is possible that new leadership in these positions could generate some positive outcomes for homeowners, home buyers, renters, investors, and communities.
At Woodstock Institute, we welcomed Spencer Cowan as our new vice president for applied research and promoted Michael Aumiller to research associate in December.
On the personal side, my younger child will graduate from high school and start college and I will sell my house (down the street from the President’s house in Chicago’s beautiful Hyde Park neighborhood) and downsize to a condo or apartment. I’m not doing a marathon this year, but I have a couple of triathlons on my schedule for which I am already in training.
Yes, it is going to be a great year! I look forward to working with you.