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UP NEXT
Here is what to buy and skip in September 2023
04:20
Craig Melvin helps Rutgers freshman move into his dorm
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Pentagon unveils ‘one-stop shop’ site for non-classified UFO docs
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85,000+ TOMY highchairs recalled over possible fall hazard
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Manhunt underway for murderer who escaped Pennsylvania prison
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Doorbell notification has dad returning home to give daughter hug
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Grief author accused of poisoning husband to due back in court
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Dust storm known as a haboob rolls through Tempe, Arizona
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US Capitol doctor clears Mitch McConnell to work after health scare
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Idalia aftermath: New video shows extent of devastation
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Donald Trump’s election fraud case in Georgia set to be televised
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How will the weather be for Labor Day weekend?
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Rip current concerns could dampen some Labor Day plans
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Labor Day weekend: Here are the best times to travel
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Why figuring out your tech personality can improve how you use it
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TODAY celebrates 100th birthdays: Aug. 31, 2023
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How a Long Island community is giving a boost to oyster population
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Watch: Man pulled over for driving with bull riding shotgun
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Ford recalls 42,000 trucks over potentially defective rear axle shaft
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Oprah, Dwayne Johnson to help Maui residents affected by wildfire
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Mortgage rates are the highest they’ve been in more than two decades, putting homeownership out of reach for some. NBC’s Vicky Nguyen reports for TODAY on how the interest rate is impacting the market.Aug. 23, 2023
UP NEXT
Here is what to buy and skip in September 2023
04:20
Craig Melvin helps Rutgers freshman move into his dorm
04:43
Pentagon unveils ‘one-stop shop’ site for non-classified UFO docs
00:32
85,000+ TOMY highchairs recalled over possible fall hazard
00:32
Manhunt underway for murderer who escaped Pennsylvania prison
00:25
Doorbell notification has dad returning home to give daughter hug
00:45
Grief author accused of poisoning husband to due back in court
02:32
Dust storm known as a haboob rolls through Tempe, Arizona
01:07
US Capitol doctor clears Mitch McConnell to work after health scare
02:00
Idalia aftermath: New video shows extent of devastation
02:41
Donald Trump’s election fraud case in Georgia set to be televised
02:28
How will the weather be for Labor Day weekend?
01:17
Rip current concerns could dampen some Labor Day plans
01:32
Labor Day weekend: Here are the best times to travel
02:26
Why figuring out your tech personality can improve how you use it
05:00
TODAY celebrates 100th birthdays: Aug. 31, 2023
01:20
How a Long Island community is giving a boost to oyster population
04:01
Watch: Man pulled over for driving with bull riding shotgun
00:37
Ford recalls 42,000 trucks over potentially defective rear axle shaft
00:29
Oprah, Dwayne Johnson to help Maui residents affected by wildfire
Hundreds of Wells Fargo customers reported issues with the bank’s systems Thursday, with problems ranging from transferring funds to declining ATM cards. This is the second major technical issue to impact the bank this month after some customers a few weeks ago noticed their direct deposits had disappeared from their accounts.
Here’s what else you need to know to Get Up to Speed and On with Your Day.
1. Trump
Donald Trump became the first former US president to have a mug shot taken when he was placed under arrest at the Fulton County jail on Thursday. He was booked as inmate No. P01135809 after surrendering on more than a dozen charges stemming from his alleged efforts to overturn Georgia’s 2020 election results. Sources tell CNN that the former president wanted to appear defiant in the mug shot, and purposefully chose not to smile. After he was released on a $200,000 bond, Trump slammed the case as “a travesty of justice,” and told reporters, “I did nothing wrong.” His surrender in Georgia marked the fourth time this year the former president has turned himself in to local or federal officials after criminal charges were brought against him — episodes that had never been seen in US history until 2023.
2. Maui
Officials in Maui County, Hawaii, have released a list of nearly 400 people who remain unaccounted for following the devastating wildfires this month. The “validated list” was put together by the FBI, a news release from the county said on Thursday. “We’re releasing this list of names today because we know that it will help with the investigation,” Police Chief John Pelletier said in the release. “We also know that once those names come out, it can and will cause pain for folks whose loved ones are listed,” he added. The list of 388 names marks a drop from the more than 1,000 people previously believed to be unaccounted for. But that figure could change as the grim search continues, officials said. At least 115 people have already been confirmed dead, making it the deadliest wildfire disaster in the US in more than 100 years.
<div data-uri="cms.cnn.com/_components/video-resource/instances/cllqg7epd000e3b6ic8oco5w2@published" data-component-name="video-resource" data-editable="settings" class="video-resource" data-video-id="us/2023/08/24/exp-hawaii-fires-governor-intv-082401pseg2-cnni-us.cnn" data-live data-analytics-aggregate-events="true" data-custom-experience data-asset-type="hlsTs" data-medium-env="prod" data-autostart="unmuted" data-show-ads="true" data-source="CNN" data-featured-video="true" data-headline=""We had essentially a fire hurricane": The Governor of Hawaii on the inferno that has left hundreds still missing." data-description="Hawaii Governor Josh Green joins CNN's Paula Newton to discuss the effects of climate change, and the powerful natural disasters that combined to cause mass devastation in Maui. ” data-duration=”04:41″ data-source-html=” – Source:
CNN
3. Power outages
Nearly 700,000 homes and businesses were without power early today across Michigan and Ohio following a forceful round of thunderstorms and a large tornado. The “extremely dangerous” tornado was confirmed near Williamston, Michigan, Thursday night around 9:30 p.m. local time, according to the National Weather Service. In addition to heavy rain of up to 8 inches in some areas, the storms brought powerful winds gusting up to 85 mph and hail up to 1.5 inches in diameter. Approximately 400,000 people were without power in southern Michigan and nearly 300,000 were in the dark in northern Ohio overnight, according to tracker PowerOutage.us. Crews are expected to survey the damage today as the storms track further south.
4. Mortgage rates
Mortgage rates soared to 7.23% this week — their highest level since 2001. For comparison, the 30-year fixed-rate a year ago was 5.55%. Mortgage rates have spiked during the Federal Reserve’s historic inflation-curbing campaign, sending home affordability to the worst levels since 1984. Buying a home is more expensive now than renting because of the added cost of financing a mortgage and rising home prices. Hopeful house hunters also face historically low inventory, increasing competition for properties. According to an analysis by Moody’s Investors Service, US homebuying costs will remain elevated at least through 2024.
5. Russia
Russian President Vladimir Putin made his first public comments Thursday on the plane crash believed to have killed Wagner chief Yevgeny Prigozhin, saying he was “talented” but made “serious mistakes in life.” The crash Wednesday took place northwest of Moscow and killed all on board, according to Russian officials. There is no concrete evidence that points to Kremlin involvement and an investigation is underway to determine the cause of the crash. However, it is known that Prigozhin recently joined a growing list of high-profile Russians who have fallen from the good graces of Putin and died under mysterious circumstances. Ukrainian President Volodymyr Zelensky said Kyiv had nothing to do with the crash, adding “but I think everyone realizes who has.” President Joe Biden similarly suggested Putin may have been behind the incident.
<div data-uri="cms.cnn.com/_components/video-resource/instances/cllqigat7000m3b6itb0tr9i6@published" data-component-name="video-resource" data-editable="settings" class="video-resource" data-video-id="world/2023/08/24/putin-comment-condolences-wagner-plane-crash-vpx.cnn" data-live data-analytics-aggregate-events="true" data-custom-experience data-asset-type="hlsTs" data-medium-env="prod" data-autostart="unmuted" data-show-ads="true" data-source="CNN" data-featured-video="true" data-headline="Putin makes first public comments since plane crash" data-description="Russian President Vladimir Putin made his first public remarks since a plane crash north of Moscow is believed to have killed Wagner chief Yevgeny Prigozhin, sending his condolences to families of the "Wagner Group employees" on board. CNN's Paula Newton has the details." data-duration="00:51" data-source-html=" – Source:
CNN
BREAKFAST BROWSE
It’s not pumpkin you’re tasting in your pumpkin spice latte Pumpkin spice blend is actually a simple combination of cinnamon, ginger, nutmeg, allspice and cloves. Check out these fall-favorite dishes that call for real pumpkin.
Selena Gomez, Miley Cyrus, Ariana Grande all released new music on the same day It’s been a big week for pop music. You’ll probably hear these songs on summer playlists and the radio soon.
A ‘forgotten’ Winnie the Pooh sketch sat in a drawer for years. Now it could be worth thousands An original drawing of the Disney character which languished for decades in a drawer could fetch nearly $40,000 at auction next month.
Comedian Kevin Hart ends up in wheelchair after racing his friend Trying to do “young stuff” has temporarily landed Kevin Hart in a wheelchair.
Dollar Tree may start locking up items The discount store known for $1 price points is seeing a rise in theft issues. The company said it may take drastic measures to prevent robberies.
QUIZ TIME
Which country successfully landed a spacecraft on the moon this week? A. Italy B. India C. Russia D. Canada Take CNN’s weekly news quiz to see if you’re correct!
TODAY’S NUMBER
7 That’s how many astronauts are currently aboard the International Space Station. A SpaceX and NASA mission was set to send four additional astronauts to the orbiting lab today, but the launch was abruptly called off for “additional analysis.”
TODAY’S QUOTE
“We don’t believe it rises to the level of a recallable safety defect.”
— Ford, responding to complaints about an “ear piercing” noise from speakers in its F-150 trucks. The automaker said it has to come up with a software fix to address the annoying noise that sounds like static, or glass shattering, and which cannot be shut off. Around 100 drivers have submitted complaints, Ford said, but the company does not yet plan to issue a full recall.
TODAY’S WEATHER
Check your local forecast here>>>
AND FINALLY …
Watch this video to see how homemade rockets are helping a Thai community uphold its traditions.
[UPDATE] This article was updated on 8/13 to include a statement from the FHFA.
Refinance mortgage loans sold to Fannie Mae and Freddie Mac after Sept. 1 will include a new adverse-market refinance fee of 0.5%, the two government sponsored enterprises announced Wednesday night. This fee will be assessed for both cash-out and no-cash-out refinances.
“In light of market and economic uncertainty resulting in higher risk and costs incurred by Fannie Mae, we are implementing a new loan-level price adjustment,” the letter from the larger of the two government-sponsored enterprises said.
Freddie Mac’s bulletin specifically cited the pandemic.
“As a result of risk management and loss forecasting precipitated by COVID-19 related economic and market uncertainty, we are introducing a new Market Condition Credit Fee,” it said.
With refinance activity rising to 65.7% of total applications – posting 12 straight weeks of year-over-year growth – the fee’s effects will be felt immediately.
For example, for a loan of $291,300 – the median home price in the second quarter – that .5% will cost lenders $1,456. The Sept. 1 sell date means some of the refis impacted are already locked and can’t be adjusted at this point, so lenders will have to pay the fee. If the deal isn’t locked, the cost likely will be passed on to the consumer.
The new credit fee doesn’t apply to purchase mortgage loans.
When reached for comment, the Federal Housing Finance Agency, which regulates Fannie Mae and Freddie Mac, gave this statement: “Based on their projected COVID-related losses, Fannie Mae and Freddie Mac (the Enterprises) requested, and were granted, permission from FHFA to place an adverse market fee on mortgage refinance acquisitions.”
The Mortgage Bankers Association issued a statement calling the new fee “ill-timed” and said it runs counter to the goals behind one of the directives signed by President Donald Trump on Saturday to support homeowners.
“Tonight’s announcement by the GSEs flies in the face of the administration’s recent executive actions urging federal agencies to take all measures within their authorities to support struggling homeowners,” the MBA statement said.
“Requiring Fannie Mae and Freddie Mac to charge a 0.5% fee on refinance mortgages they purchase will raise interest rates on families trying to make ends meet in these challenging times,” it said. “This means the average consumer will be paying $1,400 more than they otherwise would have paid.”
The timing of the announcement will result in consumers who have loans already in process being faced with unexpected costs, MBA said.
“Even worse, the Sept. 1 effective date means that thousands of borrowers who did not lock in their rates could face unanticipated cost increases just days from closing,” the trade group said.
“The housing market has been able to withstand many of the most severe effects of the COVID-19 pandemic,” MBA said. “The recent refinance activity has not only helped homeowners lower their monthly payments, but it is also reducing risk to the GSEs and taxpayers. At a time when the Federal Reserve is purchasing $40 billion in agency MBS per month to help reduce financing costs for mortgage borrowers to support the broader economy, this action raises those costs and undermines the Federal Reserve’s policy.
MBA called on the FHFA to reverse the decision.
“This announcement is bad for our nation’s homeowners and the nascent economic recovery,” the MBA statement said. “We strongly urge FHFA, which had to approve this policy, to withdraw this ill-timed, misguided directive.”
(The Center Square) – Gas prices and mortgage rates continue to rise as polling shows Americans remain worried about the economy.
Gas prices hit an average of $3.85 per gallon of regular gas nationally Tuesday, up from $3.58 a month ago. Incumbent presidents usually take criticism for gas price increases, and President Joe Biden is no exception, taking fire for his work to discourage domestic oil and gas leasing and pipeline development.
“Joe Biden wants us to believe that we are helpless victims incapable of controlling our own destiny, and that OPEC or ‘corporate greed’ determine oil and gas prices, but all he needs to do is reverse his radical green policies, allow the fossil fuel industry to operate, and we’d see prices drop to Trump era levels as domestic production increases,” Daniel Turner, executive director at the energy workers advocacy group, Power the Future, told The Center Square. “Such actions could even secure his re-election, but Biden could never admit American fossil fuels are good and necessary, even at his own political peril.”
Meanwhile, average mortgage prices last week hit 7.09%, the highest in two decades. This time last year, the average rate was about 5.13.
“The economy continues to do better than expected and the 10-year Treasury yield has moved up, causing mortgage rates to climb,” Sam Khater, Freddie Mac’s Chief Economist, said in the group’s rate announcement. “The last time the 30-year fixed-rate mortgage exceeded seven percent was last November. Demand has been impacted by affordability headwinds, but low inventory remains the root cause of stalling home sales.”
Mortgage rates have been steadily pushed up as the Federal Reserve hikes rate to combat elevated inflation, which soared earlier in the Biden administration before tapering off in recent months. The U.S. Bureau of Labor Statistics’ Producer Price Index, a key marker of inflation, has increased nearly 17% since President Joe Biden took office while wages have failed to keep up.
Meanwhile, polling shows Americans are still concerned about economic issues. The Center Square Voters’ Voices Poll, conducted in conjunction with Noble Predictive Insights, found that inflation and the economy are still top concerns for Americans.
That poll of 2,500 registered voters found inflation and price increases were the most commonly cited concern for Republicans and Independent voters and comes in second for Democrats only to climate change.
That concern has become a political headache for Biden, who has seen his approval rating dip underwater as he continues to take fire for higher prices.
Republicans were quick to blast Biden over the weekend as buying a house became even more expensive.
“Homeownership in America is now a lot less affordable as mortgage rates have reached the highest level in over 20 years,” Rep. Elise Stefanik, R-N.Y., wrote on social media. “This is what [Bidenomics] looks like.”
Biden, though, has defended his work on the economy, pointing to the relatively low unemployment rate, the slowing of inflation, and the rebound from COVID-era lockdowns.
“The Inflation Reduction Act is delivering for the American people,” Biden wrote on social media Sunday. “It’s lowering costs for families, restoring fairness to the tax code, creating good-paying jobs here in America, addressing the existential threat of the climate crisis, and more.”
WASHINGTON — After years of proposals, counterproposals, interagency disagreement and political intrigue, the Federal Reserve, Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency appear poised to finish their modernization of the Community Reinvestment Act’s implementing rules.
FDIC Chairman Martin Gruenberg said last fall that he expected the three agencies would finalize a joint rule updating the CRA in early 2023. But the intricacies of the rule, a shake-up of leadership and a string of midsize bank failures this spring likely contributed to pushing back that timeline, according to Jesse Van Tol, CEO of the National Community Reinvestment Coalition.
“You had a mini banking crisis in the spring that certainly pulled people away from this. You had a leadership transition at the Fed as well with [former Vice Chair Lael] Brainard’s departure, [and] you’ve gotten new Fed governors who came on board.” he said. “The light at the end of the tunnel is here, and I think we will see the final rule in October.”
Congress passed the CRA in 1977 as a way to address de facto lending discrimination faced by communities of color. The act requires that banks be graded on how equitably they are lending to low- and moderate-income customers and neighborhoods in their service areas, typically determined by where they have branches and deposit-taking automated teller machines. Banks need to receive a satisfactory mark in order to merge with or acquire other banks.
Given the advent of mobile banking, both banks and community groups have long agreed on the need to update the CRA — the most recent comprehensive overhaul of the rules was conducted in the 1990s.
Former Comptroller of the Currency Joseph Otting previously attempted to reform CRA implementation during the Trump administration, but community organizations argued the proposal effectively allowed banks to ignore underinvested communities and they threatened to sue the OCC when the plan was finalized in 2020. Otting’s proposal also failed to gain the support of Fed officials. The Biden administration then took on the task of reform, starting from scratch under the leadership of former Brainard.
The banking agencies issued a notice of proposed rulemaking in May 2022, but banking trade organizations raised a variety of concerns about the proposal. Banks argued that it would be too difficult to attain satisfactory ratings under the change, particularly under the retail lending portion of CRA exams. Banks also argued that the 90-day comment period was too short for banks to meaningfully respond to the proposed changes under the Administrative Procedure Act and hinted at a legal challenge if the rule was finalized as written.
Banking groups on Tuesday asked regulators to delay issuing the final joint rule due to uncertainty created by a constitutional challenge to the Consumer Financial Protection Bureau’s funding structure and by the recent capital changes regulators have proposed as part of the Basel III accords.
But the regulators appear unfazed by that criticism. Ian Katz, a Washington analyst with Capital Alpha Partners, said that may be due in part to the closing window of opportunity that regulators have to finalize the rule and avoid a congressional repeal after the 2024 election. The Congressional Review Act allows Congress to nullify a regulation within 60 legislative days of its finalization with a majority vote in both chambers and approval of the president. Katz said that a real threat of an override exists if Republicans win the House, Senate and White House.
“If the administration wants to make sure that the rule can’t be nullified by a Republican administration and Congress, it probably needs to finalize it by roughly mid-2024 to avoid the other CRA, the Congressional Review Act,” Katz said. “I think they’ll put it out before then.”
But in addition to racing against the clock, experts say regulators also have to take their time to ensure that the final rule is not vulnerable to a legal challenge.
“CRA is complicated, and the proposal gives the banks a lot of different pieces they can attack. The banks are also asserting that the regulators are going beyond their statutory authority and that the proposal, if unchanged, would be vulnerable to a legal challenge,” Katz said. “I imagine the regulators have been taking a look at that and will try to make sure they put out something that won’t be easy to strike down in court.”
Van Tol said the agencies are highly sensitive to industry concerns and have spent a lot of time making certain the law complies with statutory authority. To craft a durable rule, the agencies — particularly the Fed, which is leading the rewrite — are likely to take all the time they have. Van Tol said this puts pressure on regulators to ensure the rule withstands the test of time.
“Because the banking trades have threatened to sue them, I think they are trying to make sure that they’ve dotted the i’s and crossed their t’s in such a way that the rules are best protected,” said Van Tol.
Ye the delay in finalization can’t all be attributed entirely to industry pressure, Van Tol said. CRA-related rules have historically been very difficult to get done, in part because the details are very complex and also because they require interagency collaboration.
“It’s an interagency ruling, it’s much more complicated to coordinate amongst three agencies — two of whom have boards — who have to vote on the proposal,” he said. “The Fed [officials] are perfectionists. If you give them time, they’ll take it. They’ll take as much time as they need to get to something they’re satisfied with.”
Dennis Kelleher, CEO of the public advocacy organization Better Markets, said part of the problem is that industry turmoil and agency turnover made an already tedious process more difficult.
“I think anyone thinking it was going to be finalized earlier this year was overly optimistic,” Kelleher said. “It would have been record-breaking for them to do all that and finalize by earlier this year. While we always prefer rules to be finalized sooner than later, we’re more interested in rules being finalized that are effective, workable, durable and achieve the intended goal. If that takes more time than less, better to get it right than be quick about it.”
When reached for comment, officials at the OCC indicated they are working on the rule and incorporating public feedback.
“The OCC has been working with the Federal Reserve and FDIC to modernize and strengthen the Community Reinvestment Act to expand financial inclusion and opportunity for all Americans, especially the underserved,” they noted in an email. “The agencies received hundreds of detailed and thoughtful comments on the notice of proposed rulemaking, and we are working together to consider the suggestions.”
The FDIC and the Fed did not comment for this story.
Van Tol said that for all the bluster about a possible legal challenge, he is skeptical that banks would actually follow through on their threat to sue their prudential regulators over the rule.
“I think the trades sending that letter [on Tuesday] is just an attempt to continue to delay, which is really just an attempt to kill it,” Van Tol said. “It will be interesting to see if they do. I think it’s one thing to sue the CFPB; I think it’s another thing entirely to sue your prudential regulator. I wouldn’t want to be in that position.”
He added that banks also must toe a fine line in opposing the CRA, given how such a stance could contradict banks’ previous stated commitments to racial justice.
“Some banks will think twice — many of them having made statements about their commitment to racial equity, their commitment to the community in the wake of George Floyd — about suing over a rule that fundamentally is about lifting up underserved communities,” he said. “I think obviously that’s the reason why they work through their trades, to shield themselves from criticism.”
You may have noticed that the Republican presidential candidates are starting to up the ante ahead of the 2024 elections, with one man leading the way in the polls. But with that in mind, the White House issued a statement on Wednesday expressing concern over former President Donald Trump’s proposal to implement new tariffs on all foreign imports, asserting that such a move would adversely affect American working families, disrupt the economy, and contribute to inflation.
According to reports, Trump convened a meeting with his key economic advisors at his private golf club in New Jersey last Wednesday, dedicating two hours to outline an economic plan with a focus on trade for his potential 2024 presidential campaign. This initiative was detailed in an article by the Washington Post on Tuesday.
During the meeting, one of the proposals discussed was Trump’s intention to establish a comprehensive baseline tariff on nearly all imports to the United States, should he be reelected, as outlined in the report.
In response to these developments, White House spokesperson Andrew Bates remarked, “Combining a sweeping tariff tax on the middle class with more trickle-down tax welfare for rich special interests would stifle economic growth and fuel inflation,”
Bates emphasized that President Biden is firmly opposed to such a strategy, citing concerns that it would result in elevated prices and increased inflation. The Biden administration remains committed to collaborating with international allies to address “trade abuses committed by countries like China.”
Average U.S. mortgage rates for a 30-year fixed mortgage rose to 2.99% this week from 2.96% last week, Freddie Mac said in a report on Thursday.
The average 15-year rate rose to 2.54% from 2.46%, according to the mortgage financier.
The upward moves come after the Federal Housing Finance Agency approved a new “adverse market” fee for refinancings to compensate Fannie Mae and Freddie Mac for the additional risk posed by the economic crisis caused by the COVID-19 pandemic.
“The fact that Fannie Mae and Freddie Mac are assessing a 50 basis point adverse market fee on refinancings is not something that will reassure lenders, whether for refis or purchase loans,” said Keith Gumbinger of HSH.com. “That was a beacon telling the market `There’s a lot of risk out here,’ and that’s going to put upward pressure on rates.”
The course of the economic recovery is dependent on whether Congress will address the COVID-19 pandemic, Moody’s Investors Service said in a report on Thursday.
Speaker Nancy Pelosi (D-CA) called the House of Representatives back from its traditional August vacation this week, but the Senate remains on summer break and currently isn’t scheduled to be back in session until Sept. 7.
The Moody’s report panned the four directives signed by President Donald Trump on Aug. 8 that he said would address the lapse in beefed-up unemployment benefits and other issues.
“The recent executive actions meant to provide relief to vulnerable households are subject to implementation risk and too limited in scope to provide significant support to the economy,” the Moody’s report said.
Even with the increase this week, mortgage rates remain low and will support the economy with home purchases and renovations, said Sam Khater, Freddie Mac’s chief economist.
“Purchase housing demand continues to accelerate, ultimately providing support to an economy that otherwise has stagnated,” Khater said. “The surge in sales led to a rapid increase in the demand for remodeling and home furnishings as consumers look to renovate while adjusting to home life during COVID.”
A staggering 90 percent of home builders say the affordability of new properties is being hampered by rising lumber prices.
The finding came from the latest National Association of Home Builders/Wells Fargo Housing Market Index, where many builders claimed that the higher costs of construction are forcing more prospective buyers to back out of the new home market.
Builders say the main reason for the increased costs is the rise in lumber prices over the last one and a half years. Almost 95 percent of builders say the spike in the price of lumber was impacting the affordability of new homes, with respondents evenly split on whether it was having a “significant” or “minor” impact.
Prices of lumber in the U.S. have increased by 62 percent since President Donald Trump came into power in January 2017, the NAHB’s chief economist Robert Dietz said. He reckons that lumber tariffs have increased the price of the average new home by around $9,000.
Builders say the rising prices may be due to a widespread shortage of lumber. More than 30 percent of single-family home builders reported facing framing lumber shortages, which is the highest figure since the NAHB began tracking this data in 1994.
The problem of housing affordability isn’t just down to lumber prices however. A recent report in The Morning Call states that while lumber is a significant factor, labor shortages and growing regulations are also to blame.
According to the NAHB’s Dietz, homebuilding in many parts of the country is being held back due to a lack of workers, with almost 230,000 building jobs in the U.S. currently unfulfilled.
“Labor has been an issue of the industry for the last four or five years,” he said. “The job openings rate in the construction industry now is actually higher than it was at the peak of the building boom.”
Then there’s the problem of increased building regulations and stricter zoning requirements, which result in both fewer starts and increased costs. Dietz said that regulations add up to around a quarter of the cost of a median-priced home, and more than 30 percent of the cost of an apartment. These costs also restrict builder’s ability to produce homes at the lower-end of the market, which is the price point targeted by most younger buyers.
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].
WASHINGTON — The Bank Policy Institute and the American Bankers Association penned a joint letter Tuesday urging federal bank regulators to delay finalizing the most sweeping revisions to the Community Reinvestment Act — an anti-redlining bill — in decades.
The letter, sent by BPI and ABA to the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency suggested regulators should delay any final CRA rule until the agencies’ joint Basel III capital rules are finalized. They posited regulators had not considered how the new capital requirements lower the incentive for banks to engage in CRA activities like low down payment mortgages to low-income families.
“The proposed capital rules would reduce incentives to engage in mortgage lending, which is central to the CRA programs of many banks,” they said. “Many banks offer low down payment mortgages as a means of meeting the credit needs of low- and moderate-income families.”
In addition to asking regulators to pause the CRA rule to accommodate the likely reduction in mortgage lending, the letter also said that a constitutional challenge to the Consumer Financial Protection Bureau’s funding structure should give regulators pause as they move ahead with a final rule. The banking industry has previously expressed opposition to the CRA revamp on the grounds it oversteps congressional authority.
A Texas district court judge last month temporarily barred the CFPB from enforcing its 1071 rule until after the Supreme Court rules on the constitutionality of the CFPB’s funding structure sometime next year.
“The banking agencies should delay finalization of the CRA rules until a final determination is made regarding the status of the rules promulgated under Section 1071, which will affect how the agencies administer certain aspects of the CRA rules,” the banking groups said.
While the necessity for a CRA update is widely acknowledged, the banking industry has expressed louder opposition as new Basel III endgame requirements and post-banking crisis reforms coincide with the new CRA standards.
In a comment letter in August, 2022 the Bank Policy Institute said the agencies’ joint proposed rule exceeded statutory mandate, added needless complexity and broad application and was overly punitive in its application toward banks. Another major trade group, the American Bankers Association, made similar claims in an August comment letter, saying the proposal missed the mark. ABA said they were concerned that significant numbers of banks would need to invest more in their retail lending departments to pass retail lending examinations under the new rule.
The Community Reinvestment Act was passed in 1977 to bar banks from accepting deposits from lower-income communities without making commensurate levels of loans to those communities — a problem for many communities of color in the first years since explicit racial discrimination in lending was outlawed. The law requires banks to make loans to low- and moderate- income borrowers in the institution’s “assessment area,” defined as areas where the bank has its headquarters, branches or deposit-taking ATMs.
Banks are assessed for compliance at least every five years by their primary regulator. Banks are graded in three areas: lending, investment and service, weighted as 50%, 25% and 25% of the examination respectively. Banks are then assigned a rating of “outstanding,” “satisfactory,” “needs to improve” or “noncompliant” based on their performance.
If a bank is deemed to have less than a “satisfactory” rating, then it may not merge with or acquire another banking institution or modify its charter until it achieves compliance. But critics have argued that most banks receive either an outstanding or satisfactory rating, meaning that virtually no banks face the regulatory burdens that the CRA can impose.
Former Comptroller of the Currency Joseph Otting sought to reform the implementation of the CRA during the Trump administration, but community advocates argued that his reforms were too favorable to banks and would yield little additional investment in the communities that need it the most. Bank regulators issued their revised proposal last year. — John Heltman contributed to this report
President Donald Trump’s administration has proposed the privatization of mortgage financing giants Fannie Mae and Freddie Mac as part of sweeping chances to the way the government is organized, it was reported last week.
The proposal, which can be read here, still requires the approval of Congress, would see Fannie and Freddie transformed into private entities, HousingWire reported.
Fannie and Freddie have been managed under U.S. conservatorship since 2008, but Trump’s administration believes there’s good reason for a change in the status quo.
“Although the federal role in the housing market has helped to facilitate the availability of the 30-year fixed-rate mortgage, the current system has structural flaws that have also created distortions in home pricing that may actually hinder the goal of homeownership,” the proposal states.
The idea is that the fully privatized mortgage finances would be able to focus more on “qualified borrowers”, with the Department of Housing and Urban Development taking over responsibility of those programs that exist to help low and moderate-income buyers. Fannie and Freddie don’t issue mortgages themselves, but they back them by lenders and bundle them into securities which are guaranteed to investors.
Trump’s administration says the GSEs currently play an “outsized role” in the mortgage system and that it impedes competition in the market. It argues that privatization would increase competition and lead to lower housing prices.
Not everyone agrees however, with some expert saying that privatization of the GSEs could instead lead to higher mortgage rates as it would reduce the number of programs available to low income borrowers. At present, the government’s proposal is too vague to know for sure exactly what kind of impact it would actually have on the market.
“It is critical to America’s housing industry and a priority of NAR that affordable mortgage capital always remains available for creditworthy Americans, particularly during economic downturns—a vital role that a fully private entity could not fill,” Elizabeth Mendenhall, president of the National Association of Realtors, said in a statement. “This makes efforts to reform the secondary mortgage market all the more necessary. NAR will continue to advocate that Congress enact comprehensive housing finance reforms as quickly as possible.”
The proposal “would transform the way the federal government delivers support for the U.S. housing finance system to ensure more transparency and accountability to taxpayers, and to minimize the risk of taxpayer-funded bailouts, while maintaining responsible and sustainable support for homeowners,” it reads.
Any changes are likely to be a long time coming however, as they would require broader policy and legislative reform beyond just restructuring federal agencies and programs. The proposal would also necessitate Fannie and Freddie’s reduced role in the housing market, and the provision of an explicit and limited federal backstop that’s on budget and separate from federal support for low and moderate-income buyers.
Currently, around 70 percent of U.S. mortgages are backed by Fannie, Freddie or Ginnie Mae, which covers loans guaranteed by the Federal Housing Administration, the Department of Veterans Affairs, and the Department of Agriculture.
Mike Wheatley is the senior editor at Realty Biz News. Got a real estate related news article you wish to share, contact Mike at [email protected].