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Monday Morning Cup of Coffee: Consumer groups look to expand CFPB authority

And Steven Mnuchin marries Scottish actress

Monday Morning Cup of Coffee takes a look at news coming across the HousingWire weekend desk, with more coverage to come on bigger issues.

An early look at Fannie Mae’s second quarter 2017 Mortgage Lender Sentiment Survey shows many lenders plan to ease credit standards this year.

In fact, the number of lenders planning to loosen credit standards for GSE eligible, non-GSE eligible and government loans reached or surpassed survey highs this quarter. This is a significant change from last year, when the survey showed almost no lenders planned to ease credit standards.

A recent study from the National Association of Realtors showed credit standards did not normalize after the Great Recession. Borrowers with good-to-excellent credit scores are not getting approved at the rate they were in 2003, prior to the period of excessively lax lending standards.

Easing standards will benefit first-time homebuyers amid rising home prices and increasing competition. Hispanic homebuyers will also benefit as that population doesn’t always fit into a traditional credit profile.

“Although Hispanic homeownership has grown the past two years, housing policies still remain too restrictive for much of the Hispanic community,” said Dave Stevens, Mortgage Bankers Association president and CEO.

Back in April, the Credit Availability Index from the Urban Institute’s Housing Finance Policy Center showed lenders could double risk-taking and still remain below pre-crisis levels.

And easing standards could come just in time for what Freddie Mac predicts will be a second wave of strong housing demand in 2017.

The GSE’s monthly Outlook report from June points out housing starts saw a strong market this spring, but dropped 11.4% in April. However, the decline will soon reverse course due to solid job gains and low mortgage interest rates, according to Freddie Mac’s forecast.

“After a strong March, the housing market, from housing starts to new and existing home sales, took a hit in April,” Freddie Mac Chief Economist Sean Becketti said. “The recent declines are likely to reverse as low mortgage interest rates and solid job gains boost the housing market.”

“We expect housing starts and home sales to firm in the coming months and for 2017 to exceed 2016's best-in-a-decade levels,” Becketti said.

But while mortgage rates are down, they are still about 50 basis points higher than last year’s low, the report shows. Unless rates fall below 3.5% once again for an extended period, Freddie Mac expects refinance volume will fall. Overall, mortgage origination volume will drop by $370 billion in 2017.

However, the competitive housing market will push home prices higher, rising 5% year-over-year, the GSE forecasted.

But this weekend wasn’t all work and no play – U.S. Department of the Treasury Secretary Steven Mnuchin, 54, married his 36-year-old fiancée Louise Linton.

The billionaire’s third marriage to the Scottish actress was attended by a list of Washington insiders and Wall Street elite, including President Donald Trump, according to an article by Rebecca Harrington for Business Insider.

The ceremony was officiated by Vice President Mike Pence. Click here to see photos from the wedding.

Congrats Secretary Mnuchin!

But while Washington was taking a breather regarding deregulation and replacing Dodd-Frank, consumer groups were still hard at work as they advocate for the expansion of the Consumer Financial Protection Bureau’s authority.

Groups including the Consumer Federation of America, Public Citizen, Americans for Financial Reform and the National Consumer Law Center came together to back legislation to give the CFPB the power to protect military consumers, according to an article by Mark Huffman for ConsumerAffairs.

Senate Democrats introduced legislation which would give the CFPB oversight of the Military Consumer Enforcement Act, a law which protects military members from abusive financial practices and predatory loans, according to the article.

From the article:

The original law was aimed at promoting military readiness by trying to relieve military personnel of the worries about default judgments, foreclosures and repossessions.

“Predatory schemes frequently target service members and their families,” said Lisa Donner, Executive Director of Americans for Financial Reform. “This legislation grants the CFPB the authority it needs to effectively enforce crucial SCRA protections that make sure banks can’t put military families out on the street or seize their cars in violation of the law.”

Your week may not include any billionaire wedding parties, but it will still be jam-packed with economic news, including Case-Shiller results, pending home sales, the GDP estimate and more.

Check back with HousingWire as we bring you the latest in housing finance. Have a great week!

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